Crude settles at $50.04 per barrel, lowest since April 2009

The selloff in global oil markets showed little signs of slowing in the new year, falling as much as 6 percent on Monday to their lowest since spring of 2009 as fears of a supply glut that vexed the market for the past six months deepened.

Oil has plunged nearly 55 percent in value since June, when Brent traded above $117 a barrel and U.S. crude above $107.

The selloff, which began on concerns of oversupply in high quality U.S. shale crude, accelerated after the November meeting of the Organization of the Petroleum Exporting Countries, where Saudi Arabia ruled out production cuts as means of boosting prices. The kingdom had reasoned that reducing output will hurt its market share instead.

Some traders seem certain that U.S. crude will be trading in the $40 region later in the week if weekly oil inventory numbers for the United States on Wednesday show another supply build.

"We're headed for a four-handle," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York. "Maybe not today, but I'm sure when you get the inventory numbers that come out this week, we definitely will."

Open interest for $40-$50 strike puts in U.S. crude have risen several fold since the start of December, while $20-$30 puts for June 2015 have traded, said Stephen Schork, editor of Pennsylvania-based The Schork Report.

Russia's oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7 percent thanks to small non-state producers, Energy Ministry data showed.

Iraq's oil exports were at their highest since 1980 in December, an oil ministry spokesman said, with record sales from the country's southern terminals.

The Russian and Iraqi data overshadowed reports of drops in Libya's oil output due to conflict. Libya's oil output has fallen to around 380,000 bpd after the closure of the OPEC producer's biggest oil port Es Sider, along with another oil port Ras Lanuf.

U.S crude closed down $2.65, or 5 percent, at $50.04 a barrel—its lowest settlement since April 2009. The contract fell further in extended trading.

Front-month Brent crude hovered around $53 a barrel, down about $3, after dropping to $52.66, its lowest since May 2009.

U.S crude dipped below $50 a barrel while benchmark Brent crude tumbled under $53 after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports at near 35-year peaks.

U.S. driller ConocoPhillips added to the bearish sentiment, announcing it had struck first oil at a Norwegian North Sea project.

Top crude exporter Saudi Arabia has made deep cuts to its monthly oil prices for European buyers, a move that analysts said reflects the kingdom's deepening defence of market share. Saudi Arabia also trimmed prices for U.S. refiners while raising rates for Asia.

The euro's tumble to 2006 lows, and slower-than-expected growth in U.S. manufacturing, completed a perfect storm for the bearish oil markets.

"There's no doubt that we have a combination of supplies hitting their zenith at a time when demand is weakening," said Phil Flynn, analyst at Price Futures Group in Chicago. http://www.cnbc.com/id/102308102

Oil at $14 a barrel? Here's how it could happen

No one really saw 2014's dramatic plunge in oil price coming, so it's probably fair to say that any predictions about where it's going from here fall somewhere between educated guesses and picking a number out of a hat.

In that light, it's less than shocking to see one analyst making a case—albeit in a pure outlier sense—for a drop all the way below $14 a barrel.

Abigail Doolittle, who does business under the name Peak Theories Research, posits that current chart trends point to the possibility that crude has three downside target areas where it could find support—$44, $35 and the nightmare scenario of, yes, $13.65.

Make no mistake, she thinks that's an extreme case. Her target for the more likely move is the $35 range, which in itself is quite a call considering light crude had been just above $100 a barrel this summer and the move would represent a 33 percent or so plunge just from current levels.

But Doolittle makes room for an even more extreme scenario, in which technical support gives way as part of what she describes as a triangular pattern forming in an "ascending trend channel" that brings about the extreme case.

"There is a wild case scenario for a massive fall in oil and it is made by both the triangle and the possibility that oil's true trading path will turn out to be sideways on a potential false initial reaction of epic proportions," Doolittle explained in a report she distributed Wednesday morning. "This possibility cannot be ignored or discounted because it is simply too strong from a technical standpoint."

She acknowledges that the scenario "may sound outrageous" but cautions "odds appear fairly strongly" that the move could be triggered by "a false initial reaction or basically a massive head fake caused by a variety of factors."

Before consumers get too giddy about the cost of even lower fuel prices at the pump, Doolittle offers a word of caution.

"Clearly this would seem to be a tail wind for consumers, but the various shocks and possible financial market crashes that could be triggered by such a collapse in oil would not be, and thus this seems a very dangerous scenario indeed," she said.

Doolittle is known for making some of the more extreme calls to be found on Wall Street. She predicted, for instance, that the mid-October market tumult would continue as part of a 60 percent drop in the S&P 500, a move that has not materialized. http://www.cnbc.com/id/102303607

Gold ends 2014 at $1,184.10 an ounce; down 1.5% for the year

Gold ended 2014 below $1,200 an ounce as investors worried about tensions in Russia and political uncertainty in Greece.

U.S. gold futures for February delivery settled at $1,184.10 an ounce, down 1.5 percent for the year.

Spot gold was last down 1.6 percent at $1,180 an ounce. On Tuesday, the metal climbed to $1,209.90, its highest in nearly two weeks, as concerns over tension between Russia and the West weakened the dollar and stock markets.

Prices were relatively less volatile in 2014 compared to last year's 28 percent slide and $500 trading range. Despite falling to a 4-1/2 year low in November, gold has traded in a $260 range for the year.

Gold's main driver in 2014 has been a buoyant dollar, which was poised to post its biggest yearly gain since 2005, and anticipated U.S. interest rate hikes may strengthen its appeal in the coming year. Higher rates weigh on non-interest-bearing bullion.

On Wednesday, the dollar was down 0.1 percent against a basket of main currencies, while European stocks edged higher, after suffering from uncertainty in Greece ahead of a January election in the previous session.

``Considering the strong dollar performance in 2014, gold's downside this year has been a little bit protected by international political events that have attracted some safe-haven buying, especially in the first half,'' ABN Amro commodity strategist Georgette Boele said.

``But a new drop in gold prices driven by a stronger dollar and higher U.S. interest rate expectations is likely in 2015, when we see prices average $1,000 an ounce.''

Physical demand for gold was boosted by the holiday season and upcoming Lunar New Year celebrations in China, when gold is bought for good fortune and to be given as gifts, traders said.

Fed and TWTR Overvaluation, Evidence of Looming Market Crash: Stockman

The Federal Reserve Wednesday reassured investors that it will hold interest rates near zero for a “considerable time” after it ends the bond-buying program known as quantitative easing in October. In response, the Dow Jones Industrial Average (^DJI) closed at a new record high.

Former Director of the Office of Management and Budget and author of the book, The Great Deformation, David Stockman, has significant concerns about that very policy.

“I’m worried… that we’ve got the greatest bubble created by a central bank in human history,” he told Yahoo Finance.

In a recent blog post, Stockman offered a handful of high-flying stocks as evidence of what he sees as “madness.”

                                               “…Twitter, is all that is required to remind us that once

                                               again markets are trading in the nosebleed section

                                               of history, rivaling even the madness of March 2000.”

 

Behind the madness

In an interview with Yahoo Finance, Stockman blamed Fed policy for creating that madness.

“We have been shoving zero-cost money into the financial markets for 6-years running,” he said. “That’s the kerosene that drives speculative trading – the carry trades. That’s what the gamblers use to fund their position as they move from one momentum play and trade to another.”

And that, he says, is not sustainable. While Stockman believes tech stocks are especially overvalued, he warns that it’s not just tech valuations that are inflated. “Everything’s massively overvalued, and it’s predicated on zero-cost overnight money that continues these carry trades; It can’t continue.”

And he still believes, as he has for some time – so far, incorrectly - that there will be a day of reckoning.

“When the trades begin to unwind because the carry cost has to normalize, you’re going to have a dramatic re-pricing dislocation in these financial markets.”

As Yahoo Finance’s Lauren Lyster points out in the associated video, investors who heeded Stockman’s advice last year would have missed out on a 28% run-up in stocks. But Stockman remains steadfast in his belief that the current Fed policy and the resultant market behavior can not continue. “I think what the Fed is doing is so unprecedented, what is happening in the markets is so unnatural,” he said. “This is dangerous, combustible stuff, and I don’t know when the explosion occurs - when the collapse suddenly is upon us - but when it happens, people will be happy that they got out of the way if they did."  http://finance.yahoo.com/news/twitter--overall-stock-market--massively-overvalued-211654515.html

Investing in marijuana: Pipe dreams or path to profits?

Marijuana sales are spreading across the nation thanks to the growing legalization of the drug. Now a new financial firm, KindBanking, wants to be the financial backbone for the hemp and cannabis industry.

"Think of us as the GE Capital of this under-served, but potential multi-billion dollar industry," said KindBanking's founder and CEO David Dinenberg.

Combined recreational and medical marijuana sales in the United States are projected to be $8 million in 2018, according to Marijuana Business Daily. Twenty-three states and the District of Columbia allow medical marijuana and citizens in Colorado and Washington voted to allow adults to legally possess a small amount for recreational use. Colorado sales began the first of the year, and Washington pot shops are expected to open soon.

Read MoreNot looking at pot as 'windfall' for economy: Colorado Gov.


Matthew Staver | The Washington Post | Getty Images

KindBanking, which launched in April, already has nearly a dozen deals, and is talking to start-ups in the U.S. and around the world, including Amsterdam and Panama. The West Hollywood firm provides equity financing in states that allow pot, plus alternative capital like debt, convertible debt and other venture capital or angel investments.

In return, KindBanking becomes a partner and owns a portion of the company.

"We're doing deals for dispensaries, growers, equipment companies, edible products makers, even a weed-based online news network" Dinenberg said.

Read MoreThe best cities to live for marijuana lovers

"The entrepreneurial spirit is alive and well in America. Marijuana offers folks a way to make career-changing decisions, a chance to own their own business, forge their own path, get rich, dream the dream, live the life."

KindBanking hopes to fill the void traditionally served by banks or venture capital firms.

"Banks are especially uneasy since possession and distribution still remains illegal under federal law," Dinenberg said. "Many pot entrepreneurs might have a business plan but can't even open a checking account or secure a loan That's where KindBanking steps in. We'll even provide armored car service if that's what they need."

Read MoreColorado approves first pot banking system

As for growth potential, Dinenberg believes it's only a matter of time before more states legally sell recreational marijuana. But don't expect New Jersey to follow suit.

Governor Chris Christie told CNBC's "Squawk Box" Tuesday, "I'm against the legalization of marijuana. I think it's wrong, I don't think we should do it"

—By CNBC's Kerima Greene

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