A mixed bag of crude draw and gasoline builds from API combined with IEA comments on rising US Shale output offset by Saudi jawboning about more production cuts possible has pushedoil green before today's DOE data. However, oil prices tumbled when DOE printed an unexpected 2.347mm barrel crude build (1mm draw expected) and another major build in gasoline inventories. US crude production remains at 9-month highs.
During the last 20 years of the Soviet Union, everyone knew the system wasn’t working, but as no one could imagine any alternative, politicians and citizens were resigned to pretending that it was. Eventually this pretending was accepted as normal and the fake reality thus created was accepted as real, an effect which Yurchak termed “hypernormalisation.” Looking at events over the past few years, one wonders if our own society is experiencing the same phenomenon.
"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."
Gold is suffering the worst 6-week tumble since May 2013 and the last 24 hours have seen the losses accelerate as following The Fed's second rate hike in a decade, someone dumped over $10 billion notional of the precious metal through the futures market. As the dollar surges to 14 year highs (and EUR tumbles) so silver also is plunging most since the election near a $15 handle once again.
That so few investors know about this enormous market, its importance, and relevance is frankly pretty shocking. Understanding it goes a long way to understanding why, despite the greatest monetary intervention we’ve ever seen by central banks, we’ve remained in a contractionary environment.
OPEC has once again succeeded in jaw-boning the oil market, and Goldman Sachs hiked its oil price forecast this week by a substantial amount, but the optimism has not trickled over into the oil futures market, at least not yet as the contango'd curve still does not look very good.
Global bond yields and the dollar both weakened after the Bank of Japan offered to buy an unlimited amount of debt at fixed yields, stabilizing the global bond rout, while investors awaited testimony from Fed Chair Janet Yellen that will help shape the outlook for interest rates ahead of a December rate hike that is now seen as near certain.
Fool me once, shame on you; Fool me twice, I must be a Chinese commodity speculator. In a disastrous case of deja vu all over again, commodities from copper to iron ore and from rebar to coking coal have exploded higher in the past few weeks... just like they did in April/May of this year. And, as Reuters reports, just like we saw in May, the spike in volume relative to open interest has prompted exchanges to crackdown on the rampant speculation, increasing transaction fees and margins fuelling a "panic among investors," as they rush to sell.
For 90 min, the panicky speculator herd stampeded. Then market makers reasserted control. No, not over price--of spread! They did not manipulate the price of gold upwards. They decarried gold, that is, sold spot and bought futures.