Crude

If you think you're fighting the market, or the banks, or the Fed, you're dead wrong!

Just 2 hours after news broke of Saudi officials discussing the need to do "whatever it takes" to stabilize the oil market - sending crude soaring - half the gains are gone. With the algos tagging Friday's highs, WTI Crude has tumbled back into the red from Friday's close as traders want action not words to solve the massive global oil glut...

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The oil producers are rapidly learning from the central banks how to jawbone markets higher. With both Brent and WTI sliding as recently as ten minutes ago, suddenly a buying frenzy was unleashed following a Bloomberg headline which cited the Saudi Press Agency, according to which the world's largest crude exporter was ready to pull a Draghi and would do "whatever it takes" for a stable oil market, and that it would cooperate with OPEC and non-OPEC members for stable prices.

As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.

A big catalyst for the ongoing collapse in the Bloomberg commodity index which just hit a fresh 16 year low, is the relentless surge in the dollar, with the DXY rising as high as 99.98 the highest since April, as a result of rising prospects for a December U.S. rake hike (odds are now at 70%, up from 36% a month ago) boosting currency differentials and flows into the USD, making commodities more expensive for buyers in other currencies.

According to current and former officials who spoke on the condition of anonymity, US Central Command may have been involved in a year long effort to obscure the fact that America’s strategy to combat ISIS simply was not effective. "At the least, the prospect that senior officials intentionally skewed intelligence conclusions has raised questions about how much Mr. Obama, Congress and the public can believe the military’s assessments."  

There are so many strands of lies and distortions that it is now almost impossible for Official Washington to disentangle itself from all the false narratives that the neocons and the liberal hawks have spun in support of their various “regime change” strategies. So, the American people are left with the mainstream U.S. news media endlessly repeating storylines that are either completely false or highly exaggerated. Official Washington’s many false narratives about Russia and Syria have gotten so tangled that they have become a danger to the struggle against jihadist terrorism and conceivably a threat to the future of the planet.

"Can the government maintain this strategy of flooding the oil market? In our view, it is unlikely that Saudi leaders would want to exacerbate its ongoing reserve drain by pushing prices below $40/bbl. After all, pressure will quickly build on the riyal’s 30 year peg to the USD if Brent crude oil prices keep falling."

Between contract roll liquidity and a renewed tumble in the US Oil Rig Count, WTI Crude (Jan 16) has surged above $42.50 (Dec 15 to $41). After last week's very modest rise, the streak of rig count declines continues (11th week of last 12) with a 10 rig drop to 564 - the lowest since June 2010.

It appears European and US oil & gas stock investors (and Dow Transports lovers) believe they know better than commodity traders when it comes to some kind of future reality in which miracles of growth can happen. The disconnect between European oil & gas stocks, US energy stocks, and Trannies relative to crude oil has never been bigger...

"It is time to sell crude oil once again, and the risks are small while the potention seems large. Let’s sell a bit of both WTI and Brent crude, sufficient to be one unit in aggregate with nearby January WTI trading at or near to $41.85 and nearby Brent trading at or very near to $44.23."

European Union countries are preparing to crackdown on virtual currencies such as bitcoin, and anonymous payments made online and via pre-paid cards "in a bid to tackle terrorism financing after the Paris attacks, acording to a draft document."

Futures are modestly higher in early trading having tracked the USDJPY once again almost tick for tick, with the carry trade of choice rising to 123 shortly after Mario Draghi's latest speech pushed the dollar strong initially only to see most gains promptly evaporate against both the Yen and the Euro. European shares are likewise little changed, after gaining earlier, while Asian stocks rise; oil also advanced in early trading only to drop to its lowest overnight level moments ago, a few dimes over $40, with aluminum and copper both posting modest increases.

We wonder how long until someone finally asks the all important question regarding the Islamic State: who is the commodity trader breaching every known law of funding terrorism when buying ISIS crude, almost certainly with the tacit approval by various "western alliance" governments, and why is it that these governments have allowed said middleman to continue funding ISIS for as long as it has?