The collapse of oil will cause a series of bankruptcies in the United States

In the oil market began a new stage collapse in prices. On Wednesday, oil futures lost about 3.5%. A barrel of Brent oil has fallen to its lowest level since December last year, and the barrel of WTI and completely updated multi-year lows.

A new factor of pressure on the position of “black gold” was the weekly statistics on commercial oil stocks in the United States. According to the Energy Information Administration (EIA), the amount of inventories increased by 2.6 million barrels per day. The experts interviewed by the agency “Reuters”, expected reduction rate at 777 th. Barrels. These findings came as a surprise primarily for trading robots hedge funds, which drove down the quotes. As for the West Texas mixture WTI, the price per barrel fell to the lowest since 2009

Such low energy prices have a very negative impact not only on the economies of countries that produce oil, but also on US companies, especially in the energy sector itself. Analysts at Citigroup led the dynamics of oil prices and compare it with the dynamics of earnings per share of companies in the energy sector with a lag of four quarters.

In our opinion, there is nothing special to even comment. Falling profits clearly follows the trend in the oil market, and now we are seeing only a drop in the value of a barrel, and very significant. It is obvious that it will soon begin to fall and profits, and perhaps we will see a series of bankruptcies. This, by the way, recently wrote experts from UBS.

That would be logical, as US oil producers can not feel the effect of the devaluation of the currency, such as Russia. The dollar, on the contrary strengthened, while oil is getting cheaper, and hence falling revenues and profits. It should be noted that the yield on bonds of the energy sector has grown to a record, but the shares are kept afloat, but it is a matter of time, and some banks recommend selling them.

September 17 - Day X for the global oil market

September 17, 2015 global oil market must pass a difficult test. This analysts believe Citigroup, although the probability of the scenario is not very large.

Citi analysts advised their clients to take a cautious stance on oil in anticipation of that date.

The fact that on September 17 the Fed will once again decide to raise its key interest rate or not. On the same day the US Congress will decide the fate of the deal on Iran’s nuclear program.

However, given the fall in oil prices roughly doubled over the last year, it is unlikely the market today there are many investors who are willing to invest recklessly in oil assets in anticipation of such events.

20 August 2015

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