The Multi-Trillion Dollar Oil Market Swindle
In a past, we documented a overstatements by both a IEA and EIA in 2014 2015 in terms of supply, register and understatements of demand. Others also beheld these distortions and, possibly conscious or not, they exist and they are really vast in dollar terms. These distortions, that are inspiring cost by media hype and/or direct/indirect cost manipulation, are utterly presumably a largest in financial history.
Putting numbers behind it, with worldwide prolongation using some 95 million barrels per day, and presumption $55 per tub for oil, a marketplace for wanton oil is about $5.2 billion per day. Each $10/Barrel change is value scarcely $1 billion/day or $365 Billion/year for a worldwide wanton oil market. Add a worldwide equity marketplace caps of oil and oil marketplace associated equities and debt we have a liaison that is in a trillions; a series that can't be ignored.
According to Cornerstone Analytics, who have documented a IEA evenly underestimating direct in 2012-2013 usually to scold it aloft buliding if not years later, a EIA has combined a coming of an imbalance of supply by some 500 million barrels or $2.5 trillion in a final 5 buliding alone. This has simply swung oil by during slightest $20/barrel if not more.
I have confirmed that oil should have corrected to around $70 in a tumble of 2014, tied to U.S. prolongation increases that during a time represented a cost during that drillers would continue to supplement to supply. That cost tied to cost reductions has substantially been reduced to $60ish currently. But today, with a accord oversupply widely quoted in a media as some 2 million barrels per day worldwide, it’s transparent that if a numbers are scold below, a viewed oversupply wouldn’t exist during all. Suffice it to contend prices would be during slightest during a indicate where prolongation would need to be added, maybe around $60-$70 per barrel, if not higher.
Assuming that series during $70 and with a blended normal of WTI Brent during $55/Barrel approximately, during $15/Barrel given a 95 million barrels of tellurian production, afterwards we can guess that tellurian oil markets are being undervalued by about $1.425 billion per day or over $500 billion per year.
Furthermore, we don’t even take into comment possibly oil futures are being manipulated (much like FX, GOLD, LIBOR – all have been possibly indicted of or been held in paraphernalia scandals) along with each other commodity as a outcome of oil’s fall and a financial impact.
Why regulators, and generally a media, exclude to residence this, even in theory, and instead select to continue a fabrication of oversupply is over me. In a final dual months, EP equities fell 10 weeks in a row, that hasn’t happened given 1989.
To answer a possess doubt on because this whole eventuality is being mostly ignored, maybe that oil is suspicion to coax aloft mercantile expansion as suggested previously. But so distant that has nonetheless to even manifest as U.S. GDP expansion has indeed slowed, not accelerated. Only time will tell possibly this farfetched pierce in oil markets, as good as a volatility, is fit or not. As reported here, a EIA has already revised lower, yet usually slightly, a before month’s prolongation foresee as we predicted. Look for some-more of this to come.
Courtesy: Leonard Brecken of Oilprice.com