Race To The Bottom: The Oil Industry Is Going Self-Bankrupt

The oil industry overinvested trillions of 0% poverty capital into additional capacity and were shocked when demand never showed up. By no means the only industry to make that fatal decision of course...

Global deflation aka. "demand" with oil:

Sept. 13, 2016
IEA Cuts Oil Demand Forecast
The IEA’s closely watched monthly oil-market report marked an abrupt shift for an agency that a month ago said the world’s oil glut had begun disappearing. The Organization of the Petroleum Exporting Countries also surprised the market this week with a report that oil production outside the cartel was proving more resilient than expected.

Via ZH

WSJ: Sept. 23, 2016

Kingdom Comedown: Fall In Oil Prices Is Shock To Middle Class

Saudi Arabia heads into next week’s meeting of major oil producers in a tight spot...a sharp drop in the price of oil, Saudi Arabia’s main revenue source, has forced the government to withdraw some benefits this year—raising the cost of living in the kingdom and hurting its middle class

The sharp price drop is mainly because of a glut in the market, in part caused by Saudi Arabia itself. The world’s top oil producer continues to pump crude at record levels to defend its market share. support GDP. 

Econ 101: The Paradox of Self-Bankruptcy

Unfortunately, the WSJ Murdoch dunces are as clueless as the rest, because this has nothing to do with market share. This has to do with solvency. OPEC CAN'T cut oil production due to fixed costs - decisions made in the past that demand debt service today. Both fixed investment costs and fixed consumption costs aka. what Paul Krugman calls "GDP".

Ironically at low price levels (glut conditions) all oil producers including OPEC are price takers, as predicted by Econ 101: 

per·fect com·pe·ti·tion

noun

the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

Canadian dollar with oil:

Emerging Markets with Energy Stocks

Junk bonds (red) and Fracking stocks (black)
Frackers used the bounce in oil prices to refinance:

"The Organization of the Petroleum Exporting Countries also surprised the market this week with a report that oil production outside the cartel was proving more resilient than expected."

Oil with S&P