Oil price discussion and analysis

[frugal.rock]

Am wondering about the physical state of some/ most of these oil storage tanks. In good repair are they? Ready to use?
More delays on top of shutdowns to modify / installation of oil burning systems.
A sorry state of affairs really.

 

[sptrawler]

Not only that but if the US wants the oil anyone think they will hand it over?

Cringe worthy, still take IB points anything is better than nothing.

That is for sure, where are we going to store 90 days worth?
Not only store it but ensure it is useable when it is required, at least when you lease something, there is every expectation it is in a serviceable condition when you receive it.

I'm no expert on oil, but I have had a bit to do with stored diesel and from my limited knowledge, stored refined oil products have a shelf life and require constant monitoring for algae and maintaining correct temps for moisture and waxing etc.

If you store them as unrefined then they are brought to spec during refining, so IMO having strategic reserves in the U.S isn't a bad idea and holding enough here to ensure the reserves arrive well before the reserves on hand runs out.
There may be a case for building more storage here as the population grows, that is something that is always overlooked in planning, things get bigger and there is always something that gets missed in the upgrade.
Someone will correct me if I'm wrong.
Just my opinion.

 

[sptrawler]

Am wondering about the physical state of some/ most of these oil storage tanks. In good repair are they? Ready to use?
More delays on top of shutdowns to modify / installation of oil burning systems.
A sorry state of affairs really.

That is for sure, the tanks will have to be surveyed, as they may well be corroded above the low level which is where many would have been filled to, due to the cost of oil. But I'm sure many GT's will have standby oil tanks and management will be looking at filling them as smurf has pointed out.
A lot of coal fired stations light up on fuel oil, so they also will take the opportunity, cement works, alumina refineries etc, where fuel oil is the standby fuel it is just as easy to fire on oil as gas if it's cheap enough again as smurf has already pointed out.

 

[Smurf1976]

I'm no expert on oil, but I have had a bit to do with stored diesel and from my limited knowledge, stored oil products have a shelf life and require constant monitoring for algae etc.

Likewise I'm not expert on that but from what I do know, the heavier the product is, the less hassle storing it long term.

I know of 45,000 tonnes of heavy fuel oil that was left sitting for 7 years and was just fine after that. It fired the boilers as it was supposed to without any drama. Nothing bad happened to the steel tanks it was in either.

Crude oil likewise no drama. It has been underground for a very long time after all and goes through refining which will sort it out. Hence the US stockpile simply stored in salt domes.

At the other extreme, with petrol there can be a lot of issues with storage and the loss of volatile components if it's not airtight. Meanwhile diesel has issues with microbes, algae, sludge etc if there's a water:diesel contact layer which there often is given that any water sinks to the bottom of the tank.

 

[Smurf1976]

I'm sure many GT's will have standby oil tanks and management will be looking at filling them

For those which fire oil only they'll already have fuel in known good tanks and it's really a question about them potentially running a lot more to displace gas etc used elsewhere.

For those with dual or triple fuel systems it will depend on how well it has all been maintained which will depend on who owns it.

Main point of relevance here though is that at the global level there's some ability to use oil to replace the use of other fuels either directly (eg instead of gas or coal in the same boiler) or indirectly (running oil-fired power generation instead of hydro and storing the water etc).

Even if it doesn't all work there's going to be some ability to do that which is the relevant point in the context of oil prices and what happens at very low levels.

 

[bluekelah]

Just spend the money on more solar panels and batteries
Dont you know, excess electricity can be stored in Energon cubes and be exported for a tidy profit.

 

[ducati916]

For the history books:




jog on
duc

 

[rederob]

Morning WTI snapshot:

It's going to be a long and slow haul back, but producers able to survive this massacre will see strong rebounds in their share prices.

 

[cutz]

Looks like traders are rolling early, can someone post a chart of the jun/july calendars showing volume, I can only get price action..

@Smurf1976 good info mate.

BTW, last night I come across a recent segment on AlJez. inside story, its appears US wells are being closed and mass oil industry lay offs happening already !!

Regards.

 

[rederob]

Looks like traders are rolling early, can someone post a chart of the jun/july calendars showing volume, I can only get price action..

Hope this helps:

 

[cutz]

Thanks mate.

I was actually the volume on the calendar spread with the price candles.

Regards.

 

[rederob]

Here's the morning update on progress towards a sustainable oil price:


Baker Hughes' rig count for action to this Friday is not yet available, so here it shows that nowhere in North America did any new drilling occur last week. As we all know, without this investment there is a good chance that at some point ahead there will be a spike north in WTI prices as demand overtakes supply.

 

[Smurf1976]

nowhere in North America did any new drilling occur last week

If it's literally gone to zero well then that's another thing in the "unprecedented" category so far as I'm aware.

Drilling has its ups and downs like most industries but actually going to zero is certainly rather extreme.

 

[rederob]

If it's literally gone to zero well then that's another thing in the "unprecedented" category so far as I'm aware.

Drilling has its ups and downs like most industries but actually going to zero is certainly rather extreme.

It will be interesting to see when LTO plays begin to kick in with fresh drilling as it would suggest the chance that it's near break-even, and with the hope of price upside.

 

[Noob69]

Ok y'all. With all that's transpired, ASX:OOO is currently at $2.85. Who's having a punt?

 

[wayneL]

Here's the morning update on progress towards a sustainable oil price:


Baker Hughes' rig count for action to this Friday is not yet available, so here it shows that nowhere in North America did any new drilling occur last week. As we all know, without this investment there is a good chance that at some point ahead there will be a spike north in WTI prices as demand overtakes supply.

That is an absolute certainty. As long as one can wait and weather possible margin calls in the meantime.

 

[Smurf1976]

It will be interesting to see when LTO plays begin to kick in with fresh drilling as it would suggest the chance that it's near break-even, and with the hope of price upside.

Another aspect there is the extent to which the oilfield services companies, those who physically do the work, are willing to do it cheaply.

They've got fixed costs as with any business so if there's zero work at the moment then they'll probably be cutting prices to get anything that is available rather than having a competitor get the work.

Or in other words, the cost of actually drilling a well should come down at least temporarily.

 

[Knobby22]

Too many traders, they will be taken to the cleaners again next month. Truth is they don't want and can't take the oil and their is no where to put it.

 

[rederob]

Last night Baker Hughes reported that the number of active U.S. rigs drilling for oil dropped by 60 to 378 this week, a sixth straight weekly decline which also represents a 53% decline over the year.

 

[Dona Ferentes]