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Oil's down, I see.

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Riejufixing
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PostPosted: 20:10 - 20 Apr 2020    Post subject: Oil's down, I see. Reply with quote
Producers in the USA seem to be paying people to take it away. The current glut could be shades of things to come.
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Howling Terror
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PostPosted: 21:06 - 20 Apr 2020    Post subject: Reply with quote
Donny Fart has been crowing about the deal he did i.e Hey arabs and Russians...let's reduce production a tad and start storing it.

What is it now...about a third of the pre-covid value. Blimey.
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Polarbear
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PostPosted: 22:50 - 20 Apr 2020    Post subject: Reply with quote
Tanker charter rates are going through the roof because they are being used as floating storage.

They were about $75000 a day, now it;s nearing $150000 a day.

They'll need it to pay the long tour bonuses for the seafarers which I hope they have as getting reliefs to and from ships is nigh on impossible now.
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Ste
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PostPosted: 23:16 - 20 Apr 2020    Post subject: Reply with quote
It's the price of West Texas Intermediate oil that's dropped below zero rather than Brent Crude Oil.

Transportation of WTI oil is produced in landlocked areas hundreds of miles from storage tankers whereas Brent Crude is produced very near to the sea so transportation costs are a lot lower for Brent Crude.
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I see coloured ink boy is reading last weeks news again and has just learnt how supply and demand affects oil prices.

Eh?

WTI oil prices went negative today and they weren't negative last week.
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mentalboy
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PostPosted: 00:59 - 21 Apr 2020    Post subject: Reply with quote
Ste wrote:
It's the price of West Texas Intermediate oil that's dropped below zero rather than Brent Crude Oil.

Transportation of WTI oil is produced in landlocked areas hundreds of miles from storage tankers whereas Brent Crude is produced very near to the sea so transportation costs are a lot lower for Brent Crude.
Quote:
I see coloured ink boy is reading last weeks news again and has just learnt how supply and demand affects oil prices.

Eh?

WTI oil prices went negative today and they weren't negative last week.


$-40.32 was today's low, closed at $-14.72, they haven't started to pay their customers to take it away yet...but it won't be long before they do.

Makes Brent crude seem positively bouyant at today's close of $31.87!!

EDIT: I seem to recall stats from a few years ago that small producers, usually farmers with a nodding donkey or two in their fields, are usually forced out of the market economically and close down their operations when prices sit at $16 a barrel.
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Im-a-Ridah
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PostPosted: 01:17 - 21 Apr 2020    Post subject: Reply with quote
Polarbear wrote:
Tanker charter rates are going through the roof because they are being used as floating storage.

They were about $75000 a day, now it;s nearing $150000 a day.

They'll need it to pay the long tour bonuses for the seafarers which I hope they have as getting reliefs to and from ships is nigh on impossible now.


If oil is cheap it's a great time to invade a neighbour. Tanks are very thirsty.
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Easy-X
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PostPosted: 01:43 - 21 Apr 2020    Post subject: Reply with quote
Historically this has never happened before so, for a change, we've entered a future of mystery rather than the same old humdrum stuff year in, year out.

The amusing thing is that all the apocalyptic films are about running out of water (mad max) or running out of oil. Be funny if the world (as we know it) ended because people turned their back on consumerism Thinking
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Ste
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PostPosted: 10:19 - 21 Apr 2020    Post subject: Reply with quote
Easy-X wrote:
Be funny if the world (as we know it) ended because people turned their back on consumerism Thinking

Not happening, people will always want more stuff. Laughing
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shorty
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PostPosted: 10:37 - 21 Apr 2020    Post subject: Reply with quote
Read "Walkaway" by Cory Doctorow for a fictional representation of what happens when people can turn their back on consumerism. Introduced me to the phrase "post-scarcity" which I'd never heard of before.

Shorty
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Im-a-Ridah
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PostPosted: 11:39 - 21 Apr 2020    Post subject: Reply with quote
Easy-X wrote:
Historically this has never happened before so, for a change, we've entered a future of mystery rather than the same old humdrum stuff year in, year out.

The amusing thing is that all the apocalyptic films are about running out of water (mad max) or running out of oil. Be funny if the world (as we know it) ended because people turned their back on consumerism Thinking


It was never an issue of oil running out completely, it's cheap oil running out. Most of what we pay for petrol is tax, oil itself is really cheap, even at the level of $100 a barrel. I'm all in favour of reducing our dependence on oil but for national security and energy independence reasons, not any of this eco nonsense, hence why I would support nuclear for example.
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Freddyfruitba...
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PostPosted: 12:28 - 21 Apr 2020    Post subject: Reply with quote
I'm obviously thick, but I don't understand why the price can dip below zero? Surely wherever the crude is in the supply chain why don't they just leave it where it is (starting at leaving the stuff in the ground)?

Can we expect the filling stations to be paying is to fill our bikes soon!? Confused
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chickenstrip
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PostPosted: 12:33 - 21 Apr 2020    Post subject: Reply with quote
Ste wrote:
Easy-X wrote:
Be funny if the world (as we know it) ended because people turned their back on consumerism Thinking

Not happening, people will always want more stuff. Laughing


And a fat lot of good it may do them.
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Ste
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PostPosted: 12:36 - 21 Apr 2020    Post subject: Reply with quote
Freddyfruitbat wrote:
Surely wherever the crude is in the supply chain why don't they just leave it where it is (starting at leaving the stuff in the ground)?

Storage facilities are full and production has already been cut.
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Freddyfruitba...
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PostPosted: 12:40 - 21 Apr 2020    Post subject: Reply with quote
Ste wrote:
Freddyfruitbat wrote:
Surely wherever the crude is in the supply chain why don't they just leave it where it is (starting at leaving the stuff in the ground)?

Storage facilities are full and production has already been cut.

Understood, but so what!?
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Ste
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PostPosted: 12:49 - 21 Apr 2020    Post subject: Reply with quote
As traders don't have anywhere to put the oil they want / need to get rid of their excess?
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Polarbear
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PostPosted: 13:04 - 21 Apr 2020    Post subject: Reply with quote
Freddyfruitbat wrote:
I'm obviously thick, but I don't understand why the price can dip below zero? Surely wherever the crude is in the supply chain why don't they just leave it where it is (starting at leaving the stuff in the ground)?

Can we expect the filling stations to be paying is to fill our bikes soon!? Confused


1) It can cost more to stop production and restart later than keep producing, especially in huge installations.

2) Sadly as tax is such a high percentage of fuel at the pump, it's very unlikely ever to fall below £1 a litre. It's 58p a litre tax plus 20% VAT

From the ONS - VAT is applied after fuel duty, so, for example, the pump price of a litre of petrol currently reflects the pre-tax price plus 57.95p for fuel duty plus 20 per cent VAT on the pre-tax price and a further 11.59p for VAT at 20 per cent on fuel duty.

So a litre of fuel has tax of about 69p + VAT and I bet that swill change drastically when we end lockdown. The government need tax, fuel will be taxed at £1 a litre, I reckon.
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Polarbear
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PostPosted: 16:07 - 21 Apr 2020    Post subject: Reply with quote
Ste wrote:
As traders don't have anywhere to put the oil they want / need to get rid of their excess?


This.

Basically traders buy next months/future oil, working on the principle that they will sell it for a profit before they actually have to take possession, which is something they would never normally do as they are simply commodity traders.

The ones who bought just before the collapse are now faced with having to take possession of how many millions of barrels of oil with nowhere to put it and no one to sell it to so they have to get rid of it however they can.

Personally I couldn't give a rats if they get stung. They are people who just try to manipulate prices to make money that you or I end up paying at the end product.
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Ribenapigeon
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PostPosted: 10:41 - 22 Apr 2020    Post subject: Reply with quote
Freddyfruitbat wrote:
I'm obviously thick, but I don't understand why the price can dip below zero? Surely wherever the crude is in the supply chain why don't they just leave it where it is (starting at leaving the stuff in the ground)?

Can we expect the filling stations to be paying is to fill our bikes soon!? Confused


It was an end of month acounting thing that occured in the US oil shale sector. The price went negative not because of the actual physical oil but because these companies negotiate contracts to purchase oil so that was where a company had to write up a negative value for a contract. They were actually paying the customer to remain in place as a customer. Kind of like (inb4 MPD72, but not exactly like) your broadband supplier offering you the first month of your next contract for free plus a goodie (not Tim Brooke Taylor RIP) when your current broadband contract is due to end.

The oil industry is very twisted. Saudi Arabia has a lot to answer for in this round of whackyness. There surely should come a point where bombing them makes more financial sense than selling them bombs.
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Easy-X
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PostPosted: 12:23 - 22 Apr 2020    Post subject: Reply with quote
If/when this is all over we'll discover the real effects. While demand is low all sorts of hidden [possibly more economic than engineering] systems will break and the damage won't be exposed until demand swings back up and all the stuff in storage starts getting used up. IIRC global storage capacity was already at a peak before the virus (ppl pissing about with oil prices.)

What will be really interesting is what happens to those countries that really rely on oil revenue. The Middle East won't run out of money but Venezuela and Russia would be the ones to keep an eye on.
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bhinso
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PostPosted: 16:42 - 22 Apr 2020    Post subject: Reply with quote
This thread is informative.

I was shocked when the price went negative. I was starting to think I could do a China and 'buy' up loads of oil (i.e. be paid to take it), then sell it when the price went positive again.

I know nothing about economics Sad
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Polarbear
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PostPosted: 18:23 - 22 Apr 2020    Post subject: Reply with quote
Double post
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Last edited by Polarbear on 18:24 - 22 Apr 2020; edited 1 time in total
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Polarbear
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PostPosted: 18:23 - 22 Apr 2020    Post subject: Reply with quote
bhinso wrote:
This thread is informative.

I was shocked when the price went negative. I was starting to think I could do a China and 'buy' up loads of oil (i.e. be paid to take it), then sell it when the price went positive again.

I know nothing about economics Sad


The theory is fine, it's whether you can dig a big enough hole to store a few million barrels of the stuff at the bottom of your garden. Laughing

Oh, and you have to collect it as well. Thumbs Up
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Jewlio Rides Again LLB
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PostPosted: 23:04 - 22 Apr 2020    Post subject: Reply with quote
Polarbear wrote:
Ste wrote:
As traders don't have anywhere to put the oil they want / need to get rid of their excess?


This.

Basically traders buy next months/future oil, working on the principle that they will sell it for a profit before they actually have to take possession, which is something they would never normally do as they are simply commodity traders.

The ones who bought just before the collapse are now faced with having to take possession of how many millions of barrels of oil with nowhere to put it and no one to sell it to so they have to get rid of it however they can.

Personally I couldn't give a rats if they get stung. They are people who just try to manipulate prices to make money that you or I end up paying at the end product.


Basically what happened with gold futures, and Gordon Brown's bailout by selling off cheap.
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