We still don't know how long the virus last. Unknown. I don't think either Russia or Saudis thought we would drop 20%

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Look for World government's to apply huge economic packages to support economies .

U.S. will focus on targeted Fiscal support as opposed to monetary support.  They need to support those industries that will suffer the most from the viral effects.  

Important to support them so that there is something to go back to when this pandemic is over.

If either the Russian or Saudi decisions were targeting U.S. shale they will be successful in the short term.  They will knock out over half the shale producers. Long-term they will be back in the same position , too much oil.  Supply growing faster than supply.

We probably see production drop from last week's 13 mm bbls/day to maybe 11 mm bbls/day. But as we all know you can easily turn shale oil on or off.

The consolidation will start with strong hands buying from banks or bondholders that foreclosed or companies that reorg under chapter 11 and rid their debt.  Going to need size to compete in the oil E&P going forward. Simply reog will not fly.

Banks and bondholders going to get hit hard .  Over $200 Billion shale debt outstanding. 

April review period will start the consolidation process.

The problem is we STILL don't know how long the virus lasts. Nobody has a crystal ball. 

Dr. Scott Gottlieb is a great reference.  He feels U.S. not prepared.  Need to do more.  https://mobile.twitter.com/ScottGottliebMD

I wish we could believe China's data that new infections are dropping and no deaths outside of Wuhan.  But you can't.  At least I don't trust their stats. CCP sending workers back to work way too early.

Oil price will come back but we may trade in a lower range.  Lower lows and lower highs.  

Saudi can lift oil for $2.00 but they have over 20,000 princes on Royal Welfare that live off of their stipend.  Most of the 20,000 bought ARAMCO IPO stock with money lent to them from the government.  Stock comes off lockup in June.  MBS survived a planned coup by four Princes.  Can he survive 20,000 angry princes ?

MBS should step down for his own good.  He won't.

 

Edited March 9, 2020 by BLA