Negative Oil Prices Arrive: Koch Brothers' Refinery "Pays" -$0.50 For North Dakota Crude
Do you have some extra space in your garage or attic? Or perhaps you own an oil tanker you aren’t currently using. Or maybe you have a storage unit that’s got a little extra room next to an old mattress and box springs.
If so, you may want to call up oil producers in North Dakota and ask if they’d care to send you some free oil, because the crude glut is now so acute that the Koch brothers are actually charging $0.50/bbl to take low grade oil at their Flint Hills Resources refining arm.
North Dakota Sour is a high-sulfur grade of crude and “is a small portion of the state’s production, with less than 15,000 barrels a day coming out of the ground,” Bloomberg notes, citing John Auers, executive vice president at Turner Mason & Co. in Dallas. “The output has been dwarfed by low-sulfur crude from the Bakken shale formation in the western part of the state, which has grown to 1.1 million barrels a day in the past 10 years.”
High-sulfur grades are more expensive to refine and thus fetch lower prices at market. As Bloomberg goes on to note, “Enbridge stopped allowing high-sulfur crudes on its pipeline out of North Dakota in 2011, forcing North Dakota Sour producers to rely on more expensive transport such as trucks and trains [and] the price for Canadian bitumen -- the thick, sticky substance at the center of the heated debate over TransCanada Corp.’s Keystone XL pipeline -- fell to $8.35 last week, down from as much as $80 less than two years ago.”
So there you have it. The global deflationary supply glut has now reached the point that the market is effectively forcing producers to pay to give their oil away or else see it sit in bloated storage facilities until Riyadh decides enough is enough and until the world comes to terms with the return of Iranian supply. In other words, for some US producers the business isn't just loss making, it's an exercise in sadomasochistic futility.
Meanwhile, MLP Plains All American is quoting Colorado Southeastern, Nebraska Intermediate, Eastern Kansas Common Special, and Oklahoma Sour at just $16.50/bbl, $16.00/bbl, $12.20/bbl, and $13.50/bbl, respectively.
The message for the Wells Fargos and Citis of the world: you're going to need a bigger loan loss reserve.
It's no wonder the Dallas Fed suspended mark-to-market on energy debts - there's no market to mark to.
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What goes around comes around, kid.
Shut up and take my oil.
It is not just the oil for free, even airlines have free flights now....
Oman Air in free flights promotionI wonder what else in this world is available for free today? Even 90% discount will do....
USSA succeeding in BK'ing foreign oil producing countries and their currencies....
Venezueala, Libya, iraq, Iran, Russia, Canada, Mexico and the rest of the Middle East.
this is WW#3 as we speak
Hopefully this will kill Berkshire Hathaway's stock as the rate for train freight plummets. Poor Lord Buffet!
Saudi/Exxon/CIA allegedly crashing oil as weapon:
https://www.youtube.com/watch?v=7BBVOiAQUs8
Will fail.
You forgot the /Obama/ in there.
Oh wait, I forgot Obama is just a helpless "puppet" caught up in the evil neocons game....
“Look how many countries in Africa, for example, depend on the income from oil exports,” Schwab said in an interview ahead of the WEF’s 46th annual meeting, in the Swiss resort of Davos. “Now imagine 1 billion inhabitants, imagine they all move north.”
http://www.bloomberg.com/news/articles/2016-01-18/wef-boss-schwab-warns-commodities-rout-could-spur-more-migration
Barry's a spokesman. Do you think that Aussie lizard makes decisions about the insurance business? /s
I have a few empty teacups lying around that I would be willing to rent out cheap for storage. Call me. 801-555-6757
It's going to kill Uncle Buffy's Wells Fargo before his choo-choos.
crazy...I'm hearing though that in 5 years or so this is going to reverse...the oil glut will have run it's course and we'll be back to shortages and 150+ prices per barrel.
We're not done beating the peak oil guys to a bloody pulp yet. When our arms get tired of swinging the bat against their heads maybe we'll listen to what they have to say again.
It will reverse. It always does. It's the classic boom and bust cycle of many volatile markets. Driven by high oil prices and expectations of China continuing max growth into perpetuity------> billions were spent on E&P the last 10 years, high cost oil became profitable to drill, OPEC needs $, and all of sudden you have a glut. Markets turn bearish, Prices fall, E&P is slashed, rigs and wells shuttered, high cost producers go out of business ----> then people use more oil because it's cheap, infrastructure and companies are built around cheap oil, excess oil is worked off, World GDP creeps back up and all of a sudden markets turn and it takes a lot of lead time to bring new oil back online, leading to a shortage and you're back at $100 oil. It goes around and around, it will be no different this time.
With EPA reg's on sulfur, I'm surprised they take it at all. It's pushed into the pipe with all the other oil, and somebody has to do something with it...somewhere.......
Obama wanted to gut shale industry.
Domestic oil production makes us more sovereign.
The NWO bastards don't want that.
Or...shale expanded too fucking fast under sloppy monetary policy, doesn't have sound fundamentals, and world realpolitik just showed it what gravity feels like for the first time.
Your shitty EROEI is not my fucking problem and waving your hands around and shouting "nigger", just makes you look like a dumbfuck.
Where did I shout nigger?
YOU are shouting it not me.
Ya crazy kook.
if you say anything against the muslim.... his arse kissers say you are a racist....
hence.....
I believe Sand Nigger is the proper term.
If you say the word "muslim" in Europe you're tagged with a Sharia death sentence. The joy of Islamophobia.
At zero hedge Obama is just a "puppet"
If you don't agree its the same as callign him a "nigger".
And Bush was not a puppet.
All failed democrats are puppets, so they want elect a new puppet Bernie or Hillary.
Because Presidents can't "declare war" on a fucked economy (in no small part, due to the jackass you voted for twice and are defending now) in the same way they can send troops to waste blood and treasure implementing regime change and enabling the fucked up mess that is the middle east today?
When you stop looking for blame outside yourself and start making congress do congress job, you'll get a great deal more accomplished. It seems you prefer beating up strawmen and concocting idiot conspiracy more than solving problems.
Hold Obama accountable for the things he has fucked up.
He didn't want to destroy it exactly. Wall Street need a plan B once Saudi runs out of oil in 15 years.
They just want to make sure the right people (themselves) control the oil, from San Antonio to Siberia.
They don't want anyone to be sovereign, not Russia, not Texas, not anybody.
The plan is:
1. Saudi dumps oil.
2. Russia runs out of cash, Putin is overthrown.
3. Wall Street vultures snap up North American and post-Soviet oil for pennies on the dollar.
4. Saudi runs out of oil and prices return to realistic levels.
5. Vultures contribute a portion of their winnings to Barry's library and Malia's first congressional campaign.
Try Putin defaults, West suffers.
Or....there's just no demand there and using xerox copies of money to speculate has been unmasked for the ruse it always was.
ah yes, it's Obama's fault when shale booms under his watch and it's now Obama's fault when shale busts under his watch. let me guess, youre voting for Trump? The working mans billionaire, haha.
Douchebags cucks like you are the reason I am looking foward to the coming darkness.
so you're voting for Trump as well? coming darkenss? you mean the one ZH has been saying is coming any day now for 9 years? the inflationary death spiral? or was it the deflationary death spiral? the death of all currency but precious metals? WWIII? the collapse of housing? the collapse of global banks? the collapse of global central banks? the collapse of emerging market equities? the collpase of developed market equities? Proxy war with Russia in Syria? no no, now it's the collapse of oil?
stupid people have short memories. You realize all of the same doomsday fear mongering vomit has been spewed by all sides every decade of every century of man? Remember the cuban missile crisis? Vietnam? gas shortages in the 70's? WWII, September 11, the Civil rights movement, etc. etc. Do things happen? yes. do people die? yes. Does the world go on? yes. Doomsday may happen but it's not in your lifetime (especially if you have enough $ to be on the internet).
Most of you guys are Americans so I'm going to type this slowly...
ALL of the over supply of oil on the market is American oil, okay...until the USSA helped get Iran fired back up and producing again! That's your proof that Obama is crashing the oil market to attempt to bankrupt Russia and others. Only problem, it's bankrupting Canada...thanks Obama!
American oil vis-a-vie Obama's Energy Independence Plan is the "new" oil on the market. Just becaause Saudi Arabia and the UAE doesn't want to cut production to save market share doesn't make the price crash their fault...do you really expect a one trick pony to NOT do his only trick?
I would go so far as to suggest that all of this billions being dumped into "global warming" is going directly to paying US producers to keep producing oil that isn't worth producing at the moment.
It is true that the majority of new oil on the market the past few years has come from the US, while at the same time high prices have caused a lot of demand destruction masking the weak oil growth elsewhere.
So it is one reason why I've been a bit frustated with the whole "Saudi's flooding market" story since it has no basis in reality. It is terribly convenient too that the US oil patch has in theory a link all the way to the fed and thus unlimited funding. I would dismiss it as tin foil hat thinking, but then they are getting involved with the suspending mark to market and other interventions, I also remember that there are plans for future oil sales from the SPR, I wonder if these will just happen to occur in time to prolong the current depressed prices? A lot of coincidences there.
The bounce back from this (possible) market tampering should be very interesting to watch, although in the meantime I'm going to make sure I book some cheap flights next year :D
"Obama wanted to gut shale industry."
What??? Obama claimed credit for the booming U.S. shale oil industry the same way Al Gore claimed credit for the internet. Obama whipped his cheering crowds into a frenzy with claims that the U.S. would soon be energy independent. He touted the high-paying American jobs he created for hard-working Americans.
The U.S. has considerable reserves of $100-a-barrel oil. We have no reserves of $30-a-barrel oil. Tell the Chinese to start buying oil on the open market at $100 per barrel again and maybe domestic shale oil will recover. U.S. refineries aren't going to buy domestic shale oil if they can get it cheaper elsewhere. It's called competition in a global marketplace.
Just a heads up, December 1998 WTI was $10.49 a barrel...that's a FURTHER 63% drop!!!
inflation adjusted is closer to $15/bbl...it won't drop that low though. Despite China's slowdown, they're still growing at an above average clip compared to the rest of the world and using 3x more crude than in the 90's.
Don't worry about negative oil prices, as there will be no real recovery what so ever!
The elite will soon run and hide in the bunkers paid for with citizens taxes, after engineering a full economic collapse as well as starting WW3, plus they will make sure that there are enough Jihadi's in the West to start a race war.
That should be enough to cover up the failed fiat ponzi scheme and take care of the 'excessive' population......
http://beforeitsnews.com/global-unrest/2016/01/the-lion-is-it-time-to-fi...
this all makes perfect sense - pass the popcorn please.
I'd love to sit through an Econ lecture that tried to explain this.
If I want sour crude, I'll get it cheap from House Saud. /sarc
Why not just donate it to some worthy [cough] charitable cause like the Clinton Foundation & deliver it to their doorstep?
Maybe this is a good time to stop making crappy fuel out of corn?
Na, I'd rather we keep burning our food.
Use free corn .... as bait .... to lure the Muzzies .... back to Syria ?
Whoever down voted me can go eat oil!
I personally do not call that GMO shit food.
I don't eat it so I don't care if they burn it....however government should not be forcing it into my fuel supply either.
That corn isn't food corn...but neither is the crap that is grown for animal feed that they feed to people now.
Ethanol is produced at a loss which is made up for by the subsidies that come from those of us who work and pay taxes. Monoculture farming is an oxymoron.
But I do see the sarcasm in your post.
Thanks for noticing the sarcasm, I follow the paleo diet not the FDA food pyramid and therefore do not eat grains, esspecially GMO corn. However we are exhausting land that could otherwise be utilized to grow more nutritious sustenance.
You act like we can just use these limited petroleum fertilizers whenever we feel like it instead of wasting them now.
How will we melt lawncare motor products with your kind of narrow-minded thinking?
"How will we melt lawncare motor products"
With Hilary Clinton's ugly Medusa face.
That's stone, not melting. It only has a softening effect on male genitalia.