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Fed's Beige Book Shows Widespread Concerns Over Oil's Impact
The standard modest or moderate growth comments of the Fed's typically boring Beige Book were awkwardly interspersed with a narrative-interrupting 45 mentions of concerns about oil's price plunge impact...
The Dallas District indicated that growth slowed slightly during the reporting period and that several contacts expressed concern about the effect of lower oil prices on the District economy.
The Dallas District noted that office leasing activity remained strong, but one contact noted a slight pullback in demand from oil and gas firms.
Demand for oilfield services fell in the Eleventh District. Declines were concentrated in the Permian Basin as firms moved away from traditional vertical drilling, but the Eagle Ford and other oil basins in the District also saw a slight drop off in activity. Outlooks for the first half of 2015 are very uncertain and significantly weaker than in the prior reporting period, with firms expecting anywhere from a 15 to 40 percent decline in demand for their services.
The Kansas City and Dallas Districts reported that demand for oilfield services decreased, while the Atlanta District reported that growth in the supply of crude oil and natural gas continued to outpace demand growth.
Oil drilling activity in the Kansas City District declined, and contacts expect that District's energy sector to slow further in response to lower energy prices.
Cleveland - Our contacts are fairly optimistic and expect moderate to strong growth in 2015, though some expressed concern about weakening foreign economies and a decline in the price of oil.
However, a sustained decline in oil and gas prices may pose some downside risk to drilling and production, and it is uncertain what the effect will be on hiring and wages in the near term. Overall pricing for materials and equipment is down slightly during the past six weeks. Capital spending is projected to decline in 2015.
Atlanta - Supply of crude oil and natural gas continued to outpace demand, leading to high inventory levels across the Gulf Coast. Industry contacts in the energy sector reported that the downturn in the price of oil has influenced their outlook and strategic planning for 2015, including a heightened focus on cost management, more prudent investments, and faster, more efficient drilling techniques. Exploration and production firms shared plans to continue drilling operations across the Gulf Coast and in Louisiana in 2015, though they intend to approach projects more cautiously. The same goes for oil service companies in the region, which are evaluating cost reduction strategies if low energy prices are sustained.
Chicago - Banking contacts noted the fall in oil prices as a source of medium-term uncertainty for business lending, with downside risk to loan quality for firms in the oil supply chain.
Minneapolis - Lower oil prices led to an overall slowing in hiring in the energy producing regions of North Dakota and Montana.
Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota.
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But apart from that - unambiguously good.
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What difference does it make?
Whoopie-dooo!!!
Dear Bitchez
Stocks bouncing from the lows of the day, must be good news only going forward.
Are oil companies (and oil services) going to ask for bailouts ala JPM, Goldman, AIG, GM etc....
Is that what this round of economic "great recession" (when do we just call it a depression?) is going to look like?
Save the oil companies!! No more advantages for electric cars - tax them higher. It's unpatriotic to buy little efficient cars - true patriots buy massive gas guzzlers. SUVs to the moon!!
/sarc off
As Harry Truman said, "It's a recession when your neighbor loses his job but it's a depression when you lose yours."
They won't bail out oil companies directly. They WILL bail out banks that get in trouble holding the loans and other paper against the oil companies. The minute the trouble looks "systemic" to the banking system, the presses will crank up and the purchase of "distressed oil company assets" will begin.
Long after we human beings pass from the Earth, there will still be banks processing our debt. The only thing we will leave behind to mark that we were ever here.
You forgot "at this point" for the full Hillary flavor....
Exactly.
The western markets and financial system are complete ridiculous manipulated joke
73 % of Alaska's tax revenue
comes from oil...
40 or 50 bil of state savings
won't last long at these oil prices...
The goal is to break the states that depend on oil, since they are the biggest threat to the SQ.
When does the price of oil hurt whether it's high or low? Once you let these crooks manipulate it for their own good.
plunge protection team working OT right now. fucking bullshit
They were the ones that brought the price of oil down so quickly. Front ran the trade and are funneling the earnings into next year's presidentially campaigns.
KEVIN - FINISH THAT LINE OF BLOW, SEND YOUR HO BACK TO HER APARTMENT AND GET THE FUCK BACK TO YOUR DESK, WE HAVE A MARKET TO SAVE !!!
More like - Kevin take bernanke's small weener out of your mouth and short some VXX.
Oh oil's fall in price is a concern now? Did Janet get a call from Lloyd and Jamie saying they know Morgan Stanley was super long oil and Bank of America's book is kneck deep in energy junk bonds and they'll buy them pennies on the dollar if she prints to buy the bonds back from them after? Yes? Oh good moar central planning!
Looks like PPT just got the memo from the price action.
The little guy finally gets a break and they paint it as bad. What a load of......
What, no hockey stick?
But we need something to manipulate the market - my wife needs more bling (sarc)
I've got a cousin who does archeological surveys for fracking pads, pipelines, powerlines and railways. It will be interesting to find out how much his work is going to drop-off, given he's on the leading edge of capex.
I'll report back after I see him next.
Houston we have a problem. My house just went no-bid.
QE4 = FED to purchase Oil Default Swaps created by Goldman Sachs and J.P. Morgan Chase?
Nah, they just want to park a few VLCCs in the Lincoln Memorial Reflecting Pool for awhile.
BULLISH!! The market is going to finish in the green today. The FED cant let this bitch sink!
this is a tax break for the EBT nation... Oh right EBT nation takes the bus
"Lower oil prices led to an overall slowing in hiring in the energy producing regions of North Dakota and Montana".
"Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota".
Well yea, that's how things work in the real unrigged world of bidness.
Yawn...oh look a penny...
Is it pre 82?
check for bull dozers
before you pick it up..
There is the hockey stick - for a while I was loosing faith in the plunge protection team.
Widespread Panic
Lawyers, Guns, and Moneyhttps://www.youtube.com/watch?v=3zj39pjfssA
HOUSTON — Royal Dutch Shell won’t move forward with plans for a new petrochemical plant in Qatar, the company announced Wednesday, citing the “economic climate” facing the energy sector today.
http://fuelfix.com/blog/2015/01/14/shell-scraps-plans-for-multi-billion-...
Like I said earlier, load up on shale debt, the fed Will be monetizing that soon.
Seriously Doc somebody needs to be saved. They'd better get the presses rolling!
that would be a MAJOR precedent
ie: would need Congress (at least tacitly) to approve
till now Federal Reserve has only purchased "stuff" with Full Faith and Credit of US taxpayer
How do you figure? They can monetize whatever they want as long as it's "good collateral", and the fed gets to make the determination as to what qualifies as good collateral.
They bought Mortgage-Backed Securities without Congressional approval (half of QE3's $80 billion per month was to purchase MBSs).
Now, they're not going to buy them directly from oil companies but they will buy them from the banks that are holding the paper. No jobs will be "saved or created" except at the banks.
Zactly.
you are correct
GSE mbs always operated with "implied" backing of fedgov ... bernanke made it "explicit" ... and hardly anyone in congress moved
but buying stock, junk debt, whatever is a FAR FAR removed step
also, december 24th 2009 US Treasury announced backstopping any and all losses by GSE for three years
I remember back in the day all of the housing panic blogs. Welcome to oil panic.
i'm not going to bother looking it up ... but EIA a week or two ago had a report that OPEC would be (iirc) getting around $300 billion less in revenue for 2015 than 2014 (and, they were kinda optimistic on oil prices) ... needless to say that is big chunk taken out of global economy (and don't forget the multipliers)
One person's loss is another person's gain, no? The only time it's taken out of the economy is if the gain remains stagnant.
a friend of mine owns a sporting goods store ... he attended a sporting goods show in raleigh, nc this past weekend ... asked him how it went
raleigh 2014: lots of freebies, but no great show specials
raleigh 2015: hardly any freebies, but real give away deals
It's the Economy, Stoopid (directed at FOMC fools)
So what,
It took the feds beige book to come out and now all of a sudden oil finally catchesa bid?
Everything was hinging on the feds beige book right up until now?
Is that what we are supposed to believe?
Pathetic intervention by central bank and the criminal banking syndicate.
Get out of everything and buy gold coins!
This is over the top, in your face manipulation!
The Federal Reserve will eventually be discredited and disassembled. It's only a matter of time.
http://www.globaldeflationnews.com/the-creature-from-jekyll-island-the-e...