Bitcoin Forum

Let's talk about the oil industry.

Crude oil prices are currently crashing to new lows, down 79% for the year and counting. The corona virus pandemic has completely destroyed global demand.

https://i.imgur.com/1YrESNc.png

Why does this matter? The oil industry is heavily leveraged, lots of corporate debt. (https://www.forbes.com/sites/amiyatoshpurnanandam/2020/03/10/oil-fed-and-corporate-leverage/#9ea7ed70ceb4) The oil crash threatens to push highly leveraged firms into bankruptcy:


That's where an economic crisis for oil companies snowballs into a financial crisis for banks. This may be the first domino to fall in that respect. (https://www.bloomberg.com/news/articles/2020-04-19/hin-leong-is-said-to-have-failed-to-declare-800-million-losses) A massive Singapore oil trading firm just went bankrupt, leaving its creditors (banks) with a $3.34 billion shortfall!


Deloitte audited their books through October last year and found no problems. Now, $3.34 billion gone. Who is going to eat those losses? Hin Leong and Ocean Tankers' creditors and banking partners. Could this be the first domino in a larger eventual banking crisis? (https://www.zerohedge.com/commodities/singapore-oil-trading-giant-files-bankruptcy-after-hiding-800-million-losses-secretly)

You left out the most important paragraph in the Bloomberg article:


So, this crisis was just the last drop in a 1000 gallon barrel.

I really thought that the situation in the oil industry was pretty bad, but now seeing that ZH is again going full throttle about another disaster I'm thinking nothing will happen. Contrarian betting against ZH's agenda is probably the only more profitable thing than BTC, I doubt even buying BTC at 1 cent would match that.

But how come it doesnt matter to oil industry in the long run? Surely the industry way to big and it can easily overcome the losses they are recurring right now. But lets just consider the current scenario heading up for over few months since pandemic is severe and we have no antidote for it.

Considering use of crude oil in making the fuel, there is no rocket launch, no airplane taking off, no cars/trucks/bikes running for next few months and thus kings barrels are just waste with zero demand. This can rupture the shares for oil industry pretty badly I guess.

I guess that's one way to describe a $3.34 billion shortfall. :)

A Big Four auditor also signed off on their books 6 months ago, which just goes to show how easy it is to hide major frauds even at audited public companies. Crashes and liquidity crises often bring major insolvencies like this to a head. That's what happened here. At $60/barrel they were able to keep the fraud going, but not at these prices.

And how is that the most important takeaway? Whether there is fraud underlying a bankruptcy doesn't make any difference. The issue is the systemic risk the oil industry poses to banks.

I'm more thinking about highly leveraged producers and field service companies (https://www.marketwatch.com/story/these-energy-companies-have-the-highest-debt-and-the-most-at-risk-as-the-oil-market-collapses-2020-03-10) and the banks who back them (https://www.marketwatch.com/story/you-should-avoid-shares-of-these-banks-with-too-much-oil-and-gas-exposure-2020-03-09?mod=article_inline) than physical oil traders anyway. This just happened to be relevant because the news broke yesterday. I'm sure there is also some level of Enron-style fraud going on in the oil industry too, which only exacerbates the risks.


Even a broken clock is right twice a day. You don't have to pay attention to ZH. Lots of respectable and mainstream analysts have been talking about this. https://www.nytimes.com/2020/03/20/business/energy-environment/coronavirus-oil-companies-debt.html

Black gold is experiencing its worst days, but this is not strange considering that most of the world is in a quarantine and most of the passenger and freight traffic is suspended. It is a classic example of supply and demand, and what happens when something becomes almost worthless. 

But still for those who were a little more aware of the developments in the oil price correlated with the pandemic, one moment was the key to a sharp fall in the oil price (20%), which dragged down all other markets, including stocks and crypto.


It is obvious that Russia underestimated Saudi Arabia, which turned out to be a fatal mistake that was corrected only a few days ago with a deal to reduce production by 9.7 million barrels a day, which will take effect next month. This industry is simply too big to allow itself to collapse, as many as 10 million jobs are created in the US alone, closely related to the oil industry.

The only positive side of all this is the incredible improvement in air quality and the reduction of pollution.

Yeah, because the barrel was already full, you used the word "fraud" yourself.
So the fund was nothing more than a Ponzi scheme, Ponzi schemes also keep going if people pour money, they won't fail unless one thing happens, let's be real, the main reason was the fraud in the books.
Otherwise, the entire sector would be dead.

Are you serious? :P


Not the ZH dumbwatch, it shows 25:81.


I went through the articles you've quoted:

So, that's 40 billion a year...some from companies that don't have any problems in repaying their debt.
What's 40 billion a year for the entire banking industry? EOS raised 4 billion, EOS!!!!!!!!

And again.. you've omitted a paragraph:



https://i.imgur.com/I18wb7s.png

There is just a slowing demand for personal use, transport trucks are running 24/7 , why do you think FedEx and UPS are hiring drivers?
Same for the agriculture business and many more.

We've been hit by this disastrous pandemic, every one is not prepared on this that's why every one is struggling, every market is collapsing and every one is panicking. For some time, Stock and oil market has a pattern, when stock is up and so does the oil market too, vice versa. We're on a month after some countries declared a nationwide quarantine, we might have not seen the worst effect that it could give the markets yet.
Considering this too, maybe oil market is quite safe even the prices is low since there are no consuming of it that much during this times.

Oil prices are doomed. Saudis and Russians are using this economic crisis to kill USA shale oil producers. They will succeed at its plan.

LOL, I agree.  Since they're the digital equivalent of some old guy wearing a sandwich board that says "The End is Near" I think they're only going to be right once, and only if we actually experience Armageddon.  And at that point all bets are off anyway.

It may sound harsh, but I'm not going to shed a tear for anyone in the oil industry.  If the market for oil crashes, so be it.  The world ought to have adopted electric vehicles and alternative energy sources a long time ago, and seeing as how it didn't, it's allowed so much greed and corruption to thrive over the years that the end can't come soon enough IMO.  Plus you won't hear many folks complaining about how low gas prices have been--and I hope they drop even further.

USA is the last thing to think about for both countries.
Many countries aren't satisfied with the oil prices for years. Those countries are counting mainly for the oil price for their economy since it represents more than 90% of its exportations. I am talking about Venezuela, Algeria, Iran, Gulf countries mainly and Russia too is affected. The economy of these countries is slowing down at an incredible rate, many projects are delayed and some of it is seeking financial help from many ways (Aramco for example)...
This oil price war isn't helping these countries except Saudi Arabia which can get some profits by rising its production which no one else can do.
Now back to USA shale oil industry, it is just a collateral damage imo.

The good part is, people are still afraid that "if this bad thing happens to banks, the economy will crash, so we have to save banks in order to save the economy!". Well, I am sorry but banks do need money constantly and they constantly crash the economy and so does all the other companies who have leveraged debts on oil as well.

Maybe instead of letting these huge billion dollar companies ruin the economy and constantly get saved, we could potentially just use 5x that amount that will hurt our finances more than we can imagine for now, yet we could at least never have to worry about anything like this in the future, when you consider world will be back on track to do great in 10 years after such a move, you realize in 100 years we would basically be living in the greatest prosperity the world has ever seen because our money that we work so hard for and still live poorly with it won't go to saving bigger companies anymore.

I've been following the oil market a bit during the pandemic, and (without any references) this is what I remember (by heart):

• Oil production was increased by 2 million barrels per day by the Saudis
• Oil demand has dropped by almost 30 million barrels per day
• Next month, OPEC and other countries are going to cut production by almost 10 million barrels per day
• (Strategic) oil storage facilities are quite full, other storages are being filled too
• China wants to increase it's strategic oil reserve while prices are low
• Storages at oil producing countries are being filled too
• Floating storage (oil tankers) are in high demand
• Some say oil prices could go as low as $0 or even negative price per barrel

At some point, oil producing countries will literally have no place to store their oil anymore. I don't know the details of those operations, but in my layman's view, that will mean they have to stop production in order to keep their feet clean from oil.

US tariffs on imported oil would be interesting. It protects their own shale oil industry, while the money stays within their own country instead of being paid for oil abroad. Americans won't like the higher oil prices of course, but keeping the money in their own economy could benefit the US in the long term.

Now, this went south pretty fast!
https://i.imgur.com/KDeu119.png
Source (https://finance.yahoo.com/news/texas-oil-2-barrel-raises-120000398.html)

If that BTC crash was brutal, this one is in a league of its own.
And we're still paying over 1euro/l, good old taxes  :'(

Unless they are planning to fill the 3 Gorges Dam with oil, they will run out of space pretty soon too.

LE:
Out of curiosity, I checked and it seems the dam has a storage capacity of around 3500 days of global oil production.  ;D

Wow! ft.com (https://www.ft.com/content/a5292644-958d-4065-92e8-ace55d766654):
Madness :o

I paid around 1.50 euro/l last week. Where can I sign up for a euro/l?

Let's not give them any ideas :D

So prices drop to almost zero (and possibly lower) because even though you can buy the oil, you can't store it. So I guess shutting down and starting up oil production costs more than just continuing production at a loss for a while.

It seems like stopping production isn't always their solution for oversupply of their oil, when there is no demand for it their business is practically over. If you think about it most of the businesses that uses oil like air transportation, cargo shipping, delivery trucks have all hit a pause in their businesses as well which means their business will also take a hit whether or not they like it. This isn't avoidable at all and they can't do anything about it. Best thing now for this corporations is to ride this year out in the losing side and hope everything will go back to normal as soon as this pandemic subsides.

And there it is (https://edition.cnn.com/2020/04/20/investing/premarket-stocks-trading/index.html):
Note the "minus" sign!

Uhh, what?

https://i.imgur.com/UrT0Odm.png
source (https://finance.yahoo.com/quote/CL=F?p=CL=F)

I woke up this morning, checked Yahoo and it was $10, now it's under $1 a barrel. And it's taking a toll on the stock market.

edit¨* @LoyceV beat me to it...but my pic isn't accurate, it's actually -137% wtf!??

I can beat that:
http://loyce.club/other/oil.gif

It's insane. They literally have to stop production instantly else their storage would be filled with oil that no one wants to buy at the moment. China could take up all the oil they could get while the prices are low, but even then I think that they would have a limiting capacity for oil storage. Just a month ago, Saudi announced that they will be ramping up their oil production by 3 million barrels/day. That seemed to be not a good idea after all.


Ahh, a fiery dam of oil.. What could go wrong if any country decides to try this? ;D

Marketwatch.com (https://www.marketwatch.com/story/us-oils-may-contract-skids-about-20-at-nadir-as-crudes-woes-continue-2020-04-19) explains what this means:
And I still don't really get it! So this doesn't mean oil producing companies are asking a negative price, this means the guys who bought the oil a while ago now regret it and don't want what they bought and paid for to actually get delivered, is that correct?

Yeah, because they assume nobody is that keen to buy that oil, refineries don't want it and it will cost probably an insane amount to store it anywhere if there is still room for any. So, it's a pain in the ass to have it, like gifting somebody with a mansion that is crumbling, needs a lot of money and comes with a lot of yearly taxes.


I said over, not exactly. But I'm paying 1.15!  ;D
And you Dutch are crazy with your prices, just dump all your cars in the sea, make another seawall out if them, ride bicycles and be done with it.


Do you know what's interesting?
That surprisingly, it will not be that dangerous as you might assume, crude oil if properly stored and left with no way of accumulating gas under pressure, is not that flammable, assuming you manage to keep all the water from it to prevent overflow and you constantly monitor every gas accumulation it won't burst into flames. And even if it will catch fire, there will be no gigaton explosion.

Crude oil is sold in barrels the price of 1 barrel was somewhere around 51-52 dollars in January now its as low as 20 dollars it can be very very good time to invest in crude oil i strongly belive that it'll bounce back in the last quarter if this year and many meetings also held in this month regarding crude oil between russia and Saudi Arabia they had a deal on production cuts just let this pendemic go away you'll see it will go up again.

I can see a business model where you fill abandoned oil wells with fresh oil again, and make a profit doing so :)

Unfortunately, many countries fail to read this movement, so that large countries exploiting renewable energy in a country under the guise of TORCH. China has started a program to monopolize the production of world batteries for electric cars, homes, drones, and buildings. Even locking in the OBOR program for countries that have high nickel resources.

The industrial revolution 4.0 also means the energy revolution. Given the availability of oil and coal reserves will soon run out. So it is necessary to diversify the energy to continue to meet the world's energy needs in the next fifty, one hundred, to hundreds of years in the future.

The industrial revolution 4.0 requires a reliable supply of energy for its production. The challenge is how to develop electrification, new renewable energy, and energy conservation with zero emissions. So that despite the economy and rapid movement we can still live. Electrification, diversification, and energy conservation are a must. Electricity no longer generates CO2, then diversification is carried out with the use of renewable energy and last but not least is conservation through the use of more efficient energy. So the government must have a detailed road map of the stages of the energy revolution, then a strong political commitment to realize.

What the hell is going on, I thought it is just a some sort of bug but when I read the news I found out that it is true. This kind of event will be written in the books for sure because it is not normal to see that the demand of oil will become negative, it is really first time in history. The panic is real and I know that there are some institutions and companies that experiencing now a bankruptcy because of what happened. Anyway, there is a opportunity and we should be ready especially if we will go to long position.

It is indeed not normal to see the demand of oil plunge too low but then the times are exactly that, not normal. With COVID-19, we have suddenly seen streets cleared of cars, private and public. In addition, ships are docked, planes are not flying. All these are using oil for their operation. And now that they are all stuck due to lockdowns, the oil are left unsold. I guess it will be a matter of months before the demand would soar again. 

Sooner or later this time was about to come. And I wonder why you re surprised.
People have started to try to get rid of oil production. We are promoting green energy, hybrid cars and electric cars.
It was about time to see the oil price dropping like that.

Another thought: if the shale oil producers spend around $50 per barrel of oil they produce, and the guy who buys it only wants it if someone gives him $20, can't the oil producer himself "buy" his own oil on the market, and leave it in the ground? He'll earn $20 instead of losing $50!
Or would that be considered some fraud in some way?

This the right time to buy crude oil.
The price of crude oil is minus, you will get payed by buying crude oil. 8)

As an oppurtunist, I do not see the problem because of the crash, though this may sound really crazy but investing in oil will surely be a big win because this pandemic is just a temporary. I guess I could say that this is like a stock dump and this is an oppurtunity for us, remember that when something goes down then it will surely go up in no time, I believe that the reason that the price was down because of the demand is low and I am staking my faith in the time that oil will recover. I am no analyst or expert but I see this as an oppurtunity so take this with a grain of salt.

The price of oil is really unpredictable and no one is expecting that this will happen. Imagine the price of oil goes down and becomes zero, these collapses are really shocking. This is the time where people are overwhelmed about the volatility of bitcoin, they know that there's something more worst than the price of bitcoin if it crashes. No one is expecting it and no one is prepared as this pandemic really spread faster than we think. Market, Government, and people are really struggling to recover and fight this virus because of the lack of funds that's why people do panic selling of their coins. I think this collapse in crude oil's price is just the beginning and based on my prediction, there are more bad things that will come to us.

Then what? Store it in your garage?

https://www.eia.gov/outlooks/steo/images/Fig6.png

Daily oil production is around 100 million barrels. The data in the graph is 2 weeks old by now, and I've seen estimates stating supply is currently close to 30 million barrels per day larger than demand. Even if I reduce the almost 10 million barrels per day OPEC+ production cuts, that leaves around 20 million barrels per day. That's 3.18 hm³ (https://www.wolframalpha.com/input/?i=20+million+oil+barrel+in+cubic+hectometer) (cubic hectometer).
The volume of the Empire State Building is 37 million cubic feet (https://www.esbnyc.com/sites/default/files/esb_fact_sheet_4_9_14_4.pdf), or 1.048 hm³ (https://www.wolframalpha.com/input/?i=37+million+cubic+feet+in+cubic+hectometer).

In short, this is the volume of the oil you'll need to store every 8 hours to make up for the difference between supply and demand:
https://upload.wikimedia.org/wikipedia/commons/thumb/2/20/Empire_State_Building_by_David_Shankbone.jpg/800px-Empire_State_Building_by_David_Shankbone.jpg

You can buy oil now at such a low price, but then you will face the problem of selling it. There are currently no available storage tanks for oil, so if you need to take a tanker, you will have nowhere to unload it. But at the same time, oil producers cannot stop the process of its production.

New update about oil is that it crush below to negative territory the price is $0 per barrel the effects of corona virus really hit the oil industry. This will a trigger a much more major uncertainty and fear towards investors. Though the dow and S&P wasn't affected for now the stock market is safe. Im expecting the Fed to do more extreme actions and mass money printing in coming days of trillions of dollars.

It's quite amusing how most bankers and Institutional investors expected Bitcoin to drop to zero in this financial crisis but look at Oil in had a flash crash and immediately dump to negative value.

It is strange. I believe that this is the first time something like this happened. Not two World Wars has crashed the Crude Oil market to negative prices.


It's not just about simple economics. It's the logisitcs. Storage capacity has run out! Oil buyers can't take the oil anymore.

Now I guess we all know that oil too is pump and dump  ;D. Oil price hit zero while a bitcoin is still trading above $6k so who is the boss ? We will all see what will happen after this pandemic

It's not a pump and dump because it dump for a reason, there's less demand of oil now so it's normal that the price will fall down, but it does not fall to zero, at this time, for countries that are not affected with covid or there is no lock down, they can enjoy the price of the crude oil now, and personally I got my car full tank and bought some reserve in my house as this is the first time I saw the price is this low.

Again, you missed the point: the collapse of oil prices can act as a catalyst for shuttering already struggling oil companies. ~100 bankruptcies are expected, along with 30% of junk energy bonds expected to default. https://www.cnn.com/2020/04/02/business/oil-crash-bankruptcies-whiting/index.html

That's how economic crashes work. Troubled firms can survive during boom years but go bankrupt when the tide goes back out. When they all crash at the same time (like 2008) we have a financial crisis. If there were more firms like Hin Leong engaging in Enron-style fraud, it would only exacerbate the systemic risk already posed by the oil industry.

Your argument doesn't actually suggest the oil industry is in any way robust in the face of collapsing oil prices, or that banks would be unaffected. You're just saying, "hey look over there, fraud!"


Are you?

The point of this thread is that banks are heavily exposed to oil companies, who are unprofitable or collapsing due to low oil prices, which poses systemic risk to the banking system.

The point of this thread is not whether Hin Leong had fraudulent books. That is tertiary to the above question. If anything, the fact that Deloitte signed off on Hin Leong's books raises questions about how prevalent Enron-style fraud is at public companies audited by the Big Four, i.e. virtually the entire US oil industry.


+$32 billion in the oil field services sector.

What's $241 billion, in a high leverage and potentially low liquidity environment where bonds are securitized and sold? Not nothing. It's something like 1.13% of the country's 2019 GDP, and much more significant than that in terms of banking liquidity.

Certainly not comparable to $4 billion. EOS? Shaking my head at that comparison.

I'm talking about crude oil because there are banks like Goldman Sachs who have more than 11% of outstanding loans tied to the oil sector. And none of these numbers include unfunded Q4 commitments either. It is too large to wave away if the banks are "too big to fail."

I'm not saying the oil industry is the only sector banks will see defaults in either, the opposite in fact. This is one systemic risk among several to consider. Residential mortgage delinquencies pose another major risk. (https://www.latimes.com/business/story/2020-04-02/home-mortgage-default) Then there is commercial real estate. (https://www.wsj.com/articles/loss-rate-on-banks-real-estate-loans-expected-to-soar-11585083914) The potential loss rate on consumer loans and credit cards is even worse. (https://www.forbes.com/sites/jeffkauflin/2020/04/16/exclusive-early-data-shows-12-of-online-loans-in-trouble-double-just-weeks-ago/#6201b1c18c1e) It seems worthy of speculation which of these factors, if any, might cause a tipping point for a banking crisis. Considering what happened in 2008, it would be silly to write off this possibility, especially when looking around at what's happening in the world.

Banks are bracing for the impact, because they are smart enough to see the collapse in Q2 will be epic. They've set aside ~$35 billion among themselves to cover anticipated defaults. (https://www.cnn.com/2020/04/17/business/bank-earnings-defaults-recession/index.html) Will it be enough? We'll see. In times of crisis, the markets always look liquid until all of a sudden they aren't anymore.

I would change my tune on the oil industry when WTI is trading above $50 a barrel again, because that's the minimum before even the most profitable US producers can get cash flow positive. That's a huge impediment to recovery. Surviving for a couple months is one thing, surviving longer term at these prices will prove challenging. Unfortunately there are strong signs of economic deflation now, so a swift V-shaped recovery in prices looks less likely every day.


That's one company, who managed to refinance its debt in February. Literally no bonds are being issued to energy companies anymore. (https://www.cnn.com/2020/04/02/business/oil-crash-bankruptcies-whiting/index.html) Oil companies can't refinance their debt.

And let me know when WTI is trading in the $30 to $35 range again. It's trading at $15 and touched $11 a few hours ago.

I really don't know what's going to happen but it seems silly to assume oil prices are just going to skyrocket in the near future to bail out the oil industry. Most of the commodity markets I watch are standing on the edge of a cliff too. Anything can happen, even a miraculous recovery from here, but I'm not going to stick my head in the sand given the market conditions. 2008 is still fresh in my mind.

The sentiment I see when I look around also seems way too optimistic. So many analysts are like, "Crude oil just dumped below $0 for the first time ever? Nothing to see here, move along! Everything goes back to normal next month!" We'll see about that.

Everything's "fine" now, boys  ;D

https://i.imgur.com/SzOh4qF.png
We're green!

But more importantly, June's future contracts, even though they took a big hit over the last 36hours or so, are still in somewhat good levels (price):
https://i.imgur.com/4zF0zaM.png

Brent Crude oil went down by A LOT as well so it's not like we're out of the danger zone.

Hmm, that sounds like the perfect way to get fined thousands of dollars  :D
I'm pretty sure the specs of oil future contracts have some specific rules about the price and procedures of physical delivery, so it's not like either party can work something outside of what's in the contract, plus everything it's well documented so if something looks odd, well, prepare for the consequences.

Anything is better than -$40 I guess. ;D

As far as "good levels" go, US producers need $50+ a barrel to get profitable again. That's 330% away from the current price. Everything in between just represents a sector operating with major losses, on high yield debt.

Everyone now is asking how to buy some oil barrels lol.
Production >> demand, no place to store it as it is barely full, long term contracts are getting hard to be signed and the producers are paying you to do this. That's a nightmare for them!

I really do not know what happened to OIL prices, had experienced a terrible decline throughout history, and a very drastic increase up to 200000% in a day, that's a new record in my opinion, is this market manipulation?

OPEC (https://www.investopedia.com/terms/o/opec.asp) is a cartel, of course they manipulate the market!

Hihi, first you would have to realize that I'm not at all arguing at how robust the oil industry or the banking industry is or how invincible and unpenetrable and unfu$#$ it is, they can be hit they can bleed money but not just from this little blow.
I'm just pointing at the overreacting and exaggerations that have made ZH such garbage, and I'm also pointing at some flaws you have in your reasoning. Rather than trying to arrive at a conclusion based on the information, you are trying to pick bits of info so that you arrive at the point you want to!

Take for example your starting point, you've selected a troubled company (which cooked its books with a lot of sauce)  and you're trying to paint this situation all over the industry. At the same time, when I give you a good example, you dismissed it because one company out of 100 is not relevant, this is not analyzing facts, it's picking the facts that back up your analysis.


So it is a risk or a certitude? Because you were pretty certain things will happen! That's why we have this debate after all!


You know that's not true and you know that oil is just like bitcoin mining, You're not making money at 6 cents per kWh normally but if enough people drop out of mining you might make profits even at 8. If some of them shut off their production the supply and demand ration will take care of the rest.


Let me tell you something, I've been through a lot of far worse situations in my life, not family or personally related.
I've endured the communist regime, I saw the warsaw and caer pacts crumble, I saw inflation above 1000%, I saw a recovery period and another crash at the end of the '90, I lived through 2008 which was like a breeze compared to the previous ones and every time people were acting like it is the end of the world.

It wasn't! Nor were the hundreds of pandemics not the hundreds of crashes, life will go on, the economy will recover and we will be back consuming and producing and drilling for oil and burning it..... If AOC won't be elected president!
You're underestimating the recovery potential of this flawed (considered by some) economic model.

But as you've said, I'll have to add some tickers and let you know when WTI hits 30$ and 50$!  ;D
And you own me a PM when the entire shale sector is dead for good!


Unfortunately, it won't work for most oil wells at the end of their life circle. Most of the late recovery oil is forced out through different methods from water to thermal heating, so trying to inject oil back it will be more costly from an energy consumption point of view than getting it out in the first place.
The simple solution would be oil pits, dig 5m deep pools over a 1km2 area and be careful not to let gas accumulation happen.
Venezuela actually used open-air oil pits to store a lot of oil when its infrastructure crumbled and they weren't able to move it from the exploration areas. But good luck dealing with the environmentalists.


There was no "oil price" during the world wars, nor were the same markets as we have now in place.
And if they were, the demand for oil would have pushed the price at insane levels, remember that Nazi Germany was trying to produce synthetic fuel at insane costs just because they didn't have any alternative. And,even by ww2, the Saudis couldn't flood the market with oil  ;D
 

What a week ago OPEC (Oil producing and Exporting countries ) has agreed to cut the production of oil for about 10Million barrels per day in the month of May and June which is around 20% of their production level and literally the demand has seen a sharp fall because of the pandemic situation so things might improve a bit in the May and June but it will take few more months for the demand to return

I really don't know what caused the prices to dump like that and increased but I can only speculate on what could happened in between at the very least. You can have crude oil not only in physical format but also you can get some from the stock market type investment banks as well, not really that common but crude oil is a commodity that you could purchase there, you are not really the owner of physically a barrel for example but you do have digitally purchased one, can't cash it out, can't call it to your house for example, but they just assume there is a barrel out there which is owned by you.

If the prices dropped so low that one liter of WATER is more expensive than a liter of crude oil, that means a lot of people all around the world, a big huge global movement happened that bought oil right away yesterday which caused it to go back up a bit.

Well, no one expected this as the price drops massively after 20 years if I am not wrong, With the global economy in a complete stand there no demand for any new oil. So undoubtedly the price might drop this also collapse will be unforgettable for everyone, however let's believe things will get sorted out in few days!!!

lol yeah, I've seen some folks talking about where they can buy stock of oil as if there is a person who sells for free The oil price crash is not what it really looks like, the price did crash because there were no demands so as you guys can see there is a massive price dump from oil industry but it does not mean anything.

The dump created due to oil trade war, if they acted early and reduced the production level then they are not in such situation as now.Anyway the country USA is going to get affected due to the crude oil price collapse but in reality no people in this world will get the benefit for the price decrease because they were forced to buy for higher prices even when the barrel price is in negative value.

Oil prices may not recover forever as world automobile industry slowly started adopting renewable energy resources wherever possible.

One day or other, crude oil producing countries must need to face the situation like this as all petroleum related resources are limited but unfortunately they might not be expecting this much drastic fall of crude prices due to a pandemic. I guess this covid19 outbreaks shows some trailer of what are things we may go facing in next decade or in 25 years if we keep ignoring destroying nature and not thinking about making use of renewable energy possibilities. Not sure how many governments will learn lessons from this pandemic.

This is the one that even scares me of all the business falls since this coronavirus epidemic started. Oil is a vital part of most economies of the world. However the Bret Oil is not that badly affected as the price has remained above $20 per barrel and not like the American oil which is now in the negative.

You can pause and stop oil rigs but you cant pause and stop shale oil fracking without huge cost of restarting it again. Also a lot of USA refineries are on Mexican gulf in Huston and New Orleans. You cant transport oil there from North of USA. Those Refineries still use Saudi Oil. And plenty of tankers is on the way there from Middle east.

The main problem of oil is that the market does not offer physical oil directly, but simply papers that are backed by it. Because of this, a collapse occurred, because speculators just wanted to make money, but they had to sell even in the red, because if they didn’t sell, they would have to take physical oil.

Headlines with the most probability to trend starting 4th quarter of 2020, and for the whole year of 2021, "Oil spills". The over-supply of Crude Oil must go. Hahaha.

It seems a bit weird to me that every barrel of oil gets sold almost 30 times (https://in.reuters.com/article/oil-record-volume/update-1-record-2-5-bln-barrels-of-oil-futures-traded-tuesday-idINLDE63D28320100414). The number of trades by people who never even come close to any physical oil is rediculous.

This also makes me wonder what price the oil itself is sold for. When the "speculators" sold a barrel for $-37, as far as I understand the oil producing company still gets a positive price for it's oil.

This is the first time I am haring that prices have slip in negative and people are even not ready to buy because the storage is much more expensive than even buying this contract. So hardly demand for the future contracts in buying side as well. This is happening because of the several countries under lock down and thus there is not much consumption happening and as a result the storage capacity is almost full of US now who is the biggest exporter of all.

Okay, well that's the topic at hand, so......


You haven't refuted anything. You've pulled some random numbers out of your ass and done some irrelevant hand waving that has nothing to do with the topic.

Nothing I'm saying hinges on anything ZH has ever said. I didn't mention a single piece of data from ZH. Let it go.

And what conclusion was that anyway? That the threat of bankruptcies and defaults on a large chunk of the energy bond market poses a systemic risk to banks, who may soon be reeling from losses in commercial and consumer loans? What is unreasonable about that?


Actually, I pointed out that the industry is highly leveraged and highly unprofitable and provided a multitude of data to that effect. I used Hin Leong as a single example of how the collapse of oil prices can catalyze the demise of struggling oil companies. I used Whiting Petroleum's recent bankruptcy as another, then pointed to the ~100 industry bankruptcies expected over the next year to emphasize the sector-wide risk.

I'm getting a little tired of you ignoring 99% of what I write and then completely misrepresenting me. Try responding to my last post next time, instead of repeating nonsense arguments about the OP which I've already responded to.


First, you are confusing two different articles. That company was presumably not included in the ~100 expected bankruptcies.
https://www.cnn.com/2020/04/02/business/oil-crash-bankruptcies-whiting/index.html
https://www.nytimes.com/2020/03/20/business/energy-environment/coronavirus-oil-companies-debt.html

Second, I dismissed it as being indicative of the entire sector for good reason: that company refinanced its debt months ago. No other companies in the industry can refinance debt now because no banks are funding energy bonds anymore. On top of that, their 5-year projected cushion is based on oil holding above $30. Oil is trading at $10 now, meaning they could go broke years earlier than projected.

Third, I never said every company in the industry would go bankrupt. Even then, Parsley was supposed to be an example of one of the well-capitalized oil companies. At $10 a barrel they are broke in 1.5 years based on their own projection. Will oil still be trading at $10 by then? Probably not, but this has to make you wonder about the companies that are struggling with principals due in 2020 or 2021. And while I don't expect this, if the global economy goes into a long term depression (like the 1930s) then the entire US shale industry will probably go under. In another Great Depression type context, who can compete with Saudi Arabia at $2.80 a barrel? Nobody in the US.


I have spoken repeatedly in terms of risk and possibilities. The emphasis on certainty is just one of your inventions:



Another terrible analogy. Oil does not have a difficulty adjustment algorithm. Shale production is extremely capital intensive no matter what. $50-55 a barrel is the break-even cost of production in the US shale patch, period. https://www.cnbc.com/2020/04/02/coronavirus-whiting-petroleum-is-just-the-first-domino-to-fall-in-us-shale-wipeout-strategist-says.html


Nobody cares if oil companies go belly up. The issue is how leveraged the sector is and what happens if a big chunk of the sector does go belly up, in terms of banking liquidity, and given the expected liquidity crunch in Q2.

Something to keep in mind as we rationalize why Trump is now trying to get a direct bailout for the oil industry, even though it would be incredibly unpopular with voters:
https://www.reuters.com/article/us-global-oil-trump/trump-calls-for-us-oil-industry-bailout-as-prices-plunge-idUSKCN2231Z6


Who is talking about the end of the world? ::)

All I'm talking about is the possibility of a banking crisis like 2008.

Two things first:

Good, at least now we have a common view on this.


That fact that pissed me off about Hin Leon is that you dismissed the fraud happening there as a catalyst but at the same time you ignored the fact that companies that don't have the same problems will never face the same issues and from the same article I gave you an example, the guys that knew how to shield themselves have done so.
From the moment you said that the fraud was irrelevant in the bankruptcy it's getting a little hard to ignore and get over it. No matter how many good arguments you bring to the table, that thing will still be there, like a tiny red dot on a cashmere sweater.  ;D


"Those factors will almost surely",  "may not survive"  "gas producers could file for" "could potentially spike to 30%"
Assumptions, assumptions, and again assumptions.

I think I heard those somewhere else long (or maybe not that long) time ago.
Yeah,a broken clock is also right twice a day, but good luck trying to make it point to 2016 again  ;D


Oil at 20$ crumbled the URSS, oil again at 20$ again made Russia default on its debt twice in a decade.
There are a lot of state-owned producers who are in a far worse situation than the shale producers because, in the case of private companies they can be helped by the state, in case of Rosfnet or Aramco, they're the ones that need to help the state , when they fall the country falls. The US has a lot of ways to help them, the others have none. One serious move from Trump against imports or printing a few more mickey mouse checks and the tables would be reversed for good and forever.


Oh but it's perfect, why did the shale start? Because there was a lot of money to be made, just like mining bitcoins, miners flocked to it, and then we had smaller revenue per $ invested and the ones with GPU and FPGA dropped one after one, same for every generation of Asics. If mining farms shut down the same bitcoins would be minted and the reward will be split between a lot less, just how the ones that survive the oil crash will be able to sell it at a higher price than now. And do you think mining is still a home basement business? We have around 3 billion worth of mining equipment right now in place, it's no longer child's play.

It's the same, if BTCPEC decides everyone would cut their hashrate by 10% they will have the same revenue with less power consumption.
When bitcoin dropped to ~4k for a week 15% of the hash rate was gone and even now it's not back to the same levels as of March!
How is that different? It's not  ;D
People with s9 shut them down, people with solar kept them on and still went mining, even happier than before.

It is still not recovered from the initial big fall, I know it is not as low as couple days ago but this was over 60 dollars when the year started and now it is around 10 dollars, that is still a huge drop that needs to be recovered before we can talk about good days.

Surely there must be a lot of investors trying to find as much as possible but the crude oil is something you have to store and the storage are full right now, so all that can be bought is already bought, I don't know what else they can do about it if there is absolutely no place to store the ones you buy. The production has to get lower and lower in order to meet the demand, if they continue to produce at this pace while there is no place to store them, price can't recover at all and will even continue to fall.

The reason for the collapse is just no demand. Demand in simply term is request for a commodity and when it does not happen, no supply or delivery. That means at the time now, only production can go on and no utility or end use so price will go down automatically.

This is the proof that we, the final consumers have the power to control the price of oil, no demand no money. Unfortunately this is for a short period of time.

market manipulation will always there in stock or commodity exchanges, speculator will always do bad thing to earn money.

oil demand from manufacture industry drop alot since personal consumption decrease alot when people didnt get money from job.

This has been a huge challenge this year. But I know for sure that it’s not going to continue forever and the price of Bitcoin will not fall forever, it is just a matter of time and all these things will pass and things will get better and go back to how they used to be before now.

Oil seems to be what’s being mostly affected in this situation right now, it kept crashing and reached to the extent of what we least expected would happen. The price of reduced to a negative $37, and some people have been asking whether this is going to be having any effect on the price of bitcoin, but I don’t really believe that one.

It will not last forever, but while it lasts there will be a huge problem. I think that we will see the consequences after oil we will see the stock market going down entirely! I think we are witnessing a big oil war, and that war will spread. This is not over, we will see a lot more about oil in the upcoming months, and the culmination is waiting for us, in some moments I think that big problems are yet to come, so people don't relax yet!

What we are seeing right now is not seen before and I think it will not happen again too. All the oil companies are expanded a lot all these years for meeting the demand and they didn't know situation like this happens as the demand has fallen sharply and companies running out of inventory to store the producing oil and OPEC has decided to cut the production for the month of May and June by 10M barrels per day. All these fall in price and reduced barrels sales gonna hurt the companies a lot which might trigger the economic crisis.

Yes and no, commodity markets are indeed attractive to speculators because they basically bet on oil prices in the future. Speculators can win and get profits, or vice versa, lose and suffer losses. But many companies also want to ensure that their activities are not interrupted in the future, and need to guarantee the supply of fuel for the continuity of production. So they need futures transactions to guarantee the production process, not to speculate.

This practice does not only occur with crude oil commodities, but also with many other commodities such as corn, wheat, soybeans, and coffee. For companies, futures make it easy to calculate and plan costs for the next few months.

It will recover because the fall is due to market manipulation by oil cartels. The fundamentals are still strong, just like the fundamentals of Bitcoin.
You have to realize that oil is a finite resource and the demand for it is contunuous. We all have cars, we all ride busses, and so on. Cruise and cargo shisp need it, yachts of millionaires are fueled by it. It's not going to keep being sold for cheap.
Also, all artificial influence on the market from governments and cartels can give you a false impression that there's something wrong with the commodity itself.

I am not sure how to react to that other than say that nobody, whether they’re 120 years old or whether they’re 20 months old, has ever seen an oil price lower than this.
The run was definitely characteristic of a historic tolerate marketplace for oil, which has been sunk by the breakdown of claim as a findings of coronavirus outburst and a short-lived but menacing assess war between Saudi Arabia and Russia that new level new crude to an oversupplied market.

Definitely it will go up because oil is essential for every country to start their daily work routine but the oil producing companies produced too much of barrels when there is no demand such causes problems with storing of it and which resulted into negative prices on international market.

of course it will go up later, I see some countries are not in accordance with the decline in oil prices. although oil prices have fallen, fuel prices for vehicles have not gone down in some countries. whereas the decline in fuel prices when in a pandemic / covid-19 condition really helps the community increase purchasing power. is this not very consistent with concern about political fraud

Crude oil prices are currently at the lowest level in the last 20 years (not the first time)..  This phenomenon occurs due to lack of market demand for crude oil needs because of this "PANDEMIC".  at the moment there are around 40+ countries that impose "LOCKDOWN" (which means there is no activity at all) and the rest only impose "LIMITATION OF DISTANCE".. 

The United States, Russia and Arabia (the 3 biggest oil-producing countries in the world) surely feel the worst impact of this price reduction.  they can't do anything even when China buys a lot of crude oil as their stock. it is certain that the price of crude oil will rise again but it cannot be predicted when and to what extent (price)..

This situation happen because many countries try make production and have much stock so oil price down, with world get crisis almost business stop working and oil have been in lower price, but many countries not make their oil on lower price and keep the same price before oil in lower price,

you need to realize that even if we do have the power to control the price by not buying it as a final consumer, our vehicle still rely heavily on the use of oil as a fuel and if you want a real independece from oil you should start using those electric vehicle.

Seeing the decline in oil prices from a geo-strategic geopolitical perspective nearing November 2020. America is the protector and partner of Saudi Arabia who gave approval for the decline in oil prices. Market oil cadres are Saudi Arabia, America, Venezuela, and Russia, others are small players. Saudi Arabia wants to be a controller of oil with America. MBS pushed prices below the production prices of all countries. 11 dollars where the Saudis are still profitable and who buys all of its oil is America.

The Saudi strategy of lowering prices is making all oil companies bankrupt. All who held oil bonds screamed. And in the end, the oligarchy that holds the dollar will buy oil bonds and collapsed oil companies and other securities-related to oil and oil products. Therefore, the FED flushed QE (read printing money) to incumbent oil players and supporters of the republican party to buy world oil companies that collapsed and the United States collected oil stocks for the next 1-2 years. Energy as a key to war began to be turned off.

Currently, many countries are aggressively making demands on China in collaboration with WHO officials, ranging from Germany, Israel, America, Britain. There is a possibility that China's dollar securities will be detained by all countries including America. China has no dollar and a lack of energy. China does not have energy as its national reserve, all are imports.

Field facts at this time, there are two fronts of the Chinese American war. Arabia versus Russia, The Colder War Version 3.0. The purpose of energy control is for war purposes and it is estimated that the war zone in the South China Sea and the Korean Peninsula, with the Korea Unification campaign with South Korean winners (assisted by the Americans). Trump just needs a big trigger to trigger a war like an issue that just circulated that the North Korean president is seriously ill.

Trump needs something to win, corona drugs (hydroxychloroquine and remdesivir) which are predicted as game changers are actually failing. Trump tried to blacken China but China fought back. Trump then blamed WHO. Then begin disinfecting liquid discharge, blazing sun, ultraviolet light, and bleaching fluid. But nothing can lift Trump's prestige. As megalomania, Trump will go all out and release the capabilities and back up shadows of the people behind the republican party.

2021 - 2026 won't be good years to practice Pescatarianism. Hahaha.

https://twitter.com/subnut/status/1255081820938539008

Those oil tankers would have no other choice, but to dump the oil in the ocean to save costs/expenses. It is going to be crazy.

the influence of "stay home" because pedemics affect the use of gasoline is not yet with "Lockdown" then flights are also closed between countries. so that all usage related to petroleum is affected. I agree with the colleague above, maybe after completion of the pedemic, it will gradually improve but it also takes time because there are quite a lot of reserves. because oil drilling cannot stop because the costs will be greater than having to sell oil reserves at cheap prices.

And for this short period of time we have most of the people being online at the same moment, so we can communicate and cooperate more efficiently.
I assume there still are methods of distraction, so we could not being as unite as we could be

It is quite predictable due to Global lockdowns caused by this pandemic. The demand is low but after this crisis I believe that it would go back to its normal phase. Slowly but surely.

It is a Pandemic that we are going through and therefore due to Quarantine people are actually staying at home and the demand for crude oil is plummeting.
One cannot just go around and sell them when no one wants , the market would have to close down till the time people starts going out. Also one should understand that it is really hard for the government to shut down everything and they are loosing huge money and so are the people and therefore soon enough I do believe they will either go for heard immunity or at least decrease the quarantine measures .
Then one can expect the graph to go up. There is literally nothing that can be done, if people are gonna stay at home someway or the other the market will go down and it is for the safety of others .

I heard a figure that now about 25 million barrels per day are unclaimed in the world, which is about 25% of the total production, and given the fact that there are much more vouchers on the exchange than there are directly oil, this was expected, the only big surprise , this is a price drop in the negative, and even so low.

Will it go back tho?
People's habits have been changed during lockdown, companies have been damaged, some of them closed, other ones adapted to situation and started to work remotely.
But overall I believe this situation will push humanity to go away from oil

The absolute collapse of WTI prices is primarily owing to the expiry of May WTI contracts, alongside the significant demand destruction due to lockdowns in several countries and supply glut in oil markets. Put simply in other words, the sellers are paying the buyers. Oil traders are unwilling to take the delivery owing to lack of storage space.

Here is my country the oil price is still the same due to taxation.
I think that the same has happened in many other countries so we as consumers cannot see any significant drop in the oil price. Sales are not increased due to the oil price leading to a collapse in the whole market.

i think the most cause of the price are the pandemic , the pandemic lead company to "stop" producing and that the cause they dont buy oil , and it happens to the most of company

It is really scary that it is already back at 25 dollars right now, I mean of course it was a fluke that it dropped so much, it was like 2 cents per liter of oil, that is really not something that could have been sustainable, it was peaked at 60 dollars this year so we all know it would have gone up however 25 bucks and this quickly really scared me.

I am not entirely sure if this increase is really because it should have gone up but more like there was too many talks of how oil is cheap so too many people bought. I am afraid people may see the increase and decide they did a right call and when it doesn't keep going up they will sell, because this is actually a lot of traders buying to make a profit, when there is no profit they will leave and price may down again.

I am pretty sure with this growth of oil. When the whole world socially isolated in early March and April, the demand for gasoline has dropped sharply and so the price of oil also fell. Now it seems that in Asia the disease has been well controlled, so the demand for production and gasoline has also increased. I think it will hold around $ 23 - $ 27 for a long time before there is another big upside move.

Companies that are using oil or npt less operates. Vehicles like buses and jeepneys are no where to be found on the street. Less demand for oil I think. Due to this crude oil price is crashing, I tell my mom to take advantage of it. I tell her to buy extra crude oil for our vehicle. In that case, they save money. But of course having this, we must be extra careful with this because it is dangerous and is prone in fire. Philippines are now suffering high heat index so it also be a cause of fire.

I think the Organization of Petroleum Exporting Countries, or OPEC is the main influencer of fluctuations in oil prices. OPEC is a consortium that, as of 2020, is made up of 13 countries: Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates, and Venezuela. According to 2018 statistics, OPEC controls almost 80% of the world's supply of oil reserves. The consortium sets production levels to meet global demand and can influence the price of oil and gas by increasing or decreasing production.
OPEC vowed to keep the price of oil above $100 a barrel for the foreseeable future, but in mid-2014, the price of oil began to tumble. It fell from a peak of above $100 a barrel to below $50 a barrel.3 OPEC was the major cause of cheap oil, as it refused to cut oil production, leading to the tumble in prices.

its now rainy season i believe so you should be fine   but still safety practice is a must because those stuffs are still highly flamable if expose with heat or simillar   .

  crued oil was expensive before , along time ago and people always protest its price to go down   .   im pretty sure that people also buy/invest now on it so that they can sell it or for later use    . it was like investing cryptos when they are on dump but this time we are talkin about oil   .

 

The downfall of the crude oil, will affected all this developing countries that base there economy on oil.

Massive cuts in US production will have an effect. The specialists are optimistic that when we overcome the crisis and the economy begins to recover, prices will increase due to demand.

In trading, there are terms "price takers" and "price makers". Price makers are big players (or big boys) in an industry, while price takers are those who follow the price set by the price maker.

OPEC is not a price maker, crude oil-producing countries that are members of OPEC are not price makers, even Saudi Arabia, which has the largest oil production, is also not a price maker. The price maker is the "market". But the market here is not purely based on supply and demand but there are institutions that play and corporations that control.

For the price maker oil is the US because the US has a deterrent effect. Although physically in the Middle East, America still dominates so that it becomes a price maker. This is not separated from the United States military power in the Middle East.

it will certainly happen, if you invest in OIL, now is the right time, because this pandemic will definitely end, maybe 1 year,
after this is end, all activities return to normal, and oil becomes a necessity that must be met

Oil prices have been depressed this year, thanks to oversupply pressure on prices began to intensify when the Corona virus countermeasures shut down factories, closing borders disrupting travel and sending consumers back into lockdowns, destroying crude demand.
But the biggest massacre was launched in March after Saudi Arabia declared war on oil prices in retaliation for Russia refusing to support riyadh for reducing production in order to offset the blow from the corona virus.

Crude oil is directly related to export. We, know, international trade is near to close. Countries have locked their border. Who will purchase now? Supply is available but market has a lack of buyers. There has a theory in Economics. If supply is greater than the demand, price falls for cuting off the extra supply.  That's why price is falling. If the present situation becomes worse, this decreasing trends will be continue....

Yes and also there is no one purchasing the oil as economies around the world are closed due to the covid-19 spread and now the oil that is being manufactured is to be sold so as to unload their supplies the countries are trying to sell it cheaper to get rid of it faster and there was a time when the oil futures market was at a negative rate if I am not wrong, this was quiet a bit and shocking news for me to see this kind of a thing.

Bitcoin look not interested in this year because with halving moment can break out bitcoin to higher price maybe when have other chance bitcoin keep lower price, will be the end of bitcoin era as investment assets, have to move our investment to business or try with gold and property as our investment at the future.

I dont think the banks are caught up in oil business in the same way they were involved with mortgage debt in 2008 and most importantly using this debt as their tier 1 capital reserves, hence leaving them with nothing after taking losses.   The deal with commodity trading and business has been true for decades is wild swings and great risk but also profit to this sector, banks were never unaware of this like housing debt switched from most safe forming of saving to the most dangerous with sub prime meta etc.
   So we dont have that grand collapse, oil isn't the epicentre of this 'disaster' but a side story to the wider pullback required in economies so that people not business can be prioritised and kept alive.   It is unprecedented but possible this kind of failure is not quite the story of over 10 years ago, we can reverse the decline in economies as it was deliberate.

Also I have to keep saying but its completely obvious that cheap oil and energy is a benefit to us all in general.   We wont be poorer as a nation as people who must perform work and survive from 'suffering' this cheap oil, we should all be thankful and hope that it continues.   In the northern hemisphere that energy can be used for aircon cooling, but generally we wont need as much oil until winter comes back and also the full economic consumption of a working population.   Theres sunlight behind these clouds, I'm not so gloomy long term on these problems as such.   Plus dont forget Bitcoin does use quite a bit of energy in processing, now cheaper.

I think the sharp drop in oil prices aside from Covid-19 was also due to the US-China trade war. The US Pettro dollar is falling because Russia has implemented oil price reduction policies along with Iran

Trade war between China and Russia doesn't affect the oil price, Russia and Iran would like to see oil price +$100 or even more, any drop under $50-60 is a pure loss for their economy. And yeah, covid-19 reduced the use of oil badly in the world due to confinement (planes, cars, buses...) in addition to the excess of production which is Saudi's faults then the result was chaotic!

"Trade war between China and Russia" What?! ;D
The cost of a barrel in Russia according to various sources is 25-45 dollars. For Iran, I will not say a figure, but no less than this level. But for Iran, oil is much more important, because it is under sanctions, and hydrocarbons are one of the main items of foreign exchange earnings in the country's budget.

For a long time, the oil price has had the problem of global growth not being as impressive as it should be.   They have the supply but not as much demand as should be possible with billions of people now starting to drive motor cars.    Russia mostly exports commodities and Iran oil is essential but both economies have the great negative of being inefficient in their production which then requires a higher oil price to justify.
   Now despite all the money printing and QE programs, there is no doubt the entire world at the same time is likely to see a contraction even while the monetary base expands.   So these countries are receiving less value and also lower prices and actual volume all at the same time, they are not at war with each other but the facts that assail them.

Oil really affected a lot of things this year as they say, but I am not sure whether that's true or not. The way I see it, everything is running on its own lane, and they don't really have anything to do with the other, unless there is an event that happens and affects everything. The stock market, not just the stock market, the cryptocurrency market as well, all declined in price.

The only thing I believe has caused the sudden decline in the world market earlier is the pandemic. That's the only thing strong enough to have such an effect. As for oil, I don't really see how it has anything to do with cryptocurrency or other stock markets.

I don't believe their side of "what happened". I believe my theory/forecast of "oil spills" is actually now happening, because the cost of storage is too much to maintain. Quickest to solve the problem, dump the oil, invent a story.

https://edition.cnn.com/2020/06/03/europe/russia-putin-oil-spill-norilsk-intl/index.html

Due to the epidemic the prices of everything in general have come down. When the epidemic is back under control everything will be the same again Prices will go up and demand will go up. This problem has arisen not only in the case of oil but also in the case of economic disruption The mines are not working properly.

You realize that if this was true because of an oil glut they would have spilled raw oil and not already refined diesel fuel, right?

It makes no sense to pump all that oil to the refinery, refine it to diesel, send it to a storage deposit and then dump it in a river, if they wanted to dump oil they could have done so with a crude pipe in Siberia, not dump it in a river 40 km from the point to which this goes in the Enisei, for the entire world to see.

They can dump the oil into a cave system if required, theres all kinds of imperfect storage I'd expect them to utilise before an open field and nearby river, its very visible wastage.   Not good news for anyone though the long term of post USSR countries in that region could have been far worse then it has been so far.   Somehow Putin is there as some comfortable ally to the west though I doubt many in politics would want to write a speech on this, its pretty much the case and after all we are in with China which is as bad or worse a regime.
   The 'natural' thaw of the permafrost there is already a possible equal in environment damage to human mistakes because it will release methane gas into the atmosphere which accelerates the greenhouse effect further.  Its like the global warming equal of a slow avalanche, when started its hard to halt.

First of all, I don't believe that the oil spill in Siberia was intentional. And the suggestion to dump oil in to cave systems is ridiculous. It will contaminate the underground aquifer systems and the cost of a cleanup operation would be prohibitively expensive. Underground salt dome caverns are used to store crude oil. Other cave systems are not suitable for that purpose.

One thing that strikes me is that derivatives such as gasoline were not affected by a decrease in prices, as a consequence of such collapse.

This is kind of conspiracy theory but it's not very likely in reality. No one would dump already refined oil, it makes no sense, that maybe could have been done with crude oil.
Anyway, prices are slowly getting back to normal, not quite on a level before pandemic but still.
However, I'm looking forward to the moment when world will be not depended on the oil anymore.

The cost of refining is very low, almost negligible when comparing with the possible expenses they could face by crippling one of their wells when trying to lower its production.

Yes, the price of crude oil is going low in almost six months. But here in my country , the crude oil price is going up a little by little because the government need some budget to back up a loss budget that used in to fight a pandemic crisis.

The story with the fall of oil was inevitable - remember OPEC and how Russia and the Arabs did not agree about oil. In the end, what? The Arabs oil "goes out".  Russia is ready to sell oil for 12$.
US oil is worth a penny because shale failed as a project. Yes, and in principle everything is bad there is shale oil industry, it kept only on subsidies.
Again, the fall of oil was an inevitable event. The main question is cui prodest?

Not everything. Price of food went up. People cooked and eat more since were at home. I am sure some other things needed for staying at home went up. Prices of clothes and shoes decreased. You use shoes only when walk outside.

Yes, a lot of things actually rose in price, unfortunately, I think that the price of food will never get down from this point.

Stocks like takeaway & hello fresh had an extreme increase cause of the demand of all those people who we're not going outside. I expect them to correct in a month or three, maybe not for takeaway as many people now know how convenient it is to order (fast)food online.

Price of food probably increased because of the restrictions and lower imports/exports. The demand didn't change, people will eat approximately the same quantity if they are at home or in the restaurant.

Many countries had started easing their lock-down invariably many people are putting their vehicle on the road definitely the demand for crude oil had started rising which will definitely continue in the next few month to come, many countries whose economy are oil dependent or as source of revenue has their budget  ran into deficit already as a result of this pandemic those countries would have to borrow to cover up their deficit else their economy will spell doom to their citizens.

You're actually right, I'm sorry. I was only so excited for my theory to be right.

I'm not hoping it will actually be right, but I believe some oil storage facilities, and ships will dump oil as part of their cost-cutting plan.

https://bitcointalk.org/index.php?topic=5242006.msg54330150#msg54330150

you got it right . thats the main reason why food price skyrocket but the demand got lowered because people are budgeting because some jobs havent resumed yet  . most people only ate 2 times a day but some unfortunate people are happy if they can eat once a day.  on most part of our country , they are now starting to resume . transportation are getting lively now so i expect that price of crude oil will now rise   .  fare for transportation did increased too because they limit the required passenger just to follow social distancing

That would be an act of war, when the oil tanker can burn quite low grade fuel and requires alot of it to move about I dont think they have any requirement to be dumping fuel.   Those who have no ownership of a tanker and then bought oil they cannot store are in more of a fix hence the extreme moves for a resource being priced as trash.      They can do all kinds of things with spare energy including pumping large amounts of water up hill in order to store that energy for future spike demand and others things, I cant swear its especially profitable but theres always going to multiple avenues for spare energy and projects to profit from it.
   We do waste every single day giant amounts of energy from the sun after all, also other kinds like hydro power, waves, tidal power and lots more natural energy.   This oil surplus is just something slightly new and temporary.

Yeah, I was only considering Occidental countries. Most people here didn't change their food consumption, but I didn't think of other countries with smaller social security nets.

Or there can also be surprises from China for alternative renewable and inexpensive energy sources, namely the use of lithium batteries. Some news circulating that the CATL company is ready to accept orders for lithium-ion batteries with new power can hold up to 2 million kilometers or 5 times the power of the strongest lithium batteries now, or equivalent to the use of about 20 years (it assumed used 400 km per day). Will China plan to shift the world pendulum which relies on fossil energy (America) to China as a new renewable energy hegemon.

http://www.cleanfuture.co.in/2020/06/10/catl-produce-battery-2-million-kms/

Another news about miracle batteries ...
Battery technology has been evolving steadily for the last 20 years, but by only reading headlines concerning batteries we could think space travel could be fully powered by batteries by now ;D

Economic collapse is always bad. Even if this does not happen in your country, a chain reaction occurs. Humanity can overcome the crisis only if it joins forces. But the oil situation has shown that this will not happen.

Maybe in other countries, the battery is considered a mere figment. But the people in my country witnessed until now how China has influenced the policies of officials in my country so that China can hegemony the raw material for batteries in Indonesia. 29 of the 32 nickel smelters in Indonesia are owned by China. The government prohibits miners from exporting raw nickel, so it must be sold to Chinese smelters at lower prices.

In addition, there is also the practice of smelters that were built in Indonesia not to finish the product but only to the cleaning process (NPI-nickel pig iron). In the process that is discarded is the element that has no economic value but the iron, nickel, lithium, and mineral minerals are rarely contained and what is paid in the NPI product is only the nickel content, while the other elements are a bonus.

Technology is moving so fast that even though the progress made by China is only forgetting the repetition of research that has been going on for twenty years, the term excellence is nothing but repetition. Who knows in a few years China or other countries have created portable batteries that can be a source of rocket energy.

Many of these poor countries also sell oil, so if you average the slight increase of quality life for the importer with the catastrophic consequences for the exporters,I don't know it's a good situation...