Oil fell to a 4-year low as Saudi Arabia launched a price war on Saturday with the announcement of plans to increase oil output next month, looking to boost total output above 10 million barrels a day. This will be the largest reduction seen in oil price for foreign markets in 20 years.
www.bloomberg.com/ne...ng-all-out-price-war
This comes as China, the #1 importer of foreign oil, ended 2019 with a 9.5% yoy increase in demand and a 17th consecutive year of record oil imports which equaled 10.12 million barrels per day in 2019. Chinese oil demand in 2020 has since fallen off due to nationwide quarantines as the impact of the coronavirus continues to take its toll on China’s economy as well as overall global economic activity.
www.reuters.com/arti...h-year-idUSKBN1ZD0CI
This monthly chart shows oil falling below a 4-year support level(blue dashed line) to a low of $41.28 on Friday, a decline that is expected to continue when global markets reopen tonight.
The red lines indicate a potential downtrend channel in play, created by connecting the two upper price peaks and extending a parallel line below from the December 2018 low.
The yellow area indicates the level that oil price-per-barrel is expected to reach which would put price back to late 2015-early 2016 levels in the $25-$33/barrel range which equates to a -25% drop from current price. This yellow area stems from a previous level of support/consolidation dating back to the early 2000’s and marked the bottom in oil prices during selloffs seen in 2008/2009 as well as during the 2015 decline.
This is expected to hit US shale producers as oil-and-gas companies have more than $200 billion of debt maturing over the next four years, $40 billion of which is due in 2020.
www.wsj.com/articles...-bonanza-11577880001
According to the Dallas Fed Energy Survey, average breakeven prices in the U.S. range from $48-$54 per barrel which is well above the current price of $41.28.
www.dallasfed.org/re.../economics/2019/0521
www.bloomberg.com/ne...ng-all-out-price-war
This comes as China, the #1 importer of foreign oil, ended 2019 with a 9.5% yoy increase in demand and a 17th consecutive year of record oil imports which equaled 10.12 million barrels per day in 2019. Chinese oil demand in 2020 has since fallen off due to nationwide quarantines as the impact of the coronavirus continues to take its toll on China’s economy as well as overall global economic activity.
www.reuters.com/arti...h-year-idUSKBN1ZD0CI
This monthly chart shows oil falling below a 4-year support level(blue dashed line) to a low of $41.28 on Friday, a decline that is expected to continue when global markets reopen tonight.
The red lines indicate a potential downtrend channel in play, created by connecting the two upper price peaks and extending a parallel line below from the December 2018 low.
The yellow area indicates the level that oil price-per-barrel is expected to reach which would put price back to late 2015-early 2016 levels in the $25-$33/barrel range which equates to a -25% drop from current price. This yellow area stems from a previous level of support/consolidation dating back to the early 2000’s and marked the bottom in oil prices during selloffs seen in 2008/2009 as well as during the 2015 decline.
This is expected to hit US shale producers as oil-and-gas companies have more than $200 billion of debt maturing over the next four years, $40 billion of which is due in 2020.
www.wsj.com/articles...-bonanza-11577880001
According to the Dallas Fed Energy Survey, average breakeven prices in the U.S. range from $48-$54 per barrel which is well above the current price of $41.28.
www.dallasfed.org/re.../economics/2019/0521