Alarming Prices in Crude

I have never seen prices plummet this rapidly since I have been watching Crude Oil Futures. I know the history is quite volatile because of many determining factors, but really? The World is turning upside down.

I am no professional I just own some acreage in Garvin so getting quite concerned. Read an article by Clive Maund saying oil is done, the glory days are over.

Seeking opinions from the rest of you who perhaps have been around longer than me. We have received a few offers recently which makes one wonder.

Thanks for any input.

This cart may be helpful n answering your question. Yes, it has happened before-several times. Drops are usually quite rapid and recovery is usually slower and stepwise. Crude Oil Prices - 70 Year Historical Chart

There are also usually buyers who like to take advantage of the lows. Offers are usually in areas where they see future potential and our family just ignores them, but saves the offers for reference.

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That is quite a chart! Thank you for sending. Looks like we are nearing areas where it turned around in the past.

We always say well this time it is different, never been news or a situation like this, but somehow the stock market and oil usually recover.

Do you think many companies are in danger of bankrupting this go around?

Regards -

Yes, many companies are in danger. The ones that are stronger will survive. Times of crisis always spur new creativity.

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When the Corona Virus is gone we’ll probably see a big turn a round in the oil prices because people will start using cars, planes, etc. to travel again but until then we just need to stay in and stay safe and do our part to stop the spread. Hopefully people put back profits to have a safety net for times such as these. I don’t look for a turn a round until the demand for fuel goes back up. In our seventies we have seen the oil business go through at least 3 big booms and bust but never had we had such circumstances as these. Take this social distancing seriously and help us with God’s help to lick this deal.

I think the oil market is closer related to the Saudis increasing their ouptut to purposefully drive down the price. The virus issue is certainly contributing in a negative way, but I would not expect oil markets to bounce right back once we can get back to normal.

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Agreed. What can we do to check the Saudis? Very frustrating.

There has been some chatter about the Railroad Commission tightening allowables like they used to do to limit domestic output, but I don’t see that as likely unless the big players in the industry get on board. The RRC will do whatever the big companies want them to do.

RRC not holding a lot of sway with us Oklahoma mineral owners

I know that the Saudi’s are not keeping a control on the amount of oil they are producing but not sure it is to “purposely” drive down the prices. How would that benefit them? I don’t think the demand will get back to the place where it was before the Virus as soon as it is gone but it has to help the demand and lessen the glut when everyone can go back to work, travel and socializing. Not a instant turnaround but better. We were in the oil well servicing business for 35 years and have seen oil down as far down as $5.00 a barrel and up to over $100.00. It will turnaround, not overnight but probably some years from now. Of course we never had all these circumstances at once before so no one knows for sure how it will play out and the time line. If we did we could probably get rich (on the stock market if not with selling our oil)! lol Best wishes for a safe, healthy and prosperous year!

Thank you for your insight. Your hands-on information from many years in the business is a benefit to the readers of this site.

Just read this article it is informative:

Thinking of buying a wee bit of a oil stock that has a dividend for my Roth account especially if Crude keeps dipping.

Susie, I have experienced the oil prices from 9$/bbl to 147$/bbl. Right now 2 major factors

  1. Over supply and demand destruction (because of Corona) There was an over supply before we got hit with the Corona issue that created a very very fast demand destruction, demand has dropped by 3-5m bpd of crude, people not being able to travel, gasoline and jet fuel demand killer, industrial shut down, fuel oil, diesel and nat gas /LNG demand killer
  2. Price war between the Saudi’s and the Russkies. Saudis trying to kill 2 birds with one stone , the Russkies and the US shale

Producers and lease operators are not even getting paid the posted prices, they get paid well head or other mid stream companies prices. I know several producers who are paying $$$ for companies to take away their crude and gas.

Really tough times when benchmark crude oils are at such lows. markets will stabilize and grown and prosper again, just like oil over time , as soon as CORVID 19 has been subdued there will be a bounce back into the 30s range then over time back into the 50s and if all goes well, we can see the prices in the 60s and 70s for sometime because the demand will be high and there will be a lag in supply Stay safe and healthy

IT’s not about economics right now with the Saudi’s, it is about politics. They are having an ongoing fight with Putin and the Soviet Union and purposely trying to drive the prices down to make their point. Russia and Saudi Arabia, which previously had cooperated in making the world market well-supplied, no longer can agree on how to share the benefits.

The Suadis produce the cheapest oil so they can withstand lower prices longer than most countries. They can produce at less than $10/barrel whereas the rest of the world produce on an average of 30-40 per barrel.

To answer your question as to whether oil is going to come back this time not, I offer the following:

For oil to not come back, consumption would need to be in decline or a suitable substitute would have to arrive to replace it. World consumption is not going down, it is actually going up as you can see by the attached chart. Of course if and/or when the world goes into recession, there will certainly be a decreased demand, but IMO, it will only be temporary.

Worried about the electric car replacing the need for oil? It will be awhile, since the internal combustion engine has been around for over a 100 years and you don’t replace that easily or quickly.

Don’t worry about,oil will be back after the excess supply wears off. All it would take would be a war in the middle east to turn it around very quickly.

Sleep well…

Can we really blame OPEC+ for trying to protect their market share under attack by US oil? As if they’re supposed to be the ones to adjust while US production goes through the roof?

I think they see this as the perfect timing to hurt debt-laden US Shale. This will cripple the shale industry - for awhile at least. You can’t fire all your experienced hands who wind up getting different jobs and companies go belly up, then think it’s all going to normalize quickly when prices recover - which i’m sure they will - maybe make new highs.

They know this will also put a kink in wind, solar and EV industry.

US-NUMBER-1-OIL-PRODUCER

If an oil co. started drilling before oil went down. and have been drilling for 4 months, will they complete the well or shut it down and stop drilling, Thank you.

They will likely finish drilling the well and get it into a safe mode. Depending upon the company, they will either complete and get some money coming in to start paying off the costs of drilling (and pay royalties) , or they will wait and complete later when prices are higher (and pay higher royalties) or never complete for production.

Excellent.

What helps us in this group to access what is really going on is some tangible information that is based on fact and not the media-induced fear facing all of us now in many aspects of our lives.

In my opinion Wall Street has distorted many commodities markets so that prices don’t really reflect true supply and demand. That is to say that oil prices are influenced by investor psychology, not necessarily the actual supply of oil or the actual demand. However it should be pointed out that several nations including the USA are closing down many businesses in an attempt to limit the spread of the dreaded COVID-19 virus. There are many states in the USA that are restricting travel, hence a reduced demand for gasoline and diesel fuel.