Taking cheap oil through to a logical conclusion markets should actually love it. Once we find out who is holding the inevitable bad loans and on the wrong side of the trades there will be many big winners. There are not too many companies, countries, or individuals that won't gain some benefit from this in the long run. Short term it will drop inflation but even that should push the likes of Europe towards qe and slow interest rate rises in the US and UK. equities have to be the winners in both these cases. I suppose the markets don't like surprises and $60 oil and still falling is just not a scenario their computers allow for. It might just take them a little while to recalculate and adjust their settings.
Hi John, Good points but one thing, once those funds that have been all dumping oil see a bottom and start buying it back again it will begin to rise. The market has always caused oil to be 10-20 dollars more than it should simply because of the traders. At moment noone is touching oil but once they get comfortable again that premium will begin again I think. I didn't mean the airlines necessarily, as they usually either hedge their bets or buy at current prices from the airport operator similar to us filling at a petrel station, but there are companies that would have tanks full of the stuff that might be running it down.
Electric cars. Please!!! I could elaborate... Even with much higher oil prices they won't happen soon! Not with the current technology mix under the bonnet!!! what do u base prediction of $70-80 a barrel on. Even the experts haven't a clue. Are you a adviser for the taj mahal on strategic commodity imports for india. this forum has gone to pot with off topic pontification!
Roy. I read the bloomberg article you mentioned predicting oil back at 80 by end of 2015. However must of your points would suggest that it will go the opposite way.
When china have their fill of cheap oil and slow down buying what happens to demand then? As it is they practically own all the oil they want out of Venezuela. Russia is practically begging them to buy their oil and I suspect our Arab friends are cozying up to them as well.
Oil price deflation is a very real prospect. I heard the boss of one of the low cost airline companies in the US saying they now have a department dedicated to hedging oil. They fear been the company left holding the can (literally) with the more expensive oil than their competitors. Hence, they are holding back in the hope they buy cheaper in a few months time.
Bankruptcies shoud be a given, especially in the more expensive shale producers. However, in a similar way to the property crash in ireland, their will be vultures ready to swoop in and buy their assets up for a song. These new owners will then be producing oil out of low cost infrastructure. $50 might be the new break even rather than the present $80. Add to that the prospect of the US exporting oil. It would make sence for them to do that and repay some of their massive borrowings. The original intention and traditional way of inflating their debt away seems unlikely so been a nett exporter of oil could be a good plan B. Screwing the Russian' s as a side effect at the same time would be a nice bonus.
As I see it the only way oil can get back to $100 is if this IS a political roose of some kind and that's definitely not impossible. Oil is as much a weapon as an energy source and we all know from recent middle east history how far people will go to abuse it.
This whole oil thing is funny in my opinion. I think the pendulum is swinging but has swung too far and will come back towards 70-80 before end of Q1 2015. Reason 1: I read on bloomberg that record number of massive crude containers are currently taking oil to China, that the rates have sharply risen and China are busy building storage areas so that they can build their emergency stockpiles, we could be talking couple hundred million barrels so say 1million a day for foreseeable future, then India might start doing the same, and other countries who missed the boat last time around. Reason 2: Coming towards end of quarter and you are a hedgefund that had say 100 million worth of contracts. Do you sell at a significant loss now before end of year and have the losses in the books for this year when every fund will be losing money and giving same excuse, OR, do you try and see if you can make an extra tenner a barrel in January/Feb, but you will then be making those loses next year and you'll be by yourself as the rest of the funds will have already got rid of their dirty linen. You might make a few extra bob for your investors but you might not get any thanks so best follow the crowd. Reason 3: Many companies that may have had stores of expensive oil may be trying to run that down so again, they can start the next year fresh so maybe not that much orders at the moment. Classic deflation scenario, if prices are going to go down, hold out as long as possible. For this reason, demand has probably collapsed. Reason 4: Those bankrupcies will start coming, but as we found with the banks, the whispers are much worse. Many people/organizations holding onto worthless debt, if you are a healthy oil company, do you merge with a company in trouble or do you wait until it is near collapse and pick up everything for practically nothing. Reason 5: With lower oil, some opec countries including russia will start to see unrest with declining currencies, higher inflation etc. This can lead to sabotage.
I hope it does because as an electric car fan i don't want people forgetting about electric cars just because oil is now back down. In 2017 I hope to get an e car. No point getting one beforehand as most of them are still made of steel. Game is up Opec, you could prolong it a little by reducing the prices but the future is electric in my opinion.
B. O ,I is no dif then it was this morning that we can be sure about,but we now have live with gamblers and traders daily bases.The say MM have no baring on price it's like saying weather has no baring on farmers.Advice would be get mindset right forget paper losses and I have proved over the years to myself granted you will make money G LA
I am hoping that the US markets close on a positive note today. If not then it could set the tone for the week. There is allot of financial news coming later in the week and I for one am hopeful of some positive news......I mean what the heck happened to the Santa run-up. A few days ago I was counting my money, now I'm counting the number of times I have been frustrated by this share. I know, I know......long haul investment. I still think it will bounce back. Fingers crossed for Wednesdays figures...
yes but reports are now coming out the john kerry met with saudi leaders over the summer and asked them to ramp up production so as to drag down prices and inevitably hurt russian and iranian interests
oil has always been linked to politics
the recent market sell off is more concerning than the one in october as that was about the hysterical reaction to the ebola virus , hence why airline stocks tanked , it only took two weeks for markets to rebound to where they were back then , cant see it happening so quickly this time round
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