Economy 52,842 Posted March 12, 2020 Author Share Posted March 12, 2020 1 hour ago, xoxo Craig said: Does that mean it will get cheaper? It is cheaper. It's at $30 something a barrel now Unless u mean will it go even lower? I would say it can for a while if reduced demand persists and OPEC and Russia follow thru their threats to increase production without restraint But US Shale will fall significantly after some months and that alone will help rebalance the market I think I do not believe prices below $40/barrel can last more than 6-9 months at the most unless there is a major downturn (which is possible) that will severely cripple demand Link to post Share on other sites More sharing options...
Luc 4,776 Posted March 12, 2020 Share Posted March 12, 2020 10 minutes ago, Economy said: I mean we're still using it. Ppl are still driving outside shutdown areas and oil based products still being made The #1 biggest drop in demand would be jet fuel followed by just the general slow down But this isn't just demand based... With the Russia-OPEC now deal broken investors are pricing in anticipated increased supply in the market A drop in demand at the same time production surges is terrible for the oil market God help the US Shale industry now. They are even more vulnerable than Canadian Oil companies because of their higher debt load (because of rapid uncontrolled expansion) and their short cycle oil projects which cannot smooth out short term fluctuations Italy just entered complete lockdown, nobody is driving there anymore. Nobody is painting houses, nobody is flying, nobody is taking a bus. People are probably consuming more plastic, but that can never compensate for how little people are buying gasoline. It's only a matter of time before the rest of Western Europe follows in this quarantine measure, and then probably the US. China will still probably continue to use oil because they managed to contain the virus by now, and they are a large market. In the Netherlands we didn't even start with any containment measures besides 'if you feel sick, don't go to work if you live in a certain province', yet overall traffic jams were only a third of what they are on a usual Wednesday. And if I remember correctly, oil has been HIGHLY responsive to small changes in demand in the past. For example, news in the past that China's growth was going to be closer to 6% than to 7% would push down the oil price significantly. I just don't see how a higher price for oil would be justified just taking a look at the demand and supply we can expect in the future. By May, oil-producing companies will want to get rid of their big storage of oil, while Europe and the US are only slowly starting to work again. Add to that that Saudi Arabia and Russia will still be competing over who has the bigger chunk of the pie of oil exports, and it's not as likely that production would be slowed down as quickly as before. But maybe next year it could recover. But that will depend on how much producers shale back production and on whether we're getting a second season of coronavirus. Link to post Share on other sites More sharing options...
Economy 52,842 Posted March 12, 2020 Author Share Posted March 12, 2020 6 minutes ago, Luc said: Italy just entered complete lockdown, nobody is driving there anymore. Nobody is painting houses, nobody is flying, nobody is taking a bus. People are probably consuming more plastic, but that can never compensate for how little people are buying gasoline. It's only a matter of time before the rest of Western Europe follows in this quarantine measure, and then probably the US. China will still probably continue to use oil because they managed to contain the virus by now, and they are a large market. In the Netherlands we didn't even start with any containment measures besides 'if you feel sick, don't go to work if you live in a certain province', yet overall traffic jams were only a third of what they are on a usual Wednesday. And if I remember correctly, oil has been HIGHLY responsive to small changes in demand in the past. For example, news in the past that China's growth was going to be closer to 6% than to 7% would push down the oil price significantly. I just don't see how a higher price for oil would be justified just taking a look at the demand and supply we can expect in the future. By May, oil-producing companies will want to get rid of their big storage of oil, while Europe and the US are only slowly starting to work again. Add to that that Saudi Arabia and Russia will still be competing over who has the bigger chunk of the pie of oil exports, and it's not as likely that production would be slowed down as quickly as before. But maybe next year it could recover. But that will depend on how much producers shale back production and on whether we're getting a second season of coronavirus. I know. That's why I said excluding areas in lockdown When I said reduced demand, I'm talking about places and countries in lock down not just reduced airflight I'm saying u can't say no one is using it... The world will still use a lot of oil and any place that stays in a lockdown is only for a limited number of time Unless we get a very major world recession (which can happen of course)... I don't see oil staying below $40/barrel for more than 6-9 months Only if the economy slowed so much that demand fell more than production pulled back which again could happen if we have another downturn as severe as 2008 Shale will definitely take a very severe fall second half of 2020 in production and that will be a major factor Link to post Share on other sites More sharing options...
Jason Gilson 35 Posted March 12, 2020 Share Posted March 12, 2020 1.66 is the lowest here Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted March 12, 2020 Share Posted March 12, 2020 1 hour ago, Chromatic Lover said: The Saudis did this in 2014 to push US shale producers out of business. They failed miserably given that the US was able to adopt and produce the shale for cheaper. While the flooding of oil in the markets is due to Russia not meeting the Saudis demands, the US will benefit in the long term as our shale producers will now find a way to produce it for even cheaper. Hate capitalism all you want, but if it's one of the many things the Americans are good at is making money. The benefit though is that gas prices should become cheaper for consumers. However, renewables and other alternatives would suffer as it won't be able to compete with cheap fossil fuels if prices stay too low for too long. That's a balancing problem … the gov. needs to step in an cut out tax loopoles , credits, ect. for oil companies... They profit like no other when the price spikes... but in the down market the whine for help... Doing this will help green energy alternatives become price competitive and a better way to create energy ... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 52,842 Posted March 12, 2020 Author Share Posted March 12, 2020 3 hours ago, Woolfsmck said: That's a balancing problem … the gov. needs to step in an cut out tax loopoles , credits, ect. for oil companies... They profit like no other when the price spikes... but in the down market the whine for help... Doing this will help green energy alternatives become price competitive and a better way to create energy ... The weird thing is, at least in shale, profit is still an illusion for most of those companies and one of the reasons investors started loosing patience Shale is proving to be more costly than advertised and a lot of the claims that money could be made under $40/barrel was not only exclusively in the best most productive acreage... But it was also operating costs which excluded full term costs such as land purchases for example A few companies have managed to make money but most haven't... The irony that such an explosive and game changing industry for world energy market and US economy still hasn't turned a profit and continues to be reliant on credit to grow... Link to post Share on other sites More sharing options...
Evan Peters 10,776 Posted March 12, 2020 Share Posted March 12, 2020 Ugh this honestly made me cum thinking about not paying 3$ for gas emma roberts is an abuser Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted March 12, 2020 Share Posted March 12, 2020 10 hours ago, Economy said: The weird thing is, at least in shale, profit is still an illusion for most of those companies and one of the reasons investors started loosing patience Shale is proving to be more costly than advertised and a lot of the claims that money could be made under $40/barrel was not only exclusively in the best most productive acreage... But it was also operating costs which excluded full term costs such as land purchases for example A few companies have managed to make money but most haven't... The irony that such an explosive and game changing industry for world energy market and US economy still hasn't turned a profit and continues to be reliant on credit to grow... This is the 'bubble' problem … same with the housing collapse … the bubble started when the credit restrictions and gov. guarantee (fair housing act Clinton) saw a spike in demand since there was a huge increase in 'qualified' buyers.. Oil shale will not fold because of $32 a barrel oil … but the companies who leveraged too much to build too fast will get hammered … leaving the established huge oil giants in even gianter position when there is a turn … Russia isn't dependent on oil and is using their stake in the global market to 'attempt' to grab a larger market share … They can and will hurt the Saudi's more since their economy is largely petroleum driven... and the smaller producers will see a huge downturn … The US is too big to be affected critically, but it will definitely hurt ... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
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