Crude

Europe Falls, U.S. Futures Rise As Oil Halts Two-Day Plunge

While the biggest news of the night had nothing to do with either oil or China, all that mattered to US equity futures trading also was oil and China, and since WTI managed to rebound modestly from their biggest 2-day drop in years, rising back over $30, and with China falling only 0.4% overnight after the National Team made a rare, for 2016, appearance and pushed stocks to close at the day's high, US E-minis were able to rebound from overnight lows in the mid-1880s, and levitate above 1900. Whether they sustain this level remains to be seen.

Crude Chaotic After API Reports Bigger Than Expected Inventory Build

Against expectations of a 3.75mm expectation (and following last week's massive build), API reports that crude inventories saw a very slightly bigger than expected 3.8mm build. WTI crude had plunged into the data and went entirely chaotic as it hit (swining in a 50c range) before settling lower. The biggest reason for the adverse reaction is not so much the headline build as the jump in gasoline again: gasoline inventories surged 6.6MM in the past week, after dropping in the previous week, on expectations of a far smaller 1.7MM gasoline build, once again hinting that the problem is as much demand as it is supply.

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.