What To Expect At $20 Oil?
Ladies and Gentlemen
As we saw Oil dip below $30 per barrel yesterday, we have seen somewhat of an overnight reprieve in the Oil trading sessions of Asia and Europe. However, it is very hard to find reasons to be optimistic in current conditions, especially with the over-supply and concerns about China growth. The pain low Oil prices has so far caused for Oil investors and Oil producing countries may just be a taste of things to come as we head to $20 per barrel.
We are now confronting $20 Oil and the likelihood is fairly great. Clearly Oil markets cannot maintain these prices (below $30) for very long and the question is for how much longer? The Gulf Economies as well as other Oil producing countries are suffering immensely, such as Malaysia – who are losing $68 million for every $1 decline in the price of Oil. Oil producers too.. EconocoPhillips – losing $2 billion for ever $10 decline and yesterday Petrobras announcing it is lopping $30 billion of it’s 5-year spending plan… Hours late, BP announces that they would slash 4,000 jobs.
If there is some sort of optimistic note to leave you on and that was last year China (2nd largest consumer of Oil) imported a record amount of Crude, but that was simply taking advantage of low prices… and if/when prices go up they can start taking advantage of their huge stockpiles.
$20 oil just acts to dig an even deeper hole from where you need to be before the markets look to open up again!
Best of luck guys!
Anish8FX @Atom8.com
