• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 58 mins Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 18 mins IMO 2020:
  • 6 hours China's Blueprint For Global Power
  • 12 hours World Stocks Drop And Futures Tread Water After China Reports Worst GDP Growth In 30 Years
  • 2 hours Brexit agreement
  • 3 hours The Ultimate Heresy: Technology Can't Fix What's Broken
  • 20 hours National Geographic Warns Billions Face Shortages Of Food And Clean Water Over Next 30 Years
  • 20 hours ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 20 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 13 hours Deepwater GOM Project Claims Industry First
  • 44 mins Idiotic Environmental Predictions
  • 16 hours Why did Aramco Delay IPO again ? It's Not Always What It Seems.
Alt Text

The End Of The Asian Oil Product Glut

Trafigura, one of the world’s…

Alt Text

Big Oil Tries To Buy Back Investors

Despite the turbulence in oil…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

Saudi Aramco Chairman Talks Oil Down

The sharp rally in oil prices at the end of last week came to an abrupt halt on Monday, with WTI and Brent both trading down more than 3 percent by midday.

The oil markets took another look at the fundamentals of oversupply after the largest two-day rally in seven years. There were a few reasons for this. First, China released new data that showed a decline in diesel consumption in 2015 compared to a year earlier. The figures added weight to growing concerns about a slowdown in the Chinese economy.

Also, at a conference in London on Monday, comments from Saudi Aramco Chairman Khalid Al-Falih were not received well by the markets. The chairman of the state-owned company said that it could withstand low oil prices for “a long, long time.” Moreover, he said that the company is still investing heavily in new sources of oil production, a not-so-welcome position for depressed oil markets.

Global equity markets are also down, and have fallen in concert with oil prices at the start of 2016. In fact, oil and equities have tracked each other much more closely than usual in recent weeks and months. Typically, a rise in oil prices depresses stocks because high commodity prices act as a drain on consumer economies. The reverse tends to also take place: falling commodity prices provide a stimulus to consumers, which has pushed up equities. Related: How Soon Could A Sustained Oil Price Rally Occur?

More recently, however, falling commodity prices have raised concerns about global growth. That has commodity prices and global equities moving together more than usual. According to Bloomberg, the correlation between commodity prices and global stocks – surging to a reading of 0.5 – is at its most positive in over two years. In other words, more so than at any time since 2013, energy prices are moving up and down in concert with stocks, something that has typically been a rare relationship.

 

Meanwhile, safe-haven asset classes such as U.S. treasuries, the Japanese yen, and gold have performed better as of late. “The correlation between oil prices and equities has turned positive,” chief global economist at UniCredit Bank AG, wrote in client report on Sunday. The relationship is “wrong, and therefore temporary.”

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Toby on January 26 2016 said:
    Don't forget Iranian oil flooding the depressed market!

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play