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World in Crisis: Oil Shrugs and Heads below $100

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Imagine only 10 years ago, before most Americans had heard of “hydro-fracking” or “horizontal drilling.” Imagine what a war in Iraq (the eighth largest oil producer) and skirmishes on the border of Russia (the third largest oil producer) would have meant to the price of oil? Prices would have skyrocketed. But today, in the face of instability in some of the world’s most vital oil producing regions, the price of oil is headed down.

As you can see in the chart below, on July 31 the price of WTI crude dropped below $100 a barrel for the first time since May, and is now at levels not seen since late February. Brent crude is not far behind, closing at $101.68 yesterday. It appears that American airstrikes in Iraq have calmed any remaining fears in the energy markets that the radical Islamic State would threaten supplies from Iraqi oil fields. But what’s most amazing is that in the face of these threats to global supplies, prices peaked at only $115.19 for Brent and $107.95 for WTI.

The flood of crude coming from unconventional oil plays in the U.S. and Canada have offset the geopolitical threats to global oil supplies. Recently America exported its first shipment of crude in decades (though technically it was considered “condensate” and not crude oil) to South Korea.  The revolution in American energy production is changing the paradigm of energy security and will have knock-on effects on the prices of petroleum products all the way down the production chain. More reliable oil prices will lead to more profitable business for manufacturers and lower prices for consumers. It’s a brand new day.

Oil Chart

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.