Citigroup Sees $1.1 Trillion Stimulus From Oil Plunge

[Emily]

http://www.bloomberg.com/news/2014-10-15/citigroup-sees-1-1-trillion-stimulus-from-oil-plunge.html

Citigroup Sees $1.1 Trillion Stimulus From Oil Plunge
By Grant Smith and Lananh Nguyen Oct 16, 2014 10:15 AM PT

The lowest oil price in four years will provide stimulus of as much as $1.1 trillion to global economies by lowering the cost of fuels and other commodities, according to Citigroup Inc...

ETA:
http://wallstreetonparade.com/2014/10/saudi-arabia-goes-rogue-risking-oil-price-war/

Saudi Arabia Goes Rogue, Risking Oil Price War

Pam Martens and Russ Martens: October 7, 2014
...
Making the situation even more volatile today, the International Energy Agency, which has cut demand prospects in its last three monthly reports, is due out later today with a new assessment. In its September 11 report, it called the slowdown in demand “nothing short of remarkable.” Adding to concerns of a growing supply glut are the economic woes in Europe and China.

Rumors also abound that Saudi Arabia would not be saddened to knock out some of its higher-cost rivals in a prolonged price war and that it has the fiscal resources to endure a prolonged siege. It is estimated that shale oil production in North Dakota and Texas require a minimum of $70 to $80 a barrel to operate profitably. Any dramatic price decline as occurred in 1986 would put those operations in serious jeopardy.

It won't be stimulating if all those jobs disappear.

 

[Lizw]

Re: Citigroup Sees $1.1 Trillion Stimulus From Oil Plunge

http://www.bloomberg.com/news/2014-10-15/citigroup-sees-1-1-trillion-stimulus-from-oil-plunge.html


ETA:
http://wallstreetonparade.com/2014/10/saudi-arabia-goes-rogue-risking-oil-price-war/


It won't be stimulating if all those jobs disappear.

Granted, and it's a personal concern to me, since one of my daughters works in a field that depends on the shale oil industry, but on the other hand, an overall improvement in the economy will open up new jobs for those people. Many of them are young folk who came to the area because of the booming economy and would have little problem moving on to new jobs in other places. That isn't meant to downplay the unpleasantness for anyone, just to point out that it wouldn't necessarily be catastrophic.

 

[hawkeye]

Re: Citigroup Sees $1.1 Trillion Stimulus From Oil Plunge

It's a rebalancing. Would seem to me that $1.1T of "expected" activity has been removed from the economy

 

[Emily]

http://www.bloomberg.com/news/2014-...s-brace-while-shale-boom-newbies-swagger.html

[h=1]Oil Storm Has Texas Wildcat Veterans Warning Bakken Rookies to Take Cover[/h] By Bradley Olson and Tim Loh Dec 15, 2014 8:45 AM PT
?We?re going to hunker down and go into survival mode,? Stephens, founder of Endeavor Energy Resources LP, said in an interview from his Midland office, where visitors are first greeted by a statuette of a Texas Longhorn steer. ?Stay alive is our mantra, until the price recovers.?
Go about 1,300 miles (2,100 kilometers) due north and you get a very different take from the rookie oil barons in North Dakota, where crude output from the Bakken formation went from 200,000 barrels a day in 2008 to about 1.2 million today. They?re not seeing any need to take shelter, and it shows in their swagger....

http://www.mrt.com/business/oil/article_ae6b1afc-8e0a-11e4-b6fe-b7b5a1f1c088.html

[h=1]Another decade, another oil bust[/h] Posted: Sunday, December 28, 2014 2:55 pm
By Collin Eaton | Houston Chronicle
... The Federal Reserve has kept interest rates low since the financial crisis, prompting investors to seek better returns by pumping more than $200 billion into higher-paying - but risky - low-grade corporate bonds for energy companies.
The oil price tumble has put those energy bonds on track for their worst year since the crisis, according to Barclays. Prices for the U.S. energy sector?s high-yield debt instruments, known as junk bonds because they carry high risk for investors, have dropped nearly 20 percent since June.
?The whole credit spectrum has been experiencing a significant amount of shock,? said Shaia Hosseinzadeh, a principal at investment firm WL Ross & Co.

Read more: Another decade, another oil bust - MRT.com: Oil http://www.mrt.com/business/oil/article_ae6b1afc-8e0a-11e4-b6fe-b7b5a1f1c088.html#ixzz3NLFHUPAL
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