Economic principles explain why the Saudis began, in late 2014, to pump crude as fast as they could – or close to as fast as possible. In fact, there is a good reason why the Saudi princes are panicked and pumping.
The monetary policy beatings will continue until morale improves. Eight long years after monetary policy experimentation went extreme, Reuters reportsthe amount of QE stimulus being pumped into the world financial system has never been higher... and it's about to get bigger.
The financial and economic world in 2016 is, more than anything, a confidence game (pun intended). The year started with confidence severely shaken, so gasoline (as one real economic variable) and hiding intervention (the further hint of desperation) are more likely to have lasting negative effects than effusive but unbacked mainstream praise for the nth year in a row.
In the latest European assault to take place just over the past hour, two knifemen raided the Church of the Gambetta in the northern French town of Saint-Etienne-du-Rouvray, taking between 4 and 6 hostages and allegedly killing a priest before being killed by police. According to subsequent unconfirmed reports the priest had been beheaded.
Democrats were delighted to watch as last week's scandal-plagued Republican National Convention lurched from one fiasco to another until.... the Democratic National Convention appeared to crash and burn in a disoragnized launch among angry supporters, blistering temperatures, sheer chaos, and a fractured organization that has left Republicans stunned in amazement at a Democratic party seemingly torn in two.
Refiners are shifting to yet another desperate attempt to delay the inevitable market equilibrium point by switching from summer to winter blend as demand for the former has disappointed. The problem is that by doing so early, stocks of winter blend will fill that much sooner, and absent some miraculous surge in demand in the winter months, the moment when the price of oil tumbles has merely been postponed for a few months while assuring that the drop - when it comes - will be much more acute.
Facing an already rambunctious crowd - chanting 'Bernie' at every mention of Clinton - The DNC has been forced to issue a formal apology to Bernie Sanders (and presumably his supporters).... "the inexcusable remarks... do not reflect the value of the DNC or our steadfast commitment to neutrality during the nominating process."
WTI Crude (Sept) oil futures have contonued their 6-day slide this mornig, pressing back to a $43 handle at 3-month lows. While the seasonality, both price and oil demand, and gasoline glut remain significant overhangs, it appears a bigger driver for now is the rapid unwind of record long speculative positioning in crude markets.
Gold is in a bull market for a number of reasons including political risk and there is "every reason for it to continue" according to Dominic Frisby writing in the UK's best selling financial publication Money Week.
There has been little notable market moves overnight, with the record rally in the S&P500 set to continue and European stocks climbing as German IFO business confidence proved more resilient than economists predicted in the month after Britain voted to leave the European Union, falling less than expected from 108.7 to 108.3, above the 107.5 consensus, with expectations printing at 102.2 above the 101.2 expected. Bonds fell with gold as the dollar gained before central bank meetings in the U.S. and Japan this week.