BL

Saudis did not discount to spite Russia. April contract price $58.50. Friday spot price $45.27. Difference - $13.13 drop. Buyers commit March 10th for April delivery.

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19 minutes ago, Gerry Maddoux said:

Nope, this is all on MbS. He threw a temper tantrum. I'm no fan of the butcher Putin but this guy MbS is a man-child who has no historical perspective and no control over his emotions. Russia can wait this out, especially with that huge Yamal Peninsula strike. He can just mind his p's and q's and wait. The Russian economy can actually absorb this. The Saudi economy cannot. I look for MbS to be assassinated in the next month. The House of Saud has tired of his escapades and this, I believe, will be the final straw. The Thanksgiving Massacre cost the royal family $500 billion that is gone for good. This will mount up very very fast. I look for oil to lose down to $20 tomorrow, another $5 the next day, and finally settle around $15. The KSA can't tolerate that sort of financial excision for very long. The long knives are already out. He has pissed off way too many people. Trump is going to throw his ass to the wolves, because Trump needs Big Oil and Richard Kinder and the Permian Highway pipeline and he will do more damage to this guy than the dogs could. 

Don't know enough about MBS and how the royal family view him. Obviously things were not going well if his cousins are sitting in jail along with ministers and generals. 

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Saudi reserves are fine, and their sovereign fund is flush. The $1/2 Trillion returned by the royal family that wasn't used to maintain the Saudi welfare state - meaning most of it, is still there. I think that MBS likely has more mileage than Putin in financial terms. Politics of the royal family, I don't know.

 

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1 minute ago, 0R0 said:

Saudi reserves are fine, and their sovereign fund is flush. The $1/2 Trillion returned by the royal family that wasn't used to maintain the Saudi welfare state - meaning most of it, is still there. I think that MBS likely has more mileage than Putin in financial terms. Politics of the royal family, I don't know.

Well, you need to get acquainted with the machinations of the House of Saud if you believe those things. The half-trillion was shake-down money. From several hundred very rich Saudis unaccustomed to being shaken down. One of them owns a major portion of Citibank. This prince now has well more enemies within the House of Saud than friends. He has destroyed his heritage, piecemeal. He is done.

Putin can actually sit this out. It will be hard on his country and his own sovereign fund, but it can be tolerated. It took two years before for the House of Saud to burn through 500 billion dollars between 2014 and 2016. That's what it'll take this time too--usually, a price war takes about two years. By the time he figures it out, the Saudis will be close to bankrupt. And the shale industry? It'll be transferred lock stock and barrel over to Exxon and Chevron and Occidental, drilling apace at a breakeven price of about $35. 

As the Saudis go, there goes the entire OPEC consortium, which is a ragtag bunch if I ever saw one. No single nation/country in that previous group could negotiate a deal, much less figure out a plan. Iran will not and cannot tolerate this kind of waste, nor, frankly, should they be expected to. I am no fan of Putin but why on earth should he go along with something that doesn't benefit him, his coterie, and last of all to him, his country? 

No, this is a blowup by a man-child of a prince, and a hated one by now. Within his own royal house he couldn't find three people who'd protect him. He is fated, this one. His country had a shot at diversification, at the image he promulgated, and now he has blown it to smithereens. There is almost no stink on Putin. This is on MbS. And he will wear it to his grave.

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Does anyone else think this price war is very convenient for Donald Trump's election campaign this year. If the Russians truly do want Trump in the White House, then they reject the Saudi's request and Saudi's flood the market and it gives the US a big financial benefit of lower oil prices. Interesting!!!!!

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4 hours ago, Carlos1955 said:

Does anyone else think this price war is very convenient for Donald Trump's election campaign this year. If the Russians truly do want Trump in the White House, then they reject the Saudi's request and Saudi's flood the market and it gives the US a big financial benefit of lower oil prices. Interesting!!!!!

I don't think that Russia is particularly concerned with US elections now. Trump didn't really stack up as a "great friend" to Russia.  

That said, there is nothing better for the general US economy than a low oil price. Would help people avoid Covid19 transmission on public transport if they can suddenly afford to commute by car. After all, some people have physical jobs for which they actually need to be there, so can't tele-commute.. 

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10 hours ago, BLA said:

The price was going down Monday either way.  Cuts or no cuts.

My point being Saudis not trying to start a price war . . . .  Just wants to survive.  They had to discount or their exports would drop much more. 

The virus is getting worse worldwide.  Dr. Fauci said does not look good for U.S.  He sees quarenteens in U.S. like China and Italy.  

Well, at some point, somebody’s exports have to drop or else the surplus just gets bigger and bigger.

This begs the question, why are people buying the ‘new’ oil as opposed to the ‘surplus’ oil? If people/governments/countries would purchase the ‘surplus’ oil, instead of the ‘new’ oil, wouldn’t this mechanism force production cuts until the surplus was gone?

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Whatever the benefits comes from low oil prices, it will quickly evaporate with massive layoffs in the oilpatch. This will setup snowball effect to the suppliers, and many other service industries and businesses. If this price is kept $20-$30/bbl till end of the year the job losses in the oilpatch, and service industries will be >500K, and this will be just the beginning. There will not be ANY winners from this. I do not think, that President Trump can afford this scenario to play out. The healthy oilpatch needs prices >$65/bbl, and is one of the biggest contributors to the healthy economy. Oil at $20/bl will KILL economy. Any economy for that matter. There won't be any winners.

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10 hours ago, George8944 said:

Hello Roberto!   One thing I like about this forum is people post from different countries.  The same issue can have many different view points depending upon where you live.  I like hearing all these.   "The truth is out there."

^

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2 hours ago, Zak Pol said:

Whatever the benefits comes from low oil prices, it will quickly evaporate with massive layoffs in the oilpatch. This will setup snowball effect to the suppliers, and many other service industries and businesses. If this price is kept $20-$30/bbl till end of the year the job losses in the oilpatch, and service industries will be >500K, and this will be just the beginning. There will not be ANY winners from this. I do not think, that President Trump can afford this scenario to play out. The healthy oilpatch needs prices >$65/bbl, and is one of the biggest contributors to the healthy economy. Oil at $20/bl will KILL economy. Any economy for that matter. There won't be any winners.

The layoffs in the oil patch occurred years ago. Shale oil kept some folks working, but internationally the devastation has already occurred.

If the oilfield ever recovers from this latest death knell....good luck finding good people experienced enough, in all aspects, to get things kicked off again.

 

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19 hours ago, Zhong Lu said:

I'm just pissed I bought on Friday.  Then again, couldn't have known the weekend OPEC news, but still "falling knives" and such.

Overconfidence after making lots of money.  Now I'm going to lose a chunk of money. Gaaaaaaaaarrrrggghhh.  

Watch for a rebound. 

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18 hours ago, El Nikko said:

I'd also be interested in what people think about the 23 trillion national debt the US has and it's budget defecit....does anyone thing this is going to get fixed and if it doesn't does it matter?

 

That is a very big issue that needs to be addressed. 

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18 hours ago, El Nikko said:

Until you have to pay it back?

I should have studied economics because I always tried to not have any debt and that's why I never had a fancy car or anything

A lot of people got rich with other peoples money (OPM). A lot went broke too. 

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5 hours ago, Douglas Buckland said:

The layoffs in the oil patch occurred years ago. Shale oil kept some folks working, but internationally the devastation has already occurred.

If the oilfield ever recovers from this latest death knell....good luck finding good people experienced enough, in all aspects, to get things kicked off again.

 

Not to mention the rapid training of 'locals' that's been going on for years. Hiring westerners was getting rarer and rarer when I was overseas, I imagine that's only got worse since then. I wouldn't advise anyone to get into the oil industry anymore unless they had transferable skills or can find a 'dead man's shoes' job in the country they reside.

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9 minutes ago, El Nikko said:

Not to mention the rapid training of 'locals' that's been going on for years. Hiring westerners was getting rarer and rarer when I was overseas, I imagine that's only got worse since then. I wouldn't advise anyone to get into the oil industry anymore unless they had transferable skills or can find a 'dead man's shoes' job in the country they reside.

The oil industry has a huge downstream component also. It isn't going to disappear. People will still be buying their big vehicles. The electric vehicle industry will be a niche for the foreseeable future unless prices are reduced greatly. 

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6 hours ago, Douglas Buckland said:

If the oilfield ever recovers from this latest death knell....good luck finding good people experienced enough, in all aspects, to get things kicked off again.

Can't they be pirated from other countries? Exxon has a large "Rolodex."

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8 hours ago, Gerry Maddoux said:

Can't they be pirated from other countries? Exxon has a large "Rolodex."

Maybe they do...but the really experienced hands are getting older and retiring or have found jobs in other industries to pay the bills and put food on the table. After this last prolonged slump and lack of security in the oilfield combined with the perception that fossil fuels are on the way out....THEY ARE NOT COMING BACK!

Yes, you can fill some slots with inexperienced hands, but experienced engineers, supervisors, superintendents, managers, DP operators, ROV hands....good luck with that.

The looming Big Crew Change has been ignored, but it hasn’t gone away.

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@Gerry Maddoux

“Can't they be pirated from other countries? Exxon has a large "Rolodex."

Gerry, you’ve touched a nerve here.

It is a fallacy that Exxon, or any of the majors or multi-nationals employ the best talent in the drilling industry. Generally, those who work for these outfits are more concerned about job security, hiding in the masses and decision by committee thereby avoiding responsibility than in thinking out of the box and reacting quickly to problems as they arise.

These outfits are ‘process driven’, that is, ‘if it ain’t in the manual, you ain’t doing it!’

This is what has created the drilling consultant industry.

The problem when selecting a consultant is being able to identify the clever, ‘out of the box’ thinking, self-starting consultant from the ‘consultant’ that simply brings the process driven approach to the table...or the one who couldn’t even make it with a major, multi-national firm. 
 

I am sure there are many who disagree (probably employed by a major...), but give what I said some thought.

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9 hours ago, ronwagn said:

The oil industry has a huge downstream component also. It isn't going to disappear. People will still be buying their big vehicles. The electric vehicle industry will be a niche for the foreseeable future unless prices are reduced greatly. 

Hard to have a healthy downstream industry when the upstream industry is dying on the vine.

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8 minutes ago, Douglas Buckland said:

Gerry, you’ve touched a nerve here.

I can see that, and I apologize--I didn't intend a slur, or to dismiss anyone's credentials. On some level, I am aware that there are exclusive, talented men and women who work well above the fray, probably not for Exxon. I tried hard to do that myself and understand how a nerve regarding my own career could lie very close to the surface.

My comment probably grew from an effort to understand a world that I know only slightly, and mostly from the outside. This whole thing just seems so cockeyed to me. I read these posts by Mr. Coyne and shake my head. I have tried to envision a world laden with windmills and solar panels. I have read all the scientific studies on ground temperatures, cloud covers and precipitation in the microclimate induced by solar farms. I have tried to fathom just what the IMO2020 mandate might do in regards to "climate change." 

Any of my posts have to be read in that vein. Most of what I know about oil and gas I have learned right here. It fascinates me. I am invested in it. I never had the skills that you have. I had my own skills and I could easily get my blood up if someone denigrated them. 

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Reading any post by Mr. Coyne can induce mental anguish...😂

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12 hours ago, ronwagn said:

That is a very big issue that needs to be addressed. 

 

I think at the moment corporate debt (up to $10 trillion) is the clear and present danger.

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