Oil Drops Below $60 After Saudis Question Need to Cut

Oil Well - Photo by Ryan Lackey

Benchmark U.S. oil prices dropped below $60 a barrel for the first time since July 2009 as Saudi Arabia questioned the need to cut output, signaling its priority is defending market share.

West Texas Intermediate crude slid 1.6 percent in New York. The market will correct itself, according to Saudi Arabian Oil Minister Ali Al-Naimi. Global demand for crude from the Organization of Petroleum Exporting Countries will drop next year by about 300,000 barrels a day to 28.9 million, the least since 2003, the group predicted yesterday.

Oil’s collapse into a bear market has been exacerbated as Saudi Arabia, Iraq and Kuwait, OPEC’s three largest members, offered the deepest discounts on exports to Asia in at least six years. The group decided against reducing its output quota at a meeting last month, letting prices drop to a level that may slow U.S. production that’s surged to the highest level in more than three decades.

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1 thought on “Oil Drops Below $60 After Saudis Question Need to Cut”

  1. My thinking is that it has to be costing a huge amount of money for the Saudi Oil People to tank the price of gasoline so low.
    So what do they get out of it?
    If it is the collapse of the oil market and make less efficient methods of oil gathering go bankrupt then how much is enough?
    If it is to bring down the entire economy of the United States Banking System, how much will that cost them in the currency exchange as they own a lot of American Dollars?
    Or are they in bed with the Chinese and the Soviets?
    What are they getting for the money they are giving up? That is the question everyone should be asking.
    Personally, I think we should be buying up the most economical cars with the highest ratio of miles per gallon that we can find. Because when the smoke clears, then gasoline will cost double what it costs right now.
    The last time this happened was Hueston. Banks all over Hueston when bankrupt over night.
    At the same time as the banks closed, the customers owed millions in mortgages. So if you had 150,000 in the bank and a house mortgage the bankrupt institution foreclosed on you because you could not access your money to pay the mortgage payments. They had your money and they foreclosed on your house because you could not get to your money. Might happen again.
    The difference is those same banks have almost everyone on direct deposit now. So even if you make money, the bank wins. They take your money and they do not let you get your money from the bank under federal regulations of bankruptcy.
    I think those rules of bankrupt banks still exist. They are very much in bed with the government on this. But they are also parasites at the teller window and that is going to be very apparent very soon.
    You look anywhere in the world and people do not trust the banking system to be honest. That is why even today people keep their money at home instead of in a bank when ever possible.
    That is why checks are cashed and people hide the money.
    Even that is useless if the government counterfeits the currency to the point where the money becomes worth nothing.
    What will happen is a devaluation of every currency in the world as it compares with the U.S. Dollar.
    China is touted as some kind of great economy. I say they are head over heels in debt.
    Russia has already had one bankruptcy in the 90s based on military expenditures. They didn’t learn a thing as they are going back to military solutions with very expensive weapons.
    If we have commodities like gasoline at $2.35-$2.50 a gallon . . .
    If we have gold at a much lower rate of exchange . . . someone dumps gold on the market.
    If we end up with food at a much lower price . . . again someone floods the market with food. No, I do not know who could do that.
    Then the rest of the world suffers the result as everything goes back to being exchanged in dollars.
    Only the future tells the answer to my questions here. I can and have been entirely wrong before.
    If I was to invest, I would have invested in oil as a stable currency. So did a lot of bankers invest that way. Now that investment may be in the toilet.
    The reality is that oil is being competed against on a number of different areas. Trucks are going to natural gas instead of diesel fuel.
    Shale oil is in direct competition. It is only a matter of time before someone puts out a diesel engine that uses multiple sources of fuel by the switch of a computer distributing the fuel. By multiple liines into the engine instead of just one so that alternate fuels are a good choice.
    The question remains, what do the Middle East people get for their money with much lower oil prices?

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