Its going to be an oil bloodbath

[dgowin + 43]

As there is no replacement for plastic, petrochemicals and the bases of many drugs, hydrocarbons are going to be around for a very long time. The real question is "should we be burning hydrocarbons just to provide transportation?" There are options we should develop.

As for global warming and high CO2 levels, I hope so. My plants will love it. We have a lot of people to feed. Over 70% of this planet is covered by water. Higher temperatures mean higher humidity, more plant life. 

[Dan Clemmensen + 1,011]

I continue to be confused. Yes it will be a bloodbath, but not because of OPEC++. The headlines are still all about OPEC++ emergency meetings, but those guys are just debating about rearranging the deck chairs on the Titanic. Over the next six weeks, covid-19 will cause consumption to drop by from 20% to 30%, and this will require production to be curtailed when storage fills up. This is true no matter what OPEC++ agrees to or fails to agree to. This also means that even if the price of crude were to magically pop up to $50/bbl, producers would still see a drop in gross revenue of 20% to 30%. But the actual revenue drop will be worse and longer, because oversupply drives prices down and because anyone caught holding the bag with oil in expensive storage will be desperate to dump it.  So, my wild guesstimate: Immediate demand drop by 20% in April and a potential drop to 30% in May, with the demand drop lasting about 8 week at this level before very gradually recovering as the pandemic sloshes around the world and eventually fizzles out over the course of a year, maybe. If the world's leadership performs brilliantly, the economy (and oil demand) may recover quickly and completely after that, but another possibility is the covid-19 demand reduction morphing into a more classical economic recession, or worse.

[Gerry Maddoux + 3,627]

^

Perception, Dan, drives the oil market and sets the price--so much more than supply/demand. 

The heartless, mindless act of increasing production by the Saudis, at a time of incredible global stress, reset the perception. 

Putin, by his stoic recalcitrance, added to that.

Net/Net: the whole world thinks that crude oil is everywhere--almost as mysteriously omnipresent as Covid-19. And at a time that it is destroying the world. 

The incredible wake-up call is going to be in a year or so. This date was extended by about six months by demand destruction due to the virus. But at some point, supply and demand will be in harmony once again. And since events develop out of the blue, something will almost certainly occur to overweight demand, or underweight supply. 

At that point, the perception will be that we are in a critical supply shortage.  

[0R0 + 6,251]

40 minutes ago, Dan Clemmensen said:

I continue to be confused. Yes it will be a bloodbath, but not because of OPEC++. The headlines are still all about OPEC++ emergency meetings, but those guys are just debating about rearranging the deck chairs on the Titanic. Over the next six weeks, covid-19 will cause consumption to drop by from 20% to 30%, and this will require production to be curtailed when storage fills up. This is true no matter what OPEC++ agrees to or fails to agree to. This also means that even if the price of crude were to magically pop up to $50/bbl, producers would still see a drop in gross revenue of 20% to 30%. But the actual revenue drop will be worse and longer, because oversupply drives prices down and because anyone caught holding the bag with oil in expensive storage will be desperate to dump it.  So, my wild guesstimate: Immediate demand drop by 20% in April and a potential drop to 30% in May, with the demand drop lasting about 8 week at this level before very gradually recovering as the pandemic sloshes around the world and eventually fizzles out over the course of a year, maybe. If the world's leadership performs brilliantly, the economy (and oil demand) may recover quickly and completely after that, but another possibility is the covid-19 demand reduction morphing into a more classical economic recession, or worse.

The world will be mostly up and running by May. The financial kick from the Fed and the fiscal profligacy will be in full force and the list of to-do industrial investment is enormous. China is now verboten. US industry must train the barista and waiter generation to do industrial work. They need only be reassured that policy is not going to throw them to the wolves again and as happened to their parents by crushing their employers with red tape while encouraging imports of subsidized foreign goods.  

Public transport is dead. Long car rides are in, sardines in a flying can are out. Cars will be all over while high level employees will continue to shun work at downtown offices where parking is a rare privilege and prefer working from home or new satellite offices across suburbia. The new conference room is Zoom. Down town is Wuhan from now on. I don't think the Queens to Manhattan sardine commuter is coming back for long. 

So we have a large increase in demand coming. While we have a substantial decrease coming as well as downtown offices see their workers relocated to suburbia and exurbia. I suspect that people will be buying two seats at a time to avoid sitting next to anyone on flights. Not great for loading factors and good for jet fuel demand. 

This is not the first time we have seen this, that was the US trend of the 1960s and 1970s. When downtowns became holes in the center of the doughnut. I believe that the spread of high speed internet beyond exurbia will speed the transition that was going to happen anyway. 

Overall, I expect a 3% elevated oil demand for the next 3-5 years as the global supply chain redistributes into regions and China is bypassed. Then we resume and accelerate the decline trend in demand due to global demographics shifting to ageing. It will look like oil demand in Europe over the last 20 years just for the whole globe. 

The supply situation will be very tough by 2022 when the oil storage empties. The world is not investing in new production. While production will decline 8% per year in conventional oil and 30% or more in shale. So at some point, even if the recovery is slow, there will be a shortage. You will want to be up to your eyeballs in shale assets when that comes. 

I think the recent disruption in food shipments and export bans will cause food importers to hoard grains in a big way, stoking price inflation for the next few years.

[Dan Clemmensen + 1,011]

1 hour ago, Gerry Maddoux said:

^

Perception, Dan, drives the oil market and sets the price--so much more than supply/demand. 

The heartless, mindless act of increasing production by the Saudis, at a time of incredible global stress, reset the perception. 

Putin, by his stoic recalcitrance, added to that.

As far as I know, neither the Saudis nor the Russians increased production. In both cases, they declared that they intended to increase production, but there is no evidence that they did so, and no need to do so because the demand crash accomplished much more than any such increase could. So they get their big propaganda win for free, except for the minor problem that the price crash is going to hurt them badly on top of the revenue crash caused by a forced production decrease.

[Dan Clemmensen + 1,011]

59 minutes ago, 0R0 said:

The world will be mostly up and running by May. ...

Public transport is dead. ...

So we have a large increase in demand coming. ...

Overall, I expect a 3% elevated oil demand for the next 3-5 years ...

The supply situation will be very tough by 2022 when the oil storage empties. ...

I think the recent disruption in food shipments and export bans will cause food importers to hoard grains in a big way, stoking price inflation for the next few years.

Every one of your predictions may very well be true. My crystal ball is far too cloudy to look that far ahead. My uneducated gut guesstimate is that governments will inject cash to restart crude production as fast as is physically possible as part of a more general  kickstart of all shut down companies, and without careful handling, this may keep crude prices depressed even longer. However, I was trying to focus on the much shorter term, between today and the point when consumption returns to 100 million bbl/day, and from there to when we get back to where production and consumption are again in rough balance. The world will (probably) not be up an running by May. "Up and running" means being broadly out of lockdown, which takes thirteen weeks or more unless you have dictatorial powers (like China) or start with a hyperagressive quarantine, like South Korea and Taiwan. US-style "stay home" orders flatten the curve, which lengthens the curve. California as been by far the most successful big state in terms of cases per million population. We were the first to lock down (15 march), and we might actually peak in new cases per day before 1 May, but we won't be able to come out of lockdown until June 15 at the earliest. States that locked down later will also unlock later.

[0R0 + 6,251]

3 hours ago, Dan Clemmensen said:

Every one of your predictions may very well be true. My crystal ball is far too cloudy to look that far ahead. My uneducated gut guesstimate is that governments will inject cash to restart crude production as fast as is physically possible as part of a more general  kickstart of all shut down companies, and without careful handling, this may keep crude prices depressed even longer. However, I was trying to focus on the much shorter term, between today and the point when consumption returns to 100 million bbl/day, and from there to when we get back to where production and consumption are again in rough balance. The world will (probably) not be up an running by May. "Up and running" means being broadly out of lockdown, which takes thirteen weeks or more unless you have dictatorial powers (like China) or start with a hyperagressive quarantine, like South Korea and Taiwan. US-style "stay home" orders flatten the curve, which lengthens the curve. California as been by far the most successful big state in terms of cases per million population. We were the first to lock down (15 march), and we might actually peak in new cases per day before 1 May, but we won't be able to come out of lockdown until June 15 at the earliest. States that locked down later will also unlock later.

I am assuming we have a cure in the HCQ/Z as it directly attacks the virus and its main effect, which appears to be attacking hemoglobin and breaking off the heme portion to release free iron into the blood. The infection rate does not matter from this point forward. With an easy widely available cure at hand there is no reason for lockdowns to continue past the point of having sufficient inventories or running production of the drug cocktail at sufficient volumes. 

There is no 13 weeks. Contrary to the advice given to Trump. We CAN open up for business while the virus contagion rebounds because (1) we can stop the virus from developing into disease with HCQ/Z (2) we have a test available to give an immediate result. We need to let the current crop of carriers to end their viral load, which requires 1-2 additional weeks from now. 

We can use temperature measurement data from the public to track regional hot spots developing so they can reimpose contagion controls if they need to and obtain supplies pronto. You can see that fevers are down to near nothing - there are not even flu cases. CA can open up, as can most of the country but for very particular hot spots. 

https://healthweather.us/?regionId=06037&mode=Atypical

https://healthweather.us/?regionId=20173&mode=Atypical

https://healthweather.us/?regionId=12099&mode=Atypical

https://healthweather.us/?regionId=36047&mode=Atypical

2 weeks after you fall to <1% fevers you should be able to open up the county in question. You can probably do it in a single week with some risk. If we had masks on hand, gloves and sanitizer dispensers on each belt or purse then we could open up nearly all of the country right now. This is not the bubonic plague

The epidemiologic models are mathematical gunk in the gears of understanding the disease and its response to our behavioral adaptation to limit contagion and application of medication. I still can't believe that nobody has used the temperature data to inform epidemiological models in order to create useful dynamic forecasts. Static models ignoring data and circumstances are as useful as rocks to the decision makers. You might get some results by tossing them at each other. All the epidemiological models use as their main inputs only the confirmed cases and deaths, most don't even integrate the context of sampling from the general population, contact trail, or symptomatic patient. Reality has way too much hair on it to fit into a simple fixed parameter model. 

Gloves, masks, sanitation and avoidance of dense crowded conditions is all you need. The Swedes have it down pat. No need for a general shutdown. If there was a slight reason for it when it just started, there is absolutely no reason for it now. Protect the high risk population. Restrict the high transmission rate activity and let people live. 

So I am predicting that the Trump admin will try to get as much stimulus squeezed out of congress and the Fed as they can, and within as short a time as decorum allows, will release the lockdowns entirely, while cluing in governors that they can stop already.. 

 

Edited April 7, 2020 by 0R0

[0R0 + 6,251]

59 minutes ago, Dan Clemmensen said:

California as been by far the most successful big state in terms of cases per million population. We were the first to lock down (15 march), and we might actually peak in new cases per day before 1 May, but we won't be able to come out of lockdown until June 15 at the earliest. States that locked down later will also unlock later.

Your governor had a severe anaphylactic reaction to the virus and killed the economy to avoid "deaths" he at least did it nearly in time. He also needs to lift it in time. There is no longer a problem - by 1 week from yesterday there should be no new infections in sizeable numbers. Nearly none within 2 weeks. He can announce opening up the state by next Monday. 

https://healthweather.us/?regionId=06037&mode=Atypical

Density related variation of R0 in the spread of CV19 virus has not been really worked on well so we don't know exactly how important the city density is, but it obviously plays a roll as propagation in LA was far slower than it was in NYC. 

 

 

 

Edited April 7, 2020 by 0R0

[Gerry Maddoux + 3,627]

2 hours ago, Dan Clemmensen said:

As far as I know, neither the Saudis nor the Russians increased production. In both cases, they declared that they intended to increase production, but there is no evidence that they did so, and no need to do so because the demand crash accomplished much more than any such increase could.

You're right--I misspoke. But from watching the market for over sixty years I believe the declaration that they intend to increase production did much more to destroy the price of a barrel of oil than somebody putting a pencil to demand destruction due to the virus.

You're still thinking this has everything to do with supply and demand, while in truth only a fraction of pricing is truly based on that. For example, over the last week the price of oil went up 30% but not a damn thing happened to production. Not really. 

[Dan Clemmensen + 1,011]

49 minutes ago, Gerry Maddoux said:

You're still thinking this has everything to do with supply and demand, while in truth only a fraction of pricing is truly based on that. For example, over the last week the price of oil went up 30% but not a damn thing happened to production. Not really. 

Actually, I have observed that price appears to be driven by pixies, foo-foo dust, and especially by forceful assertions by the Saudis. It never ceases to amaze me. That's why I said that their greatest fear is that we will start to ignore them. Since I cannot understand price, I tried to focus on the physical demand crash and its inevitable effect on physical production.

[Rob Kramer + 696]

10 hours ago, dgowin said:

As there is no replacement for plastic, petrochemicals and the bases of many drugs, hydrocarbons are going to be around for a very long time. The real question is "should we be burning hydrocarbons just to provide transportation?" There are options we should develop.

As for global warming and high CO2 levels, I hope so. My plants will love it. We have a lot of people to feed. Over 70% of this planet is covered by water. Higher temperatures mean higher humidity, more plant life. 

I agree with you on oil ... global warming not so much . I think the world is self regulating.  I've read reports that have shown at the equator (the warmest area best spot to do the testing) when the heat rose the humidity did rise also BUT caused more rain that dehumidified AND cooled . It had other benefits also. But either veiw it's not an issue. So ultimately I'm in agreement lol. 

[Dan Clemmensen + 1,011]

2 hours ago, 0R0 said:

I am assuming we have a cure in the HCQ/Z as it directly attacks the virus and its main effect, which appears to be attacking hemoglobin and breaking off the heme portion to release free iron into the blood. The infection rate does not matter from this point forward. With an easy widely available cure at hand there is no reason for lockdowns to continue past the point of having sufficient inventories or running production of the drug cocktail at sufficient volumes. 

There is no 13 weeks. Contrary to the advice given to Trump. We CAN open up for business while the virus contagion rebounds because (1) we can stop the virus from developing into disease with HCQ/Z (2) we have a test available to give an immediate result. We need to let the current crop of carriers to end their viral load, which requires 1-2 additional weeks from now. 

Everybody, including skeptics and atheists, are down on their knees praying every night that this therapy or some therapy will be shown to be effective. But as of right now, the four tiny studies have split two and two as to whether this particular therapy is effective. Wishing won't make it true. If this therapy works, it needs to be deployed en masse. There is not enough of these medications available to do that in the timeframe you mentioned. We do not have a test available in quantity, either. We do have a test, finally, and any strategy to get out of lockdown depends on that test. In CA, our current confirmed case count is about 15,000, based on a pitifully small numbedr of completed tests. I would guesstimate that the current actual case count must be at least ten time that, with the those other guys being untested becasue they didn't go to the hospital. That means we really need to test basically everybody in the state that want to leave lockdown, whcih is approximately what South Korea did. I agree with you concept here: test and release, plus rigorous contact tracing and testing, will allow us to get back to work, but we do nned that test.  My "13 weeks" was from March 15 to June 15 here in CA.

[0R0 + 6,251]

1 hour ago, Gerry Maddoux said:

You're right--I misspoke. But from watching the market for over sixty years I believe the declaration that they intend to increase production did much more to destroy the price of a barrel of oil than somebody putting a pencil to demand destruction due to the virus.

You're still thinking this has everything to do with supply and demand, while in truth only a fraction of pricing is truly based on that. For example, over the last week the price of oil went up 30% but not a damn thing happened to production. Not really. 

It is a market, it reacts to current circumstances only if it has to because it constricts the ability to trade. In general, it reacts to changes to expectations of the future, and as people change their minds from one expectation to another. 

[0R0 + 6,251]

6 minutes ago, Dan Clemmensen said:

Everybody, including skeptics and atheists, are down on their knees praying every night that this therapy or some therapy will be shown to be effective. But as of right now, the four tiny studies have split two and two as to whether this particular therapy is effective. Wishing won't make it true. If this therapy works, it needs to be deployed en masse. There is not enough of these medications available to do that in the timeframe you mentioned. We do not have a test available in quantity, either. We do have a test, finally, and any strategy to get out of lockdown depends on that test. In CA, our current confirmed case count is about 15,000, based on a pitifully small numbedr of completed tests. I would guesstimate that the current actual case count must be at least ten time that, with the those other guys being untested becasue they didn't go to the hospital. That means we really need to test basically everybody in the state that want to leave lockdown, whcih is approximately what South Korea did. I agree with you concept here: test and release, plus rigorous contact tracing and testing, will allow us to get back to work, but we do nned that test.  My "13 weeks" was from March 15 to June 15 here in CA.

There is no doubt that it kills off the virus. 

There is doubt that killing off the virus is related to the final outcome if you already are on a ventilator. As someone was half joking; maybe the ventilators are killing the late stage patients. That may actually be an irrelevant treatment, as the patients have defective hemoglobin that the virus dismantles. They need to kill the virus, protect what hemoglobin they have remaining, and get a whole blood transfusion, preferably from a recovered patient. 

Once the new case count is down, then the easy precautions of physical distancing, gloves and masks (fabric is fine you don't need N95  masks or respirators) are sufficient, the Swedes demonstrated that amply. Transmissibility drops by a factor of 10. That allows you to resume activity in production and retail. well ventilated restaurants too. Office work can be conducted with a preference to working from home when it is not impairing the work. 

The act of quarantine is itself damaging to life and for the US, it is the equivalent of killing over 700k people a month. Well beyond the worst possible outcome of this disease. Particularly now that most of us are informed as to how to attenuate the propagation and to protect the high risk population. The "deaths" calculus is a straightforward misdirection. The political decisions are based on the desire to defeat Trump at the elections, not the welfare of anyone other than the Dem party. The economic halt is bigger than the disease in scale of damage and eventually will cause a much larger damage to the health of the public in suicides, addiction, malnutrition, exposure, untreated patients and the other diseases of poverty. Quarantine is penny wise and pound foolish. 

Dr. Raoult points out that HCQ/Z is best applied at the early stages of the disease. It prevents the need for hospitalization, stops the patient from being contagious within 5 days instead of 3 weeks, and stops the progression of the disease unless you already need a ventilator. That stops the spread of the disease after you have dropped the residual transmission rate by a factor of 10.

Finally, your goal is to get most of the active population to get the disease, not to have a maybe vaccine in the imaginary future. That will be the buffer against contagion spreading. The heavily infected cities of Detroit, NY metro, Philly, Boston are testing at >40% positive. They are pretty much there already. We need to drop the quarantine to allow a slow spread of the disease, not to stop it and leave most of the people without immunity so that the disease strikes back fast if a naive region is infected. 

[ronwagn + 6,290]

On 4/3/2020 at 3:48 PM, Eyes Wide Open said:

I do understand fighting the good fight, i do understand taking a stand for what believes in. To that point you may want to take the depth of you knowledge and insight to the Indian govt along with the population at large. One can only hope renewable energy can sustain India...and it can sustain itself.

With this crash of Oil... combined with the virus...each country will soon be left to their own devices repairing and healing their own country.Oil money and its wealth has made the world go around for more than 60 yrs...that wealth has disappeared...There may come a time when your thought process on oil may be enlightened..have a read.https://finance.yahoo.com/news/india-increases-fuel-tax-bid-052810841.html

Here is how our gasoline taxes work. https://docs.google.com/document/d/1F0r9fe6qLLFgjK_zP8VDhEgAjyXkQTfszOT8Jtno514/edit

Presently wholesale gasoline is 71.8 cents per gallon, in bulk, today. 

If India is wise it will use natural gas, gasoline, and diesel until wind and solar can compete on the real price figured over the long term. 

Edited April 7, 2020 by ronwagn
addition

[ronwagn + 6,290]

On 4/4/2020 at 2:08 PM, Wags said:

Seems like most of the dinosaurs here can’t see a future without oil which doesn’t surprise me. Sure you might need oil for plastics or whatever but as an energy source it’s definitely on the out. These oil lovers literally sound like they belong to a cult of oil, I don’t understand why they get so defensive about oil. If it wasn’t for oil corporations in bed with governments , we’d be on much better and faster track to less oil energy dependence, surely most of you dinosaurs believe humans are smart enough to run this planet without using oil. Anyways it’s good thing the younger generation have a much more appreciation for the planet we live in and can fix so many of the terrible problems the dinosaurs have created and left for us to clean up.

I guess you don't care about all the cars their owners want to drive 12,000 miles a year or more. You don't care if people can run their home heaters and air conditioners in extreme weather. You are in good company if you believe Joe Biden who wants to stop drilling on federal lands, stop fracking etc. You are very unrealistic though and so is Joe Biden and his Demoncrat friends.

[ronwagn + 6,290]

On 4/4/2020 at 7:26 PM, ceo_energemsier said:

Given sagging demand, the growing scarcity of oil storage and declining production from financially strapped upstream firms, IHS Markit predicts that up to 10 million barrels per day (bpd) of world oil production will be cut or shut-in until June of this year.

That would equate to nearly 10 percent of total daily global oil output for 2019, based on the U.S. Energy Information Administration’s reported 100.6 million-bpd figure for the year.

“If oil cannot be sold or stored, it cannot be produced,” IHS Markit stated Tuesday in a written statement emailed to Rigzone. “Transportation constraints and lack of access to every available tank will prevent the utmost maximum level of storage capacity being reached.”

IHS Markit also reported that it anticipates oil demand in the second quarter of 2020 to be 16.4 million bpd lower than the year-ago level, with a projected April decline of approximately 20 million bpd. As oil storage facilities near capacity, the supply surplus cannot exceed the practical limit of 1.2 billion barrels of capacity that was available as of early First Quarter 2020, the information services firm pointed out.

To put the estimated 16.4 million-bpd oil second-quarter oil demand decrease year-on-year into perspective, IHS Markit Vice President Aaron Brady noted that it is more than six times greater than the “record drop” that occurred in the first quarter of 2009 during the Great Recession.

“Quite simply, global production has been on a pace to exceed available storage capacity,” remarked Jim Burkhard, IHS Markit’s vice president and head of oil markets. “Something has to give. And it will. Signs point to a forced 10 million barrels per day cut in world oil production.”

When might the volume of forced shut-in oil production begin to abate? IHS Markit’s currently assumes that it will start to ease in approximately the middle of this year. In the meantime, the company predicts that every region worldwide will experience an oil production decline during the second quarter – with OPEC member countries, Russia and the United States among the hardest-hit in terms of volume.

IHS Markit cautioned that its outlook presumes that a discussion will occur among international players to restrain oil output but that no deal will materialize. The firm added that some local or regional governments may still act on their own accord to address production and storage challenges. It cited the production curbs that the Canadian province of Alberta instituted in late-2018 as a potential model for combating low prices and storage constraints.

“If there is no international agreement to curtail oil production then brutal unadulterated market forces will bring the oil market into balance,” stated Burkhard. “The laws of supply and demand are fierce in extreme conditions.”

Following the “extreme, light-speed rebalancing of the oil market” that is underway, significant changes in some countries’ production levels should emerge – particularly next year if oil demand returns to a growth mode, IHS Markit contends. In that scenario, the firm anticipates U.S. crude production will be approximately 8.8 million bpd by the fourth quarter of 2021 – nearly 32 percent lower than the figure for the first quarter of 2020. Also, it foresees a much less dramatic impact to Saudi and Russian output in that time frame. The company stated that, compared to the first quarter of this year, Saudi output should be 1.8 million bpd higher and Russian output “just slightly lower” by the final quarter of 2021.

“Saudi Arabia and Russia are better positioned in a low-price environment to maintain or even increase production over the next two years compared to the United States,” IHS Markit Executive Director Bhushan Bahree explained. “Their systems depend on conventional production, which has much lower decline rates compared to U.S. tight oil. A decline in upstream investment will impact short-term production capacity to a much lesser degree than in the United States.”

Meanwhile the entire economies of Russia and OPEC will be crashing. Russia has been on that course and will crash more slowly. 

[ronwagn + 6,290]

On 4/5/2020 at 7:36 AM, Hassan Abdullahi said:

What benefit would he bring to Aramco if I may ask? 

Reality testing perhaps.

[ronwagn + 6,290]

On 4/5/2020 at 11:57 AM, KeyboardWarrior said:

So many randoms appearing in the last week. Coming in here knowing absolutely nothing and then saying something like "the end of oil is here, time for a renewables shift". It's especially funny because a broken economy can't finance these expensive solutions. Meanwhile oil is ultra cheap... 

Yes, funny thing is that cheap oil and natural gas kill renewables off. This is going to be the story in all the sensible Red States, and the Purple States. It has even affected California which is holding on to natural gas plants despite their enemies who would like to eliminate them. They have bigger and actual problems to deal with. Governor Newsom is even being nice to President Trump. 

[ronwagn + 6,290]

On 4/5/2020 at 10:29 AM, Marcin2 said:

What is the economics of crude oil industry ?

I mean how much costs are fixed and how much are variable, like rule of thumb ?

(In scenario of oil majors like: Rosneft or Saudi Aramco, Exxon, BP, where cost of capital is very low, and can eliminated from equation).

We can calculate how much governments are loosing through lost taxation but I would like to understand the situation from point of view of the industry, if no further cut and current situation will last till rebound after epidemic so August/September 2020 at earliest.

It may have started rebounding already. 

[ronwagn + 6,290]

On 4/5/2020 at 5:49 PM, Old-Ruffneck said:

Still 5 man crews on decent rigs and 4 man crews on crappy ones. Majority of rigs actually produce more employees per rig than in the horizontal days. More steps taken to get that oil outta the ground.

How about the production per rig or the oil produced per worker?

[ronwagn + 6,290]

14 hours ago, Hiten Shah said:

Don’t get frustrated. I would like to introduce myself as an Mechanical Engineer and MBA Finance.https://www.thehindubusinessline.com/economy/petrol-diesel-sales-shrink-in-march-as-lockdown-wipes-demand/article31269848.ece/amp/

if situation continues India won’t import any crude oil.

• Maruti Suzuki ( more than 50% share ) VW Group & Renault will offer only petrol and CNG engines in India
• Come April and dieselversions of over 40 cars and SUVs will be phased out from the market as companies shift their focus completely to petrol models and cleaner CNG and electric versions, with the onset of the BS6 emission norms era.

• AIR POLLUTION
  With factories shut, airplanes grounded and vehicles off the road, one positive thing that has emerged during the lockdown is the clean air and a major drop in the pollution levels in Delhi and Mumbai.

   
  Delhi, which was gasping for fresh air until January and February this year, has been witnessing clear blue skies and fresh air. The average Air Quality Index (AQI) in Delhi for the past one week has remained in the range of 50-60, which is almost 4 to 5 times lower than what it was just a couple of weeks back.
   
  The average AQI level in Delhi for February had been more than 200-250, which is hazardous, while in January and December, the AQI was between 250 and 300, which is dangerous.
   
  While comparing the current AQI levels in Delhi with that of last year during the same period, it is seen that during March 2019 to the first week April 2019, the AQI levels in Delhi were almost four times higher than what they are currently.
   
  Even Mumbai is witnessing clear blue skies and fresh air. The average AQI levels in Mumbai for the last one week remained at just 27-35, while in January and February this year, Mumbai had experienced an AQI level of around 130-150, while industrial areas and outskirts of Mumbai witnessed an average AQI level of 250.
• https://m.economictimes.com/small-biz/productline/power-generation/renewables-account-for-three-quarters-of-new-capacity-in-2019-irena/amp_articleshow/75010903.cms

The renewable energy sector added 176 gigawatts (GW) of generating capacity globally in 2019, marginally lower than the 179 GW added in 2018.

However, new renewable power accounted for 72 per cent of all power expansion last year, said International Renewable Energy Agency's (IRENA) new data on Monday.

Solar and wind contributed 90 per cent of total renewable capacity added in 2019.

"Renewable energy is a cost-effective source of new power that insulates power markets and consumers from volatility, supports economic stability and stimulates sustainable growth," IRENA Director-General Francesco La Camera said.

Glad to see you mention CNG as I am a big advocate of switching to CNG for land transport, LNG for export and ships. It could also be used in newly designed airplanes which might look a lot different. Trains can run off of LNG or electricity produced by it or piped gas. Please consider the overall cost/benefit ratio of clean natural gas versus renewables. I will only support renewables when they can win the cost/benefit ratio. The exception is for areas that are off the grid and have not transportation for fuel delivery.

[ronwagn + 6,290]

7 hours ago, Dan Clemmensen said:

I continue to be confused. Yes it will be a bloodbath, but not because of OPEC++. The headlines are still all about OPEC++ emergency meetings, but those guys are just debating about rearranging the deck chairs on the Titanic. Over the next six weeks, covid-19 will cause consumption to drop by from 20% to 30%, and this will require production to be curtailed when storage fills up. This is true no matter what OPEC++ agrees to or fails to agree to. This also means that even if the price of crude were to magically pop up to $50/bbl, producers would still see a drop in gross revenue of 20% to 30%. But the actual revenue drop will be worse and longer, because oversupply drives prices down and because anyone caught holding the bag with oil in expensive storage will be desperate to dump it.  So, my wild guesstimate: Immediate demand drop by 20% in April and a potential drop to 30% in May, with the demand drop lasting about 8 week at this level before very gradually recovering as the pandemic sloshes around the world and eventually fizzles out over the course of a year, maybe. If the world's leadership performs brilliantly, the economy (and oil demand) may recover quickly and completely after that, but another possibility is the covid-19 demand reduction morphing into a more classical economic recession, or worse.

I see this ending soon. We are waking up to the need to get back to work and real life. Old folks need to stay home and isolate until plasma treatments and vaccines become available. If you are feeling lucky that is your bet but use a mask, social distancing et all when out or even seeing visitors and receiving packages. I am 74 and will be as busy as ever but on my acre rather than on the road in Montana. 

[ronwagn + 6,290]

6 hours ago, Gerry Maddoux said:

^

Perception, Dan, drives the oil market and sets the price--so much more than supply/demand. 

The heartless, mindless act of increasing production by the Saudis, at a time of incredible global stress, reset the perception. 

Putin, by his stoic recalcitrance, added to that.

Net/Net: the whole world thinks that crude oil is everywhere--almost as mysteriously omnipresent as Covid-19. And at a time that it is destroying the world. 

The incredible wake-up call is going to be in a year or so. This date was extended by about six months by demand destruction due to the virus. But at some point, supply and demand will be in harmony once again. And since events develop out of the blue, something will almost certainly occur to overweight demand, or underweight supply. 

At that point, the perception will be that we are in a critical supply shortage.  

There may be a shortage temporarily while shale reactivates, but it won't last long. The majors will want to produce. OPEC and Russia cannot run on cheap oil very long either. Nobody can. All we need to do is apply tariffs. 

[ronwagn + 6,290]

6 hours ago, 0R0 said:

The world will be mostly up and running by May. The financial kick from the Fed and the fiscal profligacy will be in full force and the list of to-do industrial investment is enormous. China is now verboten. US industry must train the barista and waiter generation to do industrial work. They need only be reassured that policy is not going to throw them to the wolves again and as happened to their parents by crushing their employers with red tape while encouraging imports of subsidized foreign goods.  

Public transport is dead. Long car rides are in, sardines in a flying can are out. Cars will be all over while high level employees will continue to shun work at downtown offices where parking is a rare privilege and prefer working from home or new satellite offices across suburbia. The new conference room is Zoom. Down town is Wuhan from now on. I don't think the Queens to Manhattan sardine commuter is coming back for long. 

So we have a large increase in demand coming. While we have a substantial decrease coming as well as downtown offices see their workers relocated to suburbia and exurbia. I suspect that people will be buying two seats at a time to avoid sitting next to anyone on flights. Not great for loading factors and good for jet fuel demand. 

This is not the first time we have seen this, that was the US trend of the 1960s and 1970s. When downtowns became holes in the center of the doughnut. I believe that the spread of high speed internet beyond exurbia will speed the transition that was going to happen anyway. 

Overall, I expect a 3% elevated oil demand for the next 3-5 years as the global supply chain redistributes into regions and China is bypassed. Then we resume and accelerate the decline trend in demand due to global demographics shifting to ageing. It will look like oil demand in Europe over the last 20 years just for the whole globe. 

The supply situation will be very tough by 2022 when the oil storage empties. The world is not investing in new production. While production will decline 8% per year in conventional oil and 30% or more in shale. So at some point, even if the recovery is slow, there will be a shortage. You will want to be up to your eyeballs in shale assets when that comes. 

I think the recent disruption in food shipments and export bans will cause food importers to hoard grains in a big way, stoking price inflation for the next few years.

I would like to see a lot of grain hoarding and prepping around the world, while it is possible.You never know when another Black Swan will fly in.