As #CoronaVirus lockdowns have cut global #Oil consumption by up to 25%, The Global Oil Market Is fast running out of space to store its excess crude #OOTT

• The Global Oil Market Is Broken, Drowning in Crude Nobody Needs

Javier Blas

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The global oil market is broken, overwhelmed by an unmanageable surplus as virus lockdowns cascade through the world's largest economies.

Onshore tanks in many markets are full, forcing traders to store excess oil in idle supertankers. Refineries are starting to shut down because nobody needs the fuels they produce. In physical oil markets, barrels are already changing hands for less than $10, and in a few landlocked markets producers are paying consumers to take away their crude.

"The physical oil market has seized up," said Gary Ross, an influential oil watcher and chief investment officer of Black Gold Investors LLC. "The logistics are struggling to cope because we are facing a catastrophic loss of demand."

Oil traders say it's likely to get worse this week.

The root cause is an accelerating plunge in consumption that's without precedent since a steady flow of oil became essential to the global economy more than a century ago. The great crash of 1929, the twin oil shocks of the 1970s and the global financial crisis don't come close. The world normally uses 100 million barrels of oil day, and traders and analysts reckon as much as a quarter of that has disappeared in just a few weeks.

The global airline industry is grounded, countless businesses and factories are shuttered and billions of people have been forced to stay home.

"Demand clearly is off, in some parts of the world, very dramatically," Chevron CEO Mike Wirth told Bloomberg TV.

The immediate problem is a lack of storage in the right places. With demand running 20 million barrels a day below supply, the world won't have enough tanks to store the surplus in two or three months.

Read the whole story here: https://www.bloomberg.com/news/articles/2020-03-29/the-global-oil-market-is-broken-drowning-in-crude-nobody-needs?sref=VxHCy32x

Crude #Oil Price as per March 20, 2020 at 07:01AM

1 Month 3 Month 6 month 1 year 2 years 3 years 5 years 10 years crude oil

#Oil Price as per March 12, 2020 #OOTT

1 Month 3 Month 6 month 1 year 2 years 3 years 5 years 10 years crude oil bit.ly/MasterEnergyBlog

#Sanctions-hit #Venezuela offers big discounts as #oil prices collapse -

Sanctions-hit Venezuela offers big discounts as oil prices collapse -traders

March 10 (Reuters) - Venezuela's oil company PDVSA is this week offering discounts of up to $23 per barrel on its flagship crude, traders said, as a collapse in global oil prices puts more pressure on the state-run firm, already reeling from tightening U.S. sanctions. 

Petroleos de Venezuela had already been pricing its Merey heavy oil this year at $16 to $18 below Brent crude , the sources said, to entice buyers wary of drawing scrutiny from the United States, which since 2019 has sanctioned PDVSA to try to oust socialist President Nicolas Maduro, who it calls a dictator. 

With Brent prices suffering their worst rout in 30 years on Monday because of falling demand due to the coronavirus and a price war for market share between major producers Russia and Saudi Arabia, low sell prices could leave PDVSA struggling to cover its costs of production. At a Brent price of around $37 a barrel, discounts put the PDVSA heavy at a scant $14-18.

Read the rest of the story online here: https://af.reuters.com/article/commoditiesNews/idAFL1N2B31L3

#Oil: Energy companies feel the pain of #Saudi Arabia’s price war

Energy companies feel the pain of Saudi Arabia's price war
'This is the financial crisis for oil — except the producers are not too big to fail'

From the shale fields of Texas to deepwater projects in the North Sea, the price war launched by Russia and Saudi Arabia sent shockwaves across the entire energy industry and triggered the biggest sell-off since the global financial crisis.  

It has left some companies searching for strategies to protect profits and keep paying dividends. Others are fighting for survival. 

"The price collapse could be the trigger for a new phase of deep industry restructuring — one that rivals the changes seen in the late-1990s," said Tom Ellacott of the consultancy Wood Mackenzie. "Sustained prices below $40 a barrel would trigger a new wave of brutal cost-cutting. More highly-leveraged players will be forced to make the deepest cuts to stave off bankruptcy." 

Nowhere is that more true than in the shale industry, which helped end US dependence on Middle Eastern oil.

See the whole article on the FT here: https://www.ft.com/content/50c289dc-621f-11ea-b3f3-fe4680ea68b5

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#Oil Market Update March 9 2PM EDT #OOTT

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@ExxonMobil, the blue chip #Oil Co., Down ~15% pre-open $XOM #OOTT

XOM $40.88 (-14.28%) on Yahoo Finance
https://finance.yahoo.com/quote/XOM?p=XOM

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Is 2020 the year for regime change in #Venezuela? | Financial Times

With today's drop in #Oil, it may happen sooner than we thought... 

"the greatest force for change in Venezuela will be the oil price. With a global surplus of supply, and more Opec cuts in the offing, Venezuelan oil is no longer needed in the market. Without substantial export earnings, the government in Caracas is unlikely to be able to provide the investment needed to maintain current production, let alone meet Mr Maduro's target. Even the most authoritarian regimes cannot survive without revenue."

https://www.ft.com/content/860f8876-5e12-11ea-b0ab-339c2307bcd4

#Oil Crashes 31% in Worst Loss Since 1991 After Price War Erupts

After #Russia bails on OPEC+, #SaudiArabia pledges to increase production to 10MM bopd, Maybe even up to 12MM. 

Oil Crashes 31% in Worst Loss Since 1991 After Price War Erupts 

https://www.bloomberg.com/news/articles/2020-03-08/oil-in-freefall-after-saudis-slash-prices-in-all-out-crude-war

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Putin ups the ante in front of MBS & US #Fracking Industry - #Shale #Oil, #OPEC+ #OOTT

"The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2"

Putin Dumps MBS to Start a War on America's Shale Oil Industry

Ilya Arkhipov 

Vladimir Putin meets with Crown Prince Mohammed bin Salman in Riyadh, Saudi Arabia, on Oct. 14, 2019. Photographer: Alexey Nikolsky/AFP via Getty Images

At 10:16 a.m. on a wet and dreary Friday morning, Russia's energy minister walked into OPEC's headquarters in central Vienna knowing his boss was ready to turn the global oil market upside down.

Alexander Novak told his Saudi Arabian counterpart Prince Abdulaziz bin Salman that Russia was unwilling to cut oil production further. The Kremlin had decided that propping up prices as the coronavirus ravaged energy demand would be a gift to the U.S. shale industry. The frackers had added millions of barrels of oil to the global market while Russian companies kept wells idle. Now it was time to squeeze the Americans.

After five hours of polite but fruitless negotiation, in which Russia clearly laid out its strategy, the talks broke down. Oil prices fell more than 10%. It wasn't just traders who were caught out: Ministers were so shocked, they didn't know what to say, according to a person in the room. The gathering suddenly had the atmosphere of a wake, said another.

For over three years, President Vladimir Putin had kept Russia inside the OPEC+ coalition, allying with Saudi Arabia and the other members of the Organization of Petroleum Exporting Countries to curb oil production and support prices. On top of helping Russia's treasury – energy exports are the largest source of state revenue – the alliance brought foreign policy gains, creating a bond with Saudi Arabia's new leader, Crown Prince Mohammed bin Salman.

But the OPEC+ deal also aided America's shale industry and Russia was increasingly angry with the Trump administration's willingness to employ energy as a political and economic tool. It was especially irked by the U.S.'s use of sanctions to prevent the completion of a pipeline linking Siberia's gas fields with Germany, known as Nord Stream 2. The White House has also targeted the Venezuelan business of Russia's state-oil producer Rosneft.

"The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2," said Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank. "Of course, to upset Saudi Arabia could be a risky thing, but this is Russia's strategy at the moment – flexible geometry of interests."

Read the whole article on Bloomberg here: https://www.bloomberg.com/news/articles/2020-03-07/putin-dumps-mbs-to-start-a-war-on-america-s-shale-oil-industry?sref=VxHCy32x

Oil Bonanza Plunges Guyana Into Political Crisis - The New York Times

The start of oil production in December is expected to nearly double the country's gross domestic product in 2020, according to the International Monetary Fund, and multiply in years to come.

Instead, the winner-takes-all attitude that has marred the elections is weighing heavily on Guyana's economic prospects as it enters the oil age, said Ralph Ramkarran, a prominent local statesman who led a largely Quixotic campaign for a small multiethnic party.

"The thinking here is, 'why share when you're winning?'" he said. "Until that's fixed, it will remain a place of suspicion and economic underdevelopment."

The stakes could not be higher.

Exxon started production in December, and although the payoff in 2020 will be a trickle relative to what will come, it is expected to elevate oil income this year to a third of all government revenue, surpassing all of the country's traditional exports combined, according to the I.M.F.

By the end of the decade, the country's output will reach 1.2 million barrels a day,  according to estimates by the oil consultancy Rystad. That would mean Guyana's production would overtake the current output of its neighbor, the declining oil giant Venezuela.

https://www.nytimes.com/2020/03/05/world/americas/guyana-elections-oil.html

US crude #Oil exports increased 45% to ~3MM b/d in 2019 @EIA_gov #OOTT #TWIP

U.S. crude oil exports averaged 2.98 million barrels per day (b/d) in 2019, an increase of 930,000 b/d (45%) from 2018 (Figure 1). 

The number of destinations for U.S. crude oil exports increased from 41 to 44, and Canada continued to receive the largest share (15%, or 459,000 b/d), followed by South Korea (14%, or 426,000 b/d). U.S. crude oil exports to China, the third-largest export destination in 2018, fell by nearly 100,000 b/d to average 133,000 b/d in 2019. Decreased U.S. crude oil exports to China were more than offset by increases to other destinations, resulting in shifting trade patterns. The growth in U.S. crude oil exports was driven by increasing U.S. crude oil production, expanding domestic infrastructure, and increased global demand for light, low-sulfur crude oils.

#OPEC Ministers agree to cut #Oil production by 1.5MM bopd

Closed session talks continue but headlines leaking out of Vienna from 'delegates' per Bloomberg,confirming the high end scenario floated yesterday morning. Sounds like OPEC (ie Saudi) is going it alone without additional support from Russia after Novak refused to support additional cuts at the JMMC meeting yesterday.

Brent up 70c on the news and +60bps on the day, not exactly a screaming response but step in the right direction. Still waiting on additional details around duration (assume 3M to start) and how many physical barrels 1.5MM translates to given SA already under producing by 0.4MM but combined with 1MM outage from Libya a 1.5MM incremental cut should help to offset a large amount of the China/OECD demand losses, which some estimate to be over 3-3.5MM in 1Q20.