Oil Prices

[Temperament]

anyone of the view that start of bear market is already here and we are going to see things fall till mid 2017 before moving up again.

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Me too...

If we look at Japan and China the two largest economy in Asia, Japan is sorta sideways, being kept alive by abenomics for now. China on the other hand is definitely imploding. Main trade partners like south korea and taiwan have had pretty bad quarters for exports recently, which probably are a good reflection of China's economic slowdown as it is the key export market for them.

Corporate earnings in asia are mainly down as well. So fundamentally it is all set up for a bear market. The >20% drop in STI can be considered entering bear market territory already.

Nowadays with HFT and quick info flow, it will not take long for things to hit bottom for stocks, probably a month or so. For other asset classes like property, flow on effect from stock will lag half year or so usually. Things could actually rebound in 2H2016 or earlier if USA Fed steps in by announcing reversal of interest rate policy and maybe even QE4. Otherwise carry trade into emerging market will continue to unwind and push asia further into bear market.

Less we forget, a bear market can happens without a economic recession, a black swan or what not? Don't have to be so obvious as at times nobody really knows why it (Bear market) happens. No?

[CityFarmer]

To me, non-vested views are meaningless, regardless of how much bias is in the analysis. It's like someone in New York talking about poverty in Africa.
I would prefer to see the structural engineer talk about the merits/strength of the bridge by making a presentation UNDER the bridge, not in the office.

As humans, all of us generate our view of things through a filter. This filter is the human heuristics (over confidence, fear, hindsight bias etc..). Views of vested interests are tainted by this filter but actions don't. I would like to believe the 2nd level thinking investor attempts to correlate the actions of others to the current situation, rather than views. At least it is less headache (at least for me) than figuring out where oil prices will go. In anyways, there will always be multiple views everywhere and it does feel like capturing views sometimes capture more noise, more than the signal itself.

IMO, the non-vested views aren't meaningless, but must be taken with right perspective. I agree ACTIONS speak louder than WORDS.

Abe-san's QE did have a knee-jerk reaction for like 1.5years? Anyways, IIRC, the intervention was not a response to a crisis but more of a way to jump-start the perennial failing heart?

OK you are right. It isn't an intervention on crisis.

[CityFarmer]

The low oil price, is not always good to global economy...

IMF: Oil price collapse is a drag on global economy
19 Jan 2016 18:26
[WASHINGTON] The International Monetary Fund said on Tuesday that the sharp collapse in the price of oil is proving more of a drag on the global economy than a stimulus.

The financial strains on exporters and the deep investment cutbacks in the industry are more than offsetting the expected gains from cheap oil enjoyed by key importers like Japan and the United States, the IMF said.

Lower crude prices would normally stimulate some demand in countries where it is a key household and business cost, and spur more economic activity, the Fund said in its updated outlook on the world economy.

However, it said, after a 70 per cent fall in prices over 18 months, other factors have dampened the expected gains from that decline.
...
AFP

Source: Business Times Breaking News

[HitandRun]

IQ / General Knowledge Test

Without using Google or any search engine, do you know what is the cheapest grade of crude trading at? 


Answer will be provided in the following page...

WTI/Brent is trading around $28-$29.

What are the other types of crude oil trading at?

1. Opec Basket is at $23+ OPEC
2. Western Canadian Select is below $15 WCS (Most of the heavy oils in Canada are pegged to this benchmark)
3. But so far the lowest I've seen is this:

Drumroll.........

North Dakota Sour (where the famous Bakken formation is) traded at $0.50 per barrel last week before recovering somewhat Flint Hills. It was almost as cheap as the PUB water we get from the tap. 

[CY09]

http://www.marketwatch.com/story/malaysi...2016-01-19

With oil at $28 against their budgetted forecast of $48, I wonder where will they raise more tax revenue. Perhaps it will be good if their politicians could use their wealth to do local investments since one of them has almost a billion in wealth from donations

I can't forsee another hike in GST or an increase in tolls on Sg registered cars. Low oil prices is like a fiscal contraction policy to them and what the Malaysian economy needs now is expansionary policies not contractionary

[BlueKelah]

http://www.marketwatch.com/story/malaysi...2016-01-19

With oil at $28 against their budgetted forecast of $48, I wonder where will they raise more tax revenue. Perhaps it will be good if their politicians could use their wealth to do local investments since one of them has almost a billion in wealth from donations

I can't forsee another hike in GST or an increase in tolls on Sg registered cars. Low oil prices is like a fiscal contraction policy to them and what the Malaysian economy needs now is expansionary policies not contractionary

Those corrupt ones have already cash out and move their assets overseas, similar to China situation. Most likely the currency will have to be devalued further and msia government put on more debt.. I remember younger days we were par value to the ringgit. Then RM2 and now RM3. Won't be surprise if it become RM3.5 or even RM4 in the near future. Not good for them but cheap shopping and eating for us

[lilvestor]

And crude oil goes under $28... right now even bears like me are shocked at how low prices are.

[BlueKelah]

And crude oil goes under $28... right now even bears like me are shocked at how low prices are.

I must be the exception.

Historically it has gone below $20 so there is likely another 50% downside from now before rock bottom.

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[lilvestor]

And crude oil goes under $28... right now even bears like me are shocked at how low prices are.

I must be the exception.

Historically it has gone below $20 so there is likely another 50% downside from now before rock bottom.

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My own forecast a year ago was for prices to hover between $30-$40 USD, $20 sounds pretty crazy to me, over 50% of all global oil production cannot breakeven at that price. I think this is not sustainable unless the currencies of these oil producing nations sink by another 50%, but currencies like the Ruble has already fallen by well over 50% in recent years, how much lower can they go?

[brattzz]

Is cheap oil really bad for global economy??

how can that be when energy cost comes down!!