What Can Bring Oil Down to $20?

[Dan Warnick + 6,100]

19 hours ago, sadegh said:

thanks, proud to be here and excuse me for my bad English

Proud to have you.  Your English is very good, not to worry.

Edited December 17, 2018 by Dan Warnick

[Marina Schwarz + 1,576]

7 hours ago, Dan Warnick said:

Proud to have you.  You're English is very good, not to worry.

What Dan said.

[Rashed ALSAYED + 11]

OIL becomes less than 10usd !!

[cbrasher1 + 272]

54 minutes ago, rafattt said:

OIL becomes less than 10usd !!

and that would cause all kinds of economic downfalls worldwide, this appears to be a sensible conversation minus the troll with rediculous fairy tale predictions.  oil is not going to 20/bbl (i pray anyways) I concur with prior assessments that the ideal price of 60-80 is a range that all can function with.  I do not believe anyone with any marbles would want the price to go to $20.  We shall see I guess what 2019 holds, every year budgets are deplenished at this time and from what the word is here in west texas after first of year it's firing on all cylinders.  A recession decline in demand, opec+ not complying with their agreement and the Iran situation all will impact which way things go.  But nobody....NOBODY....is rooting for 10 or 20/bbl oil prices

[GJCHouston + 1]

1. Opec and associates increase production

2. Permian basin pipelines result in rapid increase in production

3. Iran continues to sell oil on large scale coupled with reduced China demand

4. Libya and Venezuela recovery

Any 2 of these in the next 3 months could result in oil in the 20’s Then US will become the control producer to the detriment of US output and more importantly jobs... US lifting cost is higher and driven by private money that reacts fast.

Long term drivers are many but not quick enough to do it in 2019 such as electric cars etc.

 

[Dan Warnick + 6,100]

11 hours ago, Marina Schwarz said:

What Dan said.

@Marina Schwarz I note that it was very kind of you NOT to point out that my reply was NOT good English.  I have changed You're to Your in my original reply.

[Auson + 123]

On 10/30/2018 at 6:00 PM, Mike Marcellus said:

On 10/30/2018 at 12:21 PM, Tom Kirkman said:

1) Demand for oil plummets due to the economic effects of the threat of triple digit oil prices.

2) Oil and gas production continue to increase, far more than is needed, due to overblown concerns about oil production cutbacks in Iran, Venezuela, etc.

3) Canada gets its act together and an oil pipeline system is put in place to export more oil to U.S.  Tar sands production increases due to pressure to pay down fixed costs.

4) U.S. Shale oil pipeline bottlenecks get resolved, and Shale oil production increases dramatically.

5) Iran keeps exporting oil, but on the black market, resulting in incorrect global oil production figures, and OPEC and Russia don't cut back.

6) Oil traders panic about overproduction and drive oil prices over a cliff.

If some (or all) of these happen by middle / end of 2019, I could plausibly see $20 oil.

 

 

I think you missed off number 

7) Elon Musk ( obviously )

[Rashed ALSAYED + 11]

13 hours ago, cbrasher1 said:

and that would cause all kinds of economic downfalls worldwide, this appears to be a sensible conversation minus the troll with rediculous fairy tale predictions.  oil is not going to 20/bbl (i pray anyways) I concur with prior assessments that the ideal price of 60-80 is a range that all can function with.  I do not believe anyone with any marbles would want the price to go to $20.  We shall see I guess what 2019 holds, every year budgets are deplenished at this time and from what the word is here in west texas after first of year it's firing on all cylinders.  A recession decline in demand, opec+ not complying with their agreement and the Iran situation all will impact which way things go.  But nobody....NOBODY....is rooting for 10 or 20/bbl oil prices

hello, when i made my note it was for the reason of a react for the topic it self and i never said the oil prices going that down!! i am very sorry if i got missunderstood , thank you all for understanding.

[Meredith Poor + 883]

Cheap solar combined with cheap high-energy-density rechargeable batteries. 'Cheap solar' would most likely take the form of Perovskites. Cheap high-energy density batteries are most likely zinc-air, which certain people claim they are making. So far, I can't find these on the open market.

In general, declining solar and storage prices progressively lowers the price where oil becomes uncompetitive. This number is sill over $100 a barrel at present, but not by much. I've seen wholesale solar panel prices at 17 cents per watt from companies in China, but I don't know if these numbers can be trusted.

I can see a scenario where the price of oil is pushed below the $20 per barrel if the price of solar drops to 7 cents per watt. Some solar cell prices are already at this number, but these are not panels, and solar panel prices don't reflect the cost of installation and deployment.

[Meredith Poor + 883]

If one divides $12 (price per ton of Powder River Basin coal) by 2000 (pounds of coal per ton) one gets a price of $.006, or .6 cents per pound of coal.

Powder River Basin coal has a BTU value of 8800 BTUs per pound.

A barrel of oil has a BTU value of approximately 5,800,000 BTUs.

Dividing 5,800,000 by 8800 yields 659 pounds of coal equivalent to a barrel of oil.

659 * .006 is roughly $4 per barrel equivalent.

All one would have to be able to do is convert coal to oil (or refined petroleum products) at 5x the price of coal.

[ceo_energemsier + 1,818]

On 10/30/2018 at 6:21 AM, Tom Kirkman said:

1) Demand for oil plummets due to the economic effects of the threat of triple digit oil prices.

2) Oil and gas production continue to increase, far more than is needed, due to overblown concerns about oil production cutbacks in Iran, Venezuela, etc.

3) Canada gets its act together and an oil pipeline system is put in place to export more oil to U.S.  Tar sands production increases due to pressure to pay down fixed costs.

4) U.S. Shale oil pipeline bottlenecks get resolved, and Shale oil production increases dramatically.

5) Iran keeps exporting oil, but on the black market, resulting in incorrect global oil production figures, and OPEC and Russia don't cut back.

6) Oil traders panic about overproduction and drive oil prices over a cliff.

If some (or all) of these happen by middle / end of 2019, I could plausibly see $20 oil.

 

Well, today we are at 49.88/bbl , not too much to go before 29.88$ to put it in the 20$/bbl range.

Look @ massive layoffs, job losses, bankruptcies (corporate and personal), foreclosures, repos and the list goes on including the economy getting weaker not stronger because of low oil prices. 

1) I see that the demand of oil will plummet when there is an actual uptick of oil prices into the 85+-95$/bbl range

2) Iran may fare well in ref, to cutbacks in production due to the sanctions , since the waivers are negating the major fears and actual , factual market supply. But then again there is March to wait and see what happens. Venezuela's oil industry is a dead horse for a while to come. It will improve and will take a long time post Maduro, given the fact that the next Gov. does a major turn around from current failed policies at all fronts.

3) Canada's potential to build new pipelines and ship the underrepresented volumes to the US/USGC and Canada's West coast is going to take some time, probably not in 2019. Tar sands production may increase only if they are able to de-bottleneck using pipelines.

4) Definitely about to happen in the US shale patch specially the Permian, new pipeline(s) throughput capacity will be operational in 2019, along with new facilities for oil-gas separation/NGLs strippers and pumping capacity. It also appears the companies are going hot and heavy to keep drilling and completing new wells, and that production may add over 1mmbpd of crude  from the Permian in 2019

5) Is a cluster F$#& , again depends on what happens in March. If Iran sells more oil on the black market it will be depressing the realized value of its own oil and yes which will also skew (in terms of volumes and predictions/projections) by OPEC and Russia in cutbacks. Russia may very well decide to keep raking in as many $$ for as many of their barrels and may just give lip service to the agreed cuts. If the cuts do happen in the agreed volumes , there maybe an actual price uptick

6) Oil traders (paper traders) may pull a short and push prices down.

And the cycle continues. Would be a time then to cherry pick and load up on good quality oil assets.

 

 

 

[ceo_energemsier + 1,818]

1 minute ago, ceo_energemsier said:

Well, today we are at 49.88/bbl , not too much to go before 29.88$ to put it in the 20$/bbl range.

Look @ massive layoffs, job losses, bankruptcies (corporate and personal), foreclosures, repos and the list goes on including the economy getting weaker not stronger because of low oil prices. 

1) I see that the demand of oil will plummet when there is an actual uptick of oil prices into the 85+-95$/bbl range

2) Iran may fare well in ref, to cutbacks in production due to the sanctions , since the waivers are negating the major fears and actual , factual market supply. But then again there is March to wait and see what happens. Venezuela's oil industry is a dead horse for a while to come. It will improve and will take a long time post Maduro, given the fact that the next Gov. does a major turn around from current failed policies at all fronts.

3) Canada's potential to build new pipelines and ship the underrepresented volumes to the US/USGC and Canada's West coast is going to take some time, probably not in 2019. Tar sands production may increase only if they are able to de-bottleneck using pipelines.

4) Definitely about to happen in the US shale patch specially the Permian, new pipeline(s) throughput capacity will be operational in 2019, along with new facilities for oil-gas separation/NGLs strippers and pumping capacity. It also appears the companies are going hot and heavy to keep drilling and completing new wells, and that production may add over 1mmbpd of crude  from the Permian in 2019

5) Is a cluster F$#& , again depends on what happens in March. If Iran sells more oil on the black market it will be depressing the realized value of its own oil and yes which will also skew (in terms of volumes and predictions/projections) by OPEC and Russia in cutbacks. Russia may very well decide to keep raking in as many $$ for as many of their barrels and may just give lip service to the agreed cuts. If the cuts do happen in the agreed volumes , there maybe an actual price uptick

6) Oil traders (paper traders) may pull a short and push prices down.

And the cycle continues. Would be a time then to cherry pick and load up on good quality oil assets.

 

 

 

Few other things that could bring the price of oil down to the 20s in 2019

A) India's oil demand drops

B) China's economy starts feeling the chomps instead of the nibbles of the Trade wars and their demand drops

C) West Africa's oil production increases by 500,000-1,000,000bpd+

D) Brazil brings additional volumes to the market

 

 

[ceo_energemsier + 1,818]

2 hours ago, Meredith Poor said:

If one divides $12 (price per ton of Powder River Basin coal) by 2000 (pounds of coal per ton) one gets a price of $.006, or .6 cents per pound of coal.

Powder River Basin coal has a BTU value of 8800 BTUs per pound.

A barrel of oil has a BTU value of approximately 5,800,000 BTUs.

Dividing 5,800,000 by 8800 yields 659 pounds of coal equivalent to a barrel of oil.

659 * .006 is roughly $4 per barrel equivalent.

All one would have to be able to do is convert coal to oil (or refined petroleum products) at 5x the price of coal.

There are ongoing projects for Coal-Liquids that have been successful and even better that the Coal-Liquids end up in actual value added fuel to be used @ the consumer level rather than having to be refined again before being used as an end product(fuel)

 

[ceo_energemsier + 1,818]

16 hours ago, cbrasher1 said:

and that would cause all kinds of economic downfalls worldwide, this appears to be a sensible conversation minus the troll with rediculous fairy tale predictions.  oil is not going to 20/bbl (i pray anyways) I concur with prior assessments that the ideal price of 60-80 is a range that all can function with.  I do not believe anyone with any marbles would want the price to go to $20.  We shall see I guess what 2019 holds, every year budgets are deplenished at this time and from what the word is here in west texas after first of year it's firing on all cylinders.  A recession decline in demand, opec+ not complying with their agreement and the Iran situation all will impact which way things go.  But nobody....NOBODY....is rooting for 10 or 20/bbl oil prices

I remember the day(s) when oil was down to $9.80 and some change per barrel (US), I think it was Louisiana crude. What a world wide economic disaster that was.

But good buying opportunity in every sector. Bought high value assets for pennies on the $, there used to be dozens and dozens of auctions in the oil patches every day.

But oil prices that low are in no one's "good, better , or best" interests

[ceo_energemsier + 1,818]

On 10/30/2018 at 4:25 AM, Marina Schwarz said:

let's have some fun, shall we? What needs to happen -- plausibly, mind -- for oil prices to dive to $20 a barrel.

Can we also go the other way?

Oil between 80-90? HAHAHA

1) Canada's oil exports drop as producers shut in due to pipeline and transport constraints

2) Venezuela goes completely nuts, down the drain and their oil industry basically produces fumes

3) Trade deals reached with China and their demand takes off with an additional 1,500,000bpd

4) Issues in West Africa plummets their oil production

5) OPEC & Russia stick to their cut volumes

6) In March, strict Iranian sanctions are implemented and enforced

7) US Bakken production dwindles (early 2019 because of weather)

8.) New US Congress takes over and they start interfering in new pipeline construction and blocking construction of already permitted pipelines and infrastructure across the country and specially in the Permian, thus prolonging the bottleneck problems and producers scale back on drilling and completions.

9) North Sea oil production plummets

10) India's demand rises

 

[ceo_energemsier + 1,818]

On 12/13/2018 at 1:40 AM, DA? said:

\.

(Bloomberg) -- Hedge funds aren’t buying into OPEC’s oil-production cuts just yet.

They slashed net wagers on a rally of West Texas Intermediate crude to the lowest in more than two years, while short-selling of Brent oil climbed for a record 11th week. Both benchmarks ended the week lower as the cartel’s efforts were overshadowed by concern about booming shale production and waning global demand. It’s mostly up to Saudi Arabia now to try to win investors over.

“Demand is now decreasing and you have a problem with Chinese growth,” said Tariq Zahir, a commodity fund manager at Tyche Capital Advisors LLC. “Right now, everything is dependent on what Saudi Arabia does.”

Saudi Arabia clearly knows that. The oil-rich kingdom has plans to slash exports to the U.S. in coming weeks in an effort to dampen visible build-ups in crude supplies, telling local refiners to expect much lower shipments in January, according to people briefed on the plans. That could bolster confidence among traders that OPEC’s de facto leader is serious about rebalancing supply and demand.

“We should be at just about the end of the cycle where longs have gotten wiped out,” said John Kilduff, a partner at New York-hedge fund Again Capital LLC “In the medium term, the Saudis exporting less to the U.S. should help us head higher.”

The biggest challenge for the Saudis is the concern that growth in prolific U.S. fields could surpass supply curbs by OPEC and its allies. North Dakota’s Bakken shale play produced a record 1.4 million barrels a day in October, while the Permian Basin of West Texas and New Mexico is forecast to surpass 4 million next month.

On Friday, traders continued to sell off oil, as Brent futures for February delivery fell 1.9 percent to settle at $60.28 a barrel in London, putting it down 2.3 percent on the week. WTI for January closed down 2.6 percent on the day, closing out the week down 2.7 percent.

Hedge funds’ net-long position on WTI -- the difference between bets on higher prices and wagers on a drop -- slid 6.7 percent to 119,675 in the week ended Dec 11, the U.S. Commodity Futures Trading Commission said Friday. That was the least bullish since August 2016. Longs-only fell 0.8 percent to the lowest since March 2013, while shorts rose 7.8 percent.

Brent net-longs edged up from a three-year low over the same period, rising by 2.3 percent to 139,597 contracts, ICE Futures Europe data showed. Longs rose 3.1 percent, while shorts rose 3.9 percent to the highest since July 2017.

“Market observers may need to wait for the cuts to percolate to inventory data,” Barclays analysts including Michael Cohen said in a note, adding that Brent and WTI prices are poised to rebound in the first half of next year.

To contact the reporter on this story: Catherine Ngai in New York at cngai16@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Carlos Caminada, Dan Reichl

[ceo_energemsier + 1,818]

On 10/30/2018 at 6:21 AM, Tom Kirkman said:

1) Demand for oil plummets due to the economic effects of the threat of triple digit oil prices.

2) Oil and gas production continue to increase, far more than is needed, due to overblown concerns about oil production cutbacks in Iran, Venezuela, etc.

3) Canada gets its act together and an oil pipeline system is put in place to export more oil to U.S.  Tar sands production increases due to pressure to pay down fixed costs.

4) U.S. Shale oil pipeline bottlenecks get resolved, and Shale oil production increases dramatically.

5) Iran keeps exporting oil, but on the black market, resulting in incorrect global oil production figures, and OPEC and Russia don't cut back.

6) Oil traders panic about overproduction and drive oil prices over a cliff.

If some (or all) of these happen by middle / end of 2019, I could plausibly see $20 oil.

 

Another key factor player will be/could be Mexico, for the flip side, short term their inactions or bad actions could boost the price and in the long run if they do the right things their actions will bring down the price

[ceo_energemsier + 1,818]

39 minutes ago, ceo_energemsier said:

Few other things that could bring the price of oil down to the 20s in 2019

A) India's oil demand drops

B) China's economy starts feeling the chomps instead of the nibbles of the Trade wars and their demand drops

C) West Africa's oil production increases by 500,000-1,000,000bpd+

D) Brazil brings additional volumes to the market

 

 

Another key factor player will be/could be Mexico, for the flip side, short term their inactions or bad actions could boost the price and in the long run if they do the right things their actions will bring down the price

[ceo_energemsier + 1,818]

AMLO Earmarks $23B to Boost National Oil Industry

by  Bloomberg

Bloomberg) -- Mexican President Andres Manuel Lopez Obrador is boosting Petroleos Mexicanos’ budget to 464.6 billion pesos ($23 billion) next year to reverse flagging oil production and increase domestic fuel output.

Lopez Obrador is proposing that Pemex invest 211 billion pesos in exploration and production ($10.4 billion) in 2019. That’s a 26 percent increase compared to last year, when Pemex planned to invest 168 billion pesos in the unit, according to the finance ministry. Oil production is expected to stabilize at 1.847 million barrels a day in 2019 with Mexico’s oil mix estimated at $55 a barrel, the ministry said.

The budget reflects Lopez Obrador’s ambition to wean Mexico from foreign fuel imports, which have been rising due to growing demand and lack of investment in refineries. To do that, the president plans to build a new refinery and refurbish the run-down existing ones, while increasing domestic oil production to feed the plants. Pemex is importing light oil from the U.S. for the first time to make up for the crude shortfall at its refineries.

“It’s an embarrassment that we are buying light oil for our refineries. If we don’t have the primary material, we can’t do anything,” Lopez Obrador told a crowd of oil workers on Saturday morning at the port of Ciudad del Carmen, Campeche, an oil hub that the president has promised will be the new Pemex headquarters. “We are going to rescue our dear Mexico and the national oil industry.”

‘Reduce Costs’

Lopez Obrador has shrugged off investor concerns that his government will worsen Pemex’s fiscal situation. The beleaguered Mexican driller is the largest Latin American corporate borrower, with $106 billion in financial debt. “We are going to invest where we know there’s oil and where it costs less to extract it,” he said. “We are going to reduce costs.”

Under a new six-year business plan, Pemex’s oil production will rise 52 percent to 2.624 million barrels a day by the end of 2024, up from 1.730 million daily barrels today, the company’s new chief executive officer, Octavio Romero, said at the event in Campeche alongside Lopez Obrador. Pemex’s output has declined every year since 2004, almost halving in that time.

The plan will focus on onshore and shallow water areas in the southeast basins as well as conventional areas in the northern basins, Romero said. As many as 20 fields will have new drilling and infrastructure contracts awarded by the end of January. Exploration investment will be increased by 10 percent each year, he added.

Ixachi Field

The boost in funds could help Pemex expand its major Ixachi field in Veracruz, which is believed to contain 1.3 billion barrels of oil equivalent in proven, probable and possible, or “3P,” reserves.

The plan to build an $8 billion refinery in his home state of Tabasco and revitalize Mexico’s existing six plants could divert Pemex’s resources away from drilling. The president has also called for a hiatus on new oil auctions for at least three years. This week, Mexico’s oil regulator CNH postponed a Pemex farm-out tender and canceled the country’s next two bid rounds planned for Feb. 14 so the government could review oil contracts and energy policy.

With assistance from Jose Orozco and Carlos Manuel Rodriguez. To contact the reporter on this story: Amy Stillman in Mexico City at astillman7@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Virginia Van Natta.

[ceo_energemsier + 1,818]

On 10/30/2018 at 12:00 PM, Mike Marcellus said:

Wouldn't it be fun if we could have 2-6,,, but #1 was merely a dip, and the ensuing cheap price lead to an increasing demand, and an economic windfall for everyone.

I wanted to play, but honestly, Tom did a better job than I would have anyway.   Tom ...the oil price in the $60s that you have spoke of,, desired I believe.  Is that enough to induce future investment from the industry to keep the game going?

At 60$/bbl there wont be a lot of investment going around in new projects. Majority of companies will be investing in "maintaining assets and preventing losses" as related to production decline.

there could be a big shift from long term project investments towards reviving older, mature fields to bring new production from proven oil fields using new technologies by certain companies.

[Robert Ziegler + 121]

On 10/30/2018 at 5:25 AM, Marina Schwarz said:

let's have some fun, shall we? What needs to happen -- plausibly, mind -- for oil prices to dive to $20 a barrel.

Venezuela production, with Russian technical assistance, goes to over 15 MM bbl/d.

[ceo_energemsier + 1,818]

8 minutes ago, Robert Ziegler said:

Venezuela production, with Russian technical assistance, goes to over 15 MM bbl/d.

Now, that is truly a masterpiece of MM

[Marina Schwarz + 1,576]

4 hours ago, Robert Ziegler said:

Venezuela production, with Russian technical assistance, goes to over 15 MM bbl/d.

and Chinese, too. Now that could push oil to $10.

[William Edwards + 708]

The original question was "What Can Bring Oil Down to $20?" The simple answer is "the bailout of the formerly optimistic speculators that expected $100 oil." First came greed. Now comes fear.

[ceo_energemsier + 1,818]

https://finance.yahoo.com/news/exxon-becomes-top-permian-driller-211710483.html