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Oil price negative?


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Oil price negative?

  #131 (permalink)
 
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 YogaTrading 
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I grew up as a teenager on Daytona Beach..dam shame whats happened there.
There is a restaurant called the North Turn, on the beach, its where the racers would come off the beach and race down A1A to the inlet and then back on the beach

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  #132 (permalink)
 
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 TraderMich 
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GFIs1 View Post
Two articles in CNN about negative oil and its effects bring it to the point

https://edition.cnn.com/2020/04/20/business/oil-price-crash-bankruptcy/index.html
https://edition.cnn.com/2020/04/22/business/negative-oil-prices-spike/index.html

Discussion:
It is assumed that "corona virus" is the reason why WTI oil - more than Brent - are in trouble and oil companies might go bankrupt.
Of course this is NOT the case. There are petrol heads thinking the world turns only because of consuming more and more of this never ending source of that stinky black mud.
Unfortunately several depending industries like car makers, ship makers, plane makers have no clue how to make it more friendly for a green world. All those companies might get in trouble too when countries put the finger on the limits of harmful emission on engines and will set large fines by doing so.
To sum it up - oil depending products will have a difficult future - be it by grounded vehicles flying or in the streets: Corona just shows us that live is possible even the engines haven't started.

Highly possible that investments in oil and its derivatives very soon will be no longer money makers.

GFIs

You are right - De drop in oil prices has nothing to do with corona crises - Oil has been in a down trend for years, and the recent sell off started end 2019 early 2020 i.e. before corona was really an issue. The low of oil prices is a structural problem, that more and more recognize that oil is becoming obsolete or the oil technology is being disrupted by green environment technology and people realize this is the future and way to go. People who hang on to the oil technology based thinking are the same kind of people who kept use horse and carriage when the automobile came around!!!! - So yes, oil prices will remain low and go lower after the recent re-bounce. Will prices be negative - No not forever but maybe close to zero but on the positive side and become not tradeable due to lag of fluctuations.

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  #133 (permalink)
SunTrader
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First of all I recycle, reuse, reduce and repurpose whatever I can however I can sensibly. Read recently only 20% of plastic that is collected is actually recycled. Not good.

Also hope that with each passing day, week, month, year, decade we use greater and greater amounts of alternative energy rather than carbon based ones till we no longer use any.

But I am also a realist. That day is still a couple of decades away from completing the transition

And actually unlike what was said here oil and auto companies, among many other industries, are working towards making that a reality.

Meanwhile, currently, CV-19 is most definitely the reason CL went negative. Of course oil was in a downtrend but demand crashed long before the price did. It might have gotten down to the low 20's or even teens, if not for CV-19, but no way would it have gone below zeroooooooooo. Without the pandemic.

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  #134 (permalink)
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Now that there is no front month expiration, and oil prices trade well above zero:

Brokerages tell clients - no buying oil for two months


https://www.reuters.com/article/us-global-oil-brokerages/brokerages-tell-clients-no-buying-oil-for-two-months-idUSKCN2253P6

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  #135 (permalink)
 
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 spideysteve 
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Counter argument to the “green deal” comments here.

When the price of a commodity gets low, people tend to use more of it. People will not buy the fancy electric car when fuel is $1/gallon. Why? Makes no sense to do so. They will buy gas for their cars and go driving.

With oil and gas prices this low, the argument for green projects, which are arguably more expensive than conventional projects, will be stifled.

The supply is huge, the price is low. People will naturally gravitate towards where their money goes further.

This is taking none of the virus issues into consideration, but that will have an end.

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  #136 (permalink)
 GFIs1 
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spideysteve View Post
Counter argument to the “green deal” comments here.

When the price of a commodity gets low, people tend to use more of it. People will not buy the fancy electric car when fuel is $1/gallon. Why? Makes no sense to do so. They will buy gas for their cars and go driving.

With oil and gas prices this low, the argument for green projects, which are arguably more expensive than conventional projects, will be stifled.

The supply is huge, the price is low. People will naturally gravitate towards where their money goes further.

This is taking none of the virus issues into consideration, but that will have an end.

There is a important hole in your argumentation: you state that oil and gas prices are the driving argument to consume more. Right - but only because the total costs of damage (to the environment) are not included! Those costs will be huge in the very future - be it health damage, cleaning the environment or re-fixing CO2 in the soil again. When oil and gas are sold with their adequate full "fair" costs, then you might buy a car - but can not drive it a lot as it will be much to expensive.

GFIs1

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  #137 (permalink)
 GFIs1 
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A serious crash ahead

EFFECTS of oil price around zero:
The fracking companies gave out a mass of bonds to be funded. If these companies go bankrupt because their costs for getting oil out of the soil is higher than the selling price on the markets - then the bonds will be vanished too. So the banks and oil bonds buyer will loose their money which will ripple the economy just by the large amount of money burned.
Such a scenario is highly possible and will be a threat to US economy.
As well as all the oil dependent and producing countries around the world will face serious problems immediately.

GFIs1

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  #138 (permalink)
 GFIs1 
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Illustration - update on the effects - today OIL:




by GFIs1

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  #139 (permalink)
 
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SunTrader View Post
First of all I recycle, reuse, reduce and repurpose whatever I can however I can sensibly. Read recently only 20% of plastic that is collected is actually recycled. Not good.

Also hope that with each passing day, week, month, year, decade we use greater and greater amounts of alternative energy rather than carbon based ones till we no longer use any.

But I am also a realist. That day is still a couple of decades away from completing the transition

And actually unlike what was said here oil and auto companies, among many other industries, are working towards making that a reality.

Meanwhile, currently, CV-19 is most definitely the reason CL went negative. Of course oil was in a downtrend but demand crashed long before the price did. It might have gotten down to the low 20's or even teens, if not for CV-19, but no way would it have gone below zeroooooooooo. Without the pandemic.

Just for clarification here. Oil (US Crude Oil Spot) has not traded negative, lowest value has been just below 10 USD (this time around) - It was "only" the future contracts that traded sub zero.

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  #140 (permalink)
 
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spideysteve View Post
Counter argument to the “green deal” comments here.

When the price of a commodity gets low, people tend to use more of it. People will not buy the fancy electric car when fuel is $1/gallon. Why? Makes no sense to do so. They will buy gas for their cars and go driving.

With oil and gas prices this low, the argument for green projects, which are arguably more expensive than conventional projects, will be stifled.

The supply is huge, the price is low. People will naturally gravitate towards where their money goes further.

This is taking none of the virus issues into consideration, but that will have an end.

You are missing the fact that a number of countries, a growing number of countries, are introducing a ban on cars using oil based technology, typical in 2030, so demand for from car owners will be falling.

The break-even cost for producing oil is a spot price between 10-50 USD, so if we see a perment price of oil around 10 USD in the long run many companies/countries will stop production as they keep loosing money for every barrel they pump up. - Now will this lead to raising prices sure - But it will also get many oil comsuming companies using oil as an aid in their production to look for alternative sources, and this change away from oil will be political supported as well and speed up the process. - And the ones who are among the forst to embrase new grren solution are the ones who will profit the most and the laggers who lives in the old world will loose.

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