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Oil Goes Berserk In Electronic Trading As WTI Passes $98
As Zero Hedge advised in early January when the severity of the Maghreb revolution was made all too clear to anyone not willing to stick their head in the CNBC sand, oil could well be the buy of a lifetime ahead of a downward spiral of unprecedented geopolitical proportions. Sure enough, today alone, WTI (April) has surged from $90 yesterday to over $98 in electronic trading (see below). Either this is some computer gone haywire in the closed session, or when America wakes up tomorrow we may be on the verge of another flash crash. As for Brent, it passed $108.50. As a reminder, and people forget this all too readily, each dollar jump in crude wipes out $100 billion in US GDP. That means that at face value, today's move in the commodity complex, may have taken out as much as 5% of annualized GDP when fully processed through the economy!
WTI (per netdania):
Brent:
And some crude observations from an otherwise calm Reuters:
Brent crude oil U.S. oil prices led the rally
The
"The market is on edge
"If you've
The
Brent
The March U.S. crude oil
Overall
The
Brent's after-hours rally forced the spread back out to $12.40 a barrel.
LIBYA UNSETTLES
In
On Sunday,
Ninety
"Libya
prices hit $108 a barrel for the first time since 2008 on Monday on
fears that spiraling violence in Libya could lead to wider supply
disruptions from the OPEC member.
to jump by more than $5, the most in over two years, as traders also
rushed to cover short positions in the key Brent/WTI spread, which had
blown out to a record $16 a barrel. The April spread narrowed to $10
during the day, but widened to over $12 in after-hours trade.
focus was on deadly clashes in Libya, where one oil firm was shutting
down some 100,000 barrels per day (bpd) of production and others
evacuated staff. The leader of the Al-Zuwayya tribe threatened oil
exports to the West would be cut off unless authorities stopped
violence.
about the potential for Middle East and North Africa supply
disruptions," said Mike Wittner, head of commodities research, Americas,
at Societe Generale.
got reports that actual disruptions are starting to occur, it's going to
have a supportive impact. A lot of it is high-quality crude and that is
important as well."
increasingly violent protests that appeared to put Muammar Gaddafi's
four decades of rule in jeopardy were the realization of weeks of
mounting concerns that Egypt-inspired unrest would seep into nearby oil producers.
oil futures, which have climbed more than $10 this year largely due to
the increasing geopolitical risk premium, jumped $3.22 a barrel, or 3.2
percent, to settle at $105.74 a barrel. They jumped another $2 to trade
as high as $108 in after-hours dealing, the highest since September 4,
2008.
contract, which expires on Tuesday, surged $5.22 a barrel to trade at
$91.42 a barrel in late-afternoon activity -- the highest in two weeks.
trading volume was less than one-third the 30-day average due to the
U.S. Presidents Day holiday, and the U.S. market won't issue an official
settlement until Tuesday.
more-active April contract jumped as much as $5.75 to a high of $95.47 a
barrel, at one point narrowing the Brent/WTI contract by nearly $3 to
$10 a barrel as traders covered short positions built up as the spread
ballooned from about $3 in January to a low of $16 last week.
Libya, scores were killed in anti-government protests as one of the
region's bloodiest revolts hit Tripoli for the first time, while army
units defected to the opposition and Gaddafi's son vowed to fight to the
last man standing.
Shaikh Faraj al Zuway, the leader of the Al-Zuwayya tribe in eastern
Libya, told Al Jazeera: "We will stop oil exports to Western countries
within 24 hours" should the violence not stop.
percent of Libyan oil exports come from the eastern region of
Cyrenaica, epicenter of the revolt, and unrest there could pose a graver
threat to oil supplies than in other nations if separatists target
infrastructure and look for a bigger slice of revenues, analysts say.
is a significant producer and exporter of good quality crude oil, and
threats by the tribal leader to stop production are worrisome," said
Christophe Barret, an oil analyst at Credit Agricole Corporate and
Investment Bank.
»
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Where's your buddy Harry Wanker? Taking inventory at his immensely profitable home furnishings business?
Hey prick I own a home furnishings business...
Don't put me in the same boat as Harry.
The burning man gay love wagon?
That is a "queen of the desert" tour. All dudes. Interesting!
yes, but which one is the catfish mouth? eeewwww. catfish mouth now takes on a whole new connotation.
Now, now, just cause Robo blew it on gold, does not mean Robo blows everything...
looks like a cross between Beach Blanket Bingo and Jesus Christ Superstar which, come to think of it, is a good way to describe your posts
Robo, your Mom is going to be really upset with you if she sees this posting. What were you thinking??????
UGA??? ...is the U of Georgia football team mascot...
See photo here...
http://en.wikipedia.org/wiki/Uga_(mascot)
I see a couple of chicks, so it's not totally gay...
Chicks, with dicks... dig?
Whatever happened to Saudi King Abdullah? Remember those rumors circulating that Obama upset him so much on the phone that he had a heart attack and died?
We haven't heard from him since 10 FEB when the Ministry of Health proclaimed he is in "Excellent condition," and recovering in Morocco. Is this an extended weekend at Bernies?
It's being widely reported that he is to return from Morocco this coming Wednesday.
Don't see why someone with his wealth would have to spend three months in a foreign country (surgery in NY, recoup in Morocco) for medical care.
I'll believe it when I see him on video at a current event (none of this Osama photoshop BS)
He's fine. My understanding is he has a half-dozen young healthy heart-donors waiting in the wings in case of any significant issue.
http://arabnews.com/saudiarabia/article275614.ece
Global warming and pollution solved, you're welcome. Signed, The Ben Bernank
Crude
Bearish Butterfly?
http://www.zerohedge.com/forum/99er-charts-0
It's a good thing ADM got all that corn-based-ethanol=mixing=in=the=fuel thingy passed. Corn is renewable!
It is and always has been the one thing Bernanke can't stop.
Oil will add to the price of everything, because of transport costs to the shelves, and no one will get a pay raise to cover it. They will not be able to buy as much of anything, and that will eviscerate non food corporate profits.
Behold society's alpha asset.
April high in globex I have 95.47 - been closed since 1.10pm ET
See that as well, i dont think its futures that trade now (till globex reopens in a few hours) but either contracts with dealers or banks.
tomorrow the fed will buy up all contracts and mark them to myth - problem solved
E99 will solve the gas problem - oh wait where's the price of corn?
hey bernak better add all the corn contracts to the shopping list
When did it trade 98 dollars. I have the April(J) contract from today
as 95.47
I saw it (WTI) at $97.56 at one moment on Bloomberg's commodities future page.
$97.50 straight from the ICE homepage...
https://www.theice.com/homepage.jhtml
"no one ever took a loss by taking a profit." the whole boondoggle is based on the idea worthless greenbacks. i say let's test that theory....
Waiting for the Barky "Cap & Trade" meme speech - NOT!
Time to sell some of the strategic reserve, assuming that isn't what they have been doing ever since we started seeing a divergence in the two markets.
Time to mortgage the farm and go all in I guess. Can't miss.
Banger,
Great Stuff. Keep it up.
Sounds like MG lost control of some of his oil. That's pretty big news.
I just heard they issued a Fatwah on Kaddafi. Where do you get those? I live out in the country and we're gonna have a garden and I'd like to protect it with all this craziness going on. Amazon didn't have any.
But oil isn't part of "core" CPI, so who cares how high it goes, right??
And when crude rose from $50 to $90 it wiped out 40% in annualized GDP? Oh please, stop it already.
except for the 'when fully processed through the economy', i thought the point being made was that today's oil price move wiped out 800 billion from the economy .. instantly.
although i easily recognize that the instantly part would be sensationalism .. it's hard for me to doubt it was the intended point.
At least the U.S. has had the foresight to develop solid alternative energy infrastructure. Yeah, right.
Deadhead, hope you got about a pound of weed and stockpile of munchies. You're going to need 'em.
the last time we had a spike was 2008 (goodbye Bush.) and 79-80 (goodbye Carter) and 73-74 (goodbye Nixon.) I'm sensing a pattern here.
This Libya thing will be turned into a rainbow of skittles in no time.
There is a saying in the desert : when the sand runs red the rivers will run dry.
Ive always heard it said a bit differently:
When the river runs red, take the dirt road.
Here in Canada there is a saying about not eating the big pink mint in the urinal.
Or.
Man going sideways in turnstile going to bangcock.
Or.
Man with head in Toliet will have a shitty view.
Or.
Man who fart in church sit in own pew.
Or.
Crowded elevator smell different to midget.
All wisdom...all the time folks!
Falak Pema will be here all night folks, be sure to tip your waitress.
"As a reminder, and people forget this all too readily, each dollar jump in crude wipes out $100 billion in US GDP."
So what, Ben will print that much in a week during QE3.
Tyler, man,
I love 99% of the stuff you post here but this one is complete BS. A $1 move in oil causes a $100 billion impact to GDP??? Not quite. Let's use some facts to illustrate the point. The U.S. consumes about 21 million barrels of oil per day or 7.665 billion barrels per year. Consequently, a $1/barrel move in oil prices would extract $7.6 billion out of the economy. About 2/3rds of that amount is sent overseas as the U.S. only produces about 7 million barrels a day domestically. If your statement were really true, then are you professing that U.S. GDP would be around $19-20 trillion if oil were $50/barrel? Hardly. It's the same reason you didn't see GDP drop dramatically when oil ran from $70 to nearly $150. It certainly a drain on GDP but not nearly to the extent you indicate. My rule of thumb is $150 billion is pulled out of the economy for every $20/bbl increase in oil (with $100 billion going overseas)
The real reason crude is going nuts right now is b/c the world is running at nearly full production capacity. Consensus estimates suggest OPEC spare productive capacity is around 4 million barrels per day. Oil approached $150/bbl when spare capacity reached about 2 million per day. Libya produces about 1.6 million barrels per day. A dislocation in their production would cause a significant impact on oil supplies and consequently price. Hence, the reason you are seeing oil prices go through the roof. Now, if the social unrest moves its way to Saudi...that would be interesting...
Hmmm. Oil now up $8 / barrel. There goes any effect QE1 and QE2 might have had on the economy. Finally time to go short the S&P.
This is about supply and demand? News to me....When global prodiction is a fraction of what is was even four years ago when China's ships were lined up outside US harbours by the dozen. I believe the figure was roughly 88 to 89 million barrels a day we were utilizing. Now it is about 83 million barrels. Makes sense to me that you would have a spike like this. Has anyone forgotten the precursors to the last mega crash we had? It was this peak oil BS, sky high precious metals and commodities that were escalating out of control on the open market through specualtion. Hey don't get me wrong through my own indicators I took the trade at 91.11 and will ride it out a bit. Price has moved about 16 dollars a barrel in about five trading days. Seems normal to me. Usually it takes months in a hot market to sustain a move like this, but hey this is completely normal to me. Anyone have any recollection of what happens to price when it goes parabolic like this? It is what happened in almost every other bull commodity market in the past. It crashes. Lets see if I am right over the next month or two. Time will tell.
Ides of March ... beware.
More like the 23rd
The WORLD uses about 85-86 million barrels a day - not the U.S. We use 20-21 mmbbl/d and import about 2/3rds that amount.
Your government tracks this data (not saying they are accurate but it's probably directionally right).
http://www.eia.doe.gov/dnav/pet/pet_cons_wpsup_k_w.htm
Not sure what you are referring to when you say production is a fraction of what it was four years. That's patently false. From the IEA February oil report:
"World oil supply rose 0.5 mb/d in January, to 88.5 mb/d, on higher OPEC crude and NGL output. Non-OPEC supply was unchanged from December at 53 mb/d, as outages continued to constrain production. 2010 estimates remain at 52.8 mb/d, while the 2011 outlook is nudged up 0.1 mb/d to 53.5 mb/d on higher North American output."
http://www.energybulletin.net/stories/2011-02-21/egypt-classic-case-rapid-net-export-decline-and-look-global-net-exports
Hmm, 100 Billion for every dollar per barrel? Does that mean the GDP goes to 0 when oil reaches 250 a barrel?
Thanks Aggiegolfer.....I do stand corrected with oil supply, I was talking about world supply as I am not from the US. Anyway that it is sliced up I find it very hard to believe from any statistics that we are consuming as much oil now as we were four years ago when you had building going on in every country, idustrial prodiction ramped up, the Baltic index surging versus falling through the basement floor like it has right now.... and gas guzzlers all over North America still coughing away. Perhaps what I am missing is the increase in demand from the emerging markets and the cars they are purchasing now? Other than that it makes no sense to me. I heard all this BS before around T Boone and the Boyz and where did it go?
MarcusAurelius,
Your intuition is correct. The developed markets have experienced flat to declining oil consumption over the past few years however the shortfall has been more than made up by the emerging markets. Increasing numbers of people in China, India, Brazil, etc are able to afford cars and other goods/services that require more energy intensity and hence - oil consumption.
It will be a continuing trend that the EM will price demand away from the DM for years to come.
Spring starts on Wednesday?