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Great News America: Oil Prices Are Tumbling Once Again - WTI $50 Handle
Oil prices tumbling 'was' great news for Americans - all those juicy tax cuts to spend on stuff that is not gas (in an entirely zero-sum game of economic value added).. but then prices started to rise. A new meme was created... rising oil prices are great news for Americans - they get to keep their high-paying drilling jobs and gas prices are cheap-ish... Following yesterday's misunderstood statement from the Saudis (that demand for their oil will rise - because US Shale is hosed), the IEA warned this morning that another big build in inventory is likely due to a "dramatic" gain in US stockpiles. That has sent WTI back into the $50 handle range and creates a rather ominous double-top in the crude complex...
It appears the short-squeeze has run much of its course as volumes fade on each spike...
Perhaps it's time for Energy stocks to fall back from hope-ville...
IEA warned...
While the U.S. will pump 200,000 barrels a day less crude this year than previously estimated, drilling from hard-to-penetrate rock formations will still add about 1.6 million barrels to global markets by 2020, the Paris-based IEA said Tuesday.
Excess supply will persist to the middle of the year, when oil inventories in industrialized nations may test a record high of 2.83 billion barrels reached in August 1998.
Charts: Bloomberg
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Hooray! Yes!
I'm confused.
Are lower prices or higher prices better for me?
Help me CNBC.
you can't eat oil bitchezzzz
But you can have the cake and eat too. I learn that from cnbc
You can't eat oil but you cannot eat without oil. Life is funny.
Given some of the petrochemicals sprayed on crops, you do eat oil. Life ain't so funny sometimes.
$35 bucks. I say bring it to down to parade rest. Fuck it.
Those jobs? Fuck those jobs. They will be gone soon enough anyway and I'll be damned if I am going to pay out the ass so that Boudreaux can send more of my effort back to Toothless-ville, Ok.
I hate lower prices. I want to pay moar.
Long craigslist for roughneck toys.
Too bad those boys cant sell their tattoos on CL.
But yes, DuraMax diesels, crossbows, ATVs, dirtbikes and 100 lb dumbbells should be flooding the Permian CL market any day now.
My Delta 88 will be pleased.
My viry first car was a 1969 Delta 88. I got it for $200 and put over 100k on the thing. That car was a tank.
Trivia: mine is the very last year with real Olds 350 engine and 4 door hardtop body style.
What would be 1980?
Depends if you are talking the Olds 350 that didn't have all the power robbing smog crap on it, you might be off by a decade in that case.
The 80's version probably put out a whopping 150 ponies.
The 350 Rocket was a real V8 IMO. Heavier block, crank etc.
Olds 442 with rocket 350 was a sweet car.
Damn, i thought they only allowed "Two and Twenty" talk on ZH...
Next it's big block's hemi's and nitro, cat's and dog's living together...
The End is Nigh
oil is sending a very clear message -
we are headed into a multi-decade period of bankruptcy, debt repudiation, contract abrogation, default.
attempts to stave off the inevitable will grow more insane and ineffecutal.
BINGO, Madcow. Now tell the plebes how all of those things - bankruptcy, debt repudiation, contract abrogation, default - aren't, in the end, good for the overall economy. Any cursory understanding of economics posits that malinvestment must be purged from the system, and there's lots of malinvestment, especially in stocks.
Look, if your stock portfolio falls by 1/3 from, say $100,000 to $67,000, but rent falls by 1/3, food costs fall by 1/3, gas prices fall by 1/3 (or more) and your income STAYS THE SAME, how is that not good?
Deflation is what's supposed to happen, and for good reason. It clears the books and helps the prudent.
Insane? Hahahahaha.
HAHAHAHAHAHAHAHAHAHAHAHAHA!
AHHHHHHHHHHHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!
Wait, wut? I hate it when that happens.
I wanna see .99 cent gasoline.
I want to see 99¢ DIESEL, the current spread is higher than that here...
I want to see a giant X over the Ethanol price at stations that have it.
AMEN.....the 30 or more cent spread is bullshit around here. Fuck ethanol, I'll pay more than that just to spite the producers.
sometimes I forget ..2008 and crimes gone unpunished..we are living the result of .gov corruption in 2008..as many of us back then said..this will destroy our economy but save the banks and keep elite MFuckers rich.
these elite held all the risk and passed it off to tax payers around the globe..nothing can change the failure of justice then and it's result is growing each year but hank paulson and corzine types eat lobster and steak and are not the least bit remorseful..this is got to end in blood -
Whatever it was that I saved on gas, I managed to keep none of it. My liability policy went up way beyond the rate of inflation and ate it all. Why the big increase in my policy? That one is easy. I made no changes to the policy and had no claims with the company (ever). That's a great reason to raise anybody's insurance premiums, right? So look for insurance companies to do great with the lower gas prices? I think I'm going to puke if I turn on a TV set for at least six months.
Or do like Texas where San Antonio and Austin have banned all Cell Phone use while in city limits. Insurance company rates will go unchanged but profit margin will definitely go up. You can still eat and drive of course... or look at your GM or Ford touch screen radio console....
This is not that bad....look the shale people are getting bumped off. As far as them being swing producers, forget it. No one is going to finance that ever again.
So far, its been trading in a range a bit and it see-saws between rig count on Friday and inventory Wed....so its go long, go short, go long, go short....etc.
What is the $64M question is when do Russia and Saudi kiss and make up over Syria. I know Assad is Putin's bestie, but sometimes you have to focus on one thing (Ukraine).
When they are buddies again, then production cuts and oil is back at $85. This is NOT supply/demand/glut driven, its geopolitical
WTI oil has a lot of dead cat bounce in it - seen on the daily
http://bullandbearmash.com/chart/wti-oil-daily-remains-buoyant-pulls-cha...
We are in deflationary times - forget any longer term upside.
The continuing ZH meme that lower oil - and consequently gas - price is "an entirely zero-sum game of economic value added" is completely false.
If gas is $3 a gallon and I buy 10 gallons, that's $30. If I buy the same 10 gallons at $2 a gallon, it's $20. There is significant value added, as I can drive the same distance for 1/3 less.
Long story short, this makes costs of goods cheaper across the board (production costs lower, transportation costs lower, etc.) No matter which way you want to slice it, we'll end up with more goods for the same money or the same amount of goods for less money, and, for my money, that's a serious economic gain.
Price at the pump has been artificially high since GWB (yeah, it's Bush's fault - we elected (selected) a Texas oilman as president in 2000. What did we expect?), so, all that extra paid at the pump was, in fact, one of the worst forms of malinvestment. Basically, people were paying more to do routine things, like go to work, take kids to school, buy stuff.
Low gas prices - for those around these parts who recall the 50s and 60s - were the "fuel" of the economy, which kept the price of everything - from housing, to food, to frisbees - LOW. Those lower prices allowed ordinary people (today known as muppets) to SAVE, INVEST and PROSPER.
Anybody who thinks higher oil prices are good and lower prices are bad is simply a complete moron, buying into a macro-economic myth.
FNE,
In other words, you can waste more efficiently.
And it would be nice if the govt lowered taxes instead of debating raising them....using that wonderful logic that if people are used to $3.85 gas, then if the pump says $2.00, we need to go ahead and get that $1.85 in addition to the current taxes we get
That $10/wk fuel savings is coming out of the pockets of those tens of thousands laid off in the oil and gas industry. And that doesn't even include the multiplier effect of those newly unemployed no longer buying housing, autos, or much of anything else. So it is a net-zero effect macroscopically. The only way that low oil prices would be good for the economy is if nobody in the O&G industry is laid off as a result.
And, if lower prices overall, aka, deflation, persists, meaning more people can afford more things, that will boost the economy in myriad ways. Corporate profits will rise (lower input costs), money in people's pockets will go further, spurring more spending, which will - wait for it - cause the Fed to RAISE RATES.
And, if banks can then start paying interest on deposits again because they have a better spread, I'm all for it.
We should all hope that the price of oil goes to $30 a barrel and stays there because it signals a return to normalcy.
$1.50 gas + 4-5% fed funds rate = Prosperity.
Why do you assume the cost of extracting the marginal barrel is under $30?
Then why aren't the costs of shit I buy going down? I'm paying a dollar less at the pump at least, when will these savings be passed onto the prices I pay? It's all ready been six months, time for some trickle down.
Diesel is still high as fuck and that is how things are shipped. So no, the cost of those Chinese imports won't decrease. Neither will the cost of food.
the drop in gas prices should offset what i pay in obamacare fines
zero sum indeed
Could we the taxpayer please step in voluntarily of course, and help to subsidize the shale industry?
Let's give them a helping hand. What do you say? lol.
WTI Get a handle already!
price at the pump falls slowly and rises quickly
Well now would be the time to expose Saudi Arabia's complicity in 9/11 to the plebs and dare them to do another oil embargo.
Better do it NOW rather than wait until all our rigs are shut down... we might need them.
So why are we going to wait until we give Saudi Arabia a grip on our balls again?
After they destroy our shale industry and the US goes bankrupt (we already are, actually), the Saudis will just dump us for the new Asian alliance, as we won't be doing much here anymore, and they won't need us. Everything can come from Asia. So they'll keep selling us oil, as long as we have a way to pay for it with our new devalued Republic dollar. But we won't be any competition for OPEC for the rest of the world's needs, because the Saudis with or without OPEC will keep the price in a sweet spot where we can't start up here again to make enough money to make it worthwhile to compete. Remember that the US has the largest fleet of gas suckers in the world on the road, so all the oil here we can produce at attractive margins will be consumed domestically, instead of exported. We could put soccer moms on Vespas, but I doubt it.
Be careful about pissing off the Saudis. They might get antsy about accepting more fiat USD for their oil, and even start dumping their USD investments.
The excess supply is all imported. Slap a $25 tax on each imported barrel then let's see about that excess supply.