Indicators of Greater Skepticism in Commodities Markets

Financial markets of all shapes and sizes seem to be affected by the current global crisis that has been engulfing the globe. The fossil fuel industry has itself been presented with many unique challenges outside of the current crisis.

Trouble in the Oil Industry

The way that the oil industry has been working as of late has left it with a weak-looking foundation. The oil industry has been hit with back to back incidents that have led to devastating effects. There are several oil companies that will soon be in need of bailouts. The path that was blazed in order to get us here involves a few different incidents.

Saudi Russian Oil Struggle

Two of the world’s premier oil-producing countries are Saudi Arabia and Russia. These two regions in either an attempt to harm each other or in a interconnected move to harm US oil markets have been driving oil prices down by overproducing and making a supply glut. The low prices have seriously harmed American oil companies’ profits.

The Chance of Chinese Economic Crash

The latest economic reports put out by the Chinese government show that the country is experiencing a contraction of its economy for the first time in over fifty years. This has stirred up a lot of anxiety amongst commodities investors. This has further aggravated the selling environment and drove prices down even farther.

Historically Low Oil Prices

With oil prices that have fallen below $20 a barrel technically it is less expensive to buy a barrel of oil than a bucket of KFC fried chicken. It may seem exciting to the average individual to see the cost of filling their cars up drop by half. This may not be as good of news as you thought.

Possible Economic Consequences

The level that oil prices are right now is so low that American companies cannot even continue to operate and make a profit. If oil prices do not rebound soon this could mean that many oil companies will go out of business. This could add to the already severe unemployment crisis that America is experiencing.

More information is available at The Wall Street Journal.

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