Resurgent US Oil Industry

By Rick Mills – Re-Blogged From http://www.Silver-Phoenix500.com

Crude oil prices dropped from $110 a barrel in the summer of 2014 to about $30 in January 2016. The effect on oil producers and oil-producing countries was dramatic. The Russian ruble plunged, and the Canadian dollar slipped to below 70 cents US for the first time since 2003, kicking the country into recession and snuffing out the oil boom in Alberta. Many foreign companies operating in the high-cost Canadian oil sands pulled up stakes.

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Crude Oil Verifies Breakdown

By Nadia Simmons – Re-Blogged From http://www.Silver-Phoenix500.com

On Friday, the black gold gained 1.15% and climbed to the previously-broken lower border of the trend channel. Is this a verification of the earlier breakdown or something more?

Crude Oil’s Technical Picture

Let’s take a closer look at the charts and find out (charts courtesy of http://stockcharts.com).

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Low Oil Prices Continue To Decimate Saudi Arabia’s Currency Reserves

By SR Srocco – Re-Blogged From http://www.SRSroccoReport.com

The low oil price continues to wreak financial havoc on the largest oil producer in the Middle East.  While the Mainstream press has published articles forecasting a rebound in Saudi Arabia’s financial outlook, due to higher oil prices this year, it seems like the Kingdom’s problems are just beginning.

In order to make up for falling oil revenues, Saudi Arabia has been liquidating its foreign currency reserves at a pretty good rate over the past two and a half years.  I discussed this in my article, Bankrupting OPEC… One Million Barrels Of Oil At A Time.  In that article I published this chart:

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Venezuela Chaos: The Biggest Threat to Cheap Oil

Venezuela’s deepening chaos could soon create tremors in the global oil markets.

Already in an economic and humanitarian crisis, Venezuela’s oil production — the country’s sole lifeline for revenue — has hit a 13-year low.

As the situation worsens, Venezuela’s oil output could plunge even lower. A new report by Columbia University’s Center on Global Energy Policy calls Venezuela a “growing supply risk for oil markets in 2017.”

Oil prices are currently around $45 a barrel, a dramatic drop from about $110 two years ago. The main reason for the low prices is that there’s too much supply globally. However, the line between oversupply and a shortage in the oil market is thin, and Venezuela could tip the scale in the opposite direction.

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Fill the US Strategic Petroleum Reserve

cropped-bob-shapiro.jpg   By Bob Shapiro

The US created a Strategic Petroleum Reserve in 1975, after the arab oil embargo (and a stupid US rationing scheme) caused supply disruptions. Today, this reserve holds a little over 1 month’s worth of oil.

Assuming that there is a real need for this Reserve, I would hope that it would be run using some basic economic and market principles. Right up at the top of the list of Market Principles is the Commandment: “But Low, and Sell High.”

The Price of Oil today is on the low side over the last 40 years, on an inflation adjusted basis. Back in ’73-’74, the Price of Oil went from under $10 a barrel to the mid-$30s. While the nominal Price today is in the low $40s, adjusted for the CPI, oil is under $8 a barrel in 1975 Dollars. (The CPI is a low-ball number, so maybe $5 is closer.)

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Slippery Oil Prices Plunge Over Cliff Into Bear Market

By David Haggith – Re-Blogged From Great Recession Blog

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:

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Destroying Crude Oil Price Rally – Something Dark Emerges from the Tar Pits and Oil Sands

By David Haggith – Re-Blogged From Great Recession Blog

The crude oil price rally has been completely destroyed, though I’ll admit I was wrong when I predicted crude oil prices would plummet in March or April as the perfect storm developed against oil prices. Instead, they rallied. In spite of that, I continued to believe my error was in timing and not in fact — not in the fact that another harsh fall in oil prices was beating a path to our doors.

Crude oil prices beaten down by a storm still building

So, I continued to write articles about the forces building against oil prices, even in the face of a strong rally, which many believed would set a new position for oil for the remainder of 2016. That storm has, as of today, completely clawed back the post-March rally by taking crude oil prices back to a three month low and to where they stood at the start of the year as well. West Texas Intermediate just struck $42/barrel today.

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The Oversupply Of Oil Means Ports Are Swamped With Oil Tankers

By David Haggith – Re-Blogged From http://www.Silver-Phoenix500.com

This picture of one port tells a major story: Tankers are running circles around the Chinese port of Qingdao. One ship has been carving circles in the water for twenty days, waiting for a chance to offload at any one of several “teapot” (small) refineries in the region.

China is the world’s second-largest consumer of oil. Lack of available storage capacity on land is slowing down the rate at which refiners can take in crude, as is a reduction in the profitability of refineries, which is causing them to back off on refining.

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Raging Wildfire in Canada Fuels Oil Prices

By Matt Egan – Re-Blogged From CNN Money

Canada’s oil-rich province of Alberta is under siege from a massive wildfire. And that’s creating turmoil in the global oil markets.

The huge forest fire has already torched at least 1,600 homes and forced the evacuation of about 88,000 people in the region, including everyone from the oil sands town of Fort McMurray.

Fire Canada oil town Fort McMurray Alberta

The disaster has also caused Royal Dutch Shell (RDSA)to shut down its Albian Sands facility and other producers have had to reduce the amount of oil they are pumping as well.

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More Pressure Builds Against Oil Prices

By David Haggith – Re-Blogged From The Great Recession Blog

Saudi Arabia has moved beyond its original statement that it will only support a production freeze if “other major producing nations” sign on to the agreement. It has now clarified what I believed to be intended by its initial caveat all along, stating that it will only sign on to a production freeze if ALL nations sign on to such a freeze. So, “other” means “every.”

To which, Iran says, “Never!”

The Saudi Deputy Crown Prince went even further than that by stating if ANY nation does not sign on to a production freeze, “then we will not reject any opportunity that knocks on our door,” by which he means any opportunity to ramp up crude oil production and sell more oil.

And here is what that means for the OPEC meeting in Doha this month that has raised hopes that I believed to be absurd in the first place:

OilBarrels-500x375

The actions and intentions of Saudi Arabia and Russia—the two largest oil-producing nations attending the Doha meeting on 17 April—have dashed all hopes of any fruitful outcome. The most important meeting of the last three decades, which has promised to forge new friendships and a new cartel, is turning out to be the biggest farce, even before the curtain is raised.

The recent announcements from Saudi Arabia outlining the plan to create a $2 trillion fund to reduce dependency on oil and reports of austerity plans indicate that the Kingdom is not taking the Doha meeting seriously. It also seems to be sending a message to the others that it will not buckle under any sort of pressure, and it is readying its Plan B.

The Doha meeting will turn out to be a total disaster and the sentiment will be further damaged if the participating members don’t release a common statement. Forget about the production freeze. Listen carefully, Bears can be heard sharpening their claws ahead of the meeting. (OilPrice.com)

Meanwhile, what do Russia’s actions (the other key player in this agreement to talk about an agreement) say about the likelihood of success? Russia’s production has worked its way up since talk about having a talk began to a new thirty-year high!

Oil production in Iraq has also picked up so much that there is standing room only in the Persian Gulf:

Oil tankers are caught in a traffic jam near the Iraqi port of Basra, causing delays in loading. According to Reuters, around 30 very large crude carriers (VLCCs) are sitting in the Persian Gulf, and the backlog could cost ship owners more than $75,000 per day. Some could be waiting for weeks to reach the port…. The culprit is high oil production in Iraq. The port at Basra is struggling to load up all the oil tankers fast enough, forcing some to sit and wait…. And the line of tankers appears to be growing. The gridlock is forcing up the cost of renting an oil tanker. That, combined with the shrinking capacity of available storage in China is pushing up tanker rates in Asia as well. (OilPrice.com)

While oil tankers are stacking up because of increased Iraqi production, they are also stacking up because, once loaded, they have nowhere to go! So, it’s a pile-up at sea.

As storage becomes less available on land and sea, the price of storage goes up (supply and demand again). As ships has become backlogged, the price of shipping has nearly doubled. Increases in the cost of moving and storing crude oil, put additional downward pressure on how much people are willing to pay for crude oil. So, while supply (production) is still rising in many parts of the world, demand for more crude is going to fall, as it gets pricy to have it just sitting around.

In spite of ramping up it’s production, Iraq is one of five OPEC nations on the brink of financial disaster, due in large part to the current low oil prices — the others being Venezuela, Nigeria, Libya, and Algeria. So, these smaller nations talk of hope for the Doha meeting, while the larger nations give no rational basis for hope.

One has to wonder how long it will be before some architect of human chaos decides the way to resolve this crisis for the oil and banking industries is with a Middle-East war that crushes supply lines and knocks out production. Let’s hope not, but history has its example wars that look like they had such motivation.

So far, there is a growing storm of reasons to stay with my prediction that the price of oil is going to go back down. As I published my article yesterday to that effect, the price of oil was going up rapidly; but I look at the fundamentals and see a lot more downside … and stay with that.

Oil, oil everywhere, and almost nowhere left to put it.

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Perfect Storm For Oil Started On Schedule And Continues To Build

By David Haggitg – Re-Blogged From http://www.Gold-Eagle.com

The perfect storm I predicted against the price of oil in the Ides of March has not fully developed, but all the forces I spoke of are continuing to build. The balmy days that prevailed for oil prices in early March have gone away, replaced by a downdraft that is once again suppressing prices more and more since their peak in mid-March. The storm’s breezes can now be felt in prices that have relinquished 40% of their earlier gains, and the clouds are becoming more apparent to all.

Prices had one of their worst days of the year on Friday of last week and drifted marginally lower again on Monday of this week, stabilizing some on Tuesday. Friday’s pounding came because Saudi Arabia announced it would not participate in the oil supply freeze that it negotiated with Russia since Iran is not going to join the freeze.

That is one of the major storm fronts that I said would come into prominence as part of the perfect storm against the price of oil. I pointed out a few times that market enthusiasm over talk of a deal (still not completed) between Saudi Arabia and Russia to merely freeze production was ludicrous because the Saudis always said the deal was contingent upon other producers joining and that “other producers” most certainly included Iran, and that Iran most certainly would not join the deal.

Don’t expect Saudi Arabia to flinch and start backing down now that Iran has made clear it will not join the deal by freezing its production. Deputy Crown Prince …

Bin Salman nevertheless said Saudi Arabia was ready to face a prolonged period of low oil prices that have dropped sharply since mid-2014 as a result of higher global production. “I don’t believe that the decline in oil prices poses a threat to us,” he said. (Arab Times Online)

Even if a production freeze is formalized, it’s a bad thing, not a good thing. That makes it all the more silly that talk of the deal pushed down prices for a while. The deal, if it happens, promises to freeze production at January’s extremely high levels, which absolutely guarantees continued oversupply (unless there is a huge increase in demand, which so far has evaded the oil industry). A freeze is far from being a production cut, which is the only thing that can solve the oil industry’s problems on the supply side. Far too much has been made of the deal by a market full of unrealistic optimists for that reason.

Freezing production at January levels is “looking more and more pointless”, according to analysts…. What is becoming very clear is that Saudi Arabia is serious about moving away from the traditional play of adjusting prices by cutting or freezing supplies by itself. (The Week)

The dividing line between Saudi Arabia and Iran has hardened, and a deal would only freeze production at a level of continuous oversupply. All what I said a month ago. It’s a deal that is not likely to happen, and if it does, it is pointless anyway. I’ve just been waiting for this one part of the storm to organize into clear formation so that everyone can see it before writing more, and it now has. You can see those swirling storm clouds from that particular direction quite clearly now in the daily news, and you can see that they have started bringing down oil prices.

That was Friday’s big blow. Monday’s downdraft came in part because the National Iranian Oil Co. stated that it just authorized sales of crude to Dutch Royal Shell after the company settled a debt dispute with Iran. Iran repeated that it will continue to expand its oil production and sales until they reach the levels they were before Iran’s nuclear dispute with the West, hardening its stance against the Saudi-Russian deal.

Demand for oil products may be receding, not rising

Compounding matters, government data was released on Monday that showed the first small drop in gasoline demand in fourteen months. Until now, gasoline demand has remained a pillar that helped support the US oil industry through the supply glut. Drop in demand for products derived from oil is being noted in other parts of the world, too:

The oil price “can easily revisit the lows seen earlier this year,” French bank BNP Paribas said in a note to clients, as bearish demand data added to concern over a deal to freeze excess supply…. This comes ahead of a second quarter period that typically sees a dip in demand as refinery maintenance peaks. (The Week)

That’s right. The refinery shut-down period for maintenance that I said would be the second front that comes in to form the perfect storm has just begun. It’s a couple of weeks later than I expected, but wind from that direction is picking up velocity now. It will become an additional force against the price of oil so long as refineries stay in maintenance mode, which reduces their demand for crude.

The third front in the perfect storm — tanks starting to fill the brim

…This all coincides with figures showing buying of crude derivative products slipping in key Asian markets, “as onshore storage facilities in Singapore and Malaysia are filled to the rims”

The third front is just starting to happen. It will very slowly gain strength, but it certain to be the worst front of all over time. As tank farms around the world fill to capacity along with ships at sea, storage becomes more problematic. Oil has fewer and fewer places to go, and demand for crude will fall off a cliff.

As it stands right now, there is nothing that will prevent that from happening. A production freeze means we keep moving toward that end at the current rate of production. Lack of a freeze means production continues to expand so that the world has to make the necessary supply adjustments out sooner.

On Tuesday, Brent crude briefly touched down on a one-month low of $37.27 then floated back up slightly when Kuwait claimed that a production freeze is still possible without Iran.

Asked if anything is likely to come from the April 17th meeting of OPEC where the possible production freeze will be discussed, Lord John Brown, executive chair of L1 Energy, told CNBC

I’d be very surprised at this time. Production is high. People are scrambling to maintain markets that they have and to gain markets from other people. So, it’s not a time for reconciliation yet.

I would be surprised, too, because Kuwait doesn’t have a lot to say about it and, in fact, is doing its part to make things worse, while Saudi Arabia has made its position clear, exactly where I said it would stand. In fact, Kuwait may just be trying to take pressure off its own announcement that it will be ramping up more production soon:

The Middle East sour crude complex is likely to come under bearish pressure on news of Kuwait and Saudi Arabia agreeing to restart production from the 300,000 b/d offshore Khafji oil field…. “Even the idea of a freeze [in oil production] may be tested by [the] announcement that Saudi Arabia and Kuwait are preparing to restart the 300,000 b/d Khafji oil field … Citi analyst Timothy Evans said in a note to clients. (Platts)

Iraq’s oil production also increased through the month of March.

The impact on the US oil industry, seen in broad terms, is that the US now has fewer oil rigs in production than at any time in the past sixty years following fifteen weeks of continual decline. Nevertheless, oversupply continues to rule the market. As many as sixty small and a couple of large oil companies have gone out of business or declared bankruptcy.

Numerous bonds and other forms of loans to the oil industry are in default but are being ignored by banks because the banks don’t wish to compound the problem for themselves by creating a situation where they have to write down the value of the securities on that debt and have to write off debts. So, everyone is trying to sit it out. The scale of the problem for banks is largely masked because the Dallas Fed has told banks to sit tight as much as possible.

It’s believed data later this week will show that crude stock in the US has continued to grow over the past week to a higher record high. That will be the eighth week of setting new records in total US oil storage. If that data turns out as expected, that will offset news of a drawdown in Oklahoma the week before, showing it that to be nothing more than a brief eddy in the winds.

We are relentlessly getting closer to a point of total market saturation, which happens when all tanks are full.

Conclusion: The perfect storm for oil is arriving onshore now

The winds and clouds that are bringing the perfect storm against oil prices from three fronts are all growing stronger. I can now easily find many conservative market analysts starting to agree with what I predicted a month ago:

Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits…. “Given that recent price appreciation does not seem to be very well founded in improving fundamentals, and that upward trends may prove difficult to sustain, the risk is growing that any setback will result in a rush for the exits that could again lead commodity prices to overshoot to the downside.” (NewsMax)

“Overshooting” is just another way of saying “the perfect storm.”

Barclays also notes that positioning in the oil market has reached “bullish extremes” because the bullish rise in crude oil prices is not based on sound fundamentals. That’s right. It’s based on wishful thinking that is based on vague hopes that, if properly worded, would say Saudi Arabia will continue its production full speed ahead if Iran does cooperate and will otherwise increase production beyond its current levels. (That’s all a production freeze offers.)

Barclays says the rush for the exits could bring a price drop of 25%.

Even Goldman Sachs agrees with me now:

Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating as it did last spring. (Zero Hedge)

In other words, this problem is NOT going away until lower prices finish the job of flushing away the weakest competitors as a way of reducing supply to match current demand. So, if the energy production deal does finally go through in mid-April, we will still have to fill our waterbeds with oil to find places to store the overproduction. It will just take longer to get to the point. (The greater truth is that Saudi Arabia and Russia cannot really ramp up oil production much more anyway. So, talk of a deal not to increase production is really the most meaningless babble on the planet right now.)

Whether a deal happens or not, more oil companies, more related service businesses, and some of their bankers will be flushed away. The only thing that could change that is either a big increase in demand (not seen as likely by anyone that I’ve come across) or a big reduction in supply (not being talked about by anyone anywhere).

Barring a war or huge natural catastrophe that forcibly cuts off large amounts of production, the only reductions in supply that will happen are the hard ones that come from businesses closing shop. Those who continue to hope for an easier answer in the form of prices that stabilize the market at its present production levels are nothing but rosy-eyed dreamers, living in economic denial.

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Oil Price Prospects

cropped-bob-shapiro.jpg   By Bob Shapiro

Crude oil prices have fallen from $100+ two years ago to around $37 today, after going under $30 briefly last month. Not surprisingly, there are differing views on the direction of prices going forward.

Lets look at where we are now.

The Shale Boom has catapulted the US to the top world producer spot, surpassing Saudi Arabia. This has greatly reduced US imports of oil and is a major contributor to the price break we’ve seen. As an aside, the US Balance of Payments has been much reduced by US Shale Oil production, even though the Deficit once again is running at over $500 Billion a year.

But, there are other factors greatly affecting the supply-demand balance for oil.

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Why Oil Prices are Likely to Remain Low for the Foreseeable Future – Shale 2.0

By Anthony Watts – Re-Blogged From http://www.WattsUpWithThat.com

Shale Revolution Changes Everything

How the Shale Revolution Has Reduced Geopolitical and Price Risk

shale2-0

Opec was on the verge of claiming victory over its North American rivals last night after its strategy of squeezing out the shale industry by flooding the markets with oil appeared to be vindicated. The oil producers’ cartel said that falling prices would force lower production from its rivals by the end of this year, with American and Canadian producers particularly affected. –Marcus Leroux, The Times, 19 January 2016
When oil prices tick up, thousands of profit-seeking investors make individual decisions

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Jig Is Up For The Fed

By Rick Ackerman – Re-Blogged From http://www.Gold-Eagle.com

Traders seem obsessed lately with the ups, and mostly downs, of crude oil — so much so that every dip, feint and jiggle in energy futures is being replicated almost tick-for-tick by the S&Ps. A recent op-ed piece by Don Luskin in the Wall Street Journal asserted that falling oil prices brought on mainly by a fracking glut are crushing the world economy, but this gets it exactly wrong. In fact, falling crude prices are merely symptomatic, albeit in a big way, of deflationary forces that are starting to implode the global economy with black-hole force.

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Godzilla El Nino to Lower Your Heating Bill

By Matt Egan – Re-Blogged From http://money.cnn.com

Apparently, a godzilla is destroying the natural gas market.

Don’t worry, there isn’t a giant sea monster preparing an attack. Rather, predictions of an extremely warm winter — driven by what meteorologists have dubbed a “Godzilla” El Nino — have caused natural gas prices to plummet dramatically.

Natural gas prices tumbled 9% on Monday to three-and-a-half year lows. They’re already down 18% in October and nearly one-third so far this year.

Meteorologists are predicting the unseasonably warm fall temperatures to continue into the winter, which would diminish demand for natural gas to heat homes and businesses.

“A warm winter is the last thing this market needs,” Bank of America Merrill Lynch commodity strategist Sabine Schels wrote in a research report.

Schels believes a mild winter is a “big risk” and could cause a “gas glut” in the coming months.

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Credit Crunch All Over Again!

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

It smells like crunch time to me, the markets have flattened or begun to even roll over on continuously decreasing volume.  The economy has also turned down all over the world including in China.  Europe is contracting, Britain has finally figured out their finances are FUBAR and the U.S. would not show growth if not for the biggest inventory build in history.  Oil tankers are sitting idle (and full) all over the world, is this a sign of “recovery” or of stagnation.  The Baltic Dry index is plumbing news, this would be a sign of what?  When I wrote crunch time above, I should have clarified, it looks “credit” crunch time and this time there is no white knight to save the day.

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End Energy Intervention

By Jerry Taylor and Peter Van Doren – Re-Blogged From http://www.downsizinggovernment.org

Large-scale federal intervention into America’s energy markets began in the 1930s and lasted for four decades. Many rules were imposed to control prices, restrict imports, and distort markets in various other ways. The shortcomings of this heavy regulatory climate became apparent during the energy crises of the 1970s, prompting policymakers to reverse course and begin deregulating oil, natural gas, and coal markets.

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End Energy Regulation

By Peter Van Doren – Re-Blogged From http://www.downsizinggovernment.org

Large-scale federal intervention into America’s energy markets began in the 1930s and continued through the 1970s. A series of major laws and executive actions sought to control energy prices, regulate electric and gas utilities, and limit imports. Competition was stifled and domestic investment was suppressed.

By the 1970s, the Middle East oil embargoes and other upheavals began making the failure of federal energy interventions clear to policymakers. They reversed course, and took major deregulatory steps in the 1970s and 1980s to free up energy markets, to the ultimate benefit of consumers and the overall economy.

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Peak Oil Re-visited

By Mike Jonas – Re-Blogged From http://www.WattsUpWihThat.com

In 2012, I said that it was getting ever more difficult to increase production, and that I suspected that we were already at or close to Peak Oil, but that it was still mathematically possible that Peak Oil was many years away. Do I still think that? In a way, yes, but … well, read on …

In this article, I look at the major factors affecting oil supply, look at past oil market behaviour and how the future may develop, see what lessons can be learned from Hubbert’s Peak, and speculate on when Peak Oil will occur and what it may feel like.

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Three Sigma Extremes In The Bond Market

By Gary Christenson – Re-Blogged From http://www.Silver-Phoenix500.com

US T-Bond futures closed Friday, March 27 up nearly 12% from the February close.  That was the 3rd largest monthly percent move since 1977 when my data begins and created a 3.61 standard deviation change.  This is a huge move.  What does it mean?

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Extremes: Expect Consequences (Part 2)

By Gary Christenson – Re-Blogged From http://www.Silver-Phoenix500.com

WHAT EXTREMES?

Crude Oil has fallen nearly 60% in less than a year – back to lows last seen in 2008, after crashing from a high near $147 a few months earlier.  The economic consequences in the oil sector will be extreme.

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Weekly Climate and Energy News Roundup #174

The Week That Was: March 28, 2015 – Brought to You by www.SEPP.org

By Ken Haapala, President, Science and Environmental Policy Project (SEPP)

Number of the Week: 6.2%

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Intellectual Freedom and Censorship: On her web site, Donna Laframboise, discusses an open letter to museums signed by 54 individuals who described themselves as “members of the scientific community. “ The letter objects to museums receiving funds from “those who profit from fossil fuels or fund lobby groups that misrepresent climate science.” The letter specifically discusses David Koch, who “is a major donor, exhibit sponsor and trustee on the Board of Directors at the Smithsonian’s National Museum of Natural History, and the American Museum of Natural History.” The letter asserts that “Mr. Koch also funds a large network of climate-change-denying organizations, spending over $67 million since 1997 to fund groups denying climate change science.”

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Talk is Cheap

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

Wednesday the Fed made their announcement and deleted the famous word “patient”.  I have never seen such a nonsensical frenzy over anything, never mind a single word.  The reaction was everything …except the dollar was bid.  Sadly, reality has also been deleted as the Fed cannot “go there”, if they did and when they do (are forced to), life as we knew it will be history.  Reality is the global economy has stalled.  Most of Europe is in recession, China’s growth has stalled and the U.S., even with fudged numbers will not be able to show any growth.

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Beware Of The ”Frack-Log”

By Andrew Hoffman – Re-Blogged From http://www.Silver-Phoenix500.com

Why do I spend so much time discussing collapsing oil prices, you ask? Well, for one, because as we wrote back on October 15th – when WTI crude was $83/bbl, compared to $43/bbl this (Monday) morning – “crashing oil prices portend unspeakable horrors.” And this, just a week after October 7th‘s “2008 is back“; as obvious signs of global economic collapse were evident before the price of the world’s most important commodity crashed. As for said “unspeakable horrors,” the political, economic, and social ramifications will be devastating here in the States – where hundreds of high cost, junk-bond financed shale producers face certain bankruptcy, and one-third of S&P 500 capital expenditures dramatic downward revisions. That said, the overseas impact will be still uglier – where everyone from corrupt, inefficient state oil companies

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Unraveling the Mystery of Oil and the Swiss Franc

By Vitaliy Katsenelson – Re-Blogged From IMA Portfolio Management

I want to preface my article with a short excerpt from one of my favorite books, Antifragile, by Nassim Taleb:

A turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys “with increased statistical confidence.” The butcher will keep feeding the turkey until a few days before Thanksgiving. Then comes that day when it is really not a very good idea to be a turkey. So with the butcher surprising it, the turkey will have a revision of belief—right when its confidence in the statement that the butcher loves turkeys is maximal and “it is very quiet” and soothingly predictable in the life of the turkey.…The key here is that such a surprise will be a Black Swan event; but just for the turkey, not for the butcher….

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When The History Books Are Written…

By Andrew Hoffman – Re-Blogged From http://www.Gold-Eagle.com

It’s Wednesday morning; and again, I’m having difficulty focusing on a single “horrible headline” – or if you will, a single “horrible topic.” I could start by following up with yesterday’s “PDAC, the Epitome of Mining Ineptitude” with this article from Brent Cook – a geologist who has written a mining newsletter for years – titled “Exploration cuts killing miners’ future.” And this one, of how Australian gold production rose in 2014; but “due to lower prices, Australian gold miners increased the ore grades they were targeting, and pushed their processing plants even harder. In other words, though “superficially, the figures give the impression of a healthy and vibrant industry, “higher grades and greater throughput shortens mine lives.”

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US Economic Headwind

cropped-bob-shapiro.jpg   By Bob Shapiro

Economic numbers released today show the US Economy contracting. But some of these numbers understate the damage.

One of the most important statistic is Unemployment. Government figures show that Initial Claims for Unemployment, and Continuing Claims, both were up – to 320,000 and 2,421,000 respectively. While single week changes certainly can’t demonstrate a trend, there has been a significant increase from just a couple of months ago.

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Countdown To “Grexit”

By Andrew Hoffman – Re-Blogged From http://www.Silver-Phoenix500.com

After declining for an incredible 47 of the past 51 days, the Baltic Dry Index has officially breached its all-time low of 554 – set in 1986, 29 years ago. Sure, propagandists will try to blame tanker “oversupply” rather than plunging end user demand – just as they blame the catastrophic oil price plunge on “oversupply” of high cost oil, rather than said “under-demand.” However, the fact remains that both the Baltic Dry Index and oil price are freefalling – in both cases, catalyzing massive corporate and investment losses; layoffs; and defaults.

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Business Cycles and Government Decisions

cropped-bob-shapiro.jpg   By Bob Shapiro

Economic conditions tend to run in cycles. Pressures build, official efforts are made to contain any perceived bad effects, and at some point, the pressures overwhelm all opposition. The cave-in frequently, but not always, sets pressures in motion in the opposite direction.

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People Have More Money. Let’s Tax It!

Re-Blogged From http://www.Mises.org By John P. Cochran

As highlighted by David Henderson and Peter Boettke, markets and competition are like weeds, not delicate flowers. Economies recover even from severe boom-bust episodes and despite growth-retarding regime uncertainty. Even burdensome regulation, per Pierre Lemieux, causes a “slow-motion collapse” or stagnation, not a crash. But one thing can be counted on, as innovation or recovery begin to deliver additional spending power to the productive class of the economy, the “unmet needs” crowd will just as quickly be out clamoring for a heightened government share of the ‘bounty’ for some imagined greater public good.

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Which Way the US Economy?

cropped-bob-shapiro.jpg   By Bob Shapiro

There have been a lot of news items lately which will / could have an impact on the US Economy and the Jobs outlook. The US currently has about 140 million people working, a rise of 2 million over the last 7 years. At less than 24,000 rise per month, that doesn’t come close to satisfying the demand for jobs with roughly 120,000 Americans entering the job market each month. The US would have needed to create 10 million new jobs during the last 7 years to do that.

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Crude Oil Supply and Demand

Re-Blogged from http://www.Silver-Phoenix500.com By Keith Weiner

We don’t normally analyze the crude oil market. However, there has been a huge price move (which may not be complete yet). With the endless rumors of deals that explain the move, we thought we would look at the spreads. The data shows a startling picture.

You should approach supply and demand in this market similarly to gold and silver. The difference is that there is very little inventory buffered in the system. Notwithstanding what you read about China “buying up” the oil to take advantage of “cheap” prices, oil requires specialized storage facilities. There is a significant cost to store it, and finite capacity too.

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Vetoing Bipartisan Energy, Job, and Economic Growth

New Republican members were still being sworn in and expressing their desire for bipartisan initiatives, when President Obama said he would veto the Keystone pipeline, ObamaCare fixes, and other bills that run counter to his agenda. Washington’s new “common ground” will be a tricky, dangerous swamp.

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Oil Prices

cropped-bob-shapiro.jpg   By Bob Shapiro

I wrote recently about the big drop in the price of oil since last summer. Back in June, crude oil sold for $105 – today, the price is below $59 – per 55 Gallon barrel. That’s a drop of about 44% during the last 6 months.

On the supply side, that drop likely will cause some slowdown in the new US oil fields in North Dakota and Texas, which are dependent on

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