The ever-dropping oil price is teasing new lows as politics, statistics, and public opinion combine to hammer it into the ground.
In this clip, Sean O'Reilly, Tyler Crowe, and Taylor Muckerman talk about how Saudi Arabia's recent undercutting moves against Iran have changed the public's perception of OPEC, and how China's stock market performance and its stock market "circuit breaker" is scaring people even further from investing into anything associated with the commodity.
A full transcript follows the video.
This podcast was recorded on Jan. 7, 2016.
Sean O'Reilly: It's been a pleasant year so far in the energy sector, hasn't it, guys?
Tyler Crowe: Oh, it's great. Absolutely wonderful.
O'Reilly: Oil went into the holidays at the 30s; it's actually now at new lows. I think $32.50 was the low today; I think it's up a little bit now. Kind of a dismal start, so we pretty much have to talk about it. Why is this happening? I thought we were at the bottom last year.
Taylor Muckerman: We're always at the bottom. Until we're always at the top.
Crowe: Yeah, you always love those qualifying statistics like "Well, this is the worst three days to start a year. It's not the first three days ever, it's just the worst the days to start a year." It's like, well, OK, whatever.
Muckerman: Pick a day and time and find a stat.
Crowe: Yeah. "This is the worst third Tuesday in a month for ... " I don't know how long. But there's just so many of those that are just fascinating. Or stupid. I don't know what you want to call it.
O'Reilly: Didn't the slide start when Saudi Arabia and Iran cut ties? Wasn't that when things started sliding again?
Muckerman: It's tough to really pin down when they stared, when they stopped, and when they kept going. Typically, you would imagine that --
O'Reilly: Well, you were talking before we were on air, and I wanted to segue to the chart you're looking at with terror and all that stuff.
Muckerman: So, basically the reason it's sliding that people are saying now is that Saudi Arabia is like, "You know what, Iran?"
O'Reilly: "We don't like you!"
Muckerman: "You're coming online and we don't think you're going to be able to do it because we're just going to sell it to Europe at a very steep discount." So they're basically undercutting Iran, rather than a military action against them. They're just basically saying, "Up yours, we're going to cut prices, specifically to the people that you're most likely to sell to."
O'Reilly: And the market is taking this as basically, the odds of OPEC coordinating ... they were really low before, but now, it's like not even possible. The reason oil's falling is that, after Saudi Arabia and Iran cut ties, people are like, "There's no way OPEC is going to even talk to each other now."
Crowe: There's so many reasons why oil's going down. So there's that. Everyone thinks OPEC is losing their minds, a herd of cats that's going to go off and do its own thing.
Muckerman: Well, these are, arguably, the two most powerful countries in OPEC. And they were never very amiable to begin with, and then you go off and behead a foreign national from Iran ...
Crowe: And then, you've got inventory data where people are losing their minds over inventory data, and all of these things, everybody's losing their minds after watching China's stock market fall over the past few days, going, "Oh, China's falling into a pit of despair."
Muckerman: We need an oil circuit breaker.
O'Reilly: Yes, perfect.
Muckerman: We need a circuit breaker for oil price sell-offs.
O'Reilly: Crowe and I were talking earlier, like, the Chinese circuit breaker for their stock market, it's basically a self-fulfilling prophecy, because when it falls to, like, halfway down to where the circuit breaker would kick in, everybody is like, "Oh, it's going to happen."
Muckerman: And then they sell out because they're scared.
O'Reilly: And then it happens, because they're think it will.
Crowe: Well, luckily, today, they got rid of it.
Crowe: Yay. We'll see what happens with that.
Muckerman: Until tomorrow, when they reinstate it.
O'Reilly: Yeah. It's like, "We're just going to stop all trading forever! We don't like the stock market anymore!"