Waiting for the snow to hit I am reminded of a longer term view of the oil market and what it means for the other seemingly unrelated markets such as the bonds, gold miners. The money has to go somewhere. Right?
Without judging the implications of a hotter planet and all that entails, we are going to continue to use fossil fuels be it here (America) or elsewhere, and most likely in other countries that are between green and pre 20th century there will be a substantial increase in use/production worldwide. That said, technology allows us to probe ever deeper into formally untapped regions. The Arctic has a new fossil fuel to burn beside all the untold oil called methane hydrate ice, and you better believe it will be on the gas market in the next 5-10 years as the summer ice is mostly gone now and science catches up with this miracle of chemistry. There is that old saw in the commodity markets that nothing cures low prices like low prices, but until we see a wave of marginal producer bankruptcies and buy outs (by the bigger players), oil will continue to sink as every barrel produced is a $31.00 earned. In an ever-increasing cycle of doom, they will have to produce more and more to service their debts taken in the credit market as they flood the market with supply which shrinks their bottom line further. At some point in the very near future there will be no storage space left, and then what. CAPITULATION BOTTOM. I am watching the banks and credit markets for that very event, to be sure there are stirrings, but the take-overs need to happen too. This was true in the gold markets as well. They are so lean now, that almost every penny above 1200 oz goes on their bottom line, but the pain in the miners was years long, In oil, this is only been since July 2014. I see mid summer as a bottom. Good trading all.
Without judging the implications of a hotter planet and all that entails, we are going to continue to use fossil fuels be it here (America) or elsewhere, and most likely in other countries that are between green and pre 20th century there will be a substantial increase in use/production worldwide. That said, technology allows us to probe ever deeper into formally untapped regions. The Arctic has a new fossil fuel to burn beside all the untold oil called methane hydrate ice, and you better believe it will be on the gas market in the next 5-10 years as the summer ice is mostly gone now and science catches up with this miracle of chemistry. There is that old saw in the commodity markets that nothing cures low prices like low prices, but until we see a wave of marginal producer bankruptcies and buy outs (by the bigger players), oil will continue to sink as every barrel produced is a $31.00 earned. In an ever-increasing cycle of doom, they will have to produce more and more to service their debts taken in the credit market as they flood the market with supply which shrinks their bottom line further. At some point in the very near future there will be no storage space left, and then what. CAPITULATION BOTTOM. I am watching the banks and credit markets for that very event, to be sure there are stirrings, but the take-overs need to happen too. This was true in the gold markets as well. They are so lean now, that almost every penny above 1200 oz goes on their bottom line, but the pain in the miners was years long, In oil, this is only been since July 2014. I see mid summer as a bottom. Good trading all.