Today is Tuesday 12th January 2016 and we
are briefly covering the issue of the recent Slump in oil prices.
Brent crude prices fell by more than 3 per cent to $30.43 a barrel today, extending losses
over the first seven trading sessions of 2016 to 17.3%. At the time of this video it stands
at $30.96 down 1.8% and extends a nearly 7% drop from Monday. Reasons given for this fall
ranges from: too much supply, the weakening Chinese economy, sliding stock markets, and
a strong dollar, which makes it more expensive for those using other currencies to buy oil.
Initially, prices started to rise when traders said support came after Nigeria’s oil minister
commented that a “couple” of OPEC members had requested an emergency meeting. But buying
faded after the United Arab Emirates oil minister said that the current OPEC strategy was working
and the first six months of 2016 would be tough but there would be a gradual recovery
in the oil market; so traders decided to focus on the global supply glut instead.
Saudi Arabia, which sits on large cash reserves, has insisted it will not cut production unless
non-OPEC members such as Russia also lower output. Growing tensions with Iran have all
but killed off the possibility of Saudi Arabia changing course, with Tehran preparing to
raise exports once western sanctions linked to its nuclear programme are lifted. Other
OPEC members have said an emergency meeting is unlikely.
Concern about slowing demand growth and market positioning has prompted analysts to lower
their price forecasts. Barclays became the latest investment bank to revise its estimates
predicting an average price for Brent and WTI in 2016 of $37 a barrel against previous
forecasts of $60 and $56, respectively. “Although we still expect higher oil prices
over the second half of 2016, we see prices moving up from a lower base than we previously
envisaged and on a much shallower gradient,” the bank said.
Morgan Stanley analysts have stated that “oil in the $20’s” is possible if China further
devalues its currency and economists at the Royal Bank of Scotland predict that it could
slump to $16 with Standard Chartered Bank being the most bearish of all predicting a
crash down to $10 a barrel. There is no doubt that the short term outlook
for the oil market is bleak. With production creating a surplus of some 1 million barrels
a day, plus decelerating demand and OECD inventory levels at an all-time highs (so much so, that
storage is rapidly becoming a major concern), lower prices seem all but inevitable. Whilst
North Sea Oil producers can weather the storm currently and a number (but reducing number)
of US Shale oil producers can also survive this onslaught for the time being by increasing
supplies to pay off debt interest, countries such as Venezuela, Algeria and Nigeria are
facing severe financial difficulties together with political unrest as the result of rapidly
growing unemployment. Like most commodities currently the trend
is certainly lower and we foresee this also continuing in the gold and particularly in
the silver market during the first half of 2016.
Since the start of the week Silver is down some 12 cents from $13.94 – $13.82 and gold
is down s$15 from $1104 – $1089 We hope you have found this video interesting
and informative and if so, please give it a thumb up and share it on twitter. Also kindly
visit our website regularly at www.illuminatisilver.com Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are not qualified to give investment advice. Therefore, this and other productions
must not be deemed to be giving such advice and merely represent the personal views of