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Wednesday, October 29, 2014

We're Witnessing The End Of The Oil Era



Business Insider By Myles Udland
 
Dennis Gartman has a new forecast for oil: a lot lower.

the era of oil is over. 

In discussing the "end of oil," Gartman referenced news from Lockheed Martin earlier this month that the aerospace giant has made a technological breakthrough in developing a power source based on nuclear fusion. 

Gartman sees the potential in this breakthrough as being something of a death knell for oil.

Gartman also referenced other factors weighing on oil prices, namely a supply glut and a market that is contango.  A market is said to be in contango when the futures contract for a commodity is more than what the expected price will be in the future.

Gartman's comments come after what was an ugly morning for oil, which fell below $80 a barrel for the first time since June 2012.

The tumble in oil came after analysts at Goldman Sachs cut their price target on WTI crude oil to $70 by the second quarter of next year.

Goldman Sachs analyst Jeff Currie wrote:

"We are lowering our oil price forecast to reflect the required slowdown in US production growth: our WTI crude oil forecast is $75/bbl for 1Q15 and 2H15 (from $90/bbl previously).  

Our 2016 and long-term forecasts are now $80/bbl WTI, $90/bbl Brent. 

Uncertainty around the required price to slow down US shale production growth is a key risk to our price forecast."

Pendek kata  oil is going to go lower throughout 2014 and into 2015.  Goldman Sachs even forecasts US80 per barrel up to 2016.

So when is the price of petrol going to go down in our country, which produces 650,000 barrels a day? Or at least RON 97 which is not subsidised. Since RON 97 is not subsidied why doesnt the price of RON 97 decrease? The oil price in the rest of the world has decreased.

2016 is the UMNO elections. 2018 is the General Elections. If oil prices remain weak throughout 2014 to 2016 (which I think they will) Petronas' revenue will be severely affected. The gomen's revenue will be affected. 

Macam mana nak bayar gaji kakitangan kerajaan?

Macam mana nak pergi shopping di London untuk beli handbag?

How to keep burning billions for projects that DO NOT MATERIALISE like AES (money spent project batal), fuel subsidy management (money going to be spent project batal), 1MDB (black hole), sturgeon farming (money spent tapi project batal), or going into cost overruns (RM4 bil for KLIA2), money spent tapi rumah tak jadi (PR1MA housing). 

It is just endless.  All this is going to come to a head around 2016-2018. After that the BN will lose the elections.  Rotunda will have to cook her own rice.

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