Could the Oil Bust Last?

[marmar]

Could the Oil Bust Last?
Posted on January 13, 2015 by Yves Smith


Yves here. A few weeks ago, conventional wisdom was that oil prices might sink lower, but once excess supply was removed from the market, prices would return to the $80 to $100 a barrel level. Now that consensus view is starting to crack.

By Nick Cunningham, a Washington DC-based writer on energy and environmental issues. You can follow him on twitter at @nickcunningham1. Originally published at OilPrice

The oil industry has experienced boom and busts before, but the depths to which oil prices have plunged have surprised everyone. Could the oil bust now persist much longer than many think?

It is not just oil that has seen a bust. Over the last decade and a half, the global economy has witnessed a massive commodity boom, with prices rising for all sorts of raw materials, including gold, iron ore, oil, gas, copper, wheat, corn, and more. But the commodity “super-cycle” appears to be over, with vast new supplies having come online in the last few years.

As prices rose through the 2000’s, multinational companies extracting all sorts of commodities planned billion dollar projects. With new mines, new oil and gas fields, and other commodity supplies hitting the market at the same time, a bust has ensued.

“Supply has been outstripping demand not because demand has been particularly weak, but because there was too much supply,” Stephen Briggs, a commodities analyst at BNP Paribas SA, told The Wall Street Journal. “It looks like this won’t change anytime soon.”

The oil bust has captured worldwide attention in a way that crashing coal and copper prices have not. And for now, the bust may here to stay, at least a bit longer than many anticipated. ....................(more)

The complete piece is at: http://www.nakedcapitalism.com/2015/01/oil-bust-last.html

[on point]

1. Not to mention speculator dollar 'rents' siphon squeezed out of supply chain

[bemildred]

2. Deflation generally does last a while. nt

[Bandit]

3. The USA has doubled it's oil output in the last six years.

The market is glutted and IMO that is good. I like having an extra thousand dollars in my pocket that normally would have gone for gas and oil. I am a small time user too, I can only imagine what trucking companies are feeling..So for all those Right wingers that say Obama has killed oil in the USA, pfffft