Nonsense. A recession would come after a major oil spike not the other way around. The fundamentals didn't support $100 oil last year any more than they support $40 oil now. The truth will lie somewhere in the middle probably between $60-$70. The export ban repeal will bring wti to parity with Brent immediately, a possible Iran deal failure is very possible, a geopolitical event, OPEC scaling back, gasoline demand continuing etc. Rig count is still halved (this silly rig count increase you hear about weekly is almost all in the Delaware basin where bpd numbers are anemic) and capex for exploration and new wells is essentially dead. Its tougher to get permits now than it is to get the banks to fund new equipment. Be patient. Oil will rebound.
Isis gets most of their finances from the bank reserves they raided with territory taken and oil in territory taken. Now, we all know that Isis doesn't drive their oil to the refinery get it catalytically cracked, and collect the remittance after export. We know Isis doesn't drop their oil off at storage fly to London and get it transposed to paper Brent. What they do is give it to Saudi Arabia who pays 25%-50% on the barrel. This is why the Saudi's production numbers are so high-Isis oil.
Agreed, the cheaper gasoline is the more trucks and SUV's get bought. Hybrids are dead besides that Tesla model S that nobody can afford. Car sales have gone up globally thanks to China
And exactly how would a radical Iran be any worse than the terrorist state of Saudi Arabia? One, they would have a lot less money, two, a lot less lethal weapons and three, they wouldn't have an embassy in Washington that they run their covert operations and tactical campaign donations.
The ONLY reason I support the Iran deal is because its a huge blow to Saudi Arabia. And Obama might be smarter than we know, and this might be a subtle form a payback.
Fact- we were attacked by Saudi Arabia on 9/11.
Fact- 15 of the 19 hijackers were Saudis supported by high level Saudi diplomats via the damn US Saudi embassy
Fact- Bush redacted 28 pages personally in the 9\11 report dealing with the Saudi gov't support of the hijackers
Fact- Saudi Arabia supports ISIS as a counter to the groups supported by Iran in Syria\Yemen\Iraq.
Fact- ISIS doesn't drive their oil to the refinery and get paid remittance after its been catalytically cracked and exported, they give it directly to the Saudis who pay 50% on the barrel and keep the other 50%.
Fact- Saudi Arabia is involved in an oil war with the US which has caused a loss of hundreds of billions of dollars to the US gov't and US companies along with a loss of 40,000 US jobs.
Fact- Saudi Arabia has donated hundreds of millions to the Clinton and Bush administrations going back to Bush senior, at least. Probably even Reagan.
Exactly at what point does this charade end? At what point do we call Saudi Arabia what they are - enemy combatants. At what point does anyone realize that Saudi Arabia ARE the terrorists? Instead we get some stone age desert dweller named Osama Bin Laden who never had the resources to organize anything outside a rag tag camel riding group of buffoons. We run around bombing and hunting fundamentalists who are more a danger to themselves than they are to anyone else, fundamentalists who are the paid proxies of Saudis Arabia.
Saudi Arabia = Terrorists.
Sentiment: Strong Buy
Or as Aristotle called it- The Golden Mean.
$40 oil has as much to do with fundamentals as $100 oil. The truth will lie somewhere in the middle- $60-$70.
Brilliant, next these guys are going to tell us to buy a stock after its gone up 120%. Talk about late to the party, the short money opportunity has come and gone. Buffets 80:20 rule- buy when a commodity is within 20% of a bottom. Folks buying natgas and oil stocks stand to make a fortune. With the collapsing costs of production, capex cuts, layoffs, dividends slashed and layoffs these oil companies don't need oil at $90 anymore. $65 will be just fine and that's exactly where we are headed later this year.
Nobody wants coal you idiot any more than anyone wants leaded gasoline. The sooner the world gets rid of the outdated #$%$ the better off we will all be.
And exactly what difference does it make if natgas stays low? Shale costs dropped 50% in a year. Drilling times dropped from 30 day average to 17 day average. The companies reorganized their debt, layed off workers, sold least profitable assets all the while their smaller competitors are being forced out. If natgas goes to $5 with the lower production costs and reorganized company's then there is no reason for them not to be 1.5x what their 52 week low. I expect nay gas to top out at $4 and believe me that is plenty. Same with oil. $65 will be plenty.
Big oil (be it us or foreign) will find a way to get one of the Saudi's fields bombed, the Iran deal rescinded etch... big oil always has its way and ill be putting my money with them. Oil will be $65 by December. In January this type of post was commonplace when oil was where its at now. 30 days later it was up 25%.
"a huge shortage in natural gas is coming''.... I'm excited about chk's move today too but a statement like this is how you lose respect quickly. There will be no shortage of natural gas in your lifetime. In fact its unlikely natural gas trades above $5 maybe ever again; and it doesn't have to for these upstream companies to make huge profits. The profits are locked in and being slowly released via the collapsing production costs, collapsing well drilling times, efficient transportation and larger volumes used.
No, its according to their own mathematical risk models (volatility related) and margin requirements. With increased volatility, current PPS, and massive current short position I dont know of a brokerage where anyone could find 1000 shares or more to borrow short.
1- Soaring Saudi domestic oil burn rate and the war in Yemen. It was 1mbd throughout July.
2- Newly listed Saudi stock market is getting crushed and is marching in step with oil prices
I don't think the Saudis will tolerate anything under $60 for more than a few months
Saudis will not go broke anytime in your lifetime. And btw, they are winning this price war. The only concern the Saudis could face would be a major Houthis or Isis attack on one of their oil fields or refiners.
The short positioning is enormous and has to be unwound. That will happen sometime over the next few months. Alot of this drop is trading related. I think oil falls to the high $30's for no other reason than for the hedgie self fulfilling prophecy of "told ya so" but it won't be there long. That would make oil cheaper than water and fulfill a near %70 percent drop in the commodity from a year previous. Anyone still holding needs to hold. Right here is what I call the stoic zone, that is, a brief period that wipes out each and every weak hand.