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Oil falls back to 18-year lows below $20 as global demand evaporates

chuckiechan

chuckiechan

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Oil falls back to 18-year lows below $20 as global demand evaporates

U.S. oil dropped more than 7% to trade around an 18-year low on Monday as demand continues to evaporate, and as Saudi Arabia and other OPEC+ nations prepare to ramp up production.

With much of the world in lockdown as the coronavirus pandemic rages on, demand for oil has fallen off a cliff. People aren’t travelling and business has slowed, reducing the need for jet fuel and gasoline.
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I doubt the House would pass this, but we should be expanding the Strategic Petroleum Reserve, possibly by filling old salt mines and certain oil wells for retrieval at a higher price, and the treasury can pocket the difference as they sell it to oil companies for refining or shipping.

At $66 a bbl (high in 2019 was $66.30), we are looking at a $46 bbl profit. That is like $4.6 billion on 100 million bbl. (we use ~ 21 million bbl per day*) . Chicken feed at government budget impact, but hey, a billion here, four billion there, and it starts adding up.

* In 2019, the United States consumed an average of about 20.46 million barrels of petroleum per day, or a total of about 7.47 billion barrels of petroleum products.
 
chuckiechan said:
Oil falls back to 18-year lows below $20 as global demand evaporates



I doubt the House would pass this, but we should be expanding the Strategic Petroleum Reserve, possibly by filling old salt mines and certain oil wells for retrieval at a higher price, and the treasury can pocket the difference as they sell it to oil companies for refining or shipping.

At $66 a bbl (high in 2019 was $66.30), we are looking at a $46 bbl profit. That is like $4.6 billion on 100 million bbl. (we use ~ 21 million bbl per day*) . Chicken feed at government budget impact, but hey, a billion here, four billion there, and it starts adding up.

* In 2019, the United States consumed an average of about 20.46 million barrels of petroleum per day, or a total of about 7.47 billion barrels of petroleum products.
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They should use the opportunity to fill it-SPR up even more.
 
Russia is screwed.

Russia should've diversified its economy.

With all the natural resources Russia has, it should be a huge Norway, but instead its GDP is less than that of Brazil.
 
chuckiechan said:
Oil falls back to 18-year lows below $20 as global demand evaporates



I doubt the House would pass this, but we should be expanding the Strategic Petroleum Reserve, possibly by filling old salt mines and certain oil wells for retrieval at a higher price, and the treasury can pocket the difference as they sell it to oil companies for refining or shipping.

At $66 a bbl (high in 2019 was $66.30), we are looking at a $46 bbl profit. That is like $4.6 billion on 100 million bbl. (we use ~ 21 million bbl per day*) . Chicken feed at government budget impact, but hey, a billion here, four billion there, and it starts adding up.

* In 2019, the United States consumed an average of about 20.46 million barrels of petroleum per day, or a total of about 7.47 billion barrels of petroleum products.
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What? How are we going to sell US produced oil at $66/barrel when the market is at $20? Please clarify.
 
bluesmoke said:
What? How are we going to sell US produced oil at $66/barrel when the market is at $20? Please clarify.
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He is saying buy the oil when prices are depressed and then resell when the market recovers. Smart idea. I am sure some private equity folks will do it. Government can't do it because of the ffak they would get. For example Trump sold to friends,Biden sold to companies who hired is son. You know the B.S. we get every day.
 
chuckiechan said:
Oil falls back to 18-year lows below $20 as global demand evaporates



I doubt the House would pass this, but we should be expanding the Strategic Petroleum Reserve, possibly by filling old salt mines and certain oil wells for retrieval at a higher price, and the treasury can pocket the difference as they sell it to oil companies for refining or shipping.

At $66 a bbl (high in 2019 was $66.30), we are looking at a $46 bbl profit. That is like $4.6 billion on 100 million bbl. (we use ~ 21 million bbl per day*) . Chicken feed at government budget impact, but hey, a billion here, four billion there, and it starts adding up.

* In 2019, the United States consumed an average of about 20.46 million barrels of petroleum per day, or a total of about 7.47 billion barrels of petroleum products.
Click to expand...

Hmm... encouraging hoarding of a commodity by the government and with a profit motive, no less. ;)
 
bluesmoke said:
What? How are we going to sell US produced oil at $66/barrel when the market is at $20? Please clarify.
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The idea is to have the (federal?) government hoard oil available at the current low price (due to reduced demand) and later sell that oil (for a profit) when the price (demand for it) returns to normal. Placing the (federal?) government in charge of profitable commodity trading (using public funds) is dangerous territory to enter.
 
chuckiechan said:
Oil falls back to 18-year lows below $20 as global demand evaporates



I doubt the House would pass this, but we should be expanding the Strategic Petroleum Reserve, possibly by filling old salt mines and certain oil wells for retrieval at a higher price, and the treasury can pocket the difference as they sell it to oil companies for refining or shipping.

At $66 a bbl (high in 2019 was $66.30), we are looking at a $46 bbl profit. That is like $4.6 billion on 100 million bbl. (we use ~ 21 million bbl per day*) . Chicken feed at government budget impact, but hey, a billion here, four billion there, and it starts adding up.

* In 2019, the United States consumed an average of about 20.46 million barrels of petroleum per day, or a total of about 7.47 billion barrels of petroleum products.
Click to expand...

Start purchasing long term call options, now is the time to buy. There is serious money to be made.
 
ttwtt78640 said:
The idea is to have the (federal?) government hoard oil available at the current low price (due to reduced demand) and later sell that oil (for a profit) when the price (demand for it) returns to normal. Placing the (federal?) government in charge of profitable commodity trading (using public funds) is dangerous territory to enter.
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Not when you hemorrhage money like the US does.
 
chuckiechan said:
Not when you hemorrhage money like the US does.
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Hmm... allow the government the power to create an economic crisis and then to use the existence of that (government created) economic crisis to enrich itself. What could possibly go wrong with that plan?
 
ttwtt78640 said:
Hmm... allow the government the power to create an economic crisis and then to use the existence of that (government created) economic crisis to enrich itself. What could possibly go wrong with that plan?
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Is that sort of like the media creating a panic to boost its ratings?
 
PirateMk1 said:
Start purchasing long term call options, now is the time to buy. There is serious money to be made.
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All kidding aside, this is very true. A week ago, it was even truer.

If you own stocks, selling call options on them is a great way to generate cash with little risk.
 
Jay59 said:
Is that sort of like the media creating a panic to boost its ratings?
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Worse - the media cannot mandate that you close your 'non-essential' business or take a portion of your paycheck to give to someone else deemed more deserving of it.
 
washunut said:
He is saying buy the oil when prices are depressed and then resell when the market recovers. Smart idea. I am sure some private equity folks will do it. Government can't do it because of the ffak they would get. For example Trump sold to friends,Biden sold to companies who hired is son. You know the B.S. we get every day.
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I'm not convinced. We'd have to create storage, which would be inland, which has high transport cost to storage facilities, of which we currently have very little available capacity. We won't be selling anything near as much oil product as before very soon. It would make more sense to keep oil industry people employed by continuing production and putting into inventory to whatever capacity we have or can cost-efficiently create. It would even make more sense to put money into renewable energy for our future. Oil is being sold at a loss. Ugh for us, Russia and a couple other countries whose oil production is largely inland.
 
ttwtt78640 said:
The idea is to have the (federal?) government hoard oil available at the current low price (due to reduced demand) and later sell that oil (for a profit) when the price (demand for it) returns to normal. Placing the (federal?) government in charge of profitable commodity trading (using public funds) is dangerous territory to enter.
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"is dangerous territory to enter"

Agreed. Please see my post #14.
 
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