As #Oil Storage Capacity Nears “Tank Top”, Negative $100 Oil Isn’t So Crazy Anymore

50 Million barrels of oil are being put in storage every week, that's what Germany, France, Spain and the UK consume.

Why Oil at Negative $100 Isn't a Crazy Bet Anymore
https://www.bloomberg.com/news/articles/2020-04-22/tanks-full-why-oil-at-negative-100-isn-t-a-crazy-bet-anymore

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Negative #Oil prices “last nail in the coffin” for US #Shale #OOTT

• 
• New wells forecast to plunge almost 90% by the end of 2020

Historic Oil Rout Poised to Bust Shale, Trump's Energy Dominance

Kevin Crowley

A historic crash in crude prices is driving U.S. shale into full-on retreat with operators halting new drilling and shutting in old wells, moves that could cut output by 20% for the world's biggest producer of oil.

For shale companies, the price of West Texas Intermediate crude went from hunker-down-and-ride-it-out mode to crisis mode in just a few days, with many now unsure whether there will even be a market for their oil. Some 1.75 million barrels a day is at immediate risk of shutting down while the number of new wells being brought online is forecast to plunge almost 90% by the end of the year, according to IHS Markit Ltd.

In short, it's a swift and brutal end to the shale revolution, which only last year had President Donald Trump proclaiming "American Energy Dominance."

West Texas Intermediate crude prices turned negative for the first time in history on Monday, meaning at one point sellers had to pay buyers to take it away. Then, the financial squeeze on the May contract spilled over to June and into the wider market, with prices now trading around $10 a barrel, well below the daily pumping cost in large swaths of America's oil industry.

Even at $15, "everything back in the field, except the newest and most productive wells, is losing money on a cash-cost basis," said Raoul LeBlanc, a Houston-based analyst at IHS Markit. "At this price you'll start shutting in large amounts of production."

It's a bloodbath whichever way you look.

See the whole article here: https://www.bloomberg.com/news/articles/2020-04-21/historic-oil-rout-poised-to-bust-shale-trump-s-energy-dominance?utm_campaign=socialflow-organic&utm_source=twitter&cmpid%3D=socialflow-twitter-energy&utm_medium=social&utm_content=energy&__twitter_impression=true&sref=VxHCy32x

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#WTI Getting Slammed to $13/bbl, down 25% on the Day!!

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#Opec+ promises record global #oil cuts of nearly 10MM bopd, 10% of production #OOTT

Opec said it would cut 9.7m barrels a day in oil production in May and June, equivalent to almost 10 per cent of global supply, and continue with lower reductions until April 2022, in an effort to stabilise global crude markets.

It is not yet clear whether the deal will be enough to support the oil market.

See The Whole Story Here: https://www.ft.com/content/01dd5ae4-16b9-4c20-becc-6a08c6289a67

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#OPEC+ #Oil Cuts Deal: @BMO Sees Best outcome of Prices Stabilizing between $20-30 as demand rebuilds

From BMO:

 CONCLUSION:. On the positive side, the agreement avoids a price collapse as it reduces the risk of filling up the global storage capacity completely and most importantly it ends the price war between Russia and Saudi Arabia.  Our research team expects the price of oil to remain between $20 and $30 through June while the market assesses the compliance and more importantly the potential rebound in demand at some point. As of this morning, the market reaction has been somewhat muted with Brent and WTI relatively unchanged.

1- TOTAL CUTS OF 13.4Mb/d if you had OPEC at 6.1M b/d, OPEC+ members mostly Russia at 3.6Mb/d and G-20 cuts monastery US/Canada/Brazil at 3.7Mb/d. The cuts are focused on the May-June period then they go down to 8M b/d for July-dec.

2- AVOID PRICE COLLAPSE DUE TO LACK OF STORAGE- Demand destruction is estimated at 17Mb/d for 2Q ( compared to a 13.4M b/d cut but an actual cut from the March level of ONLY 7Mb/d for OPEC+ members). So this means inventories will go up by about 984M barrels versus a total storage capacity including floating storage left of 1.2 billion barrels.

3- END OF THE PRICE WAR- probably the most positive is all this is the end of the price war between Russia and Saudi Arabia

4- CUTS BY THE G-20? US/Canada/Brazil but allows Norway are talking about cutting 3.7M b/d of supply but it is not very clear how. It will  be mostly through Strategic Petroleum Reserves ( SPR) purchases, shut-ins and natural declines.

5- THE TEXAS RAILROAD COMMISSION ( RRC) meets tomorrow Tuesday to discuss production cuts. Based on recent discussions we are doubtful a serious official cut will come out of the US as most of the large producers like Exxon and Chevron have come against it.

6- IDEAL PRICE- we continue to think that $40 WTI is where the Saudis and the Russians want to oil price which is enough to kill US Shale's economics while helping the local budgets of each closer to balance.



Oil & Gas IN Fact Living on the Edge: Historic Deal With a Lot of Unknowns Randy Ollenberger • Oil & Gas (403) 515-1502 Phillip Jungwirth, CFA • Oil & Gas (303) 436-1127 Bottom Line: OPEC+ has reached an agreement to reduce production by 9.7 million b/d in May and June and roughly six million over the balance of the year. The G20 group acknowledged the need to stabilize oil markets and has reportedly agreed to reduce production by 3.7 million b/d. The OPEC+ cut (if adhered to) plus expected shut-in production due to low oil prices could be just enough to keep inventories from breaching capacity. We expect crude oil prices to trade in a $20-30/bbl range through May as the market waits to see if the production cuts materialize and are large enough to stave off disaster. Key Points OPEC+ capitulates. OPEC and its non-OPEC partners have agreed to reduce production by 9.7 million b/d in May and June and by roughly six million b/d for the remainder of the year. The baseline for the determination of production levels is October 2018 except for Saudi Arabia and Russia, which have baselines of 11 million b/d. The group will meet again on June 10 to determine if additional action is required. No commitments but uneconomic shut-ins elsewhere. The broader G20 group did not explicitly commit to any reductions in supply but acknowledged the need to stabilize oil markets and has reportedly agreed to reduce supply by 3.7 million b/d through declines and shut-in of uneconomic production. The OPEC+ cuts are not contingent on commitments from the U.S. and others to reduce supply. We anticipate a drop in non-OPEC production of 1.8 million b/d in the second quarter and growing over the balance of the year due to the drop in activity levels. Level of demand destruction unknown. We believe that global oil demand could be down more than 17 million b/d year over year in the second quarter to roughly 82 million b/d, which would represent the lowest level of demand since 2004. Taking the OPEC+ cuts into consideration we anticipate a year-over-year decline in production of 7 million to 92.8 million b/d, which implies a build of approximately 984 million barrels. We estimate remaining available global storage capacity (including floating storage) is roughly 1.2 billion barrels. While this means there could be adequate storage room there is not much room for error. Pricing in uncertainty. We expect crude oil prices to remain relatively weak through April and May as the market assesses the risk that the level of demand destruction could be higher than expected, leading to the possibility that there is not enough storage available. We also expect regional dislocations where storage fills up leading to wider price differentials in some markets. View Comment >

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#OPEC+ Trying to stabilize the mess it compounded, after collapse in #Oil demand sparked by #coronavirus pandemic threatens worldwide recession

As recently as two weeks ago, Putin was resisting any concessions in the stand-off with Saudi Arabia since Moscow pulled out of a supply-limit agreement with OPEC over demands for deeper cuts in output. That prompted Saudi Arabia to flood the market with oil, driving prices to an almost two-decade low amid a glut in supply because of a sharp fall-off in consumption.

The sudden collapse in demand sparked by the coronavirus pandemic now threatens a worldwide recession this year. 

Read the whole article on Bloomberg here: htps://www.bloomberg.com/news/articles/2020-04-03/russian-producers-ready-for-oil-cuts-in-bid-to-stop-price-rout

‪#PrivateEquity bogged down in #Oil ‬#OOTT

Private Equity Can't Escape the Pain of Shale Country's Collapse - Bloomberg

After years of poor returns, energy fundraising has plunged
Private equity-backed producers will feel pain with $25 oil

One of the biggest changes in the shale industry since the last bust: Private equity is trying to get out of the game, not in.

Even before crude prices fell off a cliff, the creation of new funds to invest in oil and gas had dwindled. Now, with demand down and output up around the world, hundreds of private equity-backed producers are faced with the same grim math as the publicly traded independent companies that used to buy them but now rarely do -- drilling new wells doesn't make money at $20 oil. 

Read the rest of the article online here: https://www.bloomberg.com/news/articles/2020-04-01/private-equity-can-t-escape-the-pain-of-shale-country-s-collapse