Only the old hands at the Coffeyville oil refinery could remember anything like the prices posted this month. The small Kansas plant in the heart of the rural US was offering just US$1.75 per barrel for Wyoming sweet crude.
With more than 2 billion people on lockdown from India to California, energy demand has plunged. In corners of the US, Canada, Russia and China, oil prices at the well head are collapsing under the weight of an unprecedented glut.
With it, the industry is bracing for something that last happened on this scale 35 years ago: producers shutting down their wells as pumping crude makes no economic sense.
“I have never seen anything like this in the markets,” said Torbjorn Tornqvist, cofounder of Gunvor Group Ltd, a large commodity trading house. “We’ve never seen anything even close to today.”
The oil market — hit by the double blow of a demand slump and a supply surge as Saudi Arabia and Russia wage a price war — is battling a surplus of as much as 20 percent of global consumption.
The consequences are brutal: prices are now low enough to force a widespread suspension of production, or a shut-in as it is known in the industry. For those waging the price war, it counts as a victory — as long as the shut-ins happen elsewhere.
Brent and West Texas Intermediate, the benchmarks closely followed in Wall Street, are hovering at about US$25 per barrel, but in the world of physical oil — where actual barrels change hands — producers are getting much less.
The industry is navigating what Mizuho Bank Ltd oil analyst Paul Sankey described as “uncharted waters to unknown lands.”
As the pain spreads, industry executives believe many other companies will stem production in the next few days.
“We need to cut crude supply by 10 million barrels a day pretty quickly,” said Russel Hardy, the head of top independent oil trader Vitol Group. “Oil prices will need to go lower, to bring the prices to a level that triggers a response.”
The last time the oil industry faced widespread shut-ins was in 1986, when Saudi Arabia also ravaged the market in a price war.
Put simply, the world cannot continue pumping at the current level of about 100 million barrels per day while demand is as much as 20 percent lower.
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
PARTNERSHIPS: TSMC said it has been working with multiple memorychip makers for more than two years to provide a full spectrum of solutions to address AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it has been collaborating with multiple memorychip makers in high-bandwidth memory (HBM) used in artificial intelligence (AI) applications for more than two years, refuting South Korean media report's about an unprecedented partnership with Samsung Electronics Co. As Samsung is competing with TSMC for a bigger foundry business, any cooperation between the two technology heavyweights would catch the eyes of investors and experts in the semiconductor industry. “We have been working with memory partners, including Micron, Samsung Memory and SK Hynix, on HBM solutions for more than two years, aiming to advance 3D integrated circuit
Vanguard International Semiconductor Corp (世界先進) and Episil Technologies Inc (漢磊) yesterday announced plans to jointly build an 8-inch fab to produce silicon carbide (SiC) chips through an equity acquisition deal. SiC chips offer higher efficiency and lower energy loss than pure silicon chips, and they are able to operate at higher temperatures. They have become crucial to the development of electric vehicles, artificial intelligence data centers, green energy storage and industrial devices. Vanguard, a contract chipmaker focused on making power management chips and driver ICs for displays, is to acquire a 13 percent stake in Episil for NT$2.48 billion (US$77.1 million).
RSS