Oil Falls Below $40 a Barrel

[nhboy]

Link

"Oil plunged below $40 a barrel in New York for the first time in more than six years, extending the longest decline since 1986 on concern slower demand growth will prolong a global glut.

Prices have tumbled almost 35 percent since this year’s highest close in June as producers pump away even after an oversupply pushed prices into a bear market. West Texas Intermediate may drop to $32 on the persisting surplus, Citigroup Inc. said Wednesday. Meanwhile, concern that China’s economy will slow increases expectation that demand will wane.

“It’s clear that the major producers, the Saudis, Russians, the U.S. and others, are battling for market share,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone.

An unexpected crude inventory gain in the U.S. last week followed signs that OPEC members are planning to boost production. A manufacturing gauge in China, the world’s second-largest oil consumer, sank to the lowest level since the financial crisis.

WTI for October delivery dropped 87 cents, or 2.1 percent, to settle at $40.45 a barrel on the New York Mercantile Exchange, the lowest close since March 2009. It touched $39.86 earlier. The volume of all futures traded was 13 percent above the 100-day average."

 

[tommyjo]

Link

"Oil plunged below $40 a barrel in New York for the first time in more than six years, extending the longest decline since 1986 on concern slower demand growth will prolong a global glut.

It touched $39.86 earlier. The volume of all futures traded was 13 percent above the 100-day average."

A couple of points. Hitting $39.86 is 14 pennies below $40...that HARDLY classifies as "PLUNGED BELOW $40".

Demand growth is not the issue with oil...it is a supply problem caused by Saudi/OPEC overproduction created to kill our production from tight oil formations. Additionally, the Iran deal will put Iranian oil back out on the world...making the supply issue worse.

 

[This_person]

A couple of points. Hitting $39.86 is 14 pennies below $40...that HARDLY classifies as "PLUNGED BELOW $40".

Demand growth is not the issue with oil...it is a supply problem caused by Saudi/OPEC overproduction created to kill our production from tight oil formations. Additionally, the Iran deal will put Iranian oil back out on the world...making the supply issue worse.

Worse? Are lower energy prices bad?

 

[LibertyBeacon]

Worse? Are lower energy prices bad?

For whom? Lower energy prices are good for some, not so much for others.

 

[Hijinx]

Haven't seen the price at the pump come down much.

They are sure to keep the supply down to keep the price at the pump up.

 

[BigBlue]

Haven't seen the price at the pump come down much.

They are sure to keep the supply down to keep the price at the pump up.

The refineries are having a hard time.

 

[LibertyBeacon]

Haven't seen the price at the pump come down much.

They are sure to keep the supply down to keep the price at the pump up.

You don't know too much about economics, do you champ?

 

[This_person]

For whom? Lower energy prices are good for some, not so much for others.

The overall effect is good. Inflation is lower, manufacturing costs reduced, shipping costs, increased spending and employment...

 

[Hijinx]

The refineries are having a hard time.

BS. They have a hard time every time some gas company needs to keep the price up/.

 

[Hijinx]

You don't know too much about economics, do you champ?

Sure I do, create a problem prices stay up. chump.

 

[littlelady]

Sure I do, create a problem prices stay up. chump.

I love that changing one letter can change the meaning of a word! But, you forgot to call LB, sugartits.

 

[LibertyBeacon]

Sure I do, create a problem prices stay up. chump.

This post is about prices falling.

 

[Hijinx]

This post is about prices falling.

My post was about the price not falling commensurately at the pump,but I doubt you can read and understand or you would know that.
By the way did you fart is that where the whoosh came from? Your posts do stink.

 

[BigBlue]

Haven't seen the price at the pump come down much.

They are sure to keep the supply down to keep the price at the pump up.

Ok, that must be why OPEC is increasing production.

 

[LibertyBeacon]

My post was about the price not falling commensurately at the pump,but I doubt you can read and understand or you would know that.
By the way did you fart is that where the whoosh came from? Your posts do stink.

atsonhead:

 

[LibertyBeacon]

My post was about the price not falling commensurately at the pump

You don't know a whole lot about economics, do ya champ?

 

[Tilted]

A couple of points. Hitting $39.86 is 14 pennies below $40...that HARDLY classifies as "PLUNGED BELOW $40".

Demand growth is not the issue with oil...it is a supply problem caused by Saudi/OPEC overproduction created to kill our production from tight oil formations. Additionally, the Iran deal will put Iranian oil back out on the world...making the supply issue worse.

Supply and supply concerns have been much of the issue with oil prices being down over the last year or so, and their part of why oil prices have come back down over the last couple of months after a bit of a recovery. But demand concerns are also part of what's been going on most recently and why oil prices have fallen as low as they have - e.g., to around $39 for WTI this morning - in the last couple of weeks. China has represented much of the demand growth and is anticipated to represent much of it going forward, so market participants are of course thinking about how much demand growth we'll see in light of what's going on in China right now.

 

[Tilted]

Worse? Are lower energy prices bad?

For Americans and for typical consumers low energy prices (in this case, oil prices) are generally, on-net, good. But there are also negative aspects of them. For instance, the drop in prices cost oil sector jobs and has put some of the smaller energy companies in financial trouble. And prices this low mean that we - America - will be producing less oil in coming months and years than we would have had prices not fallen so low. There's a reason Saudi Arabia has increased production in the face of much lower oil prices rather than cutting back on production and convincing the rest of OPEC to do so as well. They are playing an important game of chicken with part of the U.S. oil production industry (and others around the world), looking to wreck havoc on it and destroy some of their competition. They've had some success though how much they will in the end have had is left to be seen.

More to the point, referring to more oversupply as making an issue worse - when talking about various markets - is kind of a convention. It may be a good thing that certain prices drop, e.g. because a market is oversupplied, but when talking about the issue from the perspective of it being a market we quite often still use the convention of thinking of rising prices (or rising value) as positive and falling prices as negative. It's not really a commentary on whether one thing or the other is good or bad more generally, more practically. Saying the supply problem might get worse doesn't really mean I think that it's bad if there's more supply and thus that prices will drop. Again, it's an econ-speak convention - not necessarily a formal one but just how various term are used in such contexts, what they are typically taken to mean (and not mean).

 

[BigBlue]

Lower prices are not a bad thing when the product in question was over inflated in the first place .

 

[LibertyBeacon]

Lower prices are not a bad thing when the product in question was over inflated in the first place .

What do you mean by "over inflated"? How do you judge that? If you state that the prices are "over inflated", what then "should" the prices be?

Let me guess: you favor government price ceilings?