Oil Apocalypse . . . . Putin said, "Nyet" to Mohammed bin Salman

[Douglas Buckland + 6,308]

15 minutes ago, Rasmus Jorgensen said:

Not really. The problem is that world consumes less oil than it produces.

Actually, that’s it in a nutshell. The fact that EVERYONE has continued to produce, for years, when the over supply/glut was obvious defies logic.

[Guillaume Albasini + 851]

Do the US consumers prefer cheap foreign oil or US  more expensive oil ?

Now preserving the US energy independence wii have a cost.

Are the US industries ready to pay their energy at a higjer cost than their foreign competitors ?

And in a flooded market how high the tariffs should be to have a real impact and save the shale oil industry ?

Are the very capitalist shale drillers in need of a socialist solution (State subsidies or oil price set by central government ) ? Stramge paradox !

 

 

[wrs + 893]

6 hours ago, Douglas Buckland said:

Or, if there is no way to handle the associated gas....YOU DO NOT ISSUE A DRILLING PERMIT!

That's not a consideration in issuing a drilling permit.  

[wrs + 893]

18 minutes ago, Guillaume Albasini said:

Do the US consumers prefer cheap foreign oil or US  more expensive oil ?

Now preserving the US energy independence wii have a cost.

Are the US industries ready to pay their energy at a higjer cost than their foreign competitors ?

And in a flooded market how high the tariffs should be to have a real impact and save the shale oil industry ?

Are the very capitalist shale drillers in need of a socialist solution (State subsidies or oil price set by central government ) ? Stramge paradox !

 

 

WTI sells at a discount to Brent which has been as high as $10 in the last 5 years.  So you are wrong, the US has enjoyed much cheaper oil than the rest of the world to date.  It's why our economy is doing well.  However, when two parties decide to dump oil on the market below the market price, that's a different matter. That's what KSA is doing with it's recent OSP settings.  

[wrs + 893]

44 minutes ago, Rasmus Jorgensen said:

Not really. The problem is that world consumes less oil than it produces.

That's not a problem.  There is all kinds of storage for that so that when more is consumed than produced, there is a buffer.  In the US storage levels are below the 5 year average right now so I don't beleive your claim is accurate.  The US market is well balanced and shouldn't be affected by this idiocy between Russia and KSA.

Edited March 10, 2020 by wrs

[El Nikko + 2,145]

Here comes the response, I imagine more companies will be making similar announcements. If more big companies do the same the pain could be over in 6-9 months

http://www.rbcrichardsonbarr.com/IndustryResearch/News.aspx?a=news&ticker=a&w=&story=202003PZONE97866454

In other news China has declared that it has control of the virus and they have no new cases outside of Wuhan, the last I heard they claimed that factories would be back up and running fully by the end of March.

Time to batten down the hatches for a bumpy ride

[El Nikko + 2,145]

some commentary

https://hottakeoftheday.com/why-the-world-changed/

[Douglas Buckland + 6,308]

19 minutes ago, wrs said:

That's not a consideration in issuing a drilling permit.  

It may not be at the moment, but if this flaring issue gets traction, it should be.

[Rasmus Jorgensen + 1,169]

18 minutes ago, wrs said:

However, when two parties decide to dump oil on the market below the market price, that's a different matter. That's what KSA is doing with it's recent OSP settings.  

The free market will take of this. Give it time. Lot's of LTO drillers will go bankrupt. Some unstable countries will turn into an even bigger mess. 

[Douglas Buckland + 6,308]

5 minutes ago, El Nikko said:

some commentary

https://hottakeoftheday.com/why-the-world-changed/

 

20 minutes ago, wrs said:

That's not a problem.  There is all kinds of storage for that so that when more is consumed than produced, there is a buffer.  In the US storage levels are below the 5 year average right now so I don't beleive your claim is accurate.  The US market is well balanced and shouldn't be affected by this idiocy between Russia and KSA.

The oil in storage strongly effects the price!

Edited March 10, 2020 by Douglas Buckland
Typo

[Douglas Buckland + 6,308]

6 minutes ago, El Nikko said:

some commentary

https://hottakeoftheday.com/why-the-world-changed/

Well said!

[wrs + 893]

7 minutes ago, Douglas Buckland said:

 

The oil in storage strongly effects the price!

Didn't I just post that the US is in balance?  Did you miss that part?  In other words, this is not about prices being artificially high, this is about prices being about right before the CV nonsense started and even still in the US, on balance.  So why should the price drop to US producers when their market is in balance?

Furthermore, the Saudis are now threatening to dump their storage in order to crush the price.  That is an act of economic warfare, it's not what a reasonable producer does.  They are a pariah.

[Marcin2 + 725]

26 minutes ago, wrs said:

WTI sells at a discount to Brent which has been as high as $10 in the last 5 years.  So you are wrong, the US has enjoyed much cheaper oil than the rest of the world to date.  It's why our economy is doing well.  However, when two parties decide to dump oil on the market below the market price, that's a different matter. That's what KSA is doing with it's recent OSP settings.  

This is partly wrong. Many  US refineries are used to heavier ( simply better for products) blends than light WTI. So a lot of US imports and consumption is at prices similar to Brent.

OF course vassals from the North are selling their crude at 20 US dollars per barrel to US masters, good that US ban them from exporting crude oil, they would sell it to greedy Chinese at 45 US dollars - this would not be free capitalism. At all.

Only masters - US can export their crude oil, Canadians not.

Actually to be really prudent you would need to know what is the weighted average blend of US consumption.

[footeab@yahoo.com + 2,190]

56 minutes ago, Guillaume Albasini said:

Do the US consumers prefer cheap foreign oil or US  more expensive oil ?

Now preserving the US energy independence wii have a cost.

Are the US industries ready to pay their energy at a higjer cost than their foreign competitors ?

And in a flooded market how high the tariffs should be to have a real impact and save the shale oil industry ?

Are the very capitalist shale drillers in need of a socialist solution (State subsidies or oil price set by central government ) ? Stramge paradox !

Economic/Government/Life works like this:

Draw a circle:

At the top write: FREEDOM, at the bottom write: SLAVERY

On the left write: Socialism and on right write Capitalism. 

Go too far left or right you end up at Slavery. 

Keep the needle in between.... now the question is: which aspect of Economic/Government/Life  leans farther left/right than some other subject.

[wrs + 893]

21 minutes ago, Rasmus Jorgensen said:

The free market will take of this. Give it time. Lot's of LTO drillers will go bankrupt. Some unstable countries will turn into an even bigger mess. 

Dumping oil at below market is not a free market, its a WAR, economic.  They are calling it a price war, that isn't free market economics, it's fighting a war in a different way.  When you are at war you don't have free markets.

[El Nikko + 2,145]

And another one Ring Energy, so that's three companies so far who have acted very rapidly in response.

http://www.rbcrichardsonbarr.com/IndustryResearch/News.aspx?a=news&ticker=a&w=&story=202003bwire09005869r1.xml

[El Nikko + 2,145]

Marathon

http://www.rbcrichardsonbarr.com/IndustryResearch/News.aspx?a=news&ticker=a&w=&story=202003202003100657PR_NEWS_USPR_____CL45779

[Marcin2 + 725]

Putin is black belt in judo.

Putin used, as in judo , the large energy of the unstable, oversupplied oil market because of COVID19 epidemic, added Russian unwillingness for supply cuts. MbS continued Putin script with „ price war”.

Election year in US additional force multiplier.

Perfect storm for US shale.

Done

Judo is a fantastic martial arts discipline.

Edited March 10, 2020 by Marcin2
Typo

[wrs + 893]

10 minutes ago, Marcin2 said:

This is partly wrong. Many  US refineries are used to heavier ( simply better for products) blends than light WTI. So a lot of US imports and consumption is at prices similar to Brent.

OF course vassals from the North are selling their crude at 20 US dollars per barrel to US masters, good that US ban them from exporting crude oil, they would sell it to greedy Chinese at 45 US dollars - this would not be free capitalism. At all.

Only masters - US can export their crude oil, Canadians not.

Actually to be really prudent you would need to know what is the weighted average blend of US consumption.

First of all the Canadians are free to build a pipeline to their west coast, why haven't they done that?  Secondly, the heavy crude is too heavy for the refineries to process by itself so it was always blended with ligher oils.  The shallow WTI was around 32-38 API but condensate has always been well over 40 and for years it commanded a premium.  Now that it's mostly what comes up from the shale wells, there is an over supply of it compared to the slates the US refineries were using.  The Canadian sands sludge has always been blended just to get it in the pipeline and then it's blended more at the refinery.

There is not an oversupply of condensate worldwide and not all refineries are complex.  So the US has been exporting what it doesn't use, that is about 3-4mmbbl/day.  That oil sells at world market prices and competes with some of the production from KSA and Russia but because it's not heavy oil, it's not taking their market share.  Their reaction is not about shale, it's about the fact that those two produce too much heavy oil and that is what is glutted right now.  They are fighting each other for their market share.  We don't need their heavy oil.  There is plenty of it close to home.

[Marcin2 + 725]

I was never researching it in detail , I mean what mechanism is used by US to coerce Canada, but Canada cannot export its crude oil. the same with Mexico.

Uncle Sam just do not allow.

Edited March 10, 2020 by Marcin2
Typo

[Rob Plant + 2,756]

1 hour ago, wrs said:

The US market is well balanced and shouldn't be affected by this idiocy between Russia and KSA.

Tell that to the shale patch!

[El Nikko + 2,145]

I wonder what the response was to this

https://www.bloomberg.com/news/articles/2020-03-09/mnuchin-tells-russian-ambassador-u-s-wants-orderly-oil-market

[El Nikko + 2,145]

18 minutes ago, Rob Plant said:

Tell that to the shale patch!

They're listening loud and clear now, expect rig count to crash really quick.

[Ward Smith + 6,615]

14 hours ago, Enthalpic said:

Praise Jesus

Talk about society sociopaths, you take the cake. You (irrationally) hate a politician so you are thrilled that old people who voted for him will die. You're a real piece of work. 

Now you'll claim it was a joke. Except no one is laughing

[BLA + 1,666]

4 hours ago, Guillaume Albasini said:

Do the US consumers prefer cheap foreign oil or US  more expensive oil ?

Now preserving the US energy independence wii have a cost.

Are the US industries ready to pay their energy at a higjer cost than their foreign competitors ?

And in a flooded market how high the tariffs should be to have a real impact and save the shale oil industry ?

Are the very capitalist shale drillers in need of a socialist solution (State subsidies or oil price set by central government ) ? Stramge paradox !

 

 

Foreign oil is not cheaper then domestic crude.  Most cases it's on  par or more expensive.  Tax avoidance/ transfer pricing between international divisions.

Much of the imported oil is from U.S. corporations that have international E&P ops or JVs. 

Some years back I saw U.S. imported 500k bbls/day from Azerbijian.  It turned out to be from JV EXXON and Chevron had with the local Oil Company. 

Edited March 10, 2020 by BLA