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Negative Crude

Ohiosam

Ohiosam

*Supporting Member*
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Mahoning Co.
This morning I heard crude was $12. I thought "well it can't go much lower". Shows what I know, it's -$37. I can't say I know what that exactly what it means. I think it's a blood bath for the industry. Lot's of regular people that work in the industry will be hurt. Both pipe mills here are closed, maybe permanently. I wasn't sure before that Covid would lead to a depression, now it's hard to imagine it won't.
 
This is Depression not recession. This means they pay to sell their oil for $37 a barrel! Only the bigs survive this. A lot of your good paying jobs are gone because of this. It’s great for some of the economy with cheaper pump prices but will devastate those employed by oil. Future employment for many is in Dire Straits!
 
Most of my natural gas drilling in the Marcellus play is shutting down. I've been home since week #2 by choice but will have a couple high profile pads to finish up so I may have a couple of 2 week hitch's to work through...
 
We just had timber cut for a pipeline ROW that is supposed to be done by 11/1. It will absolutely suck if it stays the mess that it is in now.


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Freaking nuts. I am sure a good portion of it is due to COVID but I thought I read a few weeks ago that it was largely due to a pissing match between I believe the Saudis and Russia over the European market. The Russians wanted the European market and the Saudi's didn't want that to happen. So the Saudis flooded the market with oil while also lowering their prices. Basically doing the same thing Opec did to us to crash or oil and gas boom. Make it so cheap that we can't stay in business.
 
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Jackalope said:
Freaking nuts. I am sure a good portion of it is due to COVID but I thought I read a few weeks ago that it was largely due to a pissing match between I believe the Saudis and Russia over the European market. The Russians wanted the European market and the Saudi's didn't want that to happen. So the Saudis flooded the market with oil while also lowering their prices. Basically doing the same thing Opec did to us to crash or oil and gas boom. Make it so cheap that we can't stay in business.
Click to expand...
That’s exactly what happened, before this whole Coronavirus started too affect things...
 
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Ah. Ok. So in essence a bunch of speculative traders got stuck holding the bag. They bought a bunch of oil contracts hoping to sell them before the end of the day. They weren't able to so they would've had to take delivery per the contract. The problem is they don't have storage space reserved or really anywhere to store it because storage reserves are about full. So they paid other people to take them.


https://www.zerohedge.com/markets/here-full-explanation-behind-oils-unprecedented-negative-price
 
Jackalope said:
Freaking nuts. I am sure a good portion of it is due to COVID but I thought I read a few weeks ago that it was largely due to a pissing match between I believe the Saudis and Russia over the European market. The Russians wanted the European market and the Saudi's didn't want that to happen. So the Saudis flooded the market with oil while also lowering their prices. Basically doing the same thing Opec did to us to crash or oil and gas boom. Make it so cheap that we can't stay in business.
Click to expand...

The price was low before because of the Saudis dumping oil on the market. Normally when prices go down it sparks an increase in demand. But covid killed all demand. Planes and cars are parked, no one is going anyplace they don’t have to go. It’s a prefect storm.

Yes speculators (people not in a business that depends on oil) are taking a hit and I don’t have much sympathy for them. But many are businesses that use the various commodity trades to hedge against price fluctuations. Say you own a refinery, you contracted last fall for April delivery. Now your tanks are full because no one is buying your gas. You‘ve contracted for this crude and have no place to put it. Neither does anyone else. Can’t just dump it on the ground like milk.
 
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I watched the last hour before the closing bell yesterday, in complete awe. It was the first time since 2001 when I watched the 2nd plane fly into the 2nd tower in NYC that I knew/felt history was making and I was "present" in the moment.

Here is the bottom that I caught as the ticker updates continued....-$38.08 @ 3:51pm on Monday 4/20/2020.

FB_IMG_1587466433576.jpg
 
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As much as we as consumers should like this, this is bad, very very bad. This is the "lifeblood" of the world. Yes there were some technical reasons for the dip - contracts, timing, etc., but the world has never seen this type of demand cliff, no storage, and we are only looking at cutting 10-11M bpd.....not enough. I have a bad feeling the next few weeks are going to be interesting as OPEC disbands and countries take off the gloves to try and stay in the black.
 
I agree Adam and you are 110% correct about this being a world problem. This is gonna get interesting for sure. Some countries will make it, I just hope China doesn’t buy out the ones that can’t.
 
5Cent said:
I watched the last hour before the closing bell yesterday, in complete awe. It was the first time since 2001 when I watched the 2nd plane fly into the 2nd tower in NYC that I knew/felt history was making and I was "present" in the moment.

Here is the bottom that I caught as the ticker updates continued....-$38.08 @ 3:51pm on Monday 4/20/2020.

View attachment 100159
Click to expand...
I did the same thing yesterday and I saw -$40, I said 2020 is the year of more first's than most Americans will ever see.
 
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I talked to my dad today, who has made his paycheck on oil's back since 1978 and he said it was the strangest morning of work in his career. Two weeks ago, they cancelled all drilling until 2023. They're in a decent position compared to others, but he expects to be encouraged to retire now. My hope is they'll buy him out and he can finally enjoy life a little.
 
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bowhunter1023 said:
I talked to my dad today, who has made his paycheck on oil's back since 1978 and he said it was the strangest morning of work in his career. Two weeks ago, they cancelled all drilling until 2023. They're in a decent position compared to others, but he expects to be encouraged to retire now. My hope is they'll buy him out and he can finally enjoy life a little.
Click to expand...

I would smile knowing he made it thru till the end and was taken care of.
 
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With yesterday’s historic crash in the price of West Texas Intermediate (WTI) oil comes a big boost in the stock price for a number of Marcellus/Utica drillers. As we’ve outlined multiple times, but will repeat here again, stock traders believe that with the crash in oil prices and U.S. shale oil drillers laying down rigs faster than we can count, the high volume of “associated gas” coming from the oilfields will vastly decrease. That means less supply in the market. With less supply and the same (or increasing) demand comes higher prices for natgas. And higher prices for natgas means more profits and likely more new drilling for Marcellus/Utica drillers. Hence, investors are snapping up stocks for M-U drilling companies.

https://marcellusdrilling.com/2020/...OQnhKaZMhuHAwQxY9AJju-zV8tsWa2IofBqJt4E42PC94
 
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