Posted on 01/15/2016 12:10:20 PM PST by Citizen Zed
The selloff comes down to two simple Economy 101 forces: Increased supply and decreased demand. High prices prompted U.S. companies to start drilling for oil in shale formations using unconventional methods like hydraulic fracking and horizontal drilling. This "American Oil Renaissance," which began to gain traction in 2010, has extended from the Eagle Ford in Texas to North Dakota's Bakken Shale, Ohio's Utica, and Pennsylvania's Marcellus Shale, as U.S.-based oil & gas companies started pumping out oil and natural gas. To put it in perspective, the U.S. overtook Saudia Arabia and Russia as the top oil and gas producer.
As prices slid, many waited to see whether the Organization of Petroleum Exporting Countries (OPEC) - a collection of oil-producing countries that pumps about 40% of the world's oil - would cut back on production to push prices up. OPEC did nothing. Ever since Saudi Arabia's decision to maintain output in late 2014 - a decision it upheld at the end of 2015 - prices have kept tumbling. And U.S. drilling production has just started to decline, but the decline has been far less severe than originally predicted.
Then there's demand. Demand for oil globally began tapering off, driven most notably by a slowdown in China's economy.
(Excerpt) Read more at finance.yahoo.com ...
Graph 13, Page 25 in the OCC Q3 Report
When the tide goes out you find out who was swimming naked
I meant $4 trillion. The ones sold Q1 of 2015. See large orange square.
Oil is tanking.
Seven years of socialism and an ever-worsening economy are coming home to roost. All we can do now is turn back to capitalism and God. Will it happen? Not for another year at least.
CAPITALISM & GOD!!!
Bears repeating.
Head and Shoulders pattern on Dow.
A sell pattern. Things will get worse before they get better
Liquidity. It’s all liquidity. And when stocks with “iffy” earnings are whacked 10% and stocks with bad earns are whacked 20% in seconds, the appetite for risk goes away. Unless you want to lose 4 years of dividends in a minute.
Plus, Japan has essentially said they can no longer support the carry trade which means huge amounts of free financing goes awy.
It is all about liquidity. Not earnings, not charts, not fundamentals. The world is in the middle of a worldwide margin call.
Isn’t Iran going to start the oil flowing next week?
Yeah. You like that $1.50 per gallon gas prices?
Well, there is a hell of a price that is being paid.
The better question is what took so long.
Bush’s fault.
You make a solid point. Since the velocity of money has dropped to just above stagnate, liquidity to meet short term commitments is now king.
Cash reserves and short term debt are going to be the technical that will get watch closely over the next few months. Look for highly leveraged stocks to take a beating.
Shipping is almost at a halt, rail is going down as well.
There are many causes in an economic system that is now based on fraud a deceit, but only a fool would not realize that Obamacare is a leading cause as it has wrecked havoc on people finances while at the same time making it too expensive for retailers to stay in business.
While the price of oil may be hard on oil companies and banks it is a big plus for the consumer and retailers alike. So one has to admit that there is much more going on with the economy than what the white house and the MSM are reporting.
How many freepers a couple of years back were talking about how great it would be if gasoline would get cheap again... and how so many people would have so much more money that it would just be an economic boom ... yada yada yada. The reason the market is tanking is because about 20% of our economy depends on profitable energy production.
That's just foolish thinking..... you can't hurt 20% of our countries economy and think it is a big plus for anyone.
Test run for the late 2016 super crash, engineered so the POTUS can stay in office.
Just saw where CHipotle closing all restaurants for a meeting . Stock up 20
Mad dash for the exits.
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