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Trafigura CEO Weir says, "We will see 30% to 35% drop in demand". That amounts to 35mm bbls/day glut ! OPEC+ 10 mm cut won't fix it. It's a DEMAND problem.

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(edited)

The OPEC+ Cut helps but hardly makes up for demand loss.

It's not a supply problem at this time.  It's the DEMAND.

Said the OPEC+ cuts won't happen until May.  We are already into April.

Believes we could test the recent lows 

Trafigura (other Int'l Trading firms) buying low and putting into storage.  Big $$$.

https://www.cnbc.com/video/2020/04/03/trafigura-ceo-jeremy-weir-on-the-state-of-the-energy-market.html

" Just when you thought you thought it was safe to go back in the water."

QUOTE FROM : Peter Benchley's Novel "JAWS" 

Where do we go from here ?

Probably a deal with OPEC+ .  However, remember the number 1 mandate with Saudi Arabia is Market Share.  It will always be.  An OPEC + deal will probably happen but will be in name only.  The members never cut in reality, never will.  

As the demand destruction continues, storage capacity fills  the oil producers will be forced to cut .  They will have no choice. 

This excess supply will last till well into next year before it ends.   Then there is a good case for the start of a Super cycle the second half of next year with relatively strong prices.  

A lot of "headlines" with talk of OPEC deals, Trump meetings, TRRC phone calls and Shale producers taking action has given hope to increasing oil prices.  It's working.  I believe it does not reflect the reality of what is happening in the real world.  The market will eventually figure this out.

After a period this euphoria will  subsides.  I believe oil price will fade and test the recent lows.

Many over leveraged zombie shale oil companies believe (hope) the Federal Reserve will buy their worthless high yield debt at par.  They really believe this.   I think that program only applies to A , AA , or AAA rated debt.  They would not qualify.  I'm not 100% sure on that we'll have to see.

Trump meeting with three majors 3:00 pm eastern time today.  Looks to be contentious meeting.  The majors don't want the government involved.  They have been waiting for the consolidation for years.

My opinion: My best guess is after a short reprieve oil prices  fade and hits new lows in the high teens. 

My very best case for oil price in 2020 is in the $40's.  

OPEC+ is only a psychological factor.  That works sometimes.  What the oil industry really needs is the end of Covid19 and the world gets back to work.

My opinion. 

Edited by BLA
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Seems global oil demand is unlikely to rebound any time soon, as economic lockdowns intensify.

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Let’s start by shutting down foreign refineries and foreign imports. Should have already happened a month ago. Our Prez rides the yellow square buss.

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5 hours ago, Tom Kirkman said:

Seems global oil demand is unlikely to rebound any time soon, as economic lockdowns intensify.

Anticipate nationalization of oil...The US has its own problems as does the the world. Perhaps the age old thoughts of Canada...the US and Mexico becoming a alliance may welcome to existence.

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(edited)

On 4/3/2020 at 12:06 PM, Tom Kirkman said:

Seems global oil demand is unlikely to rebound any time soon, as economic lockdowns intensify.

Not really the case. The US is not uniformly under the blanket hard shutdown. That is more a matter of deliberate Democrat governments in Blue States attacking their people in the name of "saving lives" so that their citizen's lives are not worth living. The few others have over reacted to idiotic epidemiologic extrapolations that have no reality to them after the mild shutdown.

The folks don't get to be hospitalized till an avg 12 days from the onset of fever. So if onset of fever has peaked and declined, hospitalizations will follow with a 10-14 day lag, 14 days for the bad cities that are overrun already, probably 10 days for those with free ICU beds. All depending on when people get desperate enough to go to the hospital.

1316413333_ProgressionofCV19diseasefromonsetoffever.gif.98e89d07ff09cd913d29b0ec22689fcb.gif

So what happened in NYC is distinctly not what happens in Ohio. It isn't that NYC is ahead of Ohio, it is that NYC was ahead of Ohio at shutdown.

image.png.dd613bf47e22c88aa4fbe3a8735d07ec.png Hamilton co. (Cincinnati) OH, is one of the worst in the state, It has dropped to single new daily cases. Cuyahoga is slowing down as well, at 11 vs, 36 average for the past two weeks. We have nearly defeated the Flu in most of Ohio. 

image.thumb.png.79b71f4d1c572ad259813b627bc2e530.png

Infection rates are at the 9% of tests turning out positive. It has been that way since the start of testing. It was 8-10% for the period. That was the reality of being "behind" NY. The future is not that of NYC. it is a rapid decline of new cases to 0. It is already time to unlock Ohio to a lighter physical distancing and personal protection regime. In reality, it was never necessary to lock down Ohio but to stop mass congregations. Particularly in schools and closed quarters. 

NY has a totally different circumstance as its penetration according to the tests is up to 57% of samples in some counties and has been around 40% for the state since testing had started. I argue that a number of these negatives are due to testing for live virus and the patients had recovered from the virus but continue to have lung damage and opportunistic bacterial pneumonia. Only an antibody test will show whether they had been exposed. I bet half of the negative testing symptomatics will have proven to have antibodies soon enough.

The elevated temperature rate chart shows the rate of infection, as fever is the most universal symptom and earliest other than sore throat, that is not a universal symptom. 

They let the virus propagate to near saturation.

image.png.31a1f7e31fcc233920ccd6af3a30a1db.png  

 

New-York-Atypical-Illness-and-CDC-Trend-

Ohio-Atypical-Illness-and-CDC-Trend-Marc

 

Edited by 0R0
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Bottom line is that large cities will be on lock down somewhat longer because of infection at home due to living at close quarters with infected people increasing viral load so that even healthy younger folks will succumb. At this point healthcare workers are likely transmitters in NYC as they bring the disease to their families. 

The rest of the US at least, and other low density countries will be rid of the virus within 4-5 weeks of lockdown. At that point the physical distancing and personal protection and restricted congregation numbers without forced shutdown will do well to stop the epidemic from regaining strength. Don't even need to track people. Mid April for most of the country, by May 1 for all but the worst hit, NYC Metro, and Michigan.

The "behind" idea is incorrect. Rates of spread are not just a property of the virus but also of the population density as well as the presence of large congregations such as schools, churches, and crowded  public transport and airplanes  and airport lines.  R0 in a subway train is more like 30 vs. the 2.6 observed initially and 2.0 or so for suburbia when schools and events are closed. 

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I wonder what it will mean for elections to occur while NY Philadelphia and Detroit and Chicago are on lockdown and the rest of the country, first the Midwest, is off to normal action? 

Only Miami area in FL is still likely to induce at least a regional lockdown if not  a lock down of the state. As spring breakers brought in the disease two weeks later than in NYC. 

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