- U.S. crude oil has officially entered a bear market, having plunged more than 20% since June 10 to ~$48/bbl, amid a worldwide glut that shows little sign of slowing as U.S. production remains near 40-year highs, output from Saudi Arabia and Iraq surges to record levels, and Iran is poised to resume exports soon.
- But even though the price collapse has erased more than $100B in market cap from U.S. E&P companies, attendees at an energy conference this week in Denver reportedly talked about how they had lowered finding and development costs, sounding as if they were more likely to grow rather than shrink.
- "We have been expecting the current downturn to be as severe as the one in 1986... but not worse than that," Morgan Stanley wrote this week, but with oil rolling over again, the firm believes a worst-case scenario could be in play.
- Stanley says it underestimated OPEC's high production this year - the main reason why the re-balancing of oil markets has not gained momentum - and means the oil crash could turn out to be worse than 1986; if so, it would be the worst in at least 45 years.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, DIG, DTO, DUG, BGR, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG