Posted on 01/15/2016 11:33:08 AM PST by mykroar
World oil prices slumped more than 6 percent to below $29 a barrel on Friday, as a further fall in the Chinese stock market and the prospect of an imminent rise in Iran's crude exports deepened fears of a longer supply glut.
After closing higher for the first time in eight sessions on Thursday, U.S. and Brent crude futures slumped to new 12-year lows, taking this year's losses to more than 20 percent, the worst two-week decline since the 2008 financial crisis.
The slump was not over yet, some analysts warned, as the lifting of sanctions on Iran opens the door to a wave of new oil. The International Atomic Energy Agency (IAEA) is expected later on Friday in Vienna to issue its report on Iran's compliance with an agreement to curb its nuclear program, potentially triggering the lifting of Western sanctions.
Shares in China, the world's No. 2 oil consumer, tumbled on Friday, with the Shanghai index ending down 3.5 percent to its lowest close since December 2014 and the yuan weakening sharply offshore. Adding to fuel demand concerns, U.S. data showed retail sales fell and industrial production weakened in December.
The "ongoing worries regarding the pace of economic growth" spurred a new round of selling in the oil market, said Tim Evans, energy futures specialist at Citi Futures.
(Excerpt) Read more at cnbc.com ...
Maybe the USA should place a $25.00 per bbl tarrif on imported crude oil.
I had been thinking that with low retail prices, “smart” governmental units could more easily slap some more taxes on the stuff to get us closer to European prices.
Take that OPEC ! Hope Saudi tanks !
One well placed nuke would resolve a lot of problems.
How much of the DOW drop is due to the drop in oil company stocks?
Is this a widespread drop in the economy or just one sector?
However, the low prices could suddenly cause some producers to go offline. This applies to Venezuela and Nigeria, the two largest non-Arab OPEC members, with both countries wracked by political instability. The low prices could cause either countries’ oil exports to stop, and that will send prices soaring again.
If this keeps up for the next three months, we will be paying a dime less per gallon at the pump by Easter.
Venezula’s oil infrastructure has been neglected ever since Hugo Chavez gained power. Regardless of the price of oil, and it certainly isn’t doing them any favors, Venezuela is almost destined to go offline through sheer incompetance and neglect.
While it’s true, Venezuela supplies much of the oil demand for South America. If that goes offline, it would be an economic disaster for that continent, especially since Petrobras doesn’t have the money to exploit those offshore oilfields they discovered some years ago.
They're not particularly low. $30 is where prices had been for four years after 1999. And from 1985 to 1999, prices ranged from $10 to $20. Bottom line is that we've entered an oil bust (several years after the non-oil commodities bust began) at the tail end of a 15-year mega boom cycle, triggered by a massive boom that took China's GDP from $300B in 1980 to $6T in 2010, a 20x increase, compared to India's ~6x despite half the % population increase. Recovery will take time. I'd be surprised if it began before 2020.
Long term, low oil prices are good for the economy. Short term, energy sector investors will be taken to the cleaners because of equity raised and money borrowed on the basis of $100 oil, all of which was invested in what are now money-losing oil and gas projects.
A lot of your Free Traitor ™ buddies have been lamenting low oil prices and the loss of jobs and the economic impact. So I there the tariff thing out there to see if I could catah a few hypocrites, and I have.
Go whine to them. The low price of oil is a benefit to our economy.
It hurts Russia, Iran and other terrorist supporting countries and that's good too.
Todd please comment on this, give it your best anit American gloBULList shot.
You are not a hypocrite for sure, you are one of the ones Marx counted on to destroy any capitalist country from the inside.
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