Oils not well in Russia

The economic pain inflicted upon Russia, on the other hand, has been well-documented.

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However, despite a weakening ruble and collapsing budget revenues, Russia has been unbowed in its support for pro-Russian rebels in eastern Ukraine. Despite the ceasefire agreement signed just a few days ago in Minsk, fighting continues in Ukraine, with the Ukrainian military pulling back from a strategic rail hub after being encircled by rebel forces. Fighting has subsided somewhat after Ukraine’s retreat, but Ukrainian President Petro Poroshenko called for international peacekeepers to come to Ukraine to keep the peace. All sides are clinging to any shred of hope that the ceasefire may yet hold, with each party calling upon the other side to adhere to the terms of the Minsk accord. It’s safe to say that not only does uncertainty reign in eastern Ukraine, but we probably haven’t seen the end of fighting just yet.

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Saudis Hurting

Low oil prices are even beginning to hurt Saudi Arabia, arguably the strongest global player to weather the oil price downturn.

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The Wall Street Journal reported that Saudi Aramco is cutting costs in line with lower prices, negotiating lower fees for everything from phone bills to major contracts with oil field service companies like Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB). It goes to show that even the world’s largest oil producer is feeling the heat, and is trying to find ways to make its operations leaner.

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oil prices drop

The drop in oil prices could be the “straw that pops the $7-trillion derivative bubble.”

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Can you explain the influence of oil prices on derivatives?

It’s not the oil prices that are significant; it’s the change in oil prices. If you own an oil field and it costs you $75 to produce a barrel, at $110 a barrel ($110/bbl), you’re OK. If oil drops to $45/bbl, you’re in serious trouble.

In the shale oil sector, producers were taking out hundreds of billions of dollars in loans to finance shale oil that was costing them about $110/bbl to produce. It looked good on paper, but was a disaster waiting to happen. A lot of people in the shale oil business will soon be going out of business.

This could start World War III. The United States is the biggest oil producer in the world today, and Russia is number two. Russia’s economy is based on oil priced at $110/bbl. They are very angry at the U.S. and Saudi Arabia for the games that have been played in oil. Oil at $45/bbl is not sustainable. It could bring down the world’s financial system all by itself.

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Oil prices fluctuated up and down over the course of this week, with a wider gulf opening up between WTI and Brent crude. The U.S. Energy Information Administration reported higher than expected inventories for the week ending on February 13, jumping by 7.7 million barrels. The figures continue to astonish – even as rigs drop at a surreal pace, down 30 percent since October, production continues at elevated levels.

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Oil Price Rises

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Learn How Easy You Can Make A Passive Income Of $100 To $900 A Day Trading Oil Futures.

Oil prices gained ground after the U.S. Department of Labor said in a report on Thursday that the number of individuals filing for initial jobless benefits decreased by 8,000 last week to 287,000. Analysts had expected jobless claims to rise by 2,000 to 297,000 last week.

Investors now looked ahead to the release of the latest U.S. non-farm payrolls report later Friday, for further Oil Prices Futuresindications on the strength of the recovery in the labor market.

Market analysts expect the data to show that the U.S. economy added 215,000 jobs in September, after a gain of 142,000 in August.

Market participants were also monitoring developments in the Middle East, as Turkey’s parliament authorized the government on Thursday to order military action against Islamic State.

Elsewhere, on the ICE Futures Exchange, Brent oil for November inched up 0.03% to trade at $93.84 a barrel, with the spread between the Brent and crude contracts standing at $2.38 a barrel.

 Crude oil futures rose on Friday, as Thursday’s upbeat U.S. jobless claims data continued to support and investors awaited an upcoming report on U.S. nonfarm payrolls.

Crude oil rises ahead of U.S. nonfarm payrollsCrude oil advanced on U.S. jobless data, non-farm payrolls on tap

On the New York Mercantile Exchange, crude oil for delivery in November traded at $91.46 a barrel during European early afternoon trade, up 0.49%.

Prices gained 0.31% on Thursday to settle at $91.01.

Futures are likely to find support at $88.18 a barrel, Thursday’s low and resistance at $92.96, the high from October 1.

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OPEC Price War

oil_prices futuresDiscord at OPEC is turning into a price war, loosening the cartel’s grip on the oil market and exacerbating a recent steep sell-off.

Fissures have widened as Mideast turmoil frays political alliances and producers vie for customers amid a flood of oil from the U.S. and slowing growth in Asia.

“No one is telling anyone what they are up to,” one Gulf oil official said.

Saudi Arabia this week unilaterally lowered the price it charges for crude scheduled for delivery next month—without the typical consultation with other members of the Organization of the Petroleum Exporting Countries, according to OPEC officials. The decision surprised many market watchers, who were expecting the Saudis to cut output to help boost prices, and sent prices hurtling lower.

Brent, the global oil benchmark, slid 1.2% Friday to $92.31, the lowest price since June 2012. Prices have tumbled 20% from their mid-June high.

The U.S. benchmark, West Texas Intermediate, settled down 1.4% Friday at $89.74, the lowest settlement since April 2013. U.S. prices have fallen 16% from their mid-June high.

The Saudi decision followed a similar move by the kingdom and Kuwait to lower prices for delivery this month, without informing other OPEC members, according to OPEC officials, effectively undercutting fellow members.

“If members don’t cooperate, which is likely, everyone is in trouble and prices will drop even further,” said another OPEC official from a Persian Gulf state.

Since its founding in 1960, OPEC has been rife with infighting among member states, which decide behind closed doors when to cut or boost their collective output to try to influence prices. But in recent months, divisions have deepened significantly, according to OPEC officials and analysts. That has weakened the group’s influence at a time when it is confronting some of the biggest challenges it has ever faced.

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Oil Prices Futures

Oil Prices Futures and Gold are often thought of as defacto currencies preferred to the US dollar when the greenback sinks. As Oil and Gold are world commodities it is a natural behavior for the price of both commodities to rise in US dollar price terms when the US currency declines. When this occurs rarely do these two commodities increase in price against the resilient currencies which appreciate against the US dollar. As the US dollar appreciates against other currencies the price of Gold in US dollars declines. However oil prices futures do not always match the drop in gold prices when the US currency rebounds because often the rise in the greenback is due to an improvement in the US and world economies – which will stimulate demand for oil. In November last year oil prices futures rose as oil hit $100 per barrel for the first time in four months. After dipping to less than $76 per barrel early in October West Texas Intermediate prices increased by 30%.

oil_prices futures

Crude oil prices continue to outperform equities even though the two have moved together somewhat over the past few months.Oil has fallen back from the highs at the beginning of the year – along with Gold which has languished for the past few months. This is largely due to the turmoil in the European economies that now promote the US dollar.

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Oil Prices Futures

As Equities Rise, So Does Crude by tvnportal
As the US economy shows improvement and there are prospects of solving the European economic woes the demand for oil is expected to expand. Consequently Oil Prices Futures will be on the rise while world economic recovery proceeds. Oil prices futures and the S&P 500 Index are positively correlated – seen in 12 of the last 13 quarters. However oil prices futures gained more than 30% from early October while the S&P 500 only increased by 13%. The 12 month out forecasts for world crude oil and liquid fuel consumption total nearly 90 million barrels per day. As crude oil inventories in the US are currently at the lowest seasonal level in seven years higher Oil prices futures is definitely on the table for some time.

For those who trade oil prices futures using charts technicals for crude oil remain positive. After resistance at $90 in September which saw oil prices fall to bottom near $76 oil broke through late in October, which then turned the previous resistance level into a support support. As the US dollar gained strength from the euro mess in November and December the immediate impact on oil prices futures was obviously positive.

The recent strength in oil prices has produced the oil market in backwardation after three years of contango until late October – when the price of commodity contracts expiring in the near term was lower than the forward, future price of oil contracts. Backwardation is the reverse – being when today’s price is higher than the future purchase price.” Thus for the short-term it is quite bullish for oil and should suit most oil prices futures traders.

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