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11 Signs That The U.S. Economy Is Rapidly Deteriorating Even As The Stock Market Soars
By Michael Snyder, on May 10th, 2016
We have seen this story before, and it never ends well. From mid-March until early May 2008, a vigorous stock market rally convinced many investors that the market turmoil of late 2007 and early 2008 was over and that happy days were ahead for the U.S. economy. But of course we all know what happened. It turned out that the market downturns of late 2007 and early 2008 were just “foreshocks” of a much greater crash in late 2008. The market surge in the spring of 2008 was just a mirage, and it masked rapidly declining economic fundamentals. Well, the exact same thing is happening right now. The Dow rose another 222 points on Tuesday, but meanwhile virtually every number that we are getting is just screaming that the overall U.S. economy is steadily falling apart. So don’t be fooled by a rising stock market. Just like in the spring of 2008, all of the signs are pointing to an avalanche of bad economic news in the months ahead.
The following are 11 signs that the U.S. economy is rapidly deteriorating…
#1 Total business sales have been declining for nearly two years, and they are now about 15 percent lower than they were in late 2014.
#2 The inventory to sales ratio is now back to near where it was during the depths of the last recession. This means that there is lots and lots of unsold stuff just sitting around out there, and that is a sign of a very unhealthy economy.
#3 Corporate earnings have declined for four consecutive quarters. This never happens outside of a recession.
#4 Profits for companies listed on the S&P 500 were down 7.1 percent during the first quarter of 2016 when compared to the same time period a year ago.
#5 In April, commercial bankruptcies were up 32 percent on a year over year basis, and Chapter 11 filings were up 67 percent on a year over year basis. This is exactly the kind of spike that we witnessed during the initial stages of the last major financial crisis as well.
#6 U.S. rail traffic was 11 percent lower last month than it was during the same month in 2015. Right now there are 292 Union Pacific engines sitting idle in the middle of the Arizona desert because there is literally nothing for them to do.
#7 The U.S. economy has lost an astounding 191,000 mining jobs since September 2014. For areas of the country that are heavily dependent on mining, this has been absolutely devastating.
#8 According to Challenger, Gray & Christmas, U.S. firms announced 35 percentmore job cuts during April than they did in March. This indicates that our employment problems are accelerating.
#9 So far this year, job cut announcements are running 24 percent above the exact same period in 2015.
#10 U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016. This was the third time in a row that the GDP number has declined compared to the previous quarter, and let us not forget that the formula for calculating GDP was changed last year specifically to make the first quarter of each year look better. Without that “adjustment”, it is quite possible that we would have had a negative number for the first quarter.
#11 Barack Obama is poised to become the first president in U.S. history to never have a single year during his time in office when the economy grew by more than 3 percent.
But you never hear Obama talk about that statistic, do you?
And the mainstream media loves to point the blame at just about anyone else. In fact, the Washington Post just came out with an article that is claiming that the big problem with the economy is the fact that U.S. consumers are saving too much money…
The surge in saving is the real drag on the economy. It has many causes. “People got a cruel lesson about [the dangers] of debt,” says economist Matthew Shapiro of the University of Michigan. Households also save more to replace the losses suffered on homes and stocks. But much saving is precautionary: Having once assumed that a financial crisis of the 2008-2009 variety could never happen, people now save to protect themselves against the unknown. Research by economist Mark Zandi of Moody’s Analytics finds higher saving at all income levels.
So even though half the country is flat broke, I guess we are all supposed to do our patriotic duty by going out and running up huge balances on our credit cards.
What a joke.
Of course the U.S. economy is actually doing significantly better at the moment than almost everywhere else on the planet. Many areas of South America have already plunged into an economic depression, major banks all over Europe are in the process of completely melting down, Japanese GDP has gone negative again despite all of their emergency measures, and Chinese stocks are down more than 40 percent since the peak of the market.
This is a global economic slowdown, and just like in 2008 it is only a matter of time before the financial markets catch up with reality. I really like how Andrew Lapthorne put it recently…
On the more bearish slant is Andrew Lapthorne, head of quantitative strategy at Societe Generale. To him this profit downturn is a sign that stocks are far too overvalued and the economy is weaker than you think.
“MSCI World EPS is now declining at the fastest pace since 2009, losing 4% in the last couple of months alone (this despite stronger oil prices),” wrote Lapthorne in a note. For the S&P 500 specifically, the year on year drop in profit drop was the most since third quarter of 2009.
“Global earnings are now 14% off the peak set in August 2014 and back to where they stood five years ago. Equity prices on the other hand are 25% higher. Gravity beckons!”
I couldn’t have said it better myself.
Look, this is not a game.
So far in 2016, three members of my own extended family have lost their jobs. Businesses are going under at a pace that we haven’t seen since 2008, and this means that more mass layoffs are on the way.
We can certainly be happy that U.S. stocks are doing okay for the moment. May it stay that way for as long as possible. But anyone that believes that this state of affairs can last indefinitely is just being delusional.
Gravity beckons, and the crash that is to come is going to be a great sight to behold.
May 10th, 2016 | Tags: Bad Economic News, Economic News, Investors, Market Turmoil, Michael T. Snyder, Stock Market, Stock Market Crash 2016, Stock Market Rally, The Dow, The Economy Is Getting Worse, The Stock Market Crash Of 2016, The U.S. Economy, What Is Coming In 2016, What Will Happen In 2016 | Category: The Next Great Depression
http://theeconomiccollapseblog.com/archives/11-signs-that-the-u-s-economy-is-rapidly-deteriorating-even-as-the-stock-market-soars
Today should be exciting!
WTI 44.70 +0.04 +0.09%
I got out of part of my UWTI (29.38) this morning before WTI started dropping.
Difference between Trump and Clinton as president: One million barrels of oil a day
By Sara Sjolin
Published: May 10, 2016 1:31 p.m. ET
U.S. crude output at mercy of U.S. election
If Trump becomes next U.S. president, it could mean a boost to U.S. oil production
U.S. oil production is bound for a significant shake up after the presidential election in November, says a senior editor at energy-information provider Platts.
“This election is going to have a major impact on the direction of U.S. and, possibly, global oil supply. Maybe the most significant impact of any election in U.S. history,” said Brian Scheid, senior oil editor at Platts, at the Platts Crude Oil Summit in London on Tuesday.
Looking at a worst case/best case scenario worked out between several analysts in Washington, he estimated that with a Republican win, U.S. oil production could jump by as much as 500,000 barrels a day. If the Democrats win, there could be a decline of 500,000 barrels a day, Scheid said.
“Essentially a one million barrel per day swing depending on the result of a single election. This is a relatively major difference in supply, equal to nearly the amount of crude the entire state of North Dakota now pumps each day,” he said.
Scheid cautioned, however, that it’s extremely difficult to quantify the impact on the oil market and that it’s a best estimate with some informed speculation. Other major events such a coordinated OPEC output cut, Libya starting to export large amounts of crude again or a collapse of Venezuela’s economy are other variables that could easily have a bigger effect on the market, he noted.
But looking separately at U.S. oil production, it seems inevitable that the election outcome will change the dynamics.
Hillary Clinton — pushed left by the movement behind her Democratic rival Bernie Sanders — has vowed to reduce American oil consumption by a third and is seen as possibly banning fracking on public land. She may also further push for efforts to combat climate change, Scheid said.
“Overall, the biggest concern for the U.S. oil industry is how Clinton will deal with fracking,” he said.
And then there’s Trump. The Republican front-runner hasn’t laid out many details on his energy policy, but has boasted that he could have negotiated a much better nuclear agreement with Iran. In a recent interview with the New York Times, he also said he’s considering a ban on oil imports from Saudi Arabia and other Arab allies.
“We can talk about the logistical impossibility of this, but I think if you’re saying you’re open to a Saudi oil ban, the skies the limit for your energy policy,” Scheid said.
“Who wins in November may dictate if the U.S. shale renaissance peaked last year or if this year has been a dip ahead of a new high,” he said.
U.S. oil production peaked in April last year at 9.6 million barrels a day, but has since declined in response to lower oil prices and cuts in capital expenditures. The U.S. Energy Information Agency estimates that domestic production will fall to around 8 million barrels a day by the third quarter of next year.
http://www.marketwatch.com/story/difference-between-trump-and-clinton-as-president-one-million-barrels-of-oil-a-day-2016-05-10
WTI 44.66 +1.22 +2.81%
Was Al-Naimi's 'Ouster' A Saudi Oil Policy Shake-Up? Hardly
By Ellen R. Wald, Ph.D.CommoditiesMay 10, 2016 08:03AM
This weekend’s announcement that veteran Saudi oil minister Ali al-Naimi would be stepping down from the position he has held since 1995 drew a flurry of media speculation. Digital media outlets claimed that al-Naimi was ousted by Deputy Crown Prince Mohammed bin Salman in order to consolidate power or that he was fired to clear out opposition to Saudi Arabia’s move towards its new National Transformation Plan.
These oil shake-up theories may translate into digital click-bait, but they do not reflect the reality of Saudi Arabia. Investors should not read volatility, policy reversals, or quick changes into this move.
Here are four reasons why.
1) Retirement not termination:
Ali al-Naimi is in his 80s, and although he is in particularly good health for his age (a video of him after his daily 10K walk recently made the rounds on Twitter), his fatigue with demands of the job has been evident this year. Last January, after the death of King Abdullah, reports surfaced that he wished to retire, but King Salman reportedly convinced him to stay during the transition period. Perhaps King Salman’s abrupt announcement of the ministerial change—issued by royal decree—was less diplomatic then the West might expect, but the Saudis are nothing if not blunt.
2) No single bureaucrat runs Aramco:
Historically, Saudi Arabian policy depends on wide agreement between the King, his advisors, and major bureaucrats. Ali al-Naimi had been oil minister for twenty-one years and therefore enjoyed significant influence. However, oil policy was never his alone. He worked with CEOs of Aramco, directors of Aramco, various bureaucrats, royal advisors, members of the royal family and—not least—the three different kings who ruled the monarchy during al-Naimi's long tenure as oil minister. No oil policy, not even the current policy of high production and low prices, has been dependent on al-Naimi.
3) Heir apparent in waiting:
Born in 1960, Khalid al-Falih, the new oil minister, has been al-Naimi’s presumptive successor for several years now. His move into the job of oil minister was clearly telegraphed by the Saudi monarchy. He was CEO of Aramco from 2008 until 2015 and as CEO was expected to succeed al-Naimi. As CEO, he was expected to succeed al-Naimi in the oil ministry, just as al-Naimi had been Aramco CEO before becoming oil minister.
In a slight deviation, when King Salman came to power last year, he moved al-Falih to the Ministry of Health. In Saudi Arabia it is commonly known that if you want a job done right, you hire Aramco to do it, and al-Falih was brought in specifically to bring Aramco-style efficiencies to a ministry that had been suffering from systemic management problems that were exposed during its poor response to the MERS outbreak.
However, al-Falih’s connection to the oil industry remained strong all along. While serving as Minister of Health, al-Falih stepped down as chairman of the board of Aramco, and al-Naimi took his place. Al-Falih also continued to travel and speak for Saudi Arabia’s oil policy with key media outlets like the Wall Street Journal and the Financial Times.
4) Generational continuity:
The expanding role of young Deputy Crown Prince Mohammad bin Salman has generated significant speculation as to whether he was responsible for the recent changes. Is he trying to clean house and install new ministers loyal to him and his potentially radical policies?
This is unlikely given how many long-time and influential bureaucrats and advisors remain. Ali al-Naimi will remain in government as one of King Salman’s trusted advisors and of course, al-Falih was previously CEO of Aramco and a long-time member of the inner-circle. There is no indication that these long-serving Saudis display any specific loyalty to Mohammad bin Salman or that they have a predilection towards any new policies he might prefer (further, it has not been shown that he does prefer any significant change in oil policy).
Naturally, the oil market fears the untested youth and inexperience of Mohammad bin Salman, as do many Saudis. This is why talented technocrats like Ali al-Naimi, Khalid al-Falih, and Amin al-Nasser (Aramco’s current CEO) remain some of the most trusted advisors of King Salman, Crown Prince bin Nayef, and young Mohammad bin Salman. The latter two, both in their 50s, will help guide the Kingdom’s oil policy for years to come.
http://www.investing.com/analysis/saudi-oil-policy-shake-up-hardly-200128979
WTI 43.08 -0.36 -0.83%
Here’s what the departure of Saudi Arabia’s al-Naimi means for oil prices
By Barbara Kollmeyer
Published: May 7, 2016 3:52 p.m. ET
Oil prices could rise in the near term on volatility
Saudi Arabia’s Ali al-Naimi, right, at a May 4 meeting
He was known to some as the Alan Greenspan of the oil world.
That is Ali al-Naimi, Saudi Arabia’s powerful oil minister, who was fired from his post on Saturday. He will be replaced by Khalid-al Falih, the chairman of the country’s state oil company, Saudi Aramco.
“This is a historic one. [Al-Naimi] is the guy who for all intents and purposes has been the global oil market for the last 30 years,” said Phil Flynn, senior market analyst at Price Futures Group.
Al-Naimi gained global respect for turning the biggest oil cartel in the world, otherwise known as the Organization of the Petroleum Exporting Countries (OPEC), into a respectable organization, Flynn said in a telephone interview. And just as former Fed Chairman Greenspan would lower or raise interest rates when he thought the market needed it, al-Naimi would add or hold back on oil depending on the energy market’s needs, he added.
The move has reminded some who is ultimately in charge. While al-Falih, the new oil minister, now has one of the most powerful posts in the world, Flynn said there is no doubt that 36-year old Deputy Crown Prince Mohammed bin Salman is running the show in Saudi Arabia. “This guy is the new power broker in that country,” he said.
The dismissal of al-Naimi comes weeks after the Saudi government unveiled a plan to wean the country off its dependence on oil revenue, given the hit the country has taken from lower oil prices.
Read: Meet the 30-year old prince leading the charge to wean Saudis off oil
Some saw the writing on the wall for al-Naimi after major oil producers failed to reach a deal to freeze production in Doha, Qatar last month. While al-Naimi had previously said a deal was possible even if Iran didn’t take part, Prince Mohammed by all accounts put his foot down and no deal was done.
AFP/Getty Images
Khalid al-Falih, pictured in January.
Worry about al-Falih? Flynn said al-Naimi survived as many of his buddies were fired under Prince Mohammed’s father, King Salman bin Abdulaziz Al Saud. He said King Salman stopped short of axing al-Naimi because of the respect he commanded both in the country and abroad. It was clear, he said, that al-Naimi didn’t have the power to get a deal done at Doha.
But what some may not realize is that al-Falih also commands much respect in the oil world, said Jason Bordoff, a professor at Columbia University and founding director of the Center on Global Energy Policy in New York. “Everyone who pays attention to Saudi Arabia and oil prices knows Khalid al-Falih is very widely regarded and respected as a capable leader of Saudi Aramco,” he said in a telephone interview.
Al-Falih has been working closely with the Prince Mohammed and seems to have the “confidence and trust of him,” said Bordoff, who served as White House energy adviser to President Barack Obama from 2009 to 2013.
“Saudi Aramco is widely regarded as one of the most technically sophisticated oil companies in the world, and I’ve had some personal dealings with Khalid and many other people who have view him as an incredibly impressive and smart and capable person,” he said.
Before Saturday’s announcement, Al-Falih had been the country’s health minister, tackling a problematic area of the country’s economy, he said.
As for al-Naimi, no one should be that surprised at an 81-year old, who had spoken for years of retiring, is finally leaving that powerful oil post, he said.
Where now for oil prices? If there’s one thing that rattles the oil market, that’s any sort of surprise, and it’s fair to say the market may get the jitters over the news out of Saudi Arabia.
The Doha meeting created uncertainty for the oil market as well as questions over Saudi Arabia’s futures policies and whether it will rise to the occasion such as in the past, raising and lowering global oil production when it was needed for the rest of the world, said Flynn.
Now uncertainty in the wake of Saturday’s news could give oil prices a push in the near term, he said.
“My assumption is that we’re in a globally oversupplied market. The market might look at it two ways: more uncertainty is bullish overall, though in the short term there is this perception that Saudi Arabia may flood the market with oil,” said Flynn.
Just ahead of the failed Doha meeting, Prince Mohammed told Bloomberg in an interview that his country could boost its daily production number by as much as 20 million barrels if it invested in production capacity and by up to 11.5 million barrels a day right away. But Flynn said that given the country is seeing a strain on its finances because of weak oil prices, it can’t really afford to start ramping up production by more than a small amount.
He said it would be worth watching China closely as for how well the oil market deals with news of a new oil minister in Saudi Arabia. The Shanghai Composite SHCOMP, -2.23% fell nearly 3% on Friday on worries about looming bond defaults.
China crude imports in March were the second-highest on record, and any signs that the economy or stocks are stressed will lead the oil market to believe the country could curb that demand, said Flynn. But he’s ultimately optimistic about prices, provided the Chinese economy doesn’t fall apart.
If the Chinese economy does melt down again, he said the market will be talking about a glut, and if things stabilize in China, the conversations will be quite different, more along the balance side.
Bordoff said he doesn’t see much reaction coming from the oil market, though he agrees the changing of the guard could drive prices up in the short term.
“We’ll be watching the next 24 to 48 hours to see if any other news comes out. I don’t think that this was that unexpected. I don’t think people will view it as any indication that large-scale changes are imminent in Saudi oil policy,” he said.
West Texas Intermediate futures CLM6, +1.41% finished last week down 2.7%, while Brent crude LCON6, +0.93% the global oil benchmark, slid 4.2%. Oil gained on Friday, though as news of wildfires in an oil-rich region of Canada and disruptions to an offshore oil facility in Nigeria outweighed a disappointing U.S. jobs report.
http://www.marketwatch.com/story/heres-what-the-departure-of-saudis-al-naimi-means-for-oil-prices-2016-05-07
SAUDI ARABIA OUSTS LONGTIME OIL MINISTER
May 7, 2:07 PM EDT
BY AYA BATRAWY
ASSOCIATED PRESS
DUBAI, United Arab Emirates (AP) -- Saudi Arabia on Saturday announced the ouster of its longtime oil minister as part of a larger ongoing government shakeup.
A royal decree announced that Ali al-Naimi has been replaced by former Health Minister and Saudi Aramco board chairman Khaled al-Falih.
Al-Naimi has long been a pillar of Saudi oil policy, leading the Ministry of Petroleum and Mineral Resources since 1995. Prior to that role he'd served as the president of oil giant Aramco.
Under a new Saudi leadership led by King Salman, the king's son Deputy Crown Prince Mohammed bin Salman has largely been overseeing Saudi economic policy along with a handful of new ministers. The changes announced Saturday come as the government plans wide-ranging reforms aimed at overhauling the Saudi economy amid lower oil prices that have eroded state revenues.
Saudi Arabia's dominant market share and historical ability to influence prices by loosening or tightening its taps gave al-Naimi exceptional influence at meetings of the oil cartel OPEC, where the kingdom is by far the largest producer and de facto policy-maker. His brief utterances on the sidelines of OPEC meetings often had the power to swing global oil prices.
He has presided over a controversial strategy of keeping production levels high despite the drop in prices over the past two years in an effort to drive more expensive producers in the U.S. and elsewhere out of the market. That has led to a glut of supply.
At a talk in February in Houston, he stood by that strategy, arguing that cuts by lower-cost producers like Saudi Arabia would simply subsidize higher-cost ones.
"The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate," he said in Houston. "It sounds harsh, and unfortunately it is, but it is the more efficient way to rebalance markets."
Lower oil prices since mid-2014 pushed Saudi Arabia into a budget deficit of nearly $100 billion last year and a projected deficit this year of $87 billion. Despite efforts to limit reliance on its main export, oil accounted for more than 70 percent of the state's revenue in 2015.
Among the changes planned by Mohammed bin Salman and announced last month was a plan to publicly list less than five percent of Aramco to create a massive sovereign wealth fund to develop its cities.
Aramco boasts the world's largest oil reserves and produces some 10 million barrels of crude a day, giving it outsized influence over world energy markets. The deputy crown prince put the estimated value of Aramco at more than $2 trillion.
Oil industry watchers have for years speculated on when al-Naimi, who turns 81 this year, would step down. He was born in the kingdom's eastern oil heartland and studied geology in the U.S. in the 1960s.
The Ministry of Petroleum and Mineral Resources was renamed the Ministry of Energy, Industry and Mineral Resources. In addition to having served as health minister, al-Falih had previously been the CEO of Aramco from 2009 until his appointment as board chairman in May 2015.
Al-Falih spent his entire career at Aramco. He holds a bachelor's degree in mechanical engineering from Texas A&M University and an MBA from Saudi Arabia's King Fahd University of Petroleum and Minerals.
A number of other royal decrees announced Saturday as part of the government's restructuring also saw several ministry names changed and the removal of six ministers, including al-Naimi. The other replacements include the ministers of hajj, commerce and industry, social affairs, health and transportation.
Former Hajj Minister Bandar al-Hajjar, who helped oversee last year's tragic pilgrimage that saw more than 100 pilgrims killed by a crane collapse and more than 2,400 killed in a crush of crowds, was replaced by Mohammed Bintin.
Also, new Energy Minister al-Falih was replaced as Health Minister by former Commerce and Industry Minister Tawfiq al-Rabiah. Former Social Affairs Minister Majed al-Qasabi was named Minister of Commerce and Investment, one of the newly named ministries. The Social Affairs Ministry will be combined with the Labor Ministry under a new ministry called the Labor and Social Development Ministry.
---
Associated Press writer Adam Schreck contributed to this report.
© 2016 The Associated Press.
http://hosted.ap.org/dynamic/stories/M/ML_SAUDI_ARABIA?SITE=AP
WTI 45.76 +1.98 +4.52%
WTI 44.70 +0.92 +2.10%
03:11:07 GMT - Real-time
Type: Commodity
Group: Energy
Unit: 1 Barrel
________________________________________
• Prev. Close: 43.78
• Open: 44.05
• Day's Range: 44.05 - 44.80
Risk Is Way Off as The Greenback Dominates Movements and Gold Prices Consolidate
Tuesday May 03, 2016 17:56
Crude oil analysts have to make you laugh. But it’s a dark joke filled with dishonesty.
As oil enters its third straight day of losses, headlines are suddenly again reading along these lines: “Oversupply Worries Traders”; “Seasonal Demand for Crude Dips as Summer Gasoline Blend Transition Tapers”; “OPEC Production Up”; “Sluggish World Economy Stifles Oil Prices.”
Ladies and gentlemen, con artists, and small traders and large – there is a glut of oil. Any relief of that glut will be temporary. While that may add volatility to the trading of crude, it won’t lift the resistance level crude is now facing. (Barring some unforeseen calamity.)
Gary Wagner
Thegoldforecast.com
http://www.kitco.com/commentaries/2016-05-03/Risk-Is-Way-Off-as-The-Greenback-Dominates-Movements-and-Gold-Prices-Consolidate.html
WTI 43.65 0.00 0.00%
Tuesday May 3, 2016 - OilPrice.com
There are early signs that the three-month rally in oil prices, up from a low of $26 per barrel in February, might be reaching its limits for the time being. Oil prices retreated at the start of the week as OPEC reported higher production levels. Iraq saw oil exports rise slightly, and there are rumors that Saudi Arabia is ramping up production in the wake of the failed Doha agreement. "There are enough supply stories out there to slow or temper any gains," Energy Aspects analyst Richard Mallinson told Reuters.
Also, from a technical trading standpoint, oil is facing fierce resistance at $48 to $50 per barrel. The sharp run up in prices is now staring down a “textbook retracement,” Todd Gordon of TradingAnalysis.com said on CNBC. Backing that up is the fact that hedge funds and other money managers have amassed a huge pile of net-long bets on crude prices. Whenever positions increase by such a large amount, the chances that the pendulum swings back in the other direction rises. In other words, because oil prices have rallied so quickly, there is a good chance that they will correct and fall back again.
WTI 43.52 -1.26 -2.81%
Speaking of profit taking, crude oil hit a big pothole in the road to higher pricing after OPEC released data that showed it was close to recent output records. Brent North Sea was down about 3.00%.
Additionally, as part of that uptick in production, Iraq’s southern fields are pumping out more oil than they have in years. Russia is on the bandwagon, increasing its production and total barrels shipped in April.
Traders also cited a bearish stockpile rise of 821,969 barrels at the Cushing, Oklahoma delivery point for U.S. West Texas Intermediate crude. This is partially due to structural builds but the cyclical move is important. The summer gasoline blends are now well developed and demand for crude is down – for the moment. When school ends and vacation time begins, demand for crude to be distilled into gasoline will increase.
For the moment in crude, risk most definitely lies to the downside.
--
Looking For A Reason To Believe In Equities
Monday May 02, 2016 17:45
Gold and silver pulled back today in spite of dollar weakness, which took some of the sting out of an unexpected round of profit taking in regular trading.
What made the precious metals’ drop even more confounding was the rather modest rise in equities, which was nothing more than bargain hunting. The major indexes had fallen too quickly, even if you consider the sell off to be entirely justified.
Speaking of profit taking, crude oil hit a big pothole in the road to higher pricing after OPEC released data that showed it was close to recent output records. Brent North Sea was down about 3.00%.
Additionally, as part of that uptick in production, Iraq’s southern fields are pumping out more oil than they have in years. Russia is on the bandwagon, increasing its production and total barrels shipped in April.
Traders also cited a bearish stockpile rise of 821,969 barrels at the Cushing, Oklahoma delivery point for U.S. West Texas Intermediate crude. This is partially due to structural builds but the cyclical move is important. The summer gasoline blends are now well developed and demand for crude is down – for the moment. When school ends and vacation time begins, demand for crude to be distilled into gasoline will increase.
For the moment in crude, risk most definitely lies to the downside.
Equities are having an up, if choppy day in New York. Even Apple’s struggles are not pulling the NASDAQ down for the nonce.
The Dow and NASDAQ are up right around 0.60% and the S&P 500 slightly more.
Europe was mixed but the Nikkei was down on poor Japanese exports as the galloping yen is beginning to have a deeper impact on Japan. (The yen, though, is down today, if weakly.) Toyota, Nissan and Honda were all trading off sharply.
The rise in the yield in the U.S. 10-year bond reflected the risk-on nature of today’s trading in New York.
This is more of a general sense, rather than something rooted deeply in data, but we are feeling that regarding U.S. stocks, investors and traders are looking hard for a reason to believe.
Sometimes when you look hard for something, you find something unexpected, like the warning signs of a recession. Slow world growth is a problem no matter how you slice it.
It is unreasonable to think the United States will always be the main engine of progress. So, while everyone is looking hard for reasons to believe, Europe is a good place to start. We need them to come alive.
Wishing you as always, good trading,
Gary Wagner
Thegoldforecast.com
http://www.kitco.com/commentaries/2016-05-02/Looking-For-A-Reason-To-Believe-In-Equities.html
WTI 44.96 +0.18 +0.40%
I also added more at $29.4X.
UWTI 30.36 Down 1.73(5.39%) 11:35AM EDT
VelocityShares 3x Long Crude Oil ETN (UWTI)
WTI 45.16 -0.76 -1.66%
WTI 45.78 -0.14 -0.30%
Oil prices fall as investors continue to cash in on April’s fast run
By Biman Mukherji
Published: May 2, 2016 4:26 a.m. ET
Crude oil prices extended a fall on Monday from the end of last week as profit-taking offset positive sentiment from declining U.S. crude oil production and a weaker dollar.
The profit-taking started end of last week as crude oil prices reached 2016 highs as investors pinned their hopes on expectations that declining crude oil inventories would continue, ignoring persistent over-supply in the market.
“Overall, the supply situation has not changed much,” said Gnanasekar Thiagarajan, director at Commtrendz Risk Management.
Read: Oil’s wild ride set to continue after April’s big climb
On the New York Mercantile Exchange, light, sweet crude futures for delivery in June CLM6, -0.28% traded at $45.60 a barrel, down $0.32, or 0.7%, in the Globex electronic session. June Brent crude on London’s ICE Futures exchange fell $0.53, or 1.1%, to $46.84 a barrel.
Data released by the U.S. Energy Department on Wednesday showed a drop in domestic crude production for the seventh consecutive week, reducing output by 300,000 barrels since the beginning of the year.
“Oil inventories in the U.S. are still rising and production is only ticking down, reflecting the flexibility of U.S. shale oil, higher prices could prevent any further reduction in output,” a report by Capital Economics said.
“What’s more, Saudi Arabia could increase production over the summer when domestic demand peaks,” the report said, adding that oil prices could dip before resuming their upward march this year.
According to an ANZ Bank report, crude oil production by member countries of the Organization of the Petroleum Exporting Countries (OPEC) surged by 484,000 barrels to 33.217 million a day in April.
Analysts said a fundamental rebalancing of oil markets may yet take some time to materialize, before bringing a sustained price recovery.
http://www.marketwatch.com/story/oil-prices-fall-as-investors-continue-to-cash-in-on-aprils-fast-run-2016-05-02?link=MW_popular
WTI 45.45 -0.47 -1.02%
WTI 46.47 +0.44 +0.96%
"Peak Oil Demand" - The Collapse Of The Old Oil Order
Submitted by Tyler Durden on 04/28/2016 19:20 -0400
Carbon Emissions Crude Crude Oil Iran Iraq Kuwait Market
Submitted by Michael Klare via TomDispatch.com,
Sunday, April 17th was the designated moment. The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices. Meeting in Doha, the glittering capital of petroleum-rich Qatar, the oil ministers of the Organization of the Petroleum Exporting Countries (OPEC), along with such key non-OPEC producers as Russia and Mexico, were scheduled to ratify a draft agreement obliging them to freeze their oil output at current levels. In anticipation of such a deal, oil prices had begun to creep inexorably upward, from $30 per barrel in mid-January to $43 on the eve of the gathering. But far from restoring the old oil order, the meeting ended in discord, driving prices down again and revealing deep cracks in the ranks of global energy producers.
It is hard to overstate the significance of the Doha debacle. At the very least, it will perpetuate the low oil prices that have plagued the industry for the past two years, forcing smaller firms into bankruptcy and erasing hundreds of billions of dollars of investments in new production capacity. It may also have obliterated any future prospects for cooperation between OPEC and non-OPEC producers in regulating the market. Most of all, however, it demonstrated that the petroleum-fueled world we’ve known these last decades -- with oil demand always thrusting ahead of supply, ensuring steady profits for all major producers -- is no more. Replacing it is an anemic, possibly even declining, demand for oil that is likely to force suppliers to fight one another for ever-diminishing market shares.
The Road to Doha
Before the Doha gathering, the leaders of the major producing countries expressed confidence that a production freeze would finally halt the devastating slump in oil prices that began in mid-2014. Most of them are heavily dependent on petroleum exports to finance their governments and keep restiveness among their populaces at bay. Both Russia and Venezuela, for instance, rely on energy exports for approximately 50% of government income, while for Nigeria it’s more like 75%. So the plunge in prices had already cut deep into government spending around the world, causing civil unrest and even in some cases political turmoil.
No one expected the April 17th meeting to result in an immediate, dramatic price upturn, but everyone hoped that it would lay the foundation for a steady rise in the coming months. The leaders of these countries were well aware of one thing: to achieve such progress, unity was crucial. Otherwise they were not likely to overcome the various factors that had caused the price collapse in the first place. Some of these were structural and embedded deep in the way the industry had been organized; some were the product of their own feckless responses to the crisis.
On the structural side, global demand for energy had, in recent years, ceased to rise quickly enough to soak up all the crude oil pouring onto the market, thanks in part to new supplies from Iraq and especially from the expanding shale fields of the United States. This oversupply triggered the initial 2014 price drop when Brent crude -- the international benchmark blend -- went from a high of $115 on June 19th to $77 on November 26th, the day before a fateful OPEC meeting in Vienna. The next day, OPEC members, led by Saudi Arabia, failed to agree on either production cuts or a freeze, and the price of oil went into freefall.
The failure of that November meeting has been widely attributed to the Saudis’ desire to kill off new output elsewhere -- especially shale production in the United States -- and to restore their historic dominance of the global oil market. Many analysts were also convinced that Riyadh was seeking to punish regional rivals Iran and Russia for their support of the Assad regime in Syria (which the Saudis seek to topple).
The rejection, in other words, was meant to fulfill two tasks at the same time: blunt or wipe out the challenge posed by North American shale producers and undermine two economically shaky energy powers that opposed Saudi goals in the Middle East by depriving them of much needed oil revenues. Because Saudi Arabia could produce oil so much more cheaply than other countries -- for as little as $3 per barrel -- and because it could draw upon hundreds of billions of dollars in sovereign wealth funds to meet any budget shortfalls of its own, its leaders believed it more capable of weathering any price downturn than its rivals. Today, however, that rosy prediction is looking grimmer as the Saudi royals begin to feel the pinch of low oil prices, and find themselves cutting back on the benefits they had been passing on to an ever-growing, potentially restive population while still financing a costly, inconclusive, and increasingly disastrous war in Yemen.
Many energy analysts became convinced that Doha would prove the decisive moment when Riyadh would finally be amenable to a production freeze. Just days before the conference, participants expressed growing confidence that such a plan would indeed be adopted. After all, preliminary negotiations between Russia, Venezuela, Qatar, and Saudi Arabia had produced a draft document that most participants assumed was essentially ready for signature. The only sticking point: the nature of Iran’s participation.
The Iranians were, in fact, agreeable to such a freeze, but only after they were allowed to raise their relatively modest daily output to levels achieved in 2012 before the West imposed sanctions in an effort to force Tehran to agree to dismantle its nuclear enrichment program. Now that those sanctions were, in fact, being lifted as a result of the recently concluded nuclear deal, Tehran was determined to restore the status quo ante. On this, the Saudis balked, having no wish to see their arch-rival obtain added oil revenues. Still, most observers assumed that, in the end, Riyadh would agree to a formula allowing Iran some increase before a freeze. “There are positive indications an agreement will be reached during this meeting... an initial agreement on freezing production,” said Nawal Al-Fuzaia, Kuwait’s OPEC representative, echoing the views of other Doha participants.
But then something happened. According to people familiar with the sequence of events, Saudi Arabia’s Deputy Crown Prince and key oil strategist, Mohammed bin Salman, called the Saudi delegation in Doha at 3:00 a.m. on April 17th and instructed them to spurn a deal that provided leeway of any sort for Iran. When the Iranians -- who chose not to attend the meeting -- signaled that they had no intention of freezing their output to satisfy their rivals, the Saudis rejected the draft agreement it had helped negotiate and the assembly ended in disarray.
Geopolitics to the Fore
Most analysts have since suggested that the Saudi royals simply considered punishing Iran more important than lowering oil prices. No matter the cost to them, in other words, they could not bring themselves to help Iran pursue its geopolitical objectives, including giving yet more support to Shiite forces in Iraq, Syria, Yemen, and Lebanon. Already feeling pressured by Tehran and ever less confident of Washington’s support, they were ready to use any means available to weaken the Iranians, whatever the danger to themselves.
“The failure to reach an agreement in Doha is a reminder that Saudi Arabia is in no mood to do Iran any favors right now and that their ongoing geopolitical conflict cannot be discounted as an element of the current Saudi oil policy,” said Jason Bordoff of the Center on Global Energy Policy at Columbia University.
Many analysts also pointed to the rising influence of Deputy Crown Prince Mohammed bin Salman, entrusted with near-total control of the economy and the military by his aging father, King Salman. As Minister of Defense, the prince has spearheaded the Saudi drive to counter the Iranians in a regional struggle for dominance. Most significantly, he is the main force behind Saudi Arabia’s ongoing intervention in Yemen, aimed at defeating the Houthi rebels, a largely Shia group with loose ties to Iran, and restoring deposed former president Abd Rabbuh Mansur Hadi. After a year of relentless U.S.-backed airstrikes (including the use of cluster bombs), the Saudi intervention has, in fact, failed to achieve its intended objectives, though it has produced thousands of civilian casualties, provoking fierce condemnation from U.N. officials, and created space for the rise of al-Qaeda in the Arabian Peninsula. Nevertheless, the prince seems determined to keep the conflict going and to counter Iranian influence across the region.
For Prince Mohammed, the oil market has evidently become just another arena for this ongoing struggle. “Under his guidance,” the Financial Times noted in April, “Saudi Arabia’s oil policy appears to be less driven by the price of crude than global politics, particularly Riyadh’s bitter rivalry with post-sanctions Tehran.” This seems to have been the backstory for Riyadh’s last-minute decision to scuttle the talks in Doha. On April 16th, for instance, Prince Mohammed couldn’t have been blunter to Bloomberg, even if he didn’t mention the Iranians by name: “If all major producers don’t freeze production, we will not freeze production.”
With the proposed agreement in tatters, Saudi Arabia is now expected to boost its own output, ensuring that prices will remain bargain-basement low and so deprive Iran of any windfall from its expected increase in exports. The kingdom, Prince Mohammed told Bloomberg, was prepared to immediately raise production from its current 10.2 million barrels per day to 11.5 million barrels and could add another million barrels “if we wanted to” in the next six to nine months. With Iranian and Iraqi oil heading for market in larger quantities, that’s the definition of oversupply. It would certainly ensure Saudi Arabia’s continued dominance of the market, but it might also wound the kingdom in a major way, if not fatally.
A New Global Reality
No doubt geopolitics played a significant role in the Saudi decision, but that’s hardly the whole story. Overshadowing discussions about a possible production freeze was a new fact of life for the oil industry: the past would be no predictor of the future when it came to global oil demand. Whatever the Saudis think of the Iranians or vice versa, their industry is being fundamentally transformed, altering relationships among the major producers and eroding their inclination to cooperate.
Until very recently, it was assumed that the demand for oil would continue to expand indefinitely, creating space for multiple producers to enter the market, and for ones already in it to increase their output. Even when supply outran demand and drove prices down, as has periodically occurred, producers could always take solace in the knowledge that, as in the past, demand would eventually rebound, jacking prices up again. Under such circumstances and at such a moment, it was just good sense for individual producers to cooperate in lowering output, knowing that everyone would benefit sooner or later from the inevitable price increase.
But what happens if confidence in the eventual resurgence of demand begins to wither? Then the incentives to cooperate begin to evaporate, too, and it’s every producer for itself in a mad scramble to protect market share. This new reality -- a world in which “peak oil demand,” rather than “peak oil,” will shape the consciousness of major players -- is what the Doha catastrophe foreshadowed.
At the beginning of this century, many energy analysts were convinced that we were at the edge of the arrival of “peak oil”; a peak, that is, in the output of petroleum in which planetary reserves would be exhausted long before the demand for oil disappeared, triggering a global economic crisis. As a result of advances in drilling technology, however, the supply of oil has continued to grow, while demand has unexpectedly begun to stall. This can be traced both to slowing economic growth globally and to an accelerating “green revolution” in which the planet will be transitioning to non-carbon fuel sources. With most nations now committed to measures aimed at reducing emissions of greenhouse gases under the just-signed Paris climate accord, the demand for oil is likely to experience significant declines in the years ahead. In other words, global oil demand will peak long before supplies begin to run low, creating a monumental challenge for the oil-producing countries.
This is no theoretical construct. It’s reality itself. Net consumption of oil in the advanced industrialized nations has already dropped from 50 million barrels per day in 2005 to 45 million barrels in 2014. Further declines are in store as strict fuel efficiency standards for the production of new vehicles and other climate-related measures take effect, the price of solar and wind power continues to fall, and other alternative energy sources come on line. While the demand for oil does continue to rise in the developing world, even there it’s not climbing at rates previously taken for granted. With such countries also beginning to impose tougher constraints on carbon emissions, global consumption is expected to reach a peak and begin an inexorable decline. According to experts Thijs Van de Graaf and Aviel Verbruggen, overall world peak demand could be reached as early as 2020.
In such a world, high-cost oil producers will be driven out of the market and the advantage -- such as it is -- will lie with the lowest-cost ones. Countries that depend on petroleum exports for a large share of their revenues will come under increasing pressure to move away from excessive reliance on oil. This may have been another consideration in the Saudi decision at Doha. In the months leading up to the April meeting, senior Saudi officials dropped hints that they were beginning to plan for a post-petroleum era and that Deputy Crown Prince bin Salman would play a key role in overseeing the transition.
On April 1st, the prince himself indicated that steps were underway to begin this process. As part of the effort, he announced, he was planning an initial public offering of shares in state-owned Saudi Aramco, the world’s number one oil producer, and would transfer the proceeds, an estimated $2 trillion, to its Public Investment Fund (PIF). “IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince pointed out. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”
For a country that more than any other has rested its claim to wealth and power on the production and sale of petroleum, this is a revolutionary statement. If Saudi Arabia says it is ready to begin a move away from reliance on petroleum, we are indeed entering a new world in which, among other things, the titans of oil production will no longer hold sway over our lives as they have in the past.
This, in fact, appears to be the outlook adopted by Prince Mohammed in the wake of the Doha debacle. In announcing the kingdom’s new economic blueprint on April 25th, he vowed to liberate the country from its “addiction” to oil.” This will not, of course, be easy to achieve, given the kingdom’s heavy reliance on oil revenues and lack of plausible alternatives. The 30-year-old prince could also face opposition from within the royal family to his audacious moves (as well as his blundering ones in Yemen and possibly elsewhere). Whatever the fate of the Saudi royals, however, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.
http://www.zerohedge.com/news/2016-04-28/peak-oil-demand-collapse-old-oil-order
Analysts Just Aren’t Buying the Oil Rally
Questions remain over current high oil stockpiles and the potential for increased supply
By GEORGI KANTCHEV
Updated April 28, 2016 6:35 p.m. ET
Even as oil rallies, analysts have barely nudged up their price forecasts as they worry that crude’s recent gains might not be sustainable.
The price of oil has jumped 76% from the decade-low it hit earlier this year. That is mainly on hopes that dwindling U.S. oil production will help take crude out of an oversupplied market.
But many analysts aren’t buying the rally. They question whether the glut is indeed on the wane given current stockpiles and the potential for increased supply from Iran and elsewhere. They point out that last year, the oil price also rallied in the spring on a belief supply was falling, only to collapse in the year’s second half.
A survey of 13 investment banks by The Wall Street Journal sees Brent crude, the international oil-price benchmark, averaging $41 a barrel this year, up $1 from the same survey conducted in March. The banks see West Texas Intermediate, the U.S. oil gauge, averaging $39 a barrel this year, broadly unchanged from the prior survey.
Oil settled higher Thursday for the third consecutive session. Front-month Brent crude for June delivery rose 96 cents, or 2%, to $48.14 a barrel. U.S. futures rose 70 cents, or 1.5%, to $46.03.
“We are already seeing signs that the market will balance eventually, probably at the turn of the year,” said Gareth Lewis-Davies, senior commodity strategist at BNP Paribas. “But until then, we still have a big oversupply to worry about.”
Despite the talk of falling supply, analysts point to increases in oil stockpiles around the globe that threaten the rebound. According to Citigroup, global crude inventories have risen to records, with 370 million barrels of crude entering storage since January 2014.
Other factors that have supported prices in recent weeks, such as production outages from Nigeria to Venezuela and a weaker dollar, also might prove temporary, analysts say.
Continued weakness in oil prices will bring further pain for oil-producing countries and energy stocks. Cheap crude, however, is welcome news for consumers and businesses around the globe.
U.S. data in recent months has showed robust demand for oil products, such as gasoline, as drivers chalk up more miles on the road. Chinese data also indicate firm demand, a relief for the oil industry given forecasts of a slowdown in the world’s second-largest oil consumer.
That uptick in demand, though, might not be enough to support the oil price.
Oil storage tanks stand in this aerial photograph taken above Cushing, Okla., on March 24, 2015.ENLARGE
Oil storage tanks stand in this aerial photograph taken above Cushing, Okla., on March 24, 2015. PHOTO: BLOOMBERG NEWS
Some analysts believe the current rally could mimic last year’s. Then, Brent jumped about $20 a barrel between January and May before stumbling later in the year.
Banks surveyed now forecast Brent averaging $39.25 a barrel in the current quarter and rising to $42.30 in the third quarter. Some of the banks, including Morgan Stanley and ING, see prices falling in the third quarter.
“I’m very concerned that this rally might also run out of steam soon,” said Eugen Weinberg, head of commodities research at Commerzbank. The bank sees Brent averaging $45 a barrel in the third quarter. “Everybody’s focusing on the falling U.S. production, but there’s a lot more crude coming from other places,” he said.
Earlier this month, major oil-producing nations failed to agree on a production freeze after Saudi Arabia appeared to walk away from any agreement that didn’t include geopolitical rival Iran.
That reminded analysts that there is more oil that could enter the market. Iran has vowed to keep pumping oil until it regains the market share it lost during years of international sanctions.
Citigroup estimates that Iranian exports ran at about two million barrels a day in April. That is close to presanction levels of 2 million to 2.5 million barrels a day.
The ramp-up in Iranian production, coupled with a seasonal production increase in Saudi Arabia, could offset the declines in U.S. production this year, Morgan Stanley said.
“Doha’s failure could set up a market-share war with many producers now calling for growth,” Morgan Stanley said.
Investors, though, seem unfazed. Bets by hedge funds and other money managers that the oil price will rise jumped to record levels in recent weeks. Net long positions in Brent, or bets that it will gain, increased to 418 million barrels last week, according to exchange data. Investors also have made more bullish bets in WTI than at any time since May last year.
That investor optimism carries its own risks. If sentiment changes and those funds start to unwind their bets, the price of oil could see a sudden lurch southward.
“The extreme long speculative positions from many of these funds could prove problematic,” Morgan Stanley said.
Most banks, at least, see prices rising next year. Analysts surveyed by the Journal forecast an average Brent price of $57 a barrel in 2017.
But underscoring how analysts have become more pessimistic through this year, the same banks were predicting last August that Brent would rise above $70 a barrel this year. Hitting that level has been postponed to 2018 by these analysts.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
http://www.wsj.com/articles/analysts-arent-buying-the-oil-rally-1461840804
WTI 45.62 +0.29 +0.64%
WTI has dropped quite a bit in the last thirty-minutes.
DWTI 89.95 Down 3.45(3.69%) 1:02PM EDT - Nasdaq Real Time Price
WTI 45.87 +0.54 +1.19%
This will put UWTI at 29.36.
WTI 44.62 +0.58 +1.32%
Oil futures end lower on signs of rising production
By Myra P. Saefong and Jenny W. Hsu
Published: Apr 25, 2016 3:43 p.m. ET
Saudi Arabia announces an economic reform plan
Bloomberg
Oil futures settled lower on Monday, pulling back after a strong rally last week, on signs of rising global production.
Kuwait’s crude production is recovering after its recent workers’ strike and output from Iraq has been climbing. Saudi Arabia will reportedly complete its expansion of a major oilfield next month, but the kingdom also announced an economic reform plan Monday which, ironically, aims to reduce the kingdom’s reliance on oil.
West Texas Intermediate crude for delivery in June CLM6, -2.24% fell $1.09, or 2.5%, to settle at $42.64 a barrel on the New York Mercantile Exchange. June Brent crude LCOM6, -1.13% on London’s ICE Futures exchange fell 63 cents, or 1.4%, to $44.48 a barrel.
Cash for Gas: India’s push for direct benefits(6:14)
India’s new system for cooking-gas subsidies was intended to draw poorer households into the financial fold, but some haven't yet felt the benefits. Photo/Video: Karan Deep Singh/The Wall Street Journal
“While the petroleum markets continue to vacuum up a flow of speculative buying, we note that fresh indications of rising production pose a fundamental threat to the rally,” said Tim Evans, energy analyst at Citi Futures and OTC Clearing, in a note Monday.
Last week, oil prices rose by nearly 5% as a three-day strike in Kuwait and hopes that the oil glut would slacken overrode disappointment about the failure of major oil nations to reach an agreement on freezing their production.
“Kuwaiti oil production has rebounded quickly from last week’s strike” to 3.0 million barrels a day, and a further increase to 3.15 mmbpd in June is “at least being contemplated,” said Evans. There’s also “talk that exports from Iraq may reach a new record in April.”
Meanwhile, Saudi Arabia’s state-owned Saudi Arabian Oil Co. is set to complete its expansion of its Shaybah oilfield by the end of May, boosting its capacity to 1 million barrels a day from 750,000 barrels, according to Bloomberg News, citing people with knowledge of the plan.
“While this is presented as simply to maintain spare capacity, it could also mean increased overall production in the near term, even if it’s just a test,” said Evans.
“And with no production freeze agreement, we see no particular restraint on pushing some additional barrels into the market, particularly since the price rally creates the impression that the market would welcome the added supply,” he said.
Meanwhile, Saudi Arabia announced an economic reform plan Monday. The Saudi economy has been crimped by low crude price and the plan is a long-term blueprint for the kingdom’s economic transformation aimed at reducing its dependence on oil.
Read: Meet the 30-year old prince emerging as oil market’s ‘ultimate disrupter’
“Saudi Arabia wants to decrease its dependence on oil by investing in other sectors, and by growing other sectors, not by diminishing its oil activity,” said Omar Al-Ubaydli, a program director at the Bahrain Center for Strategic, International and Energy Studies. “Oil’s relative contribution will diminish, but not its absolute contribution.”
Deputy Crown Prince Mohammed bin Salman said in an interview aired on Saudi news channel Al-Arabiya Monday that “by 2020, we’ll be able to live without oil.”
Adding further pressure on oil Monday, Genscape reportedly said that crude inventories at the Cushing, Okla. trading hub rose about 1.5 million barrels for the week ended April 22.
“A confirmed build of more than a million barrels would seriously undercut the recent bullishness,” said Robbie Fraser, commodity analyst at Schneider Electric.
Also, new home sales numbers in the U.S. were a bit disappointing, he said, adding that overall U.S. “economic health is always a key factor for oil, but that’s going to be especially true as we hit summer driving season, where record U.S. demand is going to be relied upon to help ease global storage levels.”
Traders will be eyeing the Federal Reserve policy meeting this week for an outlook on the U.S. economy.
Back on Nymex, May gasoline RBK6, -0.71% fell 1.8 cents, or 1.2%, to $1.513 a gallon, while May heating oil HOK6, -0.96% lost 1.9 cents, or 1.4%, to $1.29 a gallon.
May natural gas NGK16, -3.18% ended at $2.063 per million British thermal units, down 7.7 cents, or 3.6%.
— Barbara Kollmeyer contributed to this article
http://www.marketwatch.com/story/oil-prices-pitch-lower-as-investors-cash-in-on-recent-gains-2016-04-25
WTI 43.11 -0.62 -1.42%
The rally does appear to be running out of steam.
WTI 43.27 -0.46 -1.05%
This is exactly why one should not hold an ETF for an extended period of time. Always take your profits.