Archives For Oil

Oil Glut?

August 21, 2015 — 1 Comment

OIl Glut

I find it interesting that we now have an oil glut when just a year or so ago, people were predicting $150 per barrel oil would be the new norm.

How is that possible?

How did no one see it coming?

Oh, and now “they” are saying that there is no end in sight for this oil glut. You have to love these “experts.”

In other news…the market’s beating is putting lots of stocks on sale. Perfect for those of us who are still saving for retirement.

I found this 3-year chart for Brent Crude this morning. Brent Crude is what is used in refining gasoline.

It’s brutal for oil companies, but good for consumers. Unfortunately, the price of gas at the pump doesn’t seem to reflect the full drop in the price of oil.

Brent Crude 3-Year Chart

Brent Crude (the oil that’s used in gasoline, as I understand it), is on the rise again. This is why gas prices are moving back up again. It gets tiresome. Gas prices go up, touch a new high, then fall back down a bit to give us a false sense of relief and then start moving right back up again. I almost feel like we’re being played.

Busy Week This Week

June 14, 2012

This week is our church’s Vacation Bible School. This is my first year to help out. Anyway, I’m swamped in the mornings.

Lots of stuff going on this week. Front page article in Monday’s WSJ stating that JP Morgan knew of the their trading risks two years ago. Interesting.

Not related to personal finance but interesting anyway…

NY is contemplating on a wider food ban. Wow. Question: where does it end?

Donald Trump and his silly notion that Obama has a secret deal to lower oil prices in order to get elected. Be quiet, Donald. I have a feeling that the lower oil prices we are seeing are due to the somewhat negative economic outlook (look at what the stock market has/hasn’t done over the last month or so).

I hope to be back to regular blogging next week. Meanwhile, discuss amongst yourselves.

Interesting chart I found on the WSJ website late last week:

Correlation between Brent crude and the S&P 500

This chart compares Brent Crude—the oil used to make gasoline—and the S&P 500. I wish I had the numbers going back further than this because it would be interesting to see the correlation over the years. I would think the correlation would be almost non-existent prior to oil’s massive runup in the early 2000s. All I know is that lately it seems as though when the stock market goes up, the price of oil goes up too. When the stock market drops, the price of oil drops. It almost looks as though the price of oil dictates where the market is going. I could be totally wrong on this (I’m not an analyst), but it’s what it looks like to me.

All this brings up a question:

Are high oil prices bad for the economy?

Here are the total returns for the S&P 500, MidCap 400, SmallCap 600, and other Indexes(May 2012)

For the S&P 500, this May’s -6.01% was the worst May since May 2010 when the index was down 7.99%. Other than 2010, we would have to go all the way back to 1962 to find a worse performance than this May’s.

Oil was way down, which is a good and bad thing. It’s good because we like paying less at the pump. It’s bad because it’s probably only down due to the economic outlook. Take a look at how closely oil and the S&P 500 track each other (click on the chart to see a larger version):

Oil and the S&P 500

The solid line represents oil (right axis) and the bars represent the S&P 500 Index (you guessed it…left axis).

This bothers me. Why? Because as soon as the S&P 500 starts moving up (which usually implies the economy is getting better), the price of oil goes with it. The price of oil can only go so high before it has a negative impact on the economy. I wish we had better oil data. I would love to see longer horizons for comparison charts.

Chart of the Day: Oil

May 23, 2012

Oil is down 14.65% for the month of May.