The recent drop in oil prices could be due to more than just lower demand, according to some analysts, who have suggested that the U.S. could be deliberately manipulating the market to hurt Russia at a time of geopolitical stress.
Patrick Legland, the global head of research at Societe Generale, conceded that he had no in depth knowledge of the situation but claimed that it was an “interesting coincidence” that the two events were happening at the same time.
“Is it lower demand or is it the U.S. clearly maneuvering?,” he told CNBC Monday.
Plantagenet on Mon, 20th Oct 2014 10:17 am
The Obama administration won’t be unhappy if the lower oil prices hurt Putin and Russia.
bobinget on Mon, 20th Oct 2014 10:20 am
IMO WTI has bottomed.
So far it’s *refiners raking in profits. Most majors have multiple refineries. Most smaller oil companies are hedged. Banks won’t lend w/o hedging.
IF majors wish to pick up valuable properties, in this case shale, they play along with price drops to scoop up companies at ridiculous low share prices.
Technically there was no reason for a $20. drop.
Europe, in particular Greece is still in deep doo.
This would be like the US stock market, oil prices falling because Detroit going BK. EU’s central bank
will be forced to stimulate just to avoid deflation.
(in America we call it ‘stagflation’ because deflation is
too scary a word.. like ‘Global Warming’ changed to ‘Climate Change’ “Whose afraid of a little (natural) change?”
Then there is fear mongering FOX News.
If older Americans (who always vote) can be frightened
by Ebola (one dead) or anti union, anti minimum wage raise Wal Mart declaring “business will be off this Christmas” (total lie) the GOP can convince older, white, SS fixed income, to vote Republican to “save the nation’ from the blacks, gays, Mexicans and students and Hillary.
Watch, after November’s election. It will be BAU. Oil will return to $90 between that Wednesday and Monday.
* Koch Brothers refineries
GregT on Mon, 20th Oct 2014 10:38 am
Patrick Legland, conspiracy theorist extraordinaire?
It would appear that he has company: http://voiceofrussia.com/2014_03_22/Ukraine-crisis-oddities-Tycoon-George-Soros-wants-US-to-crash-oil-market-1957/
March 22/ 2014
The Voice of Russia
“The infamous speculator, oligarch and political activist George Soros published a plan designed to “punish” Russia for its actions in Crimea and Ukraine. According to Soros’ plan, Washington has to crash the oil market in order to hurt the Russian economy.”
“Both Sergei Glazyev, presidential advisor and Alexei Ulyukaev, Russia’s minister of economy, hinted that Moscow will liquidate its dollar-denominated currency reserves and switch the country’s oil and natural gas trading to other currencies, therefore severely reducing the demand for American currency outside the US. The ‘nuclear option’ for retaliation would be switching the Russian oil and gas trade to gold in order to unravel the long-going manipulation of the gold prices orchestrated by the US Federal Reserve and banks like Goldman Sachs.
The idea to hurt Russia’s oil revenues for a three or four month period may be tempting for Washington but it is unlikely that the US leadership will be ready to bear the risk of wrecking the dollar-based financial system just to create a minor inconvenience for Russia.”
Or would they?
GregT on Mon, 20th Oct 2014 11:13 am
Venezuela blames U.S for global oil price slump
http://news.xinhuanet.com/english/business/2014-10/17/c_133723506.htm
“The U.S. and its allies want to affect oil prices to harm Russia, which produces around 10 million barrels per day, and that is the vital income of their economy,” said Venezuelan President Nicolas Maduro.”
Northwest Resident on Mon, 20th Oct 2014 11:26 am
This might have something to do with why oil prices are dropping:
Why Chinese Growth Forecasts Just Crashed To A Paltry 3.9% – And Are Going Even Lower – In One Chart
“Up until a few years ago, conventional wisdom was that China would grow at nearly double digits as long as the eye could see. Then, however, something happened, and China’s 9% growth became 8%, then 7% and even lower, as suddenly the Politburo made it quite clear China would not chase growth at any cost, especially when the cost is TRILLIONS IN BAD DEBT and other NPLs, as we have explained time and again. The collapse in Chinese growth expectations is shown best on the following formerly hockeysticking chart of IMF’s revised Chinese growth projections which has completely collapsed in the past few years.”
Like everyone else, China’s “growth” and increased use of oil was (and still is) “bought” with debt. Now that is reversing.
“Sadly for China’s social instability, Chinese growth is going not only to 3.9% but much, much lower.
The reason? Quietly, over the past 5 years, China racked up an epic debt load, which by 2015 is expected to hit a whopping 252% of GDP, or a 100% of GDP increase in debt, just to keep its growth dynamo running.”
ht tp://www.zerohedge.com/news/2014-10-20/why-chinese-growth-forecasts-just-crashed-paltry-39-and-are-going-even-lower-one-cha
GregT on Mon, 20th Oct 2014 11:29 am
Iran urged to hold an emergency Opec meeting due to falling oil prices
http://www.theguardian.com/world/iran-blog/2014/oct/15/iran-urged-emergency-opec-meeting-due-to-falling-oil-prices
“Iranian officials accuse Saudi Arabia for keeping crude prices low, saying Riyadh is serving western interests”
“Mirkazemi has accused the Saudis of conducting a political game and acting against the interests of Opec members.”
“Saudi Arabia, which intends to manage the Opec, serves the interests of the G20 group. We should not let Saudi Arabia to do this and our oil ministry should change its passive response to the issue,” he said.”
An EU and US oil embargo, strict banking restrictions and trade bans have been among the major measures designed to punish Tehran for its failure to comply with international demands over its nuclear activities.
shortonoil on Mon, 20th Oct 2014 11:31 am
“The price of petroleum can not exceed the value of the energy it supplies.” Petroleum has hit its maximum sustainable price, and over the long term will continue downward as entropy continues its march forward. No conspiracy, no evil Washington intent needed. Just some basic laws of physics. The world’s petroleum reserves are depleting, and this is just the inevitable outcome.
After we have used all the extractable oil on Soccer Mom trips, runs to the mall, million $ houses, three wheelers, and flying to our Caribbean vacation spots we can blame it all on the politicians!
(Don’t forget the millions of tons of Chinese junk that we don’t really want, can’t use, but had to have.)
http://www.thehillsgroup.org/
Northwest Resident on Mon, 20th Oct 2014 11:35 am
shortonoil — we DO need that Chinese junk — to keep our landfills topped off and the garbage men employed!
rockman on Mon, 20th Oct 2014 11:41 am
“…the U.S. could be deliberately manipulating the market…”. Such statements always makes me chuckle. First, exactly how does a govt that produces no oil affect the market? OTOH the US govt, via the DOD, is the single largest consumer on the planet of products refined from oil so maybe the DOD could drastically cut its consumption to drive down oil prices. The DOD doesn’t like to offer such details but based upon current US activity around the global it’s difficult to imagine any cut backs. In fact given current efforts in Iraq maybe even a small increase.
But no doubt every politician in DC (R’s and D’s) will try to take credit for the price drop. Except, of course, for some from the oil producing states. Same foolish theories IMHO as the KSA flooding the market with oil to hurt US shale players. A rather difficult idea to support once one learns that the KSA has been systematically reducing production for the last 6 months. IMHO I can think of no other organization that has done more to help the US shale players then the KSA. LOL. Certainly not the Canadian oil sands producers who have continually increased exports to the US. In the words of George H.W. Bush (in the voice of Dana Carvey): “Arabs good…Canadians bad”. LOL.
Davy on Mon, 20th Oct 2014 12:04 pm
Rock, the US is influencing the oil market but not consciously. It is a product of the unintended consequences of a Fed at the limits of QE and the need to taper. The den of thieves in DC may be taking credit for this for political consumption. They may have made some agreements or taken some market manipulation actions to distort the picture further but there are other systematic reasons beyond their control influencing the oil markets to a greater degree. The complexity of the whole system and the markets within this system surely cannot be steered as a policy. It can only be ridden like a wave.
rockman on Mon, 20th Oct 2014 12:41 pm
Davey – True. Like the man said: It’s difficult to remember the plan was to drain the swamp when you’re up to your ass in alligators.
Lots of different “plans” out there. And lots of alligators that don’t care what those plans are.
JuanP on Mon, 20th Oct 2014 3:21 pm
NR “shortonoil — we DO need that Chinese junk — to keep our landfills topped off and the garbage men employed!”
Not only that! I read reports that the energy generated by burning methane emissions at landfills is renewable and might solve all of our energy problems. 😉
redpill on Mon, 20th Oct 2014 8:02 pm
Wow, that Voice of Russia piece has to make you cringe.
They are shutting down non-state media right quick while hugely boosting military spending. Everything is the fault of the West and not their shit leadership, at least as far as state workers go.
Very sad for those Russians that thought they might be finally free from the style of leadership they’ve suffered under for far too many years.
Kristen on Mon, 20th Oct 2014 8:34 pm
Don’t oil prices always decline when an election is near?
Nony on Tue, 21st Oct 2014 1:35 am
It’s supply and demand. Lot of US barrels came on line (“drill, baby, drill”) worked. Getting Libya back didn’t hurt either. And demand is not dropping, but at least slowing in growth.