Posts
According
to MSM "Oil prices are only hurting Russia”
Oil prices have fallen below $50.
Oil
Rigs Seen Declining 600 by August as Prices Plunge
12
December, 2014
Rigs
targeting oil in the U.S. will drop below 1,100 for the first time in
three years as drillers pull out of fields made unprofitable by a 43
percent plunge in crude prices, forecasts prepared by Genscape Inc.
show.
The
oil count is set to drop by almost 600 rigs over the next eight
months, bottoming out at 1,073 in August, according to the energy
data and analytics company. Drilling will subside in most U.S. oil
fields since they all have areas that are no longer economic at
today’s oil prices, the Louisville, Kentucky-based company said.
U.S.
oil prices have dropped by almost $50 a barrel since June amid a
global glut. The slide threatens to slow a boom in U.S. shale-oil
drilling that has propelled domestic crude output to the most in
three decades and brought retail gasoline prices below $3 a gallon
for the first time since 2010. Oil rigs have fallen by 34 since
reaching a record in October, and the count is on track to drop for
the first time in five quarters.
“Last
year it was like, how high is production going to go and now the
questions are when is production going to stop,” Jodi Quinnell,
Genscape’s manager of crude oil analytics, said by telephone today.
“We’re actually predicting a little bit of a decline through
2016. That’s when it will really all play out through the
production side.”
U.S.
oil output will rise about 900,000 barrels a day to average 9.4
million at the end of 2015, Quinnell said. The pullback in drilling
will drive production down by about 47,000 barrels a day in mid-2016,
she said.
Drilling
Economics
Oil
plays in the central Rockies and Midcontinent will be hit especially
hard, said Quinnell, based in Boulder, Colorado. North Dakota’s
Bakken formation, Texas’s Eagle Ford and the Permian Basin of Texas
and New Mexico will fare better because their “drilling economics
are better,” she said.
Genscape
predicts the rig count will start rebounding in the last half of 2015
to reach 1,200 by 2018. The company models the economics of oil plays
and prices to project rig counts, Quinnell said.
U.S.
benchmark West Texas Intermediate oil tumbled by $2.88 a barrel, or
4.5 percent, to settle at $60.94 on the New York Mercantile Exchange,
the lowest close since July 2009.
Source:
Bloomberg
"Nothing happening. Go back to sleep. Go shopping"
Crude
Carnage Contagion: Biggest Stock Bloodbath In 3 Years, Credit Crashes
12
December, 2014
We
leave it to Jack to explain what happened this week...
Quite
a week!!
- WTI's 2nd worst week in over 3 years (down 10 of last 11 weeks)
- Dow's worst worst week in 3 years
- Financials worst week in 2 months
- Materials worst week since Sept 2011
- VIX's Biggest week since Sept 2011
- Gold's best week in 6 months
- Silver's last 2 weeks are best in 6 months
- HY Credit's worst 2 weeks since May 2012
- IG Credit's worst week in 2 months
- 10Y Yield's best week since June 2012
- US Oil Rig Count worst week in 2 years
- The USDollar's worst week since July 2013
- USDJPY's worst week since June 2013
- Portugal Bonds worst week since July 2011
- Greek stocks worst week since 1987
Some
serious intraday volatility this week as hope kept shining through
but in the end, reality won. Despite
spiking euphoria among US Consumers, concerns over Greek elections,
Japanese elections, the GDP-plunge-driven collapse in oil prices
(with neither OPEC nor non-OPEC willing to blink yet on cutting
production), and contagion to high-yield finallly caught up with
stocks after they blindly followed the mainstream media narrative
that low oil prices are unequivocally good for every muppet.
First
things first... 2014 so far... "why
would you buy a Treasury bond when you can buy stocks with
dividends?"
Here's
why crude matters...
No
Hindenburg Omen today but
it appears the Dow & S&P are pressing down to test their
50DMAs...
On
the week, The Dow was the laggard... NOT OFF THE LOWS
And
Energy sector the worst...
The
Russell 2000 closed the week negative year-to-date...
VIX
surged this week (ignore the excitement over percentage moves)...
Treasury
yields collapsed...
Leaving
the decoupling at epic levels... between bonds and stocks..
and
between credit and stocks...
The
Dollar slipped a little today to end the week down over 1%
Gold
and Silver had great weeks - very stable as the rest of the markets
turmoiled - while oil prices
Crude
is now down 25% from the initial OPEC leaks...back below $58!!
Makes
you wonder eh? The decoupling began when QE3 was hinted at...
and
energy credit is near 1000bps now... and is starting
to spread to rest of the HY markets...
notably
worse than stocks (for now)...
*
* *
But
it's all about the fundamentals!! Great Jobs Data, Great Retail Sales
Data, and Great Consumer Confidence Data - unless that's all totally
manipulated bullshit?
Charts:
Bloomberg
Bonus
Chart: How much longer can this go on?
Russia
IS hurting but I doubt that the Empire is going to collapse the
Russian economy as easily as they did the Soviet one
What's
The Biggest Loser Since Oil Prices Peaked?
12
December, 2014
Since
oil prices peaked in June this year, there is one clear
loser (according
to the narrative) -
Russia. Russian
stocks have dropped 41% during that time and the entire Russian
market capitalization is now only 60% of Apple!
And while Greece's recent demise has it close to being the worst
performer of the year, it's not quite. However, since
oil peaked in June, both Russia's and Greece's epic demise is trumped
by another stock market index...
Year-to-date,
Russia is the biggest loser with Greece's recent demise catching down
to it quickly...
With
Russia's entire market cap now only 60% of that of Apple...
But
since oil peaked, there is a clear loser... The
US Oil E&P sector...
Presenting
The $303 Trillion In Derivatives That US Taxpayers Are Now On The
Hook For
12
December, 2014
Courtesy
of the Cronybus(sic) last minute passage, government was provided a
quid-pro-quo $1.1 trillion spending allowance with Wall Street's
blessing in exchange for assuring banks that taxpayers would be on
the hook for yet another bailout, as a result of the swaps push-out
provision, after incorporating explicit Citigroup language that
allows financial institutions to trade certain financial derivatives
from subsidiaries that are insured by the Federal Deposit Insurance
Corp, explicitly putting
taxpayers on the hook for losses caused by these contracts. Recall:
Five years after the Wall Street coup of 2008, it appears the U.S. House of Representatives is as bought and paid for as ever. We heard about the Citigroup crafted legislation currently being pushed through Congress back in May when Mother Jones reported on it. Fortunately, they included the following image in their article:
Unsurprisingly, the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services.
We
say explicitly, of
course, because taxpayers have always been
on the hook implicitly for
the next Wall Street meltdown.
Why?
Exhibit
A: US
banks are the proud owners of $303 trillion in derivatives (and spare
us the whole "but..
but... net exposure"
cluelessness - read
here why
that is absolutely irrelevant when even one counterpaty fails):
Exhibit
B:
Here are the four banks that are in complete control of the US
"republic."
At
least we now know with certainty that to a clear majority in Congress
- one consisting of republicans and democrats - the future viability
of Wall Street is far more important than the well-being of their
constituents. Which also, implicitly, was made clear when Hank
Paulson was waving a three-page "blank check" term sheet,
and when Congress voted through the biggest bailout of banks in US
history back in 2008.
The
only question is when the next multi-trillion (or perhaps quadrillion
now that all global
central banks are all in?) bailout takes place.
Source: OCC
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