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Meanwhile, In Crude Oil...
Just as gas prices at the pump are about to rise to their highest ever for this time of the year - and further crush an already hurting consumer's disposable income - someone has decided that enough is enough and $95/bbl WTI is just too much. Crude prices just plunged on very heavy volume - just think of the implicit tax cut we will hear of course. We note three small things: 1) how does this fit the growth story that is supposedly driving bond yields higher? and 2) there is a 4-6 week lag between WTI and retail prices so do not expect this drop to ease any pressure in the short-term), and 3) we wonder if this shift is a 'tap on the shoulder' for yet another correlation-driven trade gone wrong.
Charts: Bloomberg
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WTI started to bounce back as soon as this article was posted. LOL.
WTI vigilantes -vs- Kev' Henry keep-WTI-low team.
Gotta love free markets. lmao.
Gonna flow through to lower gasoline prices,
My Ass
I suspect it's all part of the bond market 'issue'.
http://blog.quantsig.net/2013/05/29/bonds/
I have 5 bikes set up for commuting, and recently bought a 6th bike.
Bring on the high gas prices.................
Yeah....look how all that oil in the Bakken Shale Play in the Dakotas is bringing down the price of their gas.....LOL!!!!
http://gasbuddy.com/gb_gastemperaturemap.aspx
That bottom chart needs to go back to '07.
The last time gas was 3.25+ WTI was approaching 125.00$ (3.25 where im at, yours might have been 5.00+) with still moderately heavy demand.
Now you have 3.35 gas where im at, with WTI at 95.00 with absolutely zero demand. (Oh, it's the "rest" of the world that is "growing", that's why.)
Nope, that ain't why, because it's pretty obvious the "rest of the world" isn't driving that much either, (unless they are delivering a "package".)
There's a dime for the state for every gallon you put in.
Hey, i bet if they just kept gas prices high, they could just skim off .75 cents, and nobody would be the wiser!!
Oh, shit...
You're measuring the wrong parameter. The US energy independence story is bullshit. We still import a HUGE amount of crude every single day.
Every drop of it is priced Brent, or Bonny Light, or Tapis, or Urals or one of the 6 or so other non WTI blends that are the true price of oil, and all of those are $10 or $20 more per barrel than WTI.
WTI is largely meaningless. Old Normal parameter. Even the thin liquid coming out of the Texas shales isn't WTI. It's sort of not even crude. It's condensate. They call it oil for the hype, but it doesn't have the same BTUs per barrel that proper crude has.
WTI is most definitely meaningful.
WTI is the price quoted on the TV.
Yes, it is meaningful, for the small minority of refiners that have access to Cushing... It is for all intents and purposes it is simply a measure of the price of land-locked North American oil, merely a regional aberration....
As for WTI being the TV oil benchmark, traditions rarely change, even when they become obviously dated...
I find it suprising that the Seaway reversal/expansion hasn't done much to the spread. That's almost 500Kbbl/day.
All I know is if I were in office and wanted to mask inflation, I'd love to see a lower price on TV for the masses, regardless of what they know they pay for gasoline.
Whaddyamean? Reversing the Seaway has contributed to cutting the spread in 1/2...
As for TV/Radio, Brent is the name of some Fox News guy and that about sums it up...
Since WTI by spec should be at a premium against Brent, why not? Maybe the answer is just that there's too much even with Seaway pullling 500k.
Anyway, I'm sure it's a good year for Enbridge and Enterprise.
It was at a premium until the market realized that WTI is real hard to load on a tanker and ship it to where you want...
Well, duh, there is too much for the local infrastructure (outgoing pipelines and refinining capacity suited to the API and sulphur conternt) to handle, a small glut that is otherwise a pimple on the ass of the world oil market....
Flows into Cushing represent ~2-3% of the world market....
WTI is most definitely meaningful.
WTI is the price quoted on the TV.
I up-voted you because of the obvious sarcasm. Brent is the truer price.
http://www.oil-price.net/
He wasn't being sarcastic...
Damn.....look what you made me go do.....I had to down vote him now.
We still import a HUGE amount of crude every single day.
Right, and we EXPORT a MASSIVE amount of gasoline and diesel every single day...
Part of that is completely rigged.
Canada has zero need to import gas from the USA, we have our own oil & can produce our own gas.
however, due to criminal collusion, we do not refine the gas, we ship it to the USA and import back the finished gasoline.
Which is nuts.
Getting Alberta/Sask crude oil to the East coast refiners was *always* a tough task. Until this ugly WTI-Brent spread arose it was perfectly natural to have the hydrocarbons flowing as they were. But now Canada is getting hosed....
You don't understand the process.
For example, Venezuela does not have refineries that can deal with its thickness of oil. Those on the Gulf Coast of the US do.
So that crude is sent to the US, refined, and the gasoline and diesel goes back to Ven. Presto, goosed export numbers. We didn't export gasoline from US produced crude. We exported it from Venezuela crude.
Ditto the Canada situation from above. NAFTA has a clause that arranges for us to refine oil and ship gasoline to Canada. The oil refined didn't have to be US out-fo-the-ground crude. It could be from Nigeria.
Now, some of the imports in question thus go elsewhere and are not consumed in the US, but much more is. The whole energy independence meme is bullshit.
Playing contractor on the roads again and fuel is just making it impossible to really make any money. I think it has to come down or consumption just keeps falling.
crude falling, usd falling. makes sense.
This could get interesting http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=logarithmic&chdeh=1&chfdeh=0&chdet=1369857600000&chddm=774&chls=IntervalBasedLine&cmpto=NYSEARCA:USO&cmptdms=0&q=NYSEARCA:SPY&&fct=big&ei=4CKmUeDLBsW80AHeeA
Yeah! I'm high on the real thing: a clean windshield and a full tank of cheap gas.
Apologies to Firesign Theatre.
and have a nice sugar cube
Whoa, Tantrick, easy there ...
Still waiting on the electrician ?
You're dating us... :)
4) don't expect the dip to last long. Volatility, anyone?
Yes, manipulation.
Agreed! Stop hunting manipulation!
We I sell, I sell in volume to guarantee the lowest possible price!
someone has a sizeable (unlimited?) offer in the front month 87 puts.
Wake us when its back to $35 per barrel. Not. going. to. happen.
drop motherfucker
and XOM is teetering on a shorter term uptrend line that's held the last 2 months or so. If the energy space gets dumped everything else is going to break with it.
OT but with costs of everything going up, is this the future? http://www.independent.co.uk/life-style/food-and-drink/news/coming-to-your-local-supermarket-soon-chicken--la-maggots-8635208.html?origin=internalSearch
Start producing your own food now. Ignore the law written by the multi-national corrupt corporations that the CON men passed.
Gold's hanging in there today. Perhaps there's a bottoming process going on. Probably still a couple of years until we see the great rotation out of stocks, trasheries, and bernanke-bucks into precious metals in what will be the greatest panic bubble ever.
4-6 week lag? Get serious. When WTI goes up, it shows up at the pump in 3-5 days. When it goes down, it shows up in 5-7 days. 4-6 weeks is fucking ludicrous.
They are hitting all commodities yet retail prices aren't reacting anymore.
They still get gas to drop for Christmas sales..
Wholesale gasoline has dropped about a dime this morning.
How low can it go?
I don't know, but Minnesotans got gobsmacked the last two weeks--87 shot up to 4.399 a gallon. Since the weekend it's tapered back to 3.999. Still four fucking bucks! We don't drive that much so I haven't been filling up the tanks, just put in $30 whatever that gets me. Such incredible bullshit.
Oh, those "evil speculators".
And WTI matters in lieu of Brent because?
West Texas Intermediate should matter less than Brent because?
Because more crude (not crude plus condensate) is imported than produced.
Even Brent is not decisive. It's the 6 other blends like Tapis and Bonny Light and Urals etc that are all priced way above WTI. THEY are the true price of society's oil.
The average retail price of gasoline in the United States historically has tracked the price of crude oil pretty closely, with each $1/barrel increase in the price of crude oil showing up as a 2.5-cent increase in the retail price of a gallon of gasoline. But the fact that the U.S. can sell refined petroleum markets at the world price means that for purposes of using that rule of thumb today, you'd want to look at the price of Brent rather than the price of WTI.
http://www.econbrowser.com/archives/2013/02/prices_of_gasol.html
Yep.....that pretty much sums it up...
Nothing a few Russian missles can't fix.
WTI Oil is struggling to complete wave 2 up.
http://bullandbearmash.com/chart/spot-wti-oil-daily-falls-hard-early-rec...
Oil has been moving up as the US Dollar climbs - voids the inverse relationship. USD is down hard today - while the Euro, Yen and GBP are sharply higher - not something that will last.
elliot waves struggling to get any calls right 5% or more in advance of what actually happens
there is a lot of subterfuge in the oil inventory market. enterprise counts SPR oil on loan in order to buggywhip suppliers into charging less. it doesn't mean there is more supply, keep your eye on crack spreads. it has been USGs intention to keep oil prices high, because all assets move together, if you drop crude you end up dropping housing, and the whole thing (asset deflation) takes over. crude needs to go to fifty, which should drop home prices in half, and start an economy recovery for the 99%.
100% correct. I would only qualify the demand/supply assertion you make by suggesting that its a relative excess supply. EIA measures last month reported demand for gas and oilnot seen since the 70's. The demand retreat has an implied supply surge relatively speaking. Hence the channel stufing ZH wrote about some time ago. All else equal, if the EIA data is true, oil should be fetching $35 - $50/bbl at least in the short run. But, like you say - thats never going to happen.
Though economics won't accept it, there is a difference between demand and consumption. US consumption is down. There are CLAIMS that supply is magnificent, but suppose it isn't. Suppose it caused consumption to be down.
Oil has to remain high for the A-Rabs to make a lot more in petro-dollarz in order to buy UST junk bondz and fund the Deficits.
You have not been paying attention if you think that is what is going on...
Google QE and Fed treasury purchases...
Crude has been at the wrong price this whole month.. Supply building + stronger usd - should be at least $10 lower .. Must be CTA Algos finally puking out what they bought
No such thing as supply measurement when the inventory turns over every week or so.
Its just the gold bears (inflation bears) doing what they can to keep the Metals down. Just like copper.
With CHF doing its own thing.. Metal bears are stretched
Texas/US Oil Production from Shale skews things how?
wont come on line until you see $125 a barrel for an extended period.....
There has evolved to be a problem with the definition of oil, particularly from Texas shales.
(Crude + Condensate) was the traditional measure. It worked okay because conventional sources had a 90:10 mix. Crude has 5.6 million BTUs per barrel. Condensate doesn't.
Shale production out of Texas is 90:10, but the ratio is reversed in favor of condensate. The industry, naturally, hypes the total barrel flow rate, but trucks carrying food to shelves can't get up hills if the BTUs are not there. This is slowly getting into the ears of the folks who write checks for drilling investment. Condensate is not priced as high as crude.
CA is, as if you didn't know, loony. The government promotes alternative transportation, reduce your carbon foot print. So we do. The BOE, in turn, sees revenue from gasoline tax droping. So what do they do, hike the tax! A 3 cent increase is coming in July.
Just gotta love the chart showing a 3.62 average - I'm at $4.17.9 a gallon for regular locally in N. California. Adulterated with 8% ethanol no less (I check it because I can use it for av gas in my small plane when it is at or below 5% - Av gas locally - 100LL - is presently $7.15 a gallon, but all pilots are rich bastards anyway.)
But demand is down in my world: I manage a trust that receives income from owning land in SW LA leased to a gas station - rent is fixed + gallonage, and gallonage is down10K gallons a month on average this year from the palmy days of 2003-2006. (Yeah, I trust the figures.)
I never used to follow the discussions on WTI prices...sigh.
Geez, I can remember back in 2001-2002 CA gas was 2$ higher than back in my home state.
CA likes to rape its producing serfs.
A fine blast from the past and required reading for any student of oil matters:
http://www-personal.umich.edu/~twod/oil/NEW_SCHOOL_COURSE2005/articles/for_aff_aikins_oil_crisis_apr1973.pdf
If I could have unlimited amounts of free fiat, I too could hold up the price of crude or anything else indefinitely. And if I had my own trunk line and direct access to the exchange, I could keep down any commodity I chose.