Member Info for MarcelKrell

I assume they mean in terms of 'share price' … ?

Yeah, I know what you meant. But I'm only saying that oil will go (imo) into 'armageddon' territory for a short time.
CURRENT oil use is at 75% worldwide I heard them say. And it will get worse, like we agreed upon, in April, May... BEFORE (imo) your scenario kicks in.

"around the world I see production dropping and then coming bk very slowly may be in 12-18 months"

Yeah, but share prices of oil companies will start to rise again on plain 'news' that the oil-fight and (most of all) the Corona-fight is past us. Forward looking, right?

Interesting to see how this will unfold, over the coming months.

https://www.bloomberg.com/news/videos/2020-03-30/oil-tumbles-to-17-year-low-amid-coronavirus-price-war-shocks-video

At some places oil is already at $4,- RIGHT NOW. Some producers are even at negative pricing, since shutting down is also very expensive.

Watch the video. Wow.

https://www.bloomberg.com/news/videos/2020-03-30/oil-demand-shock-is-enormous-says-energy-aspect-s-sen-video

https://oilprice.com/Energy/Energy-General/Oil-Markets-Are-On-The-Brink-Of-Armageddon.html

" We are already BEYOND the pain treshold of Russia and SA"

"They will be FORCED by the market to CUT BACK"

All worlwide storage is full by the end of may.

So oil will go below $20,- before all noses are pointed in the same direction worldwide, imo.

Shpunken, this is the only thing we disagree about. :)

"Bad news has been priced in yes, but to what extent? I don’t see oil dropping below $20, but I see it reaching that number and maybe going below it during the trading hrs etc... "

Read:

"But because the glut is so ***gargantuan***, and because storage is set to run low at current prices, that means that prices ultimately have to fall even further. “For this reason, our view has been oil prices will need to move to cash costs, resulting in shut-in production,” Goldman analysts wrote in a note on Monday."

https://oilprice.com/Energy/Crude-Oil/Could-Oil-Really-Fall-To-0.html

Imo it will go below $20,- but not for months. Thanks to the unprecedented Corona situation.

Jbatch, for the record: despite the quote below from an article… shale never made a profit… as in: NEVER. That means that lenders are less inclined to fork over the money to this industry, over and over again. I posted a very good article on that.

But what you mean is, like Shpunken already said, only partly true. That is were the talk of "tariffs" is coming from: to help shale, because they never have made money. Look up my article.

"In the end, Putin also knows—or should know—that U.S. shale producers aren’t so easy to kill. These are smaller companies that can go in and out of business as prices dictate. The oil price will be low for a while because the pandemic will dramatically slow global oil demand. But eventually, economies will recover. The Russians and Saudis will talk their way -toward allowing the oil price to move higher. U.S. shale production will come back on line. We’re left to wonder just how low Putin and MBS want to go."

Our conclusions are confirmed. :) This is what an (Vital) Oil Traders says:

https://oilprice.com/Latest-Energy-News/World-News/Heres-What-Oil-Traders-Are-Doing-To-Profit-From-Ultra-Low-Oil-Prices.html

Must watch: https://www.bloomberg.com/news/videos/2020-03-25/vitol-says-oil-demand-is-down-as-much-as-20-million-barrels-a-day-video (See the first two interviews)

They talk about 3 months, and if production will not be stopped (which is hard, can't 'switch off' a well like that) we will see $10,- in this period. But not for long I think of course, imo.

They did not talk about an agreement of course. If that would happen, it's another (better) scenario.

So, since April and May will probably the most destructive months in terms of the oil price-fight, maybe even in terms of a Corona Peek (in Europe, hopefully May for the US?), Tullow should not be worried that much… agree?

Shpunken, you can look at it from two angles. I agree with you, but what also is a fact: shale never made a profit. So maybe Russians aren't able to defeat Shale, Corona is!

So Corona is fighting against Shale, more than SA and Russia together probably. Result: Shale diminished.

I think that that agreement (and returning of higher oil prices ) will happens as soon as Shale is seriously wounded… somewhere in May? After that there is no incentive anymore for SA/Russia to keep prices low (market share back to them, thanks to Shale being mostly gone). Agree?

That is why a tariff now is being touted by some, because Shale needs help in almost ANY scenario? Agree?

Marcel.

Shpunken, You could be right. Read this article that suggest a tariff on oil (and so help Shale, and heep energy independence):

https://oilprice.com/Energy/Energy-General/An-Oilmans-Plea-To-President-Trump.html

"One last point worth mentioning is that energy independence was about to fall apart anyway. The present structure of shale wasn’t working—“present” meaning two months ago. Producers can’t generate free cash flow, pay off ridiculously (and irresponsibly) large amounts of debt, and grow reserves at the same time, at least not if they want to stay listed on the NYSE. The industry was already struggling at $55 oil and $1.80 gas. Everyone was hedging every time there was a little bounce. Service companies in the shale sector were being squeezed into unprofitability. Leave natural gas alone for now but fix the cost of oil. If too much is produced, it can be sold and exported at whatever the going rate is.
Should there be naysayers, those that say this is nothing more than a bailout request, I say so what. It is and it isn’t. Prices will be low, but that will fix things and then there will be another mad rush to produce because prices will be high. Trust me. It happens every time. Boom and bust. Go to an energy conference and you will find all the producers talking about their humongous acreage position, and all the frackers talking about their humongous horsepower. Margins and profits won’t come up. Trust me. We can’t help ourselves. "

He says that currently the demand is so low that even the SA increase in production is just 'a drop in the bucket' and the Russians, indeed, have hardly the position to add serious amounts of oil to their production.

Regarding Shale, (like I quoted earlier: has never made a profit)

"On top of it all, the space for further reductions in breakeven prices is more limited than it was five years ago. It is a law as universal, perhaps, as Wright’s Law. You cannot innovate indefinitely, and you cannot bring down the breakeven level of a business to zero. What’s more, shale may be facing higher rather than lower breakevens in some parts of the shale patch.

BAM!!

https://oilprice.com/Energy/Energy-General/Russias-Plan-To-Bankrupt-US-Shale-Could-Send-Oil-To-60.html

"As soon as U.S. shale leaves the market, prices will rebound and could reach $60 a barrel, Rosneft’s Igor Sechin said recently."

I think you are right Shpunken, they probably look for a good entry point.

Just like me, but that is another thing, lol. No reason to post BS.

Interesting on Guyana:

Hess is putting its 2020 market focus on its Guyana discoveries. According to the company, the low breakeven costs of the project combined with the typically longer-lived (and large amounts of) offshore production should enable the partnership’s self-funding goal to be achieved within a couple of years. In the meantime, Hess said it has more than $1.5 billion of cash on the balance sheet to fund any partnership needs.

"Traders said cargoes of crude for delivery in April had not been hit too badly because many of the deals were struck before the oil market rout, but now prices would only go lower still.
“April was sold quite ahead of time as refiners plan several months in advance but May will not be good. All the grades will need more downward corrections,” one trader said."

***Saudi Arabia struggling to find buyers. ***

Saudi Arabia is struggling to find buyers for extra oil as demand collapses. Royal Dutch Shell (NYSE: RDS.A), China’s Unipec, Finland’s Neste, some Indian refiners and other U.S. refiners are taking less crude from Saudi Arabia, according to Reuters. Taken together, the inability to find buyers reduces the odds of Saudi Arabia ramping up production aggressively to over 12 mb/d.

https://www.reuters.com/article/us-oil-opec-russia-rdif-exclusive/exclusive-russia-calls-for-new-enlarged-opec-deal-to-tackle-oil-demand-collapse-idUSKBN21E13T?il=0

https://oilprice.com/Energy/Energy-General/Goldman-Sachs-Prepare-For-A-Massive-Oil-Demand-Shock.html

“Our base case view is that the price war continues over the upcoming quarter, which would see ICE Brent moving towards US$20/bbl over 2Q20,” ING’s strategists said. "

I do'nt think it takes that long. But we'll see.

But, like we know, the Russian government can talk BS when it needs to:

https://edition.cnn.com/2020/03/26/europe/coronavirus-russia-kremlin-intl/index.html

I don't know what the discussion is about? It does not care who could hold out for the longest. None of those two want to spend their entire 'savings' on this fight.

It's a theoretical discussion. Nobody wins at these prices. After April a lot of shale is gone (?) and then both parties will try to crack up the prices again imo.