Energy |

Gold, Commodities Routed

Bloomberg puts together lots of opinions (none of them positive) about the recent plunge in the gold price and broader weakness in the natural resource sector.

One Gina Rinehart, Australia’s commodity queen and richest woman, has been smarting, losing nearly $20 billion in net worth recently, according to this story at the Telegraph.

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Crude Oil Inventories, Prices

Not having looked at the graphic below that is updated weekly by the Department of Energy as part of their This Week in Petroleum publication, I was kind of shocked (for pretty obvious reasons) to have stumbled across it this morning.

Markets did a good job of signalling what was to come late last year as shown below.

Of course, that’s pretty much the end of the story…

Let’s all now watch the Nasdaq eclipse its internet bubble high from early-2000 as some foreign stock markets also notch fresh records in what can only be described as a “job well done” by the world’s central banks…

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Waiting to Exhale in Houston

Office construction data has never been anything that I’ve had any interest in, however, in light of the recent oil bust and the slow-motion reaction to the 50 percent drop in energy prices, charts like the one below from this Wall Street Journal story are hard to ignore.

A few more related charts appear in this offering from the WSJ Economics Blog and added context on the subject can be found in Oil Bust Hits Office Construction Boom, Banks, Suppliers – But Hey, “So Far” No Apocalypse.

Boomtown, USA

We haven’t heard much about the fallout from what appears to be an energy boom in the process of going bust about 500 miles Northwest of here in Williston, North Dakota, but that’s not surprising. These things seem to take a while to pan out.

One thing seems pretty likely if oil prices stay anywhere near current levels for any length of time – we’ll no longer have any trouble finding a hotel room when passing through the area.

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“I Don’t See a Downside”

We filled up the tank the other day and were again amazed at the numbers we saw while doing so. Consumer confidence in the U.S. is skyrocketing as we ‘Mericans are getting a nice little bonus every time we gas up the family car and, for those of modest means, saving $20 at the gas station can be a pretty big deal.

But there’s a downside…

As noted above, oil exporting countries around the world (most of whom we ‘Mericans dislike) are feeling a good deal of pain and that pain is likely to persist for some time.

But, what is not stated in the video is that there will be pain here in the U.S. too as the shale oil industry slowly comes to grips with the idea that $50 oil might not be so transitory. As noted in this report at The Atlantic, shale oil has been responsible for a good deal of the jobs growth in recent years and there are already reports of layoffs by shale oil producers, a trend that is likely to accelerate as long as oil prices are low.

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