Crude oil prices have plunged far below what the oil fundamentals might suggest and even hardened bears are starting to question this selling madness. The price drops and current levels will destroy the myth that U.S. oil production will rise regardless of the price and we are already seeing downgrades of those energy stocks across the sector. Downgrades are coming fast and furiously. Barron’s reported that Seaport Global Securities downgraded 51 energy-related stocks in the exploration and production arena, as well as offshore spa
Crude oil’s ongoing oversupply woes reached an ear-piercing crescendo during Tuesday’s trading session as WTI crude plunged into a bear market after growing signs of rising production across the globe. WTI Crude was already extremely sensitive and vulnerable to losses amid the bearish sentiment with reports of an unexpected supply increase by Libya sending prices below $43.
Crude oil traders piled onto the downside driving oil into bear market territory in a July crude oil future expiration selloff that will be one to remember. The market is still struggling and not even the fact that we have Tropical Strom Cindy pulling into refinery row, a major political shake up in Saudi Arabia and the fact that we are already seeing shale oil producers start to feel the pain of lower oil prices seems to be helping. We also saw supportive data from the American Petroleum Institute (API) for oil but with the mood as bad as it is, it didn’t do much to elevate prices.
Yesterday’s session was not like the previous ones – in the previous days, the precious metals sector moved lower together and mining stocks were leading the way. Yesterday, gold and silver declined, but miners were barely affected. Does this strength indicate a likely turnaround?