Mid-Week Review – March 11, 2020

Oil Rebounds From Worst Loss Since 1991 on Hopes for Stimulus

Oil rebounded from its worst loss since 1991 on speculation that potential U.S. tax cuts may shield the market against the economic impact of the coronavirus and a price feud between major producers.  “Today is a day of licking wounds but we’re not out of the woods yet,” said Mike Hiley, head of OTC energy trading with LPS Partners.  Click here to read more from Bloomberg.

Don’t Expect Russia to Blink on Oil Production in Price War

The Saudis’ trump card in petroleum geopolitics is their spare capacity and world-beating extraction costs at about $3 a barrel. Russia’s is its parsimony. Vladimir Putin’s budget balances with crude prices around $40. Riyadh needs more than $80. But Moscow’s $560 billion in foreign currency reserves can cover the gap for quite some time, hoping that Riyadh, or a bunch of leveraged U.S. shale producers, will cry Uncle.  Click here to read more from Barron’s.

Why Russia and Vladimir Putin are waging an oil war with America

Vladimir Putin knows America’s fragile oil industry is built on a mountain of debt. So when Saudi Arabia called for production cuts to mitigate oversupply, Putin decided to pounce.  Russia shocked the world last week by blowing up its shaky alliance with OPEC. Moscow’s refusal to join with the cartel is aimed in part at drowning US shale oil companies that rely on higher prices in a sea of cheap crude.  Click here to read more from CNN.

Oil Price Crash: 50% Of U.S. Shale Could Go Bankrupt

Oil opened on Monday down roughly 25 percent, the sharpest decline in decades, and broader financial markets fell so precipitously that the circuit breakers put in place during times of volatility tripped, temporarily halting trading.  The list of adjectives available to describe what is happening to the oil market is not adequate. There are now multiple crises unfolding at the same time.  Click here to read more from Oilprice.com.