The Two Most Important Charts For The Near-Term Future Of Oil Prices

Tyler Durden's picture

With nobody having any clue how the MENA situation will play out (and those who tell you otherwise can be immediately dismissed as full of feces to be ridiculed in perpetuity by everyone but CNBC where they will have a guaranteed contributor slot), and as crude has promptly become the most volatile asset class (as Zero Hedge predicted last summer when we lamented the death of equities) recently experiencing an unprecedented 7 Sigma move which likely led to the liquidation of at least one asset manager, there are two main charts which matter for the oil. On one hand, the Crude Oil non-commercial net specs are at an all time high: well over 100% more than during the oil time highs in crude in 2008. This means that speculators are anticipating an even more powerful move higher than that seen in the summer of 2008 when Crude hit $150 (it also presents the possibility of an unprecedented plunge in oil should the speculative thesis not be realized). Just as important, the performance of energy as a subsegment of all commodities is currently materially underperforming all other commodities, with Previous, Agircultural and Industrial commodity classes all doing far better than crude and its peers. Should there be a rotation out of other commodities into the energy complex, look for crude to surge far beyond $125 in the next few weeks. All it would take is one Saudi geopolitical spark.

Total WTI non-commercial net spec contracts and Crude Light pricing:

Total commodity returns by class:

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DoChenRollingBearing's picture

A really BAD regime change in Saudi Arabia would send crude way higher than $125.

It might be the game changer, what with all the other financial problems (debt, deficits, wholesale theft, etc.) still out there.

But, these are possible swans we can SEE.  What about the ones we cannot?

Prepare...

Hulk's picture

A bad regime change in SA is the only black swan I need to see! All other black swans will be derivative products...

IQ 145's picture

 $4.19 / gallon for regular today at the local pump in Hawaii. Ugh.

tmosley's picture

Gas there is always more expensive, just like everything else that isn't sourced locally.

Flakmeister's picture

TM, my reply is awaiting you...

tmosley's picture

Do me a favor and link to it.  I don't like digging through old stories.

Fahrenheit451's picture

At least you're in Hawaii.

hero HNL's picture

I live in Manoa....Paying $4+ for gas is still 

sheap....In Japan right now, it's $6 and it's

supposed to be deflation over here.

 

 

hero

Newsboy's picture

At Costco, or somewhere else?

Plainview's picture

I'm not convinced the Crude pump isn't just a scam; Cushing is stuffed full of the stuff every month whether its $40 a barrel or $120 a barrel. Another spec bubble to shake ones head at.

EscapeKey's picture

It would take a lot less than the 8mbpd output of SA to spike prices beyond $125.

Iran's 3.5mbpd would definitely do it. Algeria's 1.4mbpd, quite possibly.

theXman's picture

A really BAD regime change in Saudi Arabia would send crude way higher than $200. It will happen, just not this year.

Sudden Debt's picture

NO REGIME, will be a lot worse. With who are you going to trade oil then?

 

AND THAT'S THE MOST LIKELY ONE.

TeamAmerica's picture

I agree - most likely near-term outcome.  Saudi Arabia then becomes a self-service pump.

A liberal application of neutron bombs and then send in Halliburton.   No worries.

disabledvet's picture

you forgot the gay gorilla.

malikai's picture

 

A liberal application of neutron bombs and then send in Halliburton.   No worries.

Already thought this one through. It wouldn't work. All of the oil itself as well as the equipment near the detonation point would be neutron activated and radioactive. Think tritium from the hydrogen in the oil and carbon-14 from the carbon itself. There would be a bonus amount of deuterium created, however. The oil would only be good for the Eastern European and African markets. Maybe China would take it, but then it would be sold back to the west as plastic rice.

Triggernometry's picture

Good to see someone else has a clue of nuclear physics.

cunningtrader's picture

No-one, including TD, when rabbiting on about saudia arabia blah blah, talks about the REAL issue of supply which is?.... Ferris?...Bueller?....anyone? ...REFINERIES...OR RATHER THE LACK THEREOF... Who here knows, without cheating, hand on heart, when the last refinery was built in the US?.......that's right, 1976..........wanna know why? Because big oil colluded with the likes of the sierra club in the mid-nineties, to spread the message far and wide, that building refineries will fuck the human race..... translated, what they were really saying was, let's fuck the human race's hip pocket over with bullshit about refinery's environmental impacts, and watch the rivers of greenbacks flow baby.....

 

Flakmeister's picture

  Ok, you are back, chew on this

In the 19th century, refineries in the U.S. processed crude oil primarily to recover the kerosene. There was no market for the more volatile fraction, including gasoline, which was considered waste and was often dumped directly into the nearest river. The invention of the automobile shifted the demand to gasoline and diesel, which remain the primary refined products today. Today, national and state legislation requires refineries to meet stringent air and water cleanliness standards. In fact, oil companies in the U.S. perceive obtaining a permit to build a modern refinery to be so difficult and costly that no new refineries have been built (though many have been expanded) in the U.S. since 1976. More than half the refineries that existed in 1981 are now closed due to low utilization rates and accelerating mergers.[18] As a result of these closures total US refinery capacity fell between 1981 to 1995, though the operating capacity stayed fairly constant in that time period at around 15,000,000 barrels per day (2,400,000 m3/d).[19] Increases in facility size and improvements in efficiencies have offset much of the lost physical capacity of the industry. In 1982 (the earliest data provided), the United States operate 301 refineries with a combined capacity of 17.9 million barrels of crude oil each calendar day. In 2010, there were 149 operable U.S. refineries with a combined capacity of 17.6 million barrels per calendar day.[20]

In 2009 through 2010, as revenue streams in the oil business dried up and profitability of oil refineries fell due to lower demand for product and high reserves of supply preceding the economic recession, oil companies began to close or sell refineries. Due to EPA regulations, the costs associated with closing a refinery are very high, meaning that many former refineries are re-purposed.[21]

 

As you can see, US refining capacity is the about the same. Get your spin straight

cunningtrader's picture

You poor dumb c#nt, you've just supported my post.

Caerful, or you won't get paid for posting if you keep doing that lol! That, was my point  BOT,

 REFINING CAPACITY IS NOT ALLOWED TO INCREASE, BUT PRICES ARE.  You also quote demand dropped, are there BOTS in wonderland as well? This is exactly the Debeers model, constrict supply and the price will jump.

Flakmeister's picture

If you removed your head from your ass and actually researched the history of refiners you might learn something. Why build extra capacity with a huge price tag that has to amortized over many years when you don't need it. 

Why don't you look at the correlation between US crude production, refining capacity and refined product demand?

I certainly hope you know more about trading than you do about anything else you have discussed here...

cunningtrader's picture

Ahh....classic BOT BS....."when you don't need it"........fuck me your bosses are not getting their money's worth, see, us sheeple, the ones you get paid to misinform, understand how the law of supply and demand governs prices, but in your world, where BS is the norm, you trot disinformation readily, without  realizing that the sheeple have become aware of what you're paid  to do. Your're a fuckin joke. See google about how much oil gets stored in tankers globally....I fully expect your next post will "disinform" on this most interesting fact, and how you BOTS will continue to tell us sheeple, that even though demand is dropping, the price must go up.....

 

malikai's picture

Don't be sucked in. Let the trollbot have his fox news soundbite minute. It is all he/she/it gets to do.

Flakmeister's picture

BTW, anyone who really wants to learn about refining

http://www.theoildrum.com/node/7550

Follow the comments by Carnot... He only analyzes refineries as part of his job. You know, a professional. You will learn more about oil and refining in the 10 minutes it takes to read the commentary of a real expert than you will in 10 years at the Hedge listening to clowns like CT.

Spalding_Smailes's picture

Thanks for the link.

Tmosley is not the sharpest knife in the drawer either. Your right, he should stick with gold rants and the Ron Paul forums. He's been getting blasted on ZH lately ... Good work.

tmosley's picture

Blather blather goes the delivery boy.

Spalding_Smailes's picture

One thing from Carnot post 

 

As for windmills and solar. Sure, but we cannot store electricity and how are we going to build and maintain this infrastructure.

 

This is the reason Buffett bought into BYD in China. Battery storage on a massive scale for wind • solar power.  His potential successor David Sokol • MidAmerican energy is already heading up research using the battery technology with wind and solar power storage. BYD is a leader in battery power, and you can drink the liquid from the batteries. Interest stuff ..

Flakmeister's picture

 Its still active, the thread I linked, dont be shy ask questions, educate yourself...

Gotta run.. making pork tenderloins with a cranberry port reduction, to be served with a 93 Clos St. Denis...

Back later...

samsara's picture

FM

You can lead a man to wisdom, but you can't make him think.

Flakmeister's picture

True, but if you refrain from at least pointing to the path, you are as guilty as the fool.

cunningtrader's picture

Yeeeesss BOT, keep trotting out your paid shill BS........why don't you do something for the readers here, try trolling the exploration-production companies out there, who actually cap wells with 70 metre oil columns they found lol... Here you go, try WPL down in australia for starters..

what a shame bullshitting BOTS can't be publicly outed and feathered and tarred in a public square......

Flakmeister's picture

  Did you actually practice being an asshole? Looks to me like you have made it a life long ambition and goal...

 

Flakmeister's picture

Since you seem to be fascinated by cunts, you don't you get somebody to slip one over your head and fuck some sense into you....

jeff montanye's picture

wait... does that mean he's a dickhead?

cunningtrader's picture

Ha Ha oh dear, the BOT has gone and spat his dummy, what's the matter, did HQ belt you on the back of the head and mention food stamps for failing to do your job lol?   

gorillaonyourback's picture

you need someone on the ground in saudi arabia to give you accurate info.  cuz i could see them forcing crude oil back down to 80/brl,  if the saudis can maintain order.  if they loose saudis and supply disruption the 150-200/brl

bool2's picture

With proper planning, perhaps that number of troops will be able to contain the spark?

jeff montanye's picture

yes, as the bush administration demonstrated (and the obama administration demonstrates) it's the proper planning that's the bitch.

High Plains Drifter's picture

The Arabian peninsula gave the world the Prophet and the Arab Revolt against the Ottomans and the Taliban and 9/11 and – let us speak the truth – al-Qa'ida. This week's protests in the kingdom will therefore affect us all – but none more so than the supposedly conservative and definitely hypocritical pseudo-state, run by a company without shareholders called the House of Saud.<<<

The Taliban had nothing to do with 911. Good grief....Nor did the Arabs have anything to do with Al Qaeda.

Why does he insist on parroting the same old tired stupid rubbish, served up to us by the MSM? He is well read, or so he says. Yet sometimes he makes the most remarkably ignorant statements.

Snidley Whipsnae's picture

Osama Bin Laden is the son of one of the biggest and richest contractors in Saudi Arabia. Osama spent very large sums of money to build training facilities and recruitment of Muslims that would rid Saudi Arabia of infidels... meaning specifically US Military bases. Osama Bin Laden is credited with making the Al Qaeda bombing of Khobar Towers Military Barraks in SA possible.

"William Perry, who was the United States Secretary of Defense at the time that this bombing happened, said in an interview in June 2007 that "he now believes al-Qaida rather than Iran was behind a 1996 truck bombing at an American military base."[18]

In addition to Secretary Perry, Saudi Prince Nayef, head of the Ministry of Interior and the lead investigating agency, has absolved Iran of involvement in the attack.[19][20][21][22]

On June 25, 2009, Gareth Porter published an article on the website Antiwar.com stating that blaming Iran for the Khobar Towers bombing was a false leak released by U.S. officials and Saudi diplomats as sourced by the Washington Post article on April 14, 1997. This gesture as reported by Mr. Porter was a face saving gesture to the Saudi Arabian government for their complicity in allowing Osama Bin Laden to target U.S. military targets by using charities based in Saudi Arabia for funding purposes as long as Bin Laden did not target the government of Saudi Arabia."

http://en.wikipedia.org/wiki/Khobar_Towers_bombing

In addition...Most of the aircraft hijackers on 911 were Saudis... if we can believe any of the investigative reporting or official conclusions drawn by after the fact determination.

I cannot see that Jesse is making any 'ignorant statements' in his blog post. The Taliban were the brain child of the Pakistani ISI. Al Qaeda are/were recruited from the ranks of the Taliban among many other sources from many other countries. Osama Bin Laden used funds from Islamic Charities, some located in SA, to fund the recruitment and construction of Al Qaeda training camps all over the Middle East as well as in Northern Africa.

I see no contradiction in Jesse's Blog with this statement by you... "The Taliban had nothing to do with 911. Good grief....Nor did the Arabs have anything to do with Al Qaeda."... Perhaps you should re-read Jesse's Blog prior to calling him ignorant?

 

Yardfarmer's picture

I think he's talking about Robert Fisk.

jeff montanye's picture

jesse quoted seemingly approvingly so is it a distinction without a difference?

Yardfarmer's picture

HPD, thanks for the ever welcome contrarian perspective. David Lee Griffin proved rather convincingly that Osama Bin Laden (alias Tim Osman) died shortly after the 911 false flag terror and the following BBC documentary goes to great lengths to dispel the myth of Al Qa'ida as well.

http://kushmonster.blogspot.com/2010/10/al-queda-never-existed.html

oklaboy's picture

mucho gracias, great link