Question: Why are oil futures so low through 2020?

[0R0 + 6,251]

4 hours ago, Wombat said:

I think Permian will peak in 2023 due to uptake of EV/PHEV's.

As pointed out, it is NG not EVs that will restrict oil demand first. Taking heavy fuel out of shipping then rail and then diesel out of trucks, and oil out of petrochemicals. 

EV penetration is still limited by Tesla's production capacity and the fact that nobody else has a competitive battery. The dingbats at Volkswagen/Porsche came up with a really low range very high priced EV that is absolutely repugnant. Stick to PHEVs for now lest they ruin their name. Pathetic. 

BTW, unless there is a miracle in Indian politics and Sub Saharan African culture, then we are already past peak autos globally. American Millennials and Mexican young adults are the only growth car markets for the next decade or two. 

Both are gravitating to trucks, but they can't make up for the decline of cars elsewhere in the 2.5 billion industrialized world where demographics of first car buyers are shrinking fast. 

 

[Wombat + 1,028]

49 minutes ago, 0R0 said:

As pointed out, it is NG not EVs that will restrict oil demand first. Taking heavy fuel out of shipping then rail and then diesel out of trucks, and oil out of petrochemicals. 

EV penetration is still limited by Tesla's production capacity and the fact that nobody else has a competitive battery. The dingbats at Volkswagen/Porsche came up with a really low range very high priced EV that is absolutely repugnant. Stick to PHEVs for now lest they ruin their name. Pathetic. 

BTW, unless there is a miracle in Indian politics and Sub Saharan African culture, then we are already past peak autos globally. American Millennials and Mexican young adults are the only growth car markets for the next decade or two. 

Both are gravitating to trucks, but they can't make up for the decline of cars elsewhere in the 2.5 billion industrialized world where demographics of first car buyers are shrinking fast. 

 

I understand that Europeans relying on inferior Chinese batteries for now, but will soon be producing their own? They have even bought a Lithium mine in South America.

[0R0 + 6,251]

10 minutes ago, Wombat said:

I understand that Europeans relying on inferior Chinese batteries for now, but will soon be producing their own? They have even bought a Lithium mine in South America.

Hopefully they do manage to make their own. Panasonic/Tesla are way ahead. Why do you think China invited Tesla in with 100% ownership and unconditional bank financing? They dropped the EV subsidy because local makers were making short lived junk that couldn't get you anywhere beyond next door. 

[Wombat + 1,028]

3 hours ago, D Coyne said:

In the US natural gas is quite cheap, currently the problem for producers is over supply and prices so low that nobody can make any money.

Yes, the same thing happened here in Australia. Just b4 the 6 trains at Gladstone (Queensland) came on-line, the domestic price collapsed and actually turned negative. That's right, the gas producers were actually paying domestic customers to take the stuff while they in last stage construction of the LNG plants. Now we are building IMPORT terminals down South! Given US has much greater domestic use of gas (and won't ban fracking like our useless state govt's down south have done), America may escape similar problems, but 42 trains is a heck of a lot so who knows?

[ronwagn + 6,290]

On 2/14/2020 at 6:56 AM, wrs said:

Dennis,

I don't think any of them want to do anything other than manage their own output as they see fit.  Your suggestion also only applies to Texas and would not affect New Mexico or the Bakken and it wouldn't help with the dry gas problem either.  It would likely be seen as hurting the Texas producers and helping the others, not unlike how OPEC feels about shale.  The only thing that is going to change the behavior is low prices and honestly, that didn't bother KSA a couple of years ago when they imposed low prices on us at much lower production levels.  I guess turnabout is fair play.

I also think that the market players on the short side and those who would like to swoop in and grab up some good oil properties for cheap are spinning this story of unprofitability and dumping on this sector unfairly.  Look at all the other zombie companies out there, Amazon doesn't make money on anything but AWS, Netflix loses money, Uber loses money, lot's of companies continue to stay in business on cheap credit, it's not just the oil industry.  That's on the Fed.  The real-estate industry is the biggest bubble of all.

Obviously higher prices would benefit me but higher production does too.  I don't care to have resources trapped that will never be used and you see a lot of that kind of talk these days.  It's why XOM is having trouble with it's stock price right now.  There is a huge public push against FFs so while I don't like the low prices, it would be worse to have limited production and low prices which I am quite sure would eventually happen.

Why is it that we talk about shale oil and gas as if it is the only type of exploration in the United States or our neighbors? We have three coasts, Canada, Mexico, and the Caribbean just to mention the closest areas. Then we have biogas, methane hydrates, oil sands, coal to oil and gasoline. If none of that happens we have oil and/or natural gas in many areas throughout South America and the rest of the world. I think there is far more than we even consider. Then we have all the fantastic solar and wind that are going to save the world from fossil fuels. Am I off base? Please explain. 

Edited February 17, 2020 by ronwagn
addition

[Douglas Buckland + 6,308]

On 2/12/2020 at 5:51 AM, BLA said:

Simple

TOO MUCH OIL. 

Get used to it.  Oil in the $50s.  The new normal.

 

 

Can you definitively prove that there is ‘too much oil’?

How much is too much oil? How over-supplied are we?

[Wombat + 1,028]

2 hours ago, Douglas Buckland said:

Can you definitively prove that there is ‘too much oil’?

How much is too much oil? How over-supplied are we?

A lot. Nearly 2mmb/d

Edited February 17, 2020 by Wombat
Insert relevant article.

[Wombat + 1,028]

7 minutes ago, Wombat said:

A lot. Nearly 2mmb/d

Won't let me put article thru. It is on home page of this website, title:"Oil Suppliers Slash Prices To Save Asian Market Share". Surprised u haven't read it?

[cbrasher1 + 272]

14 hours ago, BLA said:

WRS

Great news . . . more conflict and war.    Hopefully it breaks out to an all out war and you can collect bigger royalty checks on your grandfather's land purchases.  So what if thousands lose their life. You'll be making a killing.

Then the drinks are on you.  Or I guess really your grandfather.

As I said last Weds we were due for a conflict flare-up in the persian gulf. 

WRS, you and the Saudis think alike.  Please don't start killing journalist like them. 

BLA might I ask what you do in the oil industry? I for one do not care if @wrs makes money off leases, without leases those of us out here on the ground wouldn't have JOBS! People who lease their land do so to make.....money....just like us hands who take the minerals out of the ground....to make money.  Is your ideaology oil and gas specific? Let's say, I had a cavern with gold in it, and a mining company came in and mined it, would you begrudge me my part on that as well because I had it? 🤔🤔 I do not understand the lease side of things, but I would think that is a negotiated monthly thing then an amount actually produced amount?

[Douglas Buckland + 6,308]

3 hours ago, Wombat said:

Won't let me put article thru. It is on home page of this website, title:"Oil Suppliers Slash Prices To Save Asian Market Share". Surprised u haven't read it?

I don’t read all the drivel on this forum.

So one article says we are over-supplied by 2mmb/d and you think this makes it a fact? Where did the author get his numbers from? Nobody else can get definitive, global data, what makes you think this guy/gal is accurate?

[wrs + 893]

10 hours ago, ronwagn said:

Why is it that we talk about shale oil and gas as if it is the only type of exploration in the United States or our neighbors? We have three coasts, Canada, Mexico, and the Caribbean just to mention the closest areas. Then we have biogas, methane hydrates, oil sands, coal to oil and gasoline. If none of that happens we have oil and/or natural gas in many areas throughout South America and the rest of the world. I think there is far more than we even consider. Then we have all the fantastic solar and wind that are going to save the world from fossil fuels. Am I off base? Please explain. 

Well I think as far as the east and west coast are concerned, most of those states don't want offshore drilling.  About the rest of it, those are probably less economic and higher oil prices would encourage development.  Definitely though, higher oil prices will be needed to spur more alternative energy development.  

I think the part of the E&P industry that isn't captive to national oil companies has to figure out where and how much it wants to develop.  So far, shale has been a business that's not hard to get into but it's hard to stay in and make a profit. I would have thought the lower prices would have cut production by now but it hasn't so I guess economics just doesn't work as it's taught in schools.

Edited February 17, 2020 by wrs

[Douglas Buckland + 6,308]

What do you guys and gals feel about a tax or fee being placed on those States on the East, West or Gulf coasts which ban offshore drilling but then benefit (needs to be qualified) from offshore oil exploration off the States which do?

Seems fair to me. If their rational is that they do not want to risk environmental damage, the money could go into a fund to mitigate environmental damage, if it occurs, in the States that drill and produce.

[BLA + 1,666]

11 hours ago, Douglas Buckland said:

Can you definitively prove that there is ‘too much oil’?

How much is too much oil? How over-supplied are we?

Yes

[BLA + 1,666]

7 hours ago, cbrasher1 said:

BLA might I ask what you do in the oil industry? I for one do not care if @wrs makes money off leases, without leases those of us out here on the ground wouldn't have JOBS! People who lease their land do so to make.....money....just like us hands who take the minerals out of the ground....to make money.  Is your ideaology oil and gas specific? Let's say, I had a cavern with gold in it, and a mining company came in and mined it, would you begrudge me my part on that as well because I had it? 🤔🤔 I do not understand the lease side of things, but I would think that is a negotiated monthly thing then an amount actually produced amount?

I  am also glad wrs makes money on his oil leases.  wrs is very knowledgeable regarding the shale industry.  I enjoy reading most of his posts and have learned a great deal from him.  

However, rooting for conflict and war in Mideast OPEC nations so he can make a few extra dollars/bbl when it would result in economic hardship and many deaths (including Americans) is wrong.  Even if he wishes it stating it on a public post takes a lot of balls. 

It's bad enough Saudi princes and Ukrainian international arms dealers think and do business that way. 

Edited February 17, 2020 by BLA

[wrs + 893]

48 minutes ago, BLA said:

I  am also glad wrs makes money on his oil leases.  wrs is very knowledgeable regardong the shale industry.  I enjoy reading most of his posts and have learned a great deal from him.  

However, rooting for conflict and war in Mideast OPEC nations so he can make a few extra dollars/bbl when it would result in economic hardship and many deaths (including Americans) is wrong.  Even if he wishes it stating it on a public post takes a lot of balls. 

It's bad enough Saudi princes and Ukrainian international arms dealers think and do business that way. 

You need to read the post again because I didn't root for the conflict.  I said I was hoping for a bounce on Monday.  My first post was one that contradicted the lowered demand argument because refiners were taking advantage of the lower prices to buy oil cheap even when they didn't need it.  Then I posted the articles about the conflict.  I didn't root for the conflict at all, only suggested that traders should take it into account.  

It is you that has inferred a meaning from my posts that was in not implied nor even expressly stated.  In my opinion, KSA is in Yemen without justification and deserves the fallout they get including having their oil processing facilities targeted by the Houthis.  WRT Libya it is their own internal conflict that is causing their production to be shut in and their exports to be cut off.  I have nothing to do with any of that but it's interesting to me how the market has entirely ignored that.

[Douglas Buckland + 6,308]

1 hour ago, BLA said:

Yes

Then do it!

[BLA + 1,666]

57 minutes ago, wrs said:

You need to read the post again because I didn't root for the conflict.  I said I was hoping for a bounce on Monday.  My first post was one that contradicted the lowered demand argument because refiners were taking advantage of the lower prices to buy oil cheap even when they didn't need it.  Then I posted the articles about the conflict.  I didn't root for the conflict at all, only suggested that traders should take it into account.  

It is you that has inferred a meaning from my posts that was in not implied nor even expressly stated.  In my opinion, KSA is in Yemen without justification and deserves the fallout they get including having their oil processing facilities targeted by the Houthis.  WRT Libya it is their own internal conflict that is causing their production to be shut in and their exports to be cut off.  I have nothing to do with any of that but it's interesting to me how the market has entirely ignored that.

" Hope we see a big bounce on Monday especially now that the mideast is heating up again."

How else can one read it ?

[Gerry Maddoux + 3,627]

11 minutes ago, BLA said:

" Hope we see a big bounce on Monday especially now that the mideast is heating up again."

How else can one read it ?

You can read it that the mideast is heating up again. 

And I sell oil. 

Hope we see a big bounce on Monday--it would sure beat the measly price we're being paid. 

I don't know wrs, but this is pretty arcane. The Saudis tried to drive his ilk into the poor house back in 2014--they tried to drill US shale into oblivion. Amazingly, shale survived . . . not because KSA or Libya or someone else felt sorry for us, but because the shale people kept on plugging. Shale has been beat half to death . . . on these very pages . . . by people who don't really know much about what they're spouting. Now we're supposed to worry about the Saudis? Give me a break!

Old wrs seems to know quite a bit about the shale field. Soon--and he knows this--his property will be exploited and they will move on. It's not like this is some sort of annuity. I identify with the man. My grandfather made the Oklahoma land rush, drove his stakes into just about the ugliest ground in the world. We made a bare living on it for two generations. Then they found some oil on it. Does that make me Billy the Kid? I don't think so. 

 

[Bob D + 562]

3 hours ago, Douglas Buckland said:

What do you guys and gals feel about a tax or fee being placed on those States on the East, West or Gulf coasts which ban offshore drilling but then benefit (needs to be qualified) from offshore oil exploration off the States which do?

Seems fair to me. If their rational is that they do not want to risk environmental damage, the money could go into a fund to mitigate environmental damage, if it occurs, in the States that drill and produce.

Douglas

I've long thought a tax should be levied on the population of any state that does not use its resources to contribute to the total national energy supply.  For instance, an energy import tax should be levied on any state with energy resources, that does not produce those resources, but instead imports energy into the state.  The tax would be an energy surcharge on gasoline, diesel, heating oil, propane, electricity, natural gas unless the state allows for wind, solar, nuclear and oil & gas development.  If a state blocks production of oil, gas, wind, solar to the greatest extent of economical project development then the tax is applied.  

For example:  Massachusetts blocks wind farms off Cape Cod despite ardent support for alternative and renewable energy and a voracious anti-fossil fuel mentality.  New York blocks pipelines and NG production in the dry gas Marcellus as the resource doesn't stop at the Pennsylvania border.  Liberals are the kings of "Do as I say not as I do" mantra also known as NIMBY (Not In My Back Yard).  My favorite is NJ which has no oil or gas activity due to lack of resource has banned fracking.  Hilarious.

Edited February 17, 2020 by Bob D
making it more better

[BLA + 1,666]

1 hour ago, Gerry Maddoux said:

You can read it that the mideast is heating up again. 

And I sell oil. 

Hope we see a big bounce on Monday--it would sure beat the measly price we're being paid. 

I don't know wrs, but this is pretty arcane. The Saudis tried to drive his ilk into the poor house back in 2014--they tried to drill US shale into oblivion. Amazingly, shale survived . . . not because KSA or Libya or someone else felt sorry for us, but because the shale people kept on plugging. Shale has been beat half to death . . . on these very pages . . . by people who don't really know much about what they're spouting. Now we're supposed to worry about the Saudis? Give me a break!

Old wrs seems to know quite a bit about the shale field. Soon--and he knows this--his property will be exploited and they will move on. It's not like this is some sort of annuity. I identify with the man. My grandfather made the Oklahoma land rush, drove his stakes into just about the ugliest ground in the world. We made a bare living on it for two generations. Then they found some oil on it. Does that make me Billy the Kid? I don't think so. 

 

I feel sorry for poor wrs.  The exploitation must be unbearable cashing those checks every month.

Gerry I'm not defending Saudi/OPEC.  But hoping for war to make a few more dollars should not be excused.  Especially when it could cost American lives.  

At minimum U.S. produces should get no less than $60 bbl.  Hoping for war to get above that is wrong.

By the way, both you and wrs are very knowledgeable about shale industry. It's appreciated.  Your and wrs's hands on experience are the best part of this website. 

Edited February 17, 2020 by BLA

[wrs + 893]

56 minutes ago, BLA said:

I feel sorry for poor wrs.  The exploitation must be unbearable cashing those checks every month.

Gerry I'm not defending Saudi/OPEC.  But hoping for war to make a few more dollars should not be excused.  Especially when it could cost American lives.  

At minimum U.S. produces should get no less than $60 bbl.  Hoping for war to get above that is wrong.

By the way it seems both you and wrs are most knowledgeable on shale that post on this board.  

Again, that is your claim that I am hoping for war.  I am not and I have said I am not but the market should take the possiblity of the conflict expanding into account.  I also think what Gerry was referring to was depletion, not exploitation.  The resource depletes and it's obnoxious to sell it for a price that is based on the fantasies of traders and not what real end users will pay.  Clearly the Chinese think it's a bargain right now as they keep buying even though they have no plans to use it.  

When you continue to repeat this claim that I am rooting for war after being corrected you become an antagonist.  Are you attempting to antagonize me or are you now going to accept that you MISREAD my post since I AM EXPLICITY STATING I AM NOT ROOTING FOR WAR? 

Edited February 17, 2020 by wrs

[wrs + 893]

Here is another article showing that there isn't a vast surplus.  If KSA had to draw down reserves to maintain it's customers in one of the lowest demand months of they year, they are having production problems.  There is a huge assumption that OPEC has a lot of spare capacity and that KSA can pump 12mmbbl/day.  That's not true but of course it's not being tested because the coronavirus is reducing demand from China conveniently for KSA.

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/021720-saudi-crude-exports-hold-steady-as-kingdom-dips-into-stocks

Stocks had hit a 15 year low of 152mmbbl in September after the Abquaiq attacks.  Clearly if your reserves drop 12mmbbl in a month, you are running a 400kbbl/day deficit.  It would take over 10mmbbl/day production to make up for that but they are only increasing production by 150kbbl/day so I think that the Saudis have to be somewhat relieved at the Coronavirus impact as it may allow them to replenish their inventories.

Total Saudi crude oil inventories were 155.199 million barrels as of the end of December, compared with 167.013 million barrels the previous month.

[BLA + 1,666]

1 hour ago, wrs said:

Again, that is your claim that I am hoping for war.  I am not and I have said I am not but the market should take the possiblity of the conflict expanding into account.  I also think what Gerry was referring to was depletion, not exploitation.  The resource depletes and it's obnoxious to sell it for a price that is based on the fantasies of traders and not what real end users will pay.  Clearly the Chinese think it's a bargain right now as they keep buying even though they have no plans to use it.  

When you continue to repeat this claim that I am rooting for war after being corrected you become an antagonist.  Are you attempting to antagonize me or are you now going to accept that you MISREAD my post since I AM EXPLICITY STATING I AM NOT ROOTING FOR WAR? 

Did you get your bounce today ?

Houthis shooting at a KSA jet set the world on fire.  Better call for a special session of the U.N. Security Council

 

[BLA + 1,666]

13 minutes ago, wrs said:

Here is another article showing that there isn't a vast surplus.  If KSA had to draw down reserves to maintain it's customers in one of the lowest demand months of they year, they are having production problems.  There is a huge assumption that OPEC has a lot of spare capacity and that KSA can pump 12mmbbl/day.  That's not true but of course it's not being tested because the coronavirus is reducing demand from China conveniently for KSA.

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/021720-saudi-crude-exports-hold-steady-as-kingdom-dips-into-stocks

Stocks had hit a 15 year low of 152mmbbl in September after the Abquaiq attacks.  Clearly if your reserves drop 12mmbbl in a month, you are running a 400kbbl/day deficit.  It would take over 10mmbbl/day production to make up for that but they are only increasing production by 150kbbl/day so I think that the Saudis have to be somewhat relieved at the Coronavirus impact as it may allow them to replenish their inventories.

Total Saudi crude oil inventories were 155.199 million barrels as of the end of December, compared with 167.013 million barrels the previous month.

 

You believe the Saudis .  LOL

It's human nature  .  .  .  People believe what they want to believe.

We all have our own bias

Edited February 17, 2020 by BLA

[Gerry Maddoux + 3,627]

As purveyors of oil, marketers of oil, drillers for oil, just oil lovers and watchers, we have, collectively, so much more to worry about than whose grandfather was smart, or lucky, or a drunk. I had one grandfather who had the first deep oil well in western Oklahoma drilled on his place. It shot oil over the arroyo. My first memory of oil was having it shoot onto the windshield, with the wipers going, and my grandfather shouting how rich we were. Well, he turned down a very large check in 1950, thinking he was sitting on the next Spindletop. The well went dry. He died poor. 

My other grandfather was aesthetic and monk-like. He had made the Oklahoma Land Rush only to find out that all the pretty land had been taken. Out of breath, out of hope, out of horse, he jumped off and stuck three stakes into the ground on the world's ugliest and meanest piece of land. He didn't die poor. 

So here I am, somewhere in between, with a lust for oil but half the brain for it--a perfect grandson. After such a declaration of mediocrity, my advice is to back off wrs. His grandfather was either lucky or smart, but probably a little of each. Do you realize how many people inherit land that is about half-assed and sell it off, along with the minerals? Quite a few. At least old wrs held onto it. And hell, that's about half the battle. I had a cousin who sold off, for the price of a new Chevy, enough minerals to yield 4.5million. Now that's something to laugh at.

Think about it: wrs doesn't need war. He has already won the battle: he didn't sell his land and he didn't sell his minerals. I'd be asking for his advice; that's what I'm going to do.