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Got oil ??? Saudis plan all out price war with output increase

edited March 8 in Fund Discussions
For those holding oil investments.

Another aspect of "disruption" relative to COVID-19.

Note: one might expect a big ding to HY bonds related to U.S. energy companies.

Disclosure: we've no direct holdings

ARTICLE

FINVIZ FUTURES

Comments

  • edited March 8
    OPEC kamikaze

    Vde down 18s% since added.. holding on for the ride, too late to sell now, should have put tight stop loss 2 wks ago
  • @johnN- Good one! :)
  • @johnN I messed up with FSENX. Well, you can say I messed up with bunch of Fido Select funds. However, I promised myself I'm not going panic for 10 years. We'll see what happens 2030.
  • @_vintagefreak - hi sir, lots *messed ups* past 4-5 weeks
  • Prince Mohammad bin Salman may be aiming at Russia, but the US oil frackers will certainly be collateral damage also.

  • Just posted in the overnight-potentials thread....


    Futures opening down 3-4-5% based on variety of factors, from COVID-19 to the failed OPEC talks. Crude futures are down 30%, the largest one day drop since the 1991 Gulf War.

    Monday trading will probably be a global bloodbath.
  • edited March 8

    Oil Prices Plunge 30% After Saudi Arabia Stuns World With Massive Discounts

    NPR is currently reporting that:
    Oil prices were in freefall on Sunday after Saudi Arabia announced a stunning discount in oil prices — of $6 to $8 per barrel — to its customers in Asia, the United States and Europe. Benchmark Brent crude oil futures dove 30% in early trading Sunday night before recovering somewhat to a drop of 22%.

    Saudi Arabia, the world's second-largest producer, this weekend also said it will actually boost oil production instead of cutting it to stem falling prices, in a stunning reversal in policy from just two days ago.

    U.S. consumers are likely to see lower prices at the gas pump, but American oil producers — who lead the world in output — could be hurt by the oil price slide.

    Economies from China to Italy have ground to a halt as quarantines shut down factories and demand for products and services craters.

    Saudi Arabia and other OPEC members sought to cut production to shore up oil prices. But the once-powerful cartel can no longer move markets alone. It needs the support of Russia, which is not an OPEC member but has recently been coordinating with the organization. Yet Russia has resisted calls for production cuts. On Friday, the talks ended in failure.

    Now, Saudi Arabia is doing an about face. If it can't get the price back up, it's going to drive the price way down. It's offering to cut the oil price for the U.S. market by $7 per barrel, to Europe by $8 and Asia by $6. Paired with Saudi Arabia's ability to rapidly increase production — flooding the market with cheap crude — those unilateral price cuts will push the price of oil down for everyone.

    And even with ample supply and low production costs, Saudi Arabia is not guaranteed to come out on top in a prolonged face-off with Russia – especially if fears of a pandemic keep planes grounded and cars in driveways no matter how cheap crude oil gets.
    This abridged news report was selected and edited for brevity.
  • There are rumors that Jedd Clampett may have to default on his Hollywood home mortgage due to crashing oil prices. "Black gold" turned out to be black but not gold. (For younger readers, this is a reference to a TV series "The Beverly Hillbillies.")

  • They learned that 'Texas Tea' was actually tea. :)

    I'm 47, I got the reference, btw....
  • ...the kinfolk said Jed should move away from there. On a serious note, this oil war is a curve ball I did not expect. Do the oil companies really use the undrilled oil as debt collateral? As prices fall the banks might find it hard to justify investments in them. I was just looking at PRNEX and thinking it was cheap. Getting cheaper I guess.
  • Howdy all,

    Just to throw a wet blanket on your party, the rates for the 10 year and 30 year are at .47 and .91 . . . and folks are looking to the Fed to do something.

    "perfect"

    and so it goes,

    peace,

    rono
  • folks are looking to the Fed to do something.
    Let's face it. The Fed cannot manufacturers corona vaccine overnight. The best scenario is at least a year away. Realistically the Fed can only do so much by lower the interest rate and the race to zero is on. Next is to purchase assets to prop up the prices. Didn't the Fed just use that tool back in 2008 and the consequence is have their balance sheet inflated to something this country never experience.
  • And how many swans did you need, sir?
  • Something from Mnuchin? Guarantees? I wish they would not. Natural consequences.
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