WTI Crude Tops $98 - Highest In 9 Months

Tyler Durden's picture

Amid the Syria debacle (or growth 'hope' if you are a true believer), the price of a barrel of WTI crude oil just topped $98 - its highest since September of last year.

The bad news for all those that 'consume' is that this level of crude suggests the price at the pump will be hitting $3.80 - that elusive P/E expansion-ending level - very soon.



Charts: Bloomberg

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BobPaulson's picture

More muppets getting scalped?

slaughterer's picture

Quadruple top- or seasonality/war play?

Feel lucky punk?

Headbanger's picture

Looks moar like an upward continuation congestion pattern to me. $200 a bbl anyone?

Go Tribe's picture

Was going to ask similar: Is that a top or a reverse head and shoulders?

SheepDog-One's picture

'Gas will be hitting $3.80'? WTF world do you live in, it's been over $3.80 here for weeks.

dick cheneys ghost's picture

thats a .40 cent discount where I live...............

Satan's picture

€2.76/ liter or about $9 a gallon here in Italy...

OpTwoMistic's picture

3.22 regular in my area of Texas.  For Exxon

crazyroadlizard's picture

With a Wally World card, I'm paying $3.06 in Arkansas!  

slotmouth's picture

I was just visiting Detroit and Gas was $4.25.  Kick 'em while they're down.

DoomJunkie's picture

$4.29 - $4.50 in Chicago. It's funny because I recall watching a post-apocyliptic movie starring Craig T. Nelson several years ago and as the throngs were wearily marching through the streets in a super green house effect heated climate, a sign at a gas station read $5.01 for regular. LOL  We're almost there and you are in Chicago if you have to buy premium.

Metalredneck's picture

$5.08 here.  God bless Canada.

SheepDog-One's picture

Gas at all time low demand, with prices pushing all time highs....another master stroke of genius from Our Overlords at the bank.

Flakmeister's picture

What makes you think that they have *any* control over the situation?

The game is over and the rules have changed, Bennie B and the Boyz are in denial over it because the alternative is unfathomable....

FeralSerf's picture

You may be right on that one. In the hierarchy of The Oligarchy, Big Oil is likely ABOVE Benny B and the Boyz.

The only way out of this prison for most of us is the breakup of Big Oil and the TBTF financials. The breakup of Standard Oil brought energy prices down a hundred years ago and it could do it again.

Maximum market caps of $50 billion or so with NO board or effective ownership intermingling for any oil or financial company would have an impact on competition.

Flakmeister's picture

I don;t disagree with your hypothesis for dealing with corporate malfeasance, but the IOCs lost their ability to shape the the global oil market back in the '70s....

Take away the tar sands and Exxon can't even replace its reserves going on 10 years now ... Only the SEC allowing bitumen to be classified as oil saved their ass...

FeralSerf's picture

Exxon can replace their reserves by purchasing them on the exchanges just like they did when they bought Mobil. They can also drill deeper like the Russians do. The Russians seem to be keeping up. I read recently that Russia is the world's LARGEST OIL PRODUCER now. They've passed the Saudis. Their EROEI must still be OK or they would have run out of money by now, eh?

Flakmeister's picture

Strringing together a few random facts does not an argument make....

PS Exxon has not been able to buy reserves on the NYSE floor, last I checked, they took it up the ass by overpaying for XTO (which was primarily a NG company) which leaves me to believe that you are probably one of those guys that gets fooled by shills talkin about BOEs....

And if you don;t know what BOE stands for, you really should simply STFU before you completely remove all doubt that you are a blowhard fool.....

FeralSerf's picture

So now you've stooped to a new low -- claiming that I don't know what "BOE" stands for, eh? Do you have any evidence to back up your claim?

Since we're on the subject of off-the-wall claims, allow me one, OK? I claim you don't know your ass from fat meat. Prove me wrong (if you can).

SheepDog-One's picture

So, you're saying oil is just going up all on its own? We know that isnt true.

Flakmeister's picture

Do you really *know* that it isn't true? Somehow I doubt that...

BTW, the latest figures from EFS and the Bakken suggest that things are starting to roll over, the sweet spots have been drilled.

LawsofPhysics's picture

Indeed, now let's see that data plotted against the world population over just the last 50 years.

RockRiver's picture

Unless, of course, you live in the Chicago area where 3.80 would be welcome relief....

Flakmeister's picture

You will get relief when some downed refineries come back...

Edit: http://oilprice.com/Latest-Energy-News/World-News/Summer-holidays-for-Indiana-families-are-delayed-for-the-time-being-as-motorists.html

and from elsewhere

Doug MacIntyre, an analyst with the EIA, said that the upper-Midwest price spike was the result of “a combination of factors, but the main thing is we got refinery outages. Some of that for maintenance and some unplanned outages. And we’ve got inventories that have been drawn down to some degree because of earlier refinery issues.”

The EIA noted that planned maintenance efforts at ExxonMobil’s refinery in Joliet, Ill., and Marathon’s refinery in Catlettsburg, Ky., reduced runs by 470,000 barrels a day. Unplanned outages, including those at HollyFrontier’s refinery in El Dorado, Kan., and Flint Hills’ refinery in St. Paul, Minn., compounded the problem.

Longer-term projects already underway “magnified the impact of the planned and unplanned outages,” the EIA said. BP’s refinery in Whiting, Ind., has had 260,000 barrels a day offline since November to install coking capacity and boost its ability to use low-quality heavy crude oil.

The agency said gasoline inventories tend to increase from January to March in anticipation of refineries’ turnaround season. Gasoline inventories in the Midwest began April near the top of the five-year average range but are now at the bottom of the range, the EIA noted.

The American Petroleum Institute blamed the Obama administration for high prices, using the opportunity to press for more open access to federal land for drilling and to urge against raising taxes. John Felmy, API’s chief economist, blamed high crude oil prices.

LawsofPhysics's picture

7+ billion (and growing) all competing for a better standard of living.  Oil remains the most fungilble source of energy (burnable calories) and commodity chemicals on earth that can make that quality of life happen.  Don't expect global demand to decrease any time soon unless thousands fusion reactors suddenly come online or those 7+ billion liabilities are cut back to under a billion.

Hedge accordingly.

FeralSerf's picture

And you can bet that Big Oil will NEVER allow thousands of cold fusion reactors producing too cheap to meter energy. That would be like allowing someone to give away an effective cure for cancer.

Follow the money!

LawsofPhysics's picture

Please, put enough smart resourceful engineers out of work and you will be surprised what happens.  Since when has anyone been doing just what is "allowed" anyway?  Where the fuck have you been?  Let me guess, you also think we have "free markets" too?

FeralSerf's picture

You guess wrong. I would NEVER suggest we have "free markets".

Put enough smart resourceful engineers out of work and you will be surprised at what that does to the unemployment insurance deficit.

Oil companies don't want any more competition from cheaper energy sources.

The universe is full of matter and energy. In fact, as far as anyone knows, that's just about all it is full of. It's up to the SURVIVING ORGANISMS (I don't know if that's us) to figure out a way to exploit that matter and energy.

LawsofPhysics's picture

No shit sherlock, but again, if I had to bet on who or what the "surviving organism" would be, I'd bet on the skilled engineer over the "swipe yo EBT" sheep every fucking time.  Everything else is fucking noise.  unemployment insurance is just part of the "bread and circuses", if it can't be delivered, it won't be.  no point in even talking about it.

FeralSerf's picture

You bet on skilled engineers. I'm betting on cockroaches as the surviving organisms.

EscapeKey's picture

It's a little known fact that the NSA have cold fusion reactors, quantum computers,  SHA-256 reversion, and perpetual motion machines all entirely working in their labs.

LawsofPhysics's picture

That's not what the engineers I know at NSA are saying.

EscapeKey's picture

I thought my inclusion of perpetual motion machines made it rather obvious I was being facetious...

Unless you believe in Steorn, of course.

eaglerock's picture

Federal agents are enroute to your home as we speak. I don't think their internet intelligence gathering devices understand sarcasm.

EscapeKey's picture

How exciting, although they might be a bit out of their jurisdic#`%${%&`+'${`%&NO CARRIER

Flakmeister's picture

There was a stealth sarc flag your radar missed...

mess nonster's picture

Cold fusion is a fantasy, as is over unity power, tesla power, etc. If there was a free energy source, and a technologically and economically feasibile power translator device, we would have it already, especially with the age of information.

There simply is no viable alternative to petroleum. Cost aside, as a an energy source, there is nothing else that is as energy dense, portable, scaleable, or versatile.

This brings us to the cost aspect. The cost of fuel is driven almost entirely by supply and demand, not tertiary causes like QE, or inflation (there is none).

Supply has plateaued, while demand continues to surge, hence, a supply squeeze and surging prices.

Gas is 3.89/gal here, and it costs 50 bucks to fill up my car for the week. I can't sustain this on a personal level. The cost of fuel has driven up the price of the products I produce. I can't afford to keep the prices low, but it turns out that no-one can afford to buy my products at the prices I have to charge.

This is no WTF moment. This is NOT inflation. Inflation is the combination of a rise in money supply AND a rise in wages and productivity. Energy shortfalls that first express themselves in economic terms as a supply/demand bottleneck may drive up prices initially, but such a price increase is not by definition inflationary. As available money is sucked into the fuel price/ supply shortfall vortex, this means less money for other things, and thus, it is essentially a deflationary dynamic.

This is a deflationary dynamic in its infancy. Soon this will be a swirling inverted tornado, sucking everything into its downward vortex to the bottom of the pit of destruction.


LawsofPhysics's picture

Deflation?  There is no such thing and no society or currency has ever collapsed (in a "pit of destruction" or otherwise) because their purchasing power was too strong.  Stop using that bullshit progressive eCONomic language, it's a trap.

nope-1004's picture



mess nonster,

Inflation is not a single definition, like "increase in money supply and wages".

Inflation can be brought about by shortage supplies with the resulting demand overpowering causing prices to rise to an equilibrium to ease demand.  That has been called demand pull inflation.

Alternatively, when you flood the market with dollars, thereby devaluing existing dollars, the average worker can't afford to live so demand more pay.  This can be called cost-push inflation.  Another version of cost push inflatin is ZIRP and how money flows to hard assets, driving commodity prices up (input costs) also causing cost-push inflation.

In addition, you have the FED monkeying in the markets, trying to keep commodities down to signal low inflation.  The definition is not that simple when the market is not allowed to operate as a free market.

And I agree with LOP:  No nation, state, society, or government has ever toppled because of a strong currency.  Inflation is coming - it has to.  There is no other alternative.  To extend your thoughts, the inflation coming will be in reaction to the heavy deflationary forces that will appear.  No central bank wants deflation and will react accordingly to kill their fiat.


Headbanger's picture


swissaustrian's picture

Oil at September 2012 levels, pms not so much. F... the miners!

LawsofPhysics's picture

Oil/coal/natgas have always been a reserve currancy of sorts.  In order to actually do anything in any economy, you need energy, period.  Soon enough moonshiners will be the new bankers as ethanol is easy to make and burn.

fuck you bernanke!

fonzannoon's picture

That's right. Those miners have already been ass backwards nationalized. Produce, and no profit for you bitchez!

khakuda's picture

The Bernank wants inflation and he will get it.

Tsunami Wave's picture

This is NOT good for those of us who live in the Great Lakes region of the US.. As if we weren't slammed enough for 2 weeks over 'refinery repairs' earlier this month.

fonzannoon's picture

I've been watching those "Pure Michigan" commercials. You guys are living the dream!

Go Tribe's picture

Me, too. It's like watching CNBC.

Flakmeister's picture

Could it be that FORBES is finally starting to get it? First there was an article about declining EROEI and now this. Spend more and get less... Shales are like scraping a hash pipe for resin to smoke, you work harder and harder to get less...

Why America's Shale Oil Boom Could End Sooner Than You Think

America’s oil producers are nervous. They’ve had a great run the past few years. Domestic oil production is up 43% since 2008 to 6.5 million barrels per day, the highest level in decades. The majority of that 2 million bpd jump comes out of the two most successful new oil fields, the Bakken and the Eagle Ford. To develop these and all the other fields nationwide, the top 50 operators invested $186 billion in 2012, according to Ernst & Young. That was a record level of spending, up 20% over 2011.

You’d think that with drillers getting better, honing techniques and driving down costs, that a 20% increase in investment would bring about a more than commensurate increase in oil and gas production volumes, right? And yet according to Ernst & Young, total U.S. oil and gas production was up “just” 13% on the year.

It’s bad enough to be spending more and more to generate ever less growth. It’s worse when that growth doesn’t even translate into profits. Oil and gas companies have spent hundreds of billions acquiring acreage, drilling wells, booking reserves, boosting supplies, but in 2012 they proved too good at their job, found too much gas, cratering the gas price, which made vast shale fields uneconomic to drill at all. In 2012 those 50 biggest companies recorded $26 billion in asset impairment charges — basically natural gas reserves that were worth $26 billion the previous year became worthless because it cost too much to drill them. This led to a 58% decline in after-tax profits in 2012 over 2011.

And you’d better believe the same thing could happen to oil reserves.