Oil Prices

Oil prices are dropping into territory we haven't seen in a while. Oil prices have been an indicator where the wild fur market is concerned, as the price generally equates to how economies throughout the world are functioning. Falling prices means there's less "function" in those economies. Lower prices are nice at the pump, but they tend to drag the price of fur down. In the current world situation, oil prices are falling as a result of cuts in production and the movement of those goods throughout the world. The prices received at earlier fur pick-ups and sales won't hold in these market conditions. Unfortunate, but none-the-less true, IMO. The good news is, markets can change quickly, so there's always hope.

2 refinery fires this month one was LP it seems like prices get low it’s time for a fire or repairs that bring the prices up.

Historically, the markets "fluctuate" during election years. As we headed into this election season, the corona virus appeared. Unlike other controllable factors of the past, this event is unprecedented, in that world economies have become intertwined in a way that makes them dependent on each other's ability to function. Economies functions from the flow of goods, ideas, people, etc. Something has to move. Stagnant money doesn't grow. Oil is the basis of many economies, if not all. It's used in moving products, product manufacture, and in the products themselves. The fall of oil prices and consumption is going to have an impact on the world's economy, ours included. I'm not saying the sky is falling...I'm just saying...head's up...be aware.

Look at China for instance. Yesterday they announced, in-country flights are $4. Imagine that. Go take a flight from NY to LA for $4. Things are slowing down a bit. May take them a few days to get back up to speed.

I'll take the cheap gas.

Surprised they haven't said increased prices due to the coronavirus.

X2

Same here. I filled up for $2.10 last evening.

I have not been following crude oil prices. But my gas price is $2.25 and up for ethanol gas.

That could actually happen........and it would make perfect sense.

As demand for oil continues to drop, the price of crude will drop. Companies will stop drilling and production will fall...........driving the prices back up. Rinse & repeat.

OPEC is going to have to make further cuts in production just to support prices......but will Russia cooperate ? Probably not. Russia would love to drive the price down low enough to bankrupt a lot of US shale producers.

With hope in one hand and a quarter in the other you can't get a cup of coffee.

You're such a rationalist!

Me too!!

oil $46.38 a barrow , I like cheap gas sure helps me out running my tree service business last year I spent for gas a few repairs over $17k, I know its not much help on the fur price , but I will take it.

X 2

Which, to me, is only a short term strategy... Once prices go back up there will be producers willing to drill again and it starts over.

Mike

Gas went up 12 cents a gallon in Hudson Wi. today.we on the MN. side were still at$2.39 a gallon. Looks like it is going in the wrong direction.
Tom

Big oil will find a way to raise prices just give them time. They will shut down refineries or say there is a shortage and burn down refinery or say they aren't making their billions to raise oil prices. They will manufacture oil prices to rise in short order if it stays low for long.

Oil companies are the biggest crooks of this world and got Gov right where they want them.

I agree with you. It all started with the prohibition era - before that people made their own fuel from corn.

So if oil companies have the ability to manipulate prices.................why don't they just keep it at the price that maximizes their profit ?

Commodities like corn and even soybeans are more correlated to oil prices than fur is. Yes we are seeing some real lulls in those markets as well. Worldwide usage is slowing and in some places imports are on hold. It could be a low cost year for US farmers to buy nitrogen fertilizer and other inputs like chemicals and any fuel related input. That may trigger even more planting of corn. The big issue will be weather. The earlier the spring the more corn that gets planted. There are some areas of the major corn belt region that are looking like a drier than normal late spring and early summer. We will see how that rolls out.

Bryce

44 and change when I looked. It's a reflection of production. Real economy is based on production. It requires the movement of people, goods, and ideas to function. When production slows, a market like oil is pretty much screwed. Their product isn't being consumed at a normal level that they produce it at. So they end up over-producing. That drops the market price because they now have to compete harder with each other to sell. The coon market is a great example. We produced more than they wanted, and we got less for our effort. Now smaller operations tend not to be able to compete, and so they move on. Larger operation can control their output, and so they can control price, as long as people are buying. At a certain point though, producing a good can cost you more than you make. That would be the case now with our fracking industry. The current drop in oil prices suggest that countries are not producing. If they aren't producing goods, they aren't buying or they aren't buying as much. Oil is everywhere in the economies of the world. And fur is directly tied to those economies. Fur prices are gonna follow. IMO

$44.76 for WTI tonight.

What you are watching in real time is a price correction caused by, hopefully, a temporary destruction of demand. While some of you are happy for lower fuel prices, and I totally understand your feelings, you should pray this is a short term event. If the corona virus becomes uncontrollable in the United States and causes widespread economic calamity, you will live to regret your joy at lower oil and fuel prices. Your 401k's and even employment opportunities will be severely negatively affected. I think it will probably be much ado about nothing and we will experience a V-shaped recovery. If so, this will be forgotten in a few months and will simply be a golden opportunity to enter the stock market. If not, you may find yourself longing for the days of a little bit higher gasoline prices and wondering how we got here, politically speaking.

Thanks.

It always helps to remember that all petroleum is not created equal.

https://rentar.com/best-crude-oil-world-crude-oils-better-others/

Mike

I think this CV issue is being way over hyped. I heard today on that many people who contract the virus will never get ill, 80% of those who do get sick will exhibit "cold" like symptoms, and 20% will develop flue like symptoms, a percentage of those people will require hospitalization and 3% of those will die.

80,000 Americans died of the flue last year, and 14,000 have already died of the flue this year.

What's the big deal.

Well, one way to think of it is like this. 1/3 of the common colds we get are a form of corona virus. We don't have a cure or a vaccine for the common cold. We don't have a cure or a vaccine for any corona virus. Covid 19 appears as a new virus. It is a deadly virus, it is contagious. Like all flues, it has the ability to mutate and make vaccines ineffective against it. If a vaccine is not discovered, or a way to detect and isolate those infected, we could have a new deadly virus that we may encounter as easily as the common cold or flu. That would change a lot about travel, work place environment, exchange of goods and services, etc. Well, I guess those things are changing now because of the virus. That's the big deal.

Would it really?

To put things in perspective the influenza A and B 29 million flu illnesses, 280,000 hospitalizations and 16,000 deaths from flu.

Remember these...…

Swine flu 2009
Bird flu H5N1 2013
Sars 2003
Anthrax
MRSA Antibiotic resistant staphylococcus which is living in every hospital in the world

Just a short list of those things that we did not know anything about when they came out. Guys you have a better chance of dying when you go to the hospital than you do this flu. It is going to be 65* and sunny here today. Opening our windows and airing things out. It is great to have a couple weeks of supplies around and I do but this will go as fast as it came. Markets will rebound and life will go on. Times like this it is good to leave the TV off and go outside and do some yard work. LLL

From Barron's yesterday afternoon


Oil Is Still Plunging as Demand Falls. One Big Buyer Is Out There.

By Avi Salzman
Feb. 28, 2020 1:24 pm ET





Fear of how the virus could affect the world economy, and demand, has sent oil prices lower.


The oil selloff gained steam on Friday, with West Texas Intermediate crude futures plunging more than 6% before recovering slightly. One gigantic market participant—China—appears to be taking advantage.

Near midday, futures on WTI were down 4.6% to $44.92. WTI hasn’t closed below $45 since 2018.

Brent crude futures also briefly fell below $50, to levels where Brent hasn’t closed since 2017. Brent is down more than 25% since the virus began making headlines in mid-January.

Oil stocks were holding up better. Exxon Mobil (ticker: XOM) traded down 0.2% to $49.75 after selling off more dramatically earlier in the week.

Oil has proven to be among the weakest assets in the coronavirus selloff. Traders entered 2020 already feeling pessimistic about oil, even before the outbreak made headlines, given expectations for continued supply growth and muted demand. The spread of the virus has intensified those fears, and led analysts to slash estimates for demand.

“A lack of buyers and cancellation of contracts has prompted many companies to park their crude on very large crude carriers near Singapore,” according to S&P Global Platts, which just reduced its estimate for global growth in demand in 2020 to 860,000 barrels a day from its previous estimate of 1.33 million barrels. That would be the slowest growth since 2011.

Things could still get worse. “If this epidemic were to turn into a global pandemic, with other large economies being affected in a similar way China has so far been, then the effects on global oil demand in the first half of 2020 could be close to catastrophic,” Platts Analytics said.

One buyer has emerged to soak up excess supply, according to RBC Capital Markets. China has been buying oil for storage, a dynamic that is keeping spot prices relatively strong.

“Preliminary satellite imaging of floating roof tanks indicate that China has increased crude stocks by some 28 million barrels so far this month,” wrote RBC’s Michael Tran. “China comprises over 80% of global stock builds this month and voluntary or not, the barrels have gone into storage and are unlikely to come out in the near term.”

Tran wonders whether weakness in the futures market will eventually hit spot prices, or if strength in the spot market will eventually convince futures traders to bid up prices.

“Given this paradox, either benchmark prices will rally or physical markets will soften, but the status quo is unlikely to hold,” he wrote. “The latter is more likely, in our opinion, but at face value, the firmer physical market suggest that crude demand does not appear as acutely dire as the refinery run cuts currently indicate.”

OPEC is planning to meet in Vienna next week to discuss whether to cut supply in an effort to boost prices. The threat of the virus even hangs over that meeting. “OPEC has said it is monitoring the health situation in Vienna after cases of the virus were reported,” Platts says.

Gas at the pump dropped 10 percent overnight here.

That's not real reassuring Larry. It started, according to a recent report from S.Korea, some time in November in Wuhan, China. This according to S. Korean "church" members who were visiting Wuhan during that time. According to them, the virus was already present and spreading when they arrived in Wuhan. IF, we can believe the reports out of China, things are starting to level off and drop, in China. Personally, I had a hard time believing China before they had a problem. I find it a little harder now, not easier. I also consider that China hasn't updated infections among it's medical professionals since Feb. 14th. Of course our own CDC hasn't updated it's report either. And just last night a CDC members insisted that Americans can keep track by simply checking through the CDC, which has provided a chart with the info. Info that's a couple weeks old as of last night.

Am I worried about covid 19, heck no. Am I monitoring what is happening, so that I am aware of what others are doing around me. Yep! Is it affecting the economic situation of the US in a negative way. Yep! Watching that too. Not worried about it either. As far as how long this will last??? None of us know the extent of it, none of us know the end. That uncertainty is what creates the fear and speculation present in parts of the world today. I think open discussion can be informative and educational. They can remove a lot of uncertainty.

I think the world economies are being affected by the virus. Whether the threat is real or not. Oil is a raw product. Raw products are typically first indicators of lower production. Lower production typically leads to weakening economies. The US economy doesn't stay within US borders any more than immigrants outside of those borders. Essentially our economy is tied in some way to the world economy. You know that when you're selling coons. We depend on those foreigners to buy our furs and we depend on them to make the stuff we want to buy. If they aren't buying, and they aren't selling us stuff they make, we ain't doing so swell. It's not the end of the world. I think we have a different view as to how this could play out, and the effects. I'm open to different perspectives from others out there. I don't think I really know what is going on. I'm trying to get a better understanding, and I'm sharing the info I come across and the thoughts I have on the topic. I enjoy reading those of others, even when I disagree.

Few things keep more money in the pocket of many working people than cheaper gas prices-especially we who live way out in the boonies.

I am bringing this post back to the top. Some of the prognosticators, me included, may want to review and update their forecasts. We are seeing how quickly and easily a global pandemic can derail economic activity. Anyone, besides me, already nostalgic for the fuel prices and economic activity of just a few short months ago?

I saw gas in Michigan this week for $1.71 and $1.75. Cheapest I have seen in many years. Around here it's right at $2.00.

Well either way, I would rather pay $2 a gallon during times like these than $5 a gallon.

It has been a long time since gasoline was $5 per gallon. With the exception of Alaska, I would guess at least 2008 or 2009. We probably haven't seen the worst of these "times" yet.

It has been awhile since high gas prices. I remember it like it was yesterday tho. I burned a $100 bill to fill my pickup and boat (boat only had a 6 gallon tank). That almost ruined a good day fishing. I thought about that all day and how crazy expensive that was. I hope those times dont come around again.

One thing for sure. No one is coming out of this unscathed. We will all take a hit. The hard working people will come out of this fine but we will have to work hard. This will be a test for the 20yr old to 40yr olds. The never had to do without. Be told what to do and when. Not like the great generation or the boomers. Stay tuned

Big oil companies will find a way pretty soon to cause a shortage, like burning down some refineries or causing some oil crisis. I will say I would rather pay more a little more gas so people can stay working and to help the economy. I also know these filthy rich oil companies will rob their own mother to get richer and get more power, they have no problem sticking to the public and creating problems to benefit them.

so is buying oil the place to go with your money if you want to invest in the stock market?

There is so much oil in the world that burning a refinery is only going to have a local impact...if that.

I would much rather see oil back in the 50-60 dollar range.

We are going to see massive debt defaults and bankruptcies of the weaker producers> Even Exxon just had their debt downgraded on the basis of weak cash flow and operating weakness. The stock has dropped nearly 53% this year.

Just think of the cash crunch some of the smaller operators are in.

The oil industry....at these prices ...could easily suffer a job loss of 500,000 jobs . That includes secondary and tertiary level related employment. The debt defaults will adversely impact regional banks, housing markets, materials manufacturers and suppliers.

The price of oil could go to 10 cents a barrel and it won't do me any good. Our price is pretty much set in stone at about $7.60 per gallon. It might go UP next June.
But the real risk here for all of us is the 2020 election, the supreme court, gun rights, capitalism, and liberty.

We better all hope that OPEC and Russia can get their heads wired together

NO !!! that's just my opinion

^ well, there is a lot of exaggeration in my post but the point is, oil will find a way to create higher prices one way or another. I have said it many times here, being an insider, oil is a corrupt business, dirty and crooked as the devil himself.

I hope you're right Snowy..........but I don't have much faith that you are.

I just read where ethanol plants are increasing basis because with oil down they aren’t making much money so they are just trying to cook the corn they have bought and holding off buying extra corn so they can stay a float.

^ not asking you too, just expressing my first hand knowledge experience with big oil. I've lived their corrupt manipulating business tactics in the world arena.

White17 is right on the money for the range of oil prices. Those prices are sufficient for our domestic industry and low enough to not put consumers in a bind. Make no mistake about it, oil is going to get cheaper before it goes back up. The industry, including all the supporting businesses, are going to get severely damaged before it recovers. The oil industry is a significant part of our GDP. Cheap oil is no longer good for America.

I don't believe Russia can do well if the current oil prices remain for very long. I'm not much for conspiracy theories but if Russia and the Saudis don't kiss and make up I would not be surprised if Russia made some mischief in the Middle East to disrupt the oil supply.

That wouldn't surprise me either !! BUT........it would be good for oil prices

How much of the US economy is based on oil?
~eight percent >> ~8%
The oil and natural gas industry is also a key source of economic growth in United States. According to API, the industry supports around 9.8 million jobs and makes up eight percent of the country's Gross Domestic Product (GDP).

Gas has been under $2 here for 2-3 weeks, today I filled up @$1.50. The average is about $1.80.

We just hit $1.88 today, north of Columbia.

I think the cheap gas is bad for the economy. I think it'll get cheaper, but I think inflation is gonna kick in on a lot of harder to get items. The longer oil is cheap, the longer it will take for other countries to bring their economies up to speed. I truly believe that Russia is using the opportunity to weaken the dollar. Between Russia and China, they have ample reason to amplify and extend the current situation.

I think cheap gas is one of the best economic simulators. In fact remember when the economy tanked in the late 2000s? Gas/diesel was over $4 per gallon and the average person had to spend so much of their income on putting fuel in the tank that could have been spent on other things. Commodities prices reflected it, transportation prices took a hit, trucking, etc. The primary reason for the economic downturn was expensive gas and everything else (housing bubble, etc.) was just collateral damage.

Cheap gas sucks for the economy. The average person may have to buy a tank of gas a week, so say 20 gallons of gas at $2 bucks instead of $2.50 is a savings of $10. Yes, $10 dollars is a lot, that’s once through the drive thru at Mickey D’s. They would probably spend that much on junk food at the store when they pay for there gas. What $2 gas does is puts a H. E. L. L of a lot of people out of work. So those people are filing for unemployment and staying home and not saving any money in gas because they aren’t buying any. The money your saving on gas, is going to support those that don’t have jobs anymore. Oil has dropped around $30 bucks a barrel in the last month, gas has only went down $.30-35 cents a gallon gas should be $.40 a gallon, IMO. Cheap gas means people are laid off and when your laid off you don’t have money to spend, so if less people are spending money how can that help the economy. Cheap gas SUCKS, and I have to stop at the fuel pump every morning and put between 20-23 gallons of it in my truck 7 days a week so I can go to work.

Doesn't matter if the has in your truck is $2/gallon or $5/gallon if you're stuck at home or can't travel due to travel bans.

It certainly sucks for those in that industry and it's supporting industries. You push gas back to $4+ a gallon and see what happens. Overall economy needs cheap energy.

Gas has a long way to go yet to get to where it was when I was in high school! Remember 16 cent gas war gas, you remember that Ken! Drive two days on two dollars worth! I know that this is a different time, and the economy is taking a hit at two dollar gas today, but thought maybe some of you would like a flash back of when life was simple! lol

Was .30-.33 when I started driving! So u got me by a couple.

Inflation adjusted,we are the same now if not cheaper

Yep !! I saw it at .045...four and a half cents per gallon in 1949...I wasn't driving back then but that price was certainly memorable

I can remember ~28¢ or low 30¢ range. We had a few home made go carts and would have to gather up some coins for gas. There was a crew of us that would wonder down to the local station with a can to get some gas to for those go carts. Times gone by and times missed very much as I age.

Just checked the inflation calc....today's gas price of 1.79 is the same as 0.28 in 1972.

^ wow! That is interesting and I actually remember ~28¢ range very well.

And a good beaver would buy your gas for the month

Somebody added 10,000+ new contracts in all months in the RBOB Gasoline yesterday. Since there is a seller for every buyer wonder who has the power? The early figures are a guess but they may have added over a thousand in the April contract.

When first notice day gets here if the shorts decide to deliver then the longs will have to take delivery or retender. Basically the shorts can retain power if they have the product and are willing to deliver. The longs can gain the power if they can and are willing to take delivery, if they have enough stoppers they can gain the power and call the shorts bluff if they don't have the product and are just speculating. The speculators get to play taking positions, day trading and scalping, providing liquidity, but in the end the people with the commodity or wanting the actual commodity rule the roost.

Don't you maybe think Russia and the Saudis are trying to drop the price to put US fracking companies out of business? I've heard those in the fracking business need oil to be at $45 a barrel to break even.

Russia,China,and other countries do not want the US dollar tied to petroleum(petrodollar).They will do their best to destroy that agreement between US and the Saudis(who agreed to sell oil in US dollars only in return for military supplies and defense).

No, it is in the 20$'s range.

A lot of the weaknesses and vulnerable aspects of our society and economy are being exposed to the rest of the 7 billion people in the world not here in the USA and some nations and leaders will use our current vulnerable status to increase their positions in the world be they economic, political or influence. When deny or down play international incidents for weeks and months many others will use that to their advantage. Also we have the largest service related economy in the World by far and those are the sectors that will be impacted hugely by this virus and our resolution(s) for our against it. We will wind up needing to subsidize these industries with trillions of dollars and service related economic sectors do not by themselves create any wealth the use the income from other sectors to shuffle money around. It is appropriate for the nation in my opinion but we are not going to see any real GDP growth when we have to provide subsidies to industries that can't generate additional real economic growth. If this continues then revenue generating industries like energy, agriculture, manufacturing, logging, mining etc. will tread water at best.

Bryce

Well said Bryce. I agree that we created it for ourselves. I don’t believe most see how deeply this may effect all our lives.

Oil producers working in the shale areas will not tread water with oil in the 20's. If you can't accumulate enough capital to drill new wells to replace your depletion, you are on a fast track to insolvency. When oil companies are trying to tread water, supporting businesses are closing their doors. I don't think people on this forum realize how bad this economic downturn could get. Read bblwi's post again.

How about now?

Funny, in the 70’s experts panicked everyone that we were almost out of oil. Now there is so much oil and it is so cheap it’s hurting the world economy.

^ ya that is part of the corrupt world of oil. These oil companies say and can put any number on anything and cause a panic to line their pockets deeper. To trust big oil in what they say or in the numbers they tell the world is like trusting a rattle snake won't strike you if it had a chance. They are about what the major media does everyday, which is tell you what they want you to hear so big oil can cash in. It is a very corrupt business in the world and US.

I suspect some will be lining their pockets with bankruptcy proceedings rather than dollars

Still NO

I dont think oil or oil exploration would be a good place to invest for a while. The amercan fracking boom is spreading across the world even the saudis and Russians have started fracking . I feel the world will be awash in oil for atleast a decade . Many contries that have been reliant on oil and natural gas from elsewhere have NG producing shale under them that lends itself well to modern fracking techniques . This will make them less reliant on heating oil from elsewhere.
If you have your heart set on the petro industries i think transmission companies would be better . Preferably diverse companies that have electrical powerlines and pipelines .

If the gov is going to fill up the caves and salt mines with oil how is the price on what the gov buys determined ?