OPEC Basket Crude Price Crashes Below $30 - Lowest Since 2004

Tyler Durden's picture




 

With WTI trading with a $32 handle, collapsing below December 2008's $32.40 lows briefly overnight, OPEC's broad basket price for crude has also reached a worrisome milestone. Amid Saudi price cuts to Europe, the basket price was set at $29.71 today - the first print below $30 since April 2004.

WTI broke 2008 lows overnight... and then ran stops to overnight highs...

 

and following the inclusion of Indonesia's crude oil price, OPEC's basket price is back below $30...

 

For the first time since April 2004...

Source: OPEC

This won't end well.

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Thu, 01/07/2016 - 12:47 | 7011898 _ConanTheLibert...
_ConanTheLibertarian_'s picture

This is getting scary.

Thu, 01/07/2016 - 12:52 | 7011943 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

The fun has just begun. 

Thu, 01/07/2016 - 13:00 | 7012019 LowerSlowerDela...
LowerSlowerDelaware_LSD's picture

Bring on the BIG, HONKING, SUVs!!!!  Cheap fuel!

Thu, 01/07/2016 - 13:14 | 7012117 red red wine
red red wine's picture

...Saudi Arabia gets more desperate, they will create more false flags.

Russia remains in the driver's seat till then.

Thu, 01/07/2016 - 13:23 | 7012176 1000 splendid suns
1000 splendid suns's picture

I find it peculiar that there is a PPT for stawks, and confirmed manipulation in the PM's yet, who knew this could happen to oil?... BS...

Thu, 01/07/2016 - 14:00 | 7012427 NotApplicable
NotApplicable's picture

Both Mises and Rothbard knew, as the debt game always works it's way through to the lowest levels of production. It starts in consumer goods then flows into capital goods, with energy being the final goods bubble.

Next up, currencies.

Thu, 01/07/2016 - 13:27 | 7012207 Tall Tom
Tall Tom's picture

Until the US Government hikes your taxes to cover the 10% shortfall in their budget that Saudi Arabia has been covering...EVERY FUCKING YEAR FOR THE PAST FORTY YEARS BY AGREEMENT THAT WE WILL PROVIDE THEM WITH MILITARY SUPPORT SHALL THE UNTHINKABLE HAPPEN.

 

But, of course, what is America's word worth? NOTHING. ABSOLUTELY NOTHING in this Entitlement Attitude land of fraud, deception, and corruption.

 

But who cares about the Petrodollar..and the agreement which the USA struck with Saudi Arabia some 40 years ago?

 

Hell we can lose World Reserve Currency Status for some Cheap Oil now. (I just wonder how many Shale Oil Companies will still be around after the fallout of this...)

 

And then when the House of Saud falls due to their FINANCIAL QUAGMIRE it is a clear bet that they will be in UTTER CHAOS OVER THERE and STOP PRODUCING OIL. And as for our "Shale Oil Miracle"? Everybody will be too damned broke and bankrupt to restart that fiasco.

 

Then we will get a WHIPSAW in the Market which may see Oil in the THOUSAND DOLLAR PER BARREL RANGE.

 

But who gives a damn about the LONG TERM IMPLICATIONS if you can drive your BIG, HONKING SUV TODAY because your mind is so fucking small that it has an HOUR TIMEFRAME on YOUR ENTIRE LIFESPAN? (...which may not be long...at this rate of degeneration anyway...)

 

Whooo Hoooo...Cheap fuel...Yay!!!

 

Yeah..Conan the Libertarian...yeah. We really have a chance with thinkers like this, right?

 

And far too many Americans have the 30 second attention spans and cannot think their way outside of a Napkin.

 

Yeah we deserve our extinction and this is an example of the reason why...

 

(Maybe someone will get a clue that one builds foundation on stable ground if one wants a successful structure built. Volatility just serves to create structural failure. Yeah Earthquakes do that at times... It is just an Engineering fact but what in the hell do I know about structural statics and dynamics???).

Thu, 01/07/2016 - 14:28 | 7012633 Likstane
Likstane's picture

Why did you capitalize napkin ?

Thu, 01/07/2016 - 14:35 | 7012666 Tall Tom
Tall Tom's picture

Fat finger, perchance?

 

I am not well versed in the Grammatical Arts as I am a low brow.

 

You win.

Thu, 01/07/2016 - 14:39 | 7012719 Likstane
Likstane's picture

Ok, thanks...I thought I was missing something.

Thu, 01/07/2016 - 13:04 | 7012048 Bill of Rights
Bill of Rights's picture

Not even close to scary, unless of course your money is tied up in a government sponsored 401k lol

Thu, 01/07/2016 - 14:07 | 7012486 83_vf_1100_c
83_vf_1100_c's picture

  I went all in on a MyRA. I can't wait til I am retired on a warm beach somewhere. /s

Thu, 01/07/2016 - 13:06 | 7012066 Tall Tom
Tall Tom's picture

Why fear this?

 

It is just the prelude to Civilizational Collapse.

 

It must end as it has been built upon a foundation of lies.

 

You can avoid the facts, through ignorance, but you cannot avoid the terrible consequences of ignoring facts.

 

Ignorance is bliss ...yes...until the stark consequences thereof smack you in the face. They just wanted you to believe the half truth, that ignorance is bliss.

 

How is that Fukushima cookoff going anyway?

 

These events are just the prelude to the mass extinction which we all deserve....ALL OF US.

 

Are you really that fearful of the consequences?

 

On a long enough timeline the survival rate for everyone drops to zero.

 

You need choose acceptance and enjoy the unraveling...die laughing...you know?

 

It is a tragic comedy after all.

Thu, 01/07/2016 - 13:53 | 7012387 PTR
PTR's picture

(I don't fear it.)

 

Regardless of how much is action/consequence, a breakdown of markets, of main street, of social patterns will preclude (and some would say be necessary) to allow a new system to come into place.  

From what others say, this is when the boot comes out and things get turned around.  

 

I certainly do hope so.  

Thu, 01/07/2016 - 14:32 | 7012652 Tall Tom
Tall Tom's picture

Actually it is when the boot smashes into humanity's face for quite awhile, the beginning of a new Dark Age.

 

We have had two Civilizational collapses and what followed was two Dark Ages. I see no valid reason to see why it will be any different if we survive this as a species.

 

Besides...Hope is not a viable strategy for success. I hope that I win the Lotto is not going to enrich me.

 

Strategies take both planning and effort. And still there is no guarantee..

Thu, 01/07/2016 - 12:48 | 7011912 Thought Processor
Thought Processor's picture

 

 

Free oil for everyone, woohoo.....................

 

 

Thu, 01/07/2016 - 12:48 | 7011913 KnuckleDragger-X
KnuckleDragger-X's picture

Be careful what you ask for. They wanted a price war and now the game will be played to the bitter end......

Thu, 01/07/2016 - 12:52 | 7011947 two hoots
two hoots's picture

And the Ruskies ain't gonna like it.

Thu, 01/07/2016 - 12:56 | 7011977 KnuckleDragger-X
KnuckleDragger-X's picture

NOBODY is going to like it, but we all get to play........

Thu, 01/07/2016 - 12:59 | 7012007 Gambit
Gambit's picture

You know what is weird Knucks, knowing the Russian quite well, I think their strategy might very well be to keep the oil prices low and destabilize the Saudis.  I have been keeping an eye on their balance sheet and debt, and their national debt denominated in dollars is roughly 18% to GDP.  In fact their reserves will cover their debt and have some left over.  As far as costs, well the rubble is down heavy so their production costs are way lower now, by some 50%.  Since the rubble is not pegged against the dollar it is free to be devalued and they don’t need to burn their reserves to keep the peg alive like the Saudies.   If they keep the prices low then they can bankrupt the Saudies and effectively, via Iran, control the ME and the oil production.  For me this was validated by the Saudies trying to engineer chaos/war in the ME, because their kingdom can no longer sustain oil prices at these levels.  Putin has effectively checkmated the Suadies in their own game, he controls the events now.   He can further exasperate the Saudi situation by channeling weapons to the Houthis via Iran.  

Thu, 01/07/2016 - 13:48 | 7012353 Thought Processor
Thought Processor's picture

 

 

That's exactly what's going on.  Saudi's were trying to lower price of oil to squeeze Russia and then Russia simply said, ok two can play that game- so they started flooding also.  

 

Whenever possible use your enemies own efforts against them.  If they extend, you pull until they over extend and reach instability.  Never let them achieve balance.

 

Not playing checkers anymore kids.

Thu, 01/07/2016 - 14:37 | 7012706 sprintjump
sprintjump's picture

Gambit, what is your outlook for the ruble? Is it worth buying and stashing/stacking? It is very low versus the dollar, and logic seems to tell me yes.

Thu, 01/07/2016 - 16:09 | 7013272 Gambit
Gambit's picture

If you want to get exposure to Russia, buying rubbles won’t be the most efficient way.  The best way to do so is to buy stocks of energy companies.  However, the time is not right.  Whatever is happening right now is just the beginning and needs to be digested by the capital markets.  This will take couple of years.  I would say look to invest in Russia early to mid 2017.  Oil still has a lot of room to fall which means rubble will devalue against the dollar.  Once oil stabilizes and Russia rebuilds its industrial base (by 2020 Putin said Russia needs to be self sufficient in food production and be the largest non-GMO, ecological food exporter in the world), standard of living wills start to go up and with it the velocity of money.  This means that the growth potential of Russian energy stocks, especially those we generate great amounts of cash, will go up several hundred percent at minimum. 

Thu, 01/07/2016 - 18:11 | 7014039 sprintjump
sprintjump's picture

Great response... This is something that i am noting, and researching. Thank you!!!

Thu, 01/07/2016 - 12:48 | 7011916 wmbz
wmbz's picture

Come on $20.00!

Thu, 01/07/2016 - 12:52 | 7011945 Wulfkind
Wulfkind's picture

There goes the Shale Oil "Miracle"

Calls for bailing out shale oil are already making the rounds on CNBS.

Thu, 01/07/2016 - 12:58 | 7011996 khnum
khnum's picture

my stupid government has thrown 4 billion in subsidies to coal seam gas in the last year wells now contaminate what was good agricultural land,prices are just about where these gas operators implode another genius investment

Thu, 01/07/2016 - 13:02 | 7012038 Thought Processor
Thought Processor's picture

 

 

I'd like to formally propose that the US Gov. should create a 'Bailout Agency.'

 

Of course it will be called something different like:  

 

1. The Agency of Prolonged Redundancy

 

2. Agency of Assisted Economic Operations

 

3.  Agency of Resuscitated Assets

 

4.  Agency of Last Resort

 

5.  Agency of Tax Revenue Dispersion into ether

 

Of course all ideas for naming this fine soon to be bloated department are welcome.  

 

Have at it-

Thu, 01/07/2016 - 12:54 | 7011956 Wulfkind
Wulfkind's picture

$20 dollar oil = $20 hookers in the Shale Patch

Thu, 01/07/2016 - 13:01 | 7012013 Jack Burton
Jack Burton's picture

Hookers and strippers have reported a huge drop in earnings, and their pimps are not happy.

Thu, 01/07/2016 - 15:45 | 7013143 Wulfkind
Wulfkind's picture

Their pimps need to get smart and tell them hoes to double up the johns.  Take two paying johns at a time.  What you can't make on margin, you gotta make up on volume.

" Now you bitches get out there and make me some money!" 

Thu, 01/07/2016 - 12:57 | 7011988 Jack Burton
Jack Burton's picture

Persian Gulf traders have confirmed the 2016 Saudi budget is based on an average crude oil price of only $29 a barrel.

Thu, 01/07/2016 - 13:01 | 7012029 WillyGroper
WillyGroper's picture

deja flop...1984 all over again

Thu, 01/07/2016 - 13:05 | 7012053 besnook
besnook's picture

the ussr's final dissolution didn't actually occur until 1999 when they officially bankrupted. the reason they bankrupted was the oil price crashed to $10 because of an orchestrated bear attack on the price. the plan then was to move in and take what hadn't already been looted and control the politics therefore the country. putin saved the motherland and will have his entombed body forever on display in red square.

the west is engaged in the same gambit today. it is thought the crash in oil prices will crash the russian economy again creating the chaos needed to take russia once and for all. again. putin is forced to save the country only this time russia is much better prepared. there is no chance of collapsing russia this time. ironically, the usa will come out of this much weaker now that russia has stuck a finger in the eye of the zionazis by standing up to them in ukraine and now the mid east.

Thu, 01/07/2016 - 13:12 | 7012110 Jack Burton
Jack Burton's picture

Oil went down to $7.00 a barrel in 1985 ending the USSR. I remember now I was actually in the USSR that year, things were not yet falling apart, but decay was very apparent.

Thu, 01/07/2016 - 13:45 | 7012333 Consuelo
Consuelo's picture

+++

 

- In addition, China wasn't a world power

- China didn't have anywhere near the physical gold holdings it has today

- China requires many aspects of Russia's military technology

- Russia needs China as an ally and potential economic backstop

- The alliance of gold, trade, geography, military hardware and growing disdain for Western hegemony seals the deal

- We're just getting started...

 

Thu, 01/07/2016 - 13:05 | 7012060 AbbeBrel
AbbeBrel's picture

Mean reversion is a bitch huh, with no large Asian Ponzi economy to blow out demand. That'n ain't commin' back, Folks, and there ain't no other Ponzi on the Planet as big as that'n.

But OTOH as I like to remind ZH'ers out there, the CRISPR technology now exploding out in Biotech space pretty much insures that this hydrocarbon economy will get transformed. The folks who insist on painfully and expensively extracting the slippery stuff are themselves on a slippery slope. Think IBM and the seven dwarves in 1970 on the eve of microprocessors (they grew up with vacuum tubes and then survived transistors and integrated circuits). Basically the Game Has Changed, dudes. Now it is a race for who can harvest the energy of our friendly neighborhood hydrogen bomb and convert it to local hydrocarbons with the aid of a bag of designer bugs and custom amino acids. It is just a matter of Internet time at this point.

Good luck to the Old Economy.

Thu, 01/07/2016 - 13:08 | 7012063 Moccasin
Moccasin's picture

Just bomb the House of Saud and the price will be heading back up towards $100 a barrel, problem solved in less than an hour.

Thu, 01/07/2016 - 13:10 | 7012096 Jack Burton
Jack Burton's picture

Persian Gulf producers  are pumping all out. That amounts to no less than seven million barrels a day over the OPEC quota. The USA is willing to kill it's entire Shale Industry in it's mania to take down the Russia economy via low oil prices. This recent drops show Saudi and the USA are still fully in line with the goal. The global glut is less than three percent of the oil supply so any unseen event that takes down a producer or a brushfire war in the oil lands would quickly end this basement price that is push down by 3% oversupply. Obama and his Saudi brothers, [yes, I do now believe Obama is a Holy Wahhabi Muslim], have the upper hand at the moment, but their postion does not have depth.

Thu, 01/07/2016 - 13:11 | 7012102 Ms No
Ms No's picture

Holy shit!  Better start a war stat! 

Thu, 01/07/2016 - 13:51 | 7012377 freakscene
freakscene's picture

i was just getting ready to post the same thing

Thu, 01/07/2016 - 13:16 | 7012132 Jack Burton
Jack Burton's picture

Pepe Escobar:

"The surplus today is only 2.2 million barrels a day, according to Petroleum Intelligence Weekly. Iran will bring on initially around 600,000 barrels a day of new oil in 2016. That means later this year we will have a 2.8-million potential surplus.

The problem is, according to Persian Gulf traders, an annual oil depletion of seven million barrels a day, and that cannot be replaced with the collapse in drilling. What this means is that all surplus oil could be wiped out in the first or second quarters of 2016. By mid-2016, oil prices should start surging dramatically, even with additional oil from Iran.

So the US government strategy has now metastasized into trying to destroy the Russian economy before the oil price inevitably recovers. That would give the US government a window of opportunity spanning only the next six months.

How this could have been pulled off so far is a testament, once again, to the irresistible force of Wall Street manipulators using cash settlement; they are able to create a crash where there is hardly any surplus oil at all. Yet even as the Empire of Chaos frantically manipulates the oil price down, it may not go down fast enough to destroy the Russian economy."

Thu, 01/07/2016 - 13:51 | 7012375 Consuelo
Consuelo's picture

"That would give the US government a window of opportunity spanning only the next six months."

 

Precisely.   And a gambit borne out of a pig-headed hubris that will kneecap the U.S. economy, and by extension, it's military projection capabilities.

 

 

Thu, 01/07/2016 - 13:18 | 7012145 Jack Burton
Jack Burton's picture

More Pepe Escobar:

"Even Reuters was forced to admit briefly the oil surplus was less than two million barrels a day, and may even be alarmingly less than a million barrels a day before returning to the usual oil-at-an-all-time-low story. This information on the real oil surplus so far had been completely censored. It confronts head on the hegemonic US narrative of surpluses lasting forever and the imminent collapse of the Russian economy."

Thu, 01/07/2016 - 13:18 | 7012148 yogibear
yogibear's picture

Down she goes!

Thu, 01/07/2016 - 13:19 | 7012150 foodstampbarry
foodstampbarry's picture

So long Canada we hardly knew ye.

Thu, 01/07/2016 - 13:33 | 7012223 Moccasin
Moccasin's picture

WCS - Western Canada Select is well below $20 a barrel - http://www.bloomberg.com/news/articles/2016-01-06/world-s-cheapest-crude...

 

Thu, 01/07/2016 - 13:30 | 7012233 edifice
edifice's picture

My broker quotes USD/CAD at 1.4078, bid. To the moon! Or, 1.60!

Thu, 01/07/2016 - 13:39 | 7012294 Moccasin
Moccasin's picture

Canadians seem proudly second class citizens on the continent selling their resources to the US market well below world prices. I just don't understand them, they are way too polite and passive for their own good.

Thu, 01/07/2016 - 13:58 | 7012421 PTR
PTR's picture

At least housing is still a valuable investment.   /s

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