The world mostly ignored Ed Morse 11 months ago when the head of commodities research at Citigroup said oil could drop as low as $20.
It’s paying attention now that crude has tipped below $30.
Crude futures in the US sank into the $20s for the first time in more than 12 years on Tuesday, hours after BP said it would slash an additional 4,000 jobs, Petroleo Brasileiro cut its spending plan and Petroliam Nasional warned that it faces several tough years. Mr Morse, who wrote in a February 9 research note that oil could fall “perhaps as low as the $20 range for a while,” said in Calgary on Tuesday that the world is now confronting $20 oil.
“The $20 number is something you have to talk about,” Mr Morse said. “When you’ve seen a $10 price slide and WTI is trading just slightly above $30, the likelihood is fairly great. Clearly oil markets cannot maintain a price at below the $30 level for very long. The question is how much longer.”
West Texas Intermediate fell as low as $29.93 a barrel before settling at $30.44 on Tuesday, the lowest level since December 2003.
Low prices could cause problems for US oil companies with covenants that specify certain debt-to-earnings ratios or interest coverage, and will make it even harder for them to obtain financing to continue operating, said Mark Sadeghian, a senior director for the energy and commodities group at Fitch Ratings.
The Bloomberg Commodities Index fell to the lowest level since at least 1991 as demand from slowing emerging-market economies fails to keep pace with a flood of supply from investments made during the price boom of a half-decade ago.
Malaysia stands to lose 300 million ringgit ($68 million) for every $1-a-barrel decline in crude, according to government estimates. ConocoPhillips is losing $1.79 billion in net income each quarter for every $10 drop in prices, according to analysts at Barclays.
Petrobras, as Brazil’s state-controlled oil producer is known, cut its five-year business plan to $98.4bn, the latest adjustment to the original $130bn announced last year.
The US Energy Information Administration reduced its forecast for WTI prices for 2016 by 24 per cent to $38.54 a barrel. In its monthly Short-Term Energy Outlook, the agency said the oil market would come back into balance in 2017.
The call for oil in the $20s has grown louder. Goldman Sachs Group gave a 50 per cent chance of oil falling to $20 in September and Morgan Stanley said Monday that a strong dollar could drop oil below $30. Mr Morse was first with the $20 call, although he said last February that it could happen in the first half of last year followed by the market balancing.
“Right now the real driving factor is access to capital markets,” Mr Sadeghian said by phone from Chicago. “$20 oil just digs an even deeper hole from where you need to be before the markets open up again.”
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Yemen's Bahais and the charges they often face
The Baha'i faith was made known in Yemen in the 19th century, first introduced by an Iranian man named Ali Muhammad Al Shirazi, considered the Herald of the Baha'i faith in 1844.
The Baha'i faith has had a growing number of followers in recent years despite persecution in Yemen and Iran.
Today, some 2,000 Baha'is reside in Yemen, according to Insaf.
"The 24 defendants represented by the House of Justice, which has intelligence outfits from the uS and the UK working to carry out an espionage scheme in Yemen under the guise of religion.. aimed to impant and found the Bahai sect on Yemeni soil by bringing foreign Bahais from abroad and homing them in Yemen," the charge sheet said.
Baha'Ullah, the founder of the Bahai faith, was exiled by the Ottoman Empire in 1868 from Iran to what is now Israel. Now, the Bahai faith's highest governing body, known as the Universal House of Justice, is based in the Israeli city of Haifa, which the Bahais turn towards during prayer.
The Houthis cite this as collective "evidence" of Bahai "links" to Israel - which the Houthis consider their enemy.
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MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5