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2015 Starts As 2014 Ended: Crude Crumbles To Fresh Lows, WTI Tests $51 Handle
Reading headlines and social media commentary in last night's thin trading, one could have been excused for thinking the collapse of global crude oil prices was over and a new renaissance had begun as 'watchers' proclaimed WTI's spurt above $55 (for a nanosecond) as indicative of the lows being in. However, just hours later, following weak European data (and a recognition of massively offside speculative positioning), WTI has collapsed over $3 from the highs and is testing towards a $51 handle.
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come on, 40, you can do it.
Come on, 0, you can do it.
Fixed it for you. It's all part of ZOPP (Zero Oil Price Policy) by the TPTB.
Tell us again Obama....on how energy prices have to rise.
Maybe we should force everyone to buy gas....even if they don't have a car.
You already do. Fascism owns you.
Let's get this consumer economy rolling! Cash for clunkers 2.0 where we trade in our Hondas for Hummers!
National Grid just pushed through a 24% increase for the Northeast. Happy New Year!
Just another reason to remove Obama and to dismantle the "grid".
"Tell us again Obama....on how energy prices have to rise."
Via higher taxation, which is exactly where they are heading if this downturn lasts more than a few months. Expect to hear the "we haven't raised gasoline taxes since 1993" chants echoing through the halls of Congress shortly.
http://thehill.com/policy/transportation/225887-reps-press-for-gas-tax-hike
rumble rumble....
PA gas tax went up by 10 cents/gal yesterday (with more increases to come next year). One of the reasons why the only Republican governor to be sent packing for home in this past November's elections was PA's own Tom Corbett.
Chuck another 15 cents in federal gas taxes on that and you'll have me back up over $3/gal in no time flat!
So, yeah, it's pretty much already going on.
MA ballot initiative removes automatic gas tax increases implemented by politicians.
The people are not interested in higher gas taxes for any reason.
Remind me, what is the "price" of something that no one will sell? Even better what happens to "prices" when no one will accept your fiat?
and gold again worthless ....
Run out into that receding $ ocean.. Take a selfie while you are at it.
ice cold water can sure distort a self image...
https://www.youtube.com/watch?v=ZDdjeCtux3k
Oil gets its price cut in half during a 6th month period, gold doesn't really move, and gold is what now?
russian sellers?
Russia supplied 10.6 million bbl / day in December... largest output since the end of the Soviet era...
Iraq is exporting the most they have since _the 1980s_ ... 2.9 million bbl / day...
glut glut glut... they can't help themselves, they need the money, they all do...
if we don't see Brent futures go below US$ 50 / bbl this year I'll eat my hat...
low oil prices beget lower oil prices. pile it high and sell it cheap
.....if you are sitting comfortably then we'll begin.....
I have about 3 years to wait out a tanking of oil prices but........ I'm not sure how long I can survive the ensuing zombpocalypse.... 20 dollar oil would be welcome
Deflation is coming no matter what. Cash is king in a deflationary environment.
Hyperinflation is a deflationary move at first.
Bingo. We have an electronic record this time around. Retribution time motherfuckers.
Default is an over leveraged move in a worthless asset.
... which only emphasizes further that cash is king... you can't buy up assets on the cheap in the deflationary period with the hope they'll get ramped up in value during the inflationary period w/o cash on hand to invest in the assets... this is how the rich get richer and the poor have kids, folks...
watch the rig count, say boone pickens; "been through this before" "and we will come thru again". maybe he will, but how about another 5 million worker jammed down the wage scale. how many fucken bartenders do we really need? waiters, greeters, wigets assemblers, i really see a problem brewing- REDUX II, the great miscarriage of the world economy via cb'ers with all the wealth, happy krugman/keyns new year! may the 1 percent fuck over the 99 percent and prosper in their manipulated markets...s/
Oh hell.....we can fix all of that with amnesty.
did you say an open season?
Holy shit it's back to where it was at 2:30 on Wednesday!
Go ahead clear out all the paper bullshit. Standing by with dry powder...
Early year gold smash entirely predictable....I expect will be a big attempt to really smash it to pieces again.
Have a real nice goldie lined up...but waiting for the inevitable gold related smashes all around.
Oh boy!!!
https://www.youtube.com/watch?v=ZuXxy8cjZQA
So I'll admit, I've been a big believer in the "Peak Oil" theory. This price crash certainly seems to be challenging that meme.
Either there has to have been a real continue demand crash allowing for an oil surplus - or there really is an abundance of oil lately regardless of demand.
Any thoughts on the Peak Oil meme and these prices? (guessing most here will say it is a function of demand from no recovery over the last 6 years).
"This price crash certainly seems to be challenging that meme." -- Big difference between long term and short term thinking.
Baring the implementation of functioning fusion reactors (which still require fuel), there are 7+ billion people on this rock all competing for a better standard of living and all the consumable calories and commodity chemicals that make that possible. Guess where the majority of these things come from?
Yes, but we must kill da Rushins. Fuck North Dakota and Texas. Balkanizing Russia is the most important thing.
Peak "cheap oil" is here. Going forward, $70 to $80 prices are needed to sustain any long-term development. In the short-term, prices will overreach on the downside just as they overreached on the upside. This is a 6 month temporary trading phenomenom before oil shoots back up to $70-$80.
stateside
and what if it doesn't?
producers will start selling for other currencies including gold
this is the biggest exodus of US$ paper and nobody is reporting on it
the world is getting ready to replace the US$
Why would producers sell for other currencies if oil isn't worth much in $? Now you claim the world is getting ready to replace the $ but then in the same breath, oil is worthless in $. Seems to me the message is the opposite. If the oil producers don't need $ why do they take $ for their oil?
"Guess where the majority of these things come from?"
Wind and Solar? ;)
Physical commodities from wind? In a round about, very slow, way maybe. You sir, should be a central banker.
We've had wind technology for thousands of years and it isn't improving. As for solar, we needed to begin rapid developemnt decades ago to achieve the level of technology needed to replace oil. Also, finite resources are needed for both. Solar voltaic is hydrocarbon based with metals interlayed in the panels and wind turbines are made out of steel.
Peak resources, bitchez.
I suspect we are seeing the same thing we saw in 08. We are in the midst of another cycle of demand destruction. What gains we saw in real employment in the form of good paying jobs were in the energy sector. That was all built around the influx of newly mouse clicked money that funded the tar sand and shale oil plays. The rest of the economy was either still withering or in the doldrums. Every dime spent on gasoline was one less dime spent on anything else. The real economy cannot afford $3.50 a gallon gasoline. The end result, another segment of the population is dropping into the underclass.
We are in a deflationary spiral that will cause all kinds of price fluctuations. The prices are not true representations of supply and demand. A starving man will swap a Rolex for a loaf of bread. The trade is not a true reflection of the value of either the Rolex or the bread. It is the mark of individual desperation.
At the risk of being pedantic, I'd only swap a Rolex for a good, fresh, sourdough rye. Anything less and I'd fast for another day.
CF, I've been thinking about this a lot. I don't have any answers but I have a few thoughts.
- We're tallking about the price in US Dollars of paper contracts. Yes, that directs that price of the actual stuff, but when we consider "supply and demand," we have to remember that the product being bought and sold is actually the paper contract, not the oil or the gasoline--not at the level at which prices are being set.
- Paper money in our system is also bought and sold as a commodity, and its price also reflects supply and demand for paper contracts; not the actual purchasing power at the consumer/individual level.
- When the value of paper money is subject to market sentiments it can change very quickly for reasons unrelated to the actual products being bought and sold, so the price of oil may have nothing to do with the supply and demand for oil, nor the cost of production.
- A good way to think about money is that it's actually a proxy for energy. If I have 2 identical pebbles and I drop one at your feet and place the other in your hand, which one has more value to you? The one in your hand of course, because I did the labor (using my energy) to put it in your hand for you. You don't have to pick it up yourself. So the cost of petroleum should be considered more in terms or EROEI (Energy Returned On Energy Invested). In that view, Saudi oil is a helluva lot cheaper than North Dakota Bakken oil, even though both are traded at the same price globally.
- I don't think "Peak Oil" should ever have been interpreted as meaning we were going to run out of the stuff. The Abiotic theory to the side, it does seem to require more energy to recover it than before and that trend hasn't changed. When EROEI reaches 1:1, it's over no matter what the market price is in paper money.
I don't know if there are any answers for you in those points, but I think they need to be considered.
when you understand what the true definition of "peak oil" is, you'll understand why all the chicken littles who were telling you the sky is falling were wrong...
Keep your powder dry men.. er traderpersons. That second leg down always seems to test some beyond stupid level. Then she goes back to some equilibrium.
Mean while the market continues to go up, oh yeah window dressing.
President Vladimir Putin signed a law on Monday introducing two-year tax holidays for private entrepreneurs in Russian regions, TASS said. The measure, which was earlier approved by the parliament, is expected to support small business. Regional authorities will now have the right to offer two-year tax holidays for new private entrepreneurs who have chosen a simplified or patent taxation system.
http://rt.com/business/
U.S. wants to revive terror scare in order to keep up the terror war industry - FBI whistleblower
President Obama admits the rise of Islamic State was never properly addressed by the U.S. intelligence....
The long airlines and retailers algos are buying every dip ( in oil )... It just keeps getting better for those bubbles.
Orwells War will Continue.
- 'US an enemy': Palestinian official blasts Washington over UNSC statehood 'VETO'
- ‘Off the rails’: Netanyahu challenges Arab-Israeli
protesters to leave Israel
- Obama admin ‘won’t be around forever’ - Israeli minister on W. Bank settlement stall
- Hezbollah warns Israel against Lebanon war, as France inks $3 bn Beirut arms deal
- Lithuania joins Eurozone despite 40% of population being against
- Russian military completes rapid-deployment drills in Kaliningrad
- Canada sends Troops to Ukraine
I find it highly likely that the Fed went long oil as a policy tool to raise asset prices back in the Spring of '09. This is likely because it would be a great way to put inflationary pressure on the dollar, thus "increasing exports" with the weaker currency.
It is likely that this summer the Fed chose to begin closing their long oil positions, driving the dollar higher while bankrupting oil producing nation-states that had grown dependent on higher oil prices. Now the Fed has a strong dollar to funnel into stocks and bonds.
Yet like all Fed plans this won't last and the next crisis is right around the bend. The oil producing states will likely drop their dollar reserve assets (dollars/USTs) in favor of alternative investments. There will be massive job loss in the energy sector so unemploment will rise, and even though I am sure Yellen gave Dimon and Blankfien a call saying the Fed was going short oil last summer there will be a major bank that didn't get the memo.
This time is different - but not in the way, we'd like it to be. The system of capitalism can no longer function without business cycles based on deficits. It's as simple as that. As soon as the purely credit-based demand collapses -no matter if private or governmental- a self-energizing race to the bottom sets in, leading to massive layoffs due to overproduction, further lowering demand and causing more layoffs.
The system has become all too productive, it cannot reproduce itself within its own producing conditions anymore, unless it uses debt to do so. This is in fact a crisis of capital itself. There's less and ever lesser wage labor needed to produce goods, ever fewer workers are able to produce more and more goods. Capital cannot be utilized nor accumulated under such circumstances, if not through deficit spending. We do exactly not need rationalisation or any higher level of productivity. It's precisely the high productivity which has brought us here. Those products can only be sold if there is money to buy them - and where shall that money ever come from, when it just can't be earned inside production, if not from debt?!
The rampant financial industry has done it's share of dirty deeds - but make no mistake, it is itself a symptom of the crisis of capital - not the cause. The cause is the progress of productivity, which undermines the very basis of capitalistic production itself. This crisis does not really derive from the financial sector, but the productive industries. It have been the financial markets, which kept a real economy alive that otherwise would already have collapsed under it's own immense overcapacities.
Does anyone think that this problem could be solved by swamping the market with more cheap fossil fuel? Wouldn't that substitute for even more wage work?
Oil prices aren't the point - wages are! When (not if) there cannot enough wages be earned to pay for the products, they will not get sold, period. When this happens (and it does) whole industrial sectors shrink or even vanish, even more people are there who may have needs, but no demand (because where there's no money, there's no demand - be the need great, or not). Then industrial demand will decrease as well, part of it being demand for oil. That is what happens - oil demand shrinks, just because no one in the world would have money to buy whichever shit it could be used for to produce. That's the reason oil prices fall.
Capitalism has always been a race against the machines - and the machines won in the end. That's why each and every attempt to get inflation or avoid deflation is doomed to fail (as of today): Because there cannot be inflation when wages steadily decrease, duh! It's that simple: You want inflation - pay higher wages, or rot in hell. You want higher oil-prices - pay higher wages (to the workers in all the world, not just your few cronies). Or prepare for recession.
Ceterum censeo Wall Street esse delendam.
Bravo! Your analysis starts with the roots of the problem, rather than trying to divine the entrails in an attempt to outsmart the alogos and profit from some shift in the markets.
The US consumers are indeed starving for wages. The problem is not only that there is production without sufficient wages to buy the goods produced, but the wage earners and consumers are geographically separated. The production facilities and the wages paid have moved from the market areas (US and EU) to low-wage, low-regulation areas like Mexico and Asia. The illusion of prosperity in the US and EU was maintained for the last 2 decades by making cheap credit available to consumers and refocusing the economy from production to financial manipulation. In 2008, the mountains of fraudulent financial products crashed, and the public had maxed out on debt. Rather than have the world recognize the unsustainability of debt-based consumption, the central banks and governments used the public purse to reinflate the banks and to try to reignite credit-based consumption. BUT the consuming public were underwater and unable to resume consumption. The public need real wages to consume, not more cheap credit and not welfare payments. Low-paying part-time jobs replaced high-paying full-time jobs, and public welfare payments kept bread-lines out of public view.
The unfunded benefit schemes like Social Security were political boondoggles, great for pandering politicians to sell and for dreaming voters to buy. Such schemes and burgeoning national debt were enabled by the idea that future economic growth and inflation would allow future governments and taxpayers to pay for them. In other words, they were ponzi schemes that depended upon an ever-increasing number of future contributors to cover previously-committed payout streams. Even the most elementary understanding of the exponential math function reveals that such schemes are unsustainable because they soon require stupendous yearly increases in contributors and contributions just to stay even, and must inevitably collapse.
Since 2008, the World has seen malinvestment of low-cost capital in emerging market countries and in excess productive capacity (China now has enough steel-making capacity to fill all possible World demand, Australia's coal and iron ore producers have increased capacity beyond all conceivable demand, etc.). Huge bubbles have been inflated in the New York stock market, in housing markets in China, and in the shale drilling game. As the World's economy cools, $9 Trillion US dollars in carry trade funds that went into emergiing markets in a frantic and risk-ignoring push for some decent rate of return are now fleeing those markets and flooding back into the perceived safety of US stocks and bonds. So much money was chasing returns that interest rates were pushed down even on risky junk bonds, which are now failing, while rates on treasury bonds are being pushed to negative real rates of return. Rampant QE has now achieved deflation, while the Keynesians keep pushing for more money printing.
In the meantime, financial manipulators rig the financial markets and extract vast sums of cash as the central banks pump liquidity into leaking bubbles, and the captive press and politicians play as cheerleaders.
QE17: Fed intends to stem off severe commodity price deflation by printing $$, firing up their BBG terminals and going long the entire ICE/COMEX/CBOT/CME/LIFFE/SAFEX/MDEX/TOCOM commodity basket. Fed ends with 45% of the open interest.
Just watch it happen..