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Long Crude Oil Speculative Bets Rise To All Time High

Tyler Durden's picture




 

Whether or not institutional investors, read large speculators, decided to invest alongside Putin in the one trade that is most critical to the future prosperity and positive cash flow balance of Russia, namely keeping the price of Crude high, and rising, is unknown, however, as the following chart the net position in crude oil futures as of the week of March 4, just hit an all time high of $44.0 billion up from $42.4 billion the week prior, surpassing all prior peaks, and certainly any set during the summer of 2008 when oil was threatening to make a run on $150, and was set to hit $200 if one believes Goldman (which nobody does).

Needless to say, any de-escalation in the Crimea - which has certainly been the key catalyst for the full court press to bet on rising crude prices in recent weeks - will have a substantial knock on effect of forcing open call positions to close, and in the process lower the price of crude further beyond just fundamentals, assuming those still exist.

 

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Mon, 03/10/2014 - 13:14 | 4530833 Flakmeister
Flakmeister's picture

Always a bearish sign...

But any pullback will be shortlived...

However, the Brent-WTI spread is not suggesting any weakness in the short term....

Mon, 03/10/2014 - 14:11 | 4531080 Jumbotron
Jumbotron's picture

And there goes the so called economic recovery.

But it will just accelerate the push for robotics and automation.  While this will increase productivity and labor costs, it will only increase those out of the job pool, increase the food stamp percentage and increase those having to go to Obamacare.

BULLISH !!!!

Mon, 03/10/2014 - 14:11 | 4531089 oddjob
oddjob's picture

 the Brent-WTI spread is not suggesting any weakness in the short term....

The CAD$ sure is.

Mon, 03/10/2014 - 14:17 | 4531112 nevadan
nevadan's picture

no kidding

 

Mon, 03/10/2014 - 13:15 | 4530840 BullyBearish
BullyBearish's picture

2nd level thinking says, "crude to drop below 90"...as this most hurts Russia and spins as good for consumer...

Mon, 03/10/2014 - 13:20 | 4530849 Flakmeister
Flakmeister's picture

If TPTB could drive oil down below 90 without deliberately crashing the economy, they already would have...

Russia or no Russia...

Mon, 03/10/2014 - 13:28 | 4530876 NihilistZero
NihilistZero's picture

They can.  It's just not the time to do it yet.  Once the cost of credit rises this will adjust.  The FED knows that continued QE was going to create a chatastrophic crash so they tapered and will raise in 2015.  Raising rates will coincide with an oil drop that will be seen as good for the consumer.  Now that the member banks have been saved and are more powerfull than ever, they have to get the next deflationary cycle going so consumer spending can rise, which will ultimately lead to the next phony bubble period.  All part of the plan...

Mon, 03/10/2014 - 13:34 | 4530913 CrashisOptimistic
CrashisOptimistic's picture

Flak has this right, and in a subtle way you do, too.

Oil is the ONE THING, and ONLY THING that is immune to government control.  "THEY" can't do anything with it.  Flak has that right.  They can't decree its value the way they can decree all else.  Its value was decided millions of years ago when the joules embedded.

But what you have right is the credit issue . . . because shale drilling is borrowed money.  If it costs too much to drill, the drilling stops, and INSTANTLY oil price rises.

Mon, 03/10/2014 - 13:44 | 4530962 NihilistZero
NihilistZero's picture

I would take it a step further and say that speculation in the futures market adds some percent to the price and that speculation is turbocharged by ZIRP and QE.  Both those programs are ending within the next 12 months.  I would expect they have the FED rate to at least 1% by mid next year.  The FED knows they have to stop the speculative bubble or risk the whole system (from which said member banks benefit).  Every shitty stat will continue to be bullish therefore justifying the rate hikes.

Mon, 03/10/2014 - 14:01 | 4530989 LawsofPhysics
LawsofPhysics's picture

"Both those programs are ending within the next 12 months." -  LMFAO!!!!!

Right, and where will interest rates be at that time?

Please enlighten us.

And then there's this... "deflationary cycle"

LMFAO!!!  Please name one society/currency that has collapsed because their purchasing power was too strong.

Mon, 03/10/2014 - 22:55 | 4533328 NihilistZero
NihilistZero's picture

Since even before the crash when has the FED not accurately projected their moves?  They've stated and stayed every course they have charted.  QE and ZIRP are over by Spring 2015...  And where did I imply inflation was anything but a positive?  Your comment implies otherwise...

Mon, 03/10/2014 - 14:14 | 4531098 CrashisOptimistic
CrashisOptimistic's picture

Well, everyone has their own crystal ball.  Sorta hard to see rates going up while GDP is projected at 1.7% for Q1.

Mon, 03/10/2014 - 13:45 | 4530964 Who Laughed
Who Laughed's picture

+1, Is there any reading available on this? Or is it collated common sense 

Mon, 03/10/2014 - 13:54 | 4531010 Flakmeister
Flakmeister's picture

More like collated common nonsense.....

Mon, 03/10/2014 - 14:01 | 4531039 Who Laughed
Who Laughed's picture

Got anything to read for me, Flak?

Mon, 03/10/2014 - 14:26 | 4531114 Flakmeister
Flakmeister's picture

On the economics side...

This is was a recent bangup presentation 

http://energypolicy.columbia.edu/events-calendar/global-oil-market-forec...

there are slides as well

Gail can be a tad pedantic and she it pretty MOR

ourfiniteworld.com

gregor.us

Greg does very good analysis...

On the production side

peakoilbarrel.com    (the apparent heir to theoildrum

Hardcore discussion:

http://peakwatch.typepad.com/decline_of_the_empire/

Dave Cohen doesn't write about oil that much anymore though. He is also one of the few people that I would not want have to debate online....

Finally, for the hydrocarbon cognescenti

rbnenergy.com

Mon, 03/10/2014 - 14:41 | 4531229 CrashisOptimistic
CrashisOptimistic's picture

Someone on peakoilbarrel said rbnergy's best stuff has gone subscription.  I looked there and some stuff was accessible and some was not.  Maybe date dependent.

Mon, 03/10/2014 - 14:44 | 4531246 Flakmeister
Flakmeister's picture

Yeah, you need to subscribe to read anything older than a month...

I also notice that Gregor has gone full subscription.... Too bad...

Tue, 03/11/2014 - 02:02 | 4533627 Who Laughed
Who Laughed's picture

Thanks!

Mon, 03/10/2014 - 13:31 | 4530894 TheBoyPlunger
TheBoyPlunger's picture

It's just in preparation for the annual fleecing of the public during the summer driving season. WTI will get pushed up to $110 due to "supply concerns" in Nigeria/Libya/Angola or "civil unrest" in Syria/Lebanon/Egypt (just like it has in each of the last 3 years), then the Iran oil deal will be completed and WTI will tank back down to 90.

Mon, 03/10/2014 - 13:52 | 4531000 Flakmeister
Flakmeister's picture

You don't seem to be aware of the cyclical nature of NA demand, hence price, not to mention the effect of changing over from winter to summer blends...

Summer blends are more expensive because you can't cut it as much with Butane....

Summer

http://www.theoildrum.com/node/2374

Winter

http://www.theoildrum.com/story/2006/9/13/234043/431

General Assays

http://www.theoildrum.com/node/2174

Mon, 03/10/2014 - 14:02 | 4531040 TheBoyPlunger
TheBoyPlunger's picture

Who cares what the reasons are? The only thing that matters is price.

Mon, 03/10/2014 - 14:22 | 4531133 Flakmeister
Flakmeister's picture

By all means cling to you childish worldview...

A sign of adulthood is when you begin to dig deeper for a more complete understanding....

Mon, 03/10/2014 - 14:39 | 4531220 TheBoyPlunger
TheBoyPlunger's picture

If your analysis of gasoline blends has been making you money over the last few years, then continue doing it. It does not sound like you are a trader though or have much skin in the game at all.

Personally I've just been playing the $90-$110 range over the last few years and it has made my account larger, and I will continue doing so until it no longer works.

 

Mon, 03/10/2014 - 13:40 | 4530926 Hongcha
Hongcha's picture

Long OGZPY today, conservative position just (1) chip on the felt at this deserted table in a smoky, despised corner of the casino.  See a double by years-end and will buy the best bottle of ice-cold premium Russian vodka I can find to celebrate.

Mon, 03/10/2014 - 13:57 | 4531032 Flakmeister
Flakmeister's picture

You are an optimist...

Time it right and you could make some serious bucks...

Mon, 03/10/2014 - 13:43 | 4530959 Flakmeister
Flakmeister's picture

Even the industry insiders know that something is amiss

http://fuelfix.com/blog/2014/03/09/oil-chiefs-to-suppliers-your-prices-a...

Mon, 03/10/2014 - 13:48 | 4530981 LawsofPhysics
LawsofPhysics's picture

Going to be a real bitch if they are right this time.

Mon, 03/10/2014 - 14:03 | 4531048 ...out of space
...out of space's picture

inflation is need

first stock up, so the people will see like economic picking up, then floodet the market with 2,7 T/usd in excesse reserve, so that inflation kick in the real asset, so that the people will start to buy stock to proteck themself , off loding them self a stock and left market crash.

looks like a plane

Mon, 03/10/2014 - 14:44 | 4531250 pndr4495
pndr4495's picture

Semgroup filed for bankruptcy protection that summer as I recall.  Gee, I wonder why.  It is far more powerful to know other traders' positions than to know anything fundamental , technical , or any other material bit of information - with a tip o the hat to Bill Gallacher in his short but informative book " Winner Take All ."

Mon, 03/10/2014 - 14:54 | 4531305 JPM Hater001
JPM Hater001's picture

The good news is we will be above the "crowded zone" shortly.  All fixed.

Tue, 03/11/2014 - 01:08 | 4533582 Mediocritas
Mediocritas's picture

Be careful going long oil. Sure, the underlying reality of supply and demand paints a case for permanently high prices, but this all rests on a foundation that requires stability in the financial system.

I learned that the hard way in 2007/2008 and should have listened to people like Nicole Foss and Raul Meyer who had already called for a dumping oil price due to bank failures.

They were right then and they'll be right again. Another Great Financial Crisis and oil's a short. Don't be stupid and take a directional position at this time, play for volatility instead. High oil prices trigger financial collapse that triggers low oil prices and I'm certainly not smart enough to predict the transition time with accuracy. Are you?

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