Price of oil

SlamDunk

(-) $16/barrel?!? That is a negative sign!

Oil plummets as storage capacity runs low, and a quirk in pricing wipes out one benchmark.
Something bizarre happened in the markets on Monday: The price of a barrel of oil went negative.

Oil prices tumbled as the economic crisis set off by the coronavirus pandemic continued to destroy demand for energy, and as concerns grew that storage tanks in the United States are near capacity and unable to hold all the unused crude. NYT

-$30/barrel

STEVEusaPA

Probably smart to buy futures. You can go 18 mos in advance.
I'm sure all the companies who lock customers in are going to really get clobbered if they didn't purchase downside protection.

SlamDunk

I wonder what this will do to the economy. In the past, high prices were blamed for a poor economy. Recently, it was low prices hurting the economy. What will this do?

PerryHolzman

This has actually been predicted for at least a month. With the downturn in travel and reduction of Mfr worldwide due to Covid-19 - which added to a price war between the Russians and Saudis the oil producers have been producing more oil than demand for almost 3 months now.

That's great while there is available storage tanks to fill up.

Once those tanks are full... you get into a situation where producers may find it better to pay people to take their oil versus shutting down their wells and pumping stations.

The prediction that we would get to this situation was made about a month ago... and without going an looking up the oil industry article, it appears that the prediction was accurate to less than a week on when it would occur.

This will cause massive shutdowns of oil producing and potentially refining capability. Some of what is shut down may not come back for a long time (likely well after Chapter 7 or 11, or its equivalent in other parts of the world and when the new owners decide its worth it).

However, if you heat with oil... A good time to install a few extra 250 gallon tanks and fill them up.

Have a great day,

Perry

SlamDunk

My brother called to have mom's oil tank topped off @$1.99/g. That was before the drop in crude. Maybe he should wait and get paid to top it off! That would be different.

when business is back to normal, the price of oil will sky rocket.

Jamie Hall

Where it's really going to create problems -- big problems -- is in oil producing nations which depend on that oil income. Some African nations... Venezuela... even Saudi Arabia and Russia. Fro that matter, parts of the UK. Not going to be fun.

Big Ed_4

!0 years it is , 10 years it isn't ....

rick in Alaska

Jamie Hall said:

Where it's really going to create problems -- big problems -- is in oil producing nations which depend on that oil income. Some African nations... Venezuela... even Saudi Arabia and Russia. Fro that matter, parts of the UK. Not going to be fun.

And Alaska!
A vast majority of our state income is from oil revenue. I can't remember the number, but I believe for us to be able to keep things the status quo, oil needs to be around $75 per barrel. Our government higher ups have been trying to balance the budget the past year or two at the level it has been, so this should really push us back even farther.
Rick