Posted on 02/24/2015 9:21:38 AM PST by alexmark1917
Greek 4 month extension does nothing for the people of Greece. Sub-prime auto loans all time high and delinquencies are rising. Existing home sales implode while home price fall. Baltic Dry Index falls and ship builders are filing for bankruptcy. US blimp in Maryland used to watch the people. Ukraine bans Russian media and sets up their own propaganda media. Poroshenko wants Crimea back as they pull more weapons to the front line. US and the coalition forces getting ready for a major offensive in the middle east. DHS budget in trouble, using fear and a false flag event to get their budget approved.
Why The Price Of Oil Is More Likely To Fall To 20 Rather Than Rise To 80
This is just the beginning of the oil crisis. Over the past couple of weeks, the price of U.S. oil has rallied back above 50 dollars a barrel. In fact, as I write this, it is sitting at $52.93. But this rally will not last. In fact, analysts at the big banks are warning that we could soon see U.S. oil hit the $20 mark. The reason for this is that the production of oil globally is still way above the current level of demand. Things have gotten so bad thatmillions of barrels of oil are being stored at sea as companies wait for the price of oil to go back up. But the price is not going to go back up any time soon. Even though rigs are being shut down in the United States at the fastest pace since the last financial crisis, oil production continues to go up. In fact, last week more oil was produced in the U.S. than at any time since the 1970s. This is really bad news for the economy, because the price of oil is already at a catastrophically low level for the global financial system. If the price of oil stays at this level for the rest of the year, we are going to see a whole bunch of energy companies fail, billions of dollars of debt issued by energy companies could go bad, and trillions of dollars of derivatives related to the energy industry could implode. In other words, this is a recipe for a financial meltdown, and the longer the price of oil stays at this level (or lower), the more damage it is going to do.
The way things stand, there is simply just way too much oil sitting out there. And anyone that has taken Economics 101 knows that when supply far exceeds demand, prices go down…
Oil prices have gotten crushed for the last six months. The extent to which that was caused by an excess of supply or by a slowdown in demand has big implications for where prices will head next. People wishing for a big rebound may not want to read farther.
Goldman Sachs released an intriguing analysis on Wednesday that shows what many already suspected: The big culprit in the oil crash has been an abundance of oil flooding the market. A massive supply shock in the second half of last year accounted for most of the decline. In December and January, slowing demand contributed to the continued sell-off.
At this point so much oil has already been stored up that companies are running out of places to put in all. Just consider the words of Goldman Sachs executive Gary Cohn…
“I think the oil market is trying to figure out an equilibrium price. The danger here, as we try and find an equilibrium price, at some point we may end up in a situation where storage capacity gets very, very limited. We may have too much physical oil for the available storage in certain locations. And it may be a locational issue.”
“And you may just see lots of oil in certain locations around the world where oil will have to price to such a cheap discount vis-a-vis the forward price that you make second tier, and third tier and fourth tier storage available.”
[…] “You could see the price fall relatively quickly to make that storage work in the market.”
http://theeconomiccollapseblog.com/archives/price-oil-likely-fall-20-rather-rise-80
mark to read later
Gas prices have gone up 50 cents just the last week. I like lower prices.
Not much use to anyone, but right.
What is the status of the strategic oil reserve? Is it at capacity? Can we expand it’s capacity? Do any in the freeper community have insight to the question?
The strategic petroleum reserve’s facilities can hold 727mm barrels. It is currently at 95% capacity. The Department of Energy updates the inventory weekly.
I agree.
Expensive energy is only desired by progressives.
Or anyone invested in North Dakota and Texas.
If the current financial system wasn't built on extraordinary levels of malinvestment based on years of artificially low interest rates, then the simple action of supply and demand wouldn't threaten anyone.
However it is, and it does.
This can't be helped. In a world full of bubbles there is always a pin.
This time the pin might be reality coming to the oil market. Or reality coming to house-prices. Or mass-realization that the Fed are never, ever, ever going to meaningfully raise interest rates. Or < add your own pin here >.
But there's always a pin. And all it does is tell the truth.
Expensive everything makes it impossible for the “peasant class” to afford it.
The ruling class doesn’t care how much anything costs because they don’t personally pay for anything, the State buys everything for them.
Not much use to anyone, but right.
OP is a blog pimp for INVESTMENT WATCH BLOG ^ (which for some reason must always be in ALLCAPS). He won't even see this reply, as he doesn't ever, ever reply to anyone.
But all he needs is blog hits. Doesn't need to be useful to anyone but himself.
I suppose he deserves some credit for not excerpting his blog. But still, as you intimated, his blog is of no use to anyone (but maybe himself, and even that is questionable).
Yes but eventually oil will get more expensive as demand keeps rising because to keep up we must get oil in more expensive places.
The Arabs can only dump cheap oil on the market for so long. Even they are starting to drill in more expensive places like deep waters and such.
The realization that the public debt is the government selling you and your posterity into slavery because by income taxes (which are non-voluntary) it is guaranteed against the income of you and your posterity — therefore there is no motivation for the elites to bay it off, it is quite advantageous for them to write checke in your name and leave you holding the bag.
No econ here, but doesn’t cheaper anything make it difficult for the Keynesians?
Nasty uncontrolled supply and demand....
KYPD
Expensive everything makes it impossible for the ‘peasant class’ to afford it. The ruling class doesn’t care how much anything costs because they don’t personally pay for anything, the State buys everything for them.
Also the realization that when the government keeps selling bonds to pay interest on previous bonds they are in essence creating more and more money which makes money worth less and less.
Just keep your eye on the BDI. That is the only index you need to watch. It is waaaay down.
This is really bad news for the economy, because the price of oil is already at a catastrophically low level for the global financial system.
...
Low energy prices are always good for the American economy. For economies that depend more on selling commodities, it’s not so good.
Most of the world hasn’t even BEGUN to frack yet.
The energy future is bright!
And the very best part is as the USA becomes more self sufficient, the big customer of the mideast towelheads is going to be China.
That wonderful country with mafia business practices and 1.5 billion expendable people to enforce them.
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