Saturday, December 20, 2014

MARC FABER on OIL PRICES – Oil Prices Wont Go Below $70 For A Long Time

MARC FABER on OIL PRICES - Oil Prices Wont Go Below $70 For A Long Time Brent crude tumbles as Saudi escalates Opec oil price war Saudi Arabia slashes oil contract price to US, sending crude traded in London sharply lower Oil prices were in free fall on Tuesday morning after it emerged that Saudi Arabia, the world's largest exporter, had slashed its contract price for its US customers in a further sign of an escalating war for control of global energy markets. Brent crude - a benchmark made of oil from 15 North Sea fields against which almost half the world's petroleum is priced - fell 2.5pc to $82.62 in the mid-morning trading session in London. US crude futures are now trading at around $76 per barrel, a figure that will squeeze the profitability of shale oil producers in the US who are seen to be the biggest threat to the domination of the Organisation of Petroleum Exporting Countries (Opec) in terms of controlling the price of crude. Tuesday's falls were triggered by state-owned Saudi Aramco - the world's largest state-owned oil company by production and reserves - slashing the contracted price for its sale of crude to the US. Opec, of which Saudi is the leading member - has been losing market share to shale oil producers in the world's largest economy with Nigeria recently dropping out of the list of member countries that supply North America. In a comment that appeared to be directed at shale oil producers in the US, Suhail al-Mazrouei, the energy minister of the United Arab Emirates speaking to Reuters in Abu Dhabi said: "We as a group of producers are not the only ones producing, there are others. Our role is to balance the market with supply, this is what we will always do." Swiss-born and -educated Marc Faber's distinct voice is a common sound on CNBC and Bloomberg TV when it comes to big-picture forecasting in investments. Publisher of the "Gloom, Boom & Doom Report," Faber's views on the markets are highly regarded. HAI Managing Editor Sumit Roy caught up with Faber and spoke to him about the recent moves in stocks, the dollar and gold. Marc Faber: The likelihood that we have something more serious now is quite high. There has been considerable technical damage in the market, with approximately half of Nasdaq and Russell 2000 shares already down 20 percent or more from their highs. Combine that with the fact that Treasury bond yields have again declined meaningfully, and it suggests the economy is not on a very sound footing. The U.S. dollar has been rising and hit a four-year high earlier this month. Is the dollar going to continue to rally from here? The reasons oil prices started sliding in June were hiding in plain sight: growth in U.S. production, sputtering demand from Europe and China, Mideast violence that threatened to disrupt supplies and never did. After three-and-a-half months of slow decline, the tipping point for a steeper drop came on Oct. 1, said Ray Carbone, president of broker Paramount Options Inc. That’s when Saudi Arabia cut prices for its biggest customers. The move signaled that the world’s largest exporter would rather defend its market share than prop up prices. “That, for me, was the giveaway,” Carbone said in an Oct. 28 phone interview from his New York office. “Once it started going, it was relentless.” Vladimir Putin has agreed a $20bn (£11.8bn) trade deal with Iran that will see Russia sidestep Western sanctions on its energy sector. Under the terms of a five-year accord, Russia will help Iran organise oil sales as well as “cooperate in the oil-gas industry, construction of power plants, grids, supply of machinery, consumer goods and agriculture products”, according to a statement by the Energy Ministry in Moscow. energy crisis
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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