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Page added on April 23, 2020
Why Oil at Negative $100 Isn’t a Crazy Bet Anymore
Orbiting hundreds of miles above the Earth, the Sentinel-1 satellites are the eyes in the sky that show why U.S. oil prices dropped below zero and why much of the world is likely to follow.
The satellite bounces radar signals off the massive metal tanks that store oil and that data is used to calculate how much crude is inside. It’s coming back with an alarming message: oil storage is running out.
It’s something that’s never happened before, and the market is only beginning to guess at what it’ll mean. Experts say it could be a matter of weeks before there’s no more room to store crude, an event called in industry parlance the “tank tops.” The result would be oil prices near zero in many parts of the world, and in some cases they could go negative.
“We are on a path to global tank tops in late May or early June,” said Florian Thaler at Oilx, a research firm which uses the satellite data.
The chaos in the American oil market on Monday could foreshadow what happens globally, if other tanks start to fill up. It also shows the market will likely anticipate peak storage, rather than wait to plunge when the limit is breached. Some oil producers have now re-drafted their contracts to stop their prices from going negative.
On Tuesday, the selling frenzy continued. Brent futures for June delivery lost 15% to trade near $16 a barrel, the lowest in almost 21 years. Key European and African crude streams, which trade at a discount to the Brent benchmark, will sell under $10 and even below $5 in some cases.
Brent Oil Drops to 21-Year Low as Selling Pressure Intensifies
“We have clearly gone to a full-scale, day-to-day market management crisis,” said Paul Sankey, a veteran oil analyst at Mizuho Bank who correctly warned of negative crude prices in March. He went a step further on Tuesday, saying: “Will we hit negative $100 a barrel next month? Quite possibly.”
The world of negative prices doesn’t have a floor, and after this week, anything is possible. One certainty is that the latest satellite data shows a massive glut. There are 50 million barrels of crude are going into storage every week, enough to fuel Germany, France, Italy, Spain, and the U.K. combined.
In India, refiners have filled 95% of fuel storage capacity, according to officials at three state-owned processors. Nigeria will cut production because it has no place to keep crude, Mele Kyari, the chief of state oil company NNPC told a local newspaper.
Oil refiners aren’t buying crude because there’s no demand for gasoline. Some producers are cutting output, but others have kept on pumping. Even a few dollars is better than none for indebted companies. The oil has nowhere to go but into storage.
The satellite data might even be overestimating how much room is actually available. A lot of empty space has already been rented out by traders.
“We can have negative prices, and very negative prices,” said Pierre Andurand, the founder of the eponymous oil hedge fund, adding that oil is a “dangerous market to trade in right now.”
From high up, the oil market looks like a global, highly interconnected system. But the reality is that the market is a collection of small and big islands, all connected via thin links. What matters is not when the world’s total storage is full, but when each of those islands, or regional hubs, reaches capacity — or threatens to.
Pipeline Crossroads
For the American market, it all comes down to Cushing, Oklahoma, the delivery point of the WTI oil futures contract. The town, which calles itself the “pipeline crossroads of the world,” hosts a dozen tank farms, big enough to hold nearly 80 million barrels.
When the WTI contract expires, traders who are long receive oil in Cushing and have to find a place to store the barrels or ship them out. Being short the contract means you have to deliver the oil.
Oil prices crashed on Monday as traders who owned the May WTI contract rushed to get out of the contract before expiry because they didn’t have tanks to store the oil. At the worst moment, someone paid $40.32 a barrel to avoid taking delivery of oil.
Negative Spiral
In the physical oil market, traders bid barrels at even larger negative prices. Plains All American Pipelines LP, one of the main oil shippers in the U.S., asked producers of a crude stream called Eastern Kansas Common to pay it $55.05 a barrel if they wanted to sell.
“Onshore storage is very limited,” said Ben Luckock, co-head of oil trading at Trafigura Group, a major commodity merchant.
Storage locations that could soon fill up include Rotterdam, a refining hub for Western Europe, several islands in the Caribbean and Singapore. While traders are also turning oil tankers into temporary floating storage facilities, they offer limited relief.
In the world of storage, Rotterdam-based Royal Vopak NV is the biggest. Its executives say there’s a global hunt already underway to secure more tanks. According to Chief Financial Officer Gerard Paulides, “the available capacity on the oil side is almost completely sold out.”
33 Comments on "Why Oil at Negative $100 Isn’t a Crazy Bet Anymore"
Cloggie on Thu, 23rd Apr 2020 4:09 pm
While some here still worry about oil, in Europe facts are being created. A consortium of European companies are building a high temperature electrolysis plant of 2.6 MW in Rotterdam harbor, that will have an efficiency of 85%. Condition: the water “feed stock” needs to be supplied in the form of steam. Later up-scaling should lead to a 100 MW installation.
https://deepresource.wordpress.com/2020/04/23/multiplhy-multi-mw-high-temperature-electrolyser/
“MULTIPLHY – Multi-MW High Temperature Electrolyser”
The sport is to combine HT-electrolysis with industrial processes where steam is used. Alternatively, a combination with a CSP plant comes to mind.
In Idaho-USA they are working on electrolysis of steam as well:
https://cleantechnica.com/2020/04/23/perovskite-assist-for-two-way-renewable-hydrogen-what-could-possibly-go-wrong/
…spearheaded by senior engineer and scientist Dong Ding (please, no jokes)… they use perovskite as key material.
May the best team win, for the benefit of us all!
makati1 on Thu, 23rd Apr 2020 5:07 pm
Neither will “win” Cloggie. Nor will this idea ever scale up to practicality. But enjoy that little fantasy world you live in as you take your farm produce to the big castle for your lord. by tradition, he gets a third of all you produce. But then I bet you pay more than 1/3 of your income to your current lords. LOL
whoa on Thu, 23rd Apr 2020 5:32 pm
Makati, bag yourself to show solidarity with supertard muzzie lovers FWMC
JuanP on Thu, 23rd Apr 2020 6:32 pm
from Plantagenet on moderated side:
“Actually the so-called Spanish flu clearly originated in China. This deadly flu first appeared in China in 1916-17, killing many people. It subsequently spread across the Eurasian continent and appeared among the troops in Europe BEFORE it appeared in Kansas. This flu can’t have originated in Kansas since it had already been causing large numbers of people to die in epidemics in China and in Europe before the outbreak in Kansas ever occurred. AND new research shows the occurrence of the flu in Kansas can now be directly linked to China. This new research links the 1918 occurrence of the flu in Kansas and other areas in North America to trainloads of Chinese laborers who were infected with the flu and were being shipped across North America to Europe to help provide needed labor for the war effort. More evidence that the Spanish flu came from China is that when a later wave of the Spanish flu reached China, it caused relatively few deaths, showing that the people in China had already been exposed to this flu in 1916-17.
https://www.nationalgeographic.com/news/2014/1/140123-spanish-flu-1918-china-origins-pandemic-science-health/
whoa on Thu, 23rd Apr 2020 6:41 pm
supertards from here on out the Spanish flue is forbidden to be spoken. It can only be referred to as the first China flu and the second china flue is our resident flu. PWSM
The Reel Donald on Thu, 23rd Apr 2020 6:44 pm
I really hope they are forced to shut-in many many wells. Anything that kicks global industrial civilization in the balls gets my vote.
JuanP on Thu, 23rd Apr 2020 6:45 pm
Police state at its best:
“Scan Your Code!”: Dystopian Post-Lockdown ‘Normal’ In Wuhan Enforced By ‘Anti-Virus Patrols’
“So far, Wuhan’s answer has been to create a version of normal that would appear utterly alien to people in London, Milan, or New York — at least for the moment,” Bloomberg writes. It’s a situation that appears ‘normal’ but with a totalitarian twist: “Bolstered by China’s powerful surveillance state, even the simplest interactions are mediated by a vast infrastructure of public and private monitoring intended to ensure that no infection goes undetected for more than a few hours.” Police in some locations have begun to use AI-powered smart helmets to track citizens’ temperatures. Source: China News/Weibo via Daily Mail. Just to get a major Lenovo tablet and phone factory on the outskirts of the city up and running again – previously closed for over two months – workers are first greeted by a series of four temperature checks. If flagged for even slightly higher than normal temperature (above 99.1F) they get referred to an in-house “anti-virus task force” to make determinations.
makati1 on Thu, 23rd Apr 2020 7:03 pm
“I really hope they are forced to shut-in many many wells. Anything that kicks global industrial civilization in the balls gets my vote.”
AMEN!
whoa on Thu, 23rd Apr 2020 9:26 pm
whoa on Thu, 23rd Apr 2020 6:41 pm
supertards from here on out the Spanish flue is forbidden to be spoken. It can only be referred to as the first China flu and the second china flue is our resident flu. PWSM
conditions were different back then supertard
would you say polio which is eliminated from america and still prevalent in muzzie pakistan both ccountries have the same deaths and death rate?
no america fare worse because muzzie paki has allah the pedifile protect muzzies
extrapolate for kung flu and hombre flu prior to that
Dick Toole on Thu, 23rd Apr 2020 10:23 pm
Cloggie this is for you. https://www.youtube.com/watch?v=Zk11vI-7czE
DerHundistLos on Thu, 23rd Apr 2020 11:11 pm
Despite the loss of 1/3 of the entire US wild bird population since 1970, Trump wants to open up for the first time ever the last refuges for wild birds and other wildlife to hunting. Representing less than 5% of the US landmass, these wildlife refuges represent wildlife’s last sanctuary. More evidence the soul of America has been corrupted by wanton greed and selfish behavior. So sick.
The Birds Of North America Are Disappearing At An Alarming Rate
Since 1970, the bird population of North America has declined by nearly 30 percent.
A study published in the journal Science states that the current total of birds in the United States and Canada is 2.9 billion birds less than the total in 1970.
To the National Audubon Society, one of the foremost avian conservation organizations in the U.S., the findings are nothing less than a “full-blown crisis.”
According to the New York Times, the researchers focused their study on 500 different species of birds, and found dramatic losses among many of them, “even among such traditionally abundant birds as robins and sparrows,” the New York Times reports.
“Declines in your common sparrow or other little brown bird may not receive the same attention as historic losses of bald eagles or sandhill cranes, but they are going to have much more of an impact,” said Hillary Young, a conservation biologist at the University of California, Santa Barbara, who was not involved in the new research.
These birds function as nature’s pest control, they spread the seeds of native trees, and they pollinate flowers. Living without the benefit of birds would make for an entirely different world.
“We were stunned by the result — it’s just staggering,” said Kenneth V. Rosenberg, a conservation scientist at Cornell University and the American Bird Conservancy, and the study’s lead author. “It’s not just these highly threatened birds that we’re afraid are going to go on the endangered species list,” he said. “It’s across the board.”
Rosenberg fellow researchers relied on reports from the North American Breeding Bird Survey and the Audubon Christmas Bird Count, among other citizen-science bird-population surveys, to chart the fluctuation of bird populations since 1970. These events bring together thousands of volunteer “field researchers,” each counting up all the birds they hear or see within a set period. The researchers then look at the data taken from specific points on the most common migratory paths for breeding populations.
Rosenberg attributes the loss of more than 700 million birds of 31 different species common to U.S. fields and farmlands could be attributed to modern agricultural techniques.
“The intensification of agriculture is happening all over the world, [as is] increased use of pesticides, as well as the continued conversion of the remaining grass and pastureland—and even native prairie” to cropland, he said.
According to Scientific American Rosenberg and his team looked at data from 143 weather radar stations around the country, as well, to “estimate changes in the total biomass of migratory birds each year between 2007 and 2017.”
Though a markedly different approach to measuring native bird populations, the results lead to much the same conclusions.
“A lot of migratory habitat for shorebirds and wintering habitat has been lost,” Sillett says. “This study points out that we have a lot more work to do in terms of habitat protection.”
In contrast, wetland avian species have seemingly grown in population since the 1970s. Ducks, geese, and swans, in particular, have rebounded in much higher numbers than prairie and forest birds.
“The strong constituency of recreational waterfowl hunters who raised their voice, put money where their mouths are and saw to it that conservation programs and policies were put in place,” Rosenberg said. “Billions of dollars [were] invested into wetlands [and] into wildlife refuges. The North American Wetlands Conservation Act was enacted in the late 1980s. All of these things were responsible for the turnaround.”
Bald eagles have seen a similar recovery, though to a lesser extent, owing to federally protected status, and the banning of DDT in 1972.
DerHundistLos on Thu, 23rd Apr 2020 11:17 pm
Thank you, Dick Toole, for the YouTube link. Cloggie aka Abraham doesn’t give a shit. He’s living in a reality of his own masturbatory dreams.
FamousDrScanlon on Thu, 23rd Apr 2020 11:20 pm
Call the N Carolina lab virus whatever you like.
I call it a good start.
U.S. coronavirus deaths top 49,000, averaging 2,000 lives lost a day: Reuters tally
https://www.reuters.com/article/us-health-coronavirus-usa-casualties/us-coronavirus-deaths-top-49000-averaging-2000-lives-lost-a-day-reuters-tally-idUSKCN22530Y
USA #1
Cloggie on Fri, 24th Apr 2020 1:59 am
“Thank you, Dick Toole, for the YouTube link. Cloggie aka Abraham doesn’t give a shit.”
Correct. I’m not going to sit out 100 minutes with that Christmas pudding Michael Moore. I’d rather flog myself 30 times, Iranian style.
FamousDrScanlon on Fri, 24th Apr 2020 5:29 am
please chang your underwear it is muuzzie underwear day chang.
Sissyfuss on Fri, 24th Apr 2020 9:15 am
Derhund, I can add my anecdotal evidence here in the rural climes of Michigan. The feeding sites on my property get less crowded each year. Much fewer sparrows, chickadees, and other assorted species. So few insects now, a major food source for them. No bees at all. Trump is the figurehead for the worst of our human species, a destroyer of the natural world. I see our side losing the fight further with each missing creature til all that’s left is us. What a horror that will be.
SocialRevolutionComing on Fri, 24th Apr 2020 1:43 pm
It looks like they are now in a rush to reopen everything. Some useless elites and politicians finally catch up to the fact that COVID hoax was collapsing the supply chain and shutting oil production. From marketwatch
Meat shortage looms as coronavirus shuts packing plants, leaving farmers with tough choices
Published: April 24, 2020 at 2:20 p.m. ET
By William Watts
Producers alter rations to slow growth, ponder euthanizing hogs
While consumers face the prospect of meat shortages as coronavirus infections shut down processing plants across the country, farmers are making tough choices about what to do with livestock they can’t move to market.
Producers are already changing ingredients in an effort to slow the growth of hogs and cattle. David Mensink, who raises around 80,000 hogs a year near Preston, Minn., said that around two weeks ago he began removing distillers corn oil, a byproduct of ethanol production, from rations.
“It’s probably the first time in my life I’ve ever changed a ration to make a pig grow slower,” he told MarketWatch, in a phone interview as he took a break from planting corn on Thursday. “We usually do all we can to provide the right nutrition to make that pig grow as efficiently as we can.”
‘It’s probably the first time in my life I’ve ever changed a ration to make a pig grow slower’
— David Mensink
Despite those efforts, Mensink and other farmers have warned that shutdowns will create a backup that will likely force producers to begin euthanizing hogs.
Animals, of course, don’t stop growing once they reach slaughter weight. Oversize animals face steep discounts from meatpapackers—consumers don’t want oversize hams or other cuts of meat — and producers also face the prospect of overcrowding.
COVID-19 outbreaks have closed around a dozen meat plants around the country in the past week, according to The Wall Street Journal, including three Tyson Foods Inc. TSN, -3.22% plants, while other facilities have curtailed operations to deal with or avert outbreaks of the deadly pathogen. Grocery executives have warned that supplies of some products could run short within two weeks, the report said.
Read:We have plenty of food, so why are grocery shelves running empty?
Altogether, closures and partial shutdowns have taken out around 30% of the country’s hog-slaughter capacity, said Mensink, who is president of the Minnesota Pork Producers Association. That equates to around 150,000 hogs a day, or 750,000 a week. Bloomberg reported that hog producers in eastern Canada have began euthanizing hogs due to bottlenecks there.
Feedlot operators are also taking steps to slow the growth of cattle, but may be able to avoid euthanization for now. That’s because the growth rate of cattle can be more finely tuned than hogs.
“The cattle that are ready for market, they’re just having to keep in the feedlot longer…and hopefully they will be able to get them to market — but everything is just slowed down,” said Ken Herz, who runs a cow-calf and feedlot operation in south-central Nebraska and is president of the Nebraska Cattlemen Association.
Calves are weaned at around six to 10 months of age and placed on pasture before eventually being moved into feedyards or sold to feedlot operators. As cattle enter what’s known as finishing stage, the content of their feed rations is adjusted in stages to allow faster growth until they are ready for slaughter.
If needed, producers can slow down growth by sticking with or reverting to lower-energy rations, said Daniel Loy, professor of animal science and director of the Iowa Beef Center at Iowa State University in Ames.
Producers typically feed a series of four to five rations, Loy said, in a phone interview. By reverting to or maintaining rations that contain more hay and forage, as opposed to grains and other higher-energy feedstuffs, producers can cut the growth rate by around a quarter-pound a day.
Loy said in more extreme circumstances, producers could revert to rations that would slow growth to around 2 to 2 ½ pounds a day without affecting the quality of the meat. In the most extreme scenario, producers could feed a maintenance ration designed to keep cattle at a steady weight, but that would risk affecting the marbling and overall quality of meat, Loy said.
While feed is delivered each day to cattle on a feedlot, hogs typically are fed via self-feeders. While there are more options when it comes to lowering the energy in cattle rations, the best producers can do with hogs is to add some fiber-type feedstuffs, Loy noted.
Standard slaughter weight for cattle typically runs between 1,300 to 1,400 pounds, while the average hog slaughter weight runs between 280 and 290 pounds, according to the U.S. Department of Agriculture.
Herz said the Nebraska Cattlemen Association is working with packers to get them to curtail dockages for oversize animals in the wake of the plant closures and slowdowns.
The U.S. Department of Agriculture last week announced an aid program that included around $1.6 billion in direct relief for hog farmers and $5.1 billion in direct relief for cattle farmers, along with $3 billion in purchases of various agricultural commodities.
Producer groups have called the aid welcome but not enough to sustain many producers.
Meanwhile, the possibility of meat shortages — and rising consumer prices — offers a contrast to cattle and hog farmers who are operating with negative margins.
Indeed, live hog futures LH.1, +3.53% jumped 16% in the past week as traders reacted to plant closures, after hitting a 3 ½ year low on April 14. Hog futures remain down more than 28% in the year to date, while live cattle futures LC.1, -0.40% are off around 34% so far in 2020.
“The profit margins were gone a long time ago,” said Herz. The longer the backups persist, “the worse it gets.”
printbabyprint on Fri, 24th Apr 2020 2:55 pm
Cloggie what happened with the coal under the oceans, and oil on mars are they coming on line soon. You are the best, I like you you make my day
Duncan Idaho on Fri, 24th Apr 2020 3:53 pm
“I find this kind of blatant attack on American exceptionalalism to be in extremely poor taste. We’re number one in everything from per capita incarceration to covid-19 deaths. When we put our mind to something there’s almost nothing we can’t achieve.”
Cloggie on Fri, 24th Apr 2020 3:56 pm
“Cloggie what happened with the coal under the oceans, and oil on mars”
Still there.
“are they coming on line soon.”
Hopefully not, not necessary. Sun, wind, geothermal, biomass suffice.
makati1 on Fri, 24th Apr 2020 5:35 pm
Good point, Duncan. You could add lying, hypocrisy and greed to that list. Obvious traits of most Amerikans, especially their demented leadership. But then, look at who voted them in. LOL.
fmr- ponders on Fri, 24th Apr 2020 5:40 pm
if u see Big Bro floating at 90MPH on the highway on his 2 wheel big rig, look carefully
Big Bro doesn’t control his rig if you see Big Sis sitting behind him. In this case Big Sis is controlling the rig.
If you see Big Bro alone on his Big Rig 2 wheel, then he’s a straggler and easily pick off by Big Muzzie and Big Muzzie Lovers.
The whole show is controlled by Big Sis. Big Sis will control you with Big Boob and if all fails will kill you.
That’s why I want to be cilled (controlled or killed)
Duncan Idaho on Fri, 24th Apr 2020 6:22 pm
https://media.tenor.com/videos/412324ec7660926d0ac992f09cf4d6f9/mp4
DerHundistLos on Fri, 24th Apr 2020 7:10 pm
Hi Sis,
Once again your sentiments represent my own perfectly. You are able to express abstract concepts beautifully.
Stay strong, brother. The world now more than ever needs the good guys to continue providing a role model for the rest of us to emulate.
With grateful appreciation,
Der
Abraham van Helsing on Fri, 24th Apr 2020 11:16 pm
“Cloggie what happened with the coal under the oceans, and oil on mars”
Still there.
“are they coming on line soon.”
Hopefully soon, Zero-point energy, dilithium crystals, autonomous dishwashers and tachyon generators will suffice.
Big Sis love supremacist muzzies on Fri, 24th Apr 2020 11:32 pm
U.K. Islamic Scholar Tim Humble: Women Must Completely Obey Their Husbands; Even Licking a Pus-Covered, Bleeding Ulcer That Covers Their Husband’s Body Would Not Fulfill Their Obligations unto Him; Husbands Have the Right to Immediate Sexual Gratification
there are a lot of muzzie libs lovers out there especially Big Sis
printbabyprint on Sat, 25th Apr 2020 12:31 am
CLoggie have you seen a new michel moore documentary?
Abraham van Helsing on Sat, 25th Apr 2020 1:50 am
Oh, have I! I absolutely love it. MM is to my mind, a true patriot. A real American Hero. I have all his DVD’s and transcripts of all his wonderful movies. We need more like him. You many not know this, but , I model my own approach to activism after him.
rockman on Sat, 25th Apr 2020 2:22 pm
Just an effort to touch on the supposed subject of this thread. At least the article does mention that “negative price of oil” the MSM jumped on was just more fake news. The report does mention (in much to little detail) was the price of OIL FUTURES CONTRACTS and not the actual price oil is being sold for. I won’t waste my time explaining oil futures: countless reports on Google. The article does screw up reporting the “price” as oil PHYSICALLY delivered due to contracts being delivered. A completely insignificant amount of CONTRACTED oil is ever delivered: all 99%+ of the oil are PAPER BARRELS. They only exist is someone’s spread sheet. In April about 1.2 BILLIONS barrels of paper oil were traded DAILY. IOW how many of those 1.2 BILLION BBLS OF OIL do you think were being delivered EVERY DAY?
The oil futures market is essentially a gambling casino: investors bet on the future prices of OIL FUTURES and not the actual price PHYSICAL OIL sells for. The negative price of “oil” is nothing more then a representation of a money lost on a very poorly made bet on the price of FUTURE OIL CONTRACTS and not the actual price producers get for selling PHYSICAL BARRELS OF OIL.
There have been a number of times in my 40+ years when for any one of a number of reasons I’ve had to greatly reduce production for oil wells. All I had to do was reduce down to a few bbls PER MONTH to maintain rights. A painful loss of revenue but never a physical problem. IOW never had to pay an oil buyer to take my oil. An idiotic concept for those foolish enough to swallow the fake news to MSM was putting out.
rockman on Sat, 25th Apr 2020 2:44 pm
I also wanted to touch on the fact that I am still shilling for what little oil is still trickling out of Texas.
There have been a number of times in my 40+ years of shilling, for any of a number of reasons I just pull whatever comes to mind out of my ass. All I had to do, was relate some boring anecdote, usually involving me sitting at a desk, filling out paperwork for the SEC, and that usually wows the dimwits and prevents anyone from asking awkward questions I would really rather avoid. Most of my ideas are idiotic concepts for those foolish to swallow my fake news I was always putting out.
wb supertard rock some muzzie or muzzie lovin sock is doing it not me on Sat, 25th Apr 2020 3:05 pm
above is not me obv.
what does Big Sis think about this how is claire goforth on Sat, 25th Apr 2020 3:20 pm
had said that if a woman were to lick a bleeding and pus-covered ulcer that covered her husband’s entire body, she would still not have fulfilled all of her obligations unto him.
whoa on Sat, 25th Apr 2020 3:44 pm
Secretary Pompeo knows that there are two independent bases for Israel’s claim to Judea and Samaria (which the Jordanians renamed the “West Bank” in order to efface, toponymically, the Jewish connection to the land). The first is the Mandate for Palestine itself.
why does it matter if muzzies claiming MN muzzieland? only total muzzie amputation starting with muzzie imams will do