AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 124975 times)

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🛢️ How High Can Oil Prices Rise?
« Reply #765 on: September 28, 2018, 03:55:14 PM »
$80 seems to be a Hard Ceiling, as Steve predicted quite some time back.

RE

https://seekingalpha.com/article/4208695-high-can-oil-prices-rise

How High Can Oil Prices Rise
Sep. 27, 2018 2:03 PM ET |
Includes: BNO, USO
Osama Rizvi
Oil & gas, energy, research analyst, Editor
Modern Diplomacy
Summary

$85 bbl. for Brent (BZ) and $75 bbl. for WTI (CL) can be considered price ceilings.

The effects of Iranian sanctions will depend upon the response of Iran. So far, it has not been dramatic. The recent military exercise was only part of anniversary of Iran-Iraq war.

Trump’s trade actions will continue weighing down on prices.

The question of how high oil prices can rise depends on three factors. One, the effect of sanctions on Iran's crude oil exports. Two, the extent to which OPEC and NOPEC members are willing to increase production levels to counter the expected downfall in supply. And, third, the gravity of trade war. Both the countries have to stop as doing otherwise might threaten a global recession or serious distortions in international trade. However, neither Trump nor China have hinted of any reconciliation soon.

As I explained in an article last month, the two main driving forces for oil remains the Iranian sanctions and trade war. Think of both the factors as an ends of a continuum and oil prices, at least till 4th of November, is bound to oscillate in this very continuum. $85 bbl. and $75 bbl. for Brent and WTI respectively seems a psychological ceiling, albeit prices have struggled hard to break the $80 (and $71 barrier) and sustain such gains.

According to recent data by S&P Global Platts, Iran's oil and condensate exports increased for the period of 1st September to 15th September to 1.69 million bpd from 1.48 million bpd from 1st August to 15th August. It is instructive to note here that China and India account for almost 50% of Iran's oil exports. Both have resisted halting oil imports from Iran. According to Platts, Indian oil trades with Iran, albeit declining last month, are expected to recover later this month. It is also working to win some waivers as US last month showed a willingness to consider waivers on a case by case basis. China has categorically refused to stop buying oil from Iran. China imported almost double the amount of oil from Iran in September as compared to August, 813,333 bpd and 466,333 bpd, respectively.
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🛢️ Oil drops for a 10th day, longest losing streak in at least three decades
« Reply #766 on: November 09, 2018, 09:45:29 AM »
https://www.cnbc.com/2018/11/09/oil-markets-crude-supply-global-economy-in-focus.html

Oil drops for a 10th day, longest losing streak in at least three decades

    Oil prices fall for a 10th consecutive session, sinking U.S. crude futures deeper into bear market territory and wiping out the benchmark's gains for the year.
    Crude futures are poised for their fifth straight week of losses on growing output from key producers and a deteriorating outlook for oil demand deepen.
    Signs that OPEC and several other oil producers including Russia could soon cut output have not put a floor under the market.

Tom DiChristopher   | @tdichristopher
Published 15 Hours Ago Updated 15 Mins Ago CNBC.com
      
OPEC consensus likely to build around Russian and Saudi decisions, says JP Morgan analyst 
8 Hours Ago | 01:12

U.S. crude prices fell Friday for a 10th consecutive session, sinking U.S. crude futures deeper into bear market territory and wiping out the benchmark's gains for the year.

The 10-day decline is the longest losing streak for U.S. crude since mid-1984, according to Refinitiv data.

Crude futures are poised for their fifth straight week of losses as growing output from key producers and a deteriorating outlook for oil demand deepen a sell-off spurred by October's broader market plunge. The drop marks a stunning reversal from last month, when oil prices hit nearly four-year highs as the market braced for potential shortages once U.S. sanctions on Iran, OPEC's third biggest oil producer, snapped back into place.

"The market's not tight. I think there are windows where you could perceive it to be tight, and I think the markets got caught into that," Christian Malek, head of EMEA oil and gas research at J.P. Morgan, told CNBC on Friday. "The reality is that we're still in a world where we're overproducing and we've got surplus."

U.S. West Texas Intermediate crude fell 66 cents, or 1.1 percent, to $60.01 by 12:22 p.m. ET. The contract is now down nearly 1 percent this year. It fell as low $59.26 on Friday, its weakest level in nearly nine months.

WTI fell into a bear market in the previous session, tumbling more than 20 percent from a nearly four-year high last month at $76.90.

International benchmark Brent crude was trading 65 cents lower at $70, down 19 percent from its recent high. The contract touched a seven-month low at $69.13 on Friday.

Brent has fallen in nine of the last 10 sessions, but is still up almost 5 percent this year.

Oil prices spiked in early October on fears that U.S. sanctions on Iran would thin out global petroleum supplies. However, the Trump administration granted temporary sanctions exemptions to eight countries, allowing Iranian crude exports to continue and easing concern about undersupply.

Analysts now expect the loss of exports from Iran to be less severe than anticipated.

Meanwhile, the world's top three producers, the United States, Russia and Saudi Arabia are also pumping at or near records. Other OPEC members and exporting nations are also turning on the taps.
Workers position a section of pipe during drilling operations at a gas well outside Corpus Christi. Patterson-UTI Energy is drilling the well for Decker Operating of Houston.
Eddie Seal | Bloomberg | Getty Images
Workers position a section of pipe during drilling operations at a gas well outside Corpus Christi. Patterson-UTI Energy is drilling the well for Decker Operating of Houston.

Signs that OPEC and several other oil producers including Russia could soon cut output have not put a floor under the market.

About two dozen exporting nations began capping their output in 2017 in order to drain a global crude glut. The group agreed in June to restore some of that output, and producers with spare capacity have been pumping more oil since then.

However, Saudi Arabia and Russia are reportedly in talks to orchestrate another round of cuts.

A committee representing the alliance meets this weekend and could make a production recommendation to the wider group. Last month the Joint Ministerial Monitoring Committee said the group may need to change course and begin cutting production once again.

"This monitoring committee is important, but it looks like consensus is likely to build around what Russia and Saudi decide, and that gets institutionalized," Malek said.
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🛢️ Oil price drops amid fears over demand
« Reply #767 on: November 14, 2018, 12:01:03 AM »
Who cooda node? ???  :icon_scratch:

RE

Oil price drops amid fears over demand

    6 hours ago


Image copyright Getty Images

Oil prices have dropped to their lowest level in over eight months amid fears about a slowdown in demand.

International benchmark Brent crude dropped almost 7% to $65.11 (£50.24) a barrel, its lowest level since March.

US oil - known as West Texas Intermediate - fell over 7% to $55.69, its lowest level since November last year and the twelfth day it has fallen.

The latest falls came after oil cartel Opec reduced its forecast for global oil demand next year.

Opec now expects world demand to grow 1.29m barrels a day next year, about 70,000 barrels a day lower than last month's forecast.

Saudi Energy Minister Khalid al-Falih had already said on Monday that Opec had agreed there was a need to cut oil production next year to prevent oversupply.

Saudi Arabia is the largest member of the Opec cartel of Middle East and African oil producers.
Oil price tumbles

Capital Economics said it was clear that "fears over excess supply in the oil market are starting to build".

It said that it expected "subdued global economic growth" to drive demand even lower than Opec was currently forecasting.

Brent Crude has now fallen over 25% since hitting a four-year high in early October, while US oil has lost 28% since its October peak.

"It's like a run on the bank. It's getting to the point where it doesn't seem to be about fundamentals anymore, but a total collapse in price," said Phil Flynn, analyst at Price Futures Group.

The latest drop in price comes after US President Donald Trump tweeted on Monday that he hoped there would be no oil output reductions, after Saudi Arabia said on Sunday that Opec was considering cutting supply next year.
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🛢️ Oil Bust Sequel? WTI Plunges over 7% to $55
« Reply #768 on: November 14, 2018, 12:01:59 AM »
It's the DEMAND, stupid.

RE

https://wolfstreet.com/2018/11/13/crude-oil-bust-wti-plunges-to-55/

Oil Bust Sequel? WTI Plunges over 7% to $55
by Wolf Richter • Nov 13, 2018 • 26 Comments   
Whiff of short-term capitulation. But fundamentals are not promising.

This is like so 2015: The price of the benchmark crude-oil grade West Texas Intermediate (WTI) plunged 7.3% on Tuesday, the biggest percentage drop since March 2016. Since the Financial Crisis, WTI has plunged over 7% on only five days, including today. It has plummeted nearly 28% since October 3. The red line in the chart is Tuesday’s move:


Tuesday was the 12th session in a row of declining prices. Total volume traded was nearly double the 100-day average, in a barrage of speculative fever interlaced with desperation and a whiff of capitulation. Fundamentally, several things are coming together, including:
Surging oil production in the US

US crude oil production reached 11.3 million barrels per day (b/d) in August, according to the EIA, thus exceeding Russia’s disclosed production for the first time. By this measure, the US was the largest oil producer in the world in August. This data point was announced on November 1, and while it didn’t really surprise anyone, the downhill cascade that was already in full swing accelerated from there.

“The forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market,” OPEC wrote in its monthly report.

“Alarming,” is what OPEC Secretary General Mohammad Barkindo called the surge of non-OPEC supply. He thought that OPEC and its allies should cut production by 1 million b/d.
Iranian exports not as much of an issue

The White House said last week that China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey would be able to continue for six months buying Iranian oil and dodge US sanctions and potential penalties for trading with Iran. This, in addition to other ways Iran has to get its oil to market, will allow for much of the Iranian oil exports to continue.
Global demand not so hot

OPEC, which still matters, now sees demand for its own oil at around 31.5 million b/d in 2019, down from its vision of around 32 million b/d just two months ago. OPEC’s outlook shows that global oil inventories will rise in 2019 even if OPEC cut its own output by 1 million b/d.
Because the global economy won’t be so hot

OPEC figures into its scenario slowing global economic growth. It just cut its forecast for global demand growth by a smidgen based on its vision of economic slowdowns in the emerging markets.
But Trump likes cheap oil.

Trying to put a floor under the plunging price of crude oil, Saudi Arabia over the weekend, announced that it would cut its own production by 500,000 b/d.

This drew withering criticism from President Trump, who has taken a stance on cheap oil, despite the economic turmoil and hardship cheap oil causes in the US oil patch, along with a drop-off in industrial production, investment, and the like. Cheap oil is no good for the biggest oil-producing states in the US, such as Texas, North Dakota, and Alaska.

But most of this has been known for a while. Oil production doesn’t just suddenly surge overnight, and demand growth doesn’t normally just slow down on your day off. These things move slowly, spread out over months and years. The fundamentals of the global oil market don’t change in six weeks, and haven’t changed much since October 3. But what did change was market sentiment.

For months, the idea of $100 oil was hung out there, and it was deemed credible and speculators took their sides. Now the bets have swung the other way. Energy junk bonds, which had been immense winners since the oil bust, are now turning the other way. And energy stocks are being beaten up again.

But with sentiment turning sour to this extent, it reeks of capitulation, at least in the short term. And a bounce in oil prices – even if it’s ephemeral – is likely on the agenda.

Longer term, oil production in the US shale patch will continue to surge until investors get tired of funding this cash-burning business. Investors did this briefly, and only to some extent during the last oil bust. A gaggle of smaller oil & gas companies defaulted and filed for bankruptcy. And production ticked down a little. But the money in the yield-starved world of that time – much of it from PE firms and hedge funds – started flowing again in the spring of 2016. And today’s self-defeating surge in production is a consequence.

But now the Fed is tightening, interest rates are rising, and yield investors have other options with less risk, and the next oil bust, if it comes to that, is going to play out in a different environment.
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🛢️ Bakken Prices Crumble On Pipeline Woes
« Reply #769 on: November 15, 2018, 04:02:12 AM »
Remember folks, you heard it here first on the Doomstead Diner (and Economic Underdow).

RE

Bakken Prices Crumble On Pipeline Woes
By Nick Cunningham - Nov 14, 2018, 6:00 PM CST


Oil production is growing so quickly in the Bakken that the region is starting to suffer from painful pipeline constraints.

U.S. shale is not new to pipeline bottlenecks. The Permian basin has suffered from steep discounts this year, with WTI in Midland trading as much as $20 per barrel below WTI in Houston at times. Meanwhile, the midstream bottleneck is especially acute in Canada, where the inability to build a major pipeline out of Alberta has led to price discounts that have reached as high as $50 per barrel. Western Canada Select fell as low as $15 per barrel in recent days after a U.S. federal judge blocked construction on the Keystone XL pipeline, dealing yet another blow to Canada’s oil industry.

Now, the pipeline woes could be spreading to the Bakken. Production in the Bakken has jumped this year, rising from 1.188 million barrels per day (mb/d) in January to 1.354 mb/d in November, according to the EIA’s forecast in its Drilling Productivity Report. It is a dramatic turnaround for the Bakken after it had hit a temporary peak in late 2014 at 1.26 mb/d, before falling to 0.956 mb/d two years later. Since bottoming out at the end of 2016, however, production has slowly rebounded, with a record output level expected this month.

Rising output has been good news for Bakken shale drillers, but now they face an uncertain near-term future as pipeline capacity fills up. While the Bakken is producing over 1.3 mb/d in output, the region’s pipeline systems can only handle 1.25 mb/d, according to Reuters and Genscape. With pipelines essentially tapped out, oil producers are starting to turn to rail, just as they did years ago when the Bakken first burst onto the scene.

To make matters worse, cold weather could disrupt rail loadings, an unfortunate bit of timing as takeaway capacity dwindles.

Another complicating factor is that Canadian oil producers, facing their own pipeline bottlenecks, have been shipping more oil into the U.S. via rail, which is crowding the rail networks in the U.S. at a time when Bakken producers are trying to do the same. One mitigating factor is refinery maintenance – several refineries in the Midwest are set to end their maintenance periods, which could provide some relief. According to S&P Global Platts, around 800,000 bpd of refining capacity was offline in October in the Midwest, and some of that is set to come online imminently.

The completion of Energy Transfer Partner’s Dakota Access Pipeline last year added takeaway capacity and narrowed regional discounts. But now, discounts are blowing out again with pipelines full. Last week, Bakken crude sold at a $20-per-barrel discount to WTI. “That basin is flush with barrels and there’s no way out,” Rick Hessling, senior vice president at U.S. refiner Marathon Petroleum Corp, said in an earnings call last week, referring to the Bakken. Frigid temperatures slowing rail traffic might create “a perfect storm,” he said.
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Related: Aramco CEO: Expect IPO In 2021

Meanwhile, pipeline operators view the current predicament as an opportunity to build out new capacity. The Dakota Access Pipeline is full, and Energy Transfer Partners plans on expanding its capacity to 570,000 bpd, up from 525,000 bpd currently.

But larger additions could be on the way. Phillips 66 and Bridger Pipeline have announced an “open season” on a new project that would move Bakken crude to Wyoming. The proposed Liberty Pipeline would have a capacity of 350,000 bpd, with the option of expanding further, and will only move forward if there is sufficient interest. With Bakken takeaway capacity gone, it would seem likely that the two companies would find willing buyers of crude. The Liberty Pipeline, should it move forward, could come online by the end of 2020.

In the short run, however, the pipeline bottleneck will weigh on prices. After trading at a discount of just $2.75 per barrel below WTI in September, the discount for Bakken crude ballooned to as much as $20 per barrel below WTI recently. Oil in the Bakken is currently trading between $15 and $20 per barrel below WTI.

It’s a rather rapid deterioration in the market for Bakken producers, who over the summer saw their region surpass the Permian in terms of profitability. But the same problem that bedeviled the Permian – insufficient pipeline capacity – is now dragging down the Bakken.

By Nick Cunningham of Oilprice.com
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🛢️ Oil Prices Crash, But Oil Majors Aren’t Panicking
« Reply #770 on: November 16, 2018, 02:12:23 AM »
https://oilprice.com/Energy/Energy-General/Oil-Prices-Crash-But-Oil-Majors-Arent-Panicking.html

Oil Prices Crash, But Oil Majors Aren’t Panicking
By Tsvetana Paraskova - Nov 15, 2018, 4:00 PM CST


In just one month, everyone stopped talking about $100 oil.

In six weeks, oil prices slid into a bear market from four-year highs in early October and booked their steepest one-day plunge in three years on Tuesday.

Early on Thursday, Brent Crude was just above $66 a barrel and WTI Crude was at $56, down about $10 from the average price in Q3.

Big Oil—which boasted soaring third-quarter profits on the back of stronger prices—now may have to show if it can continue the growing cash flow and profit trend with its conservative $55-65 oil price assumptions and breakevens for positive cash flows at around $50.

Oil prices are $10-15 above most of the biggest oil companies’ stated breakevens, but the price slide over the past month may put to the test the years of cutting costs and bringing project breakevens to as low as possible.

Breakevens at all oil majors may be lower than the current Brent Crude price, but the lower the price of oil, the less wiggling room Big Oil has to rake in more cash and reward shareholders.

“Higher volatility means they will continue to review if their economics work in a more bearish environment,” Christyan Malek, head of the European, Middle East, and Africa oil and gas research desk at JP Morgan, tells Bloomberg.

According to JP Morgan estimates, the break-even oil price for BP is $46 a barrel, for Total it’s $55, for Shell $58, for Equinor $48, and for Eni $59.

Relaed: Significant Crude Build Weighs On Oil Markets

Judging from comments of Big Oil’s top executives in recent months, $50 a barrel seems to be the watershed for most oil majors.
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“As oil prices stay up over $50 a barrel, we will be surplus free cash as we go into 2020, and 2021. And, of course, we have said our breakeven goes down to $35-40 a barrel by the end of 2021, unless we chose to distribute to shareholders,” BP’s CFO Brian Gilvary said on the Q3 earnings webcast.

Total said in its strategy presentation in September that it had more than halved its post-dividend breakeven to $50 a barrel now, compared to 2014.

“The Group resolutely maintains its programs to improve operational efficiency and reduce the breakeven to remain profitable in any environment,” Total said in its Q3 earnings release.

Shell is aiming for its projects to be able to break even at $40 oil, CFO Jessica Uhl said at the Q3 earnings call.

Norway’s Equinor said in May that it expects to be free cash flow positive in 2018-2020 even at oil below $50 a barrel.

Eni has halved its cash neutrality point—the point at which it will be able to fund capex and dividend—from $114 a barrel in 2014 to $57 a barrel, the Italian major said in its 2018-2021 strategy presentation earlier this year. In the Q3 earnings release, Eni confirmed its cash neutrality for 2018 is at $55 per barrel oil.
Related: Russia’s Most Powerful Oilman: We're Fine With Any Oil Price

In June, Eni said that its new upstream projects in execution, which account for 65 percent of the development investments in the segment, have a break-even lower than $30 a barrel.

Across the Atlantic, ConocoPhillips says it can break even at $40 oil.

“And so we’ve just really locked in our plans and said regardless of what the cycle is, and we’ve locked in a plan that says we can do this in a sub-$50 world. We can breakeven in a $40 world,” Chairman and CEO Ryan Lance said at a conference in May.

Big Oil’s cost-cutting efforts of the past few years have positioned the companies to make profits and generate cash at around $50-60 oil. With Brent at $66, the oil majors are still comfortably above breakevens, but further slides may really test their ability to continue raising profits and shareholder returns in a bear market in oil.

By Tsvetana Paraskova for Oilprice.com
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https://www.globalresearch.ca/global-oil-price-deflation-2018-the-drift-toward-global-recession-is-underway/5660278

Global Oil Price Deflation 2018. The Drift Toward Global Recession is Underway
By Dr. Jack Rasmus
Global Research, November 19, 2018
Theme: Global Economy, Oil and Energy

One of the key characteristics of the 2008-09 crash and its aftermath (i.e. chronic slow recovery in US and double and triple dip recessions in Europe and Japan) was a significant deflation in prices of global oil. After attaining well over $100 a barrel in 2007-08, crude oil prices plummeted, hitting a low of only $27 a barrel in January 2016. They slowly but steadily rose again in 2016-17 and peaked at about $80 a barrel this past summer 2018. Now the retreat has started once again, falling to a low of $55 in October and remain around $56 today, likely to fall further in 2019 now that Japan and Europe appear entering yet another recession and US growth almost certainly slowing significantly in 2019. With the potential for a US recession rising in late 2019 oil price deflation may continue into the near future. What will this mean for the global and US economies?

The critical question is what is the relationship between global oil price deflation, financial instability and crises, and recession–something mainstream economists don’t understand very well? Is the current rapid retreat of oil prices since August 2018 an indicator of more fundamental forces underway in the global and US economy? Will oil price deflation exacerbate, or even accelerate, the drift toward recession globally now underway? What about financial asset markets stability in general? What can be learned from the 2008 through 2015 experience?

In my 2016 book, ‘Systemic Fragility in the Global Economy’ and its chapter on deflation’s role in crises, I explained that oil is not just a commodity but, since the 1990s, has functioned as an important financial asset whose price affects other forms of financial assets (stocks, bonds, derivatives, currencies, etc.). Financial asset price volatility in general (bubbles and deflation) have a greater impact on the real economy than mainstream economists, who generally don’t understand financial markets and cycles, think. Hence they don’t understand how financial cycles interact with real business cycles. This applies as well to their understanding of oil prices as financial asset prices, not just commodity prices.

Oil Price Deflation Revisited 2018

Oil is a commodity whose price is determined by the interaction of supply and demand; but it is also a financial asset the price of which is determined by global finance capitalists’ speculation in oil futures markets and the competition between various forms of financial assets globally. For the new global finance capital elite (also addressed in the book) look at the returns on investment (e.g. profits) from financial asset investing globally—choosing between oil futures, stocks, bonds, derivatives, currencies, real estate on a worldwide basis.

The price of crude oil futures drives the price of crude oil in the short and medium term, as a commodity as speculators bet on oil supply and demand; and the relative price of other types of financial assets in part also determine the demand of oil speculators for oil futures.

What this means is that simply applying supply and demand analysis to determine the direction of crude oil prices globally is not sufficient. Neither supply nor demand has changed since August 2018 by 30% to explain the 30% drop in crude oil to its current mid-$50s range; nor will it explain where oil prices will go in 2019. Nevertheless, that’s what we hear from economists today trying to explain the recent drop or predict the trajectory of global oil price deflation in 2019.

What Mainstream Economists Don’t Understand

Mainstream economists are indoctrinated in the idea that only supply and demand determine prices. It harkens back to the influence of classical economics of the 18th century and Adam Smith. Supply and demand are the appearance of price determination. What matters are the forces behind, beneath and below that cause the changes in supply and demand. Those forces are the real determinants. But mainstream economists typically deal at the surface of appearances, which is why their forecasts of economic directions in the medium and longer term are so poor.

Looking at recent explanations and analyses by mainstream economists, and their echo in the business media, we get the following view:

First, it is clear that there are three major sources of oil supply globally today: US production driven by technology and the shale fracking revolution. Second, Russian production. Third, OPEC, within which Saudi Arabia and its allies, UAE, Kuwait, etc. Each produce about 10-11 million barrels per day, or bpd.

Since this summer, US fracking has resulted in roughly an additional 670,000 barrels a day by October compared to last July 2018. Both Saudi and Russian production has added roughly 700,000 more, each respectively. Offsetting the supply increase, in part, has been a reduction in output by Venezuela and Iran—both driven by US sanctions and, in the case of Venezuela, US longer term efforts to prevent the upgrading and maintenance of Venezuelan production.

The more than 2 million bpd increase in global crude oil supply by the global oil troika of US- Russia-Saudi has, on the surface, appeared as a collapse in global oil prices from $80 to $55, or about 30% in just a few months. Projections are supply increases will drive global oil prices still lower in 2019: US forecasts for 2019 are for an average of 12.06 million bpd; for Russia an average of 11.4 million bpd; and for Saudi an average of 10.6 million bpd. (Sources: EIA and OPEC secretariat).
Will Falling Oil Prices Crash the Markets?

Demand & Supply as Mere Appearance

So the appearance is that supply will drive global oil prices still lower in 2019. But what about demand? Will the forces behind it drive oil price deflation even further? And what about other financial asset markets’ price deflation? Will declines in stock, bond, derivatives, and currencies prices result in financial capitalist investors increasing their demand for oil futures as they shift investing from the collapse of values in those financial markets to oil? Or will it reduce their investing in oil futures as other financial asset markets prices deflate, as a psychological contagion effect spreads across financial asset markets in general, oil futures included?

While mainstreamers focus on and argue that pure supply considerations will predict the price of oil, my analysis insists that a deeper consideration of forces are necessary. What’s driving, and will continue to drive, oil prices are Politics, other financial markets’ price deflation, and Demand that will be driven by renewed recessions in the major advanced economies (Europe, Japan, then US, and continued GDP slowdown in China).

As global economic growth slows, now clearly underway, more than half of the world’s oil producers will increase oil production. Russia, Venezuela, Iraq, smaller African and Asia producers, are dependent on oil sales to finance much of their government budgets. As real growth slows, and recessions appear or worsen, deficits will rise further requiring more government revenues from oil sales. What these countries can’t generate in revenues from prices they will attempt to generate from more sales volume. Even Saudi Arabia has entered this group, as it seeks to generate more revenue to finance the development of its non-energy based economy plans.

So Russia and much of OPEC for political reasons will increase supply because of slowing economies—i.e. because of Demand originally and Supply only secondarily. As the global economy continues to slow Demand forces trump those of Supply. But the two are clearly mutually determined. It’s just that Demand has now become more determining and will remain so into 2019.

Debt as a Driver of Global Oil Deflation

But what’s ultimately behind the Demand forces at work? In the US it’s technology, the fracking revolution, driving down the cost of oil production and thus its price. It’s also corporate debt, often of the junk quality, that has financed the investment behind the oil production output rise. Drillers are loaded with junk bond debt, often short term, that they must pay for, or soon roll over now at a higher interest rate in 2019 and beyond. They must produce and sell more oil to pay for the new technology driven investment of recent years. And as the price falls they must produce and sell still more to generate the revenue to pay the interest and principal on that debt.

So is it really Supply, or is it more fundamentally the debt and technology that’s driving US shale output, that in turn is adding to downward global price pressures? Is it Supply or is it the way that Supply has been financed by capitalist markets?

Similarly, in the case of Russia and much of OPEC, is it Supply or is it the need of those countries to finance their government growing debt loads (and budgets in general) by generating more sales revenue from more oil output, even as the price of oil falls and thereby threatens that oil revenue stream?

Whether at the corporate or government level, the acceleration of debt in recent years is behind the forces driving excess oil production and Supply that appears the cause of the emerging oil price deflation.

Politics as a Driver of Global Oil Deflation

Domestic and global politics is another related force in some cases. Clearly, Russia is engaged in an increase in its military research and other military-related government expenditures. Its governing elite is convinced the US is preparing to challenge its political independence: NATO penetration of the Baltics and Poland, the US-encouraged coup in the Ukraine, past US ventures in Georgia, etc. has led to Russian acceleration of its military expenditures. To continue its investment as the US attempts to impose further sanctions (designed to cut Russia connections with Europe in particular), and as Russia’s economy slows as it raises its domestic interest rates in order to protect its currency, Russia must produce and sell more oil globally. It thus generates more demand for its oil competitively by lowering its price. Demand for Russian oil increases—but not due to natural economic causes as the world economy slows. It increases because it shifts oil demand from other producers to itself.

Saudi politics are also in part behind its planned production increase. It has stepped up its military expenditures as well, both for its war in Yemen and its plans for a future conflict with Iran. The Saudi government investment in domestic infrastructure also requires it to generate more oil revenue in the short term.

The recent Russian-Saudi(OPEC) agreement to reduce or hold oil production steady has been a phony agreement, as actual and planned oil production numbers clearly reveal.

Not least, there’s the question of global financial asset markets’ in decline with falling asset prices and how that impacts the oil commodity futures financial asset market. Once again, changes in oil supply and demand simply do not fluctuate by 30% in just a couple months. The driver of oil prices since July 2018 must be financial speculation in oil futures.

Here it may be argued that investors are factoring in the slowing global economy, especially in Europe and Japan, in coming months. They may be shifting investment out of oil futures as a speculative price play, and into US currency and even stocks and bonds. Or into financial asset markets in China. Or speculating on returns in select emerging market currencies and stocks that have stabilized in the short term and may rise in value, producing a nice speculative gain in the short run. The new global finance capital elite looks at competitive returns globally, in all financial asset markets. It moves its money around quickly, from one asset play to another, enabled by technology, past removal of controls on global money capital flows, easy borrowing, and ability to move quickly in and out of what is a complex network of highly liquid financial asset markets worldwide. As it sees global demand and politics playing important short term roles in global oil price declines, it shifts investment out of oil futures and into other forms of financial assets elsewhere in the global economy. Less supply of money capital for investing in oil futures reduces the demand for oil futures, which in turn reduces demand for oil and crude oil prices in general.

Conclusion

What this foregoing discussion and analysis suggests is the following:

    Looking at oil supply solely or even primarily is to look at appearances only
    But Supply & Demand analyses of oil prices are also superficial analyses of appearances. They are intermediate causal factors at best.
    What matters are real forces that more fundamentally determine supply and demand
    Politics, technology, and debt financing are more fundamental forces driving supply and demand in the intermediate and longer run.
    Oil is not just a commodity, since the 1990s especially; it has become a financial asset whose price is determined in the short run increasingly by speculative investing shifts by global finance capital elites.
    As financial assets, oil prices are determined in the short run globally by the relative price of other competing financial assets and their prices
    The structure of the global economy in the 21st century is such that a new global finance capital elite has arisen, betting on a wide choice of financial assets available in highly liquid financial asset markets, across which the elite moves investments quickly and easily due to new enabling technologies and past deregulation of cross-country money capital flows

To summarize, as it appears increasingly that politics (domestic budgets and revenue needs, US sanctions, rising military expenditures, trade wars, etc.) and a slowing global economy are causing downward pressure on oil demand and thus oil prices; this price pressure is exacerbated by a corresponding increase in production and supply as a result of rising corporate and government debt and debt-servicing needs. However, in the very short run of weekly and monthly price change, it is global oil speculators betting on further oil price deflation and shifting asset investment returns elsewhere that is the primary driver of global oil deflation.

Global oil prices are in determined by other financial asset market price deflation underway in the short term, and in turn determine in part price deflation in other financial asset markets. Global oil prices cannot be understood apart from understanding what’s happening with other financial asset markets and prices.

Understanding and predicting oil prices is thus not simply an exercise in superficial supply and demand analysis, and even less so an exercise primarily in forecasting announcements of production output plans by the big three troika of US-Russia-Saudi.

*

Note to readers: please click the share buttons above. Forward this article to your email lists. Crosspost on your blog site, internet forums. etc.

This article was originally published on the author’s blog site: Jack Rasmus.

Jack Rasmus is author of the forthcoming 2019 book, ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’, Clarity Press, and the recently published ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity 2017. He hosts the Alternative Visions radio show on the Progressive Radio Network. His twitter handle is @drjackrasmus and his website, http://kyklosproductions.com. He is a frequent contributor to Global Research.
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🛢️ Why plunging oil prices now hurt—yes hurt—the U.S. economy
« Reply #772 on: November 20, 2018, 10:59:57 AM »
https://www.marketwatch.com/story/heres-how-much-plunging-oil-prices-will-hurt-yes-hurt-the-us-economy-2018-11-20

Why plunging oil prices now hurt—yes hurt—the U.S. economy

Published: Nov 20, 2018 1:45 p.m. ET


Drivers rejoice, but relief at the pump no longer offsets hit to capital spending: economist

Not everyone celebrates lower prices.

By
William Watts
Deputy markets editor

Falling oil prices are usually greeted with cheers, especially at the gas pump. But for the economy, the equation has changed thanks to the transformation of the U.S. back into a major oil producer courtesy of the shale revolution.

“The key point to remember here is that the lower oil prices are now a net drag on the U.S. economy, because the [capital-expenditure] cutbacks triggered in the shale oil business outweigh the gains to consumers’ spending from cheaper gas prices,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Monday note.

Read: How plummeting oil prices will affect drivers over Thanksgiving

Shale output has risen sharply over the past decade, pushing U.S. oil production to a record above 10 million barrels a day in 2018.

Oil on Tuesday extended a rout that’s already pushed futures on the U.S. benchmark, West Texas Intermediate crude CLF9, -7.03% and the global benchmark, Brent crude LCOF9, -6.83% into bear markets this month. January WTI futures were down 5.5% at $54.09 a barrel, while Brent shed 5.2% to $63.31 a barrel. WTI is down nearly 30% from its bull market peak on Oct. 3.

Stocks were also under heavy pressure Tuesday, with the Dow Jones Industrial Average DJIA, -1.99%  dropping more than 400 points, or 1.6%, while the S&P 500 SPX, -1.65%  shed 1.2% and the Nasdaq Composite COMP, -1.59%  fell 0.9%, leaving the S&P and Dow in negative territory for the year to date.

Oil’s plunge doesn’t spell doom for the U.S. economy, which was already expected to slow as the boost from tax cuts faded, Shepherdson said, but the slide “will make a difference, at the margin.”

Archive: Here’s why oil rout is hurting the global economy instead of helping

He pointed to the oil selloff that began in mid-2014, taking crude from around $107 a barrel to a low near $26 in early 2016 — a move that was accompanied by a sharp slowdown in U.S. gross domestic product growth and an outright contraction in manufacturing activity, triggered by a 60% peak-to-trough collapse in mining capital expenditures.

That’s unlikely to be repeated this time around, Shepherdson said, but warned that investors should expect to see a clear drop in mining capital expenditures, or capex, which includes oil, in the first quarter — a move likely to be signaled by a decline in the Baker-Hughes oil-rig count — before the end of this year. The rig count is viewed as a real-time proxy for capital spending (see chart below).


Shepherdson noted that non-mining capex also slowed sharply as oil prices plunged in 2014 to 2016, a phenomenon he said was likely due to the hit other sectors, including parts and equipment makers, transportation and logistics firms and even real estate and finance in parts of the country heavily dependent on oil output, took as mining capex collapsed.

That’s also unlikely to be repeated this time around, he said, because the non-oil economy is in much better shape, with very strong cash flows.

Still, Shepherdson intends to keep a close eye on the capex intentions index in the National Federation of Independent Business’s monthly survey. It isn’t a perfectly reliable gauge, he said, but is the single best leading indicator of the rate of growth of non-oil capex, usually signaling turning points a couple quarters in advance. That means a significant decline in the index “would be an unambiguous reason to worry about a slowdown in growth next spring.”

Meanwhile, of course, many consumers will directly feel the benefit of lower gasoline prices, which are coming at “exactly the right time” for retailers ahead of the start of the holiday shopping season, Shepherdson said.

Chain-store sales have been strong in recent months as a result of tax cuts and a delayed response to last year’s dollar weakness, which raised the cost of imported goods, he said. Now both effects are reversing, putting holiday sales at risk.

But even there the upside is limited, Shepherdson said, warning that while lower gas prices will “flatter” sales numbers over the holiday season, consumer cash flow isn’t strong enough to maintain the near-4% real growth in spending over the second and third quarters.

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Re: Oil Price Crash: Who Cooda Node?
« Reply #773 on: November 20, 2018, 05:43:58 PM »
I think the US is in a rock in a hard place, the chinese, russians and sauds all dealing outside the dollar for oil is serious threat to US currency.  Suspect the strategy might be something like short term strong dollar to precipitate global financial crises to generate flight of buyers on ust notes.  Oil and commodities will be a major casuality and might fracture in some dramatic ways. 

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🛢️ Oil Companies Lose $1 Trillion As Prices Crash
« Reply #774 on: November 21, 2018, 05:10:50 PM »
https://oilprice.com/Energy/Energy-General/Oil-Companies-Lose-1-Trillion-As-Prices-Crash.html

Oil Companies Lose $1 Trillion As Prices Crash

By Tom Kool - Nov 20, 2018, 3:00 PM CST


Bearish sentiment has taken hold of oil markets, with oil and gas companies having lost $1 trillion since oil began its latest slide.





- The Wolfcamp has been one of the most important shale formations that has helped drive up oil and gas production in the Permian basin over the past decade.

- As of September 2018, the Wolfcamp has been responsible for roughly 1 million barrels of oil production per day, as well as 4 billion cubic feet of natural gas per day (Bcf/d).

- The Wolfcamp accounts for about a third of both oil and gas output in the Permian.

Market Movers

• EQT (NYSE: EQT) was upgraded to a Buy rating by Goldman Sachs, up from Neutral, with a $23 per share price target. EQT jumped by 2 percent on the news.

• Alberta Premier Rachel Notley said that “no option has been taken off the table” in response to the bottlenecks and price crashes for oil Canada. The statement referred to mandatory production curbs, which has been floated even by Canadian oil executives. The price discount for WCS is costing Canada $80 million per day.

• Minnesota regulators reaffirmed their support for Enbridge’s Line 3 replacement, which would double the line’s capacity to 760,000 bpd. The project is expected to come online by late 2019 or early 2020 and represents Canada’s best hope of adding midstream capacity. Pipeline opponents are trying to stop the project in Minnesota.

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OPEC+ could cut output in two weeks’ time, but for now, volatility is here to stay. “The name of the game in the oil market is volatility,” IEA executive director Fatih Birol said at a conference in Oslo. “And with the increasing pressure of geopolitics on oil markets that we are seeing, we believe that we are entering an unprecedented period of uncertainty.”

Middle East crucial to long-term conventional growth. Major oil-producing countries in the Middle East will add 2.7 mb/d of capacity through 2025, according to Rystad Energy. Iraq will add the most at 1.5 mb/d, and an additional 1.2 mb/d will come from the UAE, Iran, and the Neutral Zone between Saudi Arabia and Kuwait. Global output from conventional fields outside the Middle East peaked in 2010, Rystad says, and will fall by another 2.3 mb/d by 2025.
Related: Oil Slips As Russia Mulls Production Cuts

Hedge funds eliminate bullish bets. The bull market has now fully unwound after hedge funds and other money managers have sold off all the bullish positions they had accumulated since the second half of 2017, according to Reuters. The last seven weeks has seen the largest liquidation of long positions since 2013. Long positions are now at their lowest level since January 2016 – a period of time that coincided with the very bottom of the oil market cycle. Fund managers now have a roughly neutral position towards the market.

Japan and South Korea could resume importing from Iran. Reuters reports that Japan and South Korea may begin importing oil from Iran again in January, having obtained waivers from the U.S. government. The two countries had virtually eliminated imports from Iran in recent months, but now feel that they have some space for buying oil once again. The waivers last until May.

Oil majors focus on shale, but questions remain. The world’s largest companies continue to step up their bets on short cycle shale. BP (NYSE: BP) purchased shale assets from BHP Billiton (NYSE: BBL) earlier this year for $10 billion, while Royal Dutch Shell (NYSE: RDS.A), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP) and ExxonMobil (NYSE: XOM) have all previously announced aggressive plans to scale up production in the U.S. shale. But some of them have encountered problems, including write-downs in recent years. Medium-sized shale companies question whether or not the oil majors are equipped to perform well in short-cycle shale projects, a problem that S&P Global Platts explored.

Oil and gas companies lost $1 trillion in oil price slide. The global oil and gas sector has lost $1 trillion in value over a 40-day period since October after crude prices fell by about $20 per barrel. U.S.-listed companies in the S&P 500 shed $240 billion. ExxonMobil (NYSE: XOM), for instance, lost $35 billion in value. Some analysts are warning that OPEC+ will need to cut output to balance the market. “If they don’t cut, I guarantee you it’s going to be 2014 all over again,” Mike Bradley, managing director at the energy investment firm Tudor, Pickering, Holt & Co., told the Houston Chronicle.

Aramco abandons bond sale. Saudi Aramco abandoned plans to launch the world’s largest corporate bond sale, the proceeds for which would have funded a $70 billion stake in SABIC, the Saudi petrochemical firm. Previously, Aramco had considered a $40 billion bond sale for the acquisition, but has rejected the idea because of the financial disclosures that would be required for the sale, while officials are also worried about another market downturn that would affect interested in the debt sale.

UK shale gas may not be economic. Caudrilla Resources has begun drilling for shale gas in the UK after years of regulatory delays, but has struggled with stoppages after seismic activity. The FT warns that Cuadrilla has another problem: Producing shale gas in the UK may not ever be economic because of ample supplies on the continent and a growing source of supply in the form of LNG from Qatar, Norway and the UK. Beyond that, renewables are steadily falling in cost, down 50 percent since 2013.

Natural gas volatility bankrupts trader. Commodity-trading firm OptionSellers.com has fallen apart because of the violent swings in oil and natural gas prices. The firm apparently suffered a “catastrophic loss” by wrong-way bets on prices. Oil fell by 7 percent on November 13 and natural gas spiked by 18 percent on November 14. Individual investors, which apparently had to have made a minimum investment of $250,000, are set to lose their money.

Related: The Impending Endgame In Oil Markets

Cimarex Energy to buy Resolute Energy for $1 billion. Cimarex Energy (NYSE: XEC) is set to buy Resolute Energy (NYSE: REN) for $1 billion, combining two Permian drillers. The deal is illustrative of a wave of a consolidation underway in the Permian.

Petrobras rules out privatization. The new head of Brazil’s Petrobras ruled out a privatization effort, although he supports ongoing asset sales to help trim the company’s debt.

Protests in France over diesel taxes. The French government has hiked taxes on diesel in order to bring them up to parity with gasoline, which has been taxed at higher rate for years. However, diesel prices have been climbing around the world, in part because of the pending IMO regulations set to begin in 2020, which are putting a premium on diesel. The taxes are sparking outrage in France.

Alberta considers refinery as WCS plunges. Prices for Western Canada Select have dropped as low as $14 per barrel, as pipelines carrying oil from Alberta are full. Alberta’s Premier suggested that they could build oil refineries in the province to help alleviate the glut. Some oil companies have already curtailed output because of plunging prices, and some executives have proposed the province issue mandatory production curbs.

EVs to dominate battery market. By 2030, eight out of ten batteries sold worldwide will be used for electric vehicles, according to Bloomberg New Energy Finance. By 2040, about 55 percent of all vehicles sold will be EVs, BNEF estimates.

By Tom Kool for Oilprice.com
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Offline agelbert

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Re: Oil 🦖 Companies Lose $1 Trillion As Prices Crash
« Reply #775 on: November 21, 2018, 05:42:16 PM »


By Tom Kool - Nov 20, 2018, 3:00 PM CST

Leges         Sine    Moribus      Vanae   
Faith,
if it has not works, is dead, being alone.

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https://www.cnbc.com/2018/11/23/oil-markets-crude-supply-global-economy-in-focus.html

Oil falls to lowest since late 2017 on emerging supply glut, OPEC expected to cut

    Global oil supply has surged this year, with the top-three producers — the United States, Russia and Saudi Arabia — pumping more than a third of global consumption.
    Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut.
    Shanghai stocks fell the most in five weeks on Friday, by 2.5 percent, amid worries over China's economic growth and the U.S.-Sino trade war.

Published 7 Hours Ago Updated 1 Hour Ago Reuters
      
   
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil prices plunged to their lowest since late 2017 on Friday in choppy trading, weighed down by an emerging crude supply overhang and a darkening economic outlook.

To counter bulging supply, the Organization of the Petroleum Exporting Countries (OPEC) is expected to start withholding output after a meeting planned for Dec. 6.

International benchmark Brent crude oil futures fell their lowest since December 2017 at $61.52 per barrel, before recovering to $62.13 by 0741 GMT. That was 47 cents, or 0.8 percent below their last close.

U.S. West Texas Intermediate (WTI) crude futures slumped 2.3 percent, to $53.38 a barrel. Prices earlier fell to as low as $52.82, only 5 cents about the $52.77 level reached on Tuesday, which was the lowest since October 2017.

Amid the plunge, Brent and WTI price volatility has jumped in November to approach levels not seen since the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009.

The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter, in part because of reduced exports from Iran due to newly imposed U.S. sanctions.

Overall, however, global oil supply has surged this year, with the top-three producers - the United States, Russia and Saudi Arabia - pumping more than a third of global consumption, which stands at around 100 million barrels per day (bpd).

"The market is currently oversupplied," said U.S. investment bank Jefferies on Friday, adding that "an oversupplied market has a difficult time setting a (price) floor."

High production comes as the demand outlook weakens on the back of a global economic slowdown.

Shanghai stocks fell the most in five weeks on Friday, by 2.5 percent, amid worries over China's economic growth and doubts over the chances of President Xi Jinping and U.S. President Donald Trump achieving a de-escalation in the Sino-U.S. trade war when they meet next week.

Oil prices have plunged by around 30 percent since their last peaks in early October, as global production started to exceed consumption in the fourth quarter of this year, ending a period of undersupply that started in the first quarter of 2017, according to data in Refinitiv Eikon.

Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply.

"We will not sell oil that customers don't need," Saudi Energy Minister Khalid al-Falih told reporters.

Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut.

The group officially meets on Dec. 6 to discuss its supply policy.

U.S. bank Morgan Stanley said it saw "a far greater probability that OPEC reaches an agreement to balance the market in 2019" than not, adding that this would likely support oil prices "in the high-$50s, at least near term."
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🛢️ U.S. oil tumbles nearly 7% as pressure builds on OPEC to cut output
« Reply #777 on: November 23, 2018, 07:32:20 AM »
How LOW will it GO?

RE

https://www.marketwatch.com/story/crude-heads-for-7th-weekly-loss-as-pressure-builds-on-opec-to-cut-output-2018-11-23

U.S. oil tumbles nearly 7% as pressure builds on OPEC to cut output

Published: Nov 23, 2018 8:50 a.m.


Oil endures losses through Thanksgiving break
Getty Images

By Barbara Kollmeyer
Markets reporter

Mark DeCambre

Crude-oil prices plunged in early Friday trade in New York, with the contract headed for its seventh-straight weekly fall as investors increasingly focused on a coming OPEC meeting.

January West Texas Intermediate crude CLF9, -6.72% slid $3.73, or 6.8% to $50.90 a barrel. The contract rose nearly 2.3% on Wednesday, after losing 6.6% Tuesday to settle at a more than one-year low of $53.43. For the week so far, WTI is down 7.8%.

Global benchmark January Brent LCOF9, -5.53% slid $2.95, or 4.7%, to $59.65 a barrel, after closing up 1.5% on Wednesday. Its finish at $62.53 Tuesday was the lowest settlement since February.

“Oil remains under pressure despite noises from some OPEC countries, most notably Saudi Arabia, about another possible coordinated production cut at the next meeting in two weeks. I do wonder how much lower traders will push it given how likely it is that members will follow through on these threats,” said Craig Erlam, senior market analyst at OANDA, in a note to clients.

“Saudi Arabia’s Energy Minister al-Falih asserted yesterday that his country doesn’t intend to flood the market with oil. This points to a possible reversal of the latest production increase, which was undertaken in anticipation of the U.S. sanctions against Iran,” said Commerzbank analysts.

Observers said investors were also looking at a report this week that showed record Saudi Arabia oil production of near 11 million barrels a day, as customers tried to prepare for a disruption in Iran supplies.

And data this week showed a 4.9 million-barrel rise in U.S. crude oil stocks reported Wednesday. The Energy Information Administration reported that domestic crude supplies rose for a ninth straight week, well above the 1.9 million-barrels that had been expected by analysts surveyed by The Wall Street Journal.

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🛢️ Oil meltdown deepens as crude crashes below $51
« Reply #778 on: November 23, 2018, 08:59:58 AM »
Who cooda node?  ::)

RE

Oil meltdown deepens as crude crashes below $51


By Matt Egan, CNN Business

Updated 10:45 AM ET, Fri November 23, 2018

New York (CNN Business)Friday brought another round of dramatic price cuts in the oil patch.
US oil prices plummeted 7% and sank deeper into a bear market that has alarmed investors and made drivers around the world happy.
The latest wave of selling knocked crude below $51 a barrel for the first time since October 2017.
Anxiety about oversupply and diminished demand have sent crude down by a third since it soared to a four-year high above $76 a barrel in early October. Observers have gone from fearing $100 oil to expressing concern over why its price collapsed so quickly.

"The unrelenting six-week selloff has been unnerving to say the least," Michael Haigh, head of commodities research at Societe Generale, wrote to clients on Wednesday.

Oil bulls are hoping OPEC and Russia come to the rescue by announcing steep production cuts at a meeting next month in Vienna. However, President Donald Trump is pressuring Saudi Arabia and OPEC not to reduce output despite the crash in prices. Traders are worried Trump's recent praise for Saudi Arabia signals the Saudis won't back a significant production cut.

For the week, US oil prices are down nearly 10%.

Lukman Otunuga, research analyst at FXTM, described the weekly selloff as "brutally bearish."
Brent crude, the global benchmark, shed 5.5% on Friday and declined to a new 2018 low of $59 a barrel.

The Great Oil Crash of 2018: What's really happening

The meltdown was triggered by a series of developments that darkened the energy outlook. Prices soared over the summer as Trump vowed to zero out Iran's oil exports. That led Saudi Arabia, Russia and especially the United States to ramp up production.

However, the Trump administration later took a softer approach on Iran sanctions to keep oil from spiking. Officials granted temporary waivers to China, India and other buyers of Iran's crude. That headfake left the oil market staring at a potential glut.

At the same time, global growth fears emerged in financial markets. Economists are marking down their GDP forecasts for 2019. Germany and Japan, the world's No. 3 and 4 economies, are already in contraction. China is slowing, too. None of that is bullish for oil, which powers the world economy.
"Rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets," Otunuga wrote to clients on Friday.

The rapid collapse in oil prices caught many off guard, including hedge funds that made outsized bullish bets on crude earlier this year. Large commodity funds have accumulated losses in excess of $7.7 billion so far this quarter, Societe Generale estimates.

"Sentiment on commodity markets has been despondent," Haigh wrote.

The energy slump came at just the right time for consumers though. Millions of Thanksgiving travelers were greeted by cheaper prices at the pump. The average gallon of gallon fetched $2.58 on Friday, down sharply from $2.84 a month ago, according to AAA.
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RE:Oil meltdown deepens as crude crashes below $51
« Reply #779 on: November 23, 2018, 10:49:48 AM »
Who cooda node?  ::)

RE

Oil meltdown deepens as crude crashes below $51


By Matt Egan, CNN Business

Updated 10:45 AM ET, Fri November 23, 2018


                                          
Leges         Sine    Moribus      Vanae   
Faith,
if it has not works, is dead, being alone.

 

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