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Copper & Crude Are Getting Crushed

Tyler Durden's picture




 

Despite global geopolitical crises exploding among the world's biggest producers of oil, WTI (and Brent) crude oil prices have tumbled to 5-month lows (WTI At $96). Despite the exuberant PMIs in China, Copper and Iron ore prices are collapsing (2-month lows). One can't help but wonder what global 'economic growth' must really be like if 'demand' for all these crucial growthy commodities looks so weak?

 

Copper and crude have been smacked 2 days running starting at 8amET...

 

Pushing them to multi-month lows...

 

Notably - the initial spot surge in commodities post-Qingdao ponzi debacle has now given way to broad-based weakness...

 

just as we warned it would...

 

Chart: Bloomberg

 

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Thu, 08/14/2014 - 12:38 | 5092800 Latina Lover
Latina Lover's picture

The only growth industry globally is mainstream media BS.

Thu, 08/14/2014 - 12:44 | 5092823 The Most Intere...
The Most Interesting Frog in the World's picture

And "Trending articles" featuring beautiful women with big tits.

Thu, 08/14/2014 - 13:05 | 5092947 NidStyles
NidStyles's picture

So BTFD?

Thu, 08/14/2014 - 13:30 | 5093072 StackShinyStuff
StackShinyStuff's picture

Seems so.  Stocks melting up again.

Thu, 08/14/2014 - 13:31 | 5093078 The Most Intere...
The Most Interesting Frog in the World's picture

Every time!

Thu, 08/14/2014 - 12:48 | 5092848 MalteseFalcon
MalteseFalcon's picture

Speculator margin coming out of commodities.  No biggie.

Thu, 08/14/2014 - 12:39 | 5092804 LawsofPhysics
LawsofPhysics's picture

"crushed?"  Is crude back under $50 per barrel?  crushed? no, sorry, I think not.

Thu, 08/14/2014 - 12:47 | 5092837 ekm1
ekm1's picture

http://321energy.com/editorials/energyreport/energyreport092912.html

 

at least 30% if not more of crude oil is stored onshore and offshore to be used as collateral for derivatives due to Quantitative Easing

 

Plenty of oil, but high price otherwise derivatives implode.

Either derivatives implode, or assassinations ensue pretty soon

Thu, 08/14/2014 - 12:52 | 5092873 Seasmoke
Seasmoke's picture

One or both better happen VERY soon. Time is up !!!!!

Thu, 08/14/2014 - 12:53 | 5092877 techstrategy
techstrategy's picture

That claim is somewhere between inane and absurd.  200MM barrels will last how long?  Sorry, but that stock is paltry with respect to the flow.  That $20B in oil in a market of trillions...  Think of it as an enhanced SPR...

Thu, 08/14/2014 - 13:02 | 5092927 ekm1
ekm1's picture

Enhanced SPR is fine by me.

Real oil still out of the market to keep price up artificially, so derivatives live another day and economy collapses further

Thu, 08/14/2014 - 13:16 | 5093006 techstrategy
techstrategy's picture

EKM, some of what you say is on track, but one MUST evaluate the degree of distortion.  That oil is VERY small with respect to total.  The real impact will be if oil falls, our shale miracle will implode... The structure of the supply curve has been permanently altered... Welcome to the future.

Thu, 08/14/2014 - 13:40 | 5093099 ekm1
ekm1's picture

shale oil is trivial.

USA consumes 18 million barrels per day and produces 8.5 million per day as opposed to 7 million per day before.

 

That oil is quite large with respect to total, otherwise price would have been $40 by now

Identical scenario occurred in the run up to 2008, until Bush ordered Lehman dead and oil be emptied out from storage.

I'm not inventing something new nobody has heard about.

 

The is just a repeat of 2008 nothing more, nothing less.

Thu, 08/14/2014 - 15:57 | 5093880 techstrategy
techstrategy's picture

Need to work on your math and unit economic EKM.  We consume 18 MM BPD.  The amount held out according to the article is 10 days supply.  It simply isn't enough to effect the oil swings you are suggesting.  Further, shake is 2MM BPD.  If shake goes offline because prices fall, the surplus would be gone in a few months...

Thu, 08/14/2014 - 16:53 | 5094181 ekm1
ekm1's picture

 Read the article and check the date please, sir

1/3 of output not reported

Thu, 08/14/2014 - 12:54 | 5092890 oklaboy
oklaboy's picture

great article, from 2012, is it relevant for today?

Thu, 08/14/2014 - 13:00 | 5092919 ekm1
ekm1's picture

Of course.

That's why price has been up since.

 

Thu, 08/14/2014 - 14:17 | 5093294 Groundhog Day
Groundhog Day's picture

this tit for tat shit has gone on long enough.  the US is now getting serious with its trade wars.  The US has taken off the gloves.  How else can oil be under 95 and falling with all this tention in the middle east and russia, the largest providers of oil

Thu, 08/14/2014 - 16:06 | 5093922 GooseShtepping Moron
GooseShtepping Moron's picture

Because the demand just isn't there. The global economy is in a state of contraction and the rehypothecation trades are starting to blow up. The declining price of commodities is one of the few truthful signals the market is still sending.

Thu, 08/14/2014 - 16:15 | 5093971 brushhog
brushhog's picture

Remember these are priced in dollar ( fiat ) terms. So...global demand might be contracting but the money supply is expanding even faster. So commodity prices "should" rise in nominal terms. I'm putting this down as a temporary anomaly in an otherwise straight upward trend in almost every commodity across the board.

Thu, 08/14/2014 - 13:09 | 5092809 firstdivision
firstdivision's picture

That's cause its now become harder to create faux demand thanks to those Chinese inquiries.

Price of crude falling off a cliff.  Call me 'fucking surprised'. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

Thu, 08/14/2014 - 12:42 | 5092812 Exalt
Exalt's picture

Dat demand failure.

Thu, 08/14/2014 - 12:42 | 5092818 ekm1
ekm1's picture

You call that "crushed"?

Watch out for $10 drop in one day for 3 days in a row

Thu, 08/14/2014 - 12:42 | 5092819 The Most Intere...
The Most Interesting Frog in the World's picture

BOJ needs to start buying commodities.

Thu, 08/14/2014 - 12:44 | 5092830 Bill of Rights
Bill of Rights's picture

Cash is king....

Thu, 08/14/2014 - 12:58 | 5092909 sessinpo
sessinpo's picture

Bill of Rights: Cash is king

---

You are correct sir. It is king until it loses worlds currency reserve. When that happens, who knows but opposing forces are working on it very hard lately.

That is why most markets go down such as PMs and other commodities. It's a deflationary market where debt becomes due and people scramble for cash to make their payments. That means selling off assets which puts downward pressure in those markets.

Yes, we have some exclusions to downward prices right now such as food. But it all changes when deflation takes full forces. But it won't matter anyway. Even if food prices go down, we will be at a point where people have NO money to pay for it.

Thu, 08/14/2014 - 13:26 | 5093058 The Most Intere...
The Most Interesting Frog in the World's picture

Things always have a way of correcting themselves. US has been able to get away with currency murder for decades. With some pretty substantial competition emerging, I believe the Fed and US government realize the party is over. QE unwind is first in a series of events to occur that will strengthen the dollar and squeeze all the bullshit out of the system... Look out below...

Thu, 08/14/2014 - 12:45 | 5092831 Yen Cross
Yen Cross's picture

  Can we throw silver in that article as well?  There must be a shitload of SPOT physical demand, with all those sell forwards hammering the hell out of it everyday. /sarc

Thu, 08/14/2014 - 12:46 | 5092843 Spastica Rex
Spastica Rex's picture

Drill baby, drill!

Don't tell me it ain't profitable, just borrow some more money and get busy!

 

Thu, 08/14/2014 - 12:48 | 5092854 techstrategy
techstrategy's picture

At what point do people (including the folks here at ZH whom I definitely respect) start to realize that the move in crude is entirely contrary to EVERY other conflict in an oil producing nation?  Russia exports mainly what? China's commodity backed financing deals accumulated a lot of which physical assets?  The markets are being driven to achieve political objectives...  The outlier nature of all of these moves against historical precedent make it clear.  China and Russia have positioned themselves to drop the USD.  But, the markets can be bullied for awhile before gravity sets in... Unfortuntely, we are on the wrong side of a sustained standoff here as their resources are real and ours depend upon trust, which is systematically being destroyed by the misuse of financial markets.

We've put our financial institutions above our citizens.  

Thu, 08/14/2014 - 13:00 | 5092914 The Most Intere...
The Most Interesting Frog in the World's picture

Agree w your observation, their assets are real and ours based on trust. But wouldn't that force the price of US dollar denominated assets higher? Not lower? Also 10 year is now under 2.5% last I checked. Through manipulation, stupidity, or IDK what, the greenback appears to be a resilient little fucker.

Thu, 08/14/2014 - 13:14 | 5092997 techstrategy
techstrategy's picture

As I said, in the short run assets can be bullied using flow.  And frankly I've been pointing out on certain MOMO float scam stocks how what I refer to as the collusive cartel use options to paint the tape, which is easily done with QE flow (sell vol, pump the bid, unload via calls and collect puts coupons).  It has taken place in MOMO scams with tight institutional control of float for a long time (everyone should be exiting float scams en masse -- AMZN, NFLX, TSLA -- all the stock where institutional control of float by the top ten growth cartel holders is north of 40% and haven't been subject to true price discovery...).  Meanwhile, GLD and real investments are constantly subject to price discovery as they are what is sold to raise cash because there are actual buyers for them rather than bots scalping premium.

We can end the games people.  Exit float scams completely for cash (at least some in physical FRN) and gold.  

Thu, 08/14/2014 - 13:01 | 5092920 NOTaREALmerican
NOTaREALmerican's picture

We've been fighting ww3, for some time now, using weapons that Tom Clancy didn't care all that much for because he love ships and tanks.    

Maybe he'll be reincarnated and write a book call:  The Hunt for the USD

Thu, 08/14/2014 - 13:01 | 5092921 PeakOil
PeakOil's picture

Bingo.

Thu, 08/14/2014 - 12:53 | 5092875 sessinpo
sessinpo's picture

Copper and oil: two major components of industrial production. Very deflationary.

Thu, 08/14/2014 - 13:10 | 5092982 The Most Intere...
The Most Interesting Frog in the World's picture

Deflation and bail ins for dinner here on out. Losing Reserve status is worst case scenario. Wind down of QE first step back from the abyss.

Thu, 08/14/2014 - 12:54 | 5092885 adr
adr's picture

The price of commodities has long since disconnected from reality. The traded price in nothing but a function of the movement of money. 

The algos search for the most efficient transfer of freshly printed Fed dollars to the oligarchs pockets.

If that is shares of Tesla, oil contracts, JPY transfer, whatever. That is what is going to trade up.

The day to day trade in oil contracts is inconsequential to the end price paid by consumers. Only the settled contract matters. I seriously doubt the contract is going to stay below $100 for long. Unless the large players have decided to move out and traded volume collapses.

Fucking JPM put a price target of $350 on TSLA, even though the current price  needs sales of over 5 million cars to justify. With 15k orders for the Model X Tesla still has a way to go. But when did actual sales ever have a bearing on the price of TSLA. You can't argue with fools or criminals.

Thu, 08/14/2014 - 12:55 | 5092893 toros
toros's picture

Long CAT here, money printing will require large equip to move cash on the side lines.

Thu, 08/14/2014 - 13:02 | 5092929 NOTaREALmerican
NOTaREALmerican's picture

And don't forget,  when it's moved to the sidelines it's turned into dry powder.   Who makes the equipment that turns money into dry powder?

Thu, 08/14/2014 - 13:05 | 5092949 The Most Intere...
The Most Interesting Frog in the World's picture

The government.

Thu, 08/14/2014 - 12:55 | 5092895 FieldingMellish
FieldingMellish's picture

WTIC back under shale break even. Blowback and unintended consequences.

Thu, 08/14/2014 - 13:03 | 5092936 The Most Intere...
The Most Interesting Frog in the World's picture

Profit don't matter no more! Yippee! Capitalism is dead. Capitalism was such a meanie!

Thu, 08/14/2014 - 12:58 | 5092905 NOTaREALmerican
NOTaREALmerican's picture

This will be good because gas prices will drop and consumers will feel more confident and the Algos - which have software able to detect the subtle changes in human behavior, and injuries to Ukrainian militia leaders - will drive up the price of stock.

So, basically,  (yes)  BtFD.

Thu, 08/14/2014 - 13:14 | 5092998 q99x2
q99x2's picture

This is evidence that central banks and big banks have total control over the markets. It is also a sign that they have no options but to display it in plain view. We are getting close.

Thu, 08/14/2014 - 13:22 | 5093032 malek
malek's picture

Must.lower.Russian.revenue from energy exports

Thu, 08/14/2014 - 14:06 | 5093242 fonzannoon
fonzannoon's picture

what happened to crashisoptomistic?

Thu, 08/14/2014 - 16:47 | 5094153 L G Butz PhD
L G Butz PhD's picture

sure he's fine

back in a flash for the crash

 

Thu, 08/14/2014 - 16:17 | 5093978 brushhog
brushhog's picture

Remember these are priced in dollar ( fiat ) terms. So...global demand might be contracting but the money supply is expanding even faster. Commodity prices "should" rise in nominal terms. I'm putting this down as a temporary anomaly in an otherwise straight upward trend in almost every commodity across the board.

Thu, 08/14/2014 - 17:41 | 5094338 Quaderratic Probing
Quaderratic Probing's picture

Take oil to $35 for a year, Russia collapses the west buys Hummers with 49 foot trailers..

Vlad gets CheckMated.

Don't ever forget it's not Vlad vs The Pres it's Vlad vs the Rothchilds ( the Master chess player )

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