Black Gold

I have just seen on the news and now also read on the NY Times oil article about oil. I signed up to a NY Times subscription this week and also pay my BBC subs online so feel ok posting this article. I can’t believe black gold or oil is now in negative equity in the USA and people will pay you to take it away. It’s a market working in the new environment. Not many cars on the road, not many planes in the sky and not many industries pumping out pollution. I knew that this was theortically profitable and possible, but genuinly never thought I would see it happen in my life time let alone to black gold or oil. During the 90’s the theory was about peak oil pricing and that it would be worth more than what people could afford to pay but negative equity! The brain boggles. So I have just searched for an article on the internet that I can post about it and found a good old BBC page.

US oil prices turn negative as demand dries up

  • 1 hour ago

Share this with Facebook Share this with Messenger Share this with Twitter Share this with Email

Related Topics

Image copyright Getty Images

The price of US oil has turned negative for the first time in history.

That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.

Demand for oil has all but dried up as lockdowns across the world have kept people inside.

As a result, oil firms have resorted to renting tankers to store the surplus supply and that has forced the price of US oil into negative territory.

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel.

“This is off-the-charts wacky,” said Stewart Glickman, an energy equity analyst at CFRA Research. “The demand shock was so massive that it’s overwhelmed anything that people could have expected.”

The severe drop on Monday was driven in part by a technicality of the global oil market. Oil is traded on its future price and May futures contracts are due to expire on Tuesday. Traders were keen to offload those holdings to avoid having to take delivery of the oil and incur storage costs.

June prices for WTI were also down, but trading at above $20 per barrel. Meanwhile, Brent Crude – the benchmark used by Europe and the rest of the world, which is already trading based on June contracts – was also weaker, down 8.9% at less than $26 a barrel.

Mr Glickman said the historic reversal in pricing was a reminder of the strains facing the oil market and warned that June prices could also fall, if lockdowns remain in place. “I’m really not optimistic about the prospects for oil companies or oil prices,” he said.

OGUK, the business lobby for the UK’s offshore oil and gas sector, said the negative price of US oil would affect firms operating in the North Sea.

“The dynamics of this US market are different from those directly driving UK produced Brent but we will not escape the impact,” said OGUK boss Deirdre Michie.

“Ours is not just a trading market; every penny lost spells more uncertainty over jobs,” she said.

The oil industry has been struggling with both tumbling demand and in-fighting among producers about reducing output.

Earlier this month, Opec members and its allies finally agreed a record deal to slash global output by about 10%. The deal was the largest cut in oil production ever to have been agreed.

But many analysts say the cuts were not big enough to make a difference.

“It hasn’t taken long for the market to recognise that the Opec+ deal will not, in its present form, be enough to balance oil markets,” said Stephen Innes, chief global market strategist at Axicorp.

The leading exporters – Opec and allies such as Russia – have already agreed to cut production by a record amount.

In the United States and elsewhere, oil-producing businesses have made commercial decisions to cut output. But still the world has more crude oil than it can use.

And it’s not just about whether we can use it. It’s also about whether we can store it until the lockdowns are eased enough to generate some additional demand for oil products.

Capacity is filling fast on land and at sea. As that process continues it’s likely to bear down further on prices.

It will take a recovery in demand to really turn the market round and that will depend on how the health crisis unfolds.

There will be further supply cuts as private sector producers respond to the low prices, but it’s hard to see that being on a sufficient scale to have a fundamental impact on the market.

For US drivers, the decline in oil prices – which have fallen by about two-thirds since the start of the year – has had an impact at the pumps.

“The silver lining is, if you for various reason actually need to be on the roads, you’re filling up for far less than you would have been even four months ago,” Mr Glickman said. “The problem for most of us is even if you could fill up, where are you gong to go?”

Meanwhile, concern continues to mount that storage facilities in the US will run out of capacity, with stockpiles at Cushing, the main delivery point in the US for oil, rising almost 50% since the start of March, according to ANZ Bank. “We hold some hope for a recovery later this year,” the bank said in its research note.

Mr Innes said: “It’s a dump at all cost as no one, and I mean no one, wants delivery of oil with Cushing storage facilities filling by the minute.”


Roof us

A couple of years ago in Exeter I met a homeless man from Dublin he was quite old and all he had was his travel suitcase. He was trying to settle by a supermarket. I could see he looked out of place as though he should not be there.

We got talking and he had ran out of money and needed help. He had an Irish state pension but did not get paid that night. He was in huge pain due to swelling in his feet to from what he said was a sevear beating he had taken in his youth that now meant walking was very painfull on swollen feet.

So I decided to get him to hospital and give him some money. I booked a taxi for him paid for the taxi directly with the driver when he arrived and then gave the man a £10 for his troubles and he went on his way.

I noramally wouId not have stopped or had money to give to him but I had just had a big win on the horses and so knew that giving £20 for him was neither here nor there to me and at that moment in time it meant the world to him.

I hoep that Dublin man is ok alive and has a roof over his head now.

How can you stay at home if you do not have one?


By David Hennessy  

The manager of a West London soup kitchen has expressed concern for homeless people who cannot get their usual help because of lockdowns everywhere. 

Because they are “invisible and forgotten” they do not show up in statistics or GPs’ surgeries – meaning no-one knows how many of them are infected or how seriously. 

Andrew McLeay said Ealing Soup Kitchen which he manages, for instance, has been unable to provide its usual Friday service because the church from which is operates has been locked down.  

But the Salvation Army has been allowing their building to be used on Monday nights so the soup kitchen has been open one night a week for a takeaway service with minimal contact. 

Ealing Soup Kitchen has been operating an outreach service to get food, clothes, tents, sleeping bags and other essential items to those most in need without putting anyone at risk of infection.  

Mayor of London Sadiq Khan and the Greater London authority say they have rented 300 hotel rooms in the capital to temporarily take rough sleepers off the streets in the interests of wider public health.  

But, said Mr McLeay, people who use services like his “will be forgotten” because they do not show up in any official statistics.  

He told The Irish World: “People are saying they’re going to do stuff but we’re yet to see it.  

“Apparently Julian Bell, the leader of the Ealing Council, is supposed to be helping sort out extending night shelters and things like that. 

“(But) we’ve actually seen numbers rise and they don’t look like they’re going down.  

“It really shouldn’t be so bad here – a posh, west London suburb – that 400 people have to come to a soup kitchen every week.  

“If they were getting stuff done then we wouldn’t need to serve as many people – but we do. 

“I’m just a little sceptical that they’re going to help the people that are really in most need.  

Usual service: Mary Whelan O’Neill dishes out the soup prior to the Covid-19 lockdown.

“The government is saying they’re going to requisition hotels, or office spaces, for the homeless. 

“(Then) last week they said they were going to do hostels as hospitals.  

“Which is it? There’s so many mixed messages. 

“What’s going to happen, inevitably, is that the homeless are going to get the short end of the stick because they always do.  

“People don’t care about them. They’re not part of any official statistics a lot of the time so they don’t care. If they have to release data, it won’t mention them so it will seem as though they‘ve done a good job. 

“It’s a mess.” 

With the soup kitchen no longer able to feed people as normal, it also precludes them from carrying out their more important work of finding accommodation for people. 

Losing its contact point – the soup kitchen – for their homeless clients means they cannot try to find accommodation for people on the streets, he said.

“The food is the thing that draws people in and it’s from that that we can get them housed and then get them back into society.  

“That’s one of the biggest strengths of this charity and that arm’s been taken away because now we’re not able to open to do the housing stuff. 

“They are the invisible people and they are the forgotten people. That’s a historical thing but it doesn’t have to be.” 

“Homeless people and rough sleepers don’t go to GPs very often, how would they know if they have pre-existing medical conditions? We just don’t know.  

“We have to be careful but at the same time we just don’t want to give up.  

“It’s got to be trying to mobilise as many people as possible for as long as we can because we all know eventually the game will be up and everyone is going to be in proper isolation, and we won’t be able to leave our homes. I want to be as active as possible while we can be.” 

There but for the grace of God go us!!