NYMEX

Russia has just taken significant steps that will break the present Wall Street oil price monopoly, at least for a huge part of the world oil market. The move is part of a longer-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, today the Achilles Heel of the Russian economy.

With the seasonally drawdown-prone December completed, we begin seasonally build-prone January with expectations for a 2mm barrel build. However, according to API, both total and Cushing inventory levels tumbled (-3.9mm and 300k respectively). Great news - so why is crude tumbling? Simple - massive builds in end-products again with Gasoline up a massive 7mm barrels and Distillates up 3.6mm barrels. Having ramped off sub-$30 levels aftwr NYMEX closed, and lifted by the Iran-US news, WTI is sliding back rapidly.

Happy New Year Californians - behold the power of monopoly and regulatory capture.

Santa Claus is cutting it close: after stocks closed down yesterday, and just fractionally red for the year, the jolly old gift-giver (who now has activist investors breathing down his neck) has just three trading days to push if not stocks then the market into the green for the year. And so far, so good, with US equity futures rising by 8 points or 0.4%, on the back of some modest renewed Dollar strength but mostly on oil, which after yesterday's big slide, has managed to stem the decline and is up fractionally, just under $37, along with other commodities if not copper, which falls for second day.

For those stuck watching algos frontrun today's market paint drying, here is the full calendar of today's early market closures.

Natural-gas fell to the lowest ever inflation-adjusted price in its history of NYMEX trading on Wednesday as extremely warm weather continues to limit demand. As we recently explained, the glut in nattie is worse than that facing the crude complex, and while the glut in oil is expected to continue for the next year or so before balancing in late 2016, the pain for liquefied natural gas (LNG) could be just beginning. As one trader warned "this market is in real trouble...just wait for the bankruptcies."

Following last week's huge draw, total crude inventories were expected to drop 1 million barrels this week driven by expectations that refinery utilization rose last week. When API reported a hugely surprising 2.3 million barrel build, crude prices, which had drifted off highs after NYMEX close, dropped further as disappointment set in, back under $37.

The latest confirmation that the oil cartel formerly known as OPEC is effectively non-existent, came a little over an hour ago when in its latest November monthly report, the Organization of Petroleum Exporting Countries reported that total monthly crude output for the member nations rose to 31.695 million barrels per day, the highest amount produced in three and a half years.

With prices below $50, what is a stripper to do?

Until pro-growth, low taxation and less regulation policy changes are enacted, we don’t foresee any changes to central bank policy nor the unsustainable market divergences and asset price distortions. Expect more media propaganda on how great the economy is while the reality is another story. Early signs are that retail sales this holiday season are poor. Nobody can predict when reality will set in and equity markets revert back to pre QE levels in 2008/09. The longer this charade continues, the lower equity markets will eventually go, and in the short-term so will commodities. Then the super cycle in commodities will begin anew. Much this will hinge on next fall’s election cycle.

The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices — which few experts foresee in the near future — an over-leveraged, under-hedged US E&P industry faces a truly grim 2016.  "I could see a wave of defaults and bankruptcies on the scale of the telecoms, which triggered the 2001 recession."

While US floor markets are closed for the Thanksgiving holiday (equity, rates and energy futures are open until 1pm Eastern), Europe and Asia (as well as US equity futures) were busy rebounding overnight on strength in the commodity complex following yesterday's news that China's metals producers have asked for a wholesale government bailout or the "QEmmodity" as we have dubbed it, for the first time since 2009, which together with news that China would soon start arresting "malicious metal sellers" has provided a push for commodity prices across the board.

Fed Speak became hawkish to telegraph to financial markets that the December meeting was a potential live meeting for a rate rise.