Crude Oil Stocks Tank

[Shiranu]

https://www.nbcnews.com/business/markets/oil-prices-tumble-lowest-level-1980s-n1187716

U.S. crude prices plunged to their lowest level in history as traders continue to fret over a slump in demand due to the coronavirus pandemic.
West Texas Intermediate crude for May delivery sank to just one cent per barrel, its lowest level on record.
The front part of the oil futures ‘curve,’ which is the May contract that expires on Tuesday, was hit the hardest since it applies to fuel that’s set to be delivered while most of the country remains on lockdown thanks to the coronavirus. There’s little demand for gasoline from refineries, and storage tanks in the U.S. are nearing their limits.
The spread between the May and June contracts — known as the front month and second month — is now the widest in history, according to KKM Financial’s Jeff Kilburg.

That 1 cent a barrel is actually "good"... multiple crude oil companies have seen their stocks drop into the negatives, such as WCS and WTI. For the first time in history, American oil stocks are zeroed out.

I really thought I would be an old, or at least middle aged, man before the world fell apart. I was even doing my duty of not having any children who would have to deal with this bullshit, but nope...

[Hydra009]

Imagine this sort of low demand and resulting much less air pollution on the daily.  All it would take would be a replacement of gasoline with alternative fuel.

[Baruch]

https://www.nbcnews.com/business/markets/oil-prices-tumble-lowest-level-1980s-n1187716

That 1 cent a barrel is actually "good"... multiple crude oil companies have seen their stocks drop into the negatives, such as WCS and WTI. For the first time in history, American oil stocks are zeroed out.

I really thought I would be an old, or at least middle aged, man before the world fell apart. I was even doing my duty of not having any children who would have to deal with this bullshit, but nope...

Old book, The Seven Sisters ... about the oil business before OPEC.

https://en.wikipedia.org/wiki/Seven_Sisters_(oil_companies)

Read this decades ago, while I was taking a mineral extraction economic class (as an undergraduate).  It explains why the oil market is meta-stable.  Like balancing a pencil on the tip of your finger.  OPEC was invented to deal with this instability problem, by adding politics to economics, to make political-economics.  Of course politics and economics are never really separated.  In a market based economy, business people lobby the government.  In state-run mineral extraction (established thru nationalization of originally private enterprises), like Saudi Arabia, the two are conjoined (aka fascism).  With North Sea Oil being produced in 1975 (when this book came out) there was a partnership between multiple European countries, and private enterprise.

Since 1971 of course, the US Dollar, and thus the base world currency (which at one time was the British Pound) became dependent on the relationship between the US and Saudi Arabia, and between Saudi Arabia and the rest of OPEC (founded by Venezuela).  Today expansionist oil producers like Russia and the US (shale oil) have added to the production/political mix.  The BRICs would like to dethrone the US Dollar, and to do this dethrone the oily basis of this currency ;-)  Hence the current price war between Russia, Saudi Arabia and the US.  This can lead to war, as the embargo on oil sales to Japan in 1941 did.

On the other hand, the immense sovereign wealth funds (Norway, Saudi Arabia etc) have great sway in the financial markets.  It isn't just pensions.  So add finance as a third leg to this conundrum.  This is why the bailouts in 2008/2009 and in 2020 are done the way they were.  If you destabilize finance (as in 2008) then that endangers the oil production/politics legs.  Disrupt the political leg then ... disrupt the oil production then ... and pretty soon you have "Cirque du Soleil" ...

[Baruch]

Imagine this sort of low demand and resulting much less air pollution on the daily.  All it would take would be a replacement of gasoline with alternative fuel.

There is an abundant alternative fuel today (not deuterium fuel from sea water yet).  BS!  Billions of pounds are produced daily.  There is still a problem with thermodynamics, even if you had a pure fuel  (at least heat has to be produced).  What about global warming then?  To reduce heat output (as well as chemical pollution) you have to eliminate billions of unnecessary people, as eugenicists like Bill Gates and company can tell you.

Yes, we have less pollution now, because millions of people are at home, not at work.  Having oil at a very low price isn't stable, it will inevitably go up soon enough, once the political stability is restored (unless demand is permanently reduced thru apocalypse).  In June 2008, oil was $148 per barrel.  The higher the price of oil, the weaker the dollar and vice versa.

https://inflationdata.com/articles/wp-content/uploads/2020/02/Inflation-Adjusted-Crude-Oil-Price-Feb-2020b.png

The inflation adjusted 1946 price was about $20 per barrel and again in 1974.  This is why there was the great expansion of the US economy.  The US had to move to the Petra-Dollar because France wanted to financially destroy the US (redeem all dollars for gold) and because OPEC thought they were being screwed paying dollars for oil.  Everything changed in 1974, from a static market (regulated by governments and corporations (aka Seven Sisters)) to a more dynamic market.  The difficulty of managing all these forces; governments, companies, consumers + pandemic reduced consumption is simply too hard to collude into a profitable stability that once was.  Today oil fell thru the $20 level, because cartel-ization is failing, capitalism is winning.

No, free energy isn't happening, same as the wet dreams of Marx aren't happening.  But enjoy the cheap price for now, even though most of the cost of a gallon of petrol is government taxes.  Now we just need enough anarchism to remove the taxes on petrol, and we can live like it was 1965, all over again ;-)



As it was just before my parents and I moved there, to join my grandparents.

[Hydra009]

There is still a problem with thermodynamics, even if you had a pure fuel  (at least heat has to be produced).  What about global warming then?  To reduce heat output

Do you realize that global warming is due to greenhouse gasses trapping light from the sun, not from humans literally warming up the planet directly?  Cause there are these things called volcanoes...

[Baruch]

Do you realize that global warming is due to greenhouse gasses trapping light from the sun, not from humans literally warming up the planet directly?  Cause there are these things called volcanoes...

There are multiple causes.  Just the thermal output from factories and from home heating/cooling is a cause, even if no CO2 was produced.  And of course there are natural sources, including methane from cows, and from heating permafrost and clathrates.  And yes, body heat (from burning food) is a small contributor too.  If all the stored natural methane (permafrost and clathrates) were released suddenly, the global climate would go berserk.  This may have been a cause of prior ice ages (what heats up, must cool down).

"In 2017, U.S. total primary energy consumption was about 98 quadrillion British thermal units (Btu), which was equal to about 17% of total world primary energy consumption of about 582 quadrillion British thermal units (Btu)."

"One BTU is the amount of heat energy required to raise one pound of water by 1ºF. Water weighs 8.33 pounds per gallon so we can calculate that one gallon of water requires 8.33 BTU to raise the temperature 1ºF."

So if we concentrated a year's energy consumption well, we could heat a gallon of water so much, a new Big Bang would be created ;-)

In thermodynamic equity, the US would need to reduce energy consumption (and economy) by 12/17 or 70%.

[Baruch]

"With oil below zero, Trump to create Strategic Petroleum Reserve historic buying opportunity" ... God-Emperor strikes again.

[_Xenu_]

All other things aside, this would be a nice time to stock up our national oil reserves. It would help the industry, and give us a nice cushion for future shortages.

[SGOS]

I'm enjoying this.

[Hydra009]

All other things aside, this would be a nice time to stock up our national oil reserves. It would help the industry, and give us a nice cushion for future shortages.

Trump directed the DoE to do just that.  In March, when it was a lot higher than it is now.  The Art of the Deal, LOL.

[Shiranu]

Trump directed the DoE to do just that.  In March, when it was a lot higher than it is now.  The Art of the Deal, LOL.

Yep.

This is frankly something experts should have (and probably [hopefully?]) seen coming, though maybe not this drastic. It stands to reason that as travel drops to near zero, the demand for oil would reach near zero.

I wonder if anyone in the Trump administration thought about this and tried to bring it up with him, or if this is something everyone was ignorant to. I'll admit I didn't think about it, but in my defense it's also not my job to think about things like that.

[Baruch]

I'm enjoying this.

Free gasoline?  Sorry, taxes.  And you can't take that big vacation farther than your own back yard (lockdown) ;-)

""Tourist Go Home" – Tensions Soar As Hawaiians Urge Non-Residents To "Leave"" ... Covidiots not only went to the beach, they are still trying to go to Hawaii because of $100 airfares ;-(

[Baruch]

Trump directed the DoE to do just that.  In March, when it was a lot higher than it is now.  The Art of the Deal, LOL.

So, you expected the God-Emperor to know when the price of oil would tank?

Trump is ordering up 75 million more barrels.  How dare he not know the future price of all commodities months in advance.

[Baruch]

Yep.

This is frankly something experts should have (and probably [hopefully?]) seen coming, though maybe not this drastic. It stands to reason that as travel drops to near zero, the demand for oil would reach near zero.

I wonder if anyone in the Trump administration thought about this and tried to bring it up with him, or if this is something everyone was ignorant to. I'll admit I didn't think about it, but in my defense it's also not my job to think about things like that.

There was a trade war between Russia, Saudi Arabia and the US.  With other OPEC nations like Mexico mixed in.  So the God-Emperor could just tell those other countries what to do?  I wish ;-)

[Baruch]

"Oil Stored At Sea Accelerates To Jaw-Dropping 250 Million Barrels" ... so that is where the excess oil is stored.  I thought it was up Saudi's ass ;-)

There is a once a month "Fire Sale" on crude oil.  That puts a lot of pressure on prices.  Unless the oil currently in storage decreases, some expect the bottom price for oil to drop from -$50 to -$100 per barrel in a month from now.  Yes, children ... this can't happen in a cash economy, this happens because of very complex account payable/receivable accounting, where bets are taken daily on what the prices will be tomorrow ... on everything.

PS, WTI (a type and location of crude oil) ended -37.63 yesterday but ended +10.10 today.  So too late for y'all.  But someone made a lot of money on volatility.