Crude oil just broke $32
On Monday, West Texas Intermediate crude oil, the US benchmark, fell more than 5% to trade as low as $31.34 a barrel, the lowest since at least December 2003.
Brent crude, the international benchmark, was off over 6% on Monday to as low as $31.90 a barrel, also a 12-year.
The slide comes as oil continues to get pounded to start the year and simply can't catch a bid with a 5% daily decline seemingly becoming the new normal for oil.
In its note Morgan Stanley said it expected the current collapse in energy prices wouldn't be as severe as what was seen in 1986. As it turns out, this crash in fact far worse and things aren't likely to turn around anytime soon, either.
Here's Morgan Stanley (emphasis ours):
A quick end does not appear to be in
sight either: OPEC continues to produce "at will," Iran could increase
exports in coming months if sanctions are eased, risk to exports from
Libya are skewed to the upside, and the end of the export ban in the US
makes elevated inventories in the Lower 48 available globally. Moreover,
demand is likely to decelerate given the brittle outlook for economic
growth, particularly in emerging markets, and our house view calls for
continued dollar strength, which has weighed on oil prices throughout
this downturn.
Of
course the quick reaction is that this makes no sense for the kingdom
with oil near multi-year lows, though on closer examination this move clearly indicates some anxiety from Saudi Arabia about the future of both oil and, as a result, its financial condition.
More From Business Insider
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- 2016 could be 'the year of living dangerously for Saudi Arabia'
- end quote from:
- http://finance.yahoo.com/news/crude-oil-just-broke-32-161145176.html
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