OIL - Blood Bath is just Beginning...
Updated
Down she goes...FIND-FX-FINISH!
Note
I like USO Long...but WAIT!!!Note
bloomberg.com/opinion/articles/2020-03-29/the-coronavirus-means-it-s-a-truly-free-market-for-oil?srnd=new-economy-forumAs it stands at the moment, OPEC is not due to meet until early June, and whether the cartel’s external allies including Russia join them in an enlarged OPEC+ shindig remains to be seen. No matter, any action agreed then wouldn’t have an impact until July, at the earliest. Even an agreement reached tomorrow would have little impact until May, with April crude sales now largely completed.
By then storage tanks around the globe will be close to capacity; ships full of unwanted oil will be floating in safe anchorages; and producers will be forced to shut wells because they have simply run out places to put any crude they pump out of the ground.
Without output cuts, production shut-ins are inevitable. Consultants IHS Markit see a surplus of 1.8 billion barrels of crude building up during the first half of 2020, and yet there’s only 1.6 billion barrels of storage capacity available.
The window to distribute those cuts in an orderly manner between producers has closed. OPEC had its last chance in March and America’s leaders subsequently squandered their chance at leadership. As it now stands, production cuts will be distributed by the market on the basis of who has access to storage tanks and who is losing money by pumping. Welcome to the free market.
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