Brent for February delivery was down $1.50 to $60.19 at 1327 GMT after gaining $1.58 on Tuesday. It hit a low of $59.93 earlier in the session.
U.S. crude was down $1.17 to $55.95 a barrel, after closing $1.86 higher in the previous session.
Trade was thin as many in the European and U.S. market were off for the Christmas break.
Data from the American Petroleum Institute (API), an industry group, showed U.S. crude stocks rose by 5.4 million barrels in the week ended Dec. 19. Analysts had expected a drop of 2.3 million barrels.
In Europe, gasoline stocks reached their highest in five months in the Amsterdam-Rotterdam-Antwerp oil hub, data from PJK International showed.
A supply glut in the United States and elsewhere has helped push oil down some 46 percent since it reached this year’s peak above $115 per barrel in June.
“There was a large build in the API data and there are high stocks for now, although strong U.S. GDP growth should help demand,” said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
The dollar index stayed close to its highest since April 2006 after a revised third-quarter U.S. gross domestic product report surprised with the fastest growth in 11 years.
A strong dollar makes commodities priced in the greenback more expensive for holders of other currencies.
Now investors face more volatile markets and securities that no longer move in lock-step. At the same time, investors must cope withslower growth in China, minuscule growth in the euro area and negative growth in Japan.
Such widespread sluggish demand — along with ample supplies of oil and most everything else — is the reason commodity prices are falling. They have been since early 2011, but many people failed to notice until recently, when crude oil prices nosedived.
Normally, less demand and a supply glut would lead the Organization of Petroleum Exporting Countries, beginning with Saudi Arabia, to cut production. As the de facto cartel leader, the Saudis would often reduce output to prevent supply increases from driving down prices.
Of course, this also cost the Saudis market share and encouraged cheating by OPEC members. Saudi leaders must grind their teeth over the last decade’s unchanged demand for OPEC oil, while all the global growth has been among non-OPEC suppliers, principally in North America.
The Fools In Chesapeake ( CHK)
Yesterday Chesapeake announced it would spend a billion dollars on stock buy backs – this is foolishness bordering on gross mismanagement – like the captain of the Titanic rearranging the deck chairs. Companies must husband their funds – the best will survive and cherry pick assets from corpses – to mix as many metaphors as I can.
No Glory for Prophets
My best call in 2014 was to reverse on Quicksilver ( KWK) and sell out at $ 2.50 – it is now down a further 90 % to pennies.Many more companies will follow – don’t hold on for a recovery. That sell call earned me the most email – all negative- for the year and no thanks from investors.
The millions of dollars – per well – now at work -have to complete their drilling and this will bring on additional natural gas supplies in the U.S. that in turn will pressure oil prices well into 2015. LNG exports from the U.S. ( starting in about 12 months by Cheniere at the gulf coast in the U.S. ( and projects in Australia) will pressure international prices and also depress oil.
Planned Australian LNG projects threatened by energy price crash
Handout/ WoodsideWoodside’s Pluto LNG Loading jetty, Pluto LNG onshore gas plant.
Planned Australian liquefied natural gas (LNG) export projects, including the costly Scarborough floating vessel, are at risk as sinking energy prices make investments unviable, analysts said.
A nearly 50% slump in Asian LNG prices this year has pressured any project without a Final Investment Decision (FID). Just last week, Woodside Petroleum Ltd delayed the FID for its US$40-billion Browse floating project with Royal Dutch Shell and BP.
The next cab off that rank could be ExxonMobil and BHP Billiton’s US$10-billion Scarborough project.
Scarborough will be “commercially challenging” to justify given a raft of competing LNG projects, said Noel Tomnay, global gas and LNG research head at Wood Mackenzie.
“China’s growing pains as well as slugs of LNG coming into the market: that’s a fairly wicked combination. It would take a very brave soul to ignore the prevailing market.”
BHP and ExxonMobil were not available for comment.
The future for other Australian LNG projects without FID is also uncertain.
GDF Suez and Santos are seeking alternatives for their Bonaparte floating project, Woodside has indefinitely delayed its Sunrise project, while Shell has yet to commit to its Arrow project where it has cut hundreds of positions.
Coal Will Continue To Contract
Coal is going to be used for the next 50 years – but high sulphur mines will close and electrical generation will rely on cheap natural gas . Stay away from trying to pick the bottom in the sector.
You Have Options:
What To Do ?
Here is our recent letter:
November 2014 – 40 % cash position
Gold and Precious MetalsThe largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.
Shipping Sector / Bulk Shippers
You can review our stock market letter athttp://www.amp2012.com
to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates- illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait.
I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…
Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.
Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.
You can withdraw your funds monthly if you require an income stream.
Alternate Guaranteed Income Payments
Private client funds Minimum $10,000 Maximum Loan $500,000
Our client is seeking funds to expand their tanker fleet .
Interest 12 % compounded – paid 1% per month
Floating charge of the full $500,000 against the fleet – valued at more than $ 1 M
To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)
Call Jack direct at 604-858-3202
10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).
Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.
Tax website Http://www.youroffshoremoney.com