Forget Geopolitical De-Escalation - Here's The Real Reason Why Oil Is Tumbling

Tyler Durden's picture

As with  every other asset-class in the world now, fundamentals have taken a very distant back-seat to both liquidity (flow) and positioning (technicals) as traders are increasingly (in one way or another) on the same side of the same trade. Mainstream media will proclaim US energy "independence", US sanctions 'winning' over Putin, or US airstrikes 'calming' down Middle East uncertainty; but the real reason oil is plunging is... the biggest mass liquidation of speculative longs in recorded 30 year history over the last few weeks...



Obviously speculators remain massively - unprecedentedly long oil futures still...


Chart: Bloomberg

h/t Sean Corrigan

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
himaroid's picture

Dadgum inflation trades are going to kill folks. DEFLATION. Credit market trillions. QE billions.

SoberOne's picture

Petrodollaring out Putin. I dont know how this will end but 7t wont be well.

Gregor Samsa's picture

"The US is certainly one of the world’s leaders. At some point it seemed that it was the only leader and a uni-polar system was in place. Today it appears that is not the case. Everything in the world is interdependent and once you try to punish someone, in the end you will cut off your nose to spite your face,” --Putin


Lets Buy The Dip's picture

There's an expectation that times are good and are going to get better, and that this economy has legs, and oil will decide that.

 also on the market, there is a lot of caution there; we just broke a big barrier. We failed to break over 2,000 a couple of times. If we don't rise above it in a convincing way, that's the market telling us" that investors are wary,  see the chart HERE ==>

A few of the economic indicators have been pretty solid, which flows through to corporate profit. So the next few months will be interesting. 


CrazyCooter's picture

Maybe Putin has some calories stashed around Russia, decides to turn off the 10 million BBL/day spigot, and ride it out through winter. Russian winter much?

Won't happen, but all fucking bloody hell will come lose when the first major producer goes offline ... to the point that every major producer knows they have the world's balls in a vice.



philipat's picture

So, "Belgium" is now a big seller of crude?.....

strannick's picture

"There are no.more markets, only Government interventions".

-Chris Powell, GATA

What's more Fascist than that? It's worked for gold, why not oil? Though I expect oils too big a market for this wag the dog b.s. to last long.

That graph is a supremely important explanation of geopolitics, not a refutation of geopolitics.

Smack oil, destroy Ukraine. Stop Putin at all costs, because he opposes PetroDollar tyranny and  won't roll over.

God help us all

amusedobserver's picture

That graph tells me that the specs were all following each other long until they realized the price wasn't following them too.  So with all the turmoil in the world getting worse, why wouldn't the price of oil go sky high?

Maybe it has something to do with Siluria Technologies.  Doesn't anyone surf the internet anymore?  There is a lot of the conventional idiocy posted in these comments further down so I'm putting this up here.

Siluria has working technology to convert natural gas to gasoline (and other fuels like diesel and jet fuel) at $1 per gallon.  This isn't just theoretical dreaming, they have built pilot plants, and now demo plants, and plan to build scaled-up commercialization plants in 2017.  They have investment backing from Saudi Aramco investment arm and Kleiner Perkins.

If oil is down maybe it is because we don't need expensive oil anymore.  Natgas is currently selling for about one-sixth the equivalent energy content of oil.  Either oil is going down, or natgas is going up.  Make your bets.

Manthong's picture


Go back to sleep.

The fact that the NWO NWA CIC and State is trying an oily bear hug/squeeze should not be understood by the unwashed masses.

Enjoy.. fill up your tank.

Short today, long tomorrow.

zhandax's picture

When 'everybody' crowds to one side of the boat....

Keyser's picture

Supplies of crude are up, the Saudis have opened the spigot and have upped production and crude is being stockpied... This is all a ruse to drive down the price of crude to attack Russian exports... More of the same bullshit, different day... 

chistletoe's picture

Thank you for the information about Siluria ....


It is truly a pity, isn't it, that supposedly intelligent, educated individuals do not have any clue about chemistry?

Siluria has a process which can economically convert methane to ethylene in bulk.  This isvery  interesting news and it will have an impact on the plastics industry and all the other industrial uses for ethylene.  But ethylene is not gasoline any more that it is alcohol ....

amusedobserver's picture

I am not a chemist, but as the article clearly states:

The OCM ethylene can be converted using a different catalyst into liquid hydrocarbon fuels or blend stocks, in a process referred to as Ethylene to Liquids. The composition of the liquids products can be tailored to a preferred composition and specification. Examples of ETL products include gasoline, condensates, aromatics, heavy oil diluents and distillates (diesel and jet fuel).

The fact that this information hasn't generated more interest (but it did generate 3 downticks!) may show that most supposedly intelligent, educated people are just clueless, period.  

Deathrips's picture

The FED subsidizes oil along with all the other commodities. They are selling futures betting on the acquisition of Syria, Libya, Iran and Russias reserves. The problem is they need your kids to go and get them....For FREEDUMB.

Why can they sell shit they dont own again....?


Fuck it Ill answer my own question.


Because they are using a subsidized fake market to enslave people. Its as simple as that. They are comfortable making digital blips and paper in exchange for labor/blood (etc) from the people.

For insight into how the story ends. See Venezuela toilet paper first. See Zimbabwe next. Now that youre warmed up. See "When Money Dies" Ferguson...after reading that, know in your heart that this will be at least 10x worse.


If you depend on these traitors to are fucked.







john39's picture

hey, wait a minute...  you are supposed to be foaming at the mouth about that mannequin getting beheaded with a butter knife...

Ginsengbull's picture

"Why can they sell shit they dont own again....?"


Because someone is willing to buy it.

Honey Badger's picture

+1 for dadgum. Should be pronounced day...gum!

Quinvarius's picture

Dude.  That is why the inflation trade is going to happen.  You nutbag deflationists continue to insist deflation is possible no matter how many times you take a hammer to the head.  That credit market is why they are going to print 100's of trillions.  No matter what you think, hyperinflation is the only outcome.  They will print every dollar of that credit market, just like they have been doing the whole time.

himaroid's picture

Your big surprise will be will you discover that your all powerful fed is not in control.

Dr Strangemember's picture

How come nobody has brought up the pending rollout of the Elio Automobile?  CLEARLY it's already having an impact on prices given its 84 mpg.  Gas prices will fall another 85% in response.  

junction's picture

I just paid $3.53 a gallon at Valero in Westbury, L.I., the lowest in a year.

Grande Tetons's picture

Prices at the pump are lower to help out regular folks.....after is payback time fuckers. 

Barry O

Dragon HAwk's picture

Yup it's a historical trend, things always ( seem ) to get better right before an election.. good thing we haven't lived long enough to see thru all the  BS.. Oh Wait....

Dr Strangemember's picture

Oh, so NOW I'm the fucker??????

Bossman1967's picture

sad thing is you think that's good at 94 a barrel that's a rip off hello wake up everyone

Miffed Microbiologist's picture

WTF! I paid $3.85/gal today in San Diego! Oh yeah, I forgot I live in Cali and must have a special blend so to be environmentally friendly. Now I pray all of you from the polluting states have the decency to keep your foul air to yourselves. I'm sure Moonbeam will propose a gigantic fan to combat the grey cloud wafting over from China.


Boogity's picture

I got scammed for $5.30/gallon in Big Sur this past weekend.  There ought be a law against price gouging by fuggin California treehugging hippeshits.  Take their fuggin 'medicinal' pot away, give 'em flat top haircuts, make 'em take daily showers, and make 'em listen 24/7 to Earnest Tubb and Johnny Paycheck at 100 db.   

marathonman's picture

You can find it for $3.15/gallon in Houston area.

BiteMeBO's picture

Filled the home heating oil tank for $3.24 in NJ.  Just need to keep the zombies from siphoning it this winter.  

Midas's picture

Why do you use heating oil?  Is there not a more affordable solution?  This is an honest question.

Ginsengbull's picture

Natural gas is less safe.

BiteMeBO's picture

You selling solar?  no thanks. 

Midas's picture

I'm not selling anything.  Is heating oil more cost effective than natural gas or a heat pump?  And again, this is an honest question.  I don't live in the northeast and I have wondered why they are the only people left using heating oil.

Cognitive Dissonance's picture

Wow. What a save.

Now there are only 995 on one side of the boat with 5 having shifted to the other side in the last few weeks.

disabledvet's picture

More like a thousand foot long supertanker. "If not an entire fleet."

The gamechanger are Tesla's in my view...not the Bakken or Permian. Sounds stupid to say "all we're lacking is a battery" but sometimes knowledge is that stupid.

Pittsburgh, PA could very well be the Doha of the 21st Century. "And that does include the natural gas too."

With the Dow at 20,000 I'll believe anything at this point...

Tooth fairy, Santa Claus, the Easter Bunny...everything is on the table now. Phuck "going long"...let's buy Kentucky!

FreeMktFisherMN's picture

yawn. Oil is still in the mid 90s, and has tons of long term support lines between 92 and 87. Oil priced in gold will remain stable. 

lucyvp's picture

Im buying a long position if it hits 88, and for those with short memories 10 short years ago oil was $40.00 for wti.  I don't have a futures account.  Anyone have a better idea than DBO?

Toyota echo's picture

323 in sebring fl

OldPhart's picture

3.79 down the street...Apple Valley, CA.  Has come down from the earlier high of $4.30, but now we begin the forced shortage due to the switch back to the winter formula.


Hal n back's picture

Election coming. Time to push oil prices lower.

Or, push them lower to sanction Russia.

yogibear's picture

Exactly. Barry's wants to win at all costs.

samsara's picture

"The Price Going Down...."

Like just before a Tsunami the tide goes way out... or Like a small child that just got hurt,  you hear that long draw in of a breath(which is equal to the coming scream),   then all hell breaks loose.

I say we are just a couple years out of the shale oil/gas etc bust, and depletion really starts kicking in.

Less energy at an affordable cost. EROEI.

Liquidation of the longs makes sense.

All hell breaks loose.

FreeMktFisherMN's picture

The ND boom is a perfect display of malinvestment at work. They need high oil prices even more so because the QE bubble has blown in the usual regions which means capital is flowing to not a productive area like Williston, ND, but rather towards more absurd 'valuations' in CA and AZ, etc, and that means less supply in ND so housing prices  and rents and food there are sky high. So they need capital going towards them, but of course also no exporting gas so prices stay down due to that as well (less incentive to drill more, too). Supply/demand is always a two way street. Sure exporting gas means prices rise, but it induces more production, too, and also infusion of goods and services from abroad, too. That's how trade works.

The .govt with regs, too, of course, and QE and malinvestment thereof is causing all kinds of issues and untapped potential. I think the pessimism is unwarranted re: is there really a renaissance in shale that is going to last awhile, but it is warranted if it is predicated on .govt leading to misallocated resources and thus less good supply and instead bubbles in financial assets. 

LawsofPhysics's picture

South America exports a tremendous amount of oil.  Far above what it consumes.  Imagine if the people of these countries actually started using those calories to improve their on standards of living instead of sending it to our refineries?


tick tock motherfuckers...

Rock On Roger's picture

EROEI indeed.


I doubt if anyone other than an organic farmer (or SRSrocco) has thought of that over the last few centuries?


What is going to happen when that underwater beach ball lets go?


The long breath before the wail...

LawsofPhysics's picture

Correct, and confirmed by an executive I know at BP.  That which cannot be sustained, won't be, period.


Americans really don't understand what real poverty is, but they will soon enough.


Get those fusion reactors online motherfuckers!

marathonman's picture

Molten Lithium floride Thorium fission reactors.

BeetleBailey's picture

Oil is manipulated more than a bra size on a Vegas showgirl application....