Oil just seemingly still cannot find a bottom. Story at BBC here.
The price of Brent crude oil has fallen below $50 a barrel for the first time since May 2009.
It fell more than a dollar to $49.92 a barrel in early trading on Wednesday before edging back above the $50 mark.
Many observers expect the price of oil to fall further as North American shale producers continue to supply increasing quantities of oil and gas, and the oil-producing group Opec resists calls for cuts in production to support prices.
"With no sign that Opec will do anything about over-production, it seems likely that we could well see further declines towards $40 in the coming weeks," said CMC Markets analyst Michael Hewson."
No bottom in sight for now.
3 comments:
Look at the futures curve: spot 48.40, 6mos 51.08, 1 yr 60.87, 2yr 63.90.
Almost a mirror image of last summer. From steep backwardation to as steep contango.
Question on drop in oil prices (I would like to hear Mosler's opinion but he does not take comments anymore). New rules (deregulation) allowed pension funds (etc.) to invest in commodities like oil. What effect will the drop in oil have on these funds reserve requirements? Did all these investment funds hedge their bets with derivatives like they did in the housing boom. My gut feeling is a "perfect storm" is brewing that will be a combination of 2001 and 2008.
@ Mark Groom
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