Commodity Trade Mantra

Posts Tagged ‘Low Oil Prices’

Do Not Underestimate The Power Of This Year's Rally In Oil Prices

Oil futures are currently around $49, v/s $65 seen in the Q2 of 2015. If the futures market doesn’t expect the oil prices to rise, producers can’t lock in a profit like they might have at $65. If you can’t lock in a profit, you can’t produce as much & thus supply should theoretically fall. This has led us to say the futures price is far more important than the current or spot price.

Doha Is Done, Saudi Prince Says - No Oil Deal Without Iran

In what appears to be a Doha party-pooping statement, Saudi deputy crown prince Mohammed bin Salman stated unequivocally that The Kingdom won’t restrain its oil production unless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha. If there is no agreement, then expect a sharp oil market sell-off on Monday.

Low Oil Prices Didn’t Boost Consumer Spending, Nor The Economy - Here's Why

There is no question that lower oil prices have been a big windfall for consumers. But we’re not seeing much evidence that consumers are spending those gains on other goods or services. While a sharp increase in oil prices can reduce U.S. GDP growth, it’s harder to see evidence of significant net gains for U.S. GDP from a sharp decline in oil prices. Here is why.

The Oil Price Ceiling Has Been Set: "Above $40 And We Start Pumping Again"

The cure for low oil prices is low oil prices & as more shale companies halt production, the 3 mmb/d oversupplied oil market will slowly return to equilibrium. The oil price war is about to enter its far more vicious, and far more lethal phase, and while it is unclear who ultimately wins, whether it is Shale or the Saudis, the loser is clear: anyone who bought into bets of an imminent oil bounce.

This Is Why $20 Oil Price Is A Possibility

I believe that another plunge in the oil price is required to thrust a dagger through the heart of US shale drillers and the banks that have supported them. Low oil price will at some point result in the situation reversing & prices will turn very quickly. But before that can happen, production momentum needs to be switched off & I dare say that requires a sharply lower oil price.

Stop Blaming OPEC For Low Oil Prices

Why do we expect OPEC to cut oil production? The US has aggressively increased output. Much of the responsibility for the crash in oil prices stems from a massive increased output in the US shale patch, by around 4 million barrels per day between 2011 & the peak in 2015, nearly doubling production from 5.6 million barrels per day (mb/d) to 9.6 mb/d.

A Key Indicator Low Oil Prices Are Lifting Demand

Strong shipping demand out of China suggests that currently-low global oil prices are lifting demand. With the pricing numbers in fact showing that Chinese oil users still need a lot of supply — so much so, they’re willing to pay top dollar to bring it in. Market sources are also saying strong buying interest for VLCCs is also coming from places like Japan.

OPEC Is Winning The Oil Price War Says IEA

The Saudi-led OPEC strategy to defend market share regardless of price appears to be having the intended effect of driving out costly, ‘inefficient’ production. That is because non-OPEC supply is contracting while OPEC is keeping production elevated. Low oil prices are “closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea.

The Best Way to Profit from the Coming Gold Bull Market

Owning physical gold is the best way to defend your wealth from destructive monetary policies. But if you’re looking for huge gains in gold, look at gold mining stocks. Gold miners are leveraged to gold prices. In a gold bull market, these stocks usually rise many times higher than gold itself. GDX, an ETF which owns gold mining stocks, has jumped 21% since early August while gold is up 6.2%.

Don't Expect An Oil Price Rebound This Side Of 2017

With the oil price collapse having started roughly a year ago, that means that it may take about two more years for unconventional output to actually start declining. Given that, investors need to focus on oil stocks that can get through the next two years on minimal (if any) profit, and they themselves need to be prepared to wait for a price rebound until 2017.

Nine Reasons Why Low Oil Prices May "Morph" Into Something Much Worse

Why are commodity prices, including oil prices, lagging? Why isn’t the world economy making very many of the end products that use these commodities? It looks to me as though we are heading into a deflationary depression, because prices of commodities are falling below the cost of extraction. Let me explain some pieces of what is happening.

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