stock market was up today...

[NorthDallas40]

More disinformation on real price vs futures contracts.

 

[Velo Vol]

The bleeding continues.

 

[SpaceCoastVol]

 

[Velo Vol]

Back in the mid-00's I was into the peak oil theory. Read posts by guys who knew the industry, predicting long term $200+/barrel oil.

Needless to say, the last 15 years has not gone as expected.

 

[Mick]

View attachment 272650

Toilet paper must be on the $3 menu.

 

[Velo Vol]

Listening to oil analysts this morning and there's a good chance June contracts end up negative, too.

 

[05_never_again]

Back in the mid-00's I was into the peak oil theory. Read posts by guys who knew the industry, predicting long term $200+/barrel oil.

Needless to say, the last 15 years has not gone as expected.

The peak oil guys, many of them at least, never considered shale. It changed the oil game considerably, plus I think they just underestimated how much the OPEC nations still had anyway.

I remember reading quite a few think pieces in 2005-06 that oil prices would "never go down" ever again, not necessarily because of peak oil, but because global demand was so much more broad-based (because of BRIC) than in the past and that wouldn't allow there to every be any slack in the supply/demand dynamic. Even if there were recessions, in their view, so many more countries had "come online" that there was much more demand than in years past, particularly the 90s. I remember thinking at that time we were probably much closer to a top than a bottom - any time I hear statements to the effect of "the old rules don't really apply anymore" I get skeptical.

 

[NorthDallas40]

Listening to oil analysts this morning and there's a good chance June contracts end up negative, too.

As long as we are in a supply glut I don’t know why anybody should expect those futures to act any differently as their roll over date nears.

 

[rjd970]

As long as we are in a supply glut I don’t know why anybody should expect those futures to act any differently as their roll over date nears.

If some of these smaller oil drilling companies file bankruptcy and the big boys draw back production or stop it completely, I can see a run on oil in the near future. If that happens, demand will explode in relation to current supply once this pandemic fear ends.

 

[DancingOutlaw]

If some of these smaller oil drilling companies file bankruptcy and the big boys draw back production or stop it completely, I can see a run on oil in the near future. If that happens, demand will explode in relation to current supply once this pandemic fear ends.

This is exactly what’s going to happen. When the lights come back on these millions of barrels of excess will be used quickly. However production won’t be able to meet demand. This is what the Saudis and Russians wanted, and it’s going to cause some serious pains globally.

 

[Velo Vol]

@Rasputin_Vol !!!

 

[Velo Vol]

The peak oil guys, many of them at least, never considered shale. It changed the oil game considerably, plus I think they just underestimated how much the OPEC nations still had anyway.

Yep. U.S. production had been declining for decades. And then technology improved and the trend reversed.

 

[Velo Vol]

This is exactly what’s going to happen. When the lights come back on these millions of barrels of excess will be used quickly. However production won’t be able to meet demand. This is what the Saudis and Russians wanted, and it’s going to cause some serious pains globally.

Thta's not going to happen in the next two months. There's weeks of lag time in reducing oil production.

 

[NorthDallas40]

If some of these smaller oil drilling companies file bankruptcy and the big boys draw back production or stop it completely, I can see a run on oil in the near future. If that happens, demand will explode in relation to current supply once this pandemic fear ends.

I don’t disagree. In the longer term I could see a severe price spike since at least on the US side many of the shale wells won’t be producing until their next owner has them back online

I just don’t see the end of the world resolving itself by end of May when these futures contracts mature is all

 

[Velo Vol]

 

[rjd970]

I picture OPEC rubbing its hands together like an evil villan for the coming price pike in the next couple of years.

 

[SpaceCoastVol]

Toilet paper must be on the $3 menu.

Toilet paper? Who uses that? I have 3 seashells.

 

[Rasputin_Vol]

If some of these smaller oil drilling companies file bankruptcy and the big boys draw back production or stop it completely, I can see a run on oil in the near future. If that happens, demand will explode in relation to current supply once this pandemic fear ends.

What do you mean by "a run on oil"? And by "in the near future", do you mean later this summer? The end of the year?

 

[Rasputin_Vol]

Yep. U.S. production had been declining for decades. And then technology improved and the trend reversed.

They were drilling at a loss. In normal situations, the oil wouldn't have been economically feasible to drill. Once all of this clears up, we will see just how much shale production we will have at these sub-$60 price levels. Only a few can get away with that.

 

[Rasputin_Vol]

I don’t disagree. In the longer term I could see a severe price spike since at least on the US side many of the shale wells won’t be producing until their next owner has them back online

I just don’t see the end of the world resolving itself by end of May when these futures contracts mature is all

Even then, they won't be producing if the price isn't high enough. The credit lines have been cut off or will soon be cut off.

 

[VolStrom]

Why are we so quick to bail out the airlines but we have nothing for the oil companies?

 

[MontyPython]

Why are we so quick to bail out the airlines but we have nothing for the oil companies?

We can fill our gas tanks with cheap ass gas imported from the Kingdom, but we can't fly around on their backs.

Slippery slope bailing out is. Where. Does. It. Stop.

 

[rjd970]

What do you mean by "a run on oil"? And by "in the near future", do you mean later this summer? The end of the year?

Maybe in the next 24-36 months. I think any oil stock bought now will look really good 2+years out. I'm viewing this as buying bank stocks right after the crash in 2008. You may have to sit on it for a couple of years, but there will be a nice return at the end of it. Especially so if the government steps in. Right now big oil companies with healthy balance sheets look attractive because you know they will weather this and if it gets too rough, the government will step in. Just the world we live in now. Our economy runs on oil, it isn't going anywhere...buy now while it is hurting.

 

[Rasputin_Vol]

Maybe in the next 24-36 months. I think any oil stock bought now will look really good 2+years out. I'm viewing this as buying bank stocks right after the crash in 2008. You may have to sit on it for a couple of years, but there will be a nice return at the end of it. Especially so if the government steps in. Right now big oil companies with healthy balance sheets look attractive because you know they will weather this and if it gets too rough, the government will step in. Just the world we live in now. Our economy runs on oil, it isn't going anywhere...buy now while it is hurting.

OK that clears it up. Because my first impression reading that was you were expecting there to be a rush of buyers jumping in to buy up all of this oil in expectation of using it up soon after this coronavirus nonsense clears up in the next few weeks.

 

[NorthDallas40]

Even then, they won't be producing if the price isn't high enough. The credit lines have been cut off or will soon be cut off.

Don’t disagree Ras. But frack’ed wells from what I understand are easier to turn on and off was more the point. Once their new owners have a business case to turn the well back on they will do so. Whereas the KoS and Russians will just keep pumping.