Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Oil price slump to trigger new US debt default crisis as Opec waits
Telegraph (UK) ^ | 14 November 2014 | Andrew Critchlow

Posted on 11/15/2014 7:51:26 PM PST by Lorianne

Remember the global financial crisis, triggered six years ago when billions of dollars of dodgy loans - doled out by banks to subprime borrowers and then resold numerous times on international debt markets - began to unravel and default?

Stock markets plunged, banks collapsed and the entire global financial system teetered on the brink of catastrophe. Well a similarly chilling economic scenario could be set off by the current collapse in oil prices.

Based on recent stress tests of subprime borrowers in the energy sector in the US produced by Deutsche Bank, should the price of US crude fall by a further 20pc to $60 per barrel, it could result in up to a 30pc default rate among B and CCC rated high-yield US borrowers in the industry. West Texas Intermediate crude is currently trading at multi-year lows of around $75 per barrel, down from $107 per barrel in June.

“A shock of that magnitude could be sufficient to trigger a broader high-yield market default cycle, if materialised,” warn Deutsche strategists Oleg Melentyev and Daniel Sorid in their report.

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Government; US: Louisiana; United Kingdom
KEYWORDS: andrewcritchlow; energy; keystonexl; louisiana; oilprice; opec; override; unitedkingdom; veto
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-80 ... 101-103 next last
To: al baby

For distressed retailers like Walmart, its looks to be a good holiday season.

Just in the nick of time.


21 posted on 11/15/2014 8:17:28 PM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
[ Post Reply | Private Reply | To 18 | View Replies]

To: al baby

They’ll make it up on hedges (derivative trading) as long as the major banks don’t go bankrupt trying to cover their positions.


22 posted on 11/15/2014 8:17:56 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 18 | View Replies]

To: goldstategop

Deflation is a disaster.


23 posted on 11/15/2014 8:20:37 PM PST by cornfedcowboy
[ Post Reply | Private Reply | To 2 | View Replies]

To: al baby

Milo Minderbinder, is that you?


24 posted on 11/15/2014 8:21:58 PM PST by Sparklite
[ Post Reply | Private Reply | To 18 | View Replies]

To: cornfedcowboy

I tend to agree with that. If every small business owner were to lose 40% of their income next year this country would be in a world of hurt.


25 posted on 11/15/2014 8:22:23 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 23 | View Replies]

To: goldstategop

Sigh. Yes, I understand that. I’m enjoying the lower prices as well.

This article is about something else than that.


26 posted on 11/15/2014 8:23:48 PM PST by Lorianne (fed pork, bailouts, gone taxmoney)
[ Post Reply | Private Reply | To 17 | View Replies]

To: Lorianne

Certainly smaller and less diversified companies can go out of businesses. But others can start up again when the price rises again. In the meantime, the non oil producing part of the economy is benefiting.


27 posted on 11/15/2014 8:23:54 PM PST by Vince Ferrer
[ Post Reply | Private Reply | To 1 | View Replies]

To: goldstategop

That $75 for a barrel of oil is supposed to be “cheap.”

We are well conditioned.


28 posted on 11/15/2014 8:24:26 PM PST by Tea Party Terrorist (Why work for a living when you can vote for a living?)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Vince Ferrer

How many people do you suppose energy companies and the service companies that support energy companies employ? Its crazy to want the energy sector to under perform.


29 posted on 11/15/2014 8:26:25 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 27 | View Replies]

To: goldstategop

It doesn’t work that way with oil.

If it cost more to produce a barrel than you get out of it you simply stop producing until the price goes up.

It’s in the ground so it’s not going anywhere.

You can pay a shut in fee to the mineral owners to keep the lease or just put the well on a timer and hold the lease through production.

A single barrel a month is considered production.

Producers will attempt to create a shortage to drive the price up but until they do millions of people are out of work and mineral owners don’t get royalty checks.


30 posted on 11/15/2014 8:28:19 PM PST by IMR 4350
[ Post Reply | Private Reply | To 9 | View Replies]

To: Lorianne; All

you cannot compare gas / oil to houses. You don’t “need” to own a house, you can always rent, but if you own a car or truck to get to or do your job you need gas /oil

When The Pretender took office gas was $1.87, and had nothing to do with the gigantic problems HE caused.

We don’t need anymore fossil fuel hating trolls on FR.


31 posted on 11/15/2014 8:30:00 PM PST by Shadowstrike (Be polite, Be professional, but have a plan to kill everyone you meet.)
[ Post Reply | Private Reply | To 14 | View Replies]

To: Vince Ferrer
Certainly smaller and less diversified companies can go out of businesses. But others can start up again when the price rises again.

The most uninformed statement I've read on FR in a long time.

32 posted on 11/15/2014 8:30:25 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 27 | View Replies]

To: kjam22
How many people do you suppose energy companies and the service companies that support energy companies employ? Its crazy to want the energy sector to under perform.

So then if the energy companies "under perform", then oil becomes scare and then oil prices rise again and then oil companies do well again.

What's the problem here?

33 posted on 11/15/2014 8:31:18 PM PST by FreeReign
[ Post Reply | Private Reply | To 29 | View Replies]

To: kjam22

So if the price of oil rises, no one will invest in oil?


34 posted on 11/15/2014 8:32:52 PM PST by Vince Ferrer
[ Post Reply | Private Reply | To 32 | View Replies]

To: FreeReign

That cycle takes at least a year and a half. More likely 2 and a half. While its under performing all sorts of stuff under performs. Including a lot of your mutual funds. People get laid off across a large spectrum of our work force. People lose houses, the don’t buy cars. It slows large parts of the economy during the down time. Its a bigger deal than your $100 a month savings in your fuel cost.


35 posted on 11/15/2014 8:34:22 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 33 | View Replies]

To: FreeReign

That cycle takes at least a year and a half. More likely 2 and a half. While its under performing all sorts of stuff under performs. Including a lot of your mutual funds. People get laid off across a large spectrum of our work force. People lose houses, the don’t buy cars. It slows large parts of the economy during the down time. Its a bigger deal than your $100 a month savings in your fuel cost.


36 posted on 11/15/2014 8:34:23 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 33 | View Replies]

To: goldstategop

I agree. 60 dollars per barrell seems like a good thing for us “great unwashed”


37 posted on 11/15/2014 8:35:10 PM PST by stevecmd
[ Post Reply | Private Reply | To 2 | View Replies]

To: Vince Ferrer

You have no idea what it takes to start and grow an oil company. To get the funding to buy leases etc. To get the funding to get rigs. You’re just being naive to suggest that smaller oil companies can go out of business and then others will just replace them once the price comes back. A small producer may take years to get to the point they are before your bankrupt scenario. It ain’t like owning a fence building company or something.


38 posted on 11/15/2014 8:36:26 PM PST by kjam22 (my music video "If My People" at https://www.youtube.com/watch?v=74b20RjILy4)
[ Post Reply | Private Reply | To 34 | View Replies]

To: Shadowstrike

What I’m comparing is individuals benefitting (temporarily) by either asset values rising or prices falling vs. the bigger picture ... whether we are going to have another large shock to the economy from overextended larger players


39 posted on 11/15/2014 8:44:38 PM PST by Lorianne (fed pork, bailouts, gone taxmoney)
[ Post Reply | Private Reply | To 31 | View Replies]

To: kjam22
That cycle takes at least a year and a half. More likely 2 and a half.

?

Oil prices are going down because there is a glut of production. Oil prices will continue to go down as the market dictates.

Saying that there will be at some point a lack of production because there is too much production doesn't of course make sense.

What you will get instead is some market rate price point.

40 posted on 11/15/2014 8:46:09 PM PST by FreeReign
[ Post Reply | Private Reply | To 36 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-80 ... 101-103 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson