FXStreet (Mumbai) – The sentiment around the oil markets was hit badly this Wednesday, and the prices resumed the broader downtrend amid persisting supply glut worries ahead of the weekly EIA report
Brent hits 11-yr low, WTI falls to 2-week low
Currently, WTI drops -1.29% to 35.50, while the Brent oil plunges nearly 2% to 35.75 levels, retreating slightly from fresh 11-year low struck at $ 35.53. Oil prices wiped-out corrective gains and fell back in the negative territory as rising supply worries overshadow the ongoing tensions between Saudi Arabia and Iran.
According to a Reuters poll of eight analysts, in the United States, concerns over mounting stock levels were ongoing, with crude inventories likely to have risen by 439,000 barrels last week.
Moreover, strengthening greenback across the board ahead of the FOMC minutes, adds further to the downside in the oil prices. The US dollar trades near one-month highs at 99.60, up 0.12% on the day.
http://www.fxstreet.com/news/forex-news/article.aspx?storyid=66dcc6ee-3c74-4bc4-9bd7-8c59af2ebe6aSaudi-Iran tensions can’t stop the oil price crash as Brent reaches fresh 11-year low
Brent crude falls below $35 as Iran says oversupply, rather than a new Middle East war, is the biggest threat to prices
http://www.telegraph.co.uk/finance/oilprices/12084237/saudi-arabia-iran-tensions-brent-crude-oil-hits-11-year-low.htmlDow set for triple-digit loss as China roils markets again
U.S. stock futures pointed to sharp losses at the open on Wednesday, after weak Chinese services data cemented fears of an economic slowdown in the world’s second largest economy.
Futures for the Dow Jones Industrial Average YMH6, -1.38% slid 161 points, or 1%, to 16,920, while those for the S&P 500 index ESH6, -1.48% dropped 21.20 points, or 1.1%, to 1,990.50. Futures for the Nasdaq 100 index NQH6, -1.61% lost 48.25 points, or 1.1%, to 4,435.00.
“The dismal start to 2016 appears to have only intensified this Wednesday, with disappointing Chinese services data (sending the yuan to a 5-year low against the dollar even if the Shanghai Composite managed some counter-intuitive growth), a fresh 11-year low for Brent Crude and reports of a fourth nuclear test from North Korea,” said Connor Campbell, financial analyst at Spreadex, in a note.
The purchasing managers index for China’s services sector dropped to a 17-month low in December, further indicating growth in the world’s second-largest economy is slowing down. Markets in Asia mainly fell in reaction, with the Hang Seng IndexHSI, -0.98% down 1%, but the Shanghai Composite Index SHCOMP, +2.25% bucked the trend with a rise of 2.3%.
The services data come after a disappointing reading on China’s manufacturing sector on Monday, which triggered a market rout globally.
http://www.marketwatch.com/story/dow-set-for-triple-digit-loss-as-china-roils-markets-again-2016-01-06?dist=beforebellA “Perfect Storm Is Coming” Deutsche Warns As Baltic Dry Falls To New Record Low
At 468, The Baltic Dry Index is now at a new record low…
![](https://ip.bitcointalk.org/?u=http%3A%2F%2Fwww.zerohedge.com%2Fsites%2Fdefault%2Ffiles%2Fimages%2Fuser3303%2Fimageroot%2F2016%2F01%2F20160105_BDIY_0.jpg&t=665&c=R9sU70aiBUtHOg)
Which leads Deutsche Bank to warn of…A Perfect Storm Brewing
The improvement in dry bulk rates we expected into year-end has not materialized. And based on conversations we’ve had with several industry contacts, we believe a number of dry bulk companies are contemplating asset sales to raise liquidity, lower daily cash burn, and reduce capital commitments. The glut of “for sale” tonnage has negative implications for asset and equity values. More critically, it can easily lead to breaches in loan-to-value covenants at many dry bulk companies, shortening the cash runway and likely necessitating additional dilutive actions.
Dry bulk companies generally have enough cash for the next 1yr or so, but most are not well positioned for another leg down in asset values
The majority of publically listed dry bulk companies have already taken painful measures to adapt to the market- some have filed Chapter 11, others have issued equity at deep discounts, and most have tried to delay/defer/cancel newbuilding deliveries.
The additional cushion, however, is likely not enough if asset values take another leg down; especially given the majority of publically listed dry bulk companies are already near max allowable LTV levels.
The move to sell assets in unison can lead to a downward spiral, where the decline in values leads to an immediate need for additional equity to cure LTV breaches.
Source: Deutsche Bank
http://www.zerohedge.com/news/2016-01-05/perfect-storm-coming-deutsche-warns-baltic-dry-falls-new-record-low