It keeps falling; it’s heading towards level two now – aiming for level one!
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This post was last edited by TH373637 on 2016-1-22 at 11:12. According to a report from Business Society on January 21, Michael Strobaek, Credit Suisse’s head of investment strategy, said in an interview on Tuesday (January 19) that he expects oil prices to bottom out around $25 per barrel, and that the bank plans to increase its holdings in energy stocks once prices reach that level. Strobaek said, “Oil prices and the energy industry are becoming exceptionally cheap, making them worth a big bet on.” I hope and believe that oil prices will reach $25 and then not fall any further. This was also the catalyst that led to the full exposure of credit defaults related to oil prices. ” When asked about which type of energy stocks should be invested in, Strobaek replied, “Energy companies in Brazil will be particularly attractive at that time, while stocks in Europe, Japan, and India are also major beneficiaries of falling crude oil prices.” ” He mentioned, “Some companies have begun to realize this; for example, Reliance Industries Ltd, based in Mumbai, saw a surge in profits in the third quarter due to higher profit margins from converting crude oil into fuel.” In the eurozone, analysts expect companies’ profits to rise by 10% in 2015. ” As the oversupply situation continues to worsen, oil prices have recently dropped to 12-year lows, dealing a significant blow to energy companies. In the United States alone, 26 energy companies filed for bankruptcy in 2015, a number that exceeds the total from the previous five years combined. Meanwhile, Norway, the largest crude oil exporter in Western Europe, has declared that the industry is in crisis. Meanwhile, Sete Brasil Participacoes SA in Latin America has not made any payments to the two largest oil well manufacturers in the world since November 2014. However, Storbaek said that as further drops in oil prices trigger credit issues for American companies, this will clean up this struggling industry and create more opportunities to buy stocks. Although analysts have lowered their profit forecasts, oil stocks continue to fall at an accelerated pace, making them cheaper in some regions than before. In Europe, oil stocks are trading at near-year lows in terms of price-to-earnings ratios based on profit forecasts, while their counterparts in emerging markets are at 3-month lows. However, the situation might worsen before it improves. (Article source: FX168) http://www.100ppi.com/news/detail-20160121-735892.html
There is severe overcapacity, raw material prices are abnormally low; companies cannot stop production even during difficult times, as doing so would mean shutting down completely
According to a report by CTONews on January 21, Kuwaiti crude oil prices dropped by $1.14 on Wednesday to $19.14 per barrel. In the international market, due to increased supply, crude oil prices have dropped by more than 25% compared to the beginning of this year. Brent crude oil prices dropped by 88 cents to $27.88 per barrel, while U.S. crude oil prices fell by $1.91 to $26.55 per barrel. A new era has arrived
According to Business News, on Thursday, January 21, the March futures contract for U.S. NYMEX WTI crude oil rose by $1.18, or 4.16%, to close at $29.53 per barrel. From the opening of the Asian session until most of the European session, oil prices fluctuated within the range of $27.87 per barrel to $28.75 per barrel. Before the release of U.S. EIA inventory data, oil prices rose by about $0.6 in the short term due to short-covering activity. Subsequently, U.S. EIA inventory data showed a significant increase in crude oil stocks compared to the previous figure, causing oil prices to drop by around 0.3 dollars in an instant. However, following news of an attack on oil terminals in Libya, prices rebounded due to oversold conditions, rising rapidly by more than 0.8 dollars to reach a daily high of 30.25 dollars per barrel. It declined slightly before the close. Meanwhile, ICE Brent crude oil futures rose $1.37 on Thursday, gaining 4.91% to close at $29.25 per barrel. As oil prices had been in a \"oversold\" condition from a technical perspective, coupled with reports of attacks on crude oil terminals in Libya, concerns arose that there could be issues with crude oil supply in the Middle East; as a result, crude oil futures prices rose sharply by more than 4% on Thursday. On Wednesday, U.S. WTI crude oil prices and Brent crude oil prices both hit their lowest levels since 2003. Phil Flynn, senior market analyst at Price Futures Group, said two factors drove up oil prices on Thursday. On the one hand, the increase in U.S. EIA crude oil inventories announced on Thursday was less than the increase in U.S. API crude oil inventories reported on Wednesday ； On the other hand, there are reports of a massive fire at Libya’s crude oil storage tanks. According to AFP, the **state** attacked the crude oil terminal facilities at the oil export port in northern Libya in order to control crude oil exports. Flynn said that this news dispelled concerns that Libya would soon export more crude oil. However, Tim Evans, the lead market analyst at Long Leaf Trading Group, believes that the attacks on Libyan oil ports are not the main reason for the sharp rise in crude oil prices. Because, compared to the global supply, Libya’s supply is relatively limited. Evans believes that the risk-aversion sentiment in various markets has eased, and therefore the trend in crude oil prices should be consistent with the trend in prices in other markets. Stock markets in Europe and the United States both rose on Thursday. Nevertheless, the attacks in Libya were seen by the market as the main factor that offset the negative impact of the U.S. crude oil inventory data. The report shows that as of the week ending January 15, U.S. EIA crude oil inventories increased by 3.979 million barrels, a figure that was lower than the increase in API crude oil inventories reported earlier; API crude oil inventories rose by 4.61 million barrels. Tyler Richey, the editor of the 7 p.m. report that provides daily market commentary, said another factor supporting oil prices is that crude oil production in the 48 states of the U.S. has declined slightly for the first time in the past 7 weeks. At the very least, this information makes the situation of extreme oversupply in the global crude oil market seem less pessimistic, and there are good reasons for the market to lock in the profits obtained from short-selling after a sharp drop in oil prices. Overall, John Macaluso, an analyst at BridgeStreet Capital Advisors, said that although oil prices saw a sharp rebound following the release of inventory data, the overall sentiment remains bearish. Today’s rebound is merely a result of short-covering to lock in profits following an oversold technical condition. Until the fundamentals truly change, caution is still needed when going long to buy at low prices. (Article source: Huitong Network) http://www.100ppi.com/news/detail-20160122-737064.html
Due to the global economic downturn, along with other factors, oil prices have dropped to such levels that for those in the energy and chemical industry, aside from the **three major oil companies that are protected, it’s unlikely that anyone else will fare well; even those three major companies are closing down plants and restructuring their operations. With lower oil prices, people’s lives don’t seem to have improved much.