Crude

WTI Crude Crashes Back Below $30

What goes up (on short-squeeze-driven hope and rumors), must come down (on supply, demand reality and denials)...

Frontrunning: February 2

  • Punxsutawney Phil Does Not see shadow, signifying an early spring (CBS)
  • Front-Runners Give Ground as Rivals Make Mark in Iowa (WSJ)
  • Republican Cruz bests Trump in Iowa race, Clinton edges out Sanders (Reuters)
  • Iowa Narrows the Field (BBG)
  • Global stocks snap winning streak as oil pressure returns (Reuters)
  • ‘Dark Pool’ Settlements Bring Tangled Relationships to Light (WSJ)

Groundhog Day Trading: Stocks Slide As Oil Plunge Returns; BP Suffers Biggest Loss On Record

It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in the world by market cap.

"Prospects For Social Disintegration Are Huge" As Wave Of Oil Refugees Looms

Today’s plunging oil prices will benefit a few. Motorists, once again, will be happy; but the pain will be earth-shaking for many others. Never mind the inevitable turmoil in global financial markets or the collapse of shale-oil production in the United States and what it implies for energy independence. The real risk lies in countries that are heavily dependent on oil. As in the old Soviet Union, the prospects for social disintegration are huge. Europe is already struggling to accommodate refugees from the Middle East and Africa, imagine what would happen if they imploded and their disenfranchised, angry, and impoverished residents all started moving north.

Crude Sinks To Day Lows After Goldman Explains Why No Oil Production Cuts Are Coming

"Despite the sharp bounce in oil prices that these headlines generated, we do not expect such a cut will occur unless global growth weakens sharply from current levels, which is not our economists' forecast. This view is anchored by our belief that such a cut would be self-defeating given the short-cycle of shale production and the only nascent non-OPEC supply response to OPEC's November 2014 decision to maximize long-term revenues."

Rally Hobbled As Ugly China Reality Replaces Japan NIRP Euphoria; Oil Rebound Fizzles

It didn't take much to fizzle Friday's Japan NIRP-driven euphoria, when first ugly Chinese manufacturing (and service) PMI data reminded the world just what the bull in the China shop is leading to a 1.8% Shanghai drop on the first day of February. Then it was about oil once more when Goldman itself said not to expect any crude production cuts in the near future. Finally throw in some very cautious words by the sellside what Japan's act of NIRP desperation means, and it becomes clear why stocks on both sides of the pond are down, why crude is not far behind, and why gold continues to rise.

America's #1 Import: Deflation

It seems that everyone these days is exporting deflation to the US. American consumers will be delighted with everyone sending cheaper goods their way. However, what this may do to their income and employment prospects is a whole different matter.

Global Trade Collapsed In January: Bellwether South Korea Exports Crash "Most Since Lehman"

As the first major exporting nation to report each month, all eyes and hopeful speculative capital was glued to tonight's South Korean trade data. After a brief respite in November, December's drop was worrisome, but January's just reported 18.5% crash - the most since the financial crisis - has only been seen during a US economic recession. Worse still, South Korean imports plunged over 20% in January as it appears crashing crude and cliff-diving freight indices are less about supply and more about demand (there is none) after all.

"Time To Panic"? Nigeria Begs World Bank For Massive Loan As Dollar Reserves Dry Up

Having urged "don't panic" just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all.

The Last (Policy-Induced) Gasp Of Speculative Excess

Markets these days have every reason to question the efficacy of global monetary management. Last week saw dovish crisis management vociferation from the ECB’s Draghi. Now the BOJ adopts a crisis management stance. The week also had talk of some deal to reduce global crude supply. Meanwhile, the PBOC injected a weekly record $105 billion of new liquidity. Nonetheless, the Shanghai Composite sank 6.1% to a 13-month low. There was desperation in the air – along with a heck of a short squeeze and general market mayhem.