Oil price discussion and analysis

[InsvestoBoy]

Locally I can get fuel for 80 cents a lt today could that be lower tomorrow?

The price of fuel has to be a huge plus, for those that have a high fuel component in their bottom line, QUBE (QUB)?

Fuel at the pump here is priced on different benchmarks, namely Tapis Crude and Singapore Mogas (refined product).

The economics are different. Forget the financial media if you want to track this stuff for the Aussie economy.

You can see how Tapis trades here on a 21 hour delay https://oilprice.com/oil-price-charts so check back tomorrow morning to see how it is faring.

Don't forget to factor AUD in.

 

[rederob]

A while ago, we visited this, the truckies etc. And Aurizon
Maybe this should be in a different thread?

Maybe, but diesel prices are at least 20% higher than unleaded in most places - generally still over $1.20 - so the savings to date don't seem that significant...yet.

A handy guide to fuel prices "at the gate" is here.

 

[Smurf1976]

I don't know who they're selling to as there has to be a buyer.

One possibility would be the US government.

Trump wanted to fill the Strategic Petroleum Reserve but couldn't get the relevant approvals from Congress to spend the money so the plan was shelved.

If the price is negative however well then he doesn't need anyone to approve the spending I assume (note that's an assumption on my part, I'm not familiar with the detail of how US laws work with that sort of thing). If that's the case, he doesn't need approval to spend no money, then removes the obstacle to filling the SPR.

There's space to add approximately 77 million barrels to the SPR.

Unrelated to that, I won't name the facility since the info isn't public but an Australian facility recently ran a large boiler up to full output firing oil in what could be considered as a test of sorts. Oil isn't the normal fuel used at this facility but the potential is there if it becomes cheap enough.

Plausibly there will be possible users in the US with the same idea noting that depending on the boiler and what emissions controls it has, it's not impossible to burn raw (unrefined) crude oil as boiler or furnace fuel in heavy industry or for power generation. It would normally be uneconomical to do so but technically it can certainly be done if you've got the right equipment (which some certainly would have).

 

[Smurf1976]

Diesel demand down 20%
Gasoline demand down 50%
Aviation fuel/kero down 80%

I'll note there that this also adds some difficulties in refining.

The refineries do have the technical capability to move the product split around to some extent but it would be stretching the limits to adapt to such a drastic change. That's going to cause some disruption in the refined product markets as well and upset the relative pricing of those fuels.

 

[Country Lad]

In the US
Aviation fuel/kero down 80%

hmm, I wonder how that affects Qantas' hedging seeing they are not using any real quantity of fuel

 

[InsvestoBoy]

hmm, I wonder how that affects Qantas' hedging seeing they are not using any real quantity of fuel

Qantas hedging program would be long to avoid being exposed to rising fuel costs.

As long as they exited their hedges as demand went down, they're probably fine. They probably ate a bit of pain in March. The joys of hedging.

 

[rederob]

Am posting this for "posterity" - note that highs and lows are highlighted:

 

[Garpal Gumnut]

It's a day old but the New York Times reported that there is no more room to store imported oil in the US.

gg

 

[wayneL]

Don't look now, but the June (etc) contract is copping a shellacking now too.

 

[rederob]

June futures shaken after being stirred:

 

[cutz]

Hi rederob,

Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !

 

[rederob]

Hi rederob,

Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !

Best I have free access to is here, others might have a better link.

WTI's future is not well:

 

[Smurf1976]

This suggests that the point where storage capacity physically runs out, regardless of what arrangements exist financially, is at most weeks away indeed we're already at least half way there.

https://www.zerohedge.com/s3/files/inline-images/total storage capacity_0.jpg?itok=w1KaPpRs

 

[frugal.rock]

I paid 59.9 cents per litre for E10 Unleaded petrol around 10 days ago.
Was on my way to a cheaper priced servo as well! I thought thistle doo.!
And it was then I realised that the POO was really in the poo.
Got the numbers on the pump mixed up, thinking had only squeezed in 30 litres for $50... it's a good shock to be getting 50 litres for $30 !
There was petrol spilling overflowing everywhere...!

F.Rock

 

[ducati916]

Hi rederob,

Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !

There was 108K OI for May still open yesterday.

jog on
duc

 

[tinhat]

The smell of your own **** is beautiful.

 

[rederob]

Hi rederob,

Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !

If you subscribed to Barcharts you can get chart like this for free:

 

[rederob]

This suggests that the point where storage capacity physically runs out, regardless of what arrangements exist financially, is at most weeks away indeed we're already at least half way there.

https://www.zerohedge.com/s3/files/inline-images/total storage capacity_0.jpg?itok=w1KaPpRs

I was curious about what happens to a contract when no storage is available, because the NYMEX WTI has a delivery point at Cushing. If it's full and people who hold the contract at the end of the trading window have to take physical delivery of the oil they bought, does NYMEX wear any loss?

 

[rederob]

Just a morning refresh on the June futures chart over the last day - looks bleak:

 

[BlindSquirrel]

With the oversupply of oil they'll run out of places to put it all. How about investing in oil tanker companies?