If You Are An Oil Bull, Don’t Look At These 2 Charts
Tyler Durden: It’s getting worse… faster! These two stunning overnight developments in crude oil prices should shock investors.
First, OPEC – after its crude basket price dropped below $30 for the first time in 12 years - slashed its price overnight by $2 to $27.85 – the biggest single-day drop in history and lowest level since November 2003…
Is it any wonder the Saudis are trying to sell every national asset to subsidize this US Shale-crushing energy price?
Second, even closer to home, Canadian heavy crude oil collapse below $20 – a record low!!
The low prices may push more of the highest-cost output offline. Producers including Baytex Energy Corp. and Canadian Natural Resources Ltd. have shut in more than 35,000 barrels a day of heavy oil and bitumen production capacity, according to company presentations and a report on the Alberta government website.
Current prices are “below shut-in levels,” said Tim Pickering, founder and chief investment officer of Auspice Capital Advisors Ltd. in Calgary. There’s no incentive to ship Canadian crude to the U.S. Gulf Coast and producers may start annual maintenance sooner than planned, he said. “We’re the last barrel produced and we’re the first barrel shut in.”
So record inventory surge in gasoline, global storage at its limits, price-war in Europe, Saudis in panic cash-flow “whatever it takes” mode, borrowing bases being slashed, credit risk at record highs, and Canada now facing widespread shut-ins… but apart from that, the bottom must be close right?
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Bonus Chart: Venezuela lowers its crude below crucial $30 level – Feb 2004 lows.