Oil drops most since 1982

[Adam Montana]

4 hours ago, DinarThug said:

To support system" rel="">support the markets, the countries of the "OPEC +" group agreed to reduce the group's production by 9.7 million barrels per day in May and June of this year, with the cuts to be reduced in the second half of 2020 to April 2022.

 

I would love to see stats on the actual decreases that any country has done over the recent years, as a result of any of these agreements...

[DinarThug]

What does the collapse in US crude prices mean? 6 questions and 6 answers

 

- One Day Has Passed

 

Some thought, with the shock of the collapse of US crude prices yesterday, Monday, April 20, that it is a summer cloud, and explanations have gone, to say that this is linked to the last days of contracting for the shipments of next May.

But the performance of the market today, Tuesday, confirmed that the matter is a severe storm on the oil markets, as sales of oil from American crude continued, at negative prices, albeit better than they were yesterday, and so did the decline in Brent crude prices and OPEC basket in the international market.

Undoubtedly, the psychological state created by the crisis of the collapse of American crude prices has cast a shadow on the financial markets and cemented expectations for the continuation of the waves of decline in the oil market. And getting out of the Corona crisis, but if the situation continues as it is, the situation will be limited to monitoring the crashes here and there.

In light of what the oil markets witnessed yesterday from the collapse of crude prices from American oil and the retreat of the rest of the types of crude oil, we are trying in these lines to shed light on some questions related to what happened, and the possibility of extrapolating and looking ahead.

Why did US crude prices reach below zero?
The international oil market, which is highly affected by political and economic changes significantly, is based on supply and demand, and the negative repercussions on the economic level of the Corona crisis, will reduce the demand for oil significantly.

And demand for oil, although a basic determinant, but it is a dependent variable in the oil equation, because the independent variable is the demand for goods and services in the international market, and the Corona crisis has paralyzed the movement of production of goods and services worldwide, and the statements of some officials in International financial institutions, to significantly affect the overall picture of the performance of global economic activity.

During the past weeks, the Director of the International Monetary Fund, Kristalina Georgieva, stated that the global economy has already entered a recession, and that had its repercussions in the estimates of the oil market, in its dealings, so futures deals in all types of crude oil began to decline, because such a The statement casts more blur on the future of the global economy.

Most of the news published about the medical and pharmaceutical research efforts regarding access to the vaccine for the Corona virus, talks about at least six months and some talks about a year, which makes the bet to bear the risks of keeping and storing oil very high, because of the high costs.

But what led to the direct drop in the price of American crude, to below zero, and the achievement of negative prices, that the producing companies, ignored the requirements of the declining market, and remained adhering to the wrong principle, which is to maintain their market share, or seek to obtain any returns, compensating them for The losses of the low international market prices, and the producers throughout America did not coordinate with each other to manage production operations and maintain economic prices in the market.

What do negative oil prices mean?
The basic principle in commercial and economic transactions is that the commodity or service is provided, in exchange for a material return - less or more - but under exceptional circumstances, the producer may find himself facing the problem of his inability to discharge the product, so he pays whoever takes it in exchange for disposal, and this is what happened in Oil market yesterday, Monday, April 20, 2020, when US crude was offered, at negative prices, amounting to $ 37, to be paid by the producer to the buyer in some deals.

In the agricultural sector, there is evidence, albeit on a smaller scale, than in the oil market, where farmers offer their goods in the fields for free, or pay some amounts to those who get rid of them, because the cost of harvesting and transport is greater than offering them for free, and paying some amounts to those who accept them Best.

Also in some banks there is now what is known as the negative interest rate, where depositors pay fees to banks in exchange for keeping their deposits, and banks do not provide them with interest on those deposits, and this is the case now in Germany, in order to encourage people to consume, and the inability of banks to exchange Deposits in a recession.

What is the difference between US Intermediate crude and Brent crude?
The global oil market knows three main types, which are a measure of price performance: Brent crude, American crude, and OPEC basket crude.

The difference between these types, is the density of the ore, as well as its purity of impurities. And Brent crude comes first, due to the high degree of purity, and therefore we find that it is the most expensive, while the American crude is less in terms of its purity, as the impurity levels rise, as well as its density is higher, and therefore less expensive than Brent crude. Usually, there is a difference in price between Brent crude and American crude, ranging from five dollars to ten dollars, in normal conditions.

As for OPEC crude, it represents a basket of petroleum products, different soils, which undoubtedly reflect different types of densities and purity. The basket reflects the average oil prices in OPEC member countries. Often, the price of the OPEC basket will be a mediator between Brent crude and American crude.

Why did Brent crude not land like the American crude?
The collapse in the price of American crude oil is largely due to a significant decline in the price of Brent, as American crude suffers from a problem within its production region, which is the United States of America, which is an open market, and oil is imported in large quantities from outside America, in light of The mechanism of supply and demand, so supply in the American market exceeded demand significantly.

So we found Trump's statement today, April 21, that his government was considering stopping importing shipments from Saudi Arabia, which is a move by the government to reduce the oil supply in the US market.

Trump also stated that America will take advantage of the crash in oil prices to fill its strategic reservoirs by about 75 million barrels, and it is worth noting that Trump had previously stated after the signing of the "OPEC +" agreement that his policies to reduce the oil supply in the market, after June, that Strategic tanks are filled with only 19 million barrels.

Trump's talk about raising the quantities he intends to store of oil is an expression of the depth of the crisis in the American market and the extent of the losses suffered by the American oil companies.

As for Brent crude, there are general observations about it, which led to a decline in its price according to market data, but prices did not witness the collapse witnessed by American crude, because the countries that produce Brent crude do not import oil, as well as the limited markets, which are controlling their oil market Significantly .. Also, the countries that export Brent Crude have control over production processes, whether alone or with foreign partners, and therefore they have a large share of up to 60% of their production, enabling them to control the supply to some extent, in order to maintain prices, if they are Its borders are low.

The best example of this is what Reuters published today, that the UAE company ADNOC has informed the importers of its oil that it will reduce the quantities of its production and supply of oil, by rates ranging between 5% and 20%.

What is the difference between spot and forward contracts?
According to the reality of the demand for oil in the international market, the nature of contracts and deals concluded, in periods of economic boom and increased demand for oil, speculators are active in buying quantities of oil to be ready, subject to directing to their applicants, and the quantities of oil are present on the appearance of boats, and they are usually paid in them Higher prices than forward deals.

The activity in urgent deals or contracts is not limited to speculators only, but may be practiced directly by the producing countries, according to the returns achieved.

As for futures deals, they are those that are concluded slowly, and take into account the nature of production and transportation, and the organization of contracts for long periods, but the international market, on average, defines future contracts for a period of one to three months, and does not exceed that in most cases, fearing price fluctuations down and up . But there may be years of contracts for bilateral agreements between countries, and political considerations are often the basis.

What are the effects of this collapse on consumers in America and the world?
The impact of the collapse of oil prices on consumers in America differs from that in the rest of the world and the Arab region. In America and the rest of the countries that use American crude and have a free market, governed by supply and demand, and you can witness a decrease in fuel and energy prices in general, which is observed during the last period, Since the beginning of 2020.

This situation will continue from the decline in prices until at least the end of 2020, but this advantage will lose its characteristics, as long as economic activities in general remain plagued by stagnation, so what does low fuel prices mean, unless there is work to benefit from it .. it may be The positive side for governments and individuals is the low electricity consumption bills in countries that rely on oil power generation.

As for the impact on consumers in the Arab countries, it will differ from one country to another. In the oil countries, the citizen may not benefit greatly from this matter, but it may be harmed, because governments will decrease their revenues, and thus will not reduce fuel prices, fearing that they will collect themselves several Harmful, and at best some Arab oil governments may make a slight and unimportant reduction in the citizen’s life in relation to fuel and energy prices in general.

In non-oil Arab countries, governments usually justify the failure to reduce energy and fuel prices as a result of low oil on the international market, with a large deficit in their budgets, or the severity of their suffering from the domestic and foreign debt crisis.

In addition to the lack of flexibility in price policies in non-oil Arab countries, and the lack of enabling the business community or civil society to put pressure on governments to activate benefits such as lowering fuel prices, due to the low oil prices on the international market.

Source: Al-Jazeera

LINK

[horsesoldier]

1 hour ago, DinarThug said:

What does the collapse in US crude prices mean? 6 questions and 6 answers

 

- One Day Has Passed

 

Some thought, with the shock of the collapse of US crude prices yesterday, Monday, April 20, that it is a summer cloud, and explanations have gone, to say that this is linked to the last days of contracting for the shipments of next May.

But the performance of the market today, Tuesday, confirmed that the matter is a severe storm on the oil markets, as sales of oil from American crude continued, at negative prices, albeit better than they were yesterday, and so did the decline in Brent crude prices and OPEC basket in the international market.

Undoubtedly, the psychological state created by the crisis of the collapse of American crude prices has cast a shadow on the financial markets and cemented expectations for the continuation of the waves of decline in the oil market. And getting out of the Corona crisis, but if the situation continues as it is, the situation will be limited to monitoring the crashes here and there.

In light of what the oil markets witnessed yesterday from the collapse of crude prices from American oil and the retreat of the rest of the types of crude oil, we are trying in these lines to shed light on some questions related to what happened, and the possibility of extrapolating and looking ahead.

Why did US crude prices reach below zero?
The international oil market, which is highly affected by political and economic changes significantly, is based on supply and demand, and the negative repercussions on the economic level of the Corona crisis, will reduce the demand for oil significantly.

And demand for oil, although a basic determinant, but it is a dependent variable in the oil equation, because the independent variable is the demand for goods and services in the international market, and the Corona crisis has paralyzed the movement of production of goods and services worldwide, and the statements of some officials in International financial institutions, to significantly affect the overall picture of the performance of global economic activity.

During the past weeks, the Director of the International Monetary Fund, Kristalina Georgieva, stated that the global economy has already entered a recession, and that had its repercussions in the estimates of the oil market, in its dealings, so futures deals in all types of crude oil began to decline, because such a The statement casts more blur on the future of the global economy.

Most of the news published about the medical and pharmaceutical research efforts regarding access to the vaccine for the Corona virus, talks about at least six months and some talks about a year, which makes the bet to bear the risks of keeping and storing oil very high, because of the high costs.

But what led to the direct drop in the price of American crude, to below zero, and the achievement of negative prices, that the producing companies, ignored the requirements of the declining market, and remained adhering to the wrong principle, which is to maintain their market share, or seek to obtain any returns, compensating them for The losses of the low international market prices, and the producers throughout America did not coordinate with each other to manage production operations and maintain economic prices in the market.

What do negative oil prices mean?
The basic principle in commercial and economic transactions is that the commodity or service is provided, in exchange for a material return - less or more - but under exceptional circumstances, the producer may find himself facing the problem of his inability to discharge the product, so he pays whoever takes it in exchange for disposal, and this is what happened in Oil market yesterday, Monday, April 20, 2020, when US crude was offered, at negative prices, amounting to $ 37, to be paid by the producer to the buyer in some deals.

In the agricultural sector, there is evidence, albeit on a smaller scale, than in the oil market, where farmers offer their goods in the fields for free, or pay some amounts to those who get rid of them, because the cost of harvesting and transport is greater than offering them for free, and paying some amounts to those who accept them Best.

Also in some banks there is now what is known as the negative interest rate, where depositors pay fees to banks in exchange for keeping their deposits, and banks do not provide them with interest on those deposits, and this is the case now in Germany, in order to encourage people to consume, and the inability of banks to exchange Deposits in a recession.

What is the difference between US Intermediate crude and Brent crude?
The global oil market knows three main types, which are a measure of price performance: Brent crude, American crude, and OPEC basket crude.

The difference between these types, is the density of the ore, as well as its purity of impurities. And Brent crude comes first, due to the high degree of purity, and therefore we find that it is the most expensive, while the American crude is less in terms of its purity, as the impurity levels rise, as well as its density is higher, and therefore less expensive than Brent crude. Usually, there is a difference in price between Brent crude and American crude, ranging from five dollars to ten dollars, in normal conditions.

As for OPEC crude, it represents a basket of petroleum products, different soils, which undoubtedly reflect different types of densities and purity. The basket reflects the average oil prices in OPEC member countries. Often, the price of the OPEC basket will be a mediator between Brent crude and American crude.

Why did Brent crude not land like the American crude?
The collapse in the price of American crude oil is largely due to a significant decline in the price of Brent, as American crude suffers from a problem within its production region, which is the United States of America, which is an open market, and oil is imported in large quantities from outside America, in light of The mechanism of supply and demand, so supply in the American market exceeded demand significantly.

So we found Trump's statement today, April 21, that his government was considering stopping importing shipments from Saudi Arabia, which is a move by the government to reduce the oil supply in the US market.

Trump also stated that America will take advantage of the crash in oil prices to fill its strategic reservoirs by about 75 million barrels, and it is worth noting that Trump had previously stated after the signing of the "OPEC +" agreement that his policies to reduce the oil supply in the market, after June, that Strategic tanks are filled with only 19 million barrels.

Trump's talk about raising the quantities he intends to store of oil is an expression of the depth of the crisis in the American market and the extent of the losses suffered by the American oil companies.

As for Brent crude, there are general observations about it, which led to a decline in its price according to market data, but prices did not witness the collapse witnessed by American crude, because the countries that produce Brent crude do not import oil, as well as the limited markets, which are controlling their oil market Significantly .. Also, the countries that export Brent Crude have control over production processes, whether alone or with foreign partners, and therefore they have a large share of up to 60% of their production, enabling them to control the supply to some extent, in order to maintain prices, if they are Its borders are low.

The best example of this is what Reuters published today, that the UAE company ADNOC has informed the importers of its oil that it will reduce the quantities of its production and supply of oil, by rates ranging between 5% and 20%.

What is the difference between spot and forward contracts?
According to the reality of the demand for oil in the international market, the nature of contracts and deals concluded, in periods of economic boom and increased demand for oil, speculators are active in buying quantities of oil to be ready, subject to directing to their applicants, and the quantities of oil are present on the appearance of boats, and they are usually paid in them Higher prices than forward deals.

The activity in urgent deals or contracts is not limited to speculators only, but may be practiced directly by the producing countries, according to the returns achieved.

As for futures deals, they are those that are concluded slowly, and take into account the nature of production and transportation, and the organization of contracts for long periods, but the international market, on average, defines future contracts for a period of one to three months, and does not exceed that in most cases, fearing price fluctuations down and up . But there may be years of contracts for bilateral agreements between countries, and political considerations are often the basis.

What are the effects of this collapse on consumers in America and the world?
The impact of the collapse of oil prices on consumers in America differs from that in the rest of the world and the Arab region. In America and the rest of the countries that use American crude and have a free market, governed by supply and demand, and you can witness a decrease in fuel and energy prices in general, which is observed during the last period, Since the beginning of 2020.

This situation will continue from the decline in prices until at least the end of 2020, but this advantage will lose its characteristics, as long as economic activities in general remain plagued by stagnation, so what does low fuel prices mean, unless there is work to benefit from it .. it may be The positive side for governments and individuals is the low electricity consumption bills in countries that rely on oil power generation.

As for the impact on consumers in the Arab countries, it will differ from one country to another. In the oil countries, the citizen may not benefit greatly from this matter, but it may be harmed, because governments will decrease their revenues, and thus will not reduce fuel prices, fearing that they will collect themselves several Harmful, and at best some Arab oil governments may make a slight and unimportant reduction in the citizen’s life in relation to fuel and energy prices in general.

In non-oil Arab countries, governments usually justify the failure to reduce energy and fuel prices as a result of low oil on the international market, with a large deficit in their budgets, or the severity of their suffering from the domestic and foreign debt crisis.

In addition to the lack of flexibility in price policies in non-oil Arab countries, and the lack of enabling the business community or civil society to put pressure on governments to activate benefits such as lowering fuel prices, due to the low oil prices on the international market.

Source: Al-Jazeera

LINK

 

Uh - what happen to the other 14 questions Thugs ? Whoever heard of playing " 6 Questions " ???  WTF ! ? ! 

 

It's lets play " 20 Questions " right ? My God these people have allot to learn ! 

 

Appreciate your hard work bringing us the blow by blow articles Thugs.

 

Someone over there is using the Corporate Brain Cell.

[DinarThug]

13 minutes ago, horsesoldier said:

lets play " 20 Questions "

Is It Bigger Than An Iraqi Sandbox ....... Animal Or Vegetable .....        
 

 

     

 

[screwball]

On 4/23/2020 at 12:11 AM, Adam Montana said:

 

And just like that - we live in a new world. 

 

 

This might be THE strongest case I've ever seen for a GCR. I'm still not a proponent of a full GCR, but the evidence and situation details just keep piling on... this is wild.

 

Yep agree....

[DinarThug]

Crude oil prices at the experts table

Thursday 23 April 2020

 

Baghdad / Al-Sabah

 

 

Economists and experts called on the government to have papers dealing with low oil prices in global markets to reduce its impact on the Iraqi economy, which is heavily dependent on oil revenues for building its federal budget, while they identified four reasons behind the decline in West Texas oil prices and Brent crude. The Chairman of the National Business Council, Dawood Abdul Zayer, said: "The economic failures in Iraq must be addressed through the possession of papers by the new government to address excessive dependence on crude oil in financing the federal budget," noting "the importance of forming a specialized committee to study oil contracts in licensing rounds." , In a way that does not negatively affect the country. " 

He pointed out, "The importance of creating a new philosophy for state administration, and we must work according to plans drawn up and under a national approach, all the time and not when crises happen, as oil imports must go to sovereign funds that bring new resources to the country."

 

Oil prices

Brent crude futures recovered on Wednesday from their lowest level in more than 20 years, and US crude contracts jumped, supported by initial talks about additional supply cuts from OPEC producers, and increases in US stockpiles were less dreadful than some expected.

Oil trading has witnessed the biggest fluctuations, at least in the past few days. A growing glut in market supply continues with a sharp drop in demand amid orders from governments around the world to people to stay home to stem the spread of the emerging coronavirus.

Brent contracts ended the session higher by $ 1.04, or 5.4 percent, to settle at $ 20.37 a barrel. Earlier in the session, the world benchmark crude fell to $ 15.98, its lowest level since June 1999.

US benchmark West Texas Intermediate crude for June delivery rose 2.21 dollars, or 19.1 percent, to settle at the settlement of $ 13.78 a barrel.

 

Financial instruments

And the oil expert, Amr Hisham, said in a statement to "Al-Sabah": The decline in oil prices came due to the development of financial instruments, pointing out that "what determines the price is not supply, demand and expectations, but part of it for speculation and speculation."

He added: "These speculators were faced with two options, either to receive their oil due to the fullness of all the tanks in the world, or to have to sell oil at any price, which caused prices to fall to this level."

He pointed out that "there are four reasons behind the sudden and massive collapse of American Texas oil; the first is the development of financial instruments, the second is for investment and speculation, and the third is due to the fullness of the tanks in the major treasury states of the United States, China, India and South Korea, and the fourth is the price war that started two months ago, before OPEC Plus Agreement. "

He explained, "Because of the price war, the storage capacities of the United States, China, India and South Korea were filled," noting that "the United States started storing oil underground in rocky areas and with unused and welled wells that have no permeability."

 

Storage capabilities

He pointed out that "the oil tankers that are used as storage capacities before the current crisis, the rent amounted to 30 thousand dollars per day, but after this crisis, the rent reached 200 thousand dollars per day and the reason is due to its fullness of oil, which affected and reflected negatively on Brent crude." Indicating that "Iraqi oil is linked to US Brent prices, minus some Dollars. "

He stressed that "this period witnesses continuous fluctuations in oil prices until the OPEC agreement enters into force. In the event that Russia and China commit in the first two weeks of May to reduce production, prices will improve slightly and gradually, so the prices may reach more than 20 dollars, and then to 30 dollars and higher." From it a little bit, "pointing out that" the crisis will continue until the demand for oil increases after the decline in oil stocks. "

He indicated that "Iraq did not exhort from the crises that the international oil markets witnessed in previous years, noting that there was a proposal submitted to the government to establish a sovereign reserve fund to be used in crises as in the Gulf countries who have sovereign funds to resort to in such circumstances." .

 

Oil wells

In turn, "The economist Hazem Hadi said in a statement to" Al-Sabah ":" The deterioration of American Texas crude prices with this sharp decline will have a significant impact on the economic situation in the United States, because it will cause a very large surplus in the markets, considering that all American oil wells depend On the American Gulf, which comes through the offshore platforms in the United States. "

He added, "The American president tried to address the crisis by his willingness to buy 75 million barrels to save the situation," noting that "the continued decline in crude oil prices will have repercussions on the Iraqi economy, which will lead to an increase in the budget deficit to about 40 percent and makes the general budget a salary budget." Nothing else".

He pointed out that the government confirmed that the salaries of employees were not affected by this sudden decline in oil prices, but that it will have negative repercussions at the present time on the Iraqi economy, development operations, infrastructure and all projects will stop due to the lack of sufficient financial liquidity for financing.

 

Extreme competition

International energy expert Dr. Falah Al-Amri said: "Although China has started operating some of its refineries to its total capacity, this increases demand within China, but there is intense competition between Iraq, Saudi Arabia, the UAE and Kuwait, as well as Russia to meet the demand for China. The first is that China continues to import Because oil is cheap, it increases the strategic storage, as well as the growth of its consumption, and this means that this will not affect its exports from Iraq, which range between 750-850 MB.

He explained that "China has reached its full storage capacity in all parts of China, this may make it reduce imports and then begin to differentiate between its preferred customers and those close to it politically, and certainly it will be in favor of Russian oil exported to it through an oil pipeline extending from Siberian fields, and Iraq may come The second degree because of the strong relationship between Chinese oil companies and companies of the Ministry of Oil, and that the damage that may come in the problem of marketing Iraqi oil is India because of limited storage and some of its companies are specialized in heavy oil.

 

Trading contracts

Former Director of Oil Marketing, SOMO, Ahmed Al-Jubouri spoke about the reasons for the collapse in the prices of futures contracts for American crude oil. West Texas Intermediate said: "In the global oil market, there are three standard types of trading contracts, the most important of which are spot contracts, i.e. prompt delivery of quantities at prices determined immediately, and futures contracts In other words, a contract is concluded between the seller and the buyer to deliver a shipment of crude oil on the date of the deadline (it may be from one month to three months or more according to the agreement), and according to the market price on the agreed delivery date, as well as future contracts, which are trades 99 percent of them are paper and not crude barrels It is a real wave It has a contractual obligation between the seller and the buyer on the number of barrels on a future delivery date, and the period is determined according to the agreement and exceeds 12 months and more.

He continued in the first type mentioned as indicated, real trading of crude oil drums is carried out. As for the second and third types, contracts called paper contracts are issued. Financial settlements that may achieve profit or losses according to the market price, the aim of which is to speculate by traders according to the trading policy in the American market. The contract due date is between 23 to 25 of each month (in some days the weekend occurs two days), so that it is a day 26 of every month is a day for trading my earnest contracts This is on the market.

For example, today we 4/20/2020 contracts that are traded in the market and near the due date are May delivery contracts, i.e. after 4/26/2020 it will not be possible to trade May contracts as they became due for delivery, when that last person The one who has become the owner of the contract must return to the first person who issued the contract and works with him a contract settlement, and this settlement is in two forms, either the first seller delivers to whom the contract has the number of barrels and according to the number of contracts, or agrees to a financial settlement through a comparison between the selling price The barrel fixed in the contract with the price of the barrel in the market at the maturity date, and then the final owner R is for a contract, either winning or losing, and the first seller of the contract on the due date is either winning or losing according to the market price .

 

Demand slipped

This situation will be repeated every month on the due date of futures contracts as long as the current market conditions are continuous, which is represented by increasing levels of storage and declining demand, and this situation recedes with the passage of time when traders desire to trade in futures and futures contracts less, after these large losses will go to the owners of capital and speculators to invest In safer alternatives in fixed assets such as gold, metals, stocks and bonds are freely taking the risk.

LINK

[Pitcher]

https://oilprice.com/Latest-Energy-News/World-News/Have-Investors-Been-Misled-By-The-Oil-Price-Crash.html
 

Have Investors Been Misled By The Oil Price Crash?

By Tsvetana Paraskova - Apr 24, 2020, 4:30 PM CDT

A securities law firm announced on Friday an investigation on behalf of risk-averse investors with Wells Fargo, Morgan Stanley, UBS, and Merrill Lynch who have sustained significant losses recently from investment in the turbulent energy sector.

The notice comes the same week as WTI futures turned negative, although the last month of oil trading was particularly brutal, with the potential for losses significant. 

The law firm of Klayman & Toskes believes that investments in the energy sector, including the Alerian MLP Index (INDEXCME: AMZ) “may have been marketed and sold to customers who were risk averse, such as retirees or other conservative investors, that were seeking income and capital preservation and were not explained the potential risks.”

The Alerian MLP Index, the leading gauge of energy infrastructure Master Limited Partnerships, fell from $220 in January, to just $70.85 in mid-March. 

“Investors may seek damages for violations of sales practice rules and regulations in FINRA Arbitration if they were recommended investments in several major U.S. oil and gas sector firms, including Exxon, Chevron, Phillips 66, ConocoPhillips, EOG Resources, Kinder Morgan, Schlumberger, Valero Energy Corp, Marathon Petroleum Corp, Enterprise Products Partners, Tallgrass Energy, and Energy Transfer, among others," the law firm said.

The bulk of the market carnage came on Monday, when WTI Crude futures collapsed into negative territory, resulting in a lot of losses for individual investors.

Pierre Andurand, for example, warned traders on Tuesday of massive losses in ETFs.

“This shock is real. Be very careful out there. We are going to hear about crazy losses in the days and weeks to come,” Andurand said on Twitter.  

After the market crash on Monday, some brokerages have started to limit the ability of their smaller customers to place new trades in the June futures contracts of WTI and Brent Crude, two brokerages told Bloomberg on Thursday. INTL FCStone Financial Inc and Marex Spectron are limiting customers, especially smaller ones, from initiating new trades in the two most active international crude oil futures contracts. 

[Pitcher]

https://oilprice.com/Latest-Energy-News/World-News/Energy-Transfer-Asks-For-Permission-To-Turn-Pipelines-To-Oil-Storage.html
 

Energy Transfer Asks For Permission To Turn Pipelines To Oil Storage

By Tsvetana Paraskova - Apr 24, 2020, 5:30 PM CDT

Pipeline giant Energy Transfer will be asking the Texas Railroad Commission to allow it to idle two pipelines in Texas and turn them into storage for around 2 million barrels of oil, the company told Argus Media this week.

U.S. oil producers are struggling amid collapsing demand and oil prices while inventories across America are growing. Producers in Texas struggle to place their barrels with the U.S. Gulf Coast refineries, which are cutting crude processing rates in response to plunging fuel demand. The massive oil demand drop in the U.S. and overseas due to lockdowns in the COVID-19 pandemic has had U.S. oil producers scrambling to find storage for their produced barrels when no one wants more oil right now. 

Earlier this month, Enterprise Products Partners applied to open the northbound capacity of its Seaway pipeline, offering U.S. oil producers struggling to place their oil near the Gulf Coast to ship their barrels to the primary storage hub at Cushing, Oklahoma.   

“Given the current turmoil in the crude oil market, including impacts on both refinery and export demand, there is strong market interest to access the Cushing storage market,” the pipeline operator said in a filing with the U.S. Federal Energy Regulatory Commission (FERC), as carried by Reuters.  

But many analysts think that available storage in Cushing will fill up by the middle of May, or the end of May, at the latest, if demand doesn’t materially pick up by then. This is an unlikely scenario, considering the lockdowns and work from home policies in many states.

If Energy Transfer’s plan to idle two Texas pipelines for storage is approved, “After that it will be a matter of adding pumps to the lines, which we can easily achieve,” Energy Transfer told Argus this week.

“We estimate we can be ready by mid-May,” a spokeswoman for the company told Bloomberg in an email.  

[Pitcher]

https://www.shafaaq.com/en/economy/iraqi-oil-suffers-challenges-due-to-buyer-s-decline-to-purchase-governmental-advisor-says/
 

Iraqi oil suffers challenges due to buyer’s decline to purchase, Governmental advisor says

 

2020/04/25 03:51:58

Shafaq News / Mudhar Muhammad Salih, the economic advisor to the Prime Minister, Adel Abdul-Mahdi stated on Saturday that some buyers are declining to buy the Iraqi oil due to the global markets saturation with crude stocks, stressing that developing the production and lower prices will deprive Iraq of "large" quantities of production.

“There are two issues that represent the difficult oil equation in Iraq: The first relates to Iraq’s commitment to the OPEC agreement for the commitment being a reality not an option, because there is a global oil glut on two levels. The first oil market is saturated with oil stocks that exceeded the storage capacity in the world because of the world's transportation and industry cupboards stop because of Corona as the supply is still 30% higher than demand,” Saleh told Shafaq News.

He added that "the second level is that the oil supply to Iraq itself is suffering from a problem in its stability. Because the supply in some of the main demand markets is being faltered by some buyers decline to buy and the same international economic reason."

"As for the second party of the difficult oil equation, which is currently undertaken by the oil administration to attain the essential and reasonable solutions due to the growing separation between the oil amount that is paid to international foreign companies (in kind), that is, the cost of developing oil fields (which are mostly fixed-value costs) and the value of the oil paid itself to settle the dues while it is condescending or low in value (that is, according to the currently low oil prices for fixed development costs) which requires compensation in double quantities as Iraq is under production, the stability of development costs and the worsening of prices will lead to depriving Iraq of large quantitative production to address fixed costs and creating a gap detrimental financing for the public finances,” Saleh added.

The advisor indicated to the Iraqi government that "the difficult oil equation is truly two-fold, whose center is the contradiction between the drop in global oil prices and the loss of additional quantities of crude oil to pay the fixed value of dues. This matter is of high attention on the part of the oil and financial authorities in Iraq to search for solutions for the.  general budget resources and find a solution to the oil equation. "

The Iraq Oil Report website, which specializes in following up Iraqi oil news, said that Iraq is facing daunting technical and financial complications as it begins to cut oil production in support of an OPEC-plus agreement to take nearly 10 million barrels per day (bpd) off the market to combat falling crude prices.

Unlike previous cuts, this one is so large that Iraq can only meet its new quota by ordering curtailments at oil fields operated by international oil companies (IOCs) – an expensive proposition likely to trigger difficult negotiations with IOCs, given contract provisions that protect companies from discretionary shut-ins by guaranteeing payments for oil ordered to remain below ground.

According to the website, Iraq will not be able to meet the agreement to reduce its share only through agreement with international companies that manage oil fields, and it is expected that it will face difficult negotiations with those companies, given the provisions of contracts that protect companies in such circumstances.

Iraq has committed to reduce its oil production by up to 23 % starting next month, which will affect the current production, which averages about 4.5 million barrels per day (bpd).

[trident]

IMO....too little and far too late, not only in Iraq ...the train wreck is coming big time for the oil industry, because they are still shipping yet there is and will be for weeks maybe months - lack of demand. Where are you going to store tens of millions of barrels of oil when your already severely running out of storage options - worldwide ???

[Pitcher]

https://oilprice.com/Energy/Natural-Gas/Iran-Reaches-Production-Milestone-At-Worlds-Largest-Gas-Field.html
 

Iran Reaches Production Milestone At World’s Largest Gas Field

By Simon Watkins - Apr 25, 2020, 2:00 PM CDT

Reaching natural gas production of one billion cubic metres per day (Bcm/d) has been one of the three core hydrocarbons resource strategies of Iran since the Islamic Republic began to seriously develop the supergiant South Pars non-associated gas field in 1990, alongside producing 5.7 million barrels per day (bpd) of oil and building out a world-class petrochemicals sector. As highlighted by OilPrice.com, Iran is currently working quietly towards the oil output and petchems sectortargets, but it also announced last week that it is finally to achieve its monumental and long-awaited gas production target this Iranian calendar year (ending on 20 March 2021). At the same time, it also announced that its flagship Persian Gulf Star Refinery (PGSR) – essential to Iran’s new-found gasoline self-sufficiency – is ramping up its refining capacity. 

South Pars - the 3,700 square kilometer portion of the 9,700 square kilometer gas basin that Iran shares with Qatar (the North Dome field) - holds an estimated 14.2 trillion cubic meters (tcm) of gas reserves (8 percent of the world’s total and around 40 percent of Iran’s total estimated gas reserves of 33.8 tcm) plus 18 billion barrels of gas condensates. For at least two decades it has additionally accounted for around 60 percent of Iran’s overall gas production and is also central to Iran’s ambition of becoming a top-tier global player in the liquefied natural gas (LNG) market. Given the global significance of this resource, the South Pars field was, up until the re-imposition of sanctions by the U.S. in 2018, the focus of a superpower tug-of-war between NATO members and Russia, with both sides eager to put their best companies on the ground in one or more of the South Pars phases. 

For Europe (and the U.S.) this opened up the opportunity of being able to significantly reduce the continent’s extreme dependence on Russian gas flows. Russia, understandably, was equally eager to retain its gas-centric power over Europe and instead to divert Iranian gas flows eastwards, to bolster its own gas arrangements with Asia in general and with China in particular. With the withdrawal of French oil and gas major Total from Phase 11 as a result of the new U.S. sanctions, Russia has the dominant position now in Iran(albeit with China working increasingly busily alongside it), although for the time being the enormous degree of its participation is disguised in the form of ‘contractor-only’ work, as revealed by OilPrice.com.  

Premium: The Oil Sector That Will Suffer The Most

With Russia and Chinese money, equipment, technology, and expertise available as and when required, South Pars will exceed 750 million cubic meters per day of natural gas output by 20 March, in turn bringing the country’s total natural gas production capacity to one Bcm/d, according to a comment last week from Iran Petroleum Minister, Bijan Zanganeh. He added that the first major offshore development stage of Phase 11 (now under the leadership of Iran’s Petropars) – will be spudded within the next few weeks, with the Phase’s output destined to be pumped to refineries in Assaluyeh and Kangan in the Bushehr Province, and noted that the platform jacket for the Phase is in Qeshm Island ready for installation. 

According to Petropars’ plans, Phase 11 is now scheduled to be developed in two integrated and consecutive stages, with each stage containing 15 wells and the aim being the production of 56 mcm/d of natural gas plus 75,000 bpd of gas condensate and other tangential products. In addition, Zanganeh said, two 32-inch pipelines jointly stretching over 270 kilometers will be constructed and installed to ensure the onward distribution of the gas to the intended refineries. 

With around US$33 billion having already been spent on the development of South Pars as a whole, according to sources in Iran spoken to by OilPrice.com last week, a very high percentage of the work on all phases has already been completed, with just a handful not having a 95 per cent plus completion rating as of now. Of these relatively under-developed phases, Zanganeh stated earlier this year that Phase 14 would come online by the end of the current Iranian calendar year on 20 March 2020 and, according to a source who works very closely with the Petroleum Ministry, this objective was only missed because of the sudden onset of the coronavirus in Iran as elsewhere. As it stands, the third platform of the offshore field is already loaded for installation in its designated spot, and, once operational, the platform is designed to produce 14.1 mcm/d of natural gas. 

Its adjunct phase – 13 (SP13) - targeted to produce 56 mcm/d of gas on its own, saw two platforms (B and D) become ready for an operation just prior to this development and since then, according to its operator at the end of March – Iran’s Pars Oil and Gas Company – the last platform (13C) of the offshore project has been successfully installed in the Persian Gulf. In sum, 38 offshore wells have now been drilled in the offshore sector of SP13 located in the northwestern part of the gas field, with the delivery of gas to the onshore refinery scheduled to begin when an offshore pipeline becomes available. In preparation for this, a fourth train is now ready, allowing for the processing of up to the full 56 mcm/d of nominal gas capacity, which would then be fed into the Iran Gas Trunkline (IGAT) system. 

Premium: Oil Storage Nears Its Limit

At the same time, the flagship of Iran’s enormously important gasoline sector – the PGSR (more generically known as the Bandar Abbas refinery) – that is fed by gas condensate produced from South Pars is now back to full operation following a similar slowdown caused by the coronavirus outbreak and is geared towards breaking new production records. Its importance to Iran is difficult to overstate, suffice it to say that for a resource-rich country such as Iran no element of previous U.S.-led sanctions was more galling to it than having to rely on international assistance to meet its day-to-day needs for gasoline. An indication of how important it was to Iran to become self-sufficient in gasoline is evidenced by the breakneck speed with which it moved on the development of the PGSR, with the original plan involving a 360,000 bpd three-phase refinery development, each designed to produce 12 million liters per day (ml/d) of Euro 5 gasoline, plus 4.5 ml/d of Euro 4 standard diesel, 1 ml/d of kerosene and 300,000 liters per day of liquefied petroleum gas (LPG). 

To achieve these targets, the project’s developers were given a €260 million additional loan from the National Development Fund of Iran, as part of the estimated total cost for the three stages of approximately US$3.4 billion. Phase 1 was officially inaugurated in April 2017, with the first shipment of gasoline delivered for distribution just one month later in June, and Phase 2 began producing Euro 5 standard gasoline shortly after its own official launch in February 2018, running at full capacity by the end of June that year. Phase 3 saw its official inauguration shortly after that.

Despite reaching its initial targets, plans for the PGSR have been extended and, according to a comment last week from the chief executive officer of the project, Mohammad Ali Dadvar, the PGSR’s gas condensate refining capacity is set to increase to 480,000 bpd by September of this year. To this effect, according to Dadvar, air conditioning units for new cooling products and pumps, are already on-site and the construction of the required equipment is underway. “Currently, an average of 45 million liters of petrol and 17 million liters of gasoil are being produced at the refinery on a daily basis, which will increase to about 54 million liters and 20 million liters per day, respectively,” he said. In addition, he said, the refinery also now supplies 3.5 to 4 million liters per day of naphtha which is mostly exported or supplied to Tabriz and Arak petrochemical plants as feedstock. “[Given] sanctions...nearly 70 percent of the Persian Gulf Star Refinery’s output is petrol, which provides the lion’s share of the country’s demand for quality fuel,” he underlined. 

[Pitcher]

China Is Stocking Up On Cheap

COVID-19 is causing an unprecedented global economic crisis which also affects the LNG industry. In February China’s lockdown seemed to contain the outbreak of the virus but the ensuing pandemic has proven otherwise. Energy prices have plummeted as demand evaporated overnight. While China’s economy took a severe hit due to the lockdown, the country could now benefit significantly as it’s restarting while most of the world is closed for business.

Before the outbreak of COVID-19, the world's second-largest economy was on the path towards dethroning Japan and becoming the largest LNG importer. Beijing’s coal-to-gas policy was intended to combat rampant air pollution, which led to a surge in demand for cleaner natural gas. China was the largest contributor to global demand growth of supercooled fuel.

Several large producers have set their eyes on the massive Chinese market. While Qatar for years was the dominant LNG producer globally, Australia's gas sector surpassed the Arab country's due to Beijing's insatiable appetite. Doha has lifted the self-imposed moratorium on the massive North Dome field to increase production by 48 megatons/year to 126 until 2027, which is an increase of 15 percent based on global LNG production in 2018. Russia’s LNG strategy is also primarily aimed at the Asian market. Moscow intends to increase capacity to 46-65 megatons/year by 2024 and to 70-82 megatons/year by 2035.

Despite the COVID-19 outbreak in China, LNG imports were still rising during the first two months of this year. A significant part of the natural gas was heading towards storages as most of the Chinese economy was under lockdown. While imports are returning to normal again, state-owned China National Offshore Oil Corporation, the country’s biggest LNG buyer, is largely absent from the market as its storages are mostly full.

 

However, other Chinese market participants are ready to take advantage of the global LNG glut. According to Edmund Siau, a Singapore-based analyst at energy consultancy FGE, “demand has also been driven by smaller players with storage capacity, who are emerging to take advantage of low spot prices.”

According to Kpler, a Paris-based company providing market data on energy markets, Chinese companies imported about 1.26 million tons of LNG in the week of March 23, which is the first time it’s risen above the 2019 weekly average.   Related: Trump Threatens “Very Substantial” Tariffs On Oil Imports

The restarting of China coincides with the shutting down of most of the world’s economy causing lower commodity prices. Every crisis offers opportunities, including this one. The advantage has not gone unnoticed. According to Wang Li, a researcher for the Ministry of Commerce, China needs to “seize the opportunity of super-low oil prices” and expand its strategic oil reserves before prices rise again. It also includes other commodities such as LNG.

The restarting of the Chinese economy is also good news for American LNG producers as four vessels are heading to the mainland from the U.S. This would mark the first time supplies are delivered since March 2019. These companies were granted tariff exemptions for LNG cargoes.

 

 

This couldn’t have come at a better moment for America’s LNG industry as prices have sunk to historic lows. It is a remarkable turnaround for the U.S. industry that was touted as the next big player on the international gas market.

 

Despite the hopeful signs for LNG producers regarding Chinese demand, it is uncertain whether this trend will continue. Much depends on developments concerning the containment of COVID-19 in other major markets such as Japan and South Korea and how quickly they're able to restart their economies. One thing is certain, China’s becoming the buyer of last resort which increases the country’s influence. This comes at a time when the West is preoccupied and inward looking.

 

 

https://oilprice.com/Energy/Natural-Gas/China-Is-Stocking-Up-On-Cheap-LNG.html

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https://oilprice.com/Energy/Energy-General/Why-The-Oil-Industry-Can-No-Longer-Rely-On-China.html
 

Why The Oil Industry Can No Longer Rely On China

By Cyril Widdershoven - Apr 25, 2020, 6:00 PM CDT

The global oil sector is reeling from a combination of negative oil prices, storage overload, demand destruction, and calls for a renewable energy revolution in the post-COVID-19 era. 

US and European oil market analysts appear to be pinning their hopes on a rebound in oil demand from Asia. Even international financial institutions, such as the IMF, WB, ECB and OECD indicate that the future of economic and energy demand growth is inextricably linked to the future of China and, increasingly, India. 

OPEC oil and gas producers, after decades of prioritizing Western economies, have been rerouting their investments and oil and gas strategies to capture these markets of the future. Before COVID-19, China was already a key global center for trade, investments and geopolitical influence. While some critical reportshave been warning about the worrying economic and financial situation of China, mainstream investors and operators still had the country as their top investment target. Growing concerns about Beijing’s geopolitical aggression in the South China Sea and the negative impact of its One Belt One Road initiative were not enough to dissuade nations and global conglomerates from engaging economically with the Asian giant. Arab OPEC producers weren’t immune to China’s influence either, with over 50 percent of their overall investments going to the country. China, the argument goes, would always be a vital partner due to its huge population and growing political-economic reach. Then came COVID-19. The unexpected implications of this global pandemic had only previously been discussed in thinktank reports and Hollywood horror films. Nobody, it seems, thought it would ever become a reality. Now that it has, the major potential fallout from this transformative disease is far bigger than most people think.  Related: Goldman Sachs Expects Another Oil Price Crash

The true extent of the damage caused by COVID-19 is yet to be seen, mainly due to the trillions of dollars of government support that has been given to businesses. But geopolitical relations and trade routes have already changed drastically. China’s web of influence is now unraveling as it has become clear just how dangerous it is to rely so heavily on just one country for international trade and security. The lack of resilience in the global economic system, especially when it comes to production and trade, is going to very negatively impact China in the coming years.  A new resilience based on a diverse economic system will be needed to confront and mitigate future international crises or pandemics. For oil producers, especially the Arab OPEC producers and Russia, relying on China to consume a majority of their future production is a dangerous game. Just as US shale is far too heavily reliant on Cushing storage and paid the price when WTI prices crashed into negative territory as Cushing hit capacity, Arab producers have been hit hard by Chinese demand destruction.

The next development, one that is already visible within major OECD countries, will be to rethink future investment projects or current financing schemes, and set up new non-Chinese production centers or bring industry and production back home. This may sounds like Trump’s ‘America First’ policy, but it is seen by European parties as a necessary to counterweight to the ever-growing influence of China. A Make Europe Great Again (MEGA) policy, based on shortages of Chinese products, has already gained traction. The automotive, chemical and medical sectors are reconsidering their relationships with China. Discussions are clearly on the table to bring production facilities back home or to set up new ones in India, Egypt or other places, where high-tech, high education levels, and low costs are also available.  Related: $110 Trillion Renewables Stimulus Package Could Create 50 Million Jobs

OPEC’s strategists should also take a step back and look beyond China when it comes to economic interests. A restructuring of production, supported by geopolitical, financial and operational issues, outside China will directly put a major damper on oil and gas supplies and demand in the Tiger State. 

OPEC and Russia should assess the options that OECD countries, supported by others, are considering regarding the restructuring of their China policies. New emerging regions will be needed to increase the resilience of the global economy. This transformation will rapidly and dramatically influence future energy demand trade flows. Saudi Arabia, UAE, Qatar and Kuwait, must consider this before they are confronted by a fait-a-compli. COVID-19 has transformed international relations, nationalism has returned to influence the economic policies of two of the largest economic power players in the world, the USA and the EU. If it fails to act, OPEC’s oil and gas future will hit hard by lower Chinese demand. The oil cartel needs a new resilience-focused approach to its economic policies. The future of oil and gas demand will not be focused purely in China, and any nations with an interest in the industry should start to plan for that future now.