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WTI Crude Breaks Below Historic $40 Level, Energy Credit Spikes To Record Highs After Rig Count Rise
Well, we have a winner - Oil broke to a 3 handle before 10Y rates hit a 1 handle (just - 10Y at 2.04%) following the 5th weekly rise in rig count (+2 to 674). Energy credit risk is soaring to record highs as investors realize 'there will be blood' in all those highly-levered loans. This is the first time the front-month crude contract traded below $40 since March 3rd 2009... just before QE was unleashed in all its asset-inflating, malinvestment-driving, zombifying glory.
This didn't help:
- *SAUDI LIKELY TO KEEP OUTPUT NEAR 10M B/D THROUGH 2016: BARCLAYS
And then the rig count data hit..
- *U.S. TOTAL RIG COUNT 885 , BAKER HUGHES SAYS
- *U.S. OIL RIG COUNT UP 2 TO 674, BAKER HUGHES SAYS
WTI Crude breaks below $40....
and Energy credit risk is exploding..
Trade accordingly...
Charts: Bloomberg
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Yellen better start yellen
I still don't see Vlad giving back the The Crimea or The Snowden.
Global hashrate is a more important indicator than oil anyway....
Is that black hash or blonde hash?
Hindu Kush
http://www.denk-bubbles.com/wti
When do you buy back into this market?
We obviously need a war to boost demand, maybe two or three.
Vlad will give back in his own special way when the time comes.
For all those who believe in perpetual growth and rising consumption...
High consumer nations population growth is flatlining and the ROW (rest of world) low consumer nations population gains are slowing…the current 10yr period we enter represents about an est. 45% decline in new consumption from the previous 10yr period. By the time we get to ’25-’34, est. net new consumption drops by 90%+ due to significant declines among high consumer populations not adequately offset by low consumer growth.
http://econimica.blogspot.com/2015/08/population-growth-will-never-be-fix-to.html
The engines of global growth are ceasing and headwinds are really picking up…and all CB’s and governments have to offer is more debt and QE…
Agree. It's an incredible shame when the engine of growth is buying stupid shit you don't need, or upgrading your house to being physically bigger so you can have a more luxurious life when, ironically, bigger homes mean more janitorial requirements.
The last 35 years has been no growth, only increases in spending by consumers because of perpetual decreases in lending standards, thereby increasing credit. But nobody wants to admit that fact. Everyone wants to return to high income, hyper consumption, thinking that's good.
I simply can't wait until the banks go poof. The fake economy we see in front of us driven by credit is terribly disheartening and truly unmotivating.
I can wait...simply because I don't want to experience the social upheaval when the FSA doesn't get theirs & riots. And the suicides from desperate people who listened to the MSM & have never known hard times.
Where the hell is the Deer!??!
Lying on the side of the road with his guts hanging out of his chest.
Glad you asked!
Right here:
https://www.youtube.com/watch?v=PsD64KkCBFs
Nor Steven Seagal nor Gerard Depardieu....plus Putin can beat ANYONE with his Black Belt in Judo!
Meanwhile, oil will touch USD 30...next month!
Prepare accordingly!
#demanddestruction
#deglobalization
There is no FUCKING business ANYWHERE in the world! ....for those of the double meaning mind.....Even FUCKING business is down! ;)
then everyine will starve or freeze do death this winter i there.
Not everyone. Read Stalingrad by Beevor. The Russians should be just fine.
I think Vlad has had about enough of DC's reign of terror.
2-4 weeks after Ukrainian general elections this September, the Donbass is taking up a vote to join Russia. Supposedly the ballots are already printed, sporting the Russian flag no less.
My guess is that if these reports are accurate, Putin has given the go ahead for this initiative and is prepared to roll tanks into Donetsk.
Get ready!
All the Tesla-driving, Chipotle-eating hipster douches who've been ridiculing Zero Hedge look pretty fricking stupid now. That $10,000 a month lease in SF will be tricky to maintain.
We will need free latte's and more Obamacare to fix the economy.
Chipotle is pretty fucking good. And Teslas are fantastic. What's your angle here?
How's your beard coming in?
Commoditygeddon!!
WE'RE GONNA DIE!!!!!!!
Oh, wait....we'll have to spend less.
But that's just about as bad!!!!
S&P below 2000 and Oil below 40$, I'll go celebrate
Wait until the markets close so you'll know how much happy you need for the weekend.....
Just buy the fucking dip.
This calls for a nice fat cigar for lunch. Maybe a Nicaraguan.
Here's to you, boys!
You really have earned it!
marketwatch has oil it at 40.03....
It's going to bounce around, but the psychology of the markets is breaking down and the sheep are scared now......
DIVE DIVE DIVE!!!!!!
West Texas Crushed...
Houston, we have a problem.
Good thing it's all going according to plan.
Why not just give gasoline away for free for 1 week,let the inventory adjust,and then resume selling,at twice the pre-adjustment level?
The price of petrol has little to do with the price of oil. Refineries are the bottleneck and they tend to explode, undergo repairs, switch over for the next season, whenever oil prices are low.
Price is the same at 60 per barrel as 40 per barrel. Should be like 1.69 at the pump but still ass fuckin plebes at 2.49.
Yep, the government should make more profit than the oil company. Do you think the cost of refining has gone up or down in the last 30 years?
WTF do I care. Getting assfucked either way. Have a great weekend. See you in the bread lines.
Bullards in lol
That shit is all well and good, but what does this mean for the price of weed?
Stop being a degenerate; that's what it means.
You're right reverend, Jack Daniels is much better for you. The liver is evil and must be punished.
Aren't you cute imposing your morality on the rest of society.
Demand will rise, so prices will rise.
What's going on? I could barely see a thing trying to see over the tops of all these green shoots...
Barry's Legacy = decimation the entire USA O&G sector.
Very robust.
Shell layoffs hit New Orleans as oil prices diveLayoffs are starting to hit New Orleans as Royal Dutch Shell moves forward with plans to eliminate 6,500 jobs worldwide. The cuts come as Shell seeks to cut costs amid lower oil and gas prices.
http://www.nola.com/business/index.ssf/2015/08/shell_layoffs_new_orleans...
Looks like those damned Texans have innovated enough to make fracking viable (at least in some plays) down @ $40 per barrel. Suck it, Wahabis!
I saw a couple of new Fracking units out working in Oklahoma last week, and I haven't seen any of those out working for a few months now. I was a little surprised to see them actually..
Unfortunately, this price is going to impact some of clients, and some work will inevitably dry up.
Here maybe your answer: How the Worst Performing Oil Companies Are Making More Than Exxon
http://www.bloomberg.com/news/articles/2015-08-19/oil-patch-s-biggest-losers-sell-crude-for-more-than-exxon-mobilAugust 21, 2015
Rome, Italy
I grew up in Texas in a middle class household to two very hard-working parents.
And to say we were middle class may even be a stretch. We were definitely clinging to the bottom rung of middle class.
Money was always a problem. And my parents each held multiple jobs in addition to making a go of their own business in order to make ends meet.
I never missed a meal. But the constant stress and worry about how we were going to pay the bills that month was palpable.
We didn’t have medical insurance or any savings, meaning we were just one illness or urgency away from being wiped out.
There always seemed to be too much month at the end of the money. So every penny mattered.
We didn’t buy anything unless it was (a) necessary, and (b) a major bargain.
Things eventually got better, as they tend to do. My parents found their financial footing and became more successful. And I’ve done well in life.
But I’ve taken those middle class values with me into the world, and they’ve deeply impacted my own investment ethos.
Just like what was drilled into me when I was a kid, I can’t stomach overpaying for anything. Even when investing, I’m only interested in a major bargain.
This happens occasionally in investment markets, though it’s extremely rare today.
There are plenty of profitable, well-managed companies out there. But they’re incredibly expensive. Twitter, for example, has a valuation of $17 billion. Yet it lost nearly $600 million last year.
Netflix manages to grind out a profit; but the company is valued at more than 200 times its earnings.
AirBnB is a private company. Yet its value is at least $25 billion even though it doesn’t own a scrap of real estate or turn a profit.
These all strike me as extremely expensive. And ludicrous.
But it’s unfortunately the norm these days.
Most financial assets are in major bubbles, whether it’s real estate (yes US housing is at that point again), stocks, bonds, private equity, etc.
So it’s very difficult for anyone with middle class values to invest... unless you expand your thinking to the whole world.
There are pockets of value out there if you look hard enough-- like mining companies and developing markets.
Let me give you an example of something that I bought recently, and talk you through my thought process. As a caveat, I should tell you that I generally dislike stocks.
Stock markets are a rigged game designed to extract wealth from the little guy and put it in the pockets of investment banks and high frequency traders.
So for me to be interested, there better be some serious value on the table.
Royal Dutch Shell, one of the world’s largest oil and gas companies, is a good example.
Thanks to the slide in oil prices down to $40 (and perhaps lower), Shell’s stock price has been hammered.
So the company is trading right now at the value of its net tangible assets.
In other words, by buying Shell stock, I’m purchasing every asset the company owns at COST.
Yet on top of that, they pay a 7% dividend yield.
In real estate, it’s like being able to purchase a beautiful house in the best part of town at a price that barely meets the cost of construction.
And on top of that, there’s built-in rental income that starts putting money in your pocket right away.
This is a solid deal in my mind, especially for a company that has a long-term history of consistently growing its dividend yield.
(By the way, I can reinvest the dividends that they pay me into more shares, so I’ll be continually adding to my position over time.)
The added benefit is that Shell is not a US company.
I bought the stock overseas (I’ll explain why next week) and paid in British pounds.
So I could make money off the dividend. Or if the stock price goes up. Or if oil prices go up. Or if the pound appreciates against the dollar.
That’s one of the primary benefits of investing internationally: there are a LOT of different ways to make money.
And it makes a ton of sense to do this now that the dollar is at a 10+ year high against nearly every major currency out there.
(Again, developing markets are looking especially cheap, and I also bought into some of them as well, including Russian and Colombia.)
To be clear, I’m not recommending that you follow me into this.
It’s entirely possible that Shell’s stock gets cheaper. In fact, I’m expecting it. I also expect it will stay cheap for a very long time.
I just have the willingness to wait, because I know that it’s hard to lose when you buy profitable assets so cheap. Plus, Shell has seen worse in its history.
During World War I, for example, German forces wiped out over 20% of Shell’s production capacity.
So I’m confident they’ll be able to weather $40 oil without collapsing.
Have a good weekend,Simon Black
Founder, SovereignMan.com
I would really hate to be in the unenviable position of deciding whether to turn on a well when WTI = $40 because of the sunk costs.
I hate stocks because I hate corporate management, even though I am a free market guy. The company is run for the benefit of the CEO and everyone else later and last. I bought Pfizer when it was down because of the same dividend issue and figuring I could get stock appreciation, as well. They had never cut their dividend.
The CEO who an Obama sychophant cut the dividend in half for the first time in history. I lost all around and took a beating. I learned a valuable lesson, though.
Put on top of this that the whole stock market is pumped up by ZIRP, too. It's a roll of the dice and at Las Vegas you know the odds and they don't change the rules during the game.
This. Big Corporate mgmt has perverted private enterprise in the same manner/ways as big lobbying has corrupted our Republic and its national election process.
Whole lot of high grading going on as well. Iran due to sell it's oil. Iraq government trying to right the sinking ship or should I say state, more oil there. Demand falling. Down another $10? How come gas is $2.50?
Well, when we sacrificed a few hundred children last week... you know... part of the 500,000 that disappear each year due to satanic ritual abuse with a cover up that goes all the way to the highest levels of government but we're all powerless to prevent some random Guy talking about it on the internet... the blood gunked up the keyboard on the petroleum products pricing terminal, so you're stuck with expensive gas. Sorry.
we're gunna need a bigger chart...
How long til they run out of storage and start pumping it back into the wells?
Which Comes First? Oil Under $40 Or 10Y Yield Under 2.00%? http://www.zerohedge.com/news/2015-08-20/which-comes-first-oil-under-40-or-10y-yield-under-200
So now we know the answer - US Generic Govt 10 Year Yield 2.05% Now http://www.bloomberg.com/quote/USGG10YR:IND
wake me when it drops back to $12.