Venezuela from my reading has the worlds largest reserve and is at complete odds with the Saudis cutting prices and may well go it alone and decide to boost supply to make up for the cheaper prices in the US. The Saudis have deeper pockets to afford a price war but the Venezuelan's don't have the luxury.
If as it seems likely the Venezuelan's do ramp up supply this will affect this price war and then you have Russia tapping its toes and it can supply a lot more to Asia from my reading.
If these ducks line up they would really hurt the shale producers no doubt but I'm thinking beyond that to deflation if opec ends up racing each other to the bottom to maintain income and market share. The Saudis have fired the first shot (though they probably think the shale producers have), and yes as you say this could go in a direction no-one is yet grasping.
Republicans in the US it would safely be assumed will not allow anymore printing and will probably force interest rates up earlier as well. If the oil price war snowballs then raising interest rates will aid deflation as will not printing more money. As all theories go deflation sets off a race to the bottom and many end up holding off waiting movement for a cheaper price in their business activities.
I take your point on dls and agree but I still think this downward momentum in oil has a little way to go and even though dls has good fundamentals it will go with the tide IMO
DLS Price at posting:
$1.08 Sentiment: Sell Disclosure: Not Held
