Trumps Oil Industry....

[James Regan + 1,776]

Trivial visualisation of the scope and why we need to get along, beware of emerging markets, Peru looks dangerous and I can't understand for the life of me why the US is so interested in Venezuela and Maduros drug trafficking, I would focus on their Oil reserves...........

Edited April 16, 2020 by James Regan

[jean-jacques flornoy + 3]

On 4/10/2020 at 10:30 AM, Douglas Buckland said:

It’s annoying to watch the news and see others in ‘lockdown’, in Europe, the States, Singapore, and elsewhere and people are in the parks, jogging, taking walks, etc... In KL it is much stricter and more like house arrest. I really hope that they do not extend lockdown!

In Europe? Well, I don't think my appartment looks exactly like a jail house cell, but I can tell you in France we're not allowed to walk, chat and have fun in restaurants. We are not so kindly requested to stay at home and allowed to go outside only to buy food or go to the doctor. So are Germany and UK and most EU. Korea was very strict and now the have finished with Covid. Just by confinement endurance and disciplin.

[Gerry Maddoux + 3,627]

9 hours ago, James Regan said:

Im no Rocket Scientist even I can do the math, I think an official announcement from the USA agreeing to cut production would lift WTI - Is this so hard to do?

Yes, very hard. As I'm sure you know, US production is made up of thousands of old conventional wells, several large offshore wells, and shale. There is no universal way of mandating (or even coordinating) cuts. 

The Texas RRC could mandate 20% cuts across the board, but the Bakken in ND would pick up the slack. As would Oklahoma and even Colorado; even Ohio and Pennsylvania. These have nowhere near the production of the Permian but still, market share and all.

This is a slow-motion train wreck that seems hell bent on happening. The Saudis are pandering to China for long term gains. This, at a time when the world is condemning China for its handling of the virus. 

But soon the Saudis will begin hurting, as will Russia. Iran and the other OPEC nations are bleeding out. 

It sure looks like we're all going down together. Again, the only thing feasible is for the president to place a tariff on Saudi oil, use US oil exclusively, let the Saudis have China. That would place about a $40 floor under WTI. I imagine Brent would find a price of roughly $45. 

It might be a short term fix, but sometimes that's the only way out. Better to live to fight another day. 

As this now goes, a disaster that will reverberate around the world, throughout every industry, is in the making. Soon storage will completely fill. Chokepoints in US pipelines and dock offloading will develop almost at once. Prices will swoon to around $5. At that point, something truly has to give. I don't know what that will be but I can guess. But at that point, it's too late to do the obvious; the wreck has occurred.

[jean-jacques flornoy + 3]

Best thing when you look at the oil production map is to consider that main Oil producer is the poorest country of South America. In Venezuela, you don't have enough to eat, no medicines, and their so-called president is a thief well protected by a gang of crooks called Army and Police. Another funny thing to notice is that amongst main Oil producers most are ruled by criminal autocrats or princes with the crown but not the nobility supposed to go with the rank. I know mostly Africa, but I have seen that oil-less countries are generally happier and more modern that the ones which have petroleum. There you can see less corruption, more freedom and a better actions from their governments.

[Dan Warnick + 6,100]

12 hours ago, Douglas Buckland said:

if we are ever going to get back on solid ground.

No pun intended?  (Awash in oil?)

[Marcin2 + 725]

48 minutes ago, jean-jacques flornoy said:

Best thing when you look at the oil production map is to consider that main Oil producer is the poorest country of South America. In Venezuela, you don't have enough to eat, no medicines, and their so-called president is a thief well protected by a gang of crooks called Army and Police. Another funny thing to notice is that amongst main Oil producers most are ruled by criminal autocrats or princes with the crown but not the nobility supposed to go with the rank. I know mostly Africa, but I have seen that oil-less countries are generally happier and more modern that the ones which have petroleum. There you can see less corruption, more freedom and a better actions from their governments.

Venezuela would be and will be like Saudi Arabia but it is contingent on 2 scenarios:

- US will manage to take over the country during the next 5-7 years and ramp up oil production,

- US would not manage to take over the country during the next 5-7 years and China&Russia will take over the country a few years later and ramp up oil production.

No matter which scenario would prevail Venezuelans will be rich, but not earlier than 10 years.

Oil Curse.

2 dogs fighting about Venezuelan bone.

[BradleyPNW + 282]

On 4/14/2020 at 9:44 AM, Eyes Wide Open said:

Intresting Pafic North West..How did a Antifia member find its way into a oil forum?

Yes, everyone who recognizes Trump's incompetence and instability is Antifa. And geopolitical interest in oil is of no concern to anyone outside the industry. 

[Eyes Wide Open + 3,554]

47 minutes ago, BradleyPNW said:

Yes, everyone who recognizes Trump's incompetence and instability is Antifa. And geopolitical interest in oil is of no concern to anyone outside the industry. 

You make a good argument for Antifia, young childish rebellious youth who deem a Presidents actions incompetent.

So noted...no more cookies for you. And speaking to that issue, are your parents aware your online?

 

Edited April 16, 2020 by Eyes Wide Open

[D Coyne + 305]

5 hours ago, Gerry Maddoux said:

Yes, very hard. As I'm sure you know, US production is made up of thousands of old conventional wells, several large offshore wells, and shale. There is no universal way of mandating (or even coordinating) cuts. 

The Texas RRC could mandate 20% cuts across the board, but the Bakken in ND would pick up the slack. As would Oklahoma and even Colorado; even Ohio and Pennsylvania. These have nowhere near the production of the Permian but still, market share and all.

This is a slow-motion train wreck that seems hell bent on happening. The Saudis are pandering to China for long term gains. This, at a time when the world is condemning China for its handling of the virus. 

But soon the Saudis will begin hurting, as will Russia. Iran and the other OPEC nations are bleeding out. 

It sure looks like we're all going down together. Again, the only thing feasible is for the president to place a tariff on Saudi oil, use US oil exclusively, let the Saudis have China. That would place about a $40 floor under WTI. I imagine Brent would find a price of roughly $45. 

It might be a short term fix, but sometimes that's the only way out. Better to live to fight another day. 

As this now goes, a disaster that will reverberate around the world, throughout every industry, is in the making. Soon storage will completely fill. Chokepoints in US pipelines and dock offloading will develop almost at once. Prices will swoon to around $5. At that point, something truly has to give. I don't know what that will be but I can guess. But at that point, it's too late to do the obvious; the wreck has occurred.

Gerry,

See  https://www.eia.gov/dnav/pet/pet_move_wimpc_s1_4.htm

and  https://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_4.htm

Saudi imports are 438 kb/d (recent 4 week average), total crude imports are 5929 kb/d, so a tariff on Saudi imports affects very little as they are 7.4% of all US crude imports.  Most crude imported to the US comes from Canada.

[JoMack + 549]

Iran IRGC is buzzing U.S. naval vessels in the Persian Gulf yesterday.  Iran had weapons on board.  Russian planes are flyng over U.S.  forces in Alaska.  The coronavirus is starting to wane and the U.S. begins to prep to reopen the economy.  The Saudis are still pouring oil on the markets and we find that China's patient zero exposed the virus from the CCP bio lab (perhaps and purposeful?).  This is a mixture of enemies with eyes fixed on the U.S.  Trump, Pompeo, Espers and company have a lot on their plates to watch our backs at this critical time.  I hope we can survive the onslaught, since it appears this virus has opened the floodgates for the bad guys and they are coming at us from all directions.  Our energy stability is more important than ever, but it looks like it's last on the list, unfortunately.  Only opening our economy will be able to get prices up, with some help from Trump, since right now, Iran, SA, Russia and China believe we are weak and they have nothing to lose.  

[Gerry Maddoux + 3,627]

1 hour ago, D Coyne said:

Saudi imports are 438 kb/d (recent 4 week average), total crude imports are 5929 kb/d, so a tariff on Saudi imports affects very little as they are 7.4% of all US crude imports.  Most crude imported to the US comes from Canada.

But Canada didn't try to ruin the oil market by flooding the world with oil. In fact, Canadian oil is just barely hanging on. 

Put a 25% tariff on Saudi oil and see what happens to the price of WTI. I think it will go to a sustainable level: $40-45. 

500,000 barrels a day? I'd take it. The alternative is taking a wrecking ball to the US oil industry.

[Chris555 + 8]

On 4/10/2020 at 6:48 AM, James Regan said:

This may be hard to do here but lets pretend that we don't have any political agenda, deep breathes now.

Do you believe in all honesty that Trump understands the Oil Industry?

Does the US have an oil minister? or advisor?

Good question! I think, maybe Rex was kind of that. Was.

[ronwagn + 6,290]

21 hours ago, Douglas Buckland said:

How the hell is MORE storage going to mitigate the fact that there is simply too much of the stuff available!!!

Storage/surplus/glut is what got us into this mess in the first place!

The way forward is to dry up the glut. This will be painful, but ignoring it is simply kicking the can down the road, causing more pain later.

Somebody, or a group of somebodies, will have to ‘feel some pain’ if we are ever going to get back on solid ground.

We have to beat the fear of dying from covid 19 before the oil, travel, motel/hotel, restaurant, auto, RV, ship touring, and related businesses can recover. Up until now that is where we spent our extra money. 

We need to rebuild our economy based on helping everyone survive with the least amount of pain, crime, hunger, etc. People will need to meet basic needs of other people rather than the frills we have grown used to. I think our value system will be undergoing a forced change and reexamination for a year or two or more. Hopefully we will replace a maximum amount of Chinese imports with new sources during that time period. 

[Douglas Buckland + 6,308]

The ‘fear’ is the part that concerns me. If the recovery is fear, not science, driven, we will drag the recovery out much longer than required.

I have been holed up in an 1100 sq ft apartment for over a month. Here, you cannot even leave the apartment for exercise. At some point the ‘quality of life’ issue becomes a factor.

[Gerry Maddoux + 3,627]

6 minutes ago, Douglas Buckland said:

have been holed up in an 1100 sq ft apartment for over a month. Here, you cannot even leave the apartment for exercise. At some point the ‘quality of life’ issue becomes a factor.

Man, I feel for you. Better to die in the fresh air of a dystopian world than of boredom. 

Unfortunately, I think the dispositive mood right now is fear. This damn virus is so unpredictable and testing so spotty (and maybe unpredictable) that people are just frightened. 

I only have one functioning lung. My friends who have had this figured they'd have "two bad days." I figure I'd just have one bad day. But I think we need to open up the country--except for NY, NJ, Mass--very soon. I have a daughter. Better that I have one bad day than for her to have a bad life.

[Dan Clemmensen + 1,011]

5 hours ago, D Coyne said:

Gerry,

See  https://www.eia.gov/dnav/pet/pet_move_wimpc_s1_4.htm

and  https://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_4.htm

Saudi imports are 438 kb/d (recent 4 week average), total crude imports are 5929 kb/d, so a tariff on Saudi imports affects very little as they are 7.4% of all US crude imports.  Most crude imported to the US comes from Canada.

Looking at the table and the long-term chart it links to:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTNTUS2&f=W

We see what is basically a linear trend of US net imports decreasing from about 5 million bbl/day in about November 2017 to zero in November 2019. That is about the point where OPEC+ began to panic. The straight line continues down through the beginning of march, at maybe -1million bbl/day: that is, a net export of 1 million bbl/day. Later data will be crazy due to the pandemic, but without the pandemic, we could expect the US market price to act ever more strongly as a cap on the world market price. In addition, US oil will begin to take market share away from OPEC+ outside of the US instead of "merely" within the US. No wonder KSA wants to kill US shale.

And to your point, it isn't really about US imports any more. It's about US exports. Any tarrif on imports is really a signal that we will not longer tolerate the cartel and will not have much real impact. The pandemic renders all of this moot in the short term. We will have to keep the whole industry (and the whole economy) in maintenance mode until we can get out of lockdown and beyond that through a recovery phase. We can then go back to our oil price games.

[James Regan + 1,776]

WTI surges up to within healthy margin between the benchmarks, what happened?

Edited April 17, 2020 by James Regan

[Tom Kirkman + 8,860]

6 hours ago, Douglas Buckland said:

The ‘fear’ is the part that concerns me. If the recovery is fear, not science, driven, we will drag the recovery out much longer than required.

I have been holed up in an 1100 sq ft apartment for over a month. Here, you cannot even leave the apartment for exercise. At some point the ‘quality of life’ issue becomes a factor.

Best advice I can give you during the lockdown:

[Robert Thomas 2 + 10]

2 hours ago, James Regan said:

WTI surges up to within healthy margin between the benchmarks, what happened?

James, my friend, you're in the wrong place if you're looking to be informed by facts.

[Jay McKinsey + 1,490]

2 hours ago, James Regan said:

WTI surges up to within healthy margin between the benchmarks, what happened?

I think they are reporting June. May is at 18.70

Edited April 17, 2020 by Jay McKinsey

[Douglas Buckland + 6,308]

2 hours ago, James Regan said:

WTI surges up to within healthy margin between the benchmarks, what happened?

Very strange, indeed!

Maybe one of the clever financial/trader members could explain. Times like this we could really use @Mike Shellman back.

[wrs + 893]

4 hours ago, James Regan said:

WTI surges up to within healthy margin between the benchmarks, what happened?

Trump gave guidelines for reopening the economy.  Some states may open today, others just need to show a 14 day of declining trend for new cases.  Should be easy to manipulate the numbers to produce that if you want.  Shorts got sheared.  I would guess that WTI closed the gap because Europe is still locked down but the US will start back to work sooner.  

Crazy Cuomo may keep NY closed until June and the President said each governor can do what they want.  I think in Texas Abbot will open up quickly.

Edited April 17, 2020 by wrs

[El Nikko + 2,145]

4 hours ago, James Regan said:

WTI surges up to within healthy margin between the benchmarks, what happened?

https://oilprice.com/Latest-Energy-News/World-News/Rystad-Lowers-Production-Outlook-For-Shale-By-215-Million-Bpd.html

Plunging shale production?

[wrs + 893]

It also looks like there might be some kind of error in the prices being reported.  I have several feeds and the one from INO shows the front month contract at $18.78 a -10% drop from yesterday so I have no idea what is currently the price.  Likely the lower one................ UGH.

Edited April 17, 2020 by wrs

[James Regan + 1,776]

20 minutes ago, El Nikko said:

https://oilprice.com/Latest-Energy-News/World-News/Rystad-Lowers-Production-Outlook-For-Shale-By-215-Million-Bpd.html

Plunging shale production?

I don't think Rystad have enough clout to make the market move like that. That just came out of nowhere, this is being manipulated physically which also raises eyebrows as we are supposed to be on the algorithms the physical WTI at CME is on lock down. This is a ropey business which is being exposed each day we go through this Pandeconomic S^&TStorm- Computers only produce results based on data being introduced, algorithms are sneaky wee buggers, it appears AI is manipulating the human race, WillSmith Syndrome is alive and well.