stock market was up today...

#10,101
#10,101
Rasputin_Vol said:
What is she saying? She started off saying that the oil markets are trying to tell us something, but then left it at that. I'm not sure what I'm agreeing to or disagreeing to.
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Is the rout today just about oil storage? Or is it a harbinger of more ills for equities?
 
#10,102
#10,102
hog88 said:
Nope. Not when you artificially drop demand by what 80% in a month?
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Even with out that demand drop, this was going to be a tough period for domestic producers. Most of them have been borrowing to keep production going for the last few years because prices were too low. Now with a drop in demand, an abundance of supply and the credit lines being cut, I just don't see too many ways out for them... outside of a bailout.
 
#10,103
#10,103
Velo Vol said:
Is the rout today just about oil storage? Or is it a harbinger of more ills for equities?
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Well, that is a general statement, but the short answer is yes. But I would have expected a bit more in specifics to either agree or disagree with. But obviously, this is going to send shockwaves through the equities.
 
#10,105
#10,105
rjd970 said:
I've got some ETFs I'm looking at that follow the price of oil.
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I saw a Bloomberg article that pointed out that many investors are reading the impact of these prices wrong. I don’t have any knowledge on this but I think it was pointing out on how the futures roll over that all of these put options are way off base? 🤷‍♂️
 
#10,106
#10,106
Rasputin_Vol said:
Domestic producers are not going to be able to survive in this environment.
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True. But this can't be what Putin and SA were intending. I would think at some point they're going to squirm. How long before they kiss and make up....and cut production?
 
#10,107
#10,107
NorthDallas40 said:
I saw a Bloomberg article that pointed out that many investors are reading the impact of these prices wrong. I don’t have any knowledge on this but I think it was pointing out on how the futures roll over that all of these put options are way off base? 🤷‍♂️
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I've got a small amount I won't miss I'm going in on. It has big upside and if I lose it I don't really care. I get supplies are what they are, but as soon as some of these companies start filing bankruptcy and this virus ends and summer demand picks up, I figured what the hell. WTI has a $66 52-week high and is currently at -$16.

Like I said, I won't miss this cash....and it may even make me some nice coin in a year.
 
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#10,109
#10,109
Rasputin_Vol said:
Well, that is a general statement, but the short answer is yes. But I would have expected a bit more in specifics to either agree or disagree with. But obviously, this is going to send shockwaves through the equities.
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It depends how well it's contained, or if it sets off dominoes.

Oil stocks were only modestly down today.
 
#10,111
#10,111
Velo Vol said:
Is the rout today just about oil storage? Or is it a harbinger of more ills for equities?
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I think the driver is speculative. Oil futures will converge toward the physical price as the contract nears expiration. I have been shorting every oil spike I could for the last year (OILD is by far my best performing ticker for the year and is largely why my portfolio is positive ytd). I stopped shorting a month ago and went long in some restaurant names with my profits. There has been a glut of supply for quite some time. The Saudi/Russia feud along with the demand side shock globally since January due to coronavirus has created the perfect storm for futures contracts.

I don't see this as a harbinger of things to come in broader equities. That doesn't mean equities move up and to the right in a straight line from here, but I don't think we see equities fall precipitously to match this move in oil prices. Many small and mid stream players in the energy sector will be consolidated in the coming months/years, but I think this has been the expectation for some time. While I'm sure there will be some serious money made in the short term on either side of the trade, there is no market landscape where I would be bullish on oil for the long term, but I would be afraid to be short on oil at these levels.
 
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#10,112
#10,112
Oil market is ‘emblematic’ of everything wrong with the economy, Jim Cramer says

  • “So many things are broken, so many prices have gone haywire in every different industry that the averages themselves are no longer capable of relaying what publicly traded companies are actually worth,” the “Mad Money” host said.
That means oil producers are willing to pay traders to store the oil amid a coronavirus pandemic that has depleted demand for the substance. Worldwide lockdowns have spelled trouble for the cruise line, airline and restaurant industries, resulting in an extreme lack of demand for travel and, in turn, oil.

“Really, this is a windfall for anyone with storage, because right now you could make fortunes simply being paid to take oil and stick it somewhere. Then you can sell it off at a higher price a month from now,” he said. “That’s a malfunctioning market that it couldn’t work today. It simply shouldn’t happen, and it didn’t involve a lot of volume.”

Oil market is 'emblematic' of everything wrong with the economy, Jim Cramer says
 
#10,113
#10,113
Well this certainly isn’t going to help...

According to data reported by CNBC last week, shipments of Saudi oil to the United States have already almost quadrupled since the outbreak of the virus and the beginning of the price war. Shipments have soared from an average of 366,000 barrels per day in February to 829,540 barrels per day in March to 1.46 million barrels per day in the first two weeks of April.
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#10,114
#10,114
More....

A fleet of oil tankers loaded with oil from Saudi Arabia is en route to the United States, the Wall Street Journal reports; those tankers, which departed prior to the OPEC+ agreement last week, contain seven times as much oil as Saudi Arabia sent in a typical month last year.
Click to expand...
 
#10,117
#10,117
85SugarVol said:
Well this certainly isn’t going to help...

According to data reported by CNBC last week, shipments of Saudi oil to the United States have already almost quadrupled since the outbreak of the virus and the beginning of the price war. Shipments have soared from an average of 366,000 barrels per day in February to 829,540 barrels per day in March to 1.46 million barrels per day in the first two weeks of April.
Click to expand...
Click to expand...

To place this in the proper context, the US on average consumes just under ~20 million barrels per day. 1.5 million barrels added to a country that consumes 20 million barrels.

Just saying...
 
#10,118
#10,118
Rasputin_Vol said:
Yeah... look at the way they drew the gridlines on the y-axis for added effect. Looks like an inch between $10 and $100 and then 5 miles between $10 and ten cents. Why was there a need to graph it logrithmically?
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It's really bad either way.

All the logarithmic graph does is smooth the curve out.
 
#10,119
#10,119
Trump Wants To Add 75 Million Barrels Of Oil To US Reserves As Crude Oil Plummets — ‘Buy It Or We’ll Store It’

SENIOR WHITE HOUSE CORRESPONDENT
April 20, 2020

President Donald Trump stated at the White House coronavirus press briefing that he plans to take advantage of Monday’s historic drop in the price of oil to add 75 million barrels to the United States’ strategic petroleum reserve.

“At a minimum we will let people store… and charge for it,” Trump told reporters at the White House. “If we could buy it for nothing, we are going to take everything we can get. The only thing I like better than that is when they pay you to take the oil, but that’s a short-term squeeze, you understand that, so I don’t think you’re going to see that.”

“It’s a good time to buy oil and we would like to have Congress approve it, so instead of just storing it for usually the big companies, because I think we have 75 million gallons right now capacity. That’s a lot,” he continued .”So we are going to get, either ask for permission to buy it or we’ll store it. One way or the other it will be full.”

Trump Wants To Add 75 Million Barrels Of Oil To US Reserves As Crude Oil Plummets — ‘Buy It Or We’ll Store It’
 
#10,120
#10,120
Rasputin_Vol said:
Yeah... look at the way they drew the gridlines on the y-axis for added effect. Looks like an inch between $10 and $100 and then 5 miles between $10 and ten cents. Why was there a need to graph it logrithmically?
Click to expand...

Here is the same chart with log scale deselected. The link seems to default to log scaling for some reason.

Screenshot_20200420-213604.png
 
#10,122
#10,122
Franklin Pierce said:
Trump Wants To Add 75 Million Barrels Of Oil To US Reserves As Crude Oil Plummets — ‘Buy It Or We’ll Store It’

SENIOR WHITE HOUSE CORRESPONDENT
April 20, 2020

President Donald Trump stated at the White House coronavirus press briefing that he plans to take advantage of Monday’s historic drop in the price of oil to add 75 million barrels to the United States’ strategic petroleum reserve.

“At a minimum we will let people store… and charge for it,” Trump told reporters at the White House. “If we could buy it for nothing, we are going to take everything we can get. The only thing I like better than that is when they pay you to take the oil, but that’s a short-term squeeze, you understand that, so I don’t think you’re going to see that.”

“It’s a good time to buy oil and we would like to have Congress approve it, so instead of just storing it for usually the big companies, because I think we have 75 million gallons right now capacity. That’s a lot,” he continued .”So we are going to get, either ask for permission to buy it or we’ll store it. One way or the other it will be full.”

Trump Wants To Add 75 Million Barrels Of Oil To US Reserves As Crude Oil Plummets — ‘Buy It Or We’ll Store It’
Click to expand...
Well, using the math I posted earlier of 20 million barrels consumed by this country each day, that's just short of 4 days worth of supply...

C"mon now, Trump.
 
#10,123
#10,123
The US strategic oil reserves currently has around 635 million barrels of oil in storage. There's approximately 165M barrels excess unused capacity available, however, I believe such purchases would normally be approved by Congress.

Total US daily consumption of crude oil (excluding gas, LP, etc.) was around 12-13 million prior to Covid19, which we were able to produce domestically.

Production prices are significantly higher for our US companies than, say, Saudi Arabia. Thus, at prices below around $30/barrel, most of our frackers don't make money, so they likely have stopped production. Until prices go up, therefore, we'll likely see an increase in imports and/or a drawdown on current inventories which are through the roof.

An interesting point to note is that many traditional wells must continue to flow, or they can be irreparably damaged. In other words, you can't simply 'turn it off' and then on again later. In contrast, fracked wells can be abandoned and then re-opened anytime. This is good for us, and will allow the industry to pop back into action when 'normal' pricing returns. But, lots of companies will go Ch.11 in the meantime.
 
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