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Forget Geopolitical De-Escalation - Here's The Real Reason Why Oil Is Tumbling
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
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Dadgum inflation trades are going to kill folks. DEFLATION. Credit market trillions. QE billions.
Petrodollaring out Putin. I dont know how this will end but 7t wont be well.
"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
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 ==> bit.ly/1fMcakI
A few of the economic indicators have been pretty solid, which flows through to corporate profit. So the next few months will be interesting.
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.
Regards,
Cooter
So, "Belgium" is now a big seller of crude?.....
"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
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.
http://www.biofuelsdigest.com/bdigest/2014/08/20/saudi-aramco-invests-in...
Shhhhh,,,,
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.
When 'everybody' crowds to one side of the boat....
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...
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 ....
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.
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 humanity...you are fucked.
RIPS
hey, wait a minute... you are supposed to be foaming at the mouth about that mannequin getting beheaded with a butter knife...
"Why can they sell shit they dont own again....?"
Because someone is willing to buy it.
+1 for dadgum. Should be pronounced day...gum!
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.
Your big surprise will be will you discover that your all powerful fed is not in control.
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.
I just paid $3.53 a gallon at Valero in Westbury, L.I., the lowest in a year.
Prices at the pump are lower to help out regular folks.....after November...it is payback time fuckers.
Barry O
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....
Oh, so NOW I'm the fucker??????
sad thing is you think that's good at 94 a barrel that's a rip off hello wake up everyone
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.
Miffed;-)
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.
Straight up, Boogster.
You can find it for $3.15/gallon in Houston area.
Filled the home heating oil tank for $3.24 in NJ. Just need to keep the zombies from siphoning it this winter.
Why do you use heating oil? Is there not a more affordable solution? This is an honest question.
Natural gas is less safe.
You selling solar? no thanks.
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.
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.
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!
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.
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?
323 in sebring fl
Gasbuddy.com
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.
Election coming. Time to push oil prices lower.
Or, push them lower to sanction Russia.
Exactly. Barry's wants to win at all costs.
"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.
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.
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...
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...
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!
Molten Lithium floride Thorium fission reactors.
Oil is manipulated more than a bra size on a Vegas showgirl application....
I want to be the compliance officer on the latter.
@ Grand Tetons: With a moniker like yours, I'd say you are qualified. Lessee, this is a publik position, $108,000/yr. to start, a car, a phone, moving expenses to the 9th pit of hell (D.C.), and a phat bonus if we at ZH get to audit your assets.
Hired on the spot!
I follow oil prices, and nothing pisses me off more than knowing prices down, supply up, and the QT just raised gas by a dime. They are falling since the last dime jump, $3.11 coming to work today.
paper trade winds, is this the calm before the storm, hope not.
Wow! I "saved" $2.85 when I filled up my car today! Now I am going to rush over to the grocery store and use the money to buy some ....... oh wait.......
Best comment in a long time....
2 thumbs up.................
$2.85 gets him a half gallon of milk and 11 cents change.
Well, with the economy really kicking into high gear you see the resulting drop in oil demand, and so the price goes down. As everybody returns to work and starts driving to and from their office or worksite on a daily basis, the demand for gasoline just plummets, and so that's why as a result of the booming economy, reflected in soaring stock prices, we see the price of oil cratering. So the long-side speculators are just rationally capitulating in the face of the inevitable demand collapse that always happens when the economy starts to improve.
so when PMs plunge its the FED prop desk, AMIRITE?!
funny how you would never post this same data for Gold and Silver Net Spec Longs
Bullish..everything is bullish! buy buy buy!
Is there anyone out there besides me thinking that demand might have something to do with this? I know, fundamentals are so old school.
Haha. Stupid speculators. They only made 100 qazillion dollars.
The US$ strengthened over the last two months.
yup, oil goes up and down inversely with the dollar. This drop in oil will cause GDP to go down because the fracking exploration will drop as oil drops. Less drilling means lower GDP.
And what effect will that have on equities????
Don't need gas if you don't have a job to go to. Unemployment is done over the internet now, and fake job searches also.
A trip to Walmart when the EBT gets reloaded doesn't equal the daily trips to a job.
Hey Moe! You're right.
we be lookin' to get recharged not just on da 1st, but again on da 15th, PBO (pee-bo...President Barack Obama) gon' do dat fo' us...cuz we call him up on da bamaphone...den, we be a force to reckon...we be suckin' up some gas...and bama be suckin some @$$...
Isn't it just seasonal? We're in the shoulder season. People shutting down refineries for maintenance, etc. It will head up again when the weather cools off.
Hey, the "petro-dollar imperium"; it all started here and on this day (Valentine's Day 1945)....a match made in cosmic eternity. Do a natal chart on that one and you'll know how it turns out.
http://www.ameu.org/getattachment/51ee4866-95c1-4603-b0dd-e16d2d49fcbc/T...
Thanks Salah for the link
The embryonic day of petrodollar...
The Day FDR Met Saudi Arabia’s Ibn Saud
Everyone who watched was mesmerized by the spectacle, at once majestic and bizarre. Over the waters of Egypt's Great Bitter Lake, an American destroyer, the USS Murphy, steamed toward a rendezvous with history. On a deck covered with colorful carpets and shaded by an enormous tent of brown canvas, a large black-bearded man in Arab robes, his headdress bound with golden cords, was seated on a gilded throne. Around him stood an entourage of fierce-looking, dark-skinned barefoot men in similar attire, each with a sword or dagger bound to his waist by a gold-encrusted belt. On the Murphy's fantail, sheep grazed in a makeshift corral. It was, one American witness said, "a spectacle out of the ancient past on the deck of a modern man-of-war."
Awaiting the arrival of this exotic delegation aboard another American warship, the cruiser USS Quincy, were three admirals, several high-ranking U.S. diplomats and the president of the United States, Franklin D. Roosevelt. As they watched in fascination, the man in the throne was hoisted aloft in a bosun's chair and transferred from the Murphy to the Quincy, where he shuffled forward and grasped the president's hand in a firm grip. Thus began the improbable meeting between Roosevelt and the desert potentate with whom of all the world's leaders he had the least in common, King Abdul Aziz ibn Saud of Saudi Arabia. In five intense hours they would bind together the destinies of their two countries and shape the course of events in the Middle East for decades to come.
It was February 14, 1945. The end of World War II was finally in sight as Allied forces advanced on Berlin and fought their way toward the Japanese heartland. With victory assured, Roosevelt was looking toward the future and envisioning new security and economic arrangements for the nation he had led through twelve tumultuous years. He ventured to Yalta, in the Soviet Crimea, to negotiate the postwar world order and the creation of the United Nations with Prime Minister Winston Churchill of Britain and the Soviet leader Josef Stalin. Before leaving Washington, he arranged to stop in Egypt after the Yalta conference for brief meetings with three leaders whose role in the war was marginal but whose place in the future might be significant: King Farouk of Egypt, Emperor Haile Selassie of Ethiopia and King Abdul Aziz, then commonly known as Ibn Saud.
That Roosevelt included Abdul Aziz on his list was a dramatic demonstration of how far and how rapidly American strategic thinking about the Gulf region had evolved during the war. Before 1942, the U.S. government had no official interest in Saudi Arabia, even though an American oil company had struck oil there in 1938 and had created a small community of American geologists, drillers and engineers to deliver the oil to global markets. No American official of higher rank than minister in the diplomatic service had ever before encountered the bedouin monarch, and the king, in all his 64 years, had ventured no further out of the Arabian peninsula than Basra, in southern Iraq. His domain was impoverished, isolated and backward; its levels of education, public health and mechanization were among the lowest in the world.
In strategic terms, Saudi Arabia, though never colonized, was in the British sphere of influence; the British were entrenched in Iraq, Bahrain, Oman and the trucial states on the Arab side of the gulf, as well as in Egypt and Palestine. The U.S. official presence was minimal in the entire Arab world, and so was official U.S. interest. In 1941, Roosevelt rejected State Department advice to provide financial assistance to Saudi Arabia under the Lend-Lease program with the comment, "This is a little far afield for us!" The war changed all that almost overnight.
Roosevelt's military and economic advisers, alarmed by the rate at which the war was consuming U.S. domestic petroleum, began to see the potential long-term value of the Saudi fields, the only ones in the Middle East where an American company held exclusive production rights. At the same time the U.S. Armed Forces, fighting a global war, wanted an air base someplace in the Middle East that was not under British or French control. And Roosevelt, looking past the combat, nursed the hope that Abdul Aziz, who despite his lack of formal education and his country's backwardness was a hero in the Arab world, would somehow be helpful in solving a daunting problem that the president knew was coming: the future of Palestine and the resettlement of Europe's surviving Jews.
- AMEU - Americans for Middle East Understanding, Inc
Next surprise lesson: The fed really is not in control. So long Wile E.
High School Dropout here (good hard working kid) just left for North Dakota.. $ 150.00K + benefits driving a tank truck. I'm packing my fucking bags.
But it takes $10K a month to rent a rat hole.
Make your bed before you leave home. That way it will be ready for you next week when you get back home.
be careful man.. lots of freaks out there.. as rape etc.. seriously..
Gudonya
Keep the shiny side up this winter.
I'm just waiting for them realtors to move to North Dacota to give some spin to it. This is why I would definitely advice to buy property right now, before all the hawks come down there...
Watch out fer them four wheelers.
You got a time machine? Because if you're going back to 2008-2010 you would be right. Now, you should only go there if you're an engineer.
Occasionally, speculators are on the correct side of the trade.
I never understand completley this COT data because each trade has a buyer and seller. There are hedgers and speculators, sure, but I don't get how data can show a whole lot (I would never trade on it anyway; maybe secondary indicator at most).
What moves prices is (aside from manipulation a la the COMEX getting momentum going via unloading millions of ounces of gold in the blink of an eye at odd hours) new buyers coming in and bidding higher like in an auction, and sellers move up prices knowing they can get more.
You don't actually believe the data do you? JPM was recently fined the princely sum of $600,000 for giving incorrect position data. At any rate, at least in most markets, the small spec position is usually wrong.
The data is pointless anyway because the bigger issue is the complete lack of awareness of how inimical the current STATIST quo system is to the middle class. If enough people woke up to the con and the evils of inflation, the COMEX would be irrelevant as indeed paper/phyzz would diverge. So shenanigans yes go on in COMEX, but the solution is not moar CFTC/SEC, but rather people waking up and naturally making these riggers obsolete.
COT matters BECAUSE THAT IS REAL MONEY.
Liquidity positions in the USA can be so large as to be market moving...just the sheer mass of paper. "It all sounds worthless until there's 10 billion on the other side of that trade too."
That's why I think there is NO WAY the Fed is moving to raise rates anytime soon. "Wall Street has excelled far beyond even their ability to comprehend the long end." The dollar surging higher should be VERY bearish...the USA price competitive with Zaire? I DONT THINK SO!
Then again...
I'm talking about from a trading POV. Futures have buyers and sellers on each contract. Prices move as new people come in and push up or bring pressure downwards.
heh! Like my broken watch : )
Less cars More bikes.
Number of miles traveled in automobiles in the us continues to drop every year.
Well...okay. "Free fuel it is then."
These french dudes never show their teeth when they smile (cock hairs). Anyhow, if Germany folds, there could be a spike in rates/commodities. Temporary.
http://www.marketwatch.com/story/germany-must-soften-hard-line-as-france...
The sky is falling. The sky is falling.
And the real reason for the biggest mass liquidation of speculative longs in history is
that this make-believe recovery is about to give way to the worst recession since '29.
And when it comes, either because the Fed stopped printing QE or because the Fed continued to print QE, the DEMAND FOR OIL is going to dry up like most everybody's load here at ZH without their quotidian VIAGRA.
Bubble markets can't go down until enough Muppets have bought into it, and then they definitely will.
That's right Muppets, the reason the markets move the way they do is because you're in it. Or, as Warren Tax-Me-More-Just Kidding Buffett once said, "Ninety percent of all investors in the markets shouldn't be there".
Bring back steam power - then we can run our cars on all the speculated paper oil out there.
Someone took away the speculators free $$.
Energy breakthrough.
Cheap , reliable energy generation at hand.
Those in the know are dumping oil.
Fusion ?
Zeropoint?
90% photoelectric?
Interesting times at hand .
Massive tectonic shifts in geopolitics.
So is oil in contango? Where is the price/barrel going to land? WTI @88? Brent @93? Then what? Slingshot up? Black swan flock overhead of oil
the real reason oil is plunging is...
the "One Weird Trick discovered by a Mom that cut her heating bill in half".
a 1964 quarter will buy you a gallon of gas
... allowing you to drive to the store and a buy a loaf of bread with a 1945 dime.
"a 1964 quarter will buy you a gallon of gas"
That has been remarkably consistent over the last 50 years.
I frequently bring that up when nostalgic doofuses start saying: "in my day, we only paid xx cents a gallon for gas"
That same '64 quarter also bought a box of .22LR in the hardware store.
Or 5 snickers bars (the bars were larger & had suger vs. corn syrup, too)
Also..I am a Jim Willie fan...here is his latest: https://www.youtube.com/watch?v=w9f2XzcYdOs
Did "some short" (read PPT et al.) squeeze some weak longs, to support the US economy and at the same time tickle a (russian) bear ?
Here's the reason....
France's government dissolves, US will strike Syria, Europe sanctions Russia, The Fed and all central banks buying shitty bonds like MBS - the same MBS that crashed the system 7 years ago.
And on and on.
Bubbleonomics in the WS cauldron.
Any sign of Ebola in Nigerias (5th largest oil producer) producing regions?
It might have made its way to Delhi (pop 22m) on a commercial flight: Flight from Ebola: Fingers are crossed
If India gets it, west London won't last long.