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Crude Oil Futures Drop Further, As US Public Debt Sours To Record Heights

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Crude Oil Futures Drop Further, As US Public Debt Sours To Record Heights

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UPDATE (20.04.2020, 17:29 CET): One American oil benchmark, West Texas Intermediate (WTI), fell by ~40% as global oil markets continue to collapse amid the ongoing Saudi attack on the oil prices (despite the OPEC+ deal) and global economic crisis deepened by the COVID-19 outbreak. At one point, a barrel of WTI hit less than $10 — the lowest price in 34 years. At the start of 2020, a barrel price was around $60.

***

The volume of oil that Saudi Arabia will deliver to the US will be seven times the normal monthly supply rate to stay in storage facilities, the Wall Street Journal reported on April 17th.

Tankers were loaded at the height of the oil war and are still heading for the ports of Louisiana and Texas, as per the outlet.

The fleet of Saudi oil-filled tankers is slowly advancing toward the coast of the Gulf of America, threatening to exacerbate the excess of crude oil that has reached its peak in history. There are 40 million barrels of oil in 20 tankers; their arrival is expected in late May.

“This is Pearl Harbor for American oil producers. We know that the ships are arriving, and yet no one is doing anything about it,” an unnamed oil producer said.

The prices of crude oil are also dropping, with West Texas dropping more than Brent crude.

Oil plunged below $15 a barrel in New York, a fresh 21-year low, as inventories soar because of the supply-demand mismatch that’s been created by the coronavirus.

The most immediate West Texas Intermediate contract fell as much as 22% to $14.19 a barrel. While a major part of the slump is because the May futures contract expires on April 21st, the collapse reflects a fast-growing glut of oil, and rapidly expanding stockpiles in Cushing, Oklahoma, the American pricing hub.

WTI futures opened at a $9 discount for June, buyers in Texas are offering $2 a barrel for some streams.

In terms of prices it looks the following way:

  • WTI for May plummeted 22% to $14.24 a barrel. The June contact declined 7.1% to $23.25.
  • Brent for May fell 3.38% to $27.13 per barrel. Prices for June fell 3.8% to $26.99 a barrel.
Crude Oil Futures Drop Further, As US Public Debt Sours To Record Heights

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Crude Oil Futures Drop Further, As US Public Debt Sours To Record Heights

Click to see full-size image

Meanwhile, three leading centers provided their forecasts for the situation in the oil market.

The International Energy Agency (IEA) expects oil demand to be 9.3 million bpd lower this year than last year. This is equivalent to a complete loss of demand in India and Africa. The IEA also predicts that in this quarter, the amount of lost demand will be equivalent to the total volume of demand in the US and Canada, which is 23 million bpd.

OPEC estimates a drop in demand of 6.85 million bpd compared to 2019.

The US Energy Information Administration’s forecast looks more optimistic a reduction of 5.25 million bpd.

The Office of Energy Information and OPEC predicted that the annual drop in consumption will exceed the total amount of oil used in France, Germany, Italy, Spain, the UK and Japan.

According to the forecast of supply and demand of OPEC, in the second quarter the storage facilities will be filled at an average rate of 6.5 million bpd. According to estimates by the Energy Information Administration, the storage facilities will be filled with 8.6 million bpd.

The IEA believes that if the OPEC + deal comes into full force on May 1st, this figure will be 17.7 million bpd.

Based on these figures, wit can be concluded that even with the OPEC + transaction and the loss of an additional 4.5 million bpd of production outside OPEC, oil prices are still expected to fall further.

All three agencies expect the situation to improve in the second half of the year, or at least not look so bad.

Additionally, the US debt is also increasing. The debts of the US shale industry should inevitably lead to an increase in the US government debt and the collapse of the stock market.

The public debt of the United States and the debts of American corporations in 2020 reached a record four trillion dollars, which has not been seen since 1945.

ExxonMobil and Walgreens (the largest pharmacy chain in the US, annual turnover of about $100 billion) have spent their credit lines, but still need working capital.

There are only two ways out of the situation: either stopping payments on loans (partial default), or dismissing employees and reducing volumes, which would eventually lead to a total default.

According to estimates of the International Monetary Fund, US GDP will fall by 5.9% by the end of this year, ahead of a powerful quarterly collapse (JP Morgan estimates up to 40%).

There is only one way to repay fundamentally non-repayable state debts – by canceling one’s obligations (default). In historical practice, to write off such a level of debt, states have always used war as a way to revise all mutual obligations.

Thus, this relates to levels of debt unseen in modern history. A sort of point of no return is being approached.

US banks are already requiring citizens to pay off student loans and credit card debt. The US Federal Reserve lowered its key rate to zero and added $2 trillion to its portfolio. To put in perspective, $2 trillion were added in total over the four years after the Great Depression.

Currently, the US has no cause for worry, since the dollar is the global currency. But if and when India, China and Russia introduce their own forms of settlements, then that would be sufficient cause for worry.

At that point, the notion of defaulting on debt, and by way of a war to reset the global economy would be a legitimate and very real concern.

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Charles Homer

As shown in this article, the United States government has granted potential COVID-19 vaccine manufacturers a massive favour:

https://viableopposition.blogspot.com/2020/04/vaccine-liability-in-covid-19-era.html

Thanks to Washington, Big Pharma now has a pass when it comes to the potential dangers of a novel coronavirus vaccine.

Zionism = EVIL

Discounted for inflation, this comes to $3 a barrel and as I said before, soon the Saudis will be giving away oil for free. It is such a great MBS morons eureka moment to take on Russia in a suicidal oil price war. The dumbass Americunts Shale and Canadian toxic Alberta tarsands are also kaput for good.

verner

it’s always been aimed at the shale oil in the disintegrating states of A – russia has europe for its urals and china by land, pipeline or train etc and saudi has korea, japan india and some of africa togehter with russia and then up pops the shale blend of little use in the disintegrating states of A (too high api) and thus sold to japan, china etc. and exceptional dunny the dunce thought he could wrangle a deal with saudi and russia without touching his shaleoil except some vague promises of cuts. truth is that the exceptional moron would employ all printers in washington to keep shale oil above the surface and 1) stay the world’s biggest producer and 2) without incurring exceptional losses to wall street, his jewish buddies expect him to perform.

Gary Sellars

“The fleet of Saudi oil-filled tankers is slowly advancing toward the coast of the Gulf of America, threatening to exacerbate the excess of crude oil that has reached its peak in history. ”

Say what? Gulf of AMERICA??? Dafuq? Its the Gulf of Mexico… Fuck, how disgustingly American.

good american

Thought the same thing… US coast of the Gulf of Mexico. Didn’t they want to rename the Persian Gulf the Arabian Sea or something like that? Sometimes SF grammatical mistakes can be Jen level stuff.
I imagine the the title is meant to be ”soars” rather than ”sours”.

Zionism = EVIL

Well it sure has soured for the Saudi dumbasses :)

verner

no but a trade magazine tried the Irabian gulf for a few years but it never stuck

Ashok Varma

Cheap oil will be very good for Chinese and Indian economies as the west collapses.

Zionism = EVIL

Not only the western cunts are collapsing, oil is heading into negative territory as I had written a few weeks. There are half a billion barrels of oil just floating around and stored in caverns and no more space left to store. The low grade WTC (west Texas crude) is being offered at $1 a barrel and no takers. The Americunt dumbass Shale projects have all been shut down with over 120,000 unemployed and that is just the beginning. The Russians have rightly fucked the Saudis and the Americunts both in one go.

JIMI JAMES

Yep but more important ponzi bush,cheney,cruz texan oil stocks from stolen me lands,
then comes incumbent facist run canada whoms hatred for christians truly amazed!

Harry Smith

Where does China and India will sell all their products when their main market (USA) will fall?

JIMI JAMES

Good for Australians too!

Lone Ranger

Bye bye Shale oil and saudisis arabia.

Zionism = EVIL

The worst of lot is the polluting Canadian tarsands that is now non-grata and no one wants it. The dumbass Americunts are trying to offload the low grade WTC at $1 a barrel and by tomorrow it will be in negative territory.

Lone Ranger

I agree.
I dont know who is driving the prices down but on the longterm the only winner will be Russia.
They can take a nap for 10 years if they have to but saudisis and shale will be toast in a year.

Zionism = EVIL

You must have read that Russia today flatly rejected the dumbass Americunt losers efforts to extend the illegal arms embargo on Iran, so there are billion dollar barter and bi-lateral currency swap deals happening. China is also ramping up economic presence in Iran. Russia is a technological powerhouse, they have been downing Zionist crappy missiles in Syria and handing them over to Iran. BTW, Zarif is in Damascus right now as Iran is ramping up its footprint in Syria. Looks like Russia is also hardening its position against both Zionist arseholes and Americunt losers.

Lone Ranger

Good news :)
I think we are witnessing the final days of the U.S. Empire.
People wont take their B.S. forever and with Syria and their crimes against Humanity they definately have crossed the red line.
Enough is enough.

Zionism = EVIL

comment image

Lone Ranger

Cia trolls and
Hasbarats will cry and rage :)

JIMI JAMES

WTI crude in minus territory thats what you get for faking 911 and stealing from iraq!

Harry Smith

Currently, the US has no cause for worry, since the dollar is the global currency. But if and when India, China and Russia introduce their own forms of settlements, then that would be sufficient cause for worry.

The right way is to say not about currencies but about Basil III, I think. After FRS’s QE nobody believes in “paper” currencies. Gold only.

JIMI JAMES

paper currency has a future with or without gold petro dolla is doomed,each to their own:

Harry Smith

At my point it will be rather blockchain then the “paper” money we are common with.

Joao Alfaiate

The market is in contango. Of course the May contract is weak: it expires tomorrow and there is plenty of surplus production around.. If you want to have a better idea about the prospects for oil prices look at the 12 month strip.

S Melanson

I like this article overall and wonder who authored this piece. The article laid out the potential for a major war much like WWII to reset the global economy. The efforts to end the hegemonic US$ combined with unsustainable debt levels, a global problem, point to desperate times that may require desperate measures. But does the situation we face now have only one possible path – Armageddon?

One issue with the article. Tar sands when fully processed produces a synthetic light sweet crude oil that sells at near par to conventional light sweet crude oil.

JIMI JAMES

WTI CRUDE -37us,oh well,yawn)))

Sencer

Considering that oil income constitutes 40 % of russian federal budget revenues, Rosneft will soon replace its emblem by a caricature of Putin sucking a diack. LOL.

cechas vodobenikov

More drivel…”amerikans live in a thicket of illusions: amerikans demand illusions about themselves”. Daniel Boorstin”amerikans r troubled by a basic insecurity…only in the USA is the father vestigial; the amerikan mind and conscience is feminine”. Geoffrey Gorer
your feminine insecurity suggests that u r amerikan…LOL

Sencer

Cechas , love , are you quoting me from Gorers book published in 1948 ? How was Russia doing in 1948 while US was booming during that era ? You were being stuffed in cattle wagons by Stalin and heading for extermination. . LOL

Non existance of Russian authors criticizing Russia at that era does not mean that everything was fine and dandy , there is none because all who dared to criticize the government were in Gulags by then.

Actually a foreigner could fouck half of Russia with a Levis 501 and a package of Wrigleys spearmint till beginning of 90’s. So please quit pounding yr chest like a retarded peasant ape with trivival sentences like ‘’ feminine insecurity’ and spare yr BS for yourself.

cechas vodobenikov

LOL—u merely prove Gorer was correct—today u r even more feminized…the only nation I’ve been in where males retrieve drinks for females at bars—and of course in the US females take the initiative…in all other nations males do…LOL. this is why you observe so many feminized amerikan males—“feminized by what Boorstin described as “the tyranny of the school m’arm” now w submissive Asians….obviously u r illiterate in your own language…there were during Soviet times and currently enormous self criticism in Russia…as Georgi Derlugian recently wrote, “amerikan academia is far more effectively censored than was Soviet academia”. LOL…your stupidity is well known…u backward inferior species (Sendahl) incarcerate more people per capita than any nation in history—“only the least developed societies punish widely and severely”. E Durkheim
As simile write, “the monolingual inevitably confuses style with content”. “amerikans radicals both black and white adopted radical style without any radical content”. Christopher Lasch
your pathetic insecurity amuses….as Paul Fussel wrote, “nothing can thrive in amerika unless inflated by hyperbole and gilded w a fine coat of fraud. amerikans cannot think except by means of slogans–they identify garbage as quality. the stupidity and ignorance of amerikans has long been a topic of hilarity in Europe” I recall that Hunter tThompson remarked “we are a nation of used car salesmen that have no qualms about killing anyone that makes us uncomfortable”. LOL
I don’t buy garbage from used car salesladies like you! Return to your trailer park where you belong, or better continue to humiliate yourself by posting at SF

Sencer

Cechas, love , I spent a valuable 5 seconds of my life reading the crap you posted. Although your argument about females taking the initiative in US bars and all that fun stuff you wrote were quite amusing, yr insecure sexist stupidity openly proves that Kremlin has nothing but chest-pounding morons under its payroll.

It also proves me something else; the harsh policies of Stalin which killed tens of millions of peasants like you, all those attempts of the USSR to create a better role for women within Russian society has simply failed. You peasants are
uneducable, untrainable. No wonder why your women is running away from all of
you when they get the chance.

Of course, the US is nota piece from heaven, not the best place to be on the face of this earth. But comparing it with Russia and telling that Russia is a better place to live, is the epitome of stupidity and ignorance.

Let’s summarize ;

– I told you that you were heading for extermination in cattle wagons in 1948 under the rule of Stalin while the US was booming, is it true or not ?

-I also told you that half of the Russian women were ready to get laid for a pair of Levis Jeans or a package of Wrigley’s gum till 90, isnt it true?

– In fact, your women did their utmost to escape from that shithole country of yours and morons like you. Go and check many web sites such as ´My russian bride. com’’ LOL.

-I also remember telling you that bther size of all Russian economy is almost half of only Californian economy. Right or wrong ?

– How do you explain the existance of a Russian minority in the US reaching 3.5 million created through immigration? Why they are flocking to US from ‘ ‘‘heavenly Russia’’?

The above five points are facts. instead of giving me a decent reply, what you can do is trying to suffocate the subject with some ancient self-criticizing crap you copy/paste from here and there and beg help from the admin of SF.

You are living in an imaginery world apart from realities and expect others
to believe in the crap you have posted. You are talking about self-criticism of
some authors while even Robinson Crusoe or Doctor Zhivago was banned for
decades in your Dystopian land of shithole.

eltahar

The inferior Turd still butthurt Russia kicks Turd hairy ass.

Sencer

And the inferior dutch wannabe illiterate moroccon immigrant,now licks russian ass.

LOL, Inferiority complex at its best.

Its hard to be a stateless clown running after the people whom you believe to be stronger than you,isnt it house negro ?

cechas vodobenikov

it has been well established that amerikans cannot think qualitatively or dialectically–of course they cannot even comprehend quantitative analyses…..while the US imports nearly everything except toilet paper (they r full of feces), Russia is entirely self sufficient technologically, agriculturally and regarding energy production—while Russia enjoys huge financial, gold, diamond, platinum reserves, modern infrastructure, the US enjoys a 25+$ trillion nation debt and a negative balance of trade (both Russia and china have positive balances—indeed Russia derives more export income from natural gas than oil…the US is required to purchase most of their natural gas from Canada…Ft Knox contains sawdust or fools gold—the US govt refuses an independent audit—but amerikans believe anything they r told…amerikans r so mentally ill that they consume more illicit substances than any people on the planet and must import their cocaine and herioin (they consume more than any other nation per capita…and 80% of their pharmaceuticals r produced in China…the amerikans r so incompetent that they require Russian engines to reach the international space station. Russian enterprises r building “state of the art” nuclear power plants in India, Indonesia, China, Hungary, Iran, etc—the US trash has always been unreliable as documented in the book “we almost lost Detroit”, etc….even the US Association of engineers rates US infrastructure “D+” contrasted to vasty superior to Russian and Chinese infrastructure—rail, roads, public transport, airports, etc…their covid mania has made their 3rd world economy 4th world…while Russia does not need to import oil or gas, the US does—their expensive shale enterprises r all bankrupt and will be nationalized this year…the GDP of the US is fake,,,by PPP China is #1, Russia #5—irrelevant since the US GDP is only enjoyed by the elite 1%—the US possessing the greatest wealth/income disparities of all nations examined (Allianz 2015)—more than 50% of amerikans r unable to address a $400 emergency —these culturally and financially impoverished peasants, too passive and ignorant to address their decaying empire, must narcotize themselves w drugs and burgers to retain their #1 ranking in obesity, mental illness and rapes per capita—a naturally immoral, criminal people, they have more time and incarcerated people per capita than any nation in history “only the least developed societies punish widely and severely”. Durkheim… of course a stupefied people do love being submissive peasants
“amerika requires a stupefied population”. Christopher Lasch
“no people r less informed and more entertained tha amerikans. nowhere in an amerikan public education r the concepts of truth and falsity ever addressed, nor r ideas. amerikans do not converse they entertain each other. amerikans do not exchange ides–they exchange images. the problem with amerikans is not Orwellian it is Huxleyan: AMERIKANS LOVE THEIR OPPRESSION”…as Schiller wrote, “it is always the most oppressed that r the most stupid”….and precisely the same position is taken by Alan Bloom in his 1987 book , “the closing of the amerikan mind”….described by Lasch as a conservative…same taken by Zygmunt Bauman and Horkheimer/Adorno—liberal technological determinists, Marxists, post Marxists and conservatives all agree…LOL

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