Four Reasons Oil Could Fall to $40 a Barrel

The OPEC oil cartel's meeting in Vienna on Friday went largely as expected. Production was maintained at 30 million barrels per day with unofficial production numbers about 1.5 million barrels above that as Saudi Arabia opens the spigots and redoubles its price war against U.S. shale oil producers who, for their part, are also increasing production. Moreover, if Iranian economic sanctions are dropped later this month as part of a nuclear deal, another million barrels per day would be pumped.

Long story short: While oil prices have held near the $60-a-barrel level thanks to a slight inventory drawdown associated with the start of the U.S. summer driving season, a combination of deepening oversupply, still high inventories, extended bullish positioning and the regular demand slowdown at the end of the summer suggests prices should start sliding again soon. Storage tank capacity could be tested as soon as September.

Related: Why the Saudis and OPEC Want Cheaper Oil​

According to research by Credit Suisse, futures market positioning suggests downside price risk of about 30 percent — which would be enough to take West Texas Intermediate back toward $40 a barrel in a test of the March lows.

The chart above puts OPEC's decision in the context of an epic supply glut. Remember also that while the U.S. drilling rig count is down about 60 percent from its peak, total production increased in the week of May 22 to a new all-time high of 9.6 million barrels per day.

Via: The Fiscal Times

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Pete Hoekstra to Newsmax: Terrorism Growing 'By Leaps and Bounds' Under Obama

The Obama administration's confused and weak foreign policy is paving the way for terrorism to flourish, according to Pete Hoekstra, former chairman of the House Intelligence Committee.

"We now are seeing a resurgent al-Qaida, a resurgent Islamist movement. They see America as weak. They are training and people are participating in Syria, other parts of the world," Hoekstra told "The Steve Malzberg Show" on Newsmax TV.

"They're participants; they're fighting with al-Qaida and radical jihadists. They're from the West, they're from Europe, they're from Canada, and, yes, they're from the United States. They're going to come back and we are growing this problem.

"This problem is not diminishing under this president. It is growing by leaps and bounds."

He said Americans should be outraged by the "mess" being created by the White House on the world scene.

"Our friends no longer trust us, we've lost Egypt, Israel is beside itself – they're alone. It appears their only ally now in the Middle East is Saudi Arabia. How does this happen?" he said.

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Hoekstra said the United States is perceived as no longer knowing who its friends and enemies are.

Via: Newsmax

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U.S. oil production passes imports

The new crude oil production from shale formations like the Bakken in North Dakota are making a huge difference in the U.S. energy profile. In October, for the first time since 1995, more crude oil was produced in the United States than the nation imported. It isn’t energy independence but it’s a big step in that direction.

The surge in domestically produced oil can be tracked to the development of horizontal drilling technologies and hydraulic fracturing. Combined, the two advances in oil-field technology have, for the first time, allowed drillers to effectively tap shale formations that hold crude oil and natural gas.

Because of horizontal drilling and fracking, North Dakota has been setting oil production records. The state has passed sister states in oil production, and only Texas produces more crude oil than North Dakota.

Experts believe that the U.S. will surpass Russia and Saudi Arabia as the world’s top oil producer by 2015. North Dakota’s production will be a big part of that changed status.

Of course, North Dakotans have been feeling the rising volumes of crude oil production. The oil activity in western North Dakota has been intense, putting extreme demands on public and private services, generating profits for oil-related business and mineral owners, and pumping up the state budget surplus with tax revenues. Creating and expanding infrastructure has been the priority for everyone associated with the oil boom. Environment issues, related to drilling and transporting oil, are providing challenges to the state and nation as production expands.

The North Dakota experience, seen close at hand, has a tendency to eclipse what’s happening with oil and gas nationally. The drive for U.S. oil independence, long thought to be wishful thinking, seems, now, probable. Shale formations have been the game changer. And the remaking of North Dakota’s economy, with energy taking on a larger and larger role, is part of that change.

Via: The Bismarck Tribune

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Saudi Arabia severs diplomatic ties with US over response to conflict in Syria

• Saudi Arabia is an important ally to the U.S. as it provides a secure source of oil
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• Saudi diplomats now promise a 'major shift' in relations with the U.S. over inaction in the conflict in Syria
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• Secretary of State John Kerry says he is committed to keeping a good relationship with the Saudis

Upset at President Barack Obama's policies on Iran and Syria, members of Saudi Arabia's ruling family are threatening a rift with the United States that could take the alliance between Washington and the kingdom to its lowest point in years.

Saudi Arabia's intelligence chief is vowing that the kingdom will make a 'major shift' in relations with the United States to protest perceived American inaction over Syria's civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday.

Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had

'The shift away from the U.S. is a major one,' the source close to Saudi policy said. 'Saudi doesn't want to find itself any longer in a situation where it is dependent.'

It was not immediately clear whether the reported statements by Prince Bandar, who was the Saudi ambassador to Washington for 22 years, had the full backing of King Abdullah.

The growing breach between the United States and Saudi Arabia was also on display in Washington, where another senior Saudi prince criticized Obama's Middle East policies, accusing him of 'dithering' on Syria and Israeli-Palestinian peace.

Via: UK Daily Mail

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Another Reason Why America Is Amazing ...

U.S. May Overtake Saudi Arabia As World’s Top Oil Producer
NEW YORK (AP) - U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world's biggest producer.

Driven by high prices and new drilling methods, U.S. production of crude and other liquid hydrocarbons is on track to rise 7 percent this year to an average of 10.9 million barrels per day. This will be the fourth straight year of crude increases and the biggest single-year gain since 1951.

The boom has surprised even the experts.

"Five years ago, if I or anyone had predicted today's production growth, people would have thought we were crazy," says Jim Burkhard, head of oil markets research at IHS CERA, an energy consulting firm.

The Energy Department forecasts that U.S. production of crude and other liquid hydrocarbons, which includes biofuels, will average 11.4 million barrels per day next year. That would be a record for the U.S. and just below Saudi Arabia's output of 11.6 million barrels. Citibank forecasts U.S. production could reach 13 million to 15 million barrels per day by 2020, helping to make North America "the new Middle East."

The last year the U.S. was the world's largest producer was 2002, after the Saudis drastically cut production because of low oil prices in the aftermath of 9/11. Since then, the Saudis and the Russians have been the world leaders.

The United States will still need to import lots of oil in the years ahead. Americans use 18.7 million barrels per day. But thanks to the growth in domestic production and the improving fuel efficiency of the nation's cars and trucks, imports could fall by half by the end of the decade.

The increase in production hasn't translated to cheaper gasoline at the pump, and prices are expected to stay relatively high for the next few years because of growing demand for oil in developing nations and political instability in the Middle East and North Africa.

Via: CNS News

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Chicago Store-Owner Hit With Graffiti Labeling Him A “Racist” For Having Anti-Obama Sign…

CHICAGO (CBS) — An outspoken and controversial shopkeeper who has been a fixture in Lincoln Square for the past dozen years has been targeted by a vandal.

75-year-old Sam Wolfson owns String a Strand bead shop.

And he wears his heart on his sleeve. His political leanings – anti-Obama – are posted on his store window.

Like his handwritten signs that say: “Romney, if you want to be president, you have to say this: ‘If I’m elected, I will not bow down to the king of Saudi Arabia” and “Obama, I built this business working 7 days a week, you didn’t.”

“I walked in,” he said. “I was coming to work and in lipstick it had a sign, ‘Racist.’ I’m not a racist. My wife is Spanish. Come on.”

The photo with the lipstick was posted on EveryBlock.com.

He has since cleaned up the graffiti.

WBBM Newsradio spoke with some passersby on Lincoln Avenue.

“I don’t necessarily disagree with the sentiments by the lipstick vandal,” one person said. “But I don’t condone such actions.”

Wolfson says it’s just symptomatic of a contentious election year.

Via: CBS Chicago

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