Yergin: Pressure on Oil Downward

6 Comments on "Yergin: Pressure on Oil Downward"

dave thompson on Fri, 15th Jan 2016 11:55 am 



Happy smiley faces, talking more MScorpM bullshit, most watching, will take as gospel truth.

Davy on Fri, 15th Jan 2016 2:26 pm 



Here is an interesting look at the effects of monetary policy and oil:

“You Can Either Surf, or You Can Fight”
http://www.salientpartners.com/epsilontheory/post/2016/01/14/you-can-either-surf-or-you-can-fight

“We all know that it’s the overwhelming oil “glut” that’s driving oil prices down and wreaking havoc in capital markets, right? It’s all about OPEC versus US frackers, right?”

“Here’s a 5-year chart of the broad-weighted US dollar index (this is the index the Fed publishes, which – unlike the DXY index and its >50% Euro weighting – weights all US trading partners on a pro rata basis) versus the price of WTI crude oil. The red line marks Yellen’s announcement of the Fed’s current tightening bias in the summer of 2014. “ (see chart)

“Ummm … this nearly perfect inverse relationship is not an accident. I’m not saying that supply and demand don’t matter. Of course they do. What I’m saying is that divergent monetary policy and its reflection in currency exchange rates matter even more. Where is the greatest monetary policy divergence in the world today? Between the US and China. What currency is the largest contributor to the Fed’s broad-weighted dollar index? The yuan (21.5%). THIS is what you need to pay attention to in order to understand what’s going on with oil. THIS is why the game of Chicken between the Fed and the PBOC is so much more relevant to markets than the game of Chicken between Saudi Arabia and Texas.”

“What do I mean? I mean that Chinese banks are not healthy. At all. I mean that China’s attempt to recapitalize heavily indebted state-owned enterprises through the equity market was an utter failure. I mean that China is going to need every penny of its $3 trillion reserves to recapitalize its banks when the day of reckoning comes. I mean that China’s dollar reserves were $4 trillion a year ago, and they’ve spent a trillion dollars already trying to manage a slow devaluation of the yuan. I mean that the flight of capital out of China (and emerging markets in general) is an overwhelming force. I mean that we could wake up any morning to read that China has devalued the yuan by 10-15%.”

“Look … the people running Asian banks aren’t idiots. They can see where things are clearly headed, and they are going to do what smart bankers always do in these circumstances: TRUST NO ONE. I believe that there is going to be a polar vortex of a credit freeze coming out of Asia that will look a lot like 1997. Put this on top of the deflationary impact of China’s devaluation. Put this on top of an inventory-led recession or near recession in the US, together with high yield credit stress. Put this on top of massive market complacency driven by an ill-placed faith in central banks to save the day. Put this on top of a potentially realigning election in the US this November. Put this on top of a Fed that is tightening. Storm warning, indeed.”

vegeholic on Fri, 15th Jan 2016 4:13 pm 



As usual Yergin displays a keen grasp of the obvious. Of course a rebound is just around the corner. I think he says what he thinks his paymasters want to hear.

geopressure on Fri, 15th Jan 2016 4:54 pm 



Your absolutely right, vegeholic… In this case he is pushing a narrative that he has been told to push…

Production has officially fallen below the point to where is going to be very difficult keep the oil “glut” narrative going… Yergin is just a last minute tool to add credibility to the oil glut…

If Iran hesitates before bringing new production online, or if Russia shuts in an equal amount of production as Iran brings online – then refineries in the US will be sucking air by the end of next week…

Obama is about to crash the global economy in order to cut demand, that is his only tool left… Well, that & his total control over US Mainstream Media…

penury on Fri, 15th Jan 2016 5:10 pm 



Yergin is a tool. He has been talking his book for so long that reality has passed him by. Forget production, at this point what matters is consumption. Consumption cannot increase until the people have some money. Low or minimum wage jobs (while welcome for the unemployed) are a disaster for the rest of the economy. Remember no sales equals no production equals no energy requirement equals depression.

makati1 on Fri, 15th Jan 2016 7:16 pm 



Jerkin/Bloomberg. Says it all. LMAO