Is the U.S. really the primary target?
Where did the fake orders for 191,000,000 barrels of oil (1,000 per contract) go?
Following last week's dramatic 31 rig decline, Baker-Hughes reports another major decline of 28 oil rigs (dropping the total oil rigs to 439 - lowest since Jan 2010 - for the 8th consecutive week). The total rig count dropped 30. On the heels of OPEC rumors overnight and then re-rumored bullshit from Venezuela, oil prices had already surged during the day and the biggest 2-week rig count decline in 10 months after initially being sold, is rallying once again.
A week ago we exposed the real reason for the "crazy volatility" in crude oil markets, and specifically the driver of the immense rally (despite weak data) in crude - a massive liquidation of the triple-inverse ETF DWTI. Today we have another mysterious, even larger spike in crude oil prices (for no good reason other than 'old' misunderstood rumors about OPEC production cuts). The driver, it would appear, is another liquidation as the ETF trades at a huge discount to NAV. The last time this happened, it didn't last.
Another day, another OPEC Production Cut rumor, and another massive swing in WTI Crude oil prices (+11.5% - biggest since Feb 09). But having run stops to these levels, we wonder what happens next?
Following a week of crazy volatility, overnight exhausted markets took a breather.
Short-term, oil prices are a function of sentiment and manipulation. Here's how that works.
In his latest communication with the outside world, Gundlach said that gold prices are likely to reach $1400 an ounce "as investors lose faith in central banks", Reuters reported. "The evidence that negative rates are harmful and not helpful has piled up to the point that the 'In Central Banks We Trust' mantra has finally been laid bare as a hoax,"
"Look, the OPEC thing may turn out to be bogus. Lord knows we’ve heard that line too many times to count, and oil’s at $26/barrel."
Seconds after Oil hit the lows and NYMEX closed - and S&P broke the critical 1812 level, this hit:
*OPEC READY TO COOPERATE ON CUT, UAE ENERGY MIN SAYS: WSJ
So, first it was Venezuela speaking for the Saudis, then it was Russia speaking for the Saudis, now it is the UAE.
An OPEC production cut is unlikely until U.S. production declines by about another million barrels per day (mmbpd). OPEC won’t cut because it would accomplish nothing beyond a short-term increase in price. Carefully placed comments by OPEC and Russian oil ministers about the possibility of production cuts achieve almost the same price increase as an actual cut. The focus going forward must be on the source of the problem. That is the United States and not OPEC.
Because so much is riding on what so few decide,once the faith in the Central Banks fail, the chances of us getting out of this diminish every second...
"We are very bearish for the first half of the year. In the second half, every tank and swimming pool in the world is going to fill."
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