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WTI Hits $52 Handle As US Rig Count Tumbles To 8-Month Lows | Zero Hedge
WTI Hits $52 Handle As US Rig Count Tumbles To 8-Month Lows | Zero Hedge.
Just as T. Boone Pickens warned “watch the rig counts” last week, so the Baker Hughes rig countjust collapsed for the 3rd week in a row to 8-month lows. This is the fastest 3-week drop since mid-2009. Crude prices were already weak but the news has flushed WTI to a $52 handle (not seen in the front-month contract since May 2009)
Rig count is tumbling…
Some context for the surge in US rig count…
Oil Price Collapse Ricochets Around the World, Hits US Drillers, the Ruble … and Russia’s Probability of Default | Wolf Street
Oil Price Collapse Ricochets Around the World, Hits US Drillers, the Ruble … and Russia’s Probability of Default | Wolf Street.
As soon as word spread that Saudi Arabia’s Aramco cut prices, rather than production, for its US customers – though it raised prices for Asian and European customers – the price of WTI swooned $2 a barrel on Monday, then continued to plunge on Tuesday, briefly dropping below $76 a barrel, before recovering a smidgen. Prices not seen since mid-2012.
The Saudi price cut came on top of lagging economic growth and iffy demand in China and possibly a triple-dip recession in Europe, layered with what increasingly smells like an oil glut in the US where production from shale has been skyrocketing. If this price environment gets worse – and that seems to be the trend for the moment – the heat will spread to the US fracking industry.
Shale oil drillers will bleed, and some of them will crumble under the pile of debt they have issued. Plenty of investors – including those with conservative-sounding bond funds that are larded with energy junk bonds, and those with equity funds that have picked up the slew of recent energy IPOs – will lose their shirts. And if it lasts long enough, some states where oil has become the new economic lifeblood will get hit too. But mostly, in the vast and diversified US economy, it will be a minor squiggle, counterbalanced in part by the benefits of lower energy prices for consumers and businesses.
…click on the above link to read the rest of the article…
Saudi Oil Market Fight Shifting to U.S. as Asia Prices Rise – Bloomberg
Saudi Oil Market Fight Shifting to U.S. as Asia Prices Rise – Bloomberg.
Saudi Arabia’s increase in oil prices for Asia signals the world’s biggest crude exporter is shifting the focus of its fight for market share on U.S. buyers.
While Saudi Arabian Oil Co. boosteddifferentials for supplies to Asia next month after cutting some November prices to the lowest in almost six years, American buyers will get another month of reductions. The Middle East producer isn’t prepared to surrender sales in the U.S., where a shale boom has lifted output to the highest in more than 30 years, according to Idemitsu Kosan Co., Japan’s third-largest refiner, and Elements Capital Inc., a Tokyo-based hedge fund that focuses on energy.
Global oil prices slid into a bear market last month on speculation the biggest OPEC producers were discounting their crude to maintain market share, resisting calls to cut output amid slowing demand growth. West Texas Intermediate futures slumped to the lowest in three years yesterday on signs the Saudis are prepared to go even lower to shore up U.S. demand.
…click on the above link to read the rest of the article…
Peak Oil Notes – Oct 16
The price plunge which began in mid-June when New York oil futures trading around $105 a barrel continued this week with oil touching $80 on Wednesday before recovering to close at $81.78. London’s Brent crude underwent a similar collapse to close yesterday at $83.46. Weak demand: increasing US shale oil production: a stronger dollar; and the refusal of the Saudis and its Gulf Arab allies to cut production combined to trigger the decline. US retail gasoline fell to an average of $3.17 a gallon, the lowest since February 2011. The weekly stocks report will be delayed until Thursday, but analysts are expecting a 2 million barrel increase in US crude inventories.
The IEA confirmed the weakness in the world oil markets this week by cutting their forecast for the increase in global oil demand by this year by 250,000 b/d from last month’s estimate. The Agency now believes that growth in consumption this year will be only 700,000 b/d, but will increase to 1.1 million b/d in 2015 as the global economy improves.
…click on above link for the rest of the article…
