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Energy Credit Risk Re-Surges As WTI Crude Extends Losses To Worst Since November
Overnight hope has faded and WTI crude prices have retumbled as Iran deal expectations rebuild and China economic collapse fears grow. The last few days have seen crude break crucial support levels and tumble to 3 month lows, down over 12% - the biggest losing streak since November. Credit risk for HY energy names is resurgent, crushing the mal-investment dream in a double-whammy for the industry as cost of capital rises and incomes shrink.
As Cride re-tumbles...
So credit risk surges...
Following recent regulatory pressure to reduce exposure to E&P loans, one wonders who will catch this falling knife.
Charts: Bloomberg
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Drill, baby, drill!
That needed a /s? Really?
That's a nasty break below the previous low without even a bounce there.
Goes to show the deflationary implosion is getting serious now.
Good news is lower heating bills for those who can still afford any heat this winter.
Perspective is very important, considering that the majority of people on this planet get by on less than a dollar per day, maybe we have become so use to hyperinflation that we can't recognize it. Do you really believe that inflation is only 2%? LMFAO!!!!!
For them it is, ours is closer to 21%.
Looks like a lot of money is getting poured into USTs and German Bunds. Equities may run into trouble .... Or at least someone(s) is betting they will.
Don't see shortages at the gas line anytime soon.
Sounds great for super cheap fuel actually.
LOL!!! What an idiot, we have seen this before...
"Sounds great for more gasoline taxes..." -- fixed
Your local governments need cash, this is yet another opportunity for a new subsidy...
It's a shift in the tectonic plates. OPEC is dead. The US has replaced Saudi Arabia as the country with the most price leverage. Mideast sheiks have begun returning to goat herding.
If you want to see the fate of commodity-based economies, look at the mining ghost towns in the western US that in their heyday boasted world-famous hotels and opera houses.
Unlike the Saud's, the US's bias toward energy prices is down, because of its advanced economy. It has no incentive to try to pump up the price above the marginal cost of production. The price of which even in the US fields, evidently, is too low for the OPEC sheiks to continue the lifestyle to which they have become accustomed. Thus the mideast is on track to revert to what it was before fossil fuels became the primary energy source for the world. An irrelevant backwater.
Short shale into the ground. OAS, CLR, WLL.
It looks like somebody has already done that. I did not look at the price of puts but I bet they are high on these names you have presented. How much meat is left on that bone to gnaw away? One good short squeeze and your strategy, although I like it, could cause quite a few tears.
I actually bailed this morning when CLR was showing strength. I'll let them pop and then buy Jan's on them. OAS is a zero, CLR should hit the $20's if oil continues down.
I called it on July 1st it seems. It would stick around $60 until important people sold despite really high inventories then plummet. The world economy got its heart blown out 9 monts ago and is walking around like a heartless junkey high on PCP.
Deflation. It's what's for __________ (breakfast, lunch, brunch, dinner, late-night snack, grazing, nibbling, munching, shrooming, gorging). Choose one, many, or all.
Personally, I would love to see WTI stabilize at $42 per barrel. It's just enough to keep the sheiks in business, the prouctive shale wells operating and some limited new exploration, while keeping gas around $2-2.50 for most.
I can deal with $2.50 a gallon in NY. I drive a 94 Chevy van that gets 12-15 mpg, but I drive very little - maybe 50 miles a week. But, still gotta put 89 octane in my tractor, lawn mower, generator, but am willing to stock up when it gets cheap.
I could care less if investors in shale companies lose their shirts, asses, whatever. Fuck 'em. They made their money. Time to give people a break. Besides, lower gas prices are proven good for the general economy. I know some will express contrary opinions, but would you rather have a decent economy with gas at $2 a gallon or something along the lines of 2009-2014 with it hovering around $3.50-4.00. Oh, yeah, the "recovery" years.
Give me deflation or give me death (of banksters).
Deflation? In what exactly? Sure if you are prepared to return to living in mud huts...
Simple supply and demand. There are now 7+ billion people, and growing, all competing for the resources and energy that make a higher standard of living possible. Forget about growth, the resources required to simply maintain that high standard of living are huge. Stop being so myopic. Considering how well the average American lives, especially compared to their immediate neighbors to the south, I might just shut the fuck up if I were you.
In fact, let's start a new campaign of "everything is terrible here, you don't want to come here, yeah it's bad, real bad..."
.... not to worry - there is a trading G-d in Connecticut who says the "absolute floor" for oil is $40/BBL. It's laughable that someone can make such a statement.