China Capitalizing on Crashed Oil Market, Stockpiling Oil

Since the crude oil market has cratered, it seems China is buying up oil, ostensibly to expand their strategic oil reserves.

What do you make of it?

Could be nothing of significance; simply bargain shopping.

An optimist might look at things and speculate that China is expecting to bounce back soon, and begin cranking their manufacturing capacity back up, which means they need raw materials (i.e. oil)

A pessimist might look at this and wonder if China is expecting future supply disruptions, that the worst is yet to come, and they are prepping at a national scale.

There is also some interesting developments in Russia & US relations. A medical supply aid package has been sent from Russia to the US, with the understanding that the US will reciprocate and send surplus supplies back to Russia should their COVID cases begin to escalate. Perhaps the beginning of further cooperation and dare I say, an opening for the two countries to forge a better relationship moving forward. If the US and Russia teamed up strategically, they could achieve things such as freezing China out of the crude oil market; an absolute killer with respect to China's ability to sustain manufacturing capacity as before the virus emerged.

So your opinion?

Nothing of importance? Sign of expected return to normalcy? Sign of expected further descent and chaos? Geo-political chess move?

a reply to: SleeperHasAwakened

China is learning from history, we stock piled oil after the embargo, Japan lost a war for not having enough oil, and china desperately wants to be on the big boy stage.

As far as Russia and the US, it is all part of the game... (Note I dont consider Russia an imminent threat or enemy) Putin gets good publicity it tamps down some of the negativity from the west we get some gear that might not be china made junk.

a reply to: SleeperHasAwakened

Didn’t we buy oil too?
Oil is ridiculously cheap today so why wouldn’t everyone buy it if they can?

a reply to: SleeperHasAwakened

We're stockpiling oil too.

Saudi Arabia, our "ally" is the one who is capitalizing off of the crisis. They're hedging out anyone who's been a thorn in their side.

US domestic sources pay far more, especially shale producers. They'd be pulling it out of the ground for a loss.

a reply to: CriticalStinker

You nailed it.
Crude is well below profit level here in the states.

a reply to: SleeperHasAwakened

Oh, and keep your eye on Venezuela.

Russia gave them some loans a while back to keep them afloat. In return, they offered some fields and stake in certain oil companies as collateral.

The announcement for us to position naval assets around Venezuela yesterday definitely made me skeptical about the whole drug angle.

There's a lot more going on in the world than Corona right now IMO. Hopefully everyone keeps a cool head and keeps things just business.

Well, China is being smart with stocking up on oil when it is cheap like it is. And the cooperation between Russia and the US on humanitarian aide is good for both sides. Russia is our adversary, not our enemy. Even in times of war, there are rules governing caring for the enemies soldiers when they are prisoners.

Of course, the left will spin this as bad since Trump worked with Putin.

originally posted by: Bluntone22
a reply to: SleeperHasAwakened

Didn’t we buy oil too?
Oil is ridiculously cheap today so why wouldn’t everyone buy it if they can?

I just filled up my fuel oil for the furnace yesterday. Last time I filled it it was 2.89 a gallon, this time it was 1.84 a gallon. I saved like a hundred seventy seven bucks this time. I should hook up the other tank I have so I can order more for next year.

I think that the US should be filling its strategic oil reserve also.

It's simple economics. Buy when the price is low. Oil is the lowest price that it's been in years so it is time to put some aside

Just my opinion

a reply to: Wildbob77

www.reuters.com...

originally posted by: SleeperHasAwakenedPerhaps the beginning of further cooperation and dare I say, an opening for the two countries to forge a better relationship moving forward. If the US and Russia teamed up strategically, they could achieve things such as freezing China out of the crude oil market; an absolute killer with respect to China's ability to sustain manufacturing capacity as before the virus emerged.

The only hope for the free world in holding China back is USA and Russia finding enough common ground to take on a giant over twice their combined populations. Can you imagine Moscow and Washington actually finding respect for each other's zones of influence and even teaming up as allies like in previos generations when they saved the world from tyranny and evil? Nothing could stop them and their combined massive economic and intellectual resources, even China could be contained by them acting together. It's all to easy to follow the route European nations took in trying to destroy each other a century ago, only to be overtaken by the new kid on the block while they were fighting between themselves.

Aint anybody watched the market? World storage capacity is nearly full while demand has plummeted.

Some peeps were saying oil could go to zero.

And I dont know what SA is thinking...oil is all they got so they will burn through cash reserves fast if it keeps up.

Really good thread and conversation.

S+F 😉

originally posted by: Wildbob77
I think that the US should be filling its strategic oil reserve also.

It's simple economics. Buy when the price is low. Oil is the lowest price that it's been in years so it is time to put some aside

Just my opinion

We’ve been doing exactly that. The plan is to top off the strategic reserve while the price is rock bottom. I read about this weeks ago, when price per barrel dropped to about $20 due to the battle of wills raging between Saudi Arabia and Russia. It’s really hurting our fracking industry, which I’ve heard, needs about $45 a barrel to break even. The Saudis and Russians would love to destroy our fracking industry, which was glutting the market with its high production before the price dropped so low (due to both lack of demand caused by the pandemic and the insane overproduction by SA and Russia). I’m writing all this from my imperfect memory and understanding of the oil biz. I know there are some true experts on ATS; please correct any bad info I’ve stated.

originally posted by: Scapegrace

originally posted by: Wildbob77
I think that the US should be filling its strategic oil reserve also.

It's simple economics. Buy when the price is low. Oil is the lowest price that it's been in years so it is time to put some aside

Just my opinion

We’ve been doing exactly that. The plan is to top off the strategic reserve while the price is rock bottom. I read about this weeks ago, when price per barrel dropped to about $20 due to the battle of wills raging between Saudi Arabia and Russia. It’s really hurting our fracking industry, which I’ve heard, needs about $45 a barrel to break even. The Saudis and Russians would love to destroy our fracking industry, which was glutting the market with its high production before the price dropped so low (due to both lack of demand caused by the pandemic and the insane overproduction by SA and Russia). I’m writing all this from my imperfect memory and understanding of the oil biz. I know there are some true experts on ATS; please correct any bad info I’ve stated.

I've something similar, but all that's doing is delaying the inevitable, that even tho fracking is paused, it can and will start up again.

I think all countries with the capability to do will be buying up oil and gas to take advantage of the low prices.

originally posted by: ufoorbhunter

originally posted by: SleeperHasAwakenedPerhaps the beginning of further cooperation and dare I say, an opening for the two countries to forge a better relationship moving forward. If the US and Russia teamed up strategically, they could achieve things such as freezing China out of the crude oil market; an absolute killer with respect to China's ability to sustain manufacturing capacity as before the virus emerged.

The only hope for the free world in holding China back is USA and Russia finding enough common ground to take on a giant over twice their combined populations. Can you imagine Moscow and Washington actually finding respect for each other's zones of influence and even teaming up as allies like in previos generations when they saved the world from tyranny and evil? Nothing could stop them and their combined massive economic and intellectual resources, even China could be contained by them acting together. It's all to easy to follow the route European nations took in trying to destroy each other a century ago, only to be overtaken by the new kid on the block while they were fighting between themselves.

I totally agree. There’s no reason Russia and America should be enemies, but Putin and other powerful Russians can’t let go of their bitterness over losing the Cold War and much of their empire. Russia needs to realize China is an infinitely greater threat than we are. The Chinese think the Russian Far East — sparsely populated and fabulously wealthy in natural resources — rightfully belongs to them. And the Chinese steal from the Russians and copy their stuff like they do from anyone who has anything better. They are unbelievably arrogant and convinced they will rule the world some day.

a reply to: Scapegrace

It’s really hurting our fracking industry, which I’ve heard, needs about $45 a barrel to break even.

In the Bakken oilfield the cost to market price is roughly $34 a barrel for oil.

Although the biggest problem isn't actually the oil itself right now, it's that to produce oil you have to get rid of the natural gas while you are producing...

And right now oil companies are having to pay to get the nat gas offsite.

So wellsites are being shuttered in, drilling schedules have been cancelled, things are pretty bad for the entire industry right now.

With no real end in site...

This may mean another couple year shutdown for the oil industry.

But don't worry.. it's just 8% of our GDP.

My sister was pointing out that this is going to be great for everyone else, with $1 a gallon gas prices again.

Till I pointed out that it's not going to really matter that much if you don't have a job to drive to.

a reply to: Scapegrace

It would be pretty easy to get Russia back on track as an ally once again. It would mean the West pulling out of the FSU it has occupied one way or another militarily, also stopping funding and organising revolutionary NGO's in that area, it would mean pulling out of Ukraine and letting Russia regain its influence there, indeed all over the FSU bar the Baltic states. It would also take treating Russia as a true partner, dropping all sanctions against it while also dropping decades old tarrifs imposed on its export products like metals that keeps it from becoming part of the modern economic world. Once Russia is given back its sense of pride and zone of influence, maybe then their leadership can be brought on side against China and they are going to be really needed if the world is going to keep Beijing from taking over everywhere especially those areas that fall outside of the Americas.

a reply to: ufoorbhunter

The problem is that the FSU don't want to be dealing with Russia. They are sovereign states who don't want to be under the heel of Russia, the old oppressor and current antagonist. They prefer the liberal developed world and all the opportunities that brings.

Perhaps Russia needs to grow up and realise that they need to change their behaviour in order for countries to actually want to deal with them. At the moment, Russia has no friends and is not capable of moving forward economically or politically.

The current low price of oil and gas is bad for Russia, but that’s their problem.