Topic: The drying oil - page 5. (Read 873 times)
Unfortunately, the bad situation of the world markets is reflected in oil prices today. In the evening, I do not remember exactly how many years later this happened, but oil prices have declined very badly, and prices of oil futures have reached negative levels. Unfortunately, I think it is a nightmare night for the oil investor or oil company investor nowadays. I think it is important to remember that this crisis has also been likely to infect the stock markets or cryptocurrency markets.
The pandemic might have a big impact on it, with people staying at home, factories and productions are temporarily closed down, imports and exports restricted in other countries there might have been a lot of supplies of oil than the demand for it. This pandemic really had affected almost all the sectors of the economy. I think this will only be temporary, and once sone companies and lockdown had been lifted everything will recover slowly.
Right, this is the only reason I think of, factories are closed because of the lock-down so definitely no one is needing oil as this point. That's why the price suddenly plunges not just into zero but in the negative zone. Meaning the market is really flooded with oil but there are no takers, not demand. Oi Refineries are not willing to gamble, air travel are banned across the globe, and even individuals are not using their cars anymore, obviously because of the lock down. So the pandemic has a indirect negative effect to the oil industry.
The possibility of this pandemic factor is because mass production in the industry has stalled due to the long-lasting lockdown in some areas, of course this will be of little demand because according to people now rarely go out to drive cars so that the supply of oil is large and uncontrolled due to demand according to covid-19.
I do not think whether this is another factor that is clearly linked to the pandemic so that the crisis is continuing and who knows when it will be finished, but I heard the news that in the east by selling oil cheaply because of continued turbulent economic inflation.
I do not think whether this is another factor that is clearly linked to the pandemic so that the crisis is continuing and who knows when it will be finished, but I heard the news that in the east by selling oil cheaply because of continued turbulent economic inflation.
Well, the good thing about this whole thing is that the earth will rest a bit from the ruthless activities of mankind on her.
We should be moving to the good/safe sustainable alternatives for our own good and the good of earth.
Before you invent something, consider the disadvantage... Its good should far outweigh the bad or there should not be bad at all.
There should be serious consequences for people who are aware of the implications of these technologies/industries but insist on creating them, and eventually destroying the environment.
I sometimes feel very guilty knowing that i in some ways, depend on this things that are slowly destroy our world. This is one of the reasons I am moving to a clean, good, safe, sustainable living.
Hopefully it doesn't become business as usual for this kind of industry.
We should be moving to the good/safe sustainable alternatives for our own good and the good of earth.
Before you invent something, consider the disadvantage... Its good should far outweigh the bad or there should not be bad at all.
There should be serious consequences for people who are aware of the implications of these technologies/industries but insist on creating them, and eventually destroying the environment.
I sometimes feel very guilty knowing that i in some ways, depend on this things that are slowly destroy our world. This is one of the reasons I am moving to a clean, good, safe, sustainable living.
Hopefully it doesn't become business as usual for this kind of industry.
While the above factors you highlighted are the cause of the decline in oil price. The household is now the only consumer of the oil. This is very minute in the demand for the global oil. Obviously, the demand for oil is lower than the supply of oil.
But, will the price increase as OPEC has reduced the oil production volume?
But, will the price increase as OPEC has reduced the oil production volume?
No one is expecting for this to happen, but it is really true that this event is the first time where crude oil experiences crash in price that reaches 0. It is not only the household who uses oil, there are factories that needs oil just to operate and produce more products that we are needed during this quarantine. Food manufacturers and etc., are using oil so that their machines will work and the production of their products or items is continuously operating. Not all businesses are closed because of the quarantine, their are incorporation that utilizes oil so that they can grant our necessities to produce their product. Transportation is still active in using oil but this quarantine makes it minimal compared to the normal days where virus is not yet existing.
The way to stop this price drop is to decrease the production.
OPEC usually does that and the price is going up again. I wonder why they still haven't taken such measures. In the end they are going to suffer from a huge inflation.
OPEC usually does that and the price is going up again. I wonder why they still haven't taken such measures. In the end they are going to suffer from a huge inflation.
The pandemic might have a big impact on it, with people staying at home, factories and productions are temporarily closed down, imports and exports restricted in other countries there might have been a lot of supplies of oil than the demand for it. This pandemic really had affected almost all the sectors of the economy. I think this will only be temporary, and once sone companies and lockdown had been lifted everything will recover slowly.
There is simply too much OIL.
And too many non-OPEC producers (USA and Russia) are flooding the market with OIL.
OPEC is non anymore the powerhouse it used to be.
And also it's market share is a fraction of what it used to be years ago. Now the USA alone have a production roughly at 50% of OPEC volumes.
A few production cuts will be enacted from May 1st. Let's see how it plans out.
Regarding the negative prices the explanation is quite simple. And very much of a short term reasons.
OF course COVID-19 can be a perfect explanation for the "2020 leg" of the long trend graph you posted above.
And too many non-OPEC producers (USA and Russia) are flooding the market with OIL.
OPEC is non anymore the powerhouse it used to be.
And also it's market share is a fraction of what it used to be years ago. Now the USA alone have a production roughly at 50% of OPEC volumes.
A few production cuts will be enacted from May 1st. Let's see how it plans out.
Regarding the negative prices the explanation is quite simple. And very much of a short term reasons.
There are several reasons for this.
First of all, the move is due to the future of May, which will stop trading tomorrow.
From Thursday the oil will trade at the June expiration and the price will return to being more "normal" level around 22 dollars.
As mentioned all oil related products (gas, heating oil etc) are already priced on Jun expiry.
But why May contract has dropped so much?
1. The WTI has a single delivery point in Cushing (OK). All the deposits in Cushing are full, so nobody wants to "buy" oil in that location, because the cost of storage is very high.So nobody want to buy May expiry.
2. There are many "financial speculators", that is, subjects who do not want/can in any case get physical oil delivered in Cushing. This causes the fact that these subjects must necessarily close the position before the expiry of the future and therefore are forced to "sell" the future forcibly. so something like a Long Squeeze.
3. Who are those longs? Apparently Oil ETF say the biggest inflows in history during last week., both in linear and in leveraged flavours. This caused a MASSIVE long positions in front months. So this answer the above: who needed to roll their position selling May futures to buy Jun?
4. The June expiration future has an greater open interest and much larger volumes, so this one is more difficult to move with "few volumes" and in fact has fallen much less.
First of all, the move is due to the future of May, which will stop trading tomorrow.
From Thursday the oil will trade at the June expiration and the price will return to being more "normal" level around 22 dollars.
As mentioned all oil related products (gas, heating oil etc) are already priced on Jun expiry.
But why May contract has dropped so much?
1. The WTI has a single delivery point in Cushing (OK). All the deposits in Cushing are full, so nobody wants to "buy" oil in that location, because the cost of storage is very high.So nobody want to buy May expiry.
2. There are many "financial speculators", that is, subjects who do not want/can in any case get physical oil delivered in Cushing. This causes the fact that these subjects must necessarily close the position before the expiry of the future and therefore are forced to "sell" the future forcibly. so something like a Long Squeeze.
3. Who are those longs? Apparently Oil ETF say the biggest inflows in history during last week., both in linear and in leveraged flavours. This caused a MASSIVE long positions in front months. So this answer the above: who needed to roll their position selling May futures to buy Jun?
4. The June expiration future has an greater open interest and much larger volumes, so this one is more difficult to move with "few volumes" and in fact has fallen much less.
OF course COVID-19 can be a perfect explanation for the "2020 leg" of the long trend graph you posted above.
While the above factors you highlighted are the cause of the decline in oil price. The household is now the only consumer of the oil. This is very minute in the demand for the global oil. Obviously, the demand for oil is lower than the supply of oil.
But, will the price increase as OPEC has reduced the oil production volume?
But, will the price increase as OPEC has reduced the oil production volume?
Okay we get it, less cars, less vehicles traveling so the oil is not that what we really need right now
But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil
Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol
But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil
Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol
in an indirect way, they are. the economy in high consumption nations is experiencing deflation---no one is spending money. that means demand for import goods is plunging. the pandemic therefore has world trade screeching to a halt. so is air travel, which is down between 90-100% amidst all the travel restrictions.
with consumers refusing to spend, and scant world trade and air travel, who wants to pay to store tankers full of oil? nobody needs it anymore.
negative prices on may delivery means contract holders are being paid handsomely just to take delivery on oil. that's how bad things have gotten. this has never happened before.
The price of oil barrel is determined according to many factors, not only by ask and demand like other marchandises. It has been always that volatile because of it's unstable condition, like bitcoin price.
Let me tell you that there is still asks to buy oil from classic providers, even there is no cars and no vhecules, but as you said, other industries and machines use it. Even the price crashed, some countries are actually living in an oil crisis. The shippement of oil becomes the most difficult part in the oil marketplace.
Let me tell you that there is still asks to buy oil from classic providers, even there is no cars and no vhecules, but as you said, other industries and machines use it. Even the price crashed, some countries are actually living in an oil crisis. The shippement of oil becomes the most difficult part in the oil marketplace.
Okay we get it, less cars, less vehicles traveling so the oil is not that what we really need right now
But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil
Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol
as of now XRP is worth more than a barrel of oil. Smack it to the face of those people who's shouting that cryptocurrency is soooo VOLATILE
But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil
Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol
as of now XRP is worth more than a barrel of oil. Smack it to the face of those people who's shouting that cryptocurrency is soooo VOLATILE
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