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Royal Bank of Scotland: "sell everything"

Old 01-20-2016, 06:08 PM
  #101  
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Originally Posted by eaglefly View Post
Nope. The majority of the cost of oil is determined by how much excess oil the Saudi's put into the market. US fracking threatened their long term interests and so they dumped an excess in the hope it would drive prices down resulting in expensive fracking companies here going belly up. This of course, P.O.'ed the other OPEC nations as many of their economies are founded on petrochemical dollars and are going down the crapper themselves. Soon Iran will add more and thus the forecast is for even lower prices. Once enough US frackers flop, look for a resumption of high oil prices. The questions are how long that will take and who becomes collateral damage in that process.

It's another reason Iran wishes to destabilize the House of Saud and Saudi Arabia. They hope to become THE Middle East global player (and power) with an economic base with oil, a religious base with Shiite islam and a nuclear power. If they get there, it will reshape global economics and the balance of power.
I think the wild card here is Russia. Putin is not going to play nice with OPEC anymore and told his producers to plan on 40$ oil for the next ten years. With the drop in oil prices they have had to increase production to stabilize revenue.
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Old 01-20-2016, 06:15 PM
  #102  
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Originally Posted by trip View Post
I think the wild card here is Russia. Putin is not going to play nice with OPEC anymore and told his producers to plan on 40$ oil for the next ten years. With the drop in oil prices they have had to increase production to stabilize revenue.
40$ for 10yrs would be awesome
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Old 01-20-2016, 06:19 PM
  #103  
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Originally Posted by Farmlover View Post
40$ for 10yrs would be awesome
Not for our friends working the oil fields.
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Old 01-20-2016, 06:25 PM
  #104  
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Originally Posted by trip View Post
I think the wild card here is Russia. Putin is not going to play nice with OPEC anymore and told his producers to plan on 40$ oil for the next ten years. With the drop in oil prices they have had to increase production to stabilize revenue.
Not much he can do. Russia needs about $100/barrel to balance its budget according to some and it's continuing to plummet with the deficit increasing exponentially now. The ruble is rapidly falling, Western sanctions are hurting and Russia is heading toward a recession with many people there at risk of sucking on potatoes by summer. Eastern Europe is getting wary of living under the continuous energy related strong-arming by the little runt and is making moves to distance itself as much as possible from their energy influence. Could be the perfect storm for Russia and what a heartbreak that would be. Venezuela is likely to go tango uniform first though.
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Old 01-20-2016, 06:57 PM
  #105  
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Originally Posted by ejpogo View Post
Seems like every 8-10 years there is a correction/recession of some sort. Whether it is dot.com bubble, real estate bubble, oil/global bubble (or whatever this turns out to be/bubble), the US and world economy will adapt and absorb this. Bad time to retire right now (if you are not diversified). Hopefully just a bear market (or just a correction) vs a worldwide recession. Amazing how so many things work together in this global economy; however, as history has shown (and hopefully repeats itself), this will be a correction/recession and will continue with a general growth trend when you take a long-term outlook.

This happens once every decade. Will probably get a little worse, and then work itself out.
I agree with most of this but the wild card is the unprecedented Trillions of dollars printed in the last 7 years.
You can't conjure up this amount of money without eventual consequence.
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Old 01-20-2016, 06:58 PM
  #106  
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Originally Posted by Hoser View Post
Why, is that not allowed in "your" world?
Roll Tide 16
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Old 01-20-2016, 07:30 PM
  #107  
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Originally Posted by fastback View Post
Maybe so, but part of the problem is that this isn't just the energy complex breaking down. China is breaking down. It's the world's second largest economy, it hasn't finished devaluing the currency, and the secondary effects remain to be seen. I think the China slowdown is what is killing worldwide oil demand.

Another problem with oil is that the US shale industry was built on cheap high yield (aka "junk") debt. US banks own that debt and it could poison their balance sheets. Unfortunately when the banks have a big balance sheet problem, they usually share it with everybody and tank the markets. They really are pricks about it. So I'm with you, it'd be great to keep this in Texas and N Dakota but there may be some spillover.
China's oil demand is still growing, just at a slower rate than before. Keep in mind India is also the new China.

The major US banks own very little oil CO debt. It's a small fractional amount of their holdings, they sold most of it off after originating it. Our major banks are fine.

What's playing out is exactly how the Saudis envisioned it. They can't turn off the spigot too soon or it will all have been for naught. In the meantime, enjoy the low gas prices.
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Old 01-20-2016, 07:36 PM
  #108  
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Ok, so I sold everything. Now I have nothing. Can someone lend me some money so I can get to an interview for a job???
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Old 01-20-2016, 09:51 PM
  #109  
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Originally Posted by BobJenkins View Post
Ok, so I sold everything. Now I have nothing. Can someone lend me some money so I can get to an interview for a job???
It's OK man. You're going to Mesa. You'll be bathing in money in no time.
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Old 01-20-2016, 10:13 PM
  #110  
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Originally Posted by Name User View Post
China's oil demand is still growing, just at a slower rate than before. Keep in mind India is also the new China.

The major US banks own very little oil CO debt. It's a small fractional amount of their holdings, they sold most of it off after originating it. Our major banks are fine.
Of course China is still growing, their latest GDP growth was I think around 7% annualized, but that's a complete crash from recent estimates that get baked into the oil futures prices.

Also, the regional banks own a ton of energy junk debt, and they're getting clobbered because of it.
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