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    1. Member MGQ's Avatar
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      03-07-2020 07:34 PM #1
      https://www.bloomberg.com/news/artic...-out-price-war

      Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its OPEC+ alliance with Russia.

      The world’s largest oil exporter started a price war on Saturday by slashing the prices it sells crude into foreign markets by the most in at least 20 years, offering unprecedented discounts in Europe, the Far East and the U.S. to entice refiners to purchase Saudi crude at the expense of other suppliers.
      This is only temporary, unless it works. - Red Green

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    3. Member rich!'s Avatar
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      03-07-2020 07:53 PM #2


      hard sell for EVs for a bit... this going to get interesting. Most oil names have already dropped and some will go out of biz

    4. 03-07-2020 08:39 PM #3
      Interesting. Apparently, the Saudis wanted a production cut but Russia didn't want to go along with it. They (the Russians) felt that they had steady shipments going to China so they were good. Also, they wanted to hurt the shale producers here in the US since those producers have been riding off the Russo-Saudi alliance that led to higher prices since 2015. Lower prices will surely hurt the shale producers, but it'll also hurt the Russians since the Chinese drive a hard bargain when it suits them. So with the Russo-Saudi relationship now in tatters, we can expect more competition and lower prices going forward. Putin will regret this.

      TLDR:

      Losers: oil producers
      Winners: consumers

    5. Senior Member Iroczgirl's Avatar
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      03-07-2020 08:55 PM #4
      Good news for us consumers.
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    6. Member Nealric's Avatar
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      03-07-2020 09:08 PM #5
      This could get really nasty. You will get cheap gas in the short term, but this will positively tank U.S. and non-Saudi OPEC production in a way that can’t easily get turned back on.

    7. Senior Member Sporin's Avatar
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      03-07-2020 09:26 PM #6
      Big incentives on efficient cars incoming.

    8. 03-07-2020 09:32 PM #7
      Quote Originally Posted by rich! View Post


      hard sell for EVs for a bit... this going to get interesting. Most oil names have already dropped and some will go out of biz
      The FiST holds about 12 gallons, I get about 33 mpg and gas is $2.09 a gallon, no feks given for 396 miles

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      03-07-2020 09:50 PM #8
      Just in time for the wave of new EV's coming to market...

    10. Member Meroving1an's Avatar
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      03-07-2020 10:11 PM #9
      I don't hate it!

    11. Member
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      03-07-2020 10:13 PM #10
      Here goes VW all-electric plan. This will be painful for the EV market, especially if current president stays and free money for EVs dry up.

    12. Senior Member AZGolf's Avatar
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      03-07-2020 10:27 PM #11
      Quote Originally Posted by Nealric View Post
      This could get really nasty. You will get cheap gas in the short term, but this will positively tank U.S. and non-Saudi OPEC production in a way that can’t easily get turned back on.
      The US power grid has swung away from coal and on to natural gas, which currently is being sold basically for free as a byproduct of shale oil production. In theory, even if oil demand falls, the shale producers could raise natural gas prices to make up for losses on the oil side since it's not like the natural gas plants can just turn off, and importing natural gas from overseas would be dramatically more expensive than a domestic price increase. They survived the last price war when SA drove oil down to $30/bbl, and I don't think SA can afford to go that cheap again, at least not for any meaningful amount of time.

      Eventually EVs and domestic/renewable energy will finally get Asia and ME politics out of our energy policies. IMO that day can't come fast enough.

    13. Member Nealric's Avatar
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      03-07-2020 10:38 PM #12
      Quote Originally Posted by AZGolf View Post
      The US power grid has swung away from coal and on to natural gas, which currently is being sold basically for free as a byproduct of shale oil production. In theory, even if oil demand falls, the shale producers could raise natural gas prices to make up for losses on the oil side since it's not like the natural gas plants can just turn off, and importing natural gas from overseas would be dramatically more expensive than a domestic price increase. They survived the last price war when SA drove oil down to $30/bbl, and I don't think SA can afford to go that cheap again, at least not for any meaningful amount of time.

      Eventually EVs and domestic/renewable energy will finally get Asia and ME politics out of our energy policies. IMO that day can't come fast enough.
      I can see it going lower than 20, and the depths could stick around for longer. Natural gas is currently in the tank and I don’t see it recovering soon given the Coronavirus demand shock. Last go around killed of the marginal players. This one could take out all but the strongest.

    14. 03-07-2020 10:42 PM #13
      Buck-ninety gas everywhere around here, twelve bits by summer? Cool. Then again, we went shopping today and noticed both our wholesale club and our grocery store were totally out of toilet paper, thanks to panic buying from COVID19 fears (our stock will last us for months and we have bidets, so no worries). Our vengeful gods have a wicked sense of humor...
      Last edited by boogetyboogety; 03-07-2020 at 11:05 PM.

    15. Senior Member Sporin's Avatar
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      03-07-2020 10:55 PM #14
      We are still in the 2.35-2.50 range for 87 here. Will be interesting to see how low it gets.

      I’ll have one more heating oil delivery this spring (they always fill the tank at the end of the season). Looks like that might be a cheap one for once.

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      03-07-2020 11:24 PM #15
      $2.09 here, but I cringe at paying (average) $12 for paper towels and toilet paper now...WTF?
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    17. Member Cutandthrust's Avatar
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      03-07-2020 11:26 PM #16
      California is still gonna send the beating at the pump, even if it's cheap for everyone else.

    18. 03-08-2020 03:52 AM #17
      A few years back the'CDC estimates 80,000 Americans died of the flu'
      So were looking at 400,000-600,000 people starting to die from sickness and Corona virus... this is lining up for a 2022 expected economy depression, but no one knows how bad things can get.
      A very smart guy named Pye Ian thinks the virus was planned and hes got a great interview with a directors son, sean stone regarding the economy crashing.
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    19. Member Nealric's Avatar
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      03-08-2020 08:46 AM #18
      Quote Originally Posted by VigorousZX View Post
      A few years back the'CDC estimates 80,000 Americans died of the flu'
      So were looking at 400,000-600,000 people starting to die from sickness and Corona virus... this is lining up for a 2022 expected economy depression, but no one knows how bad things can get.
      A very smart guy named Pye Ian thinks the virus was planned and hes got a great interview with a directors son, sean stone regarding the economy crashing.
      I think that’s a bit histrionic, but it doesn’t matter for the purposes of oil discussion. It’s not the death toll that kills the economy (and oil demand), it’s the shutdowns of schools, businesses, and travel.

    20. 03-08-2020 09:11 AM #19
      Quote Originally Posted by Nealric View Post
      I think that’s a bit histrionic, but it doesn’t matter for the purposes of oil discussion. It’s not the death toll that kills the economy (and oil demand), it’s the shutdowns of schools, businesses, and travel.
      Absolutely, you get it

      The virus stopped production and consumption, it hits an area instantly and spreads fear and there's no way to predict where it will hit or how long it stays.

      The consumption of hand sanitizer and toilet paper doesn't make up for travel industry loss, vacation destination loss, factory shut down loss, large events cancellations and so on.

    21. Member Travis Grundke's Avatar
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      03-08-2020 09:19 AM #20
      Short term good. Long term, very bad because it's going to force a lot of US shale production to stop.

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      03-08-2020 09:36 AM #21
      Chiming in from an oil producing region of Canada:

      We are going to get absolutely f'n destroyed up here! WCS usually trades at a big discount to WTI as it's a lower quality grade and there is about a $10 per barrel transportation premium IIRC. After the Russian, than Saudi moves who knows where the floor is? I don't think it's crazy to think oil could go into the $20's which would put WCS in the $10's. At that price I think they will be forced to shut in production. Certainly the spring drilling season is going to be a total bust. It's going to be a bloodbath here.

      I've not yet seen any good estimates of what COVID-19 travel shutdowns (both mandatory and voluntary) will do to oil demand but I don't think a 10,000,000 barrel per day drop is out of the question. Who's going to break? That has to come from someone's production. My guess is that Canada and the US shale drillers will be the first to fold.

      I've read some interesting things hypothosizing that this is all Russian blowback against the USA for the economic attack on Nordstream 2. Could be. I think the Russians are well placed to survive the ensuing economic carnage as they've been forced to realign their economy domestically and batton down the hatches for years due US lead sanctions.

      I'll do my best to help the my oil producing sisters and brothers by keeping the premium guzzling throttles of my 987 and MK7 R as open as possible this summer!

    23. Member
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      03-08-2020 09:44 AM #22
      I wonder if this brings around OPEC++. If the low prices kill off small shale producers which will then be bought out my big oil companies, will OPEC++ include the big US oil companies in maintaining a certain level of oil production to keep the oil prices up? Russia's main grievance is that every time they and OPEC cut production, US ups production.

    24. Member rich!'s Avatar
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      03-08-2020 09:46 AM #23
      Quote Originally Posted by Travis Grundke View Post
      Short term good. Long term, very bad because it's going to force a lot of US shale production to stop.
      maybe short term but not like saving huge bucks, especially with virus fears and folks stop going places. Like administration wanting to make tax/rate cuts to stimulate an economy when no one wants to go anywhere and just buy toilet paper, noodles, rice, and soap.

      many spy oil/exploration names are even at/below 09 and '16 (last price war) prices... (with many down 8-22% on friday before this new news). Local impacts and debt issues on top of a growing virus situation is going to be interesting to watch play out for a few months. (15/16 last price war is a good road map, which they have been stuck in a bear market since)

    25. Senior Member Lwize's Avatar
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      03-08-2020 09:51 AM #24
      Quote Originally Posted by Cutandthrust View Post
      California is still gonna send the beating at the pump, even if it's cheap for everyone else.
      California gasoline blends are more expensive to make, get taxed higher and are subjected to more price manipulation by greedy oil companies.

      If prices drop below $3.00/gal under these circumstances, that's a win.

      My local Costco gas is still $3.159 for 87; Some in SoCal have already dropped to $2.999.

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      03-08-2020 11:45 AM #25
      Quote Originally Posted by Dubveiser View Post
      Just in time for the wave of new EV's coming to market...
      If there is a God, He is one hell of a ****ing troll

      China/EU will just titty twist harder with taxes.

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