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WTI Crude Crashes Into The $50s
UPDATE: WTI just hit a $58 handle...
Zee overnight stabilitee (and brief dead-cat-bounce this morning) has turned into a renewed bout of selling pressure and for the first time since July 2009, WTI has broken below the $60 level. Canada Heavy is trading $42.10 (down almst $4 today!), its lowest since April 2009. Energy credit spreads are wider once again, now at +952bps.
Canada Heavy has crashed...
And WTI breaks below $60 (and bounces) after multiple stop run attempts...
Now we have a problem...
Who could have seen that coming?
As Deutsche Bank warned last month, a drop in the oil price to $60 a barrel "is likely to push the whole HY energy sector into distress."
Charts: Bloomberg
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Because demand is going through the roof!
It's a US war against anyone not aligned with .gov. Iran, Russia, Venezuela, Brazil......
Saudi's aren't threatened by shale oil, as Asian growth over the years has more than offset any reduced selling to the US from shale production. I'm convinced that this is part of the financial war going on and .gov is pulling all the strings.
We agree...
But unintended consequences can be a bitch... and this war is predicated on the FED and .gov being able to contol those unintended consequences.
I just read this article and the premise is that all this market volatility will lead to unintended consequences, but not where you think.
I'm not saavy enought to figure out where but thought the author laid out a compelling argument for things two and three orders/layers deep.
I don't trade any more, but still like to examine the trends and damage caused by the PTB who pull strings without knowing fully the unintended consequences they cause.
Any Thoughts?
DaddyO
The articile states "the canada banks will be hurt". Fuck the banks, canadian ones too.
No one seems to understand the price collapse, so it must be manufactured.
Wonder what is behind whore number two, ShIt.. I mean door number two.
In the mean time, I b lovin it. Just like being laid underneath the Christmas tree.
I'm a buyer at fitty cent;)
Come on, raise your hand if you've been waiting for the doom and are sick of watching the charade (as interesting as it has been)
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I take it John Kerry's consultations with the Saudis didn't go all that well...
Guess it's time to brush up on Arabic
Man, when the Saudis want to assrape a bunch of soon to be unemployed rednecks in North Dakota in the dead of winter, they obviously put a LOT of sand in the lube...ouch.
One of my targets have been realized. (However I am still looking for $1000 Gold and $9 Silver. I like it on sale. Perhaps at the end of February...)
It remains to be seen if ekm1's target for Oil will be realized.
Good work ekm1.
The four horsemen have mounted up and are riding thru Japan and the oil patch.
Hallelujah!
Hallelujah!!
Look out below !
Cheaper just let it sit in the well and percolate a few more years.
No hurry, it will wait there, unless there is a landgrab by taxes or takeover.
Texas Tea.
http://data.cnbc.com/quotes/%40CL.1/tab/2
Canadian banks will be fine. They started shorting the US three Mooseheads ago.
No doubt his basic premise is correct. The problem is that the market is now so unnatural and opaque that it's not even clear that the public would know if a particular big company or bank had been hurt badly until well after the fact. In other words, why shouldn't we be so cynical as to imagine that if such a company or bank were deemed to be "systemically important", it might be supported surreptitously by the criminals who insist on "saving" the system with freshly minted electrons?
The shale\fracking & oil boys have pretty much hedged and fixed their prices thru the end of next year. The ones that are going to take it on the chin in this are the ones on the other side of the futures contracts. Those are the guys that are going to need the bailout and they'll probably get it.
It's probably why the "God of Crud Oil" has jumped ship.
http://www.zerohedge.com/news/2014-12-09/mystery-crude-oil-liquidator-go...
False ... Take a look at WLL, EOG. THey are very very lightly hedged. Others have used 3 ways that limit protection to a downside move (eg, PXD, NBL, EXXI). There's going to be some real pain in the oil patch
who took the other side ?
i am starting to believe that the disclosures of hedging are overblown and a cover to stem the downturn of share prices
someone is bullshit!
Don't over look the fact that Saudi's and .gov are on the same side concerning Syria and Assad. Counter Party to that is Russia and Iran. I always forget who is Sunni and who is Shia but Iran and Saudi Arabia are NOT the same. So there is the Muslim flavor element going on there.
All the other oil producers, friend or foe, are just innocent victims in this.
Friend: UK, Brazil, Sweden .....
Foe: Venezula ......
Good point. Crude tanking 40% in a matter of days heralds more than just a few corporate or "sifi" failures. This heralds breaking of nations and sordid alliances.
Iran is Shia; Saudi is Sunni. But they're holding secret meetings and making nice now as the world realigns against the petrodebt flunky psychopaths. If there is one thing that could reunite most of the Muslim world, this is it.
Who sells equipment to shale drillers?
Who holds their debt?
Who bought derivatives of that debt?
Who really cares - it's all ficticious bologna anyway?
DaddyO
One of the unintended consequences, a first order consequence, is shale oil and tar sands producers. But, altho unintended, this is a foreseeable consequence of USA's financial and economic war (and perhaps even useful if bankers or some of the majors want to pick up some of those independents on the cheap).
A second order consequence is HY credit (well covered here on ZH) which, depending upon which producers default, determines the banks, hedge funds, etc. that suffer losses as a result, along with the producers' suppliers (and those suppliers' financiers form a third order consequence) and so on down the supply chain...
Derivatives are the wild cards, as the producers and their supply chain are relatively predicable consequences. What swaps and with whom form the basis of the actual unintended and unforeseeable consequences of .gov.'s financial and economic war with Russia et. al. And I doubt it possible to know exactly where those consequences will manifest without specific knowledge about their derivative contracts. This, when compounded by both the producers' financiers and their suppliers' financiers (and so on down the line), becomes a tangled web.
If that be the case, then .gov expecting that the FED has its back in suppressing these unforeseeable unintended consequences really only has one answer -- more printing. And does the FED act directly (as in TARP) or indirectly via the TBTF banks... if the FED is willing to act at all (as they now suggest).
But, I'm really not the right person to answer. I came to ZH to learn more about markets and finance... I only know what I read in the (funny) papers (and financial blogs and ZH, of course).
^+1
Thanks for the insight, that's what I was driving at...
The second and third tier impacts are what really affect main street quickly.
In my way of thinking, those are what lie below on the street when the Hidenburg hits the tower and starts to burn and fall to the ground.
What is in the fallout zone below is what catches fire and burns the neighborhood down.
The Hindenburg is just the spark in all reality.
DaddyO
Buh...but.....if gas is cheap, the consumers are gonna start buyin' GM trucks and SUVs again, thereby totally bringing the US economy back from the dead..
OTOH, I am so totally putting in a garden and poultry yard this spring.
DaddyO
It's interesting that a bill that allows certain pension funds to reduce current retirees' benefits and another that shifts liabilities for derviative contracts to taxpayers were appended to the omnibus budget being voted (passed?) today. One (the pension bill) was "secret" and the other authored by Citi...
Perhaps some of those unintended consequences are already showing up...
Indeed! WW$$$
.gov as in the TBTJ banks that run this country. Not the military. Military doesn't take cavalier risk for to hide the true cause of the global problems -- the financial asset ponzi.
Can they really use dollars to manipulate oil down in terms of dollars? Seems like baling a boat with a fire hose.
Could it be that the real world economy is in actuality completely collapsing?
That raises a good question. If the amount of dollars necessary to purchase oil is falling fast, the demand for dollars must be crashing as well, right?
Doesn't that prevent the ability to print?
First of all, WTF is a "dollar"? The markets are all a computer game con. Market prices are foreign policy. Smashing PM's, then oil, and shorting the miners is foreign policy in action. This is about maintaining USD reserve status, not about efficient market clearing or price discovery.
There is no market for dollars, only Japan and the Fed circle jerking it.
Yeah, I guess you're right.
Silly me.
Wasn't replying to you.....
Oh... sorry your highness!
My deepest apologies.
The United States dollar is defined as 416 grains of standard silver, guess we moved away from that a bit...
http://en.wikipedia.org/wiki/Dollar#cite_note-Act_1792-17
It's ok because the media told me that shale oil is profitable at $80...and $70...and $60...and $50...
Reminds me of an investment banker I worked with when somebody asked him what commodity a prospective miner was exploring for..."what do you want them to mine?"
At what price do you want shale oil to be profitable?
Yes by shorting it, same thing with currency pairs. By pushing this rational in absurdity you could even print dollar and crash oil to zero...
Cf. Gold...
Iran's President Rohani himself publicly said so yesterday. It was on Press TV.
He added they would not forget who was behind the manipulation.
"financial war"?
It is actually part of Greater Israel's proxy war with Russia over Syria.
We Americans are the "usual pawns," in addition to the guest pawns, the Syrians, Ukrainians, etc.
An American, not US subject.
I hear that the "Dancing Mossads" are getting back together for another neo-con shitshow.
Holy crap!
If the PTB are willing to go that far, surely Russia must be doing something right.
I've never seen anything like this....
And Exxons stock is still ip
Ah ah! Of course it is. It's a "free" market, don't you know?
and down goes the SPX, what took so long?
as they are refiners as well
Of course, to Russia's leaders, they are doing "something right". They are keeping their profits and grip, while making Russians get used to living how Ukrainians do - WIth LESS!
There is no way to keep up with Asian demand.
We will all be on mopeds and bicycles in 3, 2, 1.............
That's the point... lower output will NEVER meet their demands, or needs.
We are moving towards a "not the price, but WHO you sell it to" phase of economies and stragtegic markets.
It's why the US is dating Iran again.
I have that strange feeling that this is one of those precursor market events before a major war breaks out.....
https://www.youtube.com/watch?v=RCtzQRkrj0U
War may be passe'.
Since there is more or less a 'order' then lands may be ceded like end-game in RISK.
China takes Asia. Japan is wildcard.
Russia takes Eastern Europe. Baltics are wildcard.
Turkey takes Muslim countries (de-facto) with Saudi management. Greece is wildcard.
Italy takes Mediterranian countries.
Rest of Europe breaks up, but Germany may form their own northern union.
South America and Africa is a mess, but China may sweep for the resources, since China are #1 economy.
Then fiat reserve currency changes.
By mid-2015 ?
When Brent breaks 60 then you really will start to see people get nervous.
Also .....keep an eye on Nat Gas. When it breaks $3.00....watch out.
You can watch it free here:
http://www.investing.com/commodities/crude-oil
It was like I heard a million shale oil sphincters pucker all at once, and then, silence.
pods
Fracking will open those sphincters right up...
We certainly have douches big enough for it.
LOLOLOL!!! This made my day! May the force be with you.
Yeah, it'll be the fart heard around the world.
Thank you so much for the tears of laughter.
Accrued bonus calculations revised to shit house....
We think we're gliding down the highway but in fact we're slip sliding away. (h/t Paul Simon)
Drill baby, drill.
I want a sticker for my tank lid.
Lost shale jobs should be useful in justifying QEXX.
Lost shale jobs would be useful in justifying ripping your front lawn up and planting a vegetable garden. It would also be useful in telling regulators to fuck right the hell off if you live in an area where you have to have a lawn and cannot grow tomatoes and corn and stuff in your front yard.
Now, now. I am a law abiding sheep. I have traded veggies for security and I am loving it!
The security against a neighbor having a non-standard yard is something to behold, especially if it is the potential for that non-standard yard to have some junk in it. Who needs to eat anyway?
That's what I always think when I see those suckers living on the 20th floor of a condo complex. Now you got to pay those condo fees and you can't even grow a potato to get you through the winter. Death traps, I tell ya.
Fill up the Ford F250 Super Duty Crew Cab in 4 3 2 1 ..
HALLELUJAH
And what about those of us who have horses and cattle and equipment to move around, a legitimate need?
One size approach or attitude doesn't fit them all, eh?
DaddyO
Our needs will have to adapt to the changing world. How many people legitimately need a cell phone for business and how many needed one 30 years ago?
Same as it ever was.
You don't need fuel to farm or ranch or grow or produce or live... Go Green - go dead..
Do i need too?? Lots of newbies.... ok
sarc
No, no, I think he has a point. In today's economy, you cannot be a competitive rancher or farmer without moving a lot of a stuff in a hurry. It just doesn't work to be small and non fossil fuel based in a lot of cases when FRNs are the bottom line. You will find exceptions to that, but they will be exceptions to the rule. The problem is, if oil is priced below its production cost, or above the costs that consumers can afford, this kind of system becomes unsustainable. It becomes fragile.
The fragility is becoming evermore evident everyday. I've been here on ZH for a few 24 hours and marvel at how desensitized we are to how the fragility keeps getting deeper. We're all being boiled slowly!
If you think that the current oil price slump is permanent, think again...
Now would be a good time to put in a couple of 500 or 1000 gallon tanks and stock up. These wild price swings are just tripping stops at the global government level. Russia may have been the catalyst, but Venezuela is the current victim. Who's next.
As a small gentleman farmer, fuel isn't a big line item on my expense list, but it affects the price of hay/feed and auction prices on beef and hogs. But look ahead a little and see who is put out of business in the food chain. Who was heavily leveraged on fuel and how are they able to weather this global mood swing?
There will be unintended consequences...
DaddyO
One of the reasons we have bought another horse after swearing off for decades, and riding OP's.
We can always flip it after a little training if TSHF doesn't happen.
To paraphrase my uncles favorite saying about his sailboat.
Its like standing in a pile of shit, tearing up bundles of currency.
Buy yourself a boat with 4 engines for Christmas!
C'mon $30!!!
Then we just need the 30 Year to get to 7% so we can see who's naked!
...yield on 10 yr T is boomerangin' back down...
gonna be a tough winter for those newly minted North Dakota strippers
i hope this isn't a repeat of the 1980s. that sucked.
The '70's were just as bad, long fuel lines, high interest rates and a misery index off the charts.
Ooopppps, that could be today too, eh?
DaddyO
No chance of 70s-style high interest rates.
At least a guy could get a half way decent job actually doing something useful during the 70s and 80s. Not so much these days. But hey, I hear TSA is hiring...
at least the music was good, now we have ... i don't even know where to start
And it will suck anew
$59.90: gives 'back to the 50's' new meaning.
Roll out the Hummers!
I'll take a hummer.
Oh shit, you mean they take gas? I was thinking of a different kind of hummer.
It's a Christmas miracle!
"Fill up the Ford F250 Super Duty Crew Cab in 4 3 2 1 .."
Don't forget the extra 99 GAL reserve tank.
woot! ... WTI first of my quadfecta to cross the finish line
WTI < $60
10yr yield @ 1%
30yr yield < 2%
DXY > 90
These big oil companies are all hedged out the wazoo in the commodities markets so they will be fine.
I mean, its not like the people writing the contracts are allowed unlimited leverage and if they did somehow fail its not like they have more political power than actors in the real economy so they would be held accountable and the first job of the regulators would be ensure the well being of those using the markets to facilitate real commerce.
This isn't some shithole economy like Greece or Russia.
So relax.
They missed your jest
It used to make me mad. A lot of things used to make me mad...
I think Im ready for the day when its announced that releiving the citizens of either their gold or the paper gains on their gold is the right thing to do because we are trying to build a more moral society where those who think ahead are rewarded and those who just speculate wildly are punished.
It used to make me mad.
now it makes me buy silver....
It will be like a neutron bomb on the only shining spot in the us economy. Can't relax, as the wife says they are all ready discussing layoffs at work.
No junk, forwhom, but someone in the oil patch is going to feel the hurt. The smaller companies, I suspect.
i can hear the screams of $billions in shale capex dying
Well glad I didn't buy a new crew cab diesel and that 40 foot trailer to go into the hotshot business here in Lafayette LA
The other energy hub...
Boom goes Houston. ...???
Lew said this was great for the consumer. Merry Christmas all! (oh shit, can we still say Christmas??)
Lew said alot that, if you listened to closely, confirmed that the US is the source of this market manipulation aimed at affecting Russia.
Vlad vs. The Oligarchs
Yes - Putin has underestimated the ability of others to squash him by strangling his income.
Everyone wants paid - even the communists.
I dont know if he has. You forget Vlad is VLAD. And he has some pretty mean fangs if he decides to use them. He is gentleman and a boxer.
Its not a repeat of the 1980's.
Its the USA thats banrupt,bogged down in the quagnire of wars, with piss poor leadership.
Putin will be just fine, the US not so much,
No pain , no gain.
The Russians are big on revenge served cold.
Agreed, just look at Venezuela and Norway right now....
Vlad has some big guns too.
DaddyO
You can say Christmas, but I don't know if the man above apprciates the use of the word that is an ancryon for "suger honey iced tea" in the same sentance.
Sure. you can cling to a make-believe holiday if you'd like.
What holiday isn't?
Mid-term vol is screaming to GTFO equities.
Is the coming shale energy company debt defaults the black swan of 2015? If so, look out below!
sschu
Wonder how long before some exotic 10x levered commodity derivative trades start to blow up and some TBTF shit needs bailout.
don't hold your breath
won't be long before NORP - negative oil rate policy - they'll pay you to pick up a barrel of oil ! my gas station will pay me to fill up - gonna have to go get me a big truck and dump my damn prius
Frackageddon.
Frackocalypse.
Frackostrophe.
Just stop already.
All three of those are too damn hard to pronounce.
All fracked up?
Frack this?
Hey! ZH was going to use those next week!
Frack you.
Hey ZH - The play by play on oil is getting a little old! Remember, a primary rule in marketing is don't over communicate, otherwise you start to lose your audience.
Can you dig up some other "news"?
Hey, cheap oil is good news! ZH is here to make consumers happy.
Yes, that doctor that told you there was nothing he could do to fix your brain 3 years ago. He just called and said there is still nothing he can do for you.
How about when you were born, your parents couldn't figure out what was you and what was the afterbirth?
The play by play on oil is much needed when the who financial and geo-political world hangs on it's every move.
You guys must be the twins.
So ugly when you were kids that your Mom used to park you in opposite corners of the kitchen, and feed you with a slingshot.
So ugly that she had to tie a pork chop around your necks to get the dog to play with you.
So ugly that she used to hold you up to the screen door in summertime to kill bugs before opening the door.
I got a million of 'em, amateurs.
See you in the lounge, all week long.
Save gas, fart in a jar.
Let's see, crude breaks below $60/barrel for the first time since...2009.
That was a good year, right?
Canadian healthcare no longer free... 5,4,3,2,1...
Avg. emergency room wait times go from 10hrs to 24hrs. Heart Attack, have no fear we'll be with you shortly.
actually canadian emerg is big on heart issues. if you exhibt any heart related symptoms you are wheeled right through. heart docs rule. i've waited in both american and canadian more than i ever wanted. both are crap. but canada's health plan is set up by accountants and to save money they have everything go through emerg rather than have the GP do referrals. of course it's stupid expensive and as a result the wait is tedious. bring a couple books.
It looks to me like we are getting thrown under a bus by our "allies". I don't get why. Harper sucked every single Jew/American dick he could find yet this happen.
Edit: Oh and I like my free healh care. I am really worried by this news.
harper also supported throwing the income trust funds under the bus---he has a history of serving his masters and failing to think straight. trudeau is his mom's clone. shitlery as a client once said is strong like bull, smart like tractor...jeb, well, he and bandar are long standing buddies. i hope trav777 or some other impassioned avatar runs.
Canadian oil majors are predicting this is a temporary fall and that prices go back up next year. They are not laying off anyone and only announcing modest cuts to their expansion plans (in other words, still expanding, just not as fast).
Only time will tell who's right.
They would have to say that wouldn't they? Crossing their fingers, if not shitting their pants in private.
DIVE DIVE DIVE!!!!
I hope it goes to $10 PB!
(I know I'll get down votes for saying so, but I don't give a FUCK - down vote my ass)
I 'm just thinking of the millions of folks out of jobs, who will loose their homes, etc, most of which are just blue collar people from Texas all the way up to Canada.
Hope you like more democrats as when they are starving, that's who'll they'll gravitate toward out of desperation.
Double-edged sword. No good outcome here.
Maybe not.....after The Clintonista scourge, Pelousy, Reid, Schumer, Ovomit, etc......Maybe this time is different. .....Er....uh....wait...
No drop in real demand like the 2009 event.
Looks like manipulation to me.
Then you're not paying attention. This is but one example...
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M
I find the kissenger groupies over in IEA land strangely more impartial
The eia is far to nationalistic.
Anyhow that's gasoline.
Fire up a diesel chart for me........
diesel comes off the top, then gasoline. if you can't store the later you have problems producing and using the former...
No drop in real demand....how did you figure that?
Maybe his sarc/ switch is stuck in the on position...
Industrial production fell off a cliff inhttp://www.tradingeconomics.com/russia/car-registrations in 2009 , now n
Industrial production fell off a cliff inhttp://www.tradingeconomics.com/russia/car-registrations in 2009 , nownot so much?..........
Car sales from Dublin to Moscow remain robust although nowhere near 2007 levels.
"No drop in real demand like the 2009 event."
True, it's not a drop per se, but if you look at this chart of US vechicle miles travelled (convert it to YOY % change), the last 5 years have been anemic to say the least. < 1% growth when it happens
http://research.stlouisfed.org/fred2/series/M12MTVUSM227NFWA
If the data were put on a per capita basis the performance is even worse. If people aren't working, they aren't driving.
I never discount the possibility of manipulation, but demand is lackluster to suckish no question about it.
Thanks for the succint punchline on the demand question.
gold/oil ratio hitting the low 20's. Traditionally a pullback area. Breakout? or gold drops? or oil surges?
gold has at least one last kick in the nuts capitualtion phase in it
I smell a fucking rat. Guarantee you TPTB are all short this fucker
I don't care what anyone says....there's some seriously bad shit about to happen way beyond the scope of some bullshit stawk and bawnd markets. Be prepared.
the evil empire will ringfence it - no one will ever know
I hope you're wrong but something tells me the all-time record avalanche of firearms background checks and purchases are not for duck hunting.