Oil Prices Tumble to Fresh Lows

**Oil Prices Tumble to Fresh Lows **
*Ample Supplies, Tepid Demand Have Prompted Plunge in Oil Prices *

Oil prices sank to more-than-five-year lows Monday on fresh signs that supply will outstrip demand in the coming months.

U.S. oil prices briefly fell below $50 a barrel for the first time since April 2009, and Brent, the global benchmark, crashed through the $55-a-barrel mark.

Ample oil production, particularly in the U.S., and tepid demand growth have sent oil prices plunging in recent months. Consumers are reaping the benefits, while oil-exporting nations are struggling to balance their fiscal budgets and oil companies are seeing their stock prices slump.

Production has showed no sign of slowing despite spending cutbacks by many oil companies. Prices slid Friday on reports that Russian oil output hit post-Soviet records and Iraqi oil exports were at their highest since the 1980s.

Trading volumes have been light due to the holidays, making price moves more volatile, said Ray Carbone, president of Paramount Options and a Nymex floor trader. He said traders were using options to benefit from dramatic price moves, including a potential drop to $25 a barrel.

“It’s certainly a different world,” he said. “We’re quoting [prices] that, really, we haven’t seen for a long time, since 2008-2009.”

wsj.com/articles/oil-prices-fall-to-new-lows-on-supply-glut-1420455248

To try and gain a perspective how volatile oil prices have been I created a spreadsheet to get the avg. prices of Brent Crude Oil (using US$) per barrel (from IndexMundi data portal) for 5 year spans since 1985.

5 YEAR span ------ PRICE
1/1985-12/1989 — $18.88
1/1990-12/1994 — $19.19
1/1995-12/1999 — $17.41
1/2000-12/2004 — $28.97
1/2005-12/2009 — $70.41
1/2010-12/2014 — $102.08

Today I saw brent crude price at $53.11.

The huge jump in price in 2005 makes it difficult to gauge what price is reasonable per barrel? $53.11 may look reasonable to one forecasting such in 2004?

Gas went up 20 cents at the pump today in my area. It’s the deep freeze.

A few weeks ago, I filled my tank (Saturn Vue) for $27. When I saw that number, I did a happy dance and a whoopee song in the parking lot next to my car. And I’m not ashamed!

Today, I filled it for only$21! :extrahappy:

While the good times last, my husband and I are doing to try to take the money we are not spending on gas and put it towards debt reduction. And we’ll probably spend some of it. Either way, we’re helping the economy (and ourselves). Sounds like a win-win to me.

It’s not a win for oil companies, drillers, tool makers, oil field workers, etc, etc. But it will rise again, never fear. But I will add that since the beginning of the 20th Century, gasoline has always been around $2.00/gallon, adjusted for inflation.

Precisely. It’s been “rumored” the Saudi’s are overproducing to bankrupt some of the smaller oil producers and when that happens they will cut the supply and drive the price up again. And it’s generally not easy to start up a company that’s been shut down.

I believe the price is currently dropping because Republicans are about to take control of Congress and might pass the Keystone Pipeline. And foreign oil suppliers are afraid America will become independent of them if that happens. So they are lowering their prices to try to take away some of our will to be independent of them. But the price of oil will go up again if we don’t do the pipeline.

It’s Obama’s fault for not allowing off shore drilling.

Oh wait, that was suppose to raise the price of oil. :smiley:

Jim

The American production surge did not happen because of Obama, but in spite of him.

I’m not sure if this energy consultant is on the mark but it’s interesting.

U.S. Energy Companies Test The Waters for Exports – Corporate Outlook
By Dow Jones Business News,

For the first time in 40 years, ships full of unrefined American oil are sailing from Texas to ports in Europe and Asia. This year, the new trade routes should provide a relief valve for the swelling glut of U.S. crude.

The Wall Street Journal reported last June that two Texas energy companies, Enterprise Products Partners L.P., a pipeline company based in Houston, Pioneer Natural Resources Co., an oil producer based in Dallas, received special permission from the Commerce Department that allows them to sell ultralight oil to foreign buyers without sending it to a traditional refinery. With only a few exceptions, that hadn’t been possible under a federal oil-export ban that dates back to the 1970s Arab oil embargo.

Other energy companies are testing the export waters on their own without explicit approval from the government for such sales. So far, roughly 3 million barrels of ultralight oil have been loaded onto tankers leaving Texas, and the energy industry expects that figure to grow in 2015.

Signs that the U.S. is starting to export its glut of oil is one of the factors that has sent global oil prices sliding by almost 50% to levels not seen since the most recent recession. U.S. crude prices also have tumbled to under $ 60 a barrel.

Al Troner, president of Asia Pacific Energy Consulting, said as more companies export ultralight American oil, it could take market share from big energy-exporting nations. “Exports are not derailed with this current price situation,” he said. "Ultimately only one region has the size, technology and capital to challenge the Middle East for the energy future of Asia-Pacific and that is North America led by the U.S."

Read more: nasdaq.com/article/us-energy-companies-test-the-waters-for-exports–corporate-outlook-20150105-01279#ixzz3O0KQ2A4z

Enjoy the bubble, for that is what it is.

When the price rises again, it is going to rise hard.

Particularly if by then, the shale oil, etc, in NA and elsewhere are shut down.

ICXC NIKA

Zowie—Somebody Made an Absolute Killing by Shorting Oil

That doesn’t pan out for a few reasons. First of all, the oil that would flow through the Keystone Pipeline would be from a foreign oil supplier and in fact our single largest one; Canada. Second, the oil being pumped through the pipeline is not destined for the U.S. market. Keystone wouldn’t make us independent of our foreign suppliers. It would just make us a thoroughfare so the Canadians can export more of their oil from the Gulf.

Probably OPEC members
Talk about insider trading :blush:

I believe it’s called hedging. Farmers do that with crops. The banks were allowed to do that too after the repeal of Glass-Steagull, though that became somewhat limited by the Todd-Frank bill, which itself got undermined by some provisions on a recent spending bill. Lots of opportunists out there globally making out like bandits.

“Russia stands to lose $100 billion annually if crude oil prices don’t reach at least $90 a barrel. The country breaks even at $90 a barrel and makes a profit north of that price. Russia is one of those countries where half the economy is dependent on export of crude oil and related products.”

stocknewsdesk.com/crude-oil-prices-effect-russia-euro-zone-1221248.html

…and I’ve heard that these low prices are expected to last all year long… Now Kazakhstan is second guessing its relationship within the Eurasian economic union…

oilprice.com/Energy/Crude-Oil/Kazakhstan-Stuck-Between-Falling-Exchange-Rates-And-Oil-Prices.html

Yes. But the losses can get quite heavy as well. Hedge funds (and commodity trading) entails a lot of risk. It’s why one is supposed to have a net worth above $1 million to be considered an “accredited investor” (by SEC regulations).

The over the counter derivatives; such as the credit default swaps are another financial instrument where some make billions when others lose their shirt. I still wonder who made billions from that AIG CDS meltdown?

For the producers, not so much. They are guaranteed something when the product comes to market, assuming that they had been selling off futures. If the low price is prolonged, however, this will probably curtail production altogether, especially once the costs exceed revenue. Costs, however, vary from country to country, company to company, so shutting down production won’t be uniform.

I don’t think we can say that categorically. The U.S. and Canada are basically a single economy. Money, enterprises, and goods flow freely from each to the other.

Nor can we say all the Canadian oil will go to other countries. Keystone will carry it to Gulf area refineries. There are pipelines from refineries to destinations all over the U.S. There is no reason to believe none of it will be consumed here and every reason to doubt it.

The oil will go to Gulf Refineries who will put the refined oil on the world market, and at a price which is historically more expensive than what US companies will pay.

Either way, it’s private companies looking to build a pipeline at the expense of those whom get displaced by being in the path of the pipeline and of course a risk to the largest aquifer in the nation.

Jim

All oil is on the world market. Always is. The price in one place affects the price elsewhere. There is not the least reason to believe Canadian oil will somehow be beyond the price U.S. companies will pay, since prices for oil produced in Canada, Saudi Arabia, the U.S. and everywhere else is not determined locally.

Who is going to get displaced by the pipelines? There are some big pipelines through my part of the country, and nobody was displaced for them.

There are already pipelines across the Ogalalla Aquifer, and no reason whatever to assume Keystone would be any more hazardous to the aquifer than the ones already there. Actually, the biggest hazard to that aquifer is dryland irrigation and city use.

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