Question: Why are oil futures so low through 2020?

[wrs + 893]

11 hours ago, Mike Shellman said:

Perhaps this gentlemen is a veteran himself, Tom Kirkman, and or directly or indirectly sensitive to the implications that war might raise the price of oil.  Lots of idiots actually do wish for such things to occur to their own personal benefit. In any case, asking the man if he "beat his wife," in "retaliation," is stupid, don't you think? Sure it is. Exxon, for instance, is destroying shareholder equity by jumping feet first in Permian shale oil, is the top gas flarer in the State (that flares as much gas now as the KSA) and to my knowledge close to  43,000 jobs have been lost in West Texas in the past  6 months...in some part due to majors, like Exxon, driving service and supply costs into the dirt. Those are men, and women, with families, out of work and struggling. The $300K  car thing thing is offensive as hell to anybody with an ounce of integrity. Your "moderation" is misplaced, sir. 

Your comment is misplaced, you have no dog in this fight but you have gratuitously piled on.  Go dip a stick in an oil tank see if you need to empty a couple of them yet.  

[wrs + 893]

5 hours ago, Tom Kirkman said:

There are 2 moderators in this thread trying to gently restore some civility and to reduce the antagonism.   Please do take note that if the bickering dossn't stop, then the thread will be locked for a while to cool things down.

 

I am fine with deleting the thread because what BLA has indicated is that he will not stop and I won't let him slander me and lie about what I posted so each time he does so, I will refute it. 

[wrs + 893]

Libya production down to 120kbbl/day

 

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/021920-libyas-oil-output-down-to-less-than-125000-bd-amid-terminal-blockade-noc

[BLA + 1,666]

1 hour ago, wrs said:

I am fine with deleting the thread because what BLA has indicated is that he will not stop and I won't let him slander me and lie about what I posted so each time he does so, I will refute it. 

Thanks for your posts.  They are very enlightening 

Edited February 19, 2020 by BLA

[BLA + 1,666]

1 hour ago, wrs said:

corrected

 

1 hour ago, wrs said:

I won't apologize for what I didn't do, nor will I rewrite it,  Others have shown that they have the adequate reading comprehension and integrity to read it as it was intended.  Even after you have been corrected you continue to slander me.  You are the antagonist and the one who is in the wrong but you don't have the integrity to admit it.  

You are intentionally misconstruing what was written even though you have been corrected.  You are a liar.

I forgive you even though I have a good friend that died in the Mideast conflicts and left a wife and two children without a husband and father. 

Everything is not ALL about money.

[wrs + 893]

2 minutes ago, BLA said:

 

I forgive you even though I have a good friend that died in the Mideast conflicts and left a wife and two children without a husband and father. 

Everything is not ALL about money.

I agree everything is not all about money even though the govt and media boil it down to that in the end.  Even though I benefit from high oil prices I know that beyond a certain point it's unaffordable for people and I don't want oil prices that high.  There is a happy meduim but the oil business doesn't seem to live there long.  

I think $60-$75 oil is easily absorbed by the economy and in the US the higher prices are better for the country because it's money that gets put into our economy directly.  When the shale operators can pay back those loans they are freeing up capital to become available for new business ventures.  When the loans are not repaid, it's capital destroyed and that is a drain on everyone.

My biggest complaint is with the price of oil being set by traders that don't have the interests of the oil business or the oil consumers in mind.  To traders it is ALL about the money and nothing else.  Don't take that as a knock on traders but instead it's an observation of how the system doesn't really work to reward those that directly produce the products that others benefit from having freely and abundantly available.

WRT this coronavirus outbreak, the traders took advantage of uncertainty to crush the price of oil.  It's now bouncing back.  We will see in the next couple of months where the reality is after the weather gets warmer. 

[BLA + 1,666]

6 hours ago, wrs said:

My biggest complaint is with the price of oil being set by traders that don't have the interests of the oil business or the oil consumers in mind.  To traders it is ALL about the money and nothing else.  Don't take that as a knock on traders but instead it's an observation of how the system doesn't really work to reward those that directly produce the products that others benefit from having freely and abundantly available.

Traders don't set oil prices. 

They make money taking positions, hedging by anticipating where the price of oil is going. That's why they trade  .  .  to make money. 

Traders don't care if the price goes up or goes down, as long as it's moving .  Traders need volatility (VIX) to make money.  Traders actually decrease the price volatility. 

The pros don't take naked long or short positions. 

The real pros are the trading operations of the International Trading Firms and the in house trading operations of the Major Oil companies. They have all the info and have or take delivery of actual oil. 

If I had your land I would hope for $100+ oil. Nothing wrong with making money, making lots of it.

Don't confuse the issue. My problem  with your posts has absolutely nothing to do with the price of a bbl of oil and the size of your monthly royalty check.  It has everything to do with the way you hoped to increase it.

I'm done here.  Carry on. Have fun. Make money.

 

Edited February 19, 2020 by BLA

[Mark Potochnik + 8]

It was predicted way back 5 years ago by Tony Seba. Using oil is not a guarantee. If you want to concentrate on reducing using oil you can. This has only begun. Predicted fall to $25 in the next 2 years. Real ammunition for energy reduction has only begin. VW just firing up their EV line. Tesla opening up 2  factories this year, and maybe a third. New grid storage (Tesla Megapack) to power those cars just getting started. Constant falling price of solar and storage will undercut everything out there. There is world competition to cut fossil fuel use. I have been carless for over 5 years now. ICE car sales have dropped for 2 years now. Wonderful insulation made with oil cuts energy use.

A low energy life does not mean you will give up the good life.

https://www.youtube.com/watch?v=2b3ttqYDwF0

[0R0 + 6,251]

9 hours ago, Mark Potochnik said:

It was predicted way back 5 years ago by Tony Seba. Using oil is not a guarantee. If you want to concentrate on reducing using oil you can. This has only begun. Predicted fall to $25 in the next 2 years. Real ammunition for energy reduction has only begin. VW just firing up their EV line. Tesla opening up 2  factories this year, and maybe a third. New grid storage (Tesla Megapack) to power those cars just getting started. Constant falling price of solar and storage will undercut everything out there. There is world competition to cut fossil fuel use. I have been carless for over 5 years now. ICE car sales have dropped for 2 years now. Wonderful insulation made with oil cuts energy use.

A low energy life does not mean you will give up the good life.

https://www.youtube.com/watch?v=2b3ttqYDwF0

Yes, in a few years it will have accumulated to something substantial, but it is still borderline economically. 

Eventually we will have nearly free energy "most of the time" in many key areas where people DON'T live for the most part. 

The floating anchored tall wind turbine farms in the strong wind corridors will eventually make transmission to population centers in the North cheap enough. But that approach is new and we don't yet know how well the construct would fare under the bending stress. It is after all an anchored sail boat on air bags. 

The strong solar areas are obviously where there is little precipitation Hence no water and no food, and thus very few people live there. So the second thing you need beyond storage networks is long transmission lines, e.g. S. Italy via the Alps to Switzerland Austria Czech etc., perhaps S. Germany. Perhaps to go as far as the Saharan portions of Algeria and Libya.

If people are actually planning to do all this transmission, I would be a very happy copper miner. 

 

[Wombat + 1,028]

On 2/12/2020 at 11:52 PM, wrs said:

Do you have any actual original source data for this because so far I don't see it.  The refineries are still running and they export product to other buyers.  If they don't run then other buyers will not be supplied and will buy elsewhere creating shortages.  China is not shut down, part of it is locked down but they are using energy for heating and electricity as well as transportation.  The govt is a sigificant energy consumer, it's not energy-less to ENFORCE LOCKDOWNS on their population.  The extreme to which this idiotic meme has been pushed to destroy oil prices is tiresome.

We are not seeing 3mmbbl/day demand loss, in fact I saw a calculation that said the lost flights amount to only 16,000 barrels per day of jet fuel.  Most of this is over-hyped.

WRONG!!!!!!!!!! MOST OF THIS IS "UNDER-HYPED"!!!!!!!!!!!!!

[Wombat + 1,028]

On 2/12/2020 at 9:46 AM, 0R0 said:

I think it is safe to say that you take 6 MMBbl/d for further shut down from here so long as China is still locked down and business has yet to start up  from the extended Lunar New Year holiday.

OPEC will squabble and cut. Saudi has 2 MMBbl/d of orders suspended and they can afford to stop production for the spot market. Russia, not so much.

I am surprised prices have not fallen more. I guess the undersupply before the Coronavirus was deeper than I suspected.

I am also surprised that price has not fallen further, but disagree there was previous undersupply. As Gerry said, price of oil trades on emotion (same as shares), and the thinking in oil and share markets at the moment is that virus epidemic unlikely to turn into a pandemic. That could all change this week, as South Korea now has 500 cases and Singapore not far behind. In my view, Japan should re-schedule Olympics for next year, when vaccine available to all.

[Wombat + 1,028]

On 2/13/2020 at 11:03 PM, wrs said:

You would think that makes sense but wall street values the companies on reserves and completions add to reserves.  It's not as simple as it seems and also, one producer won't make a difference, all have to cut back to make a difference.  If they all agreed to cut back that would be an illegal cartel action and I am sure Trump would be all over them with the DOJ.

Yes, it is unfortunate that most oil majors have their heads in the sand and are in denial about the fact that demand for oil peaked in 2019. The only oil company I know of that is preparing for the "paradigm shift" is Shell.

[Wombat + 1,028]

On 2/17/2020 at 4:40 AM, D Coyne said:

Wombat,

I don't think EVs will reduce demand below supply until 2037 or so, note I expect EVs will help reduce the shortage that will arise as oil peaks in 2025 or 2026, but it will take 17 years before there will be enough uptake of BEVs and plugin hybrids and hybrids that demand will be reduced below the level of supply.  Once that occurs, oil prices may start to fall.

I dunno, thanks to EV's and more efficient ICE's, oil demand in Europe peaked a decade ago and 5 years ago in US, a trend that is accelerating. Same thing just starting to occur in China. Add in the corona virus, and things look even more bleak for oil, if not LNG.

[Gerry Maddoux + 3,627]

9 minutes ago, Wombat said:

I dunno, thanks to EV's and more efficient ICE's, oil demand in Europe peaked a decade ago and 5 years ago in US, a trend that is accelerating. Same thing just starting to occur in China. Add in the corona virus, and things look even more bleak for oil, if not LNG.

Do you have any documentation for that?

And while this COVID-19 may well produce a pandemic that decimates smokers and older people, I doubt it rampages before we get some sort of vaccine. China will be back . . . some day.

[Wombat + 1,028]

34 minutes ago, Gerry Maddoux said:

Do you have any documentation for that?

And while this COVID-19 may well produce a pandemic that decimates smokers and older people, I doubt it rampages before we get some sort of vaccine. China will be back . . . some day.

I have plenty of documentation, but can never post it. Most of it from Bloomberg but can't even cut and paste articles from this site either!

[0R0 + 6,251]

8 hours ago, Wombat said:

I am also surprised that price has not fallen further, but disagree there was previous undersupply. As Gerry said, price of oil trades on emotion (same as shares), and the thinking in oil and share markets at the moment is that virus epidemic unlikely to turn into a pandemic. That could all change this week, as South Korea now has 500 cases and Singapore not far behind. In my view, Japan should re-schedule Olympics for next year, when vaccine available to all.

Hedgeye think we are in the reflationary trade phase with all central banks going at it full blast. So whomever is not having a pandemic issue is going to be investing free money yielding negative real interest rates. If the pandemic is stopped, then there is some reason that this will push growth I believe we will see a duplication of Chinese production capacity in key parts and materials over the next few years, which will use lots of energy and other resources. So that will pick up the slack from a slow China recovery. Of course, we need the pandemic to stop. 

[0R0 + 6,251]

8 hours ago, Wombat said:

I dunno, thanks to EV's and more efficient ICE's, oil demand in Europe peaked a decade ago and 5 years ago in US, a trend that is accelerating. Same thing just starting to occur in China. Add in the corona virus, and things look even more bleak for oil, if not LNG.

US auto demand shifted recently to millennials buying their first autos as they move with their new families into suburbia. They buy trucks and SUVs with 1/3 worse gas mileage than the cars that were being bought just 5 years ago. I think consumption trends in US oil have transitioned. 

If you want to see one place that will transition out of gasoline and diesel  ICEs entirely look for Israel to do it first. Pollution is rampant and respiratory diseases are as common as they are in China despite there not being a thick smog everywhere as there is in China. . 

[Wombat + 1,028]

On 2/21/2020 at 7:20 AM, 0R0 said:

Yes, in a few years it will have accumulated to something substantial, but it is still borderline economically. 

Eventually we will have nearly free energy "most of the time" in many key areas where people DON'T live for the most part. 

The floating anchored tall wind turbine farms in the strong wind corridors will eventually make transmission to population centers in the North cheap enough. But that approach is new and we don't yet know how well the construct would fare under the bending stress. It is after all an anchored sail boat on air bags. 

The strong solar areas are obviously where there is little precipitation Hence no water and no food, and thus very few people live there. So the second thing you need beyond storage networks is long transmission lines, e.g. S. Italy via the Alps to Switzerland Austria Czech etc., perhaps S. Germany. Perhaps to go as far as the Saharan portions of Algeria and Libya.

If people are actually planning to do all this transmission, I would be a very happy copper miner. 

 

Seems to work for oil rigs?

[0R0 + 6,251]

10 hours ago, Wombat said:

Seems to work for oil rigs?the st

Oil rigs don't have to cover square miles and 100s of masts with turbine blades on them, i.e. sails. The structures have to be built cheaply.

[Wombat + 1,028]

38 minutes ago, 0R0 said:

Oil rigs don't have to cover square miles and 100s of masts with turbine blades on them, i.e. sails. The structures have to be built cheaply.

I dunno, oil rigs very large and have even bigger surface area (sails) than a wind turbine.

[Wombat + 1,028]

Just now, Wombat said:

I dunno, oil rigs very large and have even bigger surface area (sails) than a wind turbine.

Oil rigs much heavier too, hence much more expensive to float?

[Wombat + 1,028]

On 2/17/2020 at 7:29 AM, 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 couldn't disagree more. Plenty Australian cars were fitted with NG in 80's and 90's when it was cheap compared to petrol, but oil cheap as well now so nobody uses NG anymore. I don't think it will take off in US, let alone Europe. EV's will be by far cheapest option in 2-3 years and that is what ppl waiting for.

[Wombat + 1,028]

2 minutes ago, Wombat said:

I couldn't disagree more. Plenty Australian cars were fitted with NG in 80's and 90's when it was cheap compared to petrol, but oil cheap as well now so nobody uses NG anymore. I don't think it will take off in US, let alone Europe. EV's will be by far cheapest option in 2-3 years and that is what ppl waiting for.

I do not see major reduction in oil for shipping, rail and diesel trucks. Petrochem a different story

[NickW + 2,714]

52 minutes ago, 0R0 said:

Oil rigs don't have to cover square miles and 100s of masts with turbine blades on them, i.e. sails. The structures have to be built cheaply.

The land they cover can still be used. 

Wind farms take up very little of the land area they cover and can still be used for crops / grazing

Solar panels if sited higher can be grazed around or in high temp climates used to shade crops from the midday sun. 

[0R0 + 6,251]

2 hours ago, NickW said:

The land they cover can still be used. 

Wind farms take up very little of the land area they cover and can still be used for crops / grazing

Solar panels if sited higher can be grazed around or in high temp climates used to shade crops from the midday sun. 

The best wind corridors are offshore at continental edges, generally over waters that are too deep to have the masts built from the sea floor up. That is why we were talking about the strength of the floating structure that holds up the masts. It is an "innovation" to allow actually tapping the steady persistent strong wind corridors offshore.