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Goldman Pours More Crude On The Fire: "Oil Prices Can Go Lower For Longer"
What a difference 5 months makes.
It seems like it was yesterday when Goldman's commodity strategist, Jeffrey Curie, wrote in a July 28, 2014 note that:
The long-awaited global recovery appears to be getting on track, lifting commodity demand
Apparently unaware that just 5 months later precisely the opposite narrative would be used by everyone, Goldman included, namely that plunging commodity prices (and demand) is a boost to the economy, Currie added the following:
One of our key macro views for 2014 has been a gradual return to the ‘Recovery’ phase of the business cycle – where accelerating growth would drive a gradual (but persistent) closing of the large negative output gap which opened following the 2008/09 crisis. Disappointing 1Q14 growth raised question marks over this view and appeared reminiscent of the previous “stop-start” recovery patterns of 2010-13. On aggregate, DM growth fell to +0.4% annualized (from +1.9% in 4Q13) and EM growth fell to +2.5% annualized (from +4.7% in 4Q13).
Our economists continue to see global growth accelerating to above trend later this year and into 2015. Accordingly, we expect a narrowing of the still sizeable global output gap, with DM economies leading the recovery.
As we have argued for some time, commodity prices and volatility are sensitive to the business cycle2. As a pro-cyclical asset, returns tend to be weakest in the Slowdown and Contraction phases of the business cycle as consumers spend less and previously planned capex projects are either delayed or abandoned altogether. In contrast, the Recovery phases of the business cycle tends to see improving consumption and investment demand, which eventually peaks at the end of the Expansion phase. This stronger demand for goods (particularly investment goods) boosts commodity demand.
Uhm... OOOPS. Guess we aren't in the Recovery phase of the business cycle after all.
Which means we are either in the expansion phase (which means the peak is nigh), or more likely, already in slowdown.
And, lo and behold, after predicting that "Brent will stay at $100 for the coming few years" just in mid-October, here is Goldman again, thoroughly destroying its "Recovery" narrative and saying it expects even more downside (!) for oil from here on out.
Here is what Jeffrey "The long-awaited global recovery appears to be getting on track" Curie sent out to Goldman's muppets overnight:
The New Oil Order: Finding a new equilibrium
1.The decline in oil prices continues unabated. We believe the oil market is experiencing a cost re-basement which makes determining when the market is oversold extremely difficult, as the price at which rebalancing occurs is now a moving target to the downside. For the market to be oversold, it requires prices to be far below costs, which are in flux as much as the oil price given the sharp declines in other commodities, currencies, rig rates and oil services costs. On top of downward cost pressures, efficiency is being forced on the industry with evidence of ‘high grading’ where rigs in non-core areas are being re-directed towards core, lower-cost resource plays. All this suggests that costs are falling nearly as fast as the price, which means oil producers can spend less to get the same or potentially even more in terms of production.
2.Although we are not willing to take a strong directional view at current price levels, there is some evidence of rebalancing beginning to happen, and it is trending faster than our forecast which was based upon $70/bbl. But the rebalancing is far from sufficient which creates more downside risks. While the overall rig count in the US dropped by 29 last week, this was almost entirely in vertical rigs, not the horizontal rigs used in shale production. Since early November, 12 US producers representing an estimated 8% of 3Q 2014 US oil production have issued 2015 capex/production growth guidance. Weighted average capex budgets are down 12% yoy. However, each is still forecasting production growth on average in 2015 vs. 2014, except one which is guiding to flat yoy production. So while reductions in capex are coming faster than expected, it is unlikely to translate into less supply than expected, highlighting both the rapid cost reductions with rig rates already down by 15-20% and efficiency gains through high grading.
3.Slowing the rebalancing and creating further downside risk is a very strong consensus view that this pull back is temporary and that oil prices will quickly rebound as they did in 2009. According to a recent Bloomberg survey, the median WTI forecast for 2016 is $86/bbl (even we forecast it going back to $80/bbl). All of these forecasts are based upon now outdated cost data that is shifting as fast as the price. It is precisely this strong view for a rebound in prices and the behavior it creates, that not only suggests that oil prices can go lower for longer, but also that the new normal is far lower than we thought just one month ago. Instead of optimizing against a lower price environment, many oil producers are trying to position themselves for the rebound in prices. There are many options available to an oil producer than just simply cutting production in response to lower oil prices – lower costs and increase volumes, sell more equity, tap a revolver or preserve liquidity to survive until another player with deeper pockets buys them even if the cost is more leverage.
4.As we argued several months ago, this sell-off has been driven by long-dated prices (a proxy for the normal price) as opposed to a weakening in the forward curve timespreads as in past bear markets. The current shape of the forward curve does not incentivize the storage of oil. Although the spot price is only at $58/bbl, the 5-year forward oil price is already lower today at $69/bbl than it was in December 2008 ($70.50/bbl) when spot WTI prices fell to $33/bbl. The reason that the forward curve was in such a deep “contango” in 2008 was that OECD inventories had swelled by 60 million barrels on a seasonally adjusted basis in October and November of that year. This October and November, the seasonally adjusted build was only 18 million barrels – far from being a significant surplus that challenges storage capacity and requires a deep contango. It is instead the expectation for forward balances to be in severe surpluses that is driving the longer-dated price decline and will ultimately help rebalance the market. We have used the phrase “long-term surpluses create near-term shortages” to characterize this trading pattern i.e. sell the forward prices on concerns of long-term surpluses that can make the reality of surpluses self-negating.
5.While this is the first time we have seen a backend driven bear market, the bull market of the 2000s was also backend driven but with weak timespreads, i.e. “long-term shortages create near-term surpluses” – the near opposite of what we are seeing today. As low-cost oil supplies were exhausted in the early 2000s the market turned to higher cost resources and input costs escalated quickly as demand increased. The higher oil prices resulting from higher costs slowed US growth, weakened the US dollar which in turn strengthened the commodity producer currencies which further drove up the cost of producing other commodities that were inputs into oil. It was a reinforcing dynamic to the upside that created cost inflation that drove up the long-dated (normal) oil price. Now it is all working in reverse as the market searches for a new equilibrium – lower oil prices, weaker commodity currencies, lower material and oil service costs and increased efficiency are all reinforcing to the downside.
6.The natural gas experience of 2011-13 is the rule, not the exception. Despite the collapse in natural gas prices several years ago, US natural gas production has continued to grow above expectations. It is often cited as an exception as the higher oil prices subsidized the associated gas output and new low-cost fields such as the Marcellus and Utica were available. In other words, the industry just shifted its activity to the lower part of the cost curve and continued to grow output. The reasons we see this as the rule, and not the exception is that we have seen this in iron ore, coal and gold as well. So there is a likelihood we could see this in oil as producers shift all their efforts to the lower part of the cost curve.
7.With no obvious new low-cost US shale oil field, beyond the high grading to each play’s sweet spot, we believe that the oil market’s Marcellus is most likely to come from abroad. Kurdistan and Southern Iraq will likely continue to grow production, with Iran potentially contributing medium term as well. Further, in a market anchored at shale’s marginal cost of production, it is in OPEC’s interest to maximize revenue through volumes, pointing to potential increases in production over time in core OPEC too. Russia could be the oil market’s Marcellus field as well. It is important to stress that the Russian ruble has weakened almost as much as the oil price has declined, leaving oil prices in Russian ruble near an all-time high. This is important as all costs are Ruble denominated while revenues are USD denominated, leaving Russian oil companies’ margins insulated despite the dollar decline in price. In addition, the Russian government is easing the export taxes which further improve the profitability of Russian oil.
8.While core-OPEC such as Saudi Arabia have substantial dollar reserves to weather low oil prices for a very long time, distressed-OPEC like Venezuela are in a very difficult position. In fact, these producers are some of the top candidates to aide in the rebalancing of the market in 2015. In addition, Libya has experienced setbacks with increased fighting over the weekend leading to another output loss to below 500 thousand barrels per day. While this may help keep the market from experiencing near-term surpluses, the temporary nature of it doesn’t help solve the longer-term imbalances.
9.While historically a 40% pull back in prices would stimulate demand by 50bp, the responsiveness of demand and global growth is likely far less than what it was historically. In the US, net imports are around 25% of demand, levels only seen during the depths of the early 1980s recession. In China and other emerging markets, governments are taking advantage of the decline in oil prices to reduce subsidies and/or introduce consumption taxes as nearly all developed markets have. Further, the sharp decline in nearly all commodity prices and the weakening in commodity currencies creates headwinds for oil demand in the commodity producing emerging markets in Latin America and the Middle East. Historically these regions didn’t contribute much to oil demand, today they do.
10.It is important to emphasize that this is a supply driven bear market and not demand driven. We have to go back to the mid-1980s to find another supply driven bear market. Because the surplus is supply driven it is easily observable in the future unlike demand shocks that are instantaneous, so the market is trying to rebalance the future, not so much the present. In the 2000s we forecasted severe supply driven shortages that never came, because long dated prices dragged the market high enough to slow demand and bring on marginal supplies –hence long-term shortages created near-term surpluses. Once again the market is trying to rebalance the future, by re-basing industry costs to take out the excess marginal production. As the industry takes the ‘fat’ out of the system that was built up over the past decade, the new equilibrium price is dropping sharply – where it settles is unknown right now, but we can comfortably say it is likely below our estimates from last month. Once we have cost data early next year from this time period we will have a better idea, but in the meantime volatility will likely remain high with risks skewed to the downside as the market searches for a new equilibrium.
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Looks like Goldman may be long oil suddenly.
Stolperizing their Muppet clients.
DIdn't these 'Muppets' call for $200 something a barrel not too long ago?
$55 oil coming into view here:
http://www.investing.com/commodities/crude-oil-advanced-chart
Jesus people!
The Saudis cut the price of oil to $60. Before that the question was how much political instability will there be in the ME to disrupt deliveries.
Now it's 3,000 Miles to Graceland explanations and analyses.
Once the marginal Bukkakeian producers are out of business, then the Saudis et al will raise the price right back to $100.
Near term, all else is insignificant
Longer term (just not long enough that we're all dead... Paul Krugman, maybe, but not us) it's still all about those gas pipelines between the EU and Russia or the Gulf.
Capiche?
"it's still all about those gas pipelines between the EU and Russia or the Gulf. '
and the US Dollar Fiat currency reserve...think Iraq, Libya now Russia
Unfortunately, Russia will bite back hard.....eg bomb Qatar to kingdom come, send nuclear arms to Iran, close the straight of hormuz...heck, blow up Washington, California or NY...we should be so lucky.
SACKS May Be Buying Crude With Both Sticky Claws Right Now???
All Lloyd Blankfeinrubysilvergoldwaxfeltcopperdiamondpearlstein wants for Christmas is blessings from the Baby Jesus.
IMHO this is a big part of the US/UK led attack/smear/demonize Russia campaighn
Saudia Arabia is Key and I belive is getting at least $20-$50 additional per barrel Under The Table. There's one thing we're great at = Printing Unlimited $USD
Actually their production costs are extremely low, I believe less than $25 a barrel.
They are making money, just not the amount they have gotten used to. They won't starve.
That's possible, but in the end the winner is China (and, indirectly, Russia). I would bet that's another helpful step towards China (witting or unwitting) along the same lines as cheap gold.
mostly you need a good back-story.
so many of them are available.
- massive unreported oil being harvested from beneath seagull island off the coast of hawaii.
- massive [see above] alaska
- massive shale oil being [see above] texas, dakotas, bermuda
- massive gas reserves around caspian sea
- strategic petroleum reserves being deployed
- drop in demand means excess supply
- saudis are engaged in tactical price cutting
- all those tankers circling around ports are "standing ready" to increase delivery
- massive inflows to speculative low-bidding
- data farms are moving away from oil-powered energy in favor of wind and solar and geothermal
- molten-salt thorium reactors are coming back in play
- abiogenic deep oil has been found in russia
- the magic unicorn in ethiopia has waked from its thousand year slumber and is now pissing out an unending stream of petroleum
Interesting points, I just wanna see how many marginal players like Venezuela and Libya go down. It's damned hard to predict crazy people.
Don't think they'll get much demand for 100$ frankly. All commodities are tanking, contraction coming. Not a good time to expect 100$ to sell fast.
https://www.youtube.com/watch?v=Vhbwpb-pYPQ
Still good after all these years...
Knuckles - You believe the reports Bakken will be dry in five years?
The boom/bust cycle of central banking, first by inflation then by deflation people lose there chit.
No reason to assign pet theories to declining commodities or believe propoganda media.
Hey SAT800, told ya this summer oil would plunge this fall since you want everyone to time stamp forecasts lol
yikes.
GS's (ruler-execs) always make money for their Irish clan - no matter the financial situation.
Elite Castles In Feudal Manhattan http://wp.me/p2kmGE-1Mn
Didn't Citi just say the opposite?
Well, wait until the up to 70% cut (if you are under 85) in pensions takes place ( as soon as Obama signs the 'Ominous' bill, yes folks another Christmas present to America) then see how many RVs get parked in Florida and Ohio permenantly because the retires can't even afford $1.00 gas. Not to mention the 92 million out of work and no where to go. Invest in balogona, because that is what everyone will be eating soon.
Meme - I belive the cuts in pensions and health care subsidies will be 40%.
That is the reason I suspect a false flag like an EMP will be used, as an excuse for America 2.0 and I believe this will happen before 2020. I hedge for three months of turmoil and plan on having the same luxuries as I do now. I think we'll see rationed power and wheat and yellow cheese rations during that time.
The debt will be restructured so bondholders will get a haircut but probably not the couple trillion owed to other sovereigns. After this will be a very good place to invest in.
Some valid points, but just a guess as usual. Geopolitical hanky panky is in play.
Just hope the district of critters doesn't say dollar or moar gas tax.
Guess $56 is bottom. Thanks Goldman.
you mean Muppet politicians lol
Politicians aren't muppets, they're minions.....
you said it better
how many central bankers are from Goldman, its sad they trick greedy investors, but its even worse seeing them giving democratically elected western governments advice on how to run the economy
Yep. And just when so many are going short, what's Goldman's trading record again?
/s
MOAR Consolidation
didnt these idiots at Goldman predict $200 oil a few years ago?
Seth - Yes they did and it was the spring of 2009. By fall it dropped to $90.
Muppeted again. . .
MOAR punishment against Russia for not wanting to suck dollar cock..
QE ended October 29, 2014....is it any surprise oil has been cratering since? And especially now that Neptune's in Pisces (oil! oil! oil!) until 2026. You wait, they'll find oil inside Disney World.
Predictions based on wind direction...perfect!
http://olduvai.ca
Predictions are the same as opinions. Just like buttholes, everyone has one and they all stink, except Big Butt Kim Kardasian. Play that rim shot again Kanye.
Rumor has it they're getting divorced
Rumor has it that her dad, Bruce Jenner is getting a sex change operation.
Will Kayne will pick him/her/it up, next.
See.
If they were not the center of attention then something else would be.
"Which means we are either in the expansion phase (which means the peak is nigh), or more likely, already in slowdown."
We never came out of the larger depression. It never got better in reality, it just got hosed down with the Fed's liquidity firehose for a while.
does the squid have some kind of "product" that i can buy for this?
muppet christmas carol on dvd and blu-ray.
Which muppets is Goldman getting into this position: http://michaelgarcia1980.files.wordpress.com/2010/03/kermit-gapes.jpg
They are applying the lipstick as we speak.
You get a free pair of chrome plated nipple clamps and a Hello Kitty vibrator to distract you from the real issues. Plus lunch at 21.
That shade of pink makes me look anemic. Perhaps more of a deep red with a slight purple gloss tint?
Yeah, I'm sure they do. It kind or looks like a dildo but with screws stuck in the end of it....
You might not like it..... just sayin'.....
Conclusive proof that Goldman just spin whatever narrative they think will produce the best returns on their multiple malfeasances. No doubt their new strategy is to ride the oil down to the basement and then pick the bones of whoever dies in the process.
I wonder how much of the Bakken formation they'll control when this is over. There's evil coming our way so you know Goldman has their hand in it.
if you also look at the sectors that have outperformed, 1yr, 6mos, 3mos: utilities, healthcare, staples.....we are in recession Now. Overlords to confirm this sometime this summer, when the muppets will be instructed to 'be careful'.
you may well be right
i'm still sticking to my call US recession start no later than Q1 2015
as you note, whenever one starts it won't be recognized till well after (especially with most numbers being revised(multiple times for some)
Rebalancing fucking bullshit.
Fuck you GS! End the FED!
$40 downside $100 upside?
"Its not demand driven. its not demand driven. its not demand driven ...."
If you repeat that enough times maybe you'll start to really believe.
Pay no attention to the fact that US gasoline consumption has decreased 75% in the past 5 years.
http://www.bullionbullscanada.com/us-commentary/26530-us-gasoline-consum...
Ignore the fact taht WTI is perfectly correlated to GDP epectatations.
+
This is 2008/9 all over again - except this time the bailouts will require much more expensive political capital.
bullshit madcow
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS1&f=M
Indeed. Oil and other commodities, treasury yields and asian equities indices are telling a different story you'll hear from MSNBC.
Madcow - Thats a good link. Within the same source is an article about the One Bank (BIS) http://www.bullionbullscanada.com/intl-commentary/26287-the-one-bank.
Demand has dropped since 2008. But the price rose that was all the investment banks lined up at the discount window and dumping it into commodities to milk the muppets up the butt (as usual)
As Senator Dick Durbin said in 2009 "The banks own the place".
with the Volkswagon XL1 (300mpg) coming to theater near you, they should really be taking in all they can now. they should be fearing for their future..
http://www.caranddriver.com/reviews/2014-volkswagen-xl1-first-drive-review
Pretty cool. The non-hybrid TDIs have already been kicking MPG ass for a long time with many cars making over 60+ mpg. But only available in Europe, USA will not allow! VW XL1 not even expected to be allowed. Need for fuel taxes >> need to save planet from the 'global warming' hoax.
we cracked 58 support
http://bullandbearmash.com/chart/wti-oil-weekly-tanks-forecast-58-suppor...
weekly support now shows 47
Goldman placed their bets already.
Hopefully along with their short oil / short ruble bankrupt Russia trade they went long radio-isotope dosimeters.
I'll wait to fill up my go-cart.
only if you are not using petro-dollars, there is a rumor its going to be called treasury-dollars in the near future. because it still sounds American to the financially illiterate
What does Goldman care about being 'right'? Just go along placing crazy bets, if they run out right then they keep their winnings, if they lose they get bailed out anyway.
The Squid never follows the same path that it advises for others so what is there to make of this than if someone could invent a car that runs on bullshit, Goldman could reclassify itself yet again as an energy company.
last time oil fell so fast, it was coincident with the meltdown....
K Henry, K Henry,
where for art thou?
55 handle on WTI just moments ago.
Muppetology
$40 oil?
Carnage
Oil Resumes Drop as Iran Sees $40 If There’s OPEC Discord
10 December 2014, by Grant Smith and Rupert Rowling (Bloomberg)
http://www.bloomberg.com/news/print/2014-12-10/wti-crude-declines-as-iran-sees-further-slump-on-opec-division.html
40 peices of fiat toilet paper
I wonder if Russia tried its new payment system today?
http://www.zerohedge.com/news/2014-12-09/isolated-russia-begins-testing-...
Why are we even discussing these people? It's a waste of time and intelect.
The global economy doesn't work above $50 a barrel. Ever since oil traded above that mark everything has been total fabricated bullshit.
Before that the market was still bullshit but you could point to a little sliver of reality.
You think auto sales would even be close to where they are if you took away the large truck tax subsidies and subprime loans?
For ten years oil traded on the basis of what speculators were willing to pay for the contracts because they got a new tool to play with. Consequently destroying the global economy in the process. Everything was knocked out of whack and perhaps now it is finally being brought back to something within reason.
Nat gas above $4 is insane considering the massive increase in supply and the amount being flared off, yet thanks to Wall Street speculation that is what people are being forced to pay.
It doesn't take a genious to figure out you don't have commerce if people can't afford to buy anything. If you're paying $1000 a month for health insurance, $200 a month for heat, $200 for gasoline, $100 for electricity, $1600 a month for mortgage and property taxes, let alone payroll taxes, you just ran up a tab larger than the take home pay of 75% of Americans. That's before food, entertainment, and other essentials. Extending easy credit to pull forward demand has never worked in the long run. Something has got to give. Either everything gets a lot cheaper or people start making a lot more money.
Sounds like Goldman trying to pull a Lehman on other institutions that have bets on oil prices, jawboning the price down further to wipe out its competition.
Wall Streets will bail out those shale producers and become major shareholders, we are more close to $200 oil than before.
"Hello, Scrotum Sacs Shale Oil. How may I direct your call?"
Now we know who has been shorting oil these last few months. Goldman NEVER releases anything that will help muppets make money. It's always "buy even higher so we can sell the positions we bought 4 months ago". Such a release is this one - where the smart move is to do what Goldman is doing (covering oil shorts and going long) - rather than what Goldman is saying (oil will never go up again).
Forecasts.....
It will either be $150 or $50 in 3 years.
What happened at noon to trigger the recovery?
... “Lawmakers slipped it into a larger bill because the public would not support legislation on its own to favor big banks that brought the financial crisis.”
Kicking silver in nuts as well.
CME precious metal trading stops going to get a workout very soon on the downside. Come to papa.
CRIMEX announces new Rule. Trading to halt after 4$ rise in PMs, 400$ halt on the downside!
Silver's on sale
I got a Kilo today!
I wish I had waited
To order 1 day.
Sauteed Muppets.
It's what's for dinner!
"Wait, Sol! Lloyd likes his Goys medium rare! Get that leg off the grill!
"OMG you cannot serve Goy w/o mushrooms to Jamie! Here, gimme that plate!"
EU long term energy contracts with Russia lookin pretty good right now.
Goldman Scrotum Sachs still thinks Facebook Fraud is a winner. Quite the opposite.
Goldman's Murti Says Oil `Likely' to Reach $150-$200 (Update5) |By Nesa Subrahmaniyan - May 6, 2008 12:27 EDT
Can we shove your head into your anus, Lloyd Craig Blankfein?. We’ll be doings Gods work.
"Scrotum Sacs," hahahaha!
The Saudis are printing oil.
This is the most ridiculous statement out of this analysis:
7. With no obvious new low-cost US shale oil field, beyond the high grading to each play’s sweet spot, we believe that the oil market’s Marcellus is most likely to come from abroad. Kurdistan and Southern Iraq will likely continue to grow production, with Iran potentially contributing medium term as well. Further, in a market anchored at shale’s marginal cost of production, it is in OPEC’s interest to maximize revenue through volumes, pointing to potential increases in production over time in core OPEC too. Russia could be the oil market’s Marcellus field as well. It is important to stress that the Russian ruble has weakened almost as much as the oil price has declined, leaving oil prices in Russian ruble near an all-time high. This is important as all costs are Ruble denominated while revenues are USD denominated, leaving Russian oil companies’ margins insulated despite the dollar decline in price. In addition, the Russian government is easing the export taxes which further improve the profitability of Russian oil.
Having established that the US doesn’t have its oil Marcellus Goldman Sachs believes that Iraq, Kurdistan and Iran will be the world Marcellus. Iraq political mess notwithstanding, Iraqi oil production suffers from a severe shortage of proper infrastructure to increase oil supplies, from Reuters:
DUBAI, Sept 17 (Reuters) - A lack of water threatens Iraq's plans to raise its oil output, boost its stumbling economy and become a leading producer in the region after Saudi Arabia.
A multi-billion dollar common seawater injection scheme designed to boost production from the giant export oilfields in Iraq's south is snarled up in red tape and acrimony.
The seawater injection project is core to the development of the southern fields - which account for most of Iraq's production - and aims partly to flush oil to the surface and overcome declines in production at fields such as Rumaila, West Qurna, Zubair and Majnoon.
While the Islamist insurgency has hit oil exports from Iraq's northern pipeline, the southern oilfields have not been affected by Baghdad's fight with Islamic State.
But the shortage of water is hurting production at two main southern fields: West Qurna-1 and Zubair, official and industry sources told Reuters.
Further production declines from both mature fields look likely if water scarcity persists, the sources said.
Output from West Qurna-1 - operated by ExxonMobil - has fallen almost 40 percent to around 300,000 barrels per day compared with last year, an industry source said, adding that a shortage of water was one of the reasons.
Zubair, run by Italy's ENI, is feeling the pain too. A source at state run South Oil Company said production from Zubair had fallen, but declined to give further details. It was currently pumping around 280,000 bpd, the source said.
"100 percent correct," another Iraqi oil source in Baghdad said when asked if lack of water was a reason behind the production decline in the two oilfields.
Full article:
http://www.reuters.com/article/2014/09/17/iraq-oil-water-idUSL6N0RI28H20140917
The second oil Marcellus Goldman believes is Russia, not withstanding that the Russians themselves expect their production to decline over the next few years:
Leonid Fedun, vice president of Russia's biggest private oil producer LUKoil, earlier estimated that Russia's oil production could decline 6.6 percent in the next four to five years, from the current 525 million tons per year to 490 million tons.
http://www.themoscowtimes.com/business/article/russia-s-energy-outlook-g...
Here is the funny part about Russia, Goldman states:
It is important to stress that the Russian ruble has weakened almost as much as the oil price has declined, leaving oil prices in Russian ruble near an all-time high. This is important as all costs are Ruble denominated while revenues are USD denominated, leaving Russian oil companies’ margins insulated despite the dollar decline in price.
It seems Goldman forgot about an important concept, it is called inflation. Inflation in Russia is running at 10% and is expected to go higher (http://www.economywatch.com/news/Russia-Raises-Interest-Rates-to-Fight-Burgeoning-Inflation.12-15-14.html). Goldman doesn’t seem to understand that a weaker but inflating currency is not much help when it comes to Russian oil companies maintaining their margins. Of course not to mention exploding funding costs for those companies or a diminished access to technology due to western sanctions.
Finally, let’s not forget Iran, having just failed to secure a deal last month despite a friendly US administration and US senate, it is doubtful that come January with the hawks controlling both houses of congress a deal will be struck. Of course, it is also worth noting that even with sanctions removed Iran is the most mature producer in the Mideast and is not where close to becoming the next Marcellus.
Regards,
Nawar
Great post Nawar!
"with hawks controlling both houses"
listen i'm wondering when anyone actually thought we still had representation, was it now during new elections, or was it in 1913 when everyone got their standing corruption orders for the entire .gov establishement?
friggin party line bs, none of them bitches cared about us for decades now, just our servitude.
We The People have no Representation. It was all bought up by the Banksters.
Lookit Boner
Hangin from a tree
The rope made his third leg
Stand up free!
Oil price and politics have really hammered the Ruble until it is 57 to the $US dollar. Saudi and the US are causing this each for their own aims. Reminds me of the game of thrones but no cute women.
This reminds me of Prisoners’ Dilemma aka Game Theory.
Lock and load!
Gee whiz Jeff, that's a long roundabout way of saying "Goldman is preparing to cover it's oil short positions now".
Prisoners' dilemma and Nash equilibrium
$35 for 6 months
Why isn't the Zero Hedge crowd all over Gartman? He just said "crude will head a lot lower". Isn't that a fade signal?
http://www.cnbc.com/id/102265457
They are either playing a shell game with the pea under 1 of 3 cups or they have NO idea what the heck is going on due to the mountain of dishonesty obfuscating any real idea of markets.
So your one of the guys who actually believes they keep the pea under one of the cups... naive, to say the least.
Haha, yeah, naive, I guess!
From above, contra much of what appears on ZeroHedge:
"On top of downward cost pressures, efficiency is being forced on the industry with evidence of ‘high grading’ where rigs in non-core areas are being re-directed towards core, lower-cost resource plays. All this suggests that costs are falling nearly as fast as the price, which means oil producers can spend less to get the same or potentially even more in terms of production."
"while reductions in capex are coming faster than expected, it is unlikely to translate into less supply than expected, highlighting both the rapid cost reductions with rig rates already down by 15-20% and efficiency gains through high grading."
"lower oil prices, weaker commodity currencies, lower material and oil service costs and increased efficiency are all reinforcing to the downside."
"It is important to emphasize that this is a supply driven bear market and not demand driven"
"Once again the market is trying to rebalance the future, by re-basing industry costs to take out the excess marginal production."
Ironically, the falling oil prices are also good for coal as there are several or more dollars per ton in oil related production and transportation costs in a ton of coal. So coal producers are either pocketing the difference or can drop their prices in relation to the savings in transportation costs.
This fucking den of the thieves of eniquity upon the face of humanity, who steal, rob, thieve, lie, chance their way through life with the full backing and congretional oversight of your elected representitives, are now telling you oil can fall further then?
No shit you thieving fucking criminals. lets hope the best they get away with is paying a fine again for ripping the fucking faces off of the mugs they rip off on a continual daily basis.
This outfit, this 'Goldman Sachs' is the very epitomy of what is so wrong with western culture, it makes sick even down to typing the filths name. I feel violated even thinking about the filthy dirty corruptable shit these fucking shit-stains on the face of humanity get up to.
Your on fucking notice 'Goldman Sachs'. All you dirty filthy bastards can do is destroy, for added interest profit. You will find in time, that humanity will serve notice on filth, depravity, theft, corruption.
How can you cunts who work for these bastards sleep at night?
;-)
Aye! Hear! Hear!
Does this mean that the decline of the Petrodollar has been postponed? My dollars are suddenly buying a lot more petro.
Considering that the "talk" from Moscow is about a Ruble-Dollar peg, of course it will crash tomorrow...
Oh yeah... Chicken Little informs me of "falling sky", also.
BRICS expediting efforts to set up New Development Bank at the earliest: India
Read more at:
http://economictimes.indiatimes.com/articleshow/45523933.cms?utm_source=...
Goldman's sellside shill is screaming about downside? Time to get that long position ready . . .
Shit shows and cronybuses...sounds like a new Disneyland ride, eh!
Good and truthful Light/knowledge liberally stolen and shared here that shines the light on the exact answers.:
“Ending the Rothschild Central Banking System is an end of the Criminal activity and worldwide scandals such as LIBOR, national bailouts, and other drug-money laundering activity; money used to buy weapons used in warfare … all devised to impose austerity policies on nations and to continue the flourishing of the Rothschild Banking Empire, otherwise known as the British Empire.
The Federal Reserve Bank is not a US Federal Institution. It is one of many Rothschild Central Banks. There are 28 major financial institutions (banks), in America, associated with the Federal Reserve Bank, and it is this conglomerate banking cartel, otherwise known as Wall St.are the banks that need to go out of business.
A four step solution to ending the Rothschild Banking System in America is …
1) Obama must be removed and replaced with a Real US President:
2) Congress must reinstate the Glass-Steagall Act of 1933
3) End the FED by putting the FED in Bankruptcy Receivership and reorganize it to represent a Third National Bank of the United States of America (National Banking)
4 )Issue Credit to invest in large projects that will stimulate the growth of the US physical economy; bailout the the states to keep municipalities functioning; expand the manufacturing industry that promotes Job Creation; provide adjustable mortgages and rates so that American can stay in their homes; reform Health-care and Education to fit and support national policies of scientific and technological progress and other international economic policies that strengthens US relations with Russia, China, India and other nations to develop international projects that builds and strengthens the world’s overall physical economy. We have the resources, we have the skills and talents … this can be done … all is needed from the people of earth is the will to do it.
The “fiscal cliff” that everyone is talking about is a bunch of Bullshit Policies that cut spending and budget cut this and that, which does nothing in contributing to the general welfare of the nation.
What the FOMC decision really means is that the international bailout process, which is less economic policy and more of a political strategy, is getting increasingly out of control, and people are beginning to notice.
Major Banks, Governmental Officials and Their Comrade Capitalists Targets of Spire Law Group, LLP’s Racketeering and Money Laundering Lawsuit Seeking Return of $43 Trillion to the United States Treasury.
NEW YORK, Oct. 25, 2012 /PRNewswire via COMTEX/ — Spire Law Group, LLP’s national home owners’ lawsuit, pending in the venue where the “Banksters” control their $43 trillion racketeering scheme (New York) – known as the largest money laundering and racketeering lawsuit in United States History and identifying $43 trillion ($43,000,000,000,000.00) of laundered money by the “Banksters” and their U.S. racketeering partners and joint venturers – now pinpoints the identities of the key racketeering partners of the “Banksters” located in the highest offices of government and acting for their own self-interests."
http://www.marketwatch.com/story/major-banks-governmental-officials-and-their-comrade-capitalists-targets-of-spire-law-group-llps-racketeering-and-money-laundering-lawsuit-seeking-return-of-43-trillion-to-the-united-states-treasury-2012-10-25
End Rothschild Central Banking System:
https://www.youtube.com/watch?v=ltbuEJdL6lQ
You want truth, you can't handle the truth!
http://www.activistpost.com/2014/12/the-global-bankers-coup-bail-in-and.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ActivistPost+%28Activist+Post%29
http://xrepublic.tv/node/11539
Better ideas than what we have now, mate!
Guess oil goes back up in Jan/Feb as inventories are "seasonally adjusted"