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CHINA HOARDING OIL – China is Cashing In on Cheap Crude Oil
China’s secretive effort to build a Strategic Petroleum Reserve has given oil bulls comfort that the underpinnings for global oil prices are strong. Yet in the near term, there are reasons to believe this mysterious hoard won’t offer much support.
The world’s second largest consumer of oil after the U.S. began building its strategic reserves a decade ago and recently stepped up construction of storage facilities. China aims by 2020 to squirrel away 100 days of net imports, according to state media. At current rates of imports, that would mean 600 million barrels of crude oil at least. Analyst estimates of how much China has managed to fill so far vary hugely, ranging between 120 million and 260 million barrels. In the long term, China will still buy crude to meet its strategic-reserve target, perhaps even increasing the target if it fears instability in the Middle East. And it will be doing this while the U.S., whose own strategic reserve inspired China’s in the first place, relies less on imports. At least investors can rely on the insecurities of one big oil consumer to put a limit on how low crude can go. oil china “crude oil” “saudi arabia” chinese trading tank shipping “london crude oil” storage shipment “china export” import beijing u.s. usa “united states” america consumer economy demand store storage price “oil price” stock “crude oil” petrol energy gas “green energy” factory car SUV “gas price” sale future humanity cash “china RMB” collapse dollar forex “forex trading” inventory ship 2015 2016 asia “elite nwo agenda” commodity “binary options” savings bohemian grove bilderberg switzerland alex jones infowars rant prank gerald celente jim rogers daboo77 daboo777 marc faber illuminati bankers wall street anonymous end game cern documentary movie george soros russia
This is just the beginning of the oil crisis. Over the past couple of weeks, the price of U.S. oil has rallied back above 50 dollars a barrel. In fact, as I write this, it is sitting at $52.93. But this rally will not last. In fact, analysts at the big banks are warning that we could soon see U.S. oil hit the $20 mark. The reason for this is that the production of oil globally is still way above the current level of demand. Things have gotten so bad thatmillions of barrels of oil are being stored at sea as companies wait for the price of oil to go back up. But the price is not going to go back up any time soon. Even though rigs are being shut down in the United States at the fastest pace since the last financial crisis, oil production continues to go up. In fact, last week more oil was produced in the U.S. than at any time since the 1970s. This is really bad news for the economy, because the price of oil is already at a catastrophically low level for the global financial system. If the price of oil stays at this level for the rest of the year, we are going to see a whole bunch of energy companies fail, billions of dollars of debt issued by energy companies could go bad, and trillions of dollars of derivativesrelated to the energy industry could implode. In other words, this is a recipe for a financial meltdown, and the longer the price of oil stays at this level (or lower), the more damage it is going to do.
That’s what real booms look like. They’re fed by limitless low-cost money – exuberant investors that buy the riskiest IPOs, junk bonds, leveraged loans, and CLOs usually indirectly without knowing it via their bond funds, stock funds, leveraged-loan funds, by being part of a public pension system that invests in private equity firms that invest in the boom…. You get the idea.