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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