Posted on 01/05/2015 6:50:15 AM PST by Enlightened1
Oil futures continued to tumble Monday, knocked to fresh 5 1/2 year lows as investors remain focused on a surging dollar and growing supplies of crude oil.
Meanwhile, news reports last week said Russian oil production continued to rise in December.
“The reason behind what could be the next leg lower? The economic conditions the oil markets face have not changed, which is eliminating buyers from even considering entering [long] positions,” said Jameel Ahmad, chief market analyst at FXTM.
A rising U.S. currency makes dollar-denominated crude more expensive to users of euros, yen and other units.
(Excerpt) Read more at marketwatch.com ...
Oil is crashing?
How low will it go?
So... where is the bottom?
In 2009, it was around $40... Personally, I don’t think we get that low again. But, I think we do venture below $50 for a little while. If it hit $45, I’m going to be buying oil and chemical stocks in a big way.
Well... Big for ME, anyway.
Its not just oil. Its nearly all commodities. The fact is that the demand is down since the world is in a huge economic downturn. China sits on the granddaddy of all real estate bubbles. The reality od squandered capital used to make useless and non productive edifices is dragging down the Chinese economy. The foundation of the US pseudo recovery is borrowed and printed money. That fact and an additional $80 trillion of unfunded liabilities and a bizarre anti energy crusade does not bode well. The Mideast is in chaos and non productive. The French are upset that North Africa no longer has the money to import its grain. Socialist Europe is perennially stagnant and in debt. Africa remains an economic basket case. Long time before there is a robust demand for oil.
It certainly will be below $50, and maybe $40?
Now is the time to build up US strategic stockpile reserves by buying from US producers. We’d be foolish not to do this since we need those stocks. We need them to protect our freedom and our defense. The price is a good buy and will save tax payers money. Buying now from our producers will help keep our producers producing and employed, keep our investors earning from those investments, and will force OPEC to continue its pumping at high levels. If OPEC wants to break US producers, they’ll have to continue their pumping for a longer time. And best of all the US consumer will win too.
I heard $40/barrel.
Our perspective is so short term that we keep thinking that despots and regulators hold sway. Despite their best efforts, the free market works and a true price will win out, but not without cries of disparity, demagoguery, wringing of hands and down right cheating.
The market always over-swings in both directions during a correction. It’s wonderful to catch it before it swings back.
The simple fact that our entire economy is only 15 Trillion. I just do not see it being paid off. Even if we have 30 years.
Although innovation in technology may get us out of this hole. I'm referring primarily to the Quantum chip. I believe it will change our world just as electricity changed our world in the last 134 years. The good news is it will only take 5 year point, from the 1st Quantum chip 2024, or 14 years from now in 2029.
something big is going on
Who is to blame for the shaky economy we are in? Look no further than the government, and Dent contends, “What’s happened is the government has created a bubble with all this low short- term interest rates and all this stimulus, and their only defense is to keep this bubble going. . . . We got the greatest bubble in debt in modern history by far. We have the greatest asset bubble across the world in real estate, commodities, stocks; everything is in a bubble. When these bubbles burst, the whole system comes down. They are doing everything to prevent it, but everything they do to prevent it from blowing up is making it worse. This is a game they cannot win–mark my words, cannot win, and we are going to see a major crisis . . . especially over the next two years. These falling oil prices trigger these fracking firms. They have 20% of the junk bond high-yield debt in the United States, and that’s all it takes to trigger another financial crisis, just like the subprime crisis back in 2008. All it takes is a trigger and the whole debt thing comes down.”
http://usawatchdog.com/oil-price-plunge-trigger-for-next-global-crisis-harry-dent/
In the midst of 0’s agenda to destroy our country, he will still try to take credit for this boon to our economy. It’s going to be interesting to see HOW he tries to pull it off.
Is this the free market or is it a game of "chicken" by the big guys as they try to force out the competition? I know nothing, but couldn't this lead to turmoil in emerging nations that depend on that oil revenue?
Is this the free market or is it a game of “chicken” by the big guys as they try to force out the competition? I know nothing, but couldn’t this lead to turmoil in emerging nations that depend on that oil revenue?
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The answer is that these forces too have a part to play in any long term view of the market. It’s kind of like feeding the “wildlife”. Subsidizing keeps them from figuring out their own problems. We can screw up the balance, but we create unintended consequences when we do. The Robber Barons of the 19th century eventually screwed themselves out of power.
$50.40 ten minutes ago.
Intra-day, it's cracked $50 today... we'll see where it ends up.
I could be wrong, but I just don't see it going gown as far as it did in 2009. The whole world economy was on the brink of disaster then... demand sank to nothing. Demand really hasn't dropped this time around. Supply is driving this downturn.
Prices are ALREADY low enough to impact future supply... all that is needed is, Time. But, lower prices will drive up demand..... I think it already is. Somewhere, the two will come into balance. It's just a matter of where?
Near $48 today.... this acceleration looks like it might be the final bottom blowout. We might touch $40-42 sometime this week. If we do? I’m calling “bottom”.
I get a couple of investment news letters and they have been talking about $40 dollar oil for some weeks now. They have been saying to stay AWAY from oil stocks. At least for now.
Yea... I now think we actually do have to go below $40 before it bottoms. Someone posted a chart the other day showing the range of Actual CASH COST of production. At $50, only about 2% of supply was below break even on this basis.
You have to get down to ~ $38 to get 10-15% of the supply below cash cost. That's probably the point that would be enough to really change the supply-demand balance. And, of course... the market is likely to over-shoot a bit.
The other thing I read that was convincing to me was: This effort by the US/Saudis to drive the price down is really a concerted effort to apply severe pressure primarily on Iran... to stop their nuclear program. And, also on Putin, to reign in his expansionism.
IF (and, that's a big IF) that's true. The Saudis won't care if it has to go down to $10 again.
There's GOING to be a bounce back... and, I want to be on it when it happens. But, I guess we have some more downside still to go.
Same here.
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