To: RetiredNow who wrote (148309 ) 1/17/2015 4:49:39 PM From: tejek Read Replies (3) | Respond to Oil has a decent chance of continuing to fall, because there is a worldwide oil glut and the Saudis are not willing to lose market share this time around. They want to crush the energy revolution in the US, and they have been successful at that so far. Oil will stop falling when enough oil rigs and fields are taken offline to bring supply back into balance with demand....in other words when economic equilibrium is reached. Also, you may not be worried about deflation here in the US, but Yellen sure is, and rightly so. What's hilarious to me is that the Fed excludes oil and gas from their inflation figures when they calculate whether to continue monetary stimulus or not. But now that oil is going through the floor, they are most certainly watching it closely for signs that it is triggering deflation. That's what comes from a Fed and Government that ignores pieces of the data that they don't like. Another thing, when oil prices collapse, they have historically stayed low for a very long time. So don't expect a V shaped recovery of oil prices. Already, many oil firms are doing massive layoffs and many others are having working capital issues, even as they are no longer able to get bridge loans from their typical lending sources. That's a recipe for the collapse of many of the wildcatters and many of the marginal highly leveraged MLPs that everyone has flooded into for their high yields. I think we're about to find out who was swimming naked, now that the tides going out.
