Topic: Collapse of crude oil prices - page 4. (Read 1649 times)

Definitely it will go up because oil is essential for every country to start their daily work routine but the oil producing companies produced too much of barrels when there is no demand such causes problems with storing of it and which resulted into negative prices on international market.

I am not sure how to react to that other than say that nobody, whether they’re 120 years old or whether they’re 20 months old, has ever seen an oil price lower than this.
The run was definitely characteristic of a historic tolerate marketplace for oil, which has been sunk by the breakdown of claim as a findings of coronavirus outburst and a short-lived but menacing assess war between Saudi Arabia and Russia that new level new crude to an oversupplied market.

It will recover because the fall is due to market manipulation by oil cartels. The fundamentals are still strong, just like the fundamentals of Bitcoin.
You have to realize that oil is a finite resource and the demand for it is contunuous. We all have cars, we all ride busses, and so on. Cruise and cargo shisp need it, yachts of millionaires are fueled by it. It's not going to keep being sold for cheap.
Also, all artificial influence on the market from governments and cartels can give you a false impression that there's something wrong with the commodity itself.

Yes and no, commodity markets are indeed attractive to speculators because they basically bet on oil prices in the future. Speculators can win and get profits, or vice versa, lose and suffer losses. But many companies also want to ensure that their activities are not interrupted in the future, and need to guarantee the supply of fuel for the continuity of production. So they need futures transactions to guarantee the production process, not to speculate.

This practice does not only occur with crude oil commodities, but also with many other commodities such as corn, wheat, soybeans, and coffee. For companies, futures make it easy to calculate and plan costs for the next few months.

What we are seeing right now is not seen before and I think it will not happen again too. All the oil companies are expanded a lot all these years for meeting the demand and they didn't know situation like this happens as the demand has fallen sharply and companies running out of inventory to store the producing oil and OPEC has decided to cut the production for the month of May and June by 10M barrels per day. All these fall in price and reduced barrels sales gonna hurt the companies a lot which might trigger the economic crisis.

It will not last forever, but while it lasts there will be a huge problem. I think that we will see the consequences after oil we will see the stock market going down entirely! I think we are witnessing a big oil war, and that war will spread. This is not over, we will see a lot more about oil in the upcoming months, and the culmination is waiting for us, in some moments I think that big problems are yet to come, so people don't relax yet!

This has been a huge challenge this year. But I know for sure that it’s not going to continue forever and the price of Bitcoin will not fall forever, it is just a matter of time and all these things will pass and things will get better and go back to how they used to be before now.

Oil seems to be what’s being mostly affected in this situation right now, it kept crashing and reached to the extent of what we least expected would happen. The price of reduced to a negative $37, and some people have been asking whether this is going to be having any effect on the price of bitcoin, but I don’t really believe that one.

market manipulation will always there in stock or commodity exchanges, speculator will always do bad thing to earn money.

oil demand from manufacture industry drop alot since personal consumption decrease alot when people didnt get money from job.

This is the proof that we, the final consumers have the power to control the price of oil, no demand no money. Unfortunately this is for a short period of time.

The reason for the collapse is just no demand. Demand in simply term is request for a commodity and when it does not happen, no supply or delivery. That means at the time now, only production can go on and no utility or end use so price will go down automatically.

It is still not recovered from the initial big fall, I know it is not as low as couple days ago but this was over 60 dollars when the year started and now it is around 10 dollars, that is still a huge drop that needs to be recovered before we can talk about good days.

Surely there must be a lot of investors trying to find as much as possible but the crude oil is something you have to store and the storage are full right now, so all that can be bought is already bought, I don't know what else they can do about it if there is absolutely no place to store the ones you buy. The production has to get lower and lower in order to meet the demand, if they continue to produce at this pace while there is no place to store them, price can't recover at all and will even continue to fall.

Looks like the worst time is yet to come. Crisis is going to be worse and worse

Two things first:

Good, at least now we have a common view on this.


That fact that pissed me off about Hin Leon is that you dismissed the fraud happening there as a catalyst but at the same time you ignored the fact that companies that don't have the same problems will never face the same issues and from the same article I gave you an example, the guys that knew how to shield themselves have done so.
From the moment you said that the fraud was irrelevant in the bankruptcy it's getting a little hard to ignore and get over it. No matter how many good arguments you bring to the table, that thing will still be there, like a tiny red dot on a cashmere sweater.  


"Those factors will almost surely",  "may not survive"  "gas producers could file for" "could potentially spike to 30%"
Assumptions, assumptions, and again assumptions.

I think I heard those somewhere else long (or maybe not that long) time ago.
Yeah,a broken clock is also right twice a day, but good luck trying to make it point to 2016 again  


Oil at 20$ crumbled the URSS, oil again at 20$ again made Russia default on its debt twice in a decade.
There are a lot of state-owned producers who are in a far worse situation than the shale producers because, in the case of private companies they can be helped by the state, in case of Rosfnet or Aramco, they're the ones that need to help the state , when they fall the country falls. The US has a lot of ways to help them, the others have none. One serious move from Trump against imports or printing a few more mickey mouse checks and the tables would be reversed for good and forever.


Oh but it's perfect, why did the shale start? Because there was a lot of money to be made, just like mining bitcoins, miners flocked to it, and then we had smaller revenue per $ invested and the ones with GPU and FPGA dropped one after one, same for every generation of Asics. If mining farms shut down the same bitcoins would be minted and the reward will be split between a lot less, just how the ones that survive the oil crash will be able to sell it at a higher price than now. And do you think mining is still a home basement business? We have around 3 billion worth of mining equipment right now in place, it's no longer child's play.

It's the same, if BTCPEC decides everyone would cut their hashrate by 10% they will have the same revenue with less power consumption.
When bitcoin dropped to ~4k for a week 15% of the hash rate was gone and even now it's not back to the same levels as of March!
How is that different? It's not  
People with s9 shut them down, people with solar kept them on and still went mining, even happier than before.

Okay, well that's the topic at hand, so......


You haven't refuted anything. You've pulled some random numbers out of your ass and done some irrelevant hand waving that has nothing to do with the topic.

Nothing I'm saying hinges on anything ZH has ever said. I didn't mention a single piece of data from ZH. Let it go.

And what conclusion was that anyway? That the threat of bankruptcies and defaults on a large chunk of the energy bond market poses a systemic risk to banks, who may soon be reeling from losses in commercial and consumer loans? What is unreasonable about that?


Actually, I pointed out that the industry is highly leveraged and highly unprofitable and provided a multitude of data to that effect. I used Hin Leong as a single example of how the collapse of oil prices can catalyze the demise of struggling oil companies. I used Whiting Petroleum's recent bankruptcy as another, then pointed to the ~100 industry bankruptcies expected over the next year to emphasize the sector-wide risk.

I'm getting a little tired of you ignoring 99% of what I write and then completely misrepresenting me. Try responding to my last post next time, instead of repeating nonsense arguments about the OP which I've already responded to.


First, you are confusing two different articles. That company was presumably not included in the ~100 expected bankruptcies.
https://www.cnn.com/2020/04/02/business/oil-crash-bankruptcies-whiting/index.html
https://www.nytimes.com/2020/03/20/business/energy-environment/coronavirus-oil-companies-debt.html

Second, I dismissed it as being indicative of the entire sector for good reason: that company refinanced its debt months ago. No other companies in the industry can refinance debt now because no banks are funding energy bonds anymore. On top of that, their 5-year projected cushion is based on oil holding above $30. Oil is trading at $10 now, meaning they could go broke years earlier than projected.

Third, I never said every company in the industry would go bankrupt. Even then, Parsley was supposed to be an example of one of the well-capitalized oil companies. At $10 a barrel they are broke in 1.5 years based on their own projection. Will oil still be trading at $10 by then? Probably not, but this has to make you wonder about the companies that are struggling with principals due in 2020 or 2021. And while I don't expect this, if the global economy goes into a long term depression (like the 1930s) then the entire US shale industry will probably go under. In another Great Depression type context, who can compete with Saudi Arabia at $2.80 a barrel? Nobody in the US.


I have spoken repeatedly in terms of risk and possibilities. The emphasis on certainty is just one of your inventions:



Another terrible analogy. Oil does not have a difficulty adjustment algorithm. Shale production is extremely capital intensive no matter what. $50-55 a barrel is the break-even cost of production in the US shale patch, period. https://www.cnbc.com/2020/04/02/coronavirus-whiting-petroleum-is-just-the-first-domino-to-fall-in-us-shale-wipeout-strategist-says.html


Nobody cares if oil companies go belly up. The issue is how leveraged the sector is and what happens if a big chunk of the sector does go belly up, in terms of banking liquidity, and given the expected liquidity crunch in Q2.

Something to keep in mind as we rationalize why Trump is now trying to get a direct bailout for the oil industry, even though it would be incredibly unpopular with voters:
https://www.reuters.com/article/us-global-oil-trump/trump-calls-for-us-oil-industry-bailout-as-prices-plunge-idUSKCN2231Z6


Who is talking about the end of the world?

All I'm talking about is the possibility of a banking crisis like 2008.

This is the first time I am haring that prices have slip in negative and people are even not ready to buy because the storage is much more expensive than even buying this contract. So hardly demand for the future contracts in buying side as well. This is happening because of the several countries under lock down and thus there is not much consumption happening and as a result the storage capacity is almost full of US now who is the biggest exporter of all.

It seems a bit weird to me that every barrel of oil gets sold almost 30 times. The number of trades by people who never even come close to any physical oil is rediculous.

This also makes me wonder what price the oil itself is sold for. When the "speculators" sold a barrel for $-37, as far as I understand the oil producing company still gets a positive price for it's oil.

Headlines with the most probability to trend starting 4th quarter of 2020, and for the whole year of 2021, "Oil spills". The over-supply of Crude Oil must go. Hahaha.

The main problem of oil is that the market does not offer physical oil directly, but simply papers that are backed by it. Because of this, a collapse occurred, because speculators just wanted to make money, but they had to sell even in the red, because if they didn’t sell, they would have to take physical oil.

You can pause and stop oil rigs but you cant pause and stop shale oil fracking without huge cost of restarting it again. Also a lot of USA refineries are on Mexican gulf in Huston and New Orleans. You cant transport oil there from North of USA. Those Refineries still use Saudi Oil. And plenty of tankers is on the way there from Middle east.

This is the one that even scares me of all the business falls since this coronavirus epidemic started. Oil is a vital part of most economies of the world. However the Bret Oil is not that badly affected as the price has remained above $20 per barrel and not like the American oil which is now in the negative.