There isn’t any end user demand because of quarantine and there isn’t any place to store the stuff, so the world has a huge problem on their hands now, when it comes to crude.
As ZH pointed out earlier, producers are essentially floating their inventory on giant tankers now, which is why day rates have exploded from $20k per day to as high as $300k.
“This is a once-in-a-generation type of event,” she said Thursday, quoted by OilandGas360.
As Bloomberg reported separately, citing Robert Hvide Macleod, CEO of tanker owner Frontline Management, “oil is going on ships at a speed never seen before,” as a result of the market’s glut; he added that vessels are being filled at five times the pace of 2015, when oil market was last heavily oversupplied. International Seaways, another owner, said on Thursday that the total volume of oil in floating storage may top 100 million barrels during this glut.
Because of this, I am long FRO — this time for good, or all least until comfortably profitable. The bigger story today is the price of regional crude supplies in the US — junk oil markets. Refiners would buy junk oil from places like Arkansas, Alabama, and Wyoming and made due with it. But with WTI trading at $20, there is zero demand for shit tier crude.
The following landlocked crude is trading minimum 50% discount to WTI, all under $10. I suspect the price to ship the crude makes it untenable.
Colorado Southeastern, North Central Colorado, Central Kansas Sweet, Eastern Kansas Common, Kansas Common, Michigan Sour, Mississippi Extra Heavy Asphaltic Sour, Central Montana, Nebraska Intermediate, Nebraska Western, North Dakota Light Sweet, Oklahoma Sour, South Texas Sour, Upper Texas Gulf Coast, Williston Basin Mixed Sweet, Eastern Wyoming Sweet, Wyoming Asphalt Sour, Wyoming Heavy Sour, Wyoming Sweet.
Wyoming Asphalt Sour trading at negative prices this month and is essentially worthless now.If you enjoy the content at iBankCoin, please follow us on Twitter