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WTI Crude Oil Surges To Highest Price On Record For This Day In History

Tyler Durden's picture




 

Whether driven by real supply-demand issues, concerns over terrorism (sparked by the Sochi plane debacle), or hopes a renewed un-tapered QE on the basis of 2 piss-poor jobs reports in a row is unclear. What is clear is that WTI crude is having its best day in over 2 months - now at its highest in 2014, back above $100 a barrel and its most expensive in history for this time of year.

2014 highs, biggest jump in 2 months, back over $100 per barrel

 

and the most expensive barrel of oil for this time of year in history...

 

Charts: Bloomberg

 

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Fri, 02/07/2014 - 16:03 | 4412893 Magnix
Magnix's picture

WHY!? WHY?! Come on! I just bought gasoline to fill up my pick up at $2.99 in Dallas, TX!

Fri, 02/07/2014 - 16:05 | 4412904 Say What Again
Say What Again's picture

WTF is driving these markets?  It seems as though every market is schizophrenic and moving on limited volume.  Must be those Central Bankers doing their manipulation thing

Fri, 02/07/2014 - 16:15 | 4412937 Headbanger
Headbanger's picture

Cause word is out the shale oil fields are being depleted a lot faster than expected?

Or more likely, just to fuck over the little people even moar!

Fri, 02/07/2014 - 16:16 | 4412947 HyBrasilian
HyBrasilian's picture

Just switch to NAT GAS powered vehicle fleets... OH WAIT!

Fri, 02/07/2014 - 16:23 | 4412968 Fish Gone Bad
Fish Gone Bad's picture

More money chasing fewer resources. 

Fri, 02/07/2014 - 17:37 | 4413213 ejmoosa
ejmoosa's picture

Even were it the same amount of resources, more money is chasing it.

 

Fri, 02/07/2014 - 16:25 | 4412982 CrashisOptimistic
CrashisOptimistic's picture

Have a close look at those natgas cars.  A real close look.

Even with the gas compressed to pressures higher than what's in pipes, those cars have essentially no trunk because the fuel tank occupies the volume the trunk used to have.

And even if you do that, you get about half the range per tank of a equivalent proper gasoline car.

A 42 gallon barrel of room temperature 1 atmosphere pressure oil contains 5.6 million BTUs.  A 42 gallon container of room temperature 1 atmosphere pressure natural gas contains 5600 BTUs.

There is no escaping physics.  Print all you want.  Pretend all you want.  No escape.

Fri, 02/07/2014 - 17:05 | 4413093 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Gas prices are relatively cheap at about $3.00/gallon in my neck of the woods. This tells me some independent refiner and/or gas station owners are getting screwed big time.

Fri, 02/07/2014 - 17:12 | 4413123 HyBrasilian
HyBrasilian's picture

@Crash

 

My post was /sarc...

 

Your point is taken... I lived in Europe for a bit [over a decade ago], & my colleague had a Mercedes that ran on the NAT GAS [so I understand the 'trunk' ramifications because I WITNESSED it]...

All things considered... It's DEPARTURE from what [Americans] are used to [& fully dependent on 'INDIVIDUAL' circumstances]... In the end ~ homies gotta do what homies gotta do]...

I see a future of *VARYING* modalities [instead of the COOKIE CUTTER solutions that the gatekeepers have attempted to herd us into over the past 50+ years]...

 

Peace

Fri, 02/07/2014 - 19:25 | 4413676 LMAOLORI
LMAOLORI's picture

 

 

People get conditioned to accept higher and higher prices among other things it seems - I don't think that's cheap (snip).

 

#13 While Barack Obama has been in the White House, the average cost of a gallon of gasoline has gone from $1.85 to $3.27.

Fri, 02/07/2014 - 19:50 | 4413754 zaphod42
zaphod42's picture

I guess he drank all the oil?  Get real.  It was DOWN to $1.85 from historic highs closer to $5.00/gal.  Price bounced because supplies could not be maintained at $1.85/gal. 

It costs a bunch more to frac than the old wells did to drill.  And production tanks in one year!  In five years you have to re-frac the well, at even more cost.  And the production starts lower and drops faster than the first frac did.  Rinse and repeat and you see why, after 6-7 years prices are beginning their natural rise to enable some more costly, riskier effort.  Drill in the arctic; very deep oceanic frac'ing; each with its own natural limitations and higher costs.

Pretty soon capital does not want to participate.  The real problem seems to me to be that the plastics we use in alternative energy production come from oil; it is necessary to have diesel fuel in producing commercial quantity of foods; and most of our consumer goods rely on oil for oceanic transport, as well as for feed stock for plastics. 

We have dug ourselves a pretty deep hole with the ICE.  It is time to stop digging and get out of the hole.  If we can.

Good luck y'all

Craig

Sat, 02/08/2014 - 10:21 | 4414798 DaveyJones
DaveyJones's picture

nice post

Sat, 02/08/2014 - 09:36 | 4414765 thestarl
thestarl's picture

Look at the massive cost overuns Chevron are encountering developing the Gorgon field off NW Australia symptomatic of big OIL/LNG plays people can bury their fucking heads in the shit all they want  your right no escape 

Sat, 02/08/2014 - 10:25 | 4414803 DaveyJones
DaveyJones's picture

'There is no escaping physics" - unless you're NIST

Fri, 02/07/2014 - 16:14 | 4412943 TruthInSunshine
TruthInSunshine's picture

So nice to see real markets with the massive ramping of all risk assets on such great job numbers, Carl iCon tweeting love letters to Tim Cook about plenty of AAPL cash for buybacks left, and commodities spiking/cost of living spiking.

Ya' gotta' hand it to the Federal Reserve lackeys & their Wall Street Masters; these people know how to keep the Ponzi rolling like A BOSS.

Fri, 02/07/2014 - 16:19 | 4412957 Say What Again
Say What Again's picture

I know that the Fed & the Central Banks of the world are powerful, but even with my jaded point of view, I still underestimated how far they would / can go.

Fri, 02/07/2014 - 19:55 | 4413775 zaphod42
zaphod42's picture

And the Fed has what, exactly, to do with price of oil? 

Craog

Fri, 02/07/2014 - 16:07 | 4412909 the not so migh...
the not so mighty maximiza's picture

RECOVERY

Fri, 02/07/2014 - 16:54 | 4413061 Citxmech
Citxmech's picture

Yeah.  The good news is it will only get better from here. . . 

=/

Fri, 02/07/2014 - 16:14 | 4412916 CrashisOptimistic
CrashisOptimistic's picture

North Dakota will probably have production decline for the month of December (which will be reported next week, always 2 months behind) because of legitimate blame on weather.  The trucks to carry fracking material to the wells and oil from the wells get bogged down in snow and cold.

The bad news is, this will be 2 months per year, and the rest of the months will begin having difficulty overcoming it soon.

The Bakken is not really all that important globally, but it has become the poster child for abundance so when it rolls over the psychological impact will be crushing.

Fri, 02/07/2014 - 16:18 | 4412960 deflator
deflator's picture

Everything you wrote is just blah, blah blah, compared to drill, baby drill?

Fri, 02/07/2014 - 16:20 | 4412966 CrashisOptimistic
CrashisOptimistic's picture

What I wrote WAS Drill, Baby, Drill.  The snow stops the drilling.

Fri, 02/07/2014 - 16:50 | 4413052 Hulk
Hulk's picture

Shit, thats some tough snow !!!

Fri, 02/07/2014 - 16:54 | 4413062 CrashisOptimistic
CrashisOptimistic's picture

Look up the word "proppant" and find pictures of it.  Heavy stuff.  Trucks carrying it bog down.  It's needed to complete a drilled well.  Part of "drilling".

Fri, 02/07/2014 - 21:45 | 4414096 JimS
JimS's picture

I'm from North Dakota and it's really related to how fucking cold it is here. Been that way since first part of December. These extremely cold temperatures (like -20 to -25F at night) are brutal on machines, engines, metal parts and people.

Fri, 02/07/2014 - 21:52 | 4414109 JimS
JimS's picture

P.S. At -20/-25F #2 diesel will gel. There's a number of trucks that stall out on I-29 and I-94 because of this issue. Most are trucks coming up from the south. I use #1 diesel in my Jetta this time of the year.

Fri, 02/07/2014 - 19:57 | 4413796 zaphod42
zaphod42's picture

Bakken is priced out at WTI prices, going through Cushing, OK.  Eagle Ford is much more important, and production there is dropping as well.

Check it out here:  http://euanmearns.com/uk-oil-and-gas-production-update-to-october-2013/

Most of the world's oil is Brent Oil, and is about ten bucks a barrel more than Texas Sweet.  Louisiana Sweet is even more expensive. 

Prices are determined by supply (dropping) and cost of production (rising). 

If you know some way to change this equation, we are all waiting.

Craig

Sat, 02/08/2014 - 10:28 | 4414809 DaveyJones
DaveyJones's picture

"Prices are determined by supply (dropping) and cost of production (rising)"... and world demand (and population) (and world use) rising.

Sat, 02/08/2014 - 19:36 | 4415957 Matt
Matt's picture

Obviously, the price must rise until demand is brought under the rate of supply, if the supply cannot be brought up to the level of demand.

Fri, 02/07/2014 - 16:10 | 4412917 TheBoyPlunger
TheBoyPlunger's picture

UWTI Bitchez !!!! AHAHAHHAHA

Fri, 02/07/2014 - 16:10 | 4412925 Rock the Casbah
Rock the Casbah's picture

Seriously, does anyone have clue why oil is up as opposed to down?

Fri, 02/07/2014 - 16:13 | 4412935 CrashisOptimistic
CrashisOptimistic's picture

Think the thoughts you have been instructed are unthinkable.

Scarcity.

Fri, 02/07/2014 - 19:54 | 4413767 zaphod42
zaphod42's picture

Yes.  But nobody wants to talk about it. 

DENIAL!

Craig

Fri, 02/07/2014 - 16:10 | 4412928 r101958
r101958's picture

When you boost the margin on natgas the money goes somewhere else?

Fri, 02/07/2014 - 16:15 | 4412938 Spastica Rex
Spastica Rex's picture

Suck it, Peak Oilers!

Fri, 02/07/2014 - 16:14 | 4412945 CrashisOptimistic
CrashisOptimistic's picture

You would seem to have that backwards?  Doesn't scarcity lift prices?

Fri, 02/07/2014 - 16:17 | 4412953 Spastica Rex
Spastica Rex's picture

Oh yeah, you're right!

I didn't read very carefully, I just assumed that with all the fracking and excess capacity and tar sands and etc., that price was going down.

WTF?!?!?!1/!

Fri, 02/07/2014 - 16:21 | 4412963 CrashisOptimistic
CrashisOptimistic's picture

Don't let it bother you.  You'll be right tomorrow.

Fri, 02/07/2014 - 16:25 | 4412988 Spastica Rex
Spastica Rex's picture

Thank God.

Do you have any idea how expensive it is to run my 429 Mustang? Pussy Peak Oilers need to try commuting in one of those one-hour each way, every day, and then see how they feel about tar sands.

Fri, 02/07/2014 - 16:38 | 4413022 Obama_4_Dictator
Obama_4_Dictator's picture

badass car. I got a saleen myself.

Fri, 02/07/2014 - 16:50 | 4413056 Citxmech
Citxmech's picture

Would that be a Boss 429 Mustang?  If so, I salute you.

Fri, 02/07/2014 - 16:51 | 4413060 CrashisOptimistic
CrashisOptimistic's picture

Uhm, commuting 1 hour where?  It's the middle of the day and you're posting to ZH?  Your boss pay you to do that?

Fri, 02/07/2014 - 17:03 | 4413087 Spastica Rex
Spastica Rex's picture

I refuse to use sarcasm tags.

/serious

Sat, 02/08/2014 - 10:30 | 4414813 DaveyJones
DaveyJones's picture

severe rationing

Fri, 02/07/2014 - 16:58 | 4413073 stant
stant's picture

you could actually see the needle on the gauge drop when i was on the gas of my 428cj. 850 duel line double pumper

Fri, 02/07/2014 - 20:14 | 4413840 Citxmech
Citxmech's picture

I had a double-pumper on my 428-powered '69 4spd GTO.  God damn that car was fast.  

Good times.

FYI - found this on the 428 Pontiac engine:  In 1967 the 421 was bored to 4.120. this gave a displacement of 426.61 CID or a 427. The 428 had the same 4.000" stroke as the 421, and was produced from 1967 to 1969. this engine produced 360 hp and 376 hp in 1967, 375 hp and 390 hp in 1968 and 360 hp, 370 hp and 390 hp in 1969. The crankshaft in the 428 also had a "N" cast on them as opposed to the 421's Armasteel. In 1969, Pontiac also used a revised crankshaft out of a Pearlitic malleable-iron, although it still used the "N" casting letter. This new material had stronger alloys in the iron. All 428 engines were factory install in large cars only. However, there were a few dealers that would install a 428 in a customers GTO or Firebird for higher power levels.

OMG - I really hope that car had a back-yard engine swap and was not a dealer conversion or I'm going to be sick. . .  <=[ 

Fri, 02/07/2014 - 16:17 | 4412948 TheRideNeverEnds
TheRideNeverEnds's picture

Bullish!

Fri, 02/07/2014 - 16:18 | 4412956 The worst trader
The worst trader's picture

$4.50 a gallon for suoer and diesel here

Fri, 02/07/2014 - 16:35 | 4413018 DavrosoftheDaleks
DavrosoftheDaleks's picture

Blythe Masters is pissed and did something about it. 

Fri, 02/07/2014 - 16:43 | 4413038 FieldingMellish
FieldingMellish's picture

$94/bbl to make the average frack well profitable. There is your floor. EROEI, bitchez.

Sat, 02/08/2014 - 01:07 | 4414499 Flakmeister
Flakmeister's picture

Don't overplay the EROEI card. It is a real limit, but BTU arbitrage to produce liquids will be economically attractive for a long time...

Lower EROEI sources are coming on line and they represent marginal new supply. The cost of extraction in dollars, not BTU will decide whether it will be immediately extracted at least for a while...

Currently the world is at a point where it can economically support the price of the marginal barrel required to offset the decline of existing fields. The world economy has demonstrated that it currently cannot deal with Brent in the range $115-118 for sustained periods. Fortuntely the cost of a new barrel is below that, at least for now...

The shit really hits the fan when the cost of a marginal new barrel becomes more expensive than what the economy can support. Then decline set in and Four Horsemen saddle up... 

However, what can first happen is that geologically we cannot replace that marginal barrel fast enough though the economy can support the price of extraction. Same outcome but a different path...

Given the data and using history as a tempered guide, one can not say with certainty which scenario plays out. To now, that marginal barrel is still at price at which the economy can sustain activity...

Finally, in both of the above scenarios, it is not clear how we have crossed the EROEI event horizon....

Sat, 02/08/2014 - 10:45 | 4414839 DaveyJones
DaveyJones's picture

"Currently the world is at a point where it can economically support the price of the marginal barrel required to offset the decline of existing fields."

...by having the worlds' banks and governments do all sorts of things to make us think we can continue an ever expanding credit economy when our real resources, our real economy, is doing the opposite  

Sat, 02/08/2014 - 11:01 | 4414856 Flakmeister
Flakmeister's picture

Yeah.. But it is the only game that system knows how to play... As far as CBers go: "as long as it does not happen on my watch"....

Look at the Bakken and all the NG shale plays, without cheap credit they wouldn't have been exploited as quickly and supply would be down...

Note that I said, replace the decline, it should be clear that even if it were possible to increase world production significantly, it cannot be done at a price which is supportable by the world economy....

Sat, 02/08/2014 - 17:44 | 4415705 DaveyJones
DaveyJones's picture

I think we're saying the same thing

Sat, 02/08/2014 - 19:12 | 4415908 Flakmeister
Flakmeister's picture

We basically are, but I look at the TPTB as being in a trap that cannot escape whether they realize it or not, whereas I detect much more dersison and scorn from your end...

The thing is that for the TPTB, even if those who do know the extent of the trap we are in, saying anything untoward will result in them being replaced with someone less forward in expressing their views....

Sun, 02/09/2014 - 10:48 | 4417040 DaveyJones
DaveyJones's picture

can derision and scorn be considered economic output? what if it's sarcastic?

Sun, 02/09/2014 - 11:28 | 4417080 Flakmeister
Flakmeister's picture

I don't know, let me check the hedonics model....

Fri, 02/07/2014 - 17:00 | 4413080 Rockatanski
Rockatanski's picture

someone explain this chart for me?

fuel consuption lower than 30 years ago? dont tell me its due to the bluefuckingprius cars.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

 

 

Sat, 02/08/2014 - 01:26 | 4414506 Flakmeister
Flakmeister's picture

It is not what you think it is...

Look at the units, that amount in quetion is 25,000,000 gallons a day. How many barrels is that? It's about 550,000 barrels a day. Do you think that the US consumes ~3/2 550,000 barrels or less than 1 million barrels of oil a day?

Fri, 02/07/2014 - 17:05 | 4413086 Raging Debate
Raging Debate's picture

The problem is inded scarcity, a symptom of Lassez Faire and supply side economics. Why invest long term when you can manipulate short term? Human nature, taking the path of least resistance...

The good news is we are all not going to die from peak oil. The bad news is the 1% with funds to invest will have to die of old age first before funds are recycled back into the economy. This is because the West, China and much of the world has a demographic imbalance, there are generational dynamics in play. Assigning blame for that piece is futile. There are other things often discussed here such as fractional reserve lending but I am taking a large step back for the birds eye view. I'll zoom in a little:

Greenspan was correct in being concerned about savings glut in the 90's for the time Boomers started retiring. However, the monetary solutions have proven (and I think many here saw this coming) were doomed to fail. This was obvious to many by 2005z

What was required was technocratic society (that part he got right) to reorganize and focus on fiscal policy. Trade policy is another biggie but I digress...

Sat, 02/08/2014 - 19:45 | 4415970 Matt
Matt's picture

You think people saving TOO MUCH is a real problem? 

In one line, you complain about short-sightedness of humans, then you say that saving too much is a problem and maximum consumption is a good thing?!

Fri, 02/07/2014 - 17:09 | 4413114 Duc888
Duc888's picture

 

 

"badass car. I got a saleen myself."

 

The convertibles are a hoot.  You should see how they get that rake in the A-pillars / windshield.  Well, better you don't know, it's pretty ugly.

Yes, back in the day I saw how they did it.  Like mankin' sausage.  Let's just say that after they rake the pillars...it takes two tubes of silicone in the firewall area up under the dashboard to reseal the car and make it watertight (again).

 

Ask around.

Fri, 02/07/2014 - 17:17 | 4413141 Rising Sun
Rising Sun's picture

Economy is fucked.  Jobs are fucked.  Manufacturing is fucked.  Oil consumption is way down.

 

Oil goes up.  Makes sense.  Janet Rottenbox must be buying up oil contracts too.  Fuck you Yellen.  Print and buy, right bitch??

Sat, 02/08/2014 - 19:47 | 4415972 Matt
Matt's picture

You know that oil is a global commodity, right? 

Just like how the weather outside your house right now is not representative of the total global average climate?

Fri, 02/07/2014 - 21:31 | 4414064 Flakmeister
Flakmeister's picture

Part of the reason why oil is up despite all the wonderful things you hear about fracking is as follows:

1) The US and Canada are pretty much the only countries increasing production.

2) US increases are due to the Eagle Ford and Bakken, the Eagle Ford is not really oil but light condensate, useful but you don;t make diesel out of condensate. The Bakken is oil, but it is light with a reduced distallate assay. 

Diesel is what makes the world go round and diesel production is flat at best...

Sat, 02/08/2014 - 00:50 | 4414475 Notarocketscientist
Notarocketscientist's picture

High energy prices = less consumption because everything including the fuel in your tank costs more = layoffs = less tax revenue = government cutbacks, layoffs and debt increases = less consumption = more layoffs = less taxes =====  economic death spiral.

 

Compounding the problem is the fact that a weak labour market means real wages drop - as they are across the world right now - that means everything is more expensive and your buying power is dropping at the same time.

 

Governments recognize this and are trying to offset with debt, easy lending (they are purposely inflating bubbles), lower interest rates and money printing.

 

Of course they will fail - because the disease is expensive oil.  And there is no substitute

 

The economic death spiral will accelerate when the QE and ZIRP no longer have any effect and the confidence game collapses.

 

This moment will be known as the end of the industrial revolution by the few who survive.

Sat, 02/08/2014 - 07:15 | 4414678 22winmag
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Looky here... the only news today that really matters.

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