Member Info for Genghis15

hi, extrader.
On your frst para, that situation is coming anyway when c.25% of demand falls off. Best to use it to your advantage.
On your second, well, I think it was covered by my caveat, "geopolitics may interfere,".

Cebo
My views are formed by events in the oil and wider markets, and I form those views in large part from links I often post here.

I don't know if your perception that my "negative posts" track the SP is observationally correct, all I can say is that I look at the oil market, and at least on this occasion have been ahead of the game. I don't "think the oil price is going to be negative" in the sense that it will be less than zero, just to be clear. I do think there is currently a much greater likelihood of it falling into the teens than rising thru the30s.
Any views I post on here will be those that are informing my investment decisions, not vice versa.

"I look forward to …….. when the SP is much higher than it is now." Amen to that.

Bang goes any prospect of capex from them, not that there was much chance anyway.

https://giftarticle.ft.com/giftarticle/actions/redeem/c220ea94-9682-4799-9d56-9892f3d6ff1b

"What happens to Saudi production , when its customers run out of storage / demand and there are insufficient tankers to shuttle to/fro and no VLCCs left for charter...?"

They will still be the lowest cost producer, the last man standing, I guess. Much ST pain all round, bite that bullet and hold on, they can stand it more than most.

Seems a viable strategy to me. Of course, no saying how far they can take it given that geopolitics may interfere, and there mb more practical matters such as you describe , that I am unaware of.

As ever, we (and HUR) are mere pawns in the game, and just have to wait and see.

I am a new follower here, was there any news from this interview?

I prefer the line by poster TheLagerKhan on another bb, that "if any one can, a Khan can"

That rumour started as soon as Moscow locked down. Altho the Mayor did it, drastic measures like that come from Putin. So something happened to change the Russian approach.

mb in the last 2 or 3 RNSs.

It is still possible this is bluff from KSA and the oil will not sail, or be held in storage in Egypt.

But TBh it's to some degree irrelevant. They can pump 20m bd for all it matters ; if the demand isn't there, and the storage isn't there, nobody will buy it.

If I were MBS, I'd be treating the Cv demand destruction as an opportunity to wipe out higher cost production in months rather than years, and grab a bigger slice of the market for the foreseeable.

Steady production began end January. Altho somewhat at odds with earlier guidance, imv, that was stated somewhere, b4 I the last 2 or 3 RNSs.

Bbobton
Blas or Berman ….it is just opinion. But the stories from BBG are the point. KSA looking like it will carry thru its threatened April 12m+ bd. The discounts to be published 5 April.
https://twitter.com/aeberman12/status/1244986288949911552?s=20

https://twitter.com/JavierBlas/status/1244959185713934336?s=20

https://twitter.com/JavierBlas/status/1244976727794896896?s=20

"While efforts such as the administration of U.S. President Donald Trump planning to send a special energy envoy to Saudi Arabia to work on stabilising global crude markets will give energy journalists something to write about, for the moment the efforts are likely to be as successful as whistling against the wind"

https://www.reuters.com/article/column-russell-health-coronavirus-crude/column-coronavirus-demand-hit-renders-opec-trump-manoeuvres-irrelevant-russell-idUSL4N2BN0OS

KSARussia/OPEC now just a red herring. The article says it is pipeline operators, with no storage, and refineries with no demand, driving down demand for crude just as Cv has driven down demand for the refined product. Simple supply chain knock on.

Not familiar with the author, but his postulation is similar to my post above.

https://giftarticle.ft.com/giftarticle/actions/redeem/ffecf681-7335-4447-afff-1616bdcee86b

Some big decisions needed. @ $24 Brent there is no spare cashflow for any drilling, after paying bond interest, G&A, etc.

Yes there is a decent cash cushion, but in this crisis that needs preserving. I imagine there will be some tough negotiations with contractors over cancellation clauses, and mb some rough staff decisions to be made. Better now than later, imho.

Saudi, and the oil price war, is a sideshow.

The demand destruction of Cv is overwhelming everything.
But it will be interesting to see how KSA react.

Given c. 20m bd demand shortfall, the nobrealistic OPEC+ cuts can balance the market.
Low, low prices are inevitable.

As the lowest cost producer, why not just sit tight and watch you rivals fall, and scoop up bigger market share when it's all over?

Canadian oilsands, much of shale, small scale stripper wells, and lots of others will be shutting down soon.
It's just a question of time. And an oil price war that might have taken years could be over by Xmas with KSA as the big winner.

https://twitter.com/aeberman12/status/1244221174340608001?s=19

The final line is priceless. "Including a freeze on director salaries". WTF.

No surprise refiners dont want crude if theres no demand for petrol/kerosene. Storage filling up.

Buyers will fade away, prices will fall, and wells will be shut in. Whose wells, and where, we will find out.

I guess KSA 's calculation is that they r the lowest cost producer, and the current glut may work to their advantage by telescoping the pricess into a few months.

A big game being played here, high stakes, and big implications for all higher cost producers.