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Crude Soars To $104 Dragging Equities With It In "Summer Of 2008" Flashback
Anyone who followed today's trading action with a very distinct sense of summer of 2008 deja vu dread, where soaring crude led to just one thing, soaring stocks, they are forgiven, because this is precisely how one can summarize today's action. In a day devoid of any news (except for the JOLTS survey of course, which confirmed the gaming of NFP payroll numbers), in which bonds did absolutely nothing, with the 10 Year trading in a very tight range just shy of 2.65%, it was all about low-volume levitating equities and the energy complex.
Equities, in a New Normal world in which neither fundamentals, nor corporate results, nor newsflow matter, and just central banks are relevant, did their usual thing, rising for the fourth straight day on the now traditional low volume, also pushing the NASDAQ to fresh 2013 highs.
The story of the day, however, was WTI which started the day at the lows and stormed out of the gates without looking back. And with average gasoline prices per AAA once again rising, and having about 50 cent of upside from current levels based on implied WTI fair values, we wonder: just how long before the blame the speculator cards is whipped out and/or the CME hikes CL margins by 30% or more?
And most notable in this otherwise boring day, was that the Brent-WTI spread is now back to under $4 - the tightest it has been in over two years.
Keep a close eye on the spillover of soaring energy prices into corporate input costs. After all US multinationals already have a soaring USD to worry about. The one thing that will truly put an end to the party will be a surge in COGS. Or would, rather, if stuff like cash flow and profitability actually mattered.
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Oh dear. Is the sky falling again ZH?
Deflation bitchez... (in the value of dollars)
For those who own both, at least the gains in their big oil stocks are balancing out the current losses in their PM mining stocks.
Someday soon, both will be off the charts!
Silly me. Long junior miners, short oil.
Of course not, $104 per barrel crude amidst 1.8% GDP growth is precisely the stuff of which healthy, robust economies are made.
Yup... don't forget to include "As Global DEMAND for oil is declining"...
http://tribune.com.ng/news2013/en/news/item/14601-crude-oil-prices-slide...
But someone one TV told me the higher prices were a funtion of higher demand within this robust recovery.
higher debt=higher CONfidence=higher everything
Hmmm... OK I checked again to be sure... but still the answer is that global consumption is declining...
Oil demand on the decline: IEA 12 Jun, 11:42 PMAAP
Sluggish global economic growth is crimping demand for oil, including in emerging market powerhouse China, the International Energy Agency says.
http://www.businessspectator.com.au/news/2013/6/12/commodities/oil-deman...
Must be something to do with the MAGIC of the markets...
MSM talking heads will say anything to prop up Dear Leader.
Of course, it is the result of widespread adoption of advanced new green technologies - such as unemployment.
rigged indeed. "and i've been on the receiving end." the full conversion of the entire planet to all electric vehicles can't come soon enough. i do apologize for harranguing everyone here with my constant barrage of "are we there yets." (and all the "don't make me come back there" retorts are always welcome) the fear obviously isn't that Tesla is about to come out with a 30,000 dollar all electric...but a 3,000 dollar one. the whole planet would convert overnight just to put the these war mongering clowns down once and for all.
So again, where do those electric cars get their power.
I'll wave to you on our next 30 below day.
So thats where green shoots come from- green technology. Now I get it
It's paper oil. The price doesn't count.
Because every day a small group of bankers gets together at the same time and sets crude prices in a daily fix. And because OPEC actively tries to destroy the energy industry like the world gold council.
I like it. I'd also add market-makers. They sure kicked my ass manipulating pets.com stock.
destroy the energy industry? heck, no. they want to blow up the whole planet "so they can step in and buy at extra cheap." i don't like the high prices...give me an alternative so i don't have to pay them and i'll be happy.
Flamer, the sky is hovering. Watch out.
Bernanke wants a crude backed currency, "the black back."
There's several hundred Kbarrels of capacity out of Cushing since last year. Guaranteed to pull WTI toward Brent.
It's the shipping of oil by rail which is bringing up WTI.
http://www.zerohedge.com/contributed/2013-07-09/pipeline-vs-rail-canada-...
Glass is half-full: Just think of where crude would be at if people were forced to buy it because they had jobs to drive to.
Glad I burn wood.
Me too. I drive an old-timey locomotive. A unicorn is my co-pilot. AAAAAND cut to the apocalypse.
Any bets the gold/oil ratio is going to 10?
Let's see... the demand for gold increases and the price falls... while the demand for oil falls and the price rises...
Since it is obvious that the ratio is going to 10... I would be tempted to bet against it.
http://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart
i do remember 1986 "and the hissy fit Wall Street threw in 1987" as a result (Dow down 22.5% in a day.) i don't recall the world ending then. why should i be afraid of falling prices now?
When the reset happens, it's not going to last one day. Probably a few years will disappear...it'll be tough times for many/most. Kind of like it's been the last 5 years, only worse. Prepare accordingly.
That's an interesting chart! Moves in different directions during recessions. It would be a good benefit to find a pattern there.
Of course without oil society as we know it couldn't exist. More useful than gold or silver.
The traders and exporters can keep cutting back suppy and demanding higher prices. Seem logical.
Black gold can be bid up higher.
With Bernanke and the Fed devaluing the US dollar oil should keep going up in price.
Oil Producers:
The more oil producers cut supply the longer this precious commodity can last.
They will never let the stats show inflation, but my guess has always been that spiking oil, spiking interest rates and/or corporate profit growth slowing/being non-existent will ultimately cause issues for the relentless equity rise.
Most interestingly should be: soaring WTI crude prices in tandem with a soaring US$!!
Bon appétit!
So . . . you're sayin' gas will be more expensive, so things must be good, even though the IMF says growth will be modest, which should allow Bennie to pad tomorrow's Feral Open Mouthed Crusaders minutes with keywords to keep algos lubricated, then his henchmen'll talk bond vigilantes off the ledge, which should allow stocks, and oil, to soar further, but hey, to pay for this white truffle priced oil, we can all just sell a crapload of stocks . . oh, wait
Don't you know that higher gas prices means that people will spend more for energy which means more GDP and thus more growth? Durh.
This is awesome. I do not have a car and I own several oil and gas limited partnerships.
Wahooooooo!!!
Place your bets gentleman
2008 Redux in ?
Even with civilization's advance, we have retained the instinct of mass action that typically results from the effects of crowd psychology.
Both oil and fossil fuel markets are distored by government rules, regulations, and taxation. What you pay at the pump is for fuel that meets all the US Federal standards for the time of the year you purchase it and it comes from a limited number of refineries that has been restricted by law suits and regulations. The price on the market and at the pump anticipates further increases in the price of production and movement caused by government actions. IMHAO.
"They want us all to be beggers 'cause were easier to please."
Is there no one available with a flog or flay to spare?
An important question to ask: what is the marginal cost of the most hard to get oil?
I needs the obomba to gets real creative like and start issuing gas stamps sose I can gets to my part time gig in the city
Does this mean I can still BTFD?