Falling Oil Prices Vladimir Putin’s Punishment

Falling oil prices seem to be a punishment for Vladimir Putin after his ego pushed him into global conflicts and to rebuke global leaders. It seems that Mr. Putin has entered a phase of male menopause.  Sports cars, global beauties, and fast money and filthy rich friends followed by shows of his masculine form shirtless. Is this a world leader or a man trying to prove he is young and potent?  Sometimes when all plans are made and everything is going your way, the world has a way of snapping you back.  Out of the clear blue along come Saudi Arabia to kick off their battle against US shale production. No one could have imaged that OPEC would keep the tap open wide regardless of price levels and the global glut of oil.  Dramatic intervention by Russia’s central bank has failed to stop the decline in the value of the ruble. A huge increase in the country’s key interest rate from 10.5 to 17 per cent was announced at midnight Moscow time on Monday; the latest in a series of hikes. Russia’s economy is now in such poor shape that analysts are starting to evoke the specter of the financial crash of 1998.

Speaking in London, the US secretary of state John Kerry said the world was watching closely what was happening with the ruble, but defended the continued

imposition of sanctions on Russia over the Ukraine crisis. There will be no getting away from the economy when president Putin holds his annual marathon press conference on Thursday.

Energy markets face the possibility of yet more crude flooding in, which in turn will appreciate the US dollar even further while weakening many other currencies on the international exchange.  The risk of another worldwide recession is mounting as we head in to 2015.  As Venezuela’s economy continues to struggle under falling oil prices and the indifference of its fellow OPEC members, President Nicolas Maduro spoke at the ALBA conference in Cuba this past weekend, of his desire to expand the Petrocaribe program.  Despite oil prices reaching lows not seen since May 2009 yesterday, and plumbing new depths of around $54 for a short time this morning, in addition to the 11% drop in Petrocaribe shipments in 2013, Maduro called for the program to “consolidate, strengthen, grow and deploy itself with even more strength.”

World oil prices bounced off 5½-year lows on Tuesday as traders continued to speculate on the likelihood of OPEC oil supply cuts. US options expiries also added to the volatility in oil prices. Brent crude fell by 1.17 or 1.9 per cent to $59.75 a barrel while the WTI crude price rose by 53c or 0.9 per cent to $56.46 a barrel.

Continuing into the Asian session this morning crude oil fell another $1.22 to trade at 55.04 and Brent oil is below the 60 level at 59.16. Heating oil continues to fall, benefiting consumers in the US along with gasoline prices which have eased to 1.5274 reducing the prices at the gas pumps across America which is helping give Americans more money to spend at the holiday season.