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Crude Fireworks

Tyler Durden's picture


Something is spooking the reflation trade. While both gold and silver have moved decidedly higher in the past hour, little compares to the fireworks in West Texas, where crude has just gapped up a solid dollar, in what briefly appeared to be an offerless market. Furthermore the move seems contained to WTI: the move in Brent is far more cool and collected, although will likely soon follow and pass the $100 barrier. And while the disconnected between the two (north of $5 recently) has been well noted, if not completely understood, the sudden move in WTI does not seem to have an immediate catalyst: the all critical Chinese CPI/GDP/retail data is not due until tomorrow, so either someone is trying to start a HFT algo melt up in various futures markets, or fat fingers (soon to be denied) are far more prevalent than previously expected.

Incidentally the momentary move above has just wiped out another $100 billion of US GDP. While each individual $100 billion is pocket change, put 10 of these together, and soon they start to add up.

Update: the major gap appears to be merely the on the run roll...


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Tue, 01/18/2011 - 21:54 | Link to Comment slow_roast
slow_roast's picture

Buy The Pop Bitchez

Tue, 01/18/2011 - 21:56 | Link to Comment IrrationalMan
IrrationalMan's picture

your graph rolled the future.  try graphing the expiration h1 explicitly. 

Tue, 01/18/2011 - 21:58 | Link to Comment NOTW777
NOTW777's picture

they usually calmly beat down the dollar when chinese political events occur

Tue, 01/18/2011 - 22:03 | Link to Comment Turd Ferguson
Tue, 01/18/2011 - 22:07 | Link to Comment Hephasteus
Hephasteus's picture

All that gold only bought a one week dollar hump. OUCH. Things are worse than I thought.

Tue, 01/18/2011 - 22:01 | Link to Comment chump666
chump666's picture

tyler, go here

600billion asia bid on the EUR and big USD sales.  yeah somthing is up...

check your crosses  hft's are now overbidding

Tue, 01/18/2011 - 22:00 | Link to Comment Alexander Hamilton
Alexander Hamilton's picture

Feb to March rollover.

Tue, 01/18/2011 - 22:02 | Link to Comment Misean
Misean's picture

Hot money just sloshing around with reckless abandon.

Tue, 01/18/2011 - 22:03 | Link to Comment chump666
chump666's picture

F******* China!  check your wires.  major sovereign sells on the USD/plus UST's.

warning shot?




Tue, 01/18/2011 - 22:06 | Link to Comment Bearster
Bearster's picture

More like desperation trying to prevent collapse of EUR!

Did you see the news that Ireland printed EUR worth around 25% of its GDP? If Portugal, Spain, Italy, and Greece notice this trick then the EUR is finished.

Tue, 01/18/2011 - 22:09 | Link to Comment Hephasteus
Hephasteus's picture


Tue, 01/18/2011 - 22:14 | Link to Comment sabra1
sabra1's picture


Forged..... Commercial Paper?


Oh God, please no.....

Today, Qilu Bank is being investigated over a scandal allegedly involving $227m of forged commercial bank bills, used to provide short-term loans to business, and other forged commercial paper.

The lender, which is 20 per cent owned by Australia's Commonwealth Bank, is based in Jinan, the capital of Shandong province, in northeast China

Tue, 01/18/2011 - 23:55 | Link to Comment SilverRhino
SilverRhino's picture

Interesting timing with Hu Jintao on US soil today.  Looks like the economic war is picking up.


Tue, 01/18/2011 - 22:17 | Link to Comment Xibalba
Xibalba's picture


Tue, 01/18/2011 - 22:19 | Link to Comment pleseus
pleseus's picture

Ireland prints 51 billion euros out of thin air and it's a non story.  I think it's the jump the shark moment for the euro.  Germany's got to be looking for an exit.

Tue, 01/18/2011 - 22:35 | Link to Comment pleseus
pleseus's picture

Sorry I didn't clarify.  It's a non story in the main stream media.  It's a huge story none the less.  I'm sure the central bankers around the world are freaking out about Ireland doing this.  If the EU and ECB turns a blind eye to this then it won't be long till other EU countries follow.  But I kind of expect it.  There's no other way to pay off all these debts.

Tue, 01/18/2011 - 22:51 | Link to Comment AUD
AUD's picture

Not really, it's just more of the same central bank monetisation. Whatever garbage the Irish central bank monetises the government explicitly guarantees, which in turn the ECB already explicitly guarantees anyhow. The quality of the ECB's collateral, being Irish government debt, is garbage now so it won't make any difference until it day.

Tue, 01/18/2011 - 23:11 | Link to Comment spekulatn
spekulatn's picture


Conclusion: The bell tolls. Ireland's "emergency" printing of euros is perhaps the first strike; we shall see if Europe listens.

Tue, 01/18/2011 - 23:06 | Link to Comment woolly mammoth
woolly mammoth's picture

OH, thanks for clarifying for me. I get it now, Ireland created debt free money. All Central Banks worse nightmare. I new that was an important development but until now I didn't quit grasp it. It's starting to look like 2011's going to be one wild year.

Tue, 01/18/2011 - 23:58 | Link to Comment AUD
AUD's picture

Ireland created debt free money

No they didn't (I'm assuming you are not being sarcastic). You cannot 'create' debt free 'money'. Paper money is an obligation of the issuer, there is no way around this. 

Wed, 01/19/2011 - 00:14 | Link to Comment woolly mammoth
woolly mammoth's picture

The Quarter in my pocket says United States of America on it with a material cost of about $.065 spent by our government unencumbered, the dollar bill in my pocket says Federal Reserve Note that was borrowed into existence. Big difference.

Wed, 01/19/2011 - 00:02 | Link to Comment pleseus
pleseus's picture

Ireland stepped beyond the smoke screen of monetization.  They are in unvarnished money printing territory ala Zimbabwe and the Wiemar Republic.

Wed, 01/19/2011 - 00:22 | Link to Comment woolly mammoth
woolly mammoth's picture

How do you tell the difference from Ireland's created Euro from Germany's Central Bank issued Euro?

Wed, 01/19/2011 - 01:13 | Link to Comment trav7777
trav7777's picture

identical paper notes...when does the point of recognition occur?

Wed, 01/19/2011 - 01:14 | Link to Comment Orly
Orly's picture

It can run faster than her brother.


Wed, 01/19/2011 - 10:55 | Link to Comment Cpl Hicks
Cpl Hicks's picture


If he ever catches her inflation will really widen the spread.

Wed, 01/19/2011 - 01:28 | Link to Comment Mentaliusanything
Mentaliusanything's picture

Ireland Has a T with a check sum of 6 (or it could be 666)

Tue, 01/18/2011 - 22:20 | Link to Comment chump666
chump666's picture

it's not EUR support pe se, more like EU bond support via Asian govt buys.  but china is acting braindead with japan as all it does is keep the inflation spike on oil which they net import.




Tue, 01/18/2011 - 22:21 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Re: Brent vs WTI.  A great deal of discussion on this lately in various venues.  

It apparently can be attributed to pipeline issues in the US.  Enbridge and others.  They are making it difficult to get WTI to the customers, making it less in demand.  The pipelines were designed to route Texas oil and there simply is less and less of that produced now.   Brent, on the other hand, has become the most used type of oil, despite its similar depletion, simply because it can get from point A to point B.  And thus, seeing more demand, its price rises disproportionately to WTI.

Oil is all powerful, but not all oil is created equal.  

Wed, 01/19/2011 - 11:03 | Link to Comment Cpl Hicks
Cpl Hicks's picture

WTI is here in the good ol' US of A.

Brent is out there on the stormy North Sea.

Isn't there a pretty good sized $ differential just to get Brent into a US pipeline?


Tue, 01/18/2011 - 22:34 | Link to Comment Beatscape
Beatscape's picture

Yes, it is contract roll.  Still... this might help to firm up the crude market:


Shell Shuts Brent North Sea Platorms After Incident, Can't Forecast Return Royal Dutch Shell Plc, Europe’s largest oil company, said it shut down production from four Brent platforms in the North Sea following an accident.

“All non-essential personnel onboard the Shell-operated Brent Bravo platform in the northern North Sea returned to shore on Saturday,” Sally Hepton, a London-based company spokeswoman, said by phone today. “We have taken these actions as a precautionary measure.”

Shell declined to say when operations will resume or whether the company would have to declare force majeure on Brent crude shipments. There were no injuries, Hepton said.

Brent crude futures have advanced relative to U.S. benchmark West Texas Intermediate amid recent outages in the North Sea, such as Statoil ASA’s Jan. 11 closure of its Snorre A platform and Vigdis oil field after a gas leak. Brent crude for March rose as much as 94 cents today before erasing gains.

A 50 metric-ton bar fell from one of the rigs into the sea, Jake Molloy, regional organizer for the National Union of Rail, Maritime and Transport Workers, said by phone from Aberdeen, Scotland. Shell evacuated as many as 100 non-essential staff from the Brent Bravo platform, he said.

“We are aware of the situation and are working with Shell,” said Kevin Hegarty, a Liverpool, U.K.-based spokesman for the Health and Safety Executive.

Brent Output

The Brent field supplies about 4.5 million standard cubic meters of natural gas and 20,000 barrels of crude oil a day, equal to about 2 percent and 1 percent of the U.K.’s respective fuel needs, according to Shell.

Brent is one of the four North Sea crude varieties that compose Dated Brent, used as a benchmark to price cargoes from Europe, Africa and Russia.

Daily exports of North Sea Brent blend crude are scheduled at 135,484 barrels a day in January, according to a monthly loading program. Shipments in February are poised to increase 26.5 percent from this month to 171,429 barrels a day, the plan shows.

WTI futures were $7.14 a barrel cheaper than Brent on Jan. 14, the widest gap between the two grades in almost two years.

Tue, 01/18/2011 - 22:54 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture


20K bpd is noise.  

So this is not a big deal, but have a look at overall North Sea production and how it is cratering.  That IS a big deal.


Tue, 01/18/2011 - 23:09 | Link to Comment topcallingtroll
topcallingtroll's picture

Stop it. You are scaring the troll again.

Tue, 01/18/2011 - 23:16 | Link to Comment TooBearish
TooBearish's picture

not a spike Ty - contract roll - you're definately losing your edge

Tue, 01/18/2011 - 23:32 | Link to Comment chump666
chump666's picture

you got a roll because Asia just went insane.  major spike on oil in the next 24hrs eye 94

USD just got slaughtered, EUR went bid and oil spiked all less than 2hr of each other.  why?  China/Japan just bought 500billion + of EUR and caused a selling spree on the USD.  gold spiked too. 



Tue, 01/18/2011 - 23:40 | Link to Comment Buck Johnson
Buck Johnson's picture

This definitely didn't make it onto the US news, I just found out right now.  Don't let these idiots say different, Ireland out and out needed money and couldn't get what it needed either quickly, at all or at the rates it wanted (no rates) and it decided to print up money.  Then the ECB said this doesn't matter because it was so small and yada yada yada.  What this is, is the signs of desperation behind the scenes.  They don't know how much money they truly printed or if they will do it again.  Remember, once you start down this path it's very hard to stop.  And the insidious part of the trap is it makes the printer/glutton ensare itself into the trap.  So Ireland does it, whats to stop the other troubled countries from printing a billion here or a billion their and/or not even reporting they are printing.

Imagine that all 50 states could print the greenback, would you want those 50 states in the union to have the ability to print the same money you have or share with the others.  It would be uncontrollable and you would definitley be in hyperinflation.  This is the first shot of the EU and the Euro going down.  Germany wants out and after hearing about this, they can't be to happy.

Wed, 01/19/2011 - 01:16 | Link to Comment trav7777
trav7777's picture

Ireland's notes will be just as crisp as germany's. They have the same plates, same paper, same ink

Wed, 01/19/2011 - 01:32 | Link to Comment Mentaliusanything
Mentaliusanything's picture

But by Law different Serial Letters and check sums.

Ireland is T with 6 check sum 

Question are all Euros created equal ? That is the Question......

The answer is soon to be    ........... NO!

Wed, 01/19/2011 - 03:06 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Euro chick fight!

Wed, 01/19/2011 - 03:15 | Link to Comment DaBernank
DaBernank's picture

Who cares about oil? The iPad2 will fly us wherever we want to go. And it will run on unicorn dust. I heard it on the conference call.

-sent from my iPad

Wed, 01/19/2011 - 05:10 | Link to Comment terranstyler
terranstyler's picture

Tyler, I love it when you give more weight to the commodities in your reporting, as I think, they are THE up market and also have a number of (not so nice though) political consequences. Besides, they don't seem to be sooo manipulated as the equities, with the two well known shiny exceptions.

Wed, 01/19/2011 - 07:17 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

QE will save us all!

The change Obama promised is here!

Do NOT follow this link or you will be banned from the site!