Slippery Oil Prices Plunge Over Cliff into Bear Market
By David Haggith
TheGreatRecession.info
August 1, 2016
Oil today plunged quickly below $40 per barrel, taking oil prices down more than 20% from their high a little over a month ago. That officially defines a bear market in oil. As of today, oil has also moved below its 50-day, 100-day and 200-day moving averages. July has again turned out to be a huge disappointment for oil producers who mistakenly thought price recovery had come to stay.
In addition to the dark clouds I presented last week, here is a list of newly developing reasons and ways that oil prices are continuing to slide toward $30 per barrel … as I’ve predicted all along:
Saudi Arabia today lowered its price of oil to Asia in order to compete more fiercely for market share, offering its biggest discount in almost a year … because the kingdom is now backed up with oversupply in its own tanks that it has to move. After raising prices to Asia not long ago, Saudi Arabia’s optimism about increased Asian demand proved short-lived.
Asian refineries are lowering their production. According to Bloomberg, some are cutting refinery production by as much as 50%.
Short positions for West Texas Intermediate crude (WTI) increased last week by their largest volume on record. Likewise with short positions on gasoline. Hedge funds in particular are betting on a gasoline glut. Summarized Newsmax, “Money managers have never been more certain that oil prices will drop.”
The global economy is simply exhausted. Growth in global demand for oil continues slowing, and many nations and people simply cannot afford high oil prices any longer.
Thanks in part to Brexit, the global petrodollar continues to rise in value, meaning it takes fewer dollars to buy a barrel of oil.
The Rest…HERE
