Crude Oil

[BlackPeter]

Latest new on OIL....
http://www.bbc.com/news/business-35245133

Actually - not quite consistent with the "official" data. This is what the IEA said in December 2015 about the world oil storage capacity:

Shrinking non-OPEC supply and on-trend demand growth should lead to a marked slowdown in the pace of global stock builds next year (i.e. 2016). However, as extra Iranian oil hits the market, inventories are expected to swell by 300 million barrels. Concerns about reaching storage capacity limits appear to be overblown. Oil tank tops should not come under pressure any time soon, due to spare storage capacity in the US and expectations of future storage capacity additions. Much of the excess oil will be soaked up by 230 mb of new storage capacity additions, while US inventories are only 70% full.

while the BBC report claims:

"Storage is pretty much full and people are already talking about buying tankers as floating storage," he says. "But if supply continues to outstrip demand, then the only thing that you can do with the oil is sell it, which inevitably pushes the price down."

Not sure about you, but I think my money would be still on the IEA report.

[JBmurc]

Well I like your optimism ...but for me I just can't put the rose-tinted glasses on with all the factors coming together ...add in history and you can see a picture forming that's far from rosey ....not that I think the current slide will be the big one aka.. GFC2 but certainly the next move downward is likely to be.after the optimism is meet with true reality .(IMHO 8-12m out)

IMHO I think there is going to have to be some HUGE Debt write-offs ..

For me that is a move to cash ,,,low risk investments,Bullion,Cash ,Term dep ANZ,WP,ASB etc and some funds in the likes of AUD Gold producers and high yield property ... and get set for a major downturn to then buy up blue-chips / Property for a record low price...

[JBmurc]

Actually - not quite consistent with the "official" data. This is what the IEA said in December 2015 about the world oil storage capacity:



while the BBC report claims:



Not sure about you, but I think my money would be still on the IEA report.

As of only minutes ago CNBC stated US oil storage as FULL.................

[Daytr]

Crude smashed again. When is the first major bankruptcy?
As I write Chesapeake is on trading halt. Is it the first?
What will be the impacts to the wider market? Bank exposure etc?
Then there are the emerging economies that are under immense financial stress.

[Hoop]

Yes JB & Daytr... I think if the demise of oil prices stay in the $20's for a long period of time it could be big enough to cause another Financial crisis...

The Argument is that Oil reserves are assets and valued into the business structure....the housing market bust crisis in 2007-2008 wiped out over $7 trillion from the US Property Market and created the GFC .......Ok, the debt structure was dodgy which was the major factor (I highly recommend all investors should see the Film The Big Short)..but $7 trillion is a huge number.
The 2008 Financial Crisis cost the Americans $12,8 trillion*
* Mentally grasping large numbers...The height of a stack of 1,000,000,000,000 (one trillion) one dollar bills measures 67,866 miles. This would reach more than one fourth the way from the earth to the moon.

I get email from John Mauldin and his recent newsletter made me realise why equity markets are so upset with super low Oil prices...
John's article starts off with someones screengrab from Twitter



Hmmmm...From doing the simple math...prolonged low oil prices doesn't sound like good scenario for the Global economy does it?

[troyvdh]

Is it to simplistic to say that Opec's intention (by not reducing supply) is to F... the American frackers..and Russia...both I believe require a price north of $80 PB.

In addition is it correct to say that its relatively simple to cease production of oil.....but not so easy to crank it up again.

I like simplicity.cheers troy

[Daytr]

The estimate is around a trillion of debt relating to the energy sector. Not sure if that includes bonds, but it probably does.
Then there are the impacts to ancillary businesses and entire countries like Venezuela etc.
Sovereign wealth funds of oil producing countries are selling other assets such as equities, Russia selling more copper.
You get the drift.

Yes JB & Daytr... I think if the demise of oil prices stay in the $20's for a long period of time it could be big enough to cause another Financial crisis...

The Argument is that Oil reserves are assets and valued into the business structure....the housing market bust crisis in 2007-2008 wiped out over $7 trillion from the US Property Market and created the GFC .......Ok, the debt structure was dodgy which was the major factor (I highly recommend all investors should see the Film The Big Short)..but $7 trillion is a huge number.
The 2008 Financial Crisis cost the Americans $12,8 trillion*
* Mentally grasping large numbers...The height of a stack of 1,000,000,000,000 (one trillion) one dollar bills measures 67,866 miles. This would reach more than one fourth the way from the earth to the moon.

I get email from John Mauldin and his recent newsletter made me realise why equity markets are so upset with super low Oil prices...
John's article starts off with someones screengrab from Twitter



Hmmmm...From doing the simple math...prolonged low oil prices doesn't sound like good scenario for the Global economy does it?

[Joshuatree]

Crude smashed again. When is the first major bankruptcy?
As I write Chesapeake is on trading halt. Is it the first?
What will be the impacts to the wider market? Bank exposure etc?
Then there are the emerging economies that are under immense financial stress.

exposure to Oil

Haven't looked but am hearing Chesapeake is in trouble and Deutsche bank too.No source to back this up. Like OOO on the ASX as a way of exposure to Oil without a producers risk but not yet.

[stoploss]

exposure to Oil

Haven't looked but am hearing Chesapeake is in trouble and Deutsche bank too.No source to back this up. Like OOO on the ASX as a way of exposure to Oil without a producers risk but not yet.

http://www.bloomberg.com/news/videos...sue-bankruptcy

[Valuegrowth]

http://www.bloomberg.com/news/articl...tment-contract

Iran, OPEC’s Big Winner, Will Sign Landmark Oil Contract