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Is The Selling Overdone: WTI Momentum Hits Oversold For Only Third Time In Six Years
Another day, another attempt by the Saudis to topple Putin and kick the Kremlin where it hurts: the oily bottom line. And, as a result, another 2% drop in the price of West Texas Intermediate and various other crude grades around the globe.
But is the selling finally overdone, as some suggest happened to the S&P (as an alternative view to the PPT stepping in, the same PPT even Bloomberg is happy to bring up in casual conversation)? Well, according to the 1-year z-score of large speculator net position as % total open interest, is the lowest it has been since late 2011, early 2012, when the Fed was forced to bail out the world and Europe was crashing (as usual) into a deflationary vortex.
Also of note, per last week's COT report, large speculators decreased WTI crude oil longs to $26.1bn from $27.0bn notional.
But perhaps the clearest indication that not even the Saudi's can keep pushing the price of oil much further here is that from a purely technical standpoint, oil is so hated, that the daily RSI has reached oversold only for the 3rd time in six years!
So will someone (perhaps the Kremlin's various preferred Swiss energy trading companies out of Zug) finally make a move and try to trap the crude bears in the coming days? If so, the move could be violent if and when the short squeeze finally begins.
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'Oil is so hated'...bah....just less demand bottom line!
It's a fight to the death with the USA shoving our drug-addled bitch-whore KSA into the ring versus Russia.
I don't think KGB head Putin is as worried as our USA CIA media wishes to portray.
I think it is the Sauds that should be worried about racketeer Uncle Sam's ability to continue to deliver protection, although Aspen, London, Geneva, and a big-ass yacht in the Med still remain relatively safe for the Royal Court.
Saudi's have a tough job to accomplish. Keep the prices low for their Western overlords without bankrupting themselves. Expect to see a range of $85.00 to $90.00 through election time.
When you control the computers that oil is traded on you can make those numbers do anything you wish.
This allows those that buy or sell off market think they are getting deals when they are not.
The Saudi's are screwing with the Iranians as much as possible....
When did the chartists ever make any money?
Last time it was priced here was right before the 2012 election. How convienient.
It's a fight to the death with the USA shoving our drug-addled bitch-whore KSA into the ring versus Russia.
The cruelest of ironies! When you can blame the innocent for your crimes that is!
They try to make it about everything else BUT supply and demand.
This is what us free market belivers would say needs to happen to drive out weak businesses and halt malinvestments in the sector.
Will the Central Banks allow that to happen, or intervene because petroleum is a "vital national interest"?
psst...hey buddy.....we phonies up futures .1%, don't ya wanna buy some central bankster stawks?
so, oil should rise based on the massively expanding global economy, which ZH scoffs at everyday??? too funny.
Anyways, when it got oversold in 2008, it still managed to drop from 150 to 80 BEFORE LEH crashed it even further. just saying....
Demand constraints are un-American.
Christmas is coming, so get out there and drive to the mall. In your F-350. The mall in the next town down the highway.
You are assuming world oil will still be sold in USD so USA could just type up digits on computers and get oil
When the plates stop spinning and fall to the floor, when all the bluffs are called and the cards are finally on the table, reality will reassert itself and we'll all have to conform to it.
Expensive oil makes Saudis irrelevant.
Cheap oil puts Saudis in control
Saudis cannot allow computers to set the oil price. They eventually decide to take control of prices
Common sense would say so... but Saudis have nowhere to go, though they may try.
When you dance with the devil, you have to wait for the music to stop.
Music already stopped when Putin started selling oil not in USD and China doing swaps with the world.
USA economy is collapsing as a consequence
It seems like a paradox but it isn't.
Strong USD along with Saudi alliance hence interventions, is the only thing USA have as exports world wants
There is no reason for any country in the world to sell stuff in USD and USA buy stuff by just creating digits on computers.
USA must provide a service in exchange, interventions.
If no interventions, then blaaah, world drops USD as it is gradually occurring
What really matters now a days is not the nominal price of crude but the net cashflow generated from refiners by selling refined products to consumers ... That is what holds prices together. Last time i checked you cannot run a car on crude! Currently margins have dropped dramatically, so refiners cannot pay the same price for crude as refined products in most countries is either heavily taxed or controlled/subsidized by the state. Also, the move from a zero cost of funds to a higher interest cost is now hurting all asset relying commodities. This is the new normal aka bear market!
The Saudi's can't manipulate shit.
The price drop is due to dying demand (recession) brought on by none other than high oil prices.
We're riding the bumpy plateau.
Can I get my Dow Jones 10k hat out yet?
RSIs - like all the other technical "indicators" - don't mean DICK.
Especially momentum indicators as they are derived from the same data as the price-time chart and therefore CANNOT provide more information than the price chart itself contains. The use of 14 periods in the Wilder RSI is completely arbitrary and validated by notihng.
Moan when WTI is too high and then call the bottom when it's sold off. Road to the poor house.
Pardon my ignorance, but...
How can the Saudis get squeezed(if they're the shorts) when they have plenty of oil they could deliver, as opposed to having to buy in the open market?
Don't squeezes require shorts covering to get going properly?
Oil has been above $100 for a longtime. People holding existing stockpile bought at a that $100 price with margin maybe completely wiped out if oil goes much lower. Lots of people have been storing oil now the chickens are coming home to roost in regards to that it seems.