Crude close at $20.09/bbl yesterday, but it hovering near $21/bbl this morning as it keeps bouncing off of the $20/bbl technical resistance level. This sobering note comes from John Kemp from Reuters:
U.S. CRUDE PRICES near the wellhead at Midland in the heart of the Permian Basin in Texas have fallen to less than $5 per barrel. In nominal terms, crude prices at Midland are the lowest since before the first oil shock in 1973. In inflation-adjusted terms, crude prices have fallen to the lowest since the 1930s.”
The stock market is off about a half percent this morning at the open and is on a pace to have the worst first quarter in history.
The chart on the right are the results from a survey conducted by the Wall Street Journal. They asked oil producers what they needed WTI to be in order to break even. There were 157 respondents to the survey, and you can click on the image to make it larger to better see the results.
The bottom line; with the ongoing OPEC vs the world production spat taking place, on top of the greatest destruction of demand event in world history, producers are going to be under significant financial strain for some time…and some will not make it.
The second image is also from the Wall Street Journal, putting our current economic nosedive into some perspective, as many folks are comparing the current environment to The Great Depression. We are not there yet, and we have a ways to go before we are.
A number of financial analysts I have been reading believe that a significant portion of the United States economy can ‘come back online’ rather rapidly once the nationwide social distancing is eased. If this is at the end of April, where certain segments of our society can return to work, the consensus seems to be we could stave off a deepening of financial woes, collectively.
On the health front, this from the Minneapolis Star-Tribune: “The University of Minnesota and Mayo Clinic are close to unveiling antibody tests that can determine if people have already been infected by the coronavirus that causes COVID-19 and are no longer threats to get or spread the infection.”
Here is a link to the entire article, but a test like this would be a true game changer relative to how quickly the United States can get its people back to work, because being able to identify who has had the virus and is no longer at risk of infection and can thus safely go back to work, while not as important as an outright medical cure, is probably the second most important medical test doctors are working on right now.