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Energy / Oil Prices

  • Could Low Oil Prices Point To A Debt Bubble Collapse?

    Oil and other commodity prices have recently been dropping. Is this good news, or bad? Figure 1. Trend in Commodity Prices since January 2011. Brent spot oil price from EIA; Australian Coal from World Bank Prink Sheet; Food from UN’s FAO.I would argue that falling commodity prices are bad news. It likely means that the debt bubble which has been holding up the world economy for a very long–since World War II, at least–is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty.Many people have the impression that falling oil prices mean that the cost…

  • Speculators May Rally to Crude After Nigeria and Libya Problems

    November Crude Oil futures are in a position to close the week higher. This possible reversal on the weekly chart coupled with the strong upside price action earlier in the week, suggests the market may be in a position to change the trend to up on the daily chart. The current upside price action suggests investors may be starting to turn their backs on the bearish fundamentals. Early Wednesday, the U.S. Energy Information Administration reported that U.S. crude inventories rose 3.67 million barrels to 362.3 million the previous week. This represented the biggest increase in five months.Furthermore, traders had priced…

  • OPEC Hints It May Act To Stop Oil Price Slide

    Oil prices may have gone as low as OPEC is willing to tolerate. After several months of price declines, the secretary-general of the Organization of Petroleum Exporting Countries (OPEC) says the group may cut its production target for 2015 because of an abundance of supply. The oil cartel accounts for around 40 percent of the world’s oil supply, and although its influence has diminished in recent years as oil output has risen -- from the United States in particular -- the organization can still significantly impact the price of crude if it wants to. Related: Low Demand, Increased Supply Conspire To…

  • Low Demand, Increased Supply Conspire To Push Crude Prices Lower

    The price of Brent crude oil dropped to below $97 a barrel on Sept. 15, its lowest in 26 months, depressed by both a continuing oil glut and lower demand. This follows the previous week’s drop of U.S. crude to a 16-month low.Many factors on both the supply and demand sides have contributed to this slump, most recently word that growth in key sectors of China’s economy had cooled in August, particularly factory output, which was at its slowest pace during the month in almost six years. Further, this may indicate that China’s huge economy could be on the verge…

  • This is the Oil Trade You Should be Making

    Here it is, in one monumental and telling graph – the point on energy you must remember:Yes, there is demand drop in the US, Europe and Japan but it is miniscule and even 25 years from now will amount to less than a million barrels a day of total liquids consumption. Meanwhile, demand growth from China, India and the Middle East ALONE will increase close to 20 million barrels a day.Now, let me give you a second chart; the one that I believe most energy watchers are relying upon to offset chart number one: Here’s the most graphic representation I’ve…

  • No Rebound In Sight For Sliding Oil Prices

    Global oil prices have slid in recent weeks, a trend that shows no signs of changing in the immediate future. The two main benchmarks for oil prices, Brent and WTI, hit their highest levels so far this year in June amid the initial onslaught in Iraq of the Sunni jihadist group Islamic State of Iraq and Syria (ISIS). Fears that the militant group would seize Iraqi oil fields pushed up prices. Brent crude has now dipped below $100 per barrel, for the first time in over a year. WTI is trading around $92 per barrel, a 16-month low. Prices have…

  • This Large Cap Explorer is Looking Very Attractive

    In a recent column, I proposed a ‘super spike’ in oil prices – implying a super opportunity continued to exist in the exploration and production oil companies, particularly because they’ve been underperformers on the back of recently weak oil prices.  I proposed a lack of production growth in the traditional oil areas of the Middle East as the primary cause of spiking prices, again implying that US-focused E+P’s were likely to benefit the most. In the end, only an individual assessment of E+P stocks will benefit the investor, and in this column I revisit an old favorite of mine, Apache.…

  • The Coming Super Spike in Oil Prices

    In 2005, Goldman Sachs oil analyst Arjun Murti wrote of an oil “super spike”, with prices reaching $200 a barrel.  Murti was amazingly prophetic with that call, as oil topped $147 a barrel in 2008 and would likely have made his predicted $200 had the general economy not suffered an historic meltdown.Now I am seeing another opportunity for $200 oil, even though the current oil market looks more ready to drop to $75 first.  It might do that, but then I can see the coming of the next major oil “spike” – and I’m also looking for at least a…

  • How cheap is “cheap” oil?

    Everyone seems to agree that the world is running out of cheap oil. But how cheap is cheap? Until we know it’s hard to say exactly what the world is running out of, or indeed if it’s running out of it at all.  Clearly what is needed is for someone to put a dollar value on cheap oil, and here I do my best to come up with a number.Before we can start we need a definition of “cheap”. Webster’s defines it as “worth more than the price paid”, which is probably as good a definition as any, so we…

  • Dropping Oil Prices Threaten Moscow’s Budget

    Oil and gas are at the heart of the Russian economy and are largely responsible for keeping Moscow’s government budget in balance. But the recent decline in the price of oil from the North Sea and Texas has now spread to Urals crude, giving President Vladimir Putin one more economic headache.The price of Urals crude fell just below $100 per barrel on Aug. 18, an 18-month low. On Aug. 19, it dropped to less than $97 per barrel. These declines coincided with similar drops in the price of Brent crude from the North Sea and U.S. oil.The reasons are fairly…