Who would have thought that a nineteenth century discovery that helped to advance the comfort of mankind would soon be coming to cruel end in the coming years? The discovery and refined usage of crude oil gave rise to the modern automobile industry that employed millions of people, fueled the travelling industry for many decades, and made the journey across the world a seamless joy. Mankind should be forever grateful for the discovery of crude oil, because it brought so much joy to humanity and created millions of direct and indirect employment opportunities that helped to fulfill the basic necessities of life. Make sure to read the goodbye message to one of life’s greatest discoveries.
In my book (collections of research findings on the future of energy), titled ‘Crude World Oil published in 2012’, I said that crude oil price might be heading to $250 or $25 per barrel, I also highlighted the economic and financial implications of either directional moves because of the following reasons; Alternative energy, Global warming, and possible over supply/scarcity of crude oil.
I posit that if global crude oil supply declines faster as a result of drying up oil wells and reserves, that mankind might most likely see a price of $250 per barrel; however, if demand destruction orchestrated by solar power, technological advancements, and environmental consciousness continues, then a price of $25 per barrel should be a done deal. From the looks of all things, it seems that the forces responsible for continuous downward trajectories in crude oil price will continue to put smiles on the faces of many developed nations with minimal consequences, while at the same time being painful uncompromising source of anger to many crude oil producing countries like, Russia, Venezuela, Libya, Nigeria, Angola, etc.
A close look at the unending price decline in crude oil, and why price might not bottom until at least at $25 per barrel, clearly points to US Federal Reserve upcoming action or inaction on the 16th Day of December 2016. The recent irrational movements in the price of crude oil might be pointing to a settled likely interest rate increase by US Fed. Crude oil is now in no win situation because if US Fed increases interest rate, King Dollar will become stronger, pushing the prices of Crude oil and other commodities further down.
Here are some pointers I would love to leave you with! Can US Fed really increase interest rate when most nations except Nigeria are easing or lowering interest rates? A rising King Dollar would definitely increase the downward pressure on plummeting crude oil and commodity prices, so why would US Fed increase? Why would US Fed increase interest rate, when the risk of ‘Inflation’ is greatly subdued by Janet Yellen and her ebullient team of FOMC committee? Why would US Fed increase interest rate when US manufacturing companies are gradually seeing the demand for their goods dwindling down? I will be voting for QE 4 come 12/16/2015 to save mankind.
The primary possible reason, US Fed might increase interest rate on the 16th of December will be to end easy money that has been exporting inflation to emerging countries, because the easy money was used to ballooned countries’ balance sheets. Unfortunately, all beginnings must eventually come to unexpected and sometimes, painful ends. The global battle for currency devaluation is ongoing and nations that fail to partake in such battle might be left behind. China, European nations, and numerous countries are continuously devaluing their currencies to gain advantage on the export market, so US Fed monetary action might rightfully be justified if the end of easy money starts with America, after all, currency devaluation war started in America in 2008.
The only concrete reason US Fed might increase interest rate on the 16th of December 2016, would be to end predictability of US Fed and FOMC committee meetings, and such actions will definitely increase the pains emerging, developing, and under-developing economies are going through right now. For African countries that are working on their 2016 budgets, using a benchmark of $30 per barrel might be helpful in attaining realistic workable budgets, because US Fed increase in interest rate will eventually push the price of crude oil to $25 per barrel. Expect the prices of Gold and other precious metals to continue the downward route that is eroding the wealth of many people and nations.
For many years, the Organization of Petroleum Exporting Countries (OPEC), continuously overstate their reserves in a bid to maintain or increase their production quota. I was deeply concerned that if an alternative source of energy is not discovered before the overstated reserves are known to mankind, a price of $250 per barrel would have presented an inevitable economic disaster to mankind. The reverse has happened and I cannot see any reason crude oil should not get to $25 per barrel before the gyrations in energy sector will end.
Global warming and the King Dollar are the immediate reasons crude oil price will see a $25 before ever going back to $70 per barrel. As a matter of fact, the 2016 outlook on crude oil price trajectory is more gloomy than 2015. On December 16th 2015, Federal Reserve will have their last meeting on monetary policies of the year, and the outcome of that meeting might greatly escalate the price of crude oil in one direction. Fed, might increase interest rate by quarter basis points or. ..
But since the risk of inflation has greatly been reduced by falling equity and crude oil prices, I am seriously hoping that Fed would really consider Quantitative Easing 4 (QE4) because of collapsing global economy.
Global warming effects on crude oil is a justified reactions that reflects on the continued plummeting price; as the world engages in a coordinated efforts to save our beloved environment. Please do not be fooled by the upcoming bear rally in crude oil price, because the risk is still on the downside. African countries that are working on their annual budgets should use a benchmark of not more than $30 per barrel for 2016. Mankind can either accept or deny the of climate change which is the unintended consequences of decades of environmental abuses from most of the industrialized countries. Do not be fooled by the upcoming bear rallies in global currencies, crude oil and other commodity prices, because US Fed action will now be the ultimate factor that matters. I am just waiting for Santa Claus rally that will bring the market to a strong close.
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“Impact of Fed action of 12/16/2015 on my life”