US oil futures fell below $0 on Monday for the first time in history.

ezsasa

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More gyan on the topic....
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11. What will happen tomorrow?! Firstly, tomorrow the prices won't be negative. You look towards the next set of contracts (June expiry). 12. Will the petrol price come down? Yes but our ZAR is weak and there's a ton of taxes + levies AND we're less exposed to WTI.

 

nrj

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Seems mischievous. May 2021 WTI Futures are steady 34$-35$
 

Assassin 2.0

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Oil plunges 321% into negative territory for the first time ever as demand evaporates
Saloni Sardana
Apr. 20, 2020, 05:39 AM
Oil pump jacks work at sunset near Midland, Texas, U.S., August 21, 2019. REUTERS/Jessica Lutz
Reuters
Oil prices plunged to a record low and into negative territory on Monday as uncertainty mounted about storage for excess supply.
WTI crude oil futures expiring in May plunged 321%, to -$40.32 a barrel, while Brent crude slid 9.5%, to $25.41 at intrasession lows.
The coronavirus pandemic has torpedoed demand for the commodity, with fuel use in cars and planes slumping.
The commodity has fallen over the past week even after OPEC and its allies agreed to a historic production cut intended to backstop prices.
The WTI market has entered contango, meaning spot prices are lower than prices for future delivery of crude oil — a highly unusual occurrence.
Follow the price of oil live with Markets Insider.
Oil plunged into negative territory for the first time on record on Monday. The commodity's latest round of sharp selling came as uncertainty mounted about storage for excess oil. Demand for crude has plummeted since the coronavirus outbreak froze activity worldwide.
The price of West Texas Intermediate crude oil futures expiring in May plunged 321%, to -$40.32 a barrel, the lowest level ever recorded. Brent crude losses were muted by comparison, with the commodity sliding 9.5%, to $25.41 a barrel at intrasession lows.
The price of oil has continued to slide even after OPEC and its allies agreed to the biggest-ever production cut — one intended to backstop prices. Investors remain unconvinced that the cuts can offset cratering demand for the commodity as the novel coronavirus pandemic keeps society from operating normally.


Read more:The price of US crude oil just went negative for the first time ever. Here's what that really means, and why you can't fill up your car for free.
WTI crude for May delivery has traded at large discounts to longer-dated contracts. That dynamic is playing out amid worry that a key storage hub in Cushing, Oklahoma, is nearing capacity, according to Bloomberg.
"Basically, bears are out for blood," said Naeem Aslam, the chief market analyst at AvaTrade. "The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut."
He added: "The bottom line is that there is no doubt that oil prices are way oversold at the current level, but given the circumstances, it is likely that the price may continue to fall further because the rig count hasn't touched its bottom yet."


Read more:Why the price of oil is continuing to free-fall after a historic supply cut — and when experts think it may finally reach rock bottom
Oil prices and rig counts are strongly correlated. Higher oil prices make production more profitable, encouraging more producers to operate.
The closely watched Baker Hughes oil-rig report showed that as of Friday, oil-rig counts in the US were 544, down roughly 35% from the same time in March.
Oil is now in contango
The movements prompted WTI oil prices to enter contango, meaning oil contracts for future delivery are more expensive than spot prices.
"The contango on WTI from now spot to the June contract can be described as a mega-contango," said Jeffrey Halley, a senior market analyst for Asia-Pacific at Oanda. "As of Friday, spot was $18 a barrel with the June contracts around $25 a barrel."
Halley added that "the extreme contango tells us nobody in America wants the oil in the short-term."
Monday's price action pushed the commodity further into contango.
"For an investor who holds a long term perspective, a time frame of 12 months to 24 months, the current plunge in oil price represents an opportunity," Aslam said.
Read more:GOLDMAN SACHS: Buy these 21 stocks that are beating their peers by paying down debt amid an unprecedented plunge in cash spending
wti 4 20 negative oil prices v2
Andy Kiersz / Business Insider
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Assassin 2.0

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Jerusalem Post Middle East
Epic collapse in oil price is a second pandemic for the Middle East
By SETH J. FRANTZMAN APRIL 20, 2020 22:47
A general view of Abadan oil refinery in southwest Iran, is pictured from Iraqi side of Shatt al-Arab in Al-Faw south of Basra, Iraq September 21, 2019 (photo credit: REUTERS/ESSAM AL-SUDANI)
A general view of Abadan oil refinery in southwest Iran, is pictured from Iraqi side of Shatt al-Arab in Al-Faw south of Basra, Iraq September 21, 2019
(photo credit: REUTERS/ESSAM AL-SUDANI)
Iraq relies on oil and is already in economic dire distress. The successful Kurdistan autonomous region also relies on oil and will be hit hard.


Oil prices appeared to collapse on Monday as the May futures contracts for West Texas International, a benchmark trading contract, fell below zero. This doesn’t mean oil prices will really be zero, but overall oil prices have been down globally and the market turbulence has shocked people. Prices at the pump will not be reduced as much as barrels of oil will now decline from $60 last year to historic lows this month.
The oil prices are suffering the ripple effects of the coronavirus pandemic and a price war that took place between Saudi Arabia and Russia in early April. Those countries agreed on a deal between April 9 and 12 which was supposed to stabilize prices and lead to some production cuts. It was too late for the markets though.

The overall effect of the collapse in oil prices will not be known for sometime. It appears that it is one of the many secondary curves that have come out of the more well known coronavirus curve of infections. That curve was flattened by lockdowns. But lockdowns also caused travel to grind to a halt. Uncertainty meant that there is less demand for oil. Oil prices were already declining but this is the kind of uncertainty and shock that causes unprecedented results.
The next impact of the virus and oil prices is likely come in other tensions and crises in the Middle East. That means there may be growing attempts by Iran to pressure the US Navy in the Persian Gulf. This has already happened but Iran is signaling that tit has new ship missiles and drone technology that can be used against the US and allies.
There may be other ripple effects, such as economic collapse of states or political upheaval. Several countries in the region rely particularly on the oil trade. This includes Kuwait, Saudi Arabia, the UAE, Iran, Iraq, Algeria, Azerbaijan, Qatar, Oman and Bahrain. Some countries GDP is dominated by oil, including Kuwait, Saudi Arabia, Iraq and Oman. These countries have attempted to reduce their need to rely on oil in recent years, seeking to diversify their economies as they predicted oil prices will decline. But they couldn’t move fast enough. Saudi Arabia’s Vision 2030 has sought to diversify the economy and create new, non-oil based, jobs. But that is a decade off.
Iraq relies on oil and is already in economic dire distress. It has had six months of protests because the government failed over the last decade to invest in basic infrastructure. The successful Kurdistan autonomous region also relies on oil and will be hit hard.
Other countries may profit from low oil prices. Jordan, Israel, Egypt, Lebanon and other countries can benefit. Many of these countries have lost massively in tourism dollars due to the pandemic, so this is a consolation prize. The King of Jordan has sought to prepare for low oil prices. In the past Jordan has subsidized fuel prices and when it sought to lift the subsidies it ran into protests.
The falling prices can be a positive and negative to countries such as Lebanon which already have an economy on edge. These countries rely on remittances from abroad and some of that comes from the Gulf. An oil crises can actually harm the remittances even if it makes some economic pain decrease. Turkey expects to be a winner as well, reducing the cost of energy imports and reducing inflation. This is yet another mixed bag for Turkey because the country now has the most coronavirus cases in the Middle East. So it may profit from lower oil prices but suffer in other ways.
The long term story of the oil price collapse and the pandemic are a series of rare black swan events being loosed on the Middle East. The oil price collapse is likely the first of many crises and it will cause many countries to be concerned about what comes next. With closed borders, concerns about conflicts in Syria, Libya, Yemen and elsewhere, and declining interest from the Western powers, Middle Eastern countries are now more on their own than in the past. The era of great power rivalries such as the Cold War or era of colonial mandates is long over. The era of US hegemony is declining as the US shift forces from the region and contemplates more withdrawals.
This means regional conflicts and alliances are increasing as well as proxy wars in places like Yemen, Libya and Syria. For instance in Libya a UAE-Egypt-Saudi backed faction is fighting a Turkey-Qatar-backed faction. In Yemen the Iranians are backing the Houthis against a Saudi-backed government. In Syria the Russian and Iranian-backed regime face off against the US and against Turkish-backed groups. The oil crisis is a new wrench thrown into the mix.
Tags oil economy Middle East
 

Assassin 2.0

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India misses a trick due to lack of oil storage capacity


Published April 22, 2020 | By admin SOURCE: LIVE MINT Indian refiners are ruing their inability to fully reap the benefits of a sharp fall in global oil prices, thanks to a dearth of crude oil storage capacity. With Brent, the global oil benchmark, plunging to a two-decade low, expectations have risen in India that lower oil prices would cushion the country’s current account deficit and help cool inflation. A nearly month-long countrywide lockdown to contain the covid-19 pandemic has crimped demand for fuel products in India, the world’s third-largest oil importer. This has saddled refiners with unsold stocks at their depots as well as fuel retailing outlets. And with bare minimum off take, refineries are now operating at 40-50% of their capacities. “Our refineries are not running at full capacity, so we decided to divert crude and instead fill up our crude caverns. But that too is limited and will be completed by May,” said a senior official from an oil marketing company. “Had we created more storage capacity, we could have taken full advantage of these historically low crude oil prices,” the official said on condition of anonymity. Last week, India began filling its three strategic petroleum reserves (SPRs). And by the end of next month, the country would have moved about 19 million barrels of oil into these reserves located in southern India—Visakhapatnam (1.33 million tonnes) Mangaluru (1.5mt) and Padur, Karnataka, (2.5mt). India’s crude imports averaged around 4.5 million barrels per day in 2019. Even after filling up the reserves, India would have secured for itself only nine days of emergency fuel supplies at 5.33mt. Refiners and industry experts say the lack of storage capacity is an opportunity lost for the country at a time when fuel prices are at historic lows. “Had we created more space to store crude, we would have secured supplies like our Asian peers,” said an energy consultant. He spoke on the condition of anonymity as he is not allowed to speak to the media. India’s Asian peers China and Japan are way ahead in creating crude storage capacity. While India has a storage capacity of 39 million barrels, China’s total capacity is at 550 million barrels and Japan’s at 528 million barrels, ensuring a supply of over 190 days in the event of a supply disruption. Though India approved construction of two new caverns in 2018, as part of its phase two expansion, in Chandikhol in Odisha (4mt) and Padur II in Karnataka (2.5mt), work is yet to commence on these projects. While building these caverns has a budgeted cost of around ?15,000 crore (as of 2018), filling them would cost at least an additional ?20,000 crore. Debasish Mishra, partner at Deloitte Touche Tohmatsu India Pvt. Ltd, said however, that by the time these caverns become operational, there may be a big question mark on their relevance. “The proposed strategic petroleum reserves (SPRs) may take 5 to 7 years to come up, by then the global energy scenario and their relevance might have changed completely,” said Mishra. He said going forward, it is expected that energy demand would gradually shift towards electric vehicles (EVs), and demand for oil will peak and start coming down in two decades. “All these factors need to be considered while planning for more SPRs,” he said. Though the Indian Strategic Petroleum Reserves Ltd (ISPRL), which is responsible for building and filling of SPR sites, is exploring a public private partnership model with prospective partners such as financial investors, traders, or sovereign wealth funds, there is no revenue model to justify investment by the private sector, raising questions on the viability of the model, said the energy consultant.
 

Immanuel

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Question, does India have a National Strategic Oil reserve like the US does? IF so what is the capacity?
 

sorcerer

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Question, does India have a National Strategic Oil reserve like the US does? IF so what is the capacity?
India to fill its strategic petroleum reserves with own money to make the most of cheap oil

well this is what is what is known capacity .. :hmm:
 

Immanuel

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India to fill its strategic petroleum reserves with own money to make the most of cheap oil

well this is what is what is known capacity .. :hmm:
5.3 million tons seems low, 9 days is't much. Perhaps we need atleast 30 days?
 

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