The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
For anyone that doesn't understand....this is producers PAYING people to take the oil off their hands.
I first suggested to a friend back in early March that is still trading oil, that oil prices could, in certain cases go negative. He laughed it off.
He's not laughing now.
Show me where I said single figures. I didn't happen pal.
I just said I might be tempted to buy in in the low teens.
Xel, of course it will make a difference, and long term can be considered bullish, but let's not get too carried away. Saudi and Russia are BIG producers that can easily and cheaply fill any gap in production.
Obviously demand was lower in 1999 than it is now (normal, pre-virus now). But CURRENT demand is probably below that of 1999. Question is when will it pick up again? No one knows that for sure.
AS stated earlier, oil was this price in 1999. WITHOUT shale.
Saudi Arabia is more than capable of replacing the lost shale production.
It costs the Saudis 3$ a bbl to produce......
Doc, if you can't write a coherent sentence perhaps you'd be better off in a casino than trading a volatile and complicated oil stock?
Doc, feel free to show me the 'lies' I have posted. I will happily confess if you can find one.
You sound completely out of your depth here.
Bernie the bike pure lie so you trying tell everyone that your health wise up would ye.
Could you write that again in English, I have no idea what you're trying to say.
True if true.
What is the average production cost of a barrel of TLW oil?
(N.B. There is a difference in SUPPLEMENTAL cost of 1 bbl of oil, and breakeven cost of 1 bbl production.)
Doc, wake up, I have no position in TLW and have simply posted factual and accurate data on the oil market (as I was a jet fuel trader for 10 years).
Take it or leave it. Maybe try to learn how oil markets actually work?
Antharry, I think neither of those things. They're not going bust, nor are they going to the moon.
Fair value at the moment is hard to define, but the oil price is a crucial factor of course.
I could be tempted in, but with so much oil weakness right now, it would have to be low teens.
Don't forget that those tankers the WTI is being stored in are more than capable of starting their engines and moving to anywhere in the world....and that is what they will do.
Worth noting that the last time WTI was this low was in 1999.
At that time there was no US shale industry to speak of, and yet still the price was in the mid teens.
So, does the market 'need' US shale? At the moment, no, not really.
July oil contracts would disagree with you......
What would you call down 18%? A mild correction?!
No one heere wants to hear reality or a balanced view.
You have to UP UP UP!!!
Ignore the front month (although it does tell you how incredibly weak the prompt is) and look at JUne, down 5.5%.
The contango is widening to enable even VLCC storage through to June (July contract).
Kraken, are you buying Brent or Tullow?
May Wti is around 18$
June is around 25$
So the contango pays for the storage cost and you pocket 2$/bbl.
However, later the contango is less strong, so you need to sell those barrels in May, June TI related.
Trouble is every other guy with a VLCC parked up will be looking to do the same.
So expect further weakness in May, because the cuts won’t even have arrived by then.
Airlines have been hurt bad by their hedges and so may be thinking twice about doing it again, although at these prices (especially as the jet premium is also very low) it probably makes sense.
But they are into the banks for lots of money (on their 2020 and 2021 hedges) so it remains to be seen if the banks will extend further credit to them for more hedges.
The management are probably busier with survival than forward planning.
Global aviation is 7m bbls / day.