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Alexander Rogers: Why did American oil go negative

try to understand, why the price of WTI American shale oil went negative yesterday – and how does this threaten us and the USA. Disclaimer: us – by nothing.

Alexander Rogers: Why did American oil go negative

so, WTI brand price (American) yesterday fell to negative values.

In this case, the whole opposition was blown up together - joyful tweets “Well, what, putinoids, Khan at the price of oil at minus two dollars!"Were heard from Navalny, Gudkov, Stalingulag, Prosvinin and other degenerates.

That's just at the price of AMERICAN shale oil minus two dollars, I feel great, but the oppositionists have to run to wash harem pants.

A number of news publications, type "RBC", Izvestia and Vedomosti, also wrote, that "Urals oil fell to minus two dollars". What stupidly untruth. Urals fell in price by two dollars (to 26,2 dollar), not up to minus two dollars. agree, significant and fundamental difference.

As the saying goes, "Boris, do not hire idiots on this matter ".

We will try to figure it out, why the price of WTI American shale oil went negative yesterday.

I love such cases, because they always show, why physical economists always beat theoreticians torn off the "ground" (and why one conditional Marcinkiewicz is better than hundreds of conditional Demuro-Zhukovsky).

Go.

so, US economic recession, The stagnation of the economy in the EU and the global coronavirus pandemic in the aggregate have caused a drop in fuel consumption by about early March 30%. But since Saudi Arabia has been trying all this time to actively dump prices and fill the markets with cheap oil, then production continued to grow.

Unclaimed difference instead of consumption went to stocks, but in the US tanks filled up faster, than expected.

for example, Cushing to Oklahoma, which serves as the main backup hub for the USA, was filled a week ago on 70%, and traders say, that they will beat him to the eyeballs in the next two weeks.

Cushing's oil reserves rose over the week to 17 on April 9%, to 61 million barrels of, according to the Genscape report. The total storage capacity is about 76 million barrels.

And then there was a situation with oil futures expiring on Tuesday. According to the terms of the contracts, upon expiration of the contract, each owner is obliged to pick up at least Cushing 1000 barrels of purchased oil. And the traders have an unpleasant choice to pick up oil, which they do not need, or get rid of these positions.

As contracts expire on Tuesday, then in the last two hours of Monday, sales accelerated, and for 20 minutes before closing, the price of WTI crude oil entered a negative territory.

Lack of storage is a local American shale oil situation. And so at the price of Brent, Urals and other varieties it actually did not affect.

Therefore, the entire Russian opposition, which joyfully jumped due to falling oil prices, just demonstrated its stupidity, illiteracy and anti-Russian (no true patriot would wish for the collapse of his country's economy). And dived together, sorry for naturalism, head to rural need.

But the funny thing is not even that.

Trump at a press conference yesterday, dedicated to the coronavirus epidemic, touched also on this topic. And he demonstrated his blatant illiteracy in this matter (apparently, there are advisers of the corresponding bottom level - Tillerson left).

1. Trump said, that this price situation is short-term. But American analysts say, that the situation will not change, until the oil giants - Exxon and Chevron - are forced to stop production.

That is, the problems will continue at least 2-3 of the week, and possibly more.

2. Trump also said, what I intend to purchase in the state reserve 75 million barrels of oil - and this supposedly will correct the situation. But no.

At first, because he already once wanted to buy such an amount of oil, to support the industry. But Congress hacked this initiative, without providing financing. And since then nothing has fundamentally changed, what could democrats change their mind.

Secondly, will buy trump these 75 million barrels of oil, or don’t buy - and the size of the storage in Cushing from this will no longer be. It’s just that all the oil in this storage will change ownership, and there’s nowhere to download a new one anyway.

So shale oil production will still have to be turned off.

AND, at the end of the plate is from the Dallas Federal Energy Commission, with calculations, at what price for WTI oil does production at various shale oil fields become recouped.

Alexander Rogers: Why did American oil go negative

As you can see, everything is bad for the shale.

A source

                          
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