AuthorTopic: Oil Price Crash!!!  (Read 40478 times)

Offline RE

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Oil Price Crash!!!
« on: November 29, 2014, 01:11:21 AM »

logopodcastOff the microphone of RE


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Aired on the Doomstead Diner on November 29, 2014


So Much for Levitation…


wileycoyote1


How LOW can we GO here?


http://1.bp.blogspot.com/-2qXp2r9Z36Y/VHdh6F2pI8I/AAAAAAAAhcY/A7xgETnnwrs/s1600/OilPricesNov2014.PNG


Bad Times for Frackers…not a good time to stop sniffing glue…



Halliburton gets HAMMERED


http://markets.money.cnn.com/services/api/chart/snapshot_chart_api.asp?symb=HAL


EOG Resources Heads South of the Border



Discuss this RANT at the Podcast Table inside the Diner



Snippet:


…It’s Turkey Day, and I just finished consuming my Steak & Gumbo dinner, which substituted for the traditional Turkey this year. You can read more about that in my last article, A Homeless Thanksiving.


While the individual problems of each person immersed in collapsing industrial civilization are really the most important ones as time progresses here,the grand problems of the Economy and how it downspins remains important to try and understand.


Going back to my years on Peak Oil, pundits there predicted prices of $200 and more for oil as the supply diminished. This was not a scenario I ever bought into, it makes no sense. To be able to SELL Oil at $200/Barrel, you need somebody who can afford to BUY it at $200/barrel. With credit being constrained and fewer people all the time able to BUY at this price, in my view and the view of a VERY few other people in the Peak Oil community including Nicole Foss from The Automatic Earth and my good friend Steve Ludlum from Economic Undertow, really the price of Oil had nowhere to go but DOWN as time progressed…


For the rest, LISTEN TO THE RANT!!!


 


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Offline Mister Roboto

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Re: Oil Price Crash!!!
« Reply #1 on: November 29, 2014, 05:41:00 AM »
The price of oil is doing a no-bullshit "Aunt Bunny"!

<a href="http://www.youtube.com/v/Lhay0VKmtPA&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/Lhay0VKmtPA&fs=1</a>

Offline MKing

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Re: Oil Price Crash!!!
« Reply #2 on: November 29, 2014, 08:21:01 AM »
The current drop in oil prices is GGGGGRRREEATTTTTTT!!!

Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
-Dalai Lama

Offline RE

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Re: Oil Price Crash!!!
« Reply #3 on: November 29, 2014, 02:26:24 PM »
The rant is doing really well, at 116 listens with 12 Downloads and some nice comments in my Soundcloud messages.

I had an epiphany also on this, it's much like a Tsunami Effect.  You know how before the Tsunami rolls in, the tide rushes out, and anybody aware of such things knows this is the moment to run for the High Ground?

The dropping price of Oil is the tide rushing out.  When the Tsunami comes rolling in after it this time, its going to flatten just about everything at the shore, and pretty far inland too.

This would be a good time to start running, or at least find a really tall tree to strap yourself onto.

<a href="http://www.youtube.com/v/bU4Eeawx0mo?feature=player_detailpage" target="_blank" class="new_win">http://www.youtube.com/v/bU4Eeawx0mo?feature=player_detailpage</a>

RE
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Offline jdwheeler42

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Re: Oil Price Crash!!!
« Reply #4 on: November 29, 2014, 02:55:40 PM »
The dropping price of Oil is the tide rushing out.  When the Tsunami comes rolling in after it this time, its going to flatten just about everything at the shore, and pretty far inland too.

This would be a good time to start running, or at least find a really tall tree to strap yourself onto.
Or, at least, buy an EV when there is not such a premium on them?  ;)
Making pigs fly is easy... that is, of course, after you have built the catapult....

Offline RE

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Re: Oil Price Crash!!!
« Reply #5 on: November 29, 2014, 03:26:30 PM »
The dropping price of Oil is the tide rushing out.  When the Tsunami comes rolling in after it this time, its going to flatten just about everything at the shore, and pretty far inland too.

This would be a good time to start running, or at least find a really tall tree to strap yourself onto.
Or, at least, buy an EV when there is not such a premium on them?  ;)

That's what the EWz are for!  :icon_sunny:


Comes in a LOT cheaper than a Volt and a spare Battset for it only cost me $150.

The deal here is, that if/when the gas becomes unavailable to buy, most of Eddie's patients won't be able to get to the Dental Office, most of them won't have jobs to pay for new smiles, and Eddie won't be driving the Volt to the Office.  He'll be out on the Toothstead growing potatoes, and even if he keeps his Volt charged up with his solar panels, where is he going to drive to around there?  There isn't even a convenience store to buy beer for 30 miles, and I seriously doubt they will have a working Charge Station!

Now we just gotta wait for the Margin Calls on the drillers and see who goes Tits Up first.

RE
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Offline MKing

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Re: Oil Price Crash!!!
« Reply #6 on: November 29, 2014, 04:08:22 PM »
The deal here is, that if/when the gas becomes unavailable to buy, most of Eddie's patients won't be able to get to the Dental Office, most of them won't have jobs to pay for new smiles, and Eddie won't be driving the Volt to the Office.

None of this will happen in your lifetime, based on the amount of fuel available on the globe. Hell, maybe in just the US and Canada. No problemo.
Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
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Offline RE

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Re: Oil Price Crash!!!
« Reply #7 on: December 03, 2014, 12:21:14 AM »
Oil Price Slide Rocks World Economy

By Nick Beams
Global Research, December 02, 2014
World Socialist Web Site
Theme: Global Economy, Oil and Energy

Shock waves from last Thursday’s decision by the Saudi-led oil cartel, OPEC, not to cut production in the face of an oversupply on world markets have reverberated throughout the global economy, hitting energy and mining companies as well as financial markets, and threatening whole economies with bankruptcy.

The most immediate impact of the decision was seen in Russia on Monday, where the ruble hit a record low against the US dollar since the ruble’s redenomination in 1998. That followed the Russian default, which occurred in the aftermath of the Asian financial crisis of 1997–98.

The Russian economy, which relies on oil for 60 percent of its export income and 50 percent of its budget revenues, has been hammered by the 40 percent slide in the price of oil since June. The impact of the decline in oil revenues has been exacerbated by the sanctions imposed by the US and the European Union, which have considerably restricted Russian access to global financial markets and led to the drying up of investment inflows.

Oil has now slumped in price from around $100 per barrel just five months ago to below $70, and is expected to fall further. On Monday, the deputy chairwoman of the Russian central bank, Ksenia Yudaeva, said the bank had been working on the assumption that the oil price could go to $60. But no one knows if the slide will stop there.

Among the other countries most immediately impacted are Venezuela, Iran and Nigeria, all of which are heavily dependent on oil revenues to fund government programs.

In another expression of the global consequences of the OPEC decision, more than $30 billion was wiped off of the Australian share market yesterday, as mining and energy stocks tumbled. The giant global mining company BHP Billiton recorded its lowest share price in five years.

While the trigger for the decline was provided by the Saudi decision, the plunge in the price of oil is indicative of deeper processes. The year 2014 has marked the exhaustion of the various stimulus measures—above all, the program of “quantitative easing” pursued by the US Fed and other major central banks—which have sent asset prices to record highs.

The tendency in the underlying real economy has been continuing economic stagnation and the emergence of outright recession. The movement of the financial markets as compared to the real economy is, to use an analogy once employed by Leon Trotsky, like the opening of the blades of a giant pair of scissors.

Some six years after the eruption of the global financial crisis in 2008, the euro zone economy has not even reached the level of economic output achieved in 2007, with investment levels down by as much as 25 percent, while the inflation rate continues to fall.

The Japanese economy, despite the massive financial stimulus provided by so-called Abenomics, has entered another recession, its fourth in the past six years, as concerns grow over the capacity of the government to repay the public debt, now estimated to be more than 250 percent of gross domestic product. On Monday, the rating agency Moody’s downgraded its credit rating for the country, the world’s third largest single economy, putting it below China and South Korea and on a par with Bermuda, Oman and Estonia.

Over the past six years, the global economy has been sustained to a significant extent by continuing Chinese growth, largely the result of the stimulus package initiated by the Chinese government and the massive expansion of credit, estimated to be equivalent in size to the entire American banking system. But throughout this year it has become increasingly apparent that the Chinese economy is in the grip of a deflationary vortex. So-called “producer prices,” which record the value of commodities as they leave the factory gate, have been falling for the past three years. Property prices have fallen significantly, ending the real estate boom.

This week, a report by official government researchers put a figure on wasteful spending. It said some $6.8 trillion had been laid out since 2009 on “ineffective investment,” including needless steel mills, ghost cites and empty stadiums, as well as other government efforts to insulate China from the impact of the global financial crisis.

While American financial markets appear thus far to have been only marginally affected by the OPEC decision, the falling oil price will have major long-term consequences. One of the motivating factors for the Saudi decision appears to have been its determination to squeeze relatively high-cost US shale oil producers out of the market by driving prices lower. This is a replication of the strategy in the iron ore market, which has experienced a price fall similar to that of oil this year. Major producers, in particular BHP Billiton and Rio, have responded by increasing, rather than cutting, production in an effort to send their higher-cost rivals to the wall.

A continued slide in the oil price will have major consequences for junk bond and leveraged loan markets in the US. With oil prices reaching around $100 per barrel in 2011, shale oil production became profitable, even at extraction costs of between $60 and $70 per barrel. As recently as the start of the year, it was expected that oil prices would remain at $100 per barrel and shale oil was increasingly held up as providing a new vista for American economic expansion.

Over the past five years, using ultra-cheap money provided by the Fed, banks and financial speculators poured money into companies involved in shale oil extraction, with the result that energy debt now accounts for 16 percent of the $1.3 trillion US junk bond market, compared to 4 percent a decade ago.

Unlike more traditional methods of oil production, where physical capital has a relatively long life, shale oil extraction requires the continuous acquisition of new capital equipment. This means the industry is highly dependent on the flow of funds from financial markets. If this begins to dry up, companies could go bankrupt, with major flow-on consequences for the financial system as a whole.

As the case of Russia so clearly demonstrates, the underlying recessionary tendencies have been exacerbated by the increase in geo-political tensions.

Now a negative feedback process could be set in motion as the deepening global slump heightens conflicts among the major powers. Korea and other countries in the Southeast Asian region, together with China, have already been adversely affected by Abenomics, which has led to a fall in the value of the yen, hitting their export markets.

This year has also seen the emergence of tensions between the US and Germany, with the political and foreign policy establishment emphasising the need for Germany to play a greater and more independent role on the global stage in the pursuit of its own interests. With the euro zone economy on the verge of another recession, not least because of a significant weakening of the Germany economy, and the prospect of further financial turbulence, those tensions are certain to deepen.

The oil price slide is another expression of the underlying driving forces of the world capitalist system—towards economic contraction, the rise of inter-imperialist conflicts and, ultimately, war.
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Offline RE

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Oil Price Crash!!!: Now down to the $50s!!!!
« Reply #8 on: December 11, 2014, 11:33:45 AM »
How LOW can it GO?

Parenthetically, to understand why it is dropping so dramatically, just look at the FOREX market and see how Yen, Euro and Yuan are doing.  These countries have lost about 1/3rd of their purchasing power based just on the currency drop alone.  Oil price is being driven down by what is occurring in Japan, Europe and China.  They are all crashing.

RE

WTI Crude Crashes Into The $50s

Tyler Durden's picture



 

Zee overnight stabilitee (and brief dead-cat-bounce this morning) has turned into a renewed bout of selling pressure and for the first time since July 2009, WTI has broken below the $60 level. Canada Heavy is trading $42.10 (down almst $4 today!), its lowest since April 2009. Energy credit spreads are wider once again, now at +952bps.

 

Canada Heavy has crashed...

 

And WTI breaks below $60 (and bounces) after multiple stop run attempts...

 

Now we have a problem...

 

Who could have seen that coming?

 

Charts: Bloomberg

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Offline MKing

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Re: Oil Price Crash!!!
« Reply #9 on: December 11, 2014, 12:51:10 PM »
A $30 fillup to travel 572 miles yesterday.

The American consumer must be just stunned with how much more discretionary income this makes possible for them.



Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
-Dalai Lama

Offline RE

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Re: Oil Price Crash!!!
« Reply #10 on: December 12, 2014, 12:56:26 PM »
This BUST is going to be EPIC!

RE

WTI Crashes To $57 Handle; 80% Of Shale Production Non-Economic

Tyler Durden's picture





 

WTI Crude just burst below $58 and is now over 46% below the peak in June. Since the initial leaks of no production cuts at OPEC, WTI is down 25% (gold and silver are up 2-4%). At these levels only 4 of the US 18 Shale Oil regions remain economic...

 

61...60...59...58...57...

 

Down 25% from the initial OPEC leaks...

 

Which leaves only 20% of US Shale regions economic...

 

*  *  *

Unequivocally good!!

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Offline azozeo

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Re: Oil Price Crash!!!
« Reply #11 on: December 12, 2014, 01:06:05 PM »
The sharks have smelled & tasted blood in the waters
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline JRM

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Re: Oil Price Crash!!!
« Reply #12 on: December 12, 2014, 02:08:54 PM »
So the oil price is taking a dive because oil is somehow used as a generator of House-of-Cards funnymoney currency?

My head hurts.

Why ever do we allow important things to be designed or decided by stupid and greedy people?
My "avatar" graphic is Japanese calligraphy (shodō) forming the word shoshin, meaning "beginner's mind". --  http://en.wikipedia.org/wiki/Shoshin -- It is with shoshin that I am now and always "meeting my breath" for the first time. Try it!

Offline JRM

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Re: Oil Price Crash!!!
« Reply #13 on: December 12, 2014, 02:17:02 PM »
Can someone explain to a guy like me--who knows very little about the relation of oil to funnymoney (I know enough to know I don't know)--what the hell is going on? Put it in plain language, please.
My "avatar" graphic is Japanese calligraphy (shodō) forming the word shoshin, meaning "beginner's mind". --  http://en.wikipedia.org/wiki/Shoshin -- It is with shoshin that I am now and always "meeting my breath" for the first time. Try it!

Offline jdwheeler42

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Re: Oil Price Crash!!!
« Reply #14 on: December 12, 2014, 06:41:03 PM »
Why ever do we allow important things to be designed or decided by stupid and greedy people?
Because they're the ones who show up....
Making pigs fly is easy... that is, of course, after you have built the catapult....

 

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