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Eurozone falls into deflation for first time since October 2009

Eurozone Inflation Prices in the eurozone are falling for the first time in more than five years, strengthening the case for the European Central Bank to unveil a full-scale package of government bond purchases later this month, despite Germany’s disapproval. The collapse in the cost of oil dragged eurozone consumer prices down 0.2 per cent in the year to December 2014, Eurostat, the commission’s statistics bureau, said on Wednesday. The figure was slightly worse than the 0.1 per cent decline that economists had expected. More On this story On this topic IN Europe The last time the currency area was in deflation was October 2009. Prices are expected to drop again in January as more recent falls in crude lower the cost of consumer goods. The latest fall, from a 0.3 per cent increase in November, will bolster calls for more aggressive action from the ECB, where top officials […]

Posted On : Published By : Tom Whipple
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The oil price is just plain wrong

Tags: commodities | economics | government | markets | oil The price sign outside Costco in Westminster, Colorado, shows gas selling for $1.81.9 for the first time in years The oil price is still too high, often too low and much too volatile. In other words, this is a market that doesn’t work well for anyone. The excessive volatility is glaringly obvious. The 50 percent price fall since June is extreme, but the market is only occasionally calm. Since 2000 the daily price has been on average 18 percent higher or lower than six months earlier. Such variation is uncalled for, especially given the fairly modest shifts in demand. Since 1990, the annual change has never been higher than 3 percent. On the other side, the average cost of supply moves very slowly. Only modest adjustments in inventory and production rates are required to keep the price stable, as […]

Posted On : Published By : Tom Whipple
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Welcome To Peak Car

It’s looking increasingly likely that we’ve reached peak car , the point at which overall automobile usage tops out. The U.S. and Europe appear to be at that point now; the rest of the world may follow within a decade . You’d think that would spell trouble for the privately owned car—a future of waning use and perhaps eventual extinction. Think again. Peak car is the result of some major trends that look to marks the biggest change in automobile use since Henry Ford, as the car evolves from a huge piece of standalone hardware in a garage to a computerized network tool for the 21st century. Auto Use Really Is Down Peak car represents a major U-turn on thinking from just five years ago. That’s when transportation researchers forecast that the world was headed full-throttle towards global gridlock in the next 20 years , with the number of vehicles on […]

Posted On : Published By : Tom Whipple
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Energy Crisis As Early As 2016

Low oil prices today may be setting the world up for an oil shortage as early as 2016. Today we have just 2% more crude oil supply than demand and the price of gasoline is under $2.00/gallon in Texas. If oil supply falls too far, we could see gasoline prices doubling within 18 months. For a commodity as critical to our standard of living as oil is, it only takes a small shortage to drive up the price. On Thanksgiving Day, 2014 Saudi Arabia decided to maintain their crude oil output of approximately 9.5 million barrels per day. They’ve taken this action despite the fact that they know the world’s oil markets are currently over-supplied by an estimated 1.5 million barrels per day and the severe financial pain it is causing many of the other OPEC nations. By now you are all aware this has caused a sharp drop […]

Posted On : Published By : Tom Whipple
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This Oil Thing Is The Real Deal

This Oil Thing Is The Real Deal thumbnail Well! WTI below $50 and Brent below $53 when I start writing this. Who knows where they’ll be by the time I’m finished?! The euro down below $1.20, US stocks flirting with -2%, major European ones off -3%, Italy and Greece over -5%. Welcome to the real world, baby! Didn’t think you’d see it again so soon, did you? Welcome to the world where the Kool-Aid recovery does not reign supreme. Not that you’re not going to hear that anymore, and 24/7 incessantly so, but there’s no recovery with these oil prices, no matter what anybody says. The damage must be gargantuan by now. Everybody’s invested in oil. Sure, lots of shorts and stuff by now, but that’s not going to do much good. Not for pensions funds, or for governments. This thing will not blow up or over softly. There’s […]

Posted On : Published By : Tom Whipple
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How The Price Of Oil Could Fall To Just $20 A Barrel

Oil prices are plunging even lower today . WTI crude is down below $50 per barrel for the first time since 2009. That’s already down by more than half since the beginning of 2014, a development almost no one saw coming. It begs the question: What is the lowest possible low for oil right now? One answer — which will terrify countries that are big oil-producers like Russia and Venezuela — is that there’s no insurmountable reason that oil couldn’t sink as low as just $20 a barrel. It’s already been there, after all. Fifty dollar oil is already having an amazing effect: Russia’s ruble has gone through the floor , and that nation is now in an economic crisis because of it, Venezuela is also in a major political and economic crisis , and the tumbling prices are likely to drive the eurozone into deflation soon , if […]

Posted On : Published By : Tom Whipple
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Oil Prices Extend Declines

ENLARGE A refinery in Ulsan, South Korea. Reuters LONDON—Oil prices extended their slump on Tuesday with both Brent and U.S. crude futures trading at 5½-year lows amid continuing concerns about a global supply glut. Brent crude for February delivery on London’s ICE Futures Exchange dropped more than 2% to under $52 a barrel—its lowest level since April 2009. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February flirted with $49 a barrel, down about a dollar from Monday’s settlement. “Right now, panic seems to rule the place,” said Thina M. Saltvedt, a senior oil analyst at Nordea Bank Norge. “Prices could easily fall to $40 before we see any meaningful improvement.” Driving the bearish mood were reports that Russian oil output hit post-Soviet records and Iraqi oil exports were at their highest since the 1980s. Adding to the downward pressure, Saudi Arabia on Monday […]

Posted On : Published By : Tom Whipple
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Oil Extends Drop Below $50 as U.S. Stockpiles Seen Swelling Glut

Oil extended losses below $50 a barrel amid speculation that U.S. crude inventories will expand, exacerbating a global supply glut that’s driven prices to the lowest level since April 2009. Futures fell as much as 3.1 percent in New York , declining for a fourth day. Stockpiles in the world’s biggest oil consumer probably rose by 750,000 barrels last week, a Bloomberg News survey shows. A gauge of the dollar held near a nine-year high, diminishing the investment appeal of commodities, as the Federal Reserve weighs raising interest rates and amid concern that Greece will leave Europe ’s currency union. Oil slumped almost 50 percent in 2014, the most since the 2008 financial crisis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as it competes with U.S. producers. The market faces “more problems” this year, according to Morgan Stanley, with surging output in Russia and […]

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Oil prices edge up after 5 percent plunge; Brent holds above $53

SINGAPORE (Reuters) – Oil edged up on Tuesday, recovering from a five percent plunge in the previous session that saw prices touch fresh 5-1/2 year lows in an oversupplied market. Growth in oil supplies showed no sign of abating, with output in Russia hitting a record high in 2014 and exports from OPEC’s second largest producer Iraq the highest since 1980. Jitters over political uncertainty in Greece drove investors out of risk assets globally to safe haven bonds. "It’s building on the recent bearish supply demand output of oil, led originally by the OPEC meeting," said Mark Keenan who heads Asia commodities research at Societe Generale. Brent crude LCOc1 gained 13 cents and was at $53.24 a barrel by 9.26 p.m. ET, after dropping to a low of $52.66 on Monday, its lowest since May 2009. U.S. crude CLc1 was up 7 cents at $50.11 after slipping below $50 […]

Posted On : Published By : Tom Whipple
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Oil Prices Again Buck Economists’ Expectations

ByKathleen Madigan Economists ended 2014 with expectations that the rout in the oil markets was pretty much over. When asked by The Wall Street Journal in  early December where oil would trade on Dec. 31, 2014, the average forecast was $64.73 a barrel (up from just under $61 on Dec. 10). Instead, petroleum prices ended the year dropping to about $53 a barrel, and have continued to swoon in the very early days of 2015. Light, sweet oil for February delivery traded  briefly below $50 a barrel on Monday , the first time that has happened since April 2009. The price erosion is an example of Economics 101: too much supply and not enough demand are moving prices lower and lower.  What’s worsening the situation, however, is that instead of cutting back production when prices decline, energy producers such as Russia and Iraq are pumping the most crude in […]

Posted On : Published By : Tom Whipple