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Crude Crash Crushes Credit Risk: WTI Hits $47 Handle, Energy Spreads Top 1000bps
As energy stocks continue to catch down to oil-price's incessant weakness, US energy company credit risk has surged back above 1000bps for the first time in 3 weeks. WTI Crude oil prices just traded to a $47 handle - the lowest since April 2009.
Another day, another fresh low...
And energy stocks are catching down fast to oil's weakness...
Fool me once (or twice or three times)...
Charts: Bloomberg
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I wonder how many dumbasses went long oil in the $50s.
It's okay. All those speculators in small apartments are going to take delivery.
We need more tupperware!
Yes the Chinese housewives run barter town now.
Good thing America is a net importer of Oil. This means good tmes are ahead for America! This is one of the major benefits of having a consumer economy - you are positioned to benefit as global commodity prices fall.
Mmmhmm, yep, and all's well that ends well. Happy New Year.
Crude crash?
This is merely another victory for the USD, GBP, and Oceania!
Big Brother loves us...especially motorists.
There has never been a better time to buy a GMC Yukon!
Awesome! As a staunch liberal, I hope this means a third term for our Dear Leader Obama!
Cash for hybrids, get the economy rolling, buy a Hummer!
Brought to you by Arnold '16
Hummer is so ------ 'pedestrian'...
UNIMOG.
WTI and Forex could make a massive Tickmill-style short covering rally over the coming days. Too many guys are short the commodities and long the dollar.
I'd say from Forex side that EUR/USD should probably retrace and test the 1.2000 level. But it really all seems so weak right now.
I'm one of those dumbasses, but I expected to be a while until it comes back up. My reasoning is that I missed some buys the last time and oil isn't going to zero. I'm waiting this one out and I don't think I'll look so dumb.
Tank-o-rama on the indices right now. Glad I'm holding Hecla and not Apple.
Down now only 50% from where I bought it also ... shuddered when it slipped below 2 but held on.
In a down market, one does not lose $$ until one sells.
It pays to be a strong hand, eventually - Go Miners !
"In a down market, one does not lose $$ until one sells."
or gets a margin call
so long as those producers keep accepting our paper, yes, party on Garth!
"so long as those producers keep accepting our paper,"
Carpet of green or carpet of bombs.
Lets all head to the mall to shop and eat!
Last time I was there, the mall was filled to capacity and the food court had not a single seat untaken, people sitting on the floors to eat. Lower gas prices? You bet, that is an American Paradise.
I can't speak for every mall out there, but our local one is normally packed with ghetto people who just walk around all day without buying anything. This also has the effect of causing people with money to shop elsewhere. Everytime I get dragged in there I see more vaccant floor space, it will be interesting to see how much longer they can hold on.
Speaking of "filled to capacity" keep an eye on the oil storage situation here:
http://www.poten.com/
read the article "let it float"
When you see the time spread widen and ships being used as storage, you're getting near the turn.
Until then, I would not go long.
Happy New Year to you too! Missed you.
I see your 2015 comeback , is still lacking. You might be past your prime. I miss the old MDB.
MDB was en fuego yesterday. Liberal joined in too.
pods
MOAR is nubbered so enjoy
MDB, If we are a consumer based economy, why did the market rocket upwards in the last 6.5 years to new highs, while the US consumer was a corpse??
+100
@MDB how are you going to prove him wrong on this point is beyond me
federal deficit spending
Hey MDB... Are you one of those shmucks that makes 7,000 a month working from your kitchen table?
Texas became the sixth largest oil producer in the world recently. Think of the food chain of that industry. It is becoming a self reinforcing downward spiral.
No one is paniced in the era of bailouts and printing, all the players are just sitting around lookinbg at each other, waiting to see who will need the bailout first, then they'll all pile on!
The really funny thing will be if Obammy decided to follow Bush and let a "lehman" happen, then the hysteria will hit, but so far, Obammy has choosen to be a benevolent socialist obligarch and not even make thgm sweat!
Get 'em while they are hot!
I'm partial to number 10.
Can I get an AMEN?
And if you are in it for the long haul, that might not have been such a bad call. I'm not going to call what the bottom will be, but when it starts shaking the unprofitable producers out, the price is going to go back up. Should you wait until oil hits $35/bbl to get in for maximum profit? Should you be safe and go long with a 12 month or longer view right now? Who the fuck knows about the timing of this shit, but prices will go back up or shit will break so hard that you'll be looking back to the good'ole days of late 2008. Note that none of this takes into account possible Fed intervention, which is just more can kicking, making the total problem worse.
Agreed, This will lead to bankruptcies and consolidation. There are a lot of opportunities to make some serious fiat if you have the balls to forget the short term noise.
If I were going to play in the markets, which I won't because I'm not an insider, I would be going long oil right now. Contracts that mature at least 12 months from now. But I have no clue if and how the Fed is going to step into this, so I'll sit back, enjoy the cheap gas prices today, and enjoy some coffee. I would also be buying more at each major decline of price. I would not be thinking about quarterly profits. Yearly, maybe.
Will gasoline prices fall at the same rate as oil, or will refiners be able to pick up some profits?
You'd be a nut to do that.
I'm not a trader but technicals alone say look out be lower.
It is possible that the entire energy market is rigged....
Anything that I did now, I would do not expecting to see profits before next year, at the earliest. That is medium term thinking in my book. If I got into it at $47, it tanked to $30 or $35, then went back up to $100 in 12 months, I've made a killing. That's how I look at it. But it could alsohit $30, go back up to $70, cause other sectors of the economy to break, then go back down, then go back up, etc... Or the Fed could step in and start printing money to save shit. Either way, physics and geology are going to be butting up against finance, and while finance may give it the old college try, it is going to lose this battle, manipulations or not. And for the record, I am of the opinion that you should assume that anything that is traded in paper is manipulated.
Based on what?
"Your magic price hat"????
Dude...the world produces oil for a buck. The dollar has soared two years running and gasoline consumption still has not recovered from 2008.
Wanna talk extra production just google ethanol. Just the corn based shit can cover our entire fuel consumption per year.
The new Chevy Volt is unveiled in a few weeks. It gets 1000 mpg....
Anything that looks this obvious, willl ultimately NOT happen, I think people on this board and in America in general, are still operating from this premise that American markets and shale are the entire reason for the drop, etc
Thats the oil industries cover story that presents this underlying theory that this drop is temporary and based on short term dynamics!! Is the House of Saud, Shale oil, and OPEC pumping like its 2006, yes, but thats only half the story, a massive global depression in GDP, debt induced leverage calls, and economic activity is ALSO driving it down!
Oil is the ONLY real god damn source of income at this point for half the economies on earth and growing, because people sure as hell aren't buying plastic trinkets and fast food anymore!!
So its a real death spiral now, they need the cash to pay debt and ongoing expences, so they pump more as the price drops to get cash, hence dropping the price more. American shale going BK wont stop that dynamic alone!! The world is awash in oil and will remain awash until the debt is delt with, The House of Saud knows this and so does Putin and China, so dont think oil is going to rocket up anytime soon, matter of fact, it will need to stay at 25 a barrel for several years to break the US and EU and thats what their attempting to do here.
Russia is on a war footing right now and China has been for some time, Americans are delusionally watching TV and whistling past the graveyard as usual!
My opinion also.
Just as the US set a trap in Ukraine, the Russians and Chinese set one for the US.
It was easy to see the US's next move,history and hubris wrote it in ten foot high letters.
The petrodollar is already dead, soon to be followed by the USD.
Quite a gameplan.perfectly executed.
..........and by break the US and EU, I mean break the EU FROM the US militarily! Which IS happening if you read and listen to Euro news not filtered from US media. There is a groundsweel of Nationalism and Eurocentric setiment, Greece will the first to go, but wont be the last! They ALL blame the US and its "globalist Immigration policies, etc for the problems their facing and meanwhile Venezuala is meeting with China to become their personal oil bitch if they will buy it in Yuan and trade goods and services, so the petrodollar IS breaking and China will agree for the right GOLD collatoral in place, say their reserves sitting in Shanghai for example!
It can't go to zero, all you need is patience; buy it all the way to $20 and enjoy your retirement.
It can go to a dollar....
I was going to do it then retracted when Saudi PM told that even if goes 40 it will not cut production.
He said also that the decision to cut will be in the next OPEC reunion which is not for now...
So staying out of oil (I would even say markets) is a very good advice for now.
less than went long gold at $1900 and then $1800 and then $1700 and then $1600 and then $1500 and then $1400 and then $1300 and then $1200. The ones that bought below $1200 are doing OK for now but they probably have massive losses for buying so much more so much higher. LOLOLOL!!!!!!!!!!!!!
TROLLOLOLOLOL!!!!!!!!!!!!! FTFY
Allan Greenspan recommends....
But Chris Martenson predicted 120+ USD oil?
Poor fucker, still believes in logic, justice, markets and shit like that.
The market fairy is on vacation......
Remember, it is important to consider what any commodity is priced in as well.
Are those fusion reactors (which still require fuel) online yet?
Damnit what's the plan people? In the meantime I will keep our diesel reserves full. Oddly enough I have not seen a significant price drop by comparison, I wonder why?
"Oddly enough I have not seen a significant price drop by comparison, I wonder why?"
You're paying today for oil that was bought 3-6 months ago. Give it time.
Fuck you!!!
Could this spark a junk bond crisis? Well, if you're a fast pain vs a slow pain kind of person,let's get it on.
As the banks unwind their long oil positions due to margin calls all sorts of shit is about to get fucked.
Some dead bodies are about to float to the surface...
No CEOs were harmed in the making of the next crisis.
A lot of debt is about to be called, time to form the circular firing squads....
Screw the junk bonds, that only $500bn.
There are $22tn in oil derivatives behind them.
Who is holding that paper ?
Systemic contagion is probably likely here, should that junk bond crisis happen.
Those junk bonds are already gone.
I'm more concerned about whats going on behind the curtain with those derivatives.
So am I, but keep in mind that a lot of those producers bought hedges against low prices. I have yet to hear of mass defaults on those junk bonds. Only rising yields/dropping prices. We haven't seen the full effects of that yet. The panic hasn't even spread to the wider junk bond market yet. People have gotten twitchy and yields in the wider market have gone up some, but no real panic yet. The potential for fireworks is huge here. The crisis will start somewhere, and junk bonds is just as good of a place as any.
Edit: I view all of those derivatives tied to the junk bond market, whatever they may be, as just more leverage against the physical product.
The interesting question might be whose holding the paper on the people holding the paper? This will ripple back to the FED....
Oh man, please let it ripple back to the Fed. If we're all going to get fucked regardless, please let it take the Fed down.
We could use a circular firing squad over there too.
Dumb question so here is your answer:
Saudi Arabia, Nigeria, Venezuela, etc...
It's all good. King Obama has his eye on things.
Right, everyone expecting a V bottom. Good thing the douchebags in Congress want to jack up gas tax now. They don't miss a beat, blue or red.
Looks like the purple party.
Someone is going to jawbone soon.
Hummers and Escalades for all my peoples...
yeah baby!!!
USA, USA, USA!
Motor oil will be sold in copper cans again soon
cnbc will need to order lipstick by the pallet
WHAT? Oil down, rates down, stocks down....WTF?
Where am I suppose to invest?
hey, barbarious relics are up, so there's that.
How Neanderthal of you... :-)
I hear it's so easy even a caveman can do it!
hope ya'll bought some of those phony Dips on the phony paper prices of Silver....
Wonder how much the dollar rises when stocks go down.
Not much in relation to gold. Gold + 17 and climbing fast.
Black Swan. Black Oil ???
low ticked it again, thanks ZH!
Still confused why the consensus seems to be "low oil bad" but less retail/malls is good: http://www.zerohedge.com/news/2015-01-05/we-are-extremely-over-retailed-...
I'm not the brightest but it seems like demand for mall-type establishments is down in the internet age and natural selection is taking its course.
Why shouldn't it be the same with oil?
I'm interested in seeing capitalism or at least something similar to to it actually attempt to work as it should. For once, it *almost* seems like it is and there's still bitching about it. Careful what you wish for?
"Why shouldn't it be the same with oil?" -- Interesting, do tell, precisely what has replaced this important source of consumable calories and commodity chemical?
Enlighten us.
Not "replaced" - there just seems to be more currently available than is being used. Like malls.
Sure, nobody needs malls, but if the peak oil crowd gets their way, nobody will be using the all important commodity to burn through miles of road. I imagine there will be more than enough for manufacturing purposes at that point.
That's all extrapolated to the nth degree but my point is, why is it seemingly a problem if fundamentals *may* actually be having an impact in the marketplace? Ultimately I don't believe that's what is taking place here as the markets are too far gone (corrupt) from my perspective, but it's a nice thought to blind me from the truth.
The story of oil is a complex one in terms of pure economics and a simple one in terms of pure power play.
What the Libertarians do not understand is that pure economics has never existed; pure power plays much more so; when Empires reign without challenge; aka the petrodollar age in the current instance.
Just by looking at the history of the USD and OIL since 1971-- with their intricate incestuousity DECREED by the reigining POWER meme in BW revoke--- we have the BEST example of WHY Adam's Smith construct and the Invisible Hand was really smoke and mirrors in the REAL world.
Just like the Religion of Love OR the Religion of Peace, in that bygone medieval age which now resurges around OIL plays.
What Popes and Divine right kings (or caliphs) did to those two religions the current financial popes and elected monarchs are doing the the myth of the free handed market.
Oil is the face of Belzebub-- to use revelatory olde and fearmongering imagery-- and we see it today in all its unfurling demonic intensity in cauldron bubble of financial derivative soup by those who had declared that PEAK OIL was their pet financial monkey and bet their carry trades on Shale plays based on that mantra.
Peak Oil is nobody's monkey, but its shadow in the financial web can make a monkey out of the most powerful sons of Caesar !
gee larry, how big is this tax cut gonna get?
Fuck I need more popcorn......
1.916
Damn
Too much supply, too little demand - NO, it's a liquidity problem. Dejavu.
At the rate crude has been falling, minus $22 in the last 31 trading days, down 70c/day, we could be at the $42 knife-catching venue in 7-8 days:
http://www.investing.com/commodities/crude-oil-advanced-chart
Why not Thursday
or Friday ?
Gold and Silver are making a small jump.....good to see it going up for once...the last three years have been sad....
Don't put your box of kleenex away just yet; I wager that metals will continue to bleed just like the rest of the markets.
This is after all bizzaro world where anything of real value plummets alongside with paper promises of 1's and 0's.
With that said if I had some extra scratch it's a helluva buying op if anyone is looking for metals right now......of course thought the same thing when silver was at $18.
1.914, $47.80, 17,303 (minus 200): numbers like this could go on a tombstone.
Last three years have been like a Lewis Carroll novel!
The guy spinning the plates just snuck out the back door....
Keeping things in perspective :
It is interesting to look back and see over the last two years what the Alternate media has said about the effect of Oil prices on the world economy :
http://investmentwatchblog.com/oil-prices-a-huge-threat-to-euro-economy-...
This by OECD top economist (and oil lobby spokesman)
http://investmentwatchblog.com/currency-war-begins-the-u-s-dollar-collap...
This argues the effect of the weak dollar in the past. As we all know the Yen and Yuan and the end of QE have pushed the USD into dangerous territory for stock evaluation.
http://investmentwatchblog.com/the-breakdown-is-near-oil-derivatives-exp...
And now today the effect of derivative soup...
http://investmentwatchblog.com/the-oil-cartel-bites-the-drilling-mud-sau...
The financial war now moves into the economic area around Oil. Petrodollar hegemony looks like its in the cross hairs.
1.889. Run for your lives...
Meanwhile in India, an avaricious government increases excise taxes on petroleum products to make up the lost revenue
Yesterday the Canadian Globe and Mail ran a good story about the effects of this on Alberta, the home of Tar Sands and other Oil. The outlook was bleak, BUT, they still held out hope that Tar Sands could keep running through cost savings. As if, by laying off some office staff in Edmonton, they could somehow keep mining and processing heavy black tar in competition with Middle East Oil that comes out of the ground at 1/10th the cost of the best Tar Sands oil! The jobs outlook for Alberta is likely to be free fall by Spring. Already billions of oil projects on the books are being cancelled. A doubling of Tar Mining in the next 10 years is now off the table.
How many ways will jobs be lost? The mines, the processors, the truck drivers, the rail roads, oil services, office staff, financiers, housing prices, all the jobs supporting oil workers. In Edmonton the shiny office towers full of suits, and secretaries, these are the first targets for cost cutters. Their 500,000 home mortages will be untenable without their 100K a year jobs. Look for a mini house bubble crash.
The politicians who promised big spending and state emplyment for all in Alberta are now about to be bitch slapped as they made their budgets for 100 dollar average long term on oil prices.
print moar tar?
oh, wait, eh! Let's start a Maplestone pipeline to export syrup!
Things to come? Booked a nonstop for next week Tampa to O'Hare... $36.27 ( of course plus 46% tax of $16.83).
Conspiracy theory or fact:
http://goldsilver.com/news/obama-admits-falling-oil-prices-aimed-at-weak...
Big Euro banks bet the farm on the infinitely increasing price of energy.
US banks sold them their default swaps.
This is why the ECB today is floating options for QE. They will imminently need QE, regardless of what is happening with in the EU economically, to save their banking system.
And the impacts of low oil on financial entities is also why the Fed will eventually have to return to QE shortly thereafter.