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WTI Crude Tumbles Under $97 - Fresh 6-Month Lows

Tyler Durden's picture




 

While bonds and stocks shrug off the volatility in FX markets, it appears the crude oil complex is suffering. Despite Putin's discussion of "countermeasures", crude oil prices have tumbled back under $97 to fresh 6-month lows. Brent Crude is notably not selling off (yet) as the spread pushed back above $8.

 

It appears the USD plunge and oil drop are related...

 

Brent-WTI back over $8...

 

 

Charts: Bloomberg

 

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Wed, 08/06/2014 - 13:54 | 5054858 PartysOver
PartysOver's picture

Good for the peeps who bought all those cars they can not afford.  So all is well.

Wed, 08/06/2014 - 14:06 | 5054869 Headbanger
Headbanger's picture

But that's why oil is dropping in the first place

Long repo companies

http://www.youtube.com/watch?v=DLGrXGEMOSo

 

It also means the major oil company stocks will plummet and crash the S&P

Wed, 08/06/2014 - 14:09 | 5054947 pods
pods's picture

Can't wait for oil to be $10 per barrel again.  Escalade here I come.

Wait, will they still keep pumping all that hard to get oil for WAAAAAY less than cost?

pods

Wed, 08/06/2014 - 14:16 | 5054988 Headbanger
Headbanger's picture

Yeah but I bet Obongo starts a real war with Putin now jack  oil up to $200/bbl to save his sorry useless political ass!

Wed, 08/06/2014 - 14:32 | 5055078 Omen IV
Omen IV's picture

June 20, 1986 - remember it well - not pretty - even the law firms in Tulsa once the wave of Bk's were over being processed thru the court - they went bankrupt as well !

Wed, 08/06/2014 - 14:48 | 5055182 ss123
ss123's picture

Those frackin in the Bakken are now freakin in the Bakken.

 

Wed, 08/06/2014 - 13:58 | 5054880 knukles
knukles's picture

Oh silly... they all bought electric cars that don't need gasoline.  You just plug 'em in at city hall for free!  See, there's no cost and no pollution!
Everything's solved!

Whoopie!

Showing them rag-heads one fill-up at a time

Wed, 08/06/2014 - 13:59 | 5054900 PartysOver
PartysOver's picture

LOL, I stand corrected.

Wed, 08/06/2014 - 14:22 | 5055015 JohninMK
JohninMK's picture

Get too many electric cars and sure as hell they will start charging for it. No electricity is free, not even solar.

Wed, 08/06/2014 - 14:02 | 5054917 Jumbotron
Jumbotron's picture

Sure sign that the recession is back on in full force.

 

Wed, 08/06/2014 - 14:05 | 5054924 NoDebt
NoDebt's picture

But, but.... 4%, man.  What about 4%?

Wed, 08/06/2014 - 14:32 | 5055082 Jumbotron
Jumbotron's picture

Hi Kudlow.  Glad to see you back here in Fight Club.  ;)

Wed, 08/06/2014 - 14:28 | 5055056 Caveman93
Caveman93's picture

I've been sitting on a 3/4 full tank of gas in both my paid off 10 year old vehicles for two months now. My bad. No place I need to drive to anymore. No workie = no gasie required. Now they just need to make gasoline expire faster to speed up sales. 

Wed, 08/06/2014 - 13:55 | 5054870 LawsofPhysics
LawsofPhysics's picture

Please, let it drop to $50.

(and then good fucking luck taking delivery)

Wed, 08/06/2014 - 14:02 | 5054905 ekm1
ekm1's picture

It will go as low as $20 and bounce back up

There's too much oil stored around the world

 

The so called "market" is just a video game

Wed, 08/06/2014 - 14:29 | 5055066 101 years and c...
101 years and counting's picture

very possible.   it dropped to $32 in 2008.  and would have gone lower if Fed didnt print.

how quickly people forget.  

Wed, 08/06/2014 - 17:36 | 5056054 TheRedScourge
TheRedScourge's picture

How do you figure it will go lower than last time in the face of all the printing they've done since? Did they un-print a whole bunch some time when I wasn't looking? I call $60.

Wed, 08/06/2014 - 13:56 | 5054873 fonzannoon
fonzannoon's picture

cnbc says that move in the USD was "probably a fat finger"....

Wed, 08/06/2014 - 13:57 | 5054891 knukles
knukles's picture

#cnbcbunchafuckingmorons

Wed, 08/06/2014 - 14:08 | 5054941 Headbanger
Headbanger's picture

Just STFU fonz you Goldman POS!

Wed, 08/06/2014 - 14:14 | 5054974 fonzannoon
fonzannoon's picture

I am sorry you don't like me. I'd make fun of you but you have had such a tough road getting to this point in your life. I just can't help be inspired.

https://www.youtube.com/watch?v=s18WiitofZQ

Wed, 08/06/2014 - 14:04 | 5054920 NoDebt
NoDebt's picture

"Fat Finger".  That's weightist.  (I just looked it up- it's a real word, apparently)

I would prefer if CNBC would use the phrase "plus-sized finger" from now on.

Wed, 08/06/2014 - 14:17 | 5054998 pods
pods's picture

Fat finger?

Yep, fat finger in the sphincter of the USD.  

That blip was just the first knuckle.  There is more to come.

pods

Wed, 08/06/2014 - 14:24 | 5055029 mayhem_korner
mayhem_korner's picture

 

 

Thanks, pods.  That post makes me feel icky.

Wed, 08/06/2014 - 13:59 | 5054875 NoDebt
NoDebt's picture

Because the economy is so strong.  Because Obama.

There's no way we make it to the end of his second term without another crash.  No way.  And, quite frankly, I don't think Janet's got the balls to tackle a crisis like Ben the Defiler and Hank the Crank did.

Wed, 08/06/2014 - 14:06 | 5054930 fonzannoon
fonzannoon's picture

Yellen is a 200 year old gremlin. It has balls the size of  coconuts that scrape the floor when it walks.

Wed, 08/06/2014 - 14:26 | 5055046 Winston Churchill
Winston Churchill's picture

Blind date much ?

Wed, 08/06/2014 - 14:33 | 5055072 NoDebt
NoDebt's picture

Janet's just running the playbook Bernanke left on her desk before he exited in January.  Obama has obviously completely checked out and now lives at an endless stream of fund-raisers and golf courses.  Congress exists only as Kabuki Theatre now.

Nobody's minding the store.  If there was ever a time to wreak havoc, this would be it.  It would get WAY in front of them before they woke up and started taking action.

Wed, 08/06/2014 - 14:54 | 5055210 Dave Thomas
Dave Thomas's picture

Actually Yellin reminds me of the Breakstone's cottage cheese guy, he went grey and shaved his mustache. NOT THICK ENOUGH!

Wed, 08/06/2014 - 14:18 | 5054999 paulbain
paulbain's picture

--------------------------------------

 

 

 

 

NoDebt wrote:

There's no way we make it to the end of his [Obama's] second term without another crash.  No way.

     I agree, but am becoming impatient nevertheless.  Indeed, as of 2009, I thought that the crash would take place a few years ago (e.g., 2012), or, at least, that oil's price (WTI) would have breached $120/barrel by now.  Gawd, was I wrong!  WTI's price probably will not breach $120 for several years, at the earliest. 

-- Paul D. Bain

PaulBain@PObox.com

 

 

 

-------------------------

Wed, 08/06/2014 - 13:59 | 5054899 agent default
agent default's picture

You didn't ever think the bullshit is only infesting the gold market, right?

Wed, 08/06/2014 - 14:01 | 5054913 disabledvet
disabledvet's picture

Dollar and oil collapse? Don't see that everyday.

See they pushed back the Model X delivery to 2nd qtr next year.

Wed, 08/06/2014 - 14:08 | 5054942 The Most Intere...
The Most Interesting Frog in the World's picture

Uh oh :O

Wed, 08/06/2014 - 14:14 | 5054977 buzzsaw99
buzzsaw99's picture

oil being down = part of sanctions 3.0

Wed, 08/06/2014 - 14:21 | 5055010 elegance
elegance's picture

Somebody gets it.

Wed, 08/06/2014 - 15:18 | 5055321 CHX
CHX's picture

Right, a shot across the bow, and a shot in the own foot both at the same time. Look at how Europe's sanctions are backfiring already. Just sayin'. 

Wed, 08/06/2014 - 14:14 | 5054979 froze25
froze25's picture

This isn't a 6 month low, looks close to a 3 month.

Wed, 08/06/2014 - 14:15 | 5054981 The Phallic Crusader
The Phallic Crusader's picture

the real money is made on the volatility...

Wed, 08/06/2014 - 14:23 | 5055024 JohninMK
JohninMK's picture

Spot on.

Wed, 08/06/2014 - 17:40 | 5056073 TheRedScourge
TheRedScourge's picture

I see what you did there.

Wed, 08/06/2014 - 14:25 | 5055040 mayhem_korner
mayhem_korner's picture

the real money is made on the volatility...

 

Real money is not made...it's mined.

Wed, 08/06/2014 - 14:17 | 5054996 Bubber
Bubber's picture

Just a desperate attempt to put the hurt on Putin before the heating season arrives and he turns the gas off... just sayin

Wed, 08/06/2014 - 14:18 | 5054997 A82EBA
A82EBA's picture

crude at 6 mo lows, dollar at 10 mo highs

im going out to fill my tank, later

Wed, 08/06/2014 - 14:27 | 5055050 mayhem_korner
mayhem_korner's picture

 

 

Just don't fill yer tank with crude.

Wed, 08/06/2014 - 15:25 | 5055349 A82EBA
A82EBA's picture

ha, point taken, i down arrowed myself

Wed, 08/06/2014 - 14:34 | 5055090 delivered
delivered's picture

A couple thoughts on the action in oil which are of interest/concern:

On the fracking and US energy independence front, if the US truly does become energy independent (a big if), the need for the Petrodollar really comes into question as the primary supplier of oil to the US, the middle east/Saudi Arabia, will look to other markets namely China, India, and other emerging markets for sales. The Petrodollar is already coming under pressure but this trend could ultimately lead to a quicker demise. Not so much if, but when the world finally moves off the Petrodollar, the impact of unwanted dollars attempting to find a new home (rather than leaving them parked in reserves needed to support trade) should be quite a event indeed. 

As for the price of WTI, if it continues to decrease, the economic viability of fracking will come under further stress. Already, I believe the average cost of a fracked well is roughly $10 million. Further, production rates after year one tend to fall significantly compared to more traditional/conventional wells (20 to 30% compared to 5 to 10% respectively). On top of this, once the true/real impact of the environmental issues are properly accounted for after the "politics" associated with the industry give way to real data (i.e., large fracking company actually have to start to account for and set aside reserves for environmental clean-up, litigation, etc.), you have the making of an economic storm. Throw in the final piece to the puzzle in that the fracking companies that rely on large amounts of debt to finance the wells/production and all of a sudden, the darling industry of the past 5+ years, that could do no wrong, will quickly face severe economic distress.

One only needs to look back at the history of oil production in the US and boom in the Oil Belt in the early 1980's which ended up in a major bust in the late 1980's. I worked in Denver around this industry from 1985 through 1989 and watched an incredible ride up (with oil reaching $35 to $40 a barrel) end in an implosion when oil crashed to less than $15 a barrel. Many a companies and investments vanished like a fart in the wind during this period. While I wouldn't expect this type of violent correction in the current environment, if the price continues to fall then the impact will be far reaching, ranging from a positive of lower gas prices to a negative associated with financial stress in the oil production industry. 

The lesson learned is simple. Be careful what you wish for (i.e., energy independence) as what is good for the geese isn't always good for the gander (especially when the gander has alot of money at stake).

 

 

 

 

Wed, 08/06/2014 - 14:42 | 5055142 orangegeek
orangegeek's picture

stronger USD will push oil much lower over the next few weeks

 

http://bullandbearmash.com/chart/wti-oil-daily-bounces-support-retraces-...

 

oil is not going down without a fight, but the other energies have already been driven lower

Wed, 08/06/2014 - 15:44 | 5055466 Dr. Hannibal Lecter
Dr. Hannibal Lecter's picture

Rubbish.

 

and your link sucks too.

Wed, 08/06/2014 - 14:48 | 5055183 MalteseFalcon
MalteseFalcon's picture

Oil moves up.  Oil moves down.  Oil is the original phony-ass controlled "market".  Unless you can attend a meeting of the "controllers", you have no idea. 

Now in the long run, the oil runs out.  The sun will go out, too.  In either case I'll be long dead and so will you.

Wed, 08/06/2014 - 15:05 | 5055271 FieldingMellish
FieldingMellish's picture

fracking now at break even

Wed, 08/06/2014 - 15:12 | 5055299 Itchy and Scratchy
Itchy and Scratchy's picture

The real sanction on Russia!

Wed, 08/06/2014 - 15:53 | 5055525 q99x2
q99x2's picture

Deflation bitchez.

Wed, 08/06/2014 - 16:22 | 5055704 constantine
constantine's picture

The plunge in WTI seems almost completely due to the fire at CVR's Kansas refinery, which has resulted in a significanltly reduced refining capacity in the USA and a most likely temporary backup in domestic oil supplies.  The selloff, now about about 10 days old, started immediately after the initial reports of this fire and has continued.  Initial press release by CVR Refining state that the refinery will be completely offline for about a month.  

http://www.reuters.com/article/2014/07/29/us-refinery-operations-cvr-cof...

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