Technical & Fundamental Oil Reports Specialists

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After the dark comes….the pitch black

Published Friday, February 12th, 2016

The CEO of Conoco Philips, Ryan Lance, ended his IP week dinner last night with the quote in the title. It was meant to be a light hearted reference of the state of the oil market but it might as well have referred to the state of the financial markets as well. The dawn is a long, long way off.

All the bad words came out yesterday – deflation, recession, crisis, panic, safe havens, all-time lows. Confidence has evaporated, confidence that the central banks can defeat deflation and confidence that they know what they are doing. Perhaps more accurately confidence is growing that a deflationary death spiral is coming closer, that recession looms, that a financial crisis is in process and that central banks are out of their depth.

There is a litany of things to worry about, not least Russia’s warning of “a new world war” over Syria, but the latest leg down was started by the Bank of Japan’s move into negative interest rates which was followed by the Swedish central bank yesterday cutting its already negative rate further. It did this in anticipation of the ECB making a cut next month which the Riksbank fears would have a severe impact on the krona. In other words we have to all intents and purpose a currency war on our hands from which there can be no winners.

to read the rest of the report, please click here

Posted by David Hufton