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Brent In Euros Just Off All Time Highs - Is The Free Liquidity Run Almost Over?

Tyler Durden's picture


As always happens following massive liquidity injections, there comes a time when the price of oil ends the party prematurely. And with localized Cushing issues preventing another 10% to be tacked on to the cost of gasoline for now, we once again look to Europe for the fair view of what is happening with the energy market. To our surprise we find that there is now only a 5% difference between the all time highs hit in 2008 and currently in the price of Brent expressed in euros. Yet what is of particular interest is that the liquidity induced rally may be about to fizzle: we have no experienced the same near-parabolic blow off top move that we saw at the end of the summer 2008 rally (which ended up with the market plunging over 50%), and the first QE1 which plateaued oil prices and only further hopes of more QE prevented the market from dropping. Is the same fate in store for crude if indeed the Fed is prepared to let the market find its natural clearing price without daily injections of billions.


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Fri, 04/08/2011 - 12:00 | 1150162 HamyWanger
HamyWanger's picture

" Is the same fate in store for crude if indeed the Fed is prepared to let the market find its natural clearing price without daily injections of billions."

Is the FED stops QE, who will buy the 30yr, which is near its 1-year low? 

And who will buy stocks? 

No, QE will continue, and that's why I'm long DOW. 

Fri, 04/08/2011 - 12:30 | 1150321 r101958
r101958's picture

You should see what type of returns you are getting there by pricing the DOW in gold. It will tell you a different story.

Fri, 04/08/2011 - 12:33 | 1150335 Tense INDIAN
Tense INDIAN's picture

....thats rite ...definitre DOW 13000 or more

Fri, 04/08/2011 - 12:38 | 1150349 SWRichmond
SWRichmond's picture

Is the FED stops QE, who will buy the 30yr, which is near its 1-year low?

More importantly, if the Fed stops QE, what happens to federal tax receipts, and therefore the deficit?  And when the deficit explodes (if one were to believe it hasn't already) what happens to USD?

Fri, 04/08/2011 - 12:02 | 1150166 hedgeless_horseman
hedgeless_horseman's picture

There is your v-shaped recovery. 

Fri, 04/08/2011 - 13:31 | 1150538 Abitdodgie
Abitdodgie's picture

When oil hits about $140-145 the dollar will die , so the start of the great reset is almost here , time to air the bunker ,rotate the last food ,and get ready final days which will be here soon

Fri, 04/08/2011 - 13:34 | 1150547 Abitdodgie
Abitdodgie's picture

By the way April 9th is the first day of the second night,bad things always happen at night

Fri, 04/08/2011 - 20:33 | 1152196 tomster0126
tomster0126's picture

i feel you...the transition period is approaching, the death of the dollar and fiat are inevitable.  check my dude's site out he has some similar predictions to yours

Fri, 04/08/2011 - 12:04 | 1150170 RobotTrader
RobotTrader's picture

I'm wondering if the Fed is planning another "Midnight Massacre", Don Coxe style.....

Fri, 04/08/2011 - 12:06 | 1150185 Internet Tough Guy
Internet Tough Guy's picture

Crude oil pole-axed on inventory "glut"
RobotTrader - Wed, Mar 30, 2011 - 10:34 AM

Once again, the Peak Oilers were foiled again.

Looks like the long specs are finally running for the hills.

Fri, 04/08/2011 - 13:09 | 1150460 CrashisOptimistic
CrashisOptimistic's picture

The last three words of this snippet say all that must be said, from the IMF.

"WASHINGTON, April 7 (Reuters) - The International Monetary Fund on Thursday warned that the global economy was entering a period of scarcer oil that could drive prices up rapidly. In new analysis by the Washington-based global financial institution, the IMF said market tensions were increasing between growing demand for oil from fast-growing emerging market economies, like China, and production constraints due to maturing oil fields."

Fri, 04/08/2011 - 12:10 | 1150193 Cursive
Cursive's picture

It doesn't matter anymore. The American middle class has been crushed and tje American Dream has been exposed for the myth that it was. Nations do not recover from pandemic frauds such as that perpetrated by the Treserve. Life goes on, to be sure, but huge socioeconomic and political changes are only just beginning.

Fri, 04/08/2011 - 12:16 | 1150222 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

"It's called the American Dream because you have to be asleep to believe it."

-George Carlin

Fri, 04/08/2011 - 12:37 | 1150342 topcallingtroll
topcallingtroll's picture


The american dream is still alive.
I am proof of it.

Big men take chances and live dangerously.
Small men are afraid to take any risk.

Guess which group has the best chance?

What group are you in?

Fri, 04/08/2011 - 12:40 | 1150367 falak pema
falak pema's picture

You with Gen Custer at LBH?

Fri, 04/08/2011 - 12:45 | 1150379 cougar_w
cougar_w's picture

There is a reason they created the "Darwin Award"

Sat, 04/09/2011 - 01:13 | 1152840 germanicus
germanicus's picture

It is a joke, you are brain washed! It seems to me that you are the typical american, who has never been abroad!

Have you ever been in Asia, in China or Hong Kong? Open your eyes US is second world at the most, you do not have a single speed train, the infrastructure is like South America, your airports are surpassed, your cars are old, you are not able any more to build airplanes and even the space shuttle does not fly anymore? Of which dream are you talking about, Warren Buffet, Bill Gates? Mr. Gaddafi and Mr. Mugabe in Africa are also rich men...

Did you ever ask yourself why everything is produced outside the US? Did you really believe the story that the reason, ist that it is cheaper than US made things? Did you ever think about that may be Americans are not able to do it anymore?

Have a trip, visit other countries in the world, open your eyes and keep reading this blog

The American Dream is like the story of John Rambo... it never existed!




Fri, 04/08/2011 - 15:17 | 1150971 topcallingtroll
topcallingtroll's picture

Ha! The american dream is still alive. I am proof of it. Big men take chances and live dangerously. Small men are afraid to take any risk. Guess which group has the best chance? What group are you in?

Fri, 04/08/2011 - 23:43 | 1152703 thames222
thames222's picture

all I know is I'm paying over 3.75 a gallon in my area and I'm about to flip my lid.  We need some solution because these prices are killing us, literally.  It goes back to simple economics, pricing and demand.  Bernutty and is crew really just think too hard.

Sat, 04/09/2011 - 00:41 | 1152799 been there done that
been there done that's picture

Oil is STILL cheap. A slushy from 7-11 costs more, water passed through a cow is close, and many liquids priced in gallons are way more expensive. The work that a gallon of gas will do is still amazing, AND still a good deal. (for now)

Fri, 04/08/2011 - 12:14 | 1150209 HamyWanger
HamyWanger's picture

No chance, robot. If QE stops, long rates will go up and finalize the double dip in RE. Banks and municipalities are way too fragile right now for this. 

And I'm not even talking about bankrupt pension funds which are ultraleveraged, trying to play the momentum in equities to pay benefits month-on-month. 

Fiat to infinity. 

Fri, 04/08/2011 - 12:18 | 1150233 topcallingtroll
topcallingtroll's picture

Cmon can be.funnier and more annoying than that.

Fri, 04/08/2011 - 12:21 | 1150255 JOHNICON
JOHNICON's picture

If QE stops then I think long rates go down, possibly big time.  Not logical, I know, but the flight to safety thing and all that...

Fri, 04/08/2011 - 12:35 | 1150341 r101958
r101958's picture

Although QE exacerbates the problem....the real problem with oil is the fact that resources are finite.

It seems I keep having to repost......:

'Oil will decrease in price when we see demand destruction again or perhaps temporarily when the dollar has a spike. All resources are finite and will get more scarce in this economy which survives and thrives on exponential growth. So, the alternatives are: Fewer and more expensive resources as in the current economic paradigm OR the current paradigm collapses and demand is destroyed in the process (2008 style). Nuff said.'

Fri, 04/08/2011 - 12:07 | 1150184 Note to self
Note to self's picture

That saw tooth is gonna extend forward in time, going higher in every cycle, till the oil is gone.

Fri, 04/08/2011 - 12:25 | 1150278 Votewithabullet
Votewithabullet's picture

Nein nein nicht zo schnell. Price will climb forcing alternatives to market, price will drop. Rinse repeat .

Fri, 04/08/2011 - 12:47 | 1150392 cougar_w
cougar_w's picture

And every time investors jump into funding alternatives, and are then killed on the price pull-back, that investor segment is murdered and doesn't come back the next time nearly as strong.

Rinse. Repeat. The lack of a strong price signal has been the lament of alternative energy investors for eons. The jagged, turbulent end of oil is also the end of alternative energy investment. We could have managed this better, but we didn't and we won't and the chance for a do-over is past.

Sat, 04/09/2011 - 10:40 | 1153192 css1971
css1971's picture

Actually... Part of my strategy is to use the sawtooth to buy alternative and nuclear as well as conventional energy on the crash.


Fri, 04/08/2011 - 12:30 | 1150323 unwanted flatulence
unwanted flatulence's picture

this is very likely - having studied this from a geologic perspective and investment one--  my best guess is repeated sawtooth price pattern hammered down when it get so high economy's remant crashes, then recovery at ever increasing new low in each new cycle.

the beauty of PM is you own oil and gas is a relatively stable [relative to oil] currency.  just chart oil vs gold in 2008-2010 and longer.


Fri, 04/08/2011 - 12:10 | 1150192 Village Smithy
Village Smithy's picture

Hey you can look up north for the true energy cost picture as well. Up in Canada they are paying well over $5.00 per U.S. gal. and that's in $C. My friend up there told me that  everyone at work is saying the same thing. "No summer travel plans, hello staycation". 

Fri, 04/08/2011 - 12:10 | 1150200 The Axe
The Axe's picture

No tightening  No Gas

Fri, 04/08/2011 - 12:11 | 1150201 JonTurk
JonTurk's picture

spot on.. look for the euro start diving next week

Fri, 04/08/2011 - 12:20 | 1150261 JOHNICON
JOHNICON's picture

That would be great since I'm visiting Spain to see my sister next week.  :)   Every other time I've gone to Spain the Euro had been near all-time highs.  :(

Fri, 04/08/2011 - 12:15 | 1150214 bob_dabolina
bob_dabolina's picture

This is because Waddell and Reed is long oil and also because of George Bush.

Fri, 04/08/2011 - 12:14 | 1150218 topcallingtroll
topcallingtroll's picture

The strategic petroleum reserve ought to be selling into wti 110 and buying.wti at less than 80. They could make money and moderate volatility a bit.

Fri, 04/08/2011 - 13:11 | 1150476 CrashisOptimistic
CrashisOptimistic's picture

The SPR has a flow rate maximum, too.  And it can't get to all markets, because that's not what it's for.  It's for the military.

Fri, 04/08/2011 - 12:14 | 1150227 A Man without Q...
A Man without Qualities's picture

Germans love their big cars.  Now it's costing 100 Euro to fill the tank, they are starting to understand the cost for bailing out the south.  

Fri, 04/08/2011 - 12:15 | 1150228 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Wha?  I thought it was all due to increasing demand because of all the green shoots are sprouting into self sustaining growth.  You telling me my neighbor isn't selling his SUV and boat because he's upgrading to better ones?

Fri, 04/08/2011 - 12:19 | 1150235 firstdivision
firstdivision's picture

It still has room to run up in Euros as the EURUSD was rich then compared to now. 

Fri, 04/08/2011 - 12:24 | 1150281 simon says
simon says's picture

Is liquidity run over?  No for the following reasons:

-  2008 was private liquidity binge which the Fed would have kept going, but it was new to QE at that time

- 2011 is public liquidity binge which cannot stop since it will crash the UST market

- Bernanke loves inflation - he sees it as the evidence of avoiding a depression

Fed and Bankstas may tease the market with false tightenings (to keep Bankstas spread profits flowing through frontrunning), but this liquidity tap cannot be turned off.  This is a one way street to the reset of the global monetary system - could take months, years or even decades (unlikely) - timing based on ability to keep the ponzi going (and btw we are all actively playing this ponzi game together - only fools will stay out with this level of signalling).

Fri, 04/08/2011 - 12:30 | 1150312 JOHNICON
JOHNICON's picture

Your 2011 point is wrong, I think.  Ending QE and other liquidity programs will force down quite a few markets (equities, commodities, etc.) but USTs will be the beneficiary of that.  

Fri, 04/08/2011 - 12:57 | 1150420 plocequ1
plocequ1's picture

Of course the answer is no. But this is the type of question where the answer is already known. The answer is NO. But it  doesn't hurt to ask. Got to keep that yes no paradigm going

Fri, 04/08/2011 - 12:28 | 1150283 JonTurk
JonTurk's picture

EUR will be a huge short at around 1.45.. its on the brink of a big rising wedge -- inversely, USD index is about to bottom up with a perfect timing as everyone is bitching dollar now and whole mo-mo food chain piled into long commodities.

weekly technical negative divergences all set in place. starting next week it will be a tough ride for the commodity longs until the next QE (which will not happen unless markets take a big hit like the one last summer)


Fri, 04/08/2011 - 12:48 | 1150400 Arseclown
Arseclown's picture

Good luck jumping in front of that train...

Fri, 04/08/2011 - 12:38 | 1150355 falak pema
falak pema's picture

DJ up on QE-infinity but down on USD real value. One day it will all melt as nobody will want to export to US to be paid in USDD. So QE is a route to lose-lose.

Fri, 04/08/2011 - 12:43 | 1150370 t0mmyBerg
t0mmyBerg's picture

"if indeed the Fed is prepared to let the market find its natural clearing price"

Well there's the rub isnt it.  You have the Doviest Doves ever to occupy Marriner Eccles cooing about as they rain destruction on the land with giant dollops of radioactive feces, or is it faesces, and the term of the head Dove doesnt end until January 31, 2014, some 33 months from now, and the one guy who could do something about it is either content to see the country destroyed, if you believe the right-wing conspiracy cranks, or is just plain too stupid to see the darker consequences of destroying the currency in an attempt to inflate away glib progressive spending if you dont.  Good luck with non-centrally-planned price discovery any time between now and then in the absence of the system falling down around them.



Fri, 04/08/2011 - 12:43 | 1150380 buzzsaw99
buzzsaw99's picture

Is the same fate in store for crude if indeed the Fed is prepared to let the market find its natural clearing price without daily injections of billions...


The fed serves at the pleasure of the joo york banksters.

Fri, 04/08/2011 - 12:51 | 1150411 Tense INDIAN
Tense INDIAN's picture

but dont we have time till June ...its April 2nd week now....

Fri, 04/08/2011 - 12:53 | 1150413 John Law Lives
John Law Lives's picture

If oil prices are about to collapse, it would seem like a good time to load up on major airline stocks (AMR etc.).

Fri, 04/08/2011 - 13:12 | 1150480 ivars
ivars's picture

It going as it should. It will come down a bit ( 105-110) in May, when money will move into PM spike (just  before 40% correction there)



Fri, 04/08/2011 - 13:14 | 1150482 gkm
gkm's picture

As long as WTI is above 107.5 looks very bullish for 170+.  Don`t ask questions - just close your eyes and buy the dip.

Fri, 04/08/2011 - 14:43 | 1150830 sschu
sschu's picture

The markets are making no sense, or maybe they are making perfect sense.  Is crude up on:

- Liquidity courtesy of Bennie?

- MENA violence and political instability including the KSA?

- Japan uncertainty (more oil to keep the lights on?)

- Peak oil?

- World wide demand especially EM countries?

- Manipulation and/or speculators?

- Soros trying to bring down the west, USD and establish NWO?

Is this a replay of 2008 when crude crashed with the market or are we headed for $150 oil for a while?

Some of the circumstances are similar to 2008, but many are different.  This is the problem when you have centrally planned/manipulated markets, the truth is very difficult to determine.

For my money, there are plenty of folks angry with the US/USD right now.  $150 oil insures the $$ crash and a reset of the US economy along with international isolation and an end to our aircraft carriers in the Arabian Gulf (maybe).



Fri, 04/08/2011 - 16:06 | 1151173 dogismyth
dogismyth's picture

The world is so surreal, and many have adopted it as reality.  The complex, convoluted machinations of the economy have twisted our minds to accept the opposite of what is true.  As oil is rising like a shooting star once again, the markets act resilent and unaffected.  After all, we opened up 2% on crude this morning yet nary a concern from the players.  The countless articles and blogs I visit ensure me that the markets have much further to rise, and this is the play of all plays.  I seriously doubt that and I refuse to play the game or alter my thinking about what is the reality of the situation.  My thinking is unless you are holding hard're gonna get screwed like never before.  The paper trading days are slowly ending.  The final transfer of (paper) wealth is about to occur just as everyone was told how great is is.  Lol....

Fri, 04/08/2011 - 16:42 | 1151338 Urban Redneck
Urban Redneck's picture

If the Chairsatan keeps printing paper dollars then price of oil will go up in paper dollars.  Hopefully Trichet will learn from the Chairsatan's mistakes.

Sat, 04/09/2011 - 10:25 | 1153173 css1971
css1971's picture

No, the problem is that wages have not inflated at the same rate as assets. i.e. the inflation of assets is like an elastic band. At some point John Doe simply cannot afford to pay for the debt, the commodity induced inflation, the property. When that point hits, reality bites and the band snaps.

The governments and the central banks have been determinedly re-stretching the elastic band. So. deflation fast or slow. If fast, they'll probably try to re-inflate again and do yet more damage to the currency, flight to gold etc. If slow... Maybe it'll survive.

I'm not betting on sanity here. BTW. Our "leaders" are cheating lying scum and our bankers are swindling lying scum.


Fri, 04/08/2011 - 20:40 | 1152207 tomster0126
tomster0126's picture

The American Dream is not a's a mind-wrenching puzzle, and you have to figure out all of the tricks and cheats to win.  people love to criticize Horatio Alger's work as falsely promising the American Dream, but what he implies and what is true is that you have to abide by a certain set of rules to find the Dream--read up, know your facts, and make key successful decisions when opportunity strikes.

Sat, 04/09/2011 - 08:53 | 1153102 MarcusAurelius
MarcusAurelius's picture

Well either you beleive hyper inflation is coming or we are approaching a no win commodity situation much like we did in 2008. Personally I do not believe in hyper inflation as this would wipe out the rich too and quite simply it ain't gonna happen. So that leaves situation #2 where we have reached the point of the "no win". This is commodity boom is being fule by the FED to convince other countries to ward off inflation by revaluing their currencies to of course "buy in America". However what happens when they do revalue their currencies and inject this inflation back to the FED? Methinks sky high interest rates will then be in store as they will have no choice. Which means the banks will stop borrowing FREE money and so will end the commodities boom. I don't think we are very far off from this scenario. I think this implosion of price will be much different in the way it happens from 2008 but the results will be the same. Quite simply Joe six pack (me) has about an extra 2K per year that he can spend on happy times. WHen oil is this high and gas prices run rampant this disposable income disappears and Joe stays home and does very little effecting all other areas of the economy where he would have spent his money. As this is all funny money driven I think the banks will have to stop their binge first before this will end as Joe does not have the same buying power as he once did even in 2008. You can't simply have buyers in a particular market can you? You need sellers too.

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