US Oil Breaks 0$ Per Barrel

Reopened October 2019 - includes archived threads from pre-2019

US Oil Breaks 0$ Per Barrel

Postby toucana on April 20th, 2020, 8:57 pm 

Anyone want to buy some oil ? Producers aren’t just giving it away (perish the thought) - They are effectively offering to pay you to take it off their hands right now, because they have run out of anywhere to store it.

The US futures market for crude oil deliveries in May 2020 has turned negative as of Monday - something that has never happened since NYMEX oil futures began trading in 1983. It was easily the oil market's worst day on record.

The coronavirus pandemic has caused oil demand to drop so rapidly that the world is running out of room to store barrels. At the same time, Russia and Saudi Arabia flooded the world with excess supply.

That double black swan has caused oil prices to collapse to levels that make it impossible for US shale oil companies to make money. Many of them are now likely to go out of business.

US crude for June delivery is still trading above $20 a barrel -- but even that's disastrous for many of these companies who were already heavily laden with debt
"$30 is already quite bad, but once you get to $20 or even $10, it's a complete nightmare," said Artem Abramov, head of shale research at Rystad Energy.

Many oil companies took on too much debt during the good times. Some of them won't be able to survive this historic downturn.

In a $20 oil environment, 533 US oil exploration and production companies will file for bankruptcy by the end of 2021, according to Rystad Energy. At $10, there would be more than 1,100 bankruptcies, Rystad estimates.

"At $10, almost every US E&P company that has debt will have to file Chapter 11 or consider strategic opportunities," Abramov said.
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Re: US Oil Breaks 0$ Per Barrel

Postby TheVat on April 21st, 2020, 9:35 am ... 39637.html

Maybe, if refineries have to cut production, some neighborhoods in the "cancer corridors" will get some respite. And then it will be November, and the possibility of a Biden presidency and return to Obama Era pollution controls. Still won't amount to much in places like Port Arthur, I guess. America keeps buying SUV gas guzzlers.
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