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Commodity Carnage Continues - Copper & Crude Crushed
Despite calls for a bottom all the way down from $90, $85, $80, $75, $70, $65, $60, $55, and then $50... crude oil prices (both Brent and WTI) are now below that crucial level (and as Kyle bass notes, even very wealthy nations like Saudi Arabia and Norway are going to have to tap into their sovereign wealth funds to support their annual budgets this year or next). WTI is trading with a $46 handle once again (at fresh cycle lows), and Brent is trading oince again at fresh cycle lows with a $48 handle. Just as worrying away from the apparently OPEC-over-supplied (and nothing to do with demand) oil complex, copper prices just broke below $6000/mt for the first time in 5 years (which 'over-supplier' will get the blame for that? Or is it really about demand after all, just as Saudi Prince bin Talal warned). And don't mention Iron ore, Steel, Aluminum... which all hit new cycle lows...
WTI is at cycle lows - trading $46.71
Brent hits the $48 handle again and fresh cycle lows...
Copper tumbled throuigh $6000/MT for the first time since 2009...
And apart from these crucial raw materials for economic growth....
Steel yourself - China steel price closes in on 2008 lows pic.twitter.com/UlfjYL5wU9
— Tom Orlik (@TomOrlik) January 12, 2015
Charts: Bloomberg
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Cue spambot alexmark2013.
Cue QE4 fucking idiots too.
"It's temporary" -Mark Zandi
Hah ha ha ha ha ha
"Forget my BRICs, I'm just happy I got the SHITs", said Jim O'Neil, former head of talking heads at Goldman Sachs, explaining his new "Sure Happy It's Temporary" philosophy, as he resumed dooling on his chest with a strange crazed look, enjoying a quick tug and rub under the desk.
You'd drool too if you snorted as much blow as he did over the years....besides the tertiary syphillis doesn't help either in his case
So gold and silver are up while so many commdities are down which means gold and silver are trading as money.
We are entering an era of abundance where we can print commodities.
Commodities, including oil, bubbled up. Now comes the de-bubble.
That's what everyone wanted, right?
Oh, not YOUR bubble?
LOL.
Man... I need a hugh...
but Gold and Silver are up!
Been making good money with gold stocks the past few weeks. The juniors have been especially good.
While America, Russia, Venuzeula and Saudi Arabia choke, claw and scratch each other to see who will stop pumping first.
THIS IS ALL GARBAGE
The EIA charts show that gasoline consumption in the US alone is 21 million liters / day down from 65 million in 2003. This is more manipulated than a harlem globetrotters basketball game.
We put protections on our milk with the milk board.
We put protections on our wheat with tariffs and subsidies
We put protections on our new oil industry....? No wait we let a bunch of offshore camel riders wreck havoc on the new fracking oil industry that would circulate money inside the United States and create good paying jobs. I don't see the men in turbans spending much money at the mom and pop in North Dakota. But the guys working the fracking industry here are.. What a bunch of total garbage! When are we going to stop letting globalist agendas continue unabated until everybody in the world is living at third world levels?!
Put a minimum market access prices on all their oil. They can sell as much oil inside the US as they want - but for no less than $80 / barrel. There problem solved. Our energy independence on them can be broken forever - the fracking industry can be sustained and the jobs it creates support America..
Can't have that!!! Can we!! NOOOO!!!
But instead we'll let Obama socialize everything into the black hole of debt oblivion with unsustainable entitlement programs that will all soon be stopped!
CRASH CAR CRUDE !
WTI and Apple are breaking away from Gold and Silver !
It's a RACE TO THE BOTTOM !
cnmcdee, fracking is worthless. you need it above $70 for it to be sustainably profitable. And capital restraints are highly socialist, the exact knock you are putting on Obama.
And the best estamates for increased fracking production has it peaking in 7 years. So at the end of the next POTUS term we would need to find a new source.
But you are speaking of protectionism and we know that is verboten. To protect ourselves from foreign interests, or domestic, is mean, selfish and hateful, and most definitely NOT progressive. Today, to be a good progressive American, is to bend over and take it like a new age man. And no complaining!
And we wonder why homosexuality is on the upswing.
cnmcdee-
Those at the top are not interested in anything but having the rest of us living at third world levels. They have made it and they are kicking the ladder away. If you aren't there already don't plan on moving up to another rung of the ladder. The name of the game today is to maintain what you have. The winners have been chosen and people like you and me and probably a lot of other readers of ZH are not on the list.
On a side note- what is your take on the fact that fracking on the whole is a negative energy industry. I have read that it takes more energy to frack then what is recovered. Also there are quite a few who are against all the pollution it leaves in its production- water tables fouled. Shouldn't the industry clean up the area before it moves on to the next site?
"It's a big club...and you ain't in it!" - George Carlin
I agree with the idea that we should always prefer to buy from our own industries and if necessary protect them in their efforts to provide domestic jobs. The shale oil industry however was only "viable" for as long as the cheap money didn't know where to flow. Shale gas is viable and LNG could have long been a clear alternative to other fuels if just a fraction of the time and money would have been devoted to LNG stations and networks as the idiots putting into building electric cars and charging stations.
Watch how fast the computers bring oil off its lows. WTI currently down 3.7% Watch! Problem solved!!
I predict oil will not go below zero,
but I said the same thing about bonds.
I knew I shouldn't have bet you that dollar.
Oil bulls, remember 2008? Multiply by 10, that's where we're going.
so 400+?
Oil bulls got their gags, i got their money.
Oil might not go below zero but human stupidity may hit infinity.
You never know KH, oil might in fact go to zero and tulip bulbs hit $100 barrel. The markets these days make about that much sense to me.
Well with Pimlico in trouble the copper demand was sure to take a dive.
Ya all that inflation in commodities... you know that stuff that can't be "printed"
Not even with a 3D printer of the latest generation?
You can't print commodities but you can kill the customers, which has pretty much the same effect
Do you actually believe the futures market is presenting an accurate depiction of anything anymore? Why was oil at $100 2 months ago?
Printing trillions plus derivatives = volatility. It doesn't mean paper prices rising.
You can't guess how trillions in fiat will bet on leverage once placed in a paper casino. All you can say for sure is that it will all be bet and it will lose touch with reality.
With commodity prices droping you would think that these products would be cheaper in the stores..........which it ain't........WTF? Still payinig through the noise for electrical wire......
You can bet your ass that suppliers will keep sticking a fat hog in the ass as long as they keep moving product. Simple market economics.
I live in a town of 2500, three gas stations. Two of them call each other every day and set the price the same, the other one is a chain station, always a dime cheaper. It's always a week before those two that collude that the price will match the other spot if they think traffic is down.
Maverik
Right! And with oil so low, food prices should be going down, too, since they went up when oil went up.
Yah WTF!
They said our produce and beef was so expensive becuase it took so much fuel to get it here from wherever.....
When volumes drop you must decide if the answer is lowering price to get the volume back up, or holding out for a larger margin on shrinking volumes. Inevitably, it is your competition that makes the choice for you. I think margins are already small as we have already seen price reductions to pump volume (which didn't work) so now we are left with the choice of selling at zero profit (or less) to keep our customers, or just quitting. We will see more and more choosing that last option. Cycles always weed out the weak players, like the plague. We might just find out how really weak we all really are.
That is BBN (before Bankster Nonsense) thinking.
Water issues in the West will continue to keep food prices high. California has had some precipitation this winter but not enough to alleviate drought conditions.
The only hedge against deflation are those commodities that are an absolute necessity. Its always been about demand...we just forgot because the gamblers have been scamming the markets for far too long, creating false shortages to simulate false demand. As they fail and fall from the system, transparency will return, only too little and too late to do much about it. Food, water and shelter...go long. And if you must bet, bet on yourself, not some agency or bullshit salesman. Do not underestimate how fragile our existence is. We are high in the tree on very slender branches with far to fall.
Unicorns everywhere
Moar cowbell !
If Commodities in general hit 2008 levels and keeping going south, can we officially say that nothing was fixed in 2008?
Regardless, will be fun, fun, fun to watch newsmodels trying to come up with a theme that supports risk assets.
There are so many factors competing for space in the final outcome that anything can happen whether it is planned or not.
"We will never see $100 oil". Yes, he is right. We will see oil in yuan, euro or oz.
The monthly chart of crude - now 46.55 - has been showing the downside target of $40 for a month:
http://www.investing.com/commodities/crude-oil-advanced-chart
Someone has been stick-saving $CU for about a month now. Everytime it starts to plunge, someone keep stepping in to buy it...and we know it is not physical demand.
Markets are no longer about supply and demand, they are about speculation, about placing bets and waiting for the opportunity to make a killing (or being killed). We could have a bubble market in dog shit if a few big players thought there was an upside.
"Crushed"? interesting, is oil free now?
This is just "short term market fluctuation". Not to worry. /s
Check out page 76 of PwC publication on Financial reporting in the oil and gas industry (http://www.pwc.com/id/en/publications/assets/financial_reporting_in_the_... published in 2011):
Impairment indicators
Would a decline in market prices of oil and gas be an indicator of impairment?
Background
An entity has producing oil and gas fields. There has been a significant decline in the prices of oil and gas during the last six months.
Is such decline in the prices of oil and gas an indicator of impairment of the field?
Solution
Not automatically. The nature of oil and gas assets is that they often have a long useful life. Commodity price movements can be volatile and move between troughs and spikes. Price reductions can assume more significance over time. If a decline in prices is expected to be prolonged and for a significant proportion of the remaining expected life of the field, an impairment indicator will have occurred.
Short term market fluctuations may not be impairment indicators if prices are expected to return to higher levels within the near future. Such assessments can be difficult to make, with price forecasts becoming difficult where a longer view is taken. Entities should approach this area with care. In particular, entities should consider any downward movements carefully for fields which are high cost producers.
What we are seeing is reality trying to get a front row seat and so a great deal of jostling is taking place as she makes her way from the back of the crowd.
While central banks have had an aversion to the mean for the last 6 years or so, the reversion to the mean will by hook or by crook happen. This will not happen smoothly or in a straight line but it will happen.
copper was at $3000 in 2008
so there is still a long way on the road down
But this is all good. CNBC told me so.
The ZH deluge of superlatives continues.
You know its going to happen but when?
The videos of Peter Schiff predicting 2008 and being ridiculed are widely available.
I used to read the LATOC (Life After the Oil Crash) web site and I am sure he is right. BUT
How do you keep people coming back to your website?
You must make it look as though catastrophe is imminent
He worked pretty much by himself and eventually the ridicule got to him - he turned to astrology.
But I am sure he is still right, he just got the timing slightly wrong.
My comment was more about the irrational exuberance of adverbs and adjectives of the current crop of Tylers.
$35/bbl, here we come!
Aint deflation a bitch? You want the world to 'run' on Socialism? Well then here's your result! The Takers and the Fakers now outnumber the Makers. WTF else would you expect? Shit in equals shit out. Balance!
Oil production does not stop on a dime. If they ALL decided tomorrow to reduce their output (yeah, right, and someday monkeys will fly out of my ass!) it would still be six months before the ripple hit prices. And that ripple will not add up to Jack Shit because demand is ZERO...hey...wait a minute...I just thought of a new law of economics!!
ZIRP = ZERO demand
The global economy is now jammed like a toilet with too many turds.
$35?
That is a bit optimistic in my opinion.
All go ahead and throw out another one of my forecast as I have been mostly correct so far.
Oil will eventially hit atleast $25/barrel.
Those other forecast still in the works that PM bugs hate
Dollar rallies as people scramble for dollars to service debt and pay for day to day living.
Gold will eventually hit below $1000/oz
Sillver hits below $10/oz.
Notice/disclaimer: I do own some PMs which means that percentage of assets would decline.
I was calling $35/bbl a month ago and was gettiing flamed for being too pessimistic...
(I think $25/bbl is definitely a possibility)
Where are all those damn peak oil nuts. they seemed to have disappeared.
No ......
Shale proves all the easy to recover stuff has gone.
You just don't understand peak oil.
We are probably at the plateau before the decline now.
There has been a temporary anomoly.
Oil was held artificially high at $100 for a while.
This allowed that hard to extract stuff to be drilled for profitably.
The artificial price hike has allowed a lot of expensive oil to come on line as the global economy struggles causing an excess.
The excess is not that great, it is massively amplified by markets in terms of price.
Over the long term, it's going up in price and its never coming down again.
(unless someone gets a nuclear fusion reactor working commercially)
"Shale proves all the easy to recover stuff has gone."
... while it is being horsewhipped out of the market by the easy to recover stuff
there are many here who understand what peak oil is, but you're not one of them...
To be pedantic about it
The easy to recover oil is no longer sufficient to meet demand and the more expensive oil needs to be extracted.
It is still at peak oil plus or minus a little bit.
Especially as you can always change your definition of peak oil plus or minus a little bit.
Plus or minus a little bit will make no difference.
We will all be telling our grand children how we used up all the oil.
I hope you live long enough to realize how foolish your understanding of the world was.
They have a PR problem. If you read the Hirsch report, one of the main concerns (if not THE main concern) was the TIME it would take to get alternative energy sources on line. Well, here we are 10 years later and Tar Sands is up and running and NOBODY could see Fracking coming... Funny thing that 'technological innovation'. Nobody can predict it and they're even worse when it comes to WHEN.
You're in peak oil. This is what happens sliding down the back of the peak. It's called demand destruction.
http://en.wikipedia.org/wiki/Demand_destruction
Price volatility was predicted by the peak oil nuts 7 years ago.
http://europe.theoildrum.com/node/3960
If we continue to have global recessions/depressions a minimum of once or twice every goddamned decade, we'll be at 'peak oil' for the next 350 years. There's your Demand Destruction. It's called SOCIALISM.
If the next crash is big enough, then the effects of peak oil will disappear.
The last two global recessions (1930s, now) both caused by Wall Street Crashes (1929 and 2008).
An under-regulated Wall Street poses bigger threats than socialism.
oil storage tank fire in 3, 2, 1...
refinery fire in 3, 2, 1...
"Liberation" of an oil producing nation in 3,2,1....
Well, from 100 to 47, yeah, I would use the word "crushed" time and time again.
And every article I read on commodities, analysts and CEOs of companies all say it is not slowing demand but too much Capex spending bringing on new supplies. That is what is lowering the prices of all.....
Translated: Demand sucks and is going lower and these absurd low artificial interest rates made us invest in projects that are questionable at best and a disaster at worst. Just another peg in the board for absurd investment.
And when copper was last that low the S&P was around 1,150, and it's only 1,000 higher now.
Yeah, sure, that seems about right.
Goldman Sachs is forecasting oil to bottom out in the high 30 dollar range before heading back up. The capital intensive oil industry is going to take a few banks to the edge.
You need to take 2005-2013 completely out of the picture before you start looking for an accurate price for all commodities. 2005 began the great speculative binge that doubled or tripled nearly every base material from its true price because the con men entered the game and turned commodity contracts into momo stocks. Goldman chased JP Morgan, Citigroup chased them and so on and so forth. Then you had the creation of the giant commodity trading funds which ended up trading 90% of the daily contracts between them. Goldman and JP Morgan started buying up warehouses, ships, and whatever they could to store commodities to artificially inflate the price by controlling the supply creating an artificial shortage to further support higher prices for the contracts they held.
Actual consumers who needed the commodities to produce real goods now had to compete with thousands of brokers looking to only make a buck on the contract, not to use the material for anything. Something that never should have been allowed.
Copper belongs around $2500, Oil Around $40, and everything else around half what it currently trades. Perhaps if we get that and slap some regulations back on the trading parasites the global economy has a chance of coming back. Of course that means Goldman, Citi, and Morgan will blow up because their profit centers will be destroyed. But I don't care about that.
Its obvious you just don't care about the financial industry. Where are all the slackers and gamblers supposed to get their hooker and blow money from if we don't let them skim and scam the markets? You just don't have a heart!
"2005 began the great speculative binge that doubled or tripled nearly every base material from its true price because the con men entered the game"
I think it started well before that. But it gets real obvious then. These are all versions of a " long con". FED intervention to hold rates artificially low coupled with the events of repealing Glass - Steagall and subsequent risk taking insured the shit show we are living through would happen. And happen fast.
agree, the main cause for the peak wasn't peak production coupled with peak demand as classically defined... it was supply chain manipulation... well said +1
There are so many people living off the guy actually making the product they destroy the system.
Business Owner wants to dig a hole, he needs:
Blue collar to dig the hole
Supervisor to make sure the hole specifications are met
Bookkeeper
Accountant
Financial adviser
to comply with IRS, business and personal
Insurance(s)
Banker
Government reg.
Lawyer
Whole system is crumbling and I'm sure it will be blamed on the blue collar guy because he's on welfare
D E F L A T E
How much time has the average ECON Prof. in FED stocked academia world spent on deflation?
Not much.
I think I pointed this out last month. All commodities are going down. => Recession.
Y'all need a little HTML file which sucks hundreds of charts in from Yahoo, Google and so on. You too can have a trading wall of charts for the princely sum of 15 minutes of your time copying and pasting the URLs. Then at a glance you can see the directions of all sectors.
How many screens do you visualize in your mind at once?
Or does your "committee" have to get together and decide on the number? (you might not know about "the committee" though?)
Isn't it amazing that economists believe that deflation is the devil that justifies the wholesale printing of money that ultimately only enriches those very people responsible for crashing the economy? Its almost like they planned it that way.
Putin to run out of money to fund his ZH trolls in 3,2,1....
Houston is already reeling in pain as layoffs soar my buddy there tells me. I don't know what it's like in CO, SD or ND or even Canada but it might be just as bad. But as the spin masters brag, the unemployed wil find it cheaper to drive around to FF places and the mall.
They were prepared in CO. Marijuana fields.
The Saud-US Oligarchy Oil patch rift is jeopardizing 3 T $ of US Oil lobby investments in Shale down the road on home turf.
As it is jeopardizing US military plays on the playing fields of Iraq's asymmetric war against Isis/Al Qaeda.
The Iranian Shia militia have REPLACED US as N° 1 support to Iraq by its "boots on ground" presence. In their common fight against ISIS Sunni fundamentalism.
It is clear that the HFs of Sunni brigade, financing the ISIS and Al-Qaeda splinters, will now face more determined retaliation from Shia Iran AND a united Europe--post Paris display-- which will target on Syria's and Yemen's territories the fanatical militia sent to feed local jihadism in Europe.
How Europe faces a potential of increased military response of Jihadist virulence from its bases in Sahel and Middle East will be more and more a subject of tomorrow's world.
As the now evident-to-all and clearly deficient legacy of criminally virulent (Abu Ghraib) past momentum of GWB-US neo-cons' 2003/2008 Crusade, has left a legacy that has totally hamstrung all current US admin initiative to achieve efficient resolution on this front; irrespective of what more virulent critics might allege of US initiated false flags and machiavellian divide and rule CIA initiated games.
Apart from the financial conundrum, the jihadist terror threat and Ukrainian civil war conundrums are now the most urgent issues facing Europe.
The Financiial conundrum in Euro zone comes to boil on Jan 25...As for the other issues :
Mutti and consorts better come up with a common strategy on both fronts -- WHICH IS DIFFERENT TO JUST COW TOWING TO A US ADMINISTRATION THAT HAS SHOWN ITS DE FACTO PREVIOUS DISDAIN FOR EURO INITIATIVES (FU EU).
Tipping times, dangerous chimes and flocks of black swans.
OIL should find a temporary bottom here shortly, but the major trend os still down...
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
The dollar is strong explaining the copper price, though I'm not sure where it goes next.
And copper stayed strong while gold and silver crashed, and now gold and silver are modestly strong while copper and especially oil are crashing. All the guideline ratios on this stuff are broken. Or else the PMs are about to crash again.
Copper is probably the most stable indicator at this point, unless they figure out a way to frack copper.
Damn !
I'm gonna trash all those soda cans I have been hoarding for 10 years...
They can take the place of banana peels on the floors of the exchanges.
For every 10,000 good paying jobs that have been recovered away and never to be seen again, about 10 Ferraris are sitting idle (not idling) in a garage somewhere.
Question: How many times do I need to exchange my Chinese made LED lightbulbs with a supposedly 25,000 hour guarantee?
Answer: The prematurely burnt out Chinese made lightbulb is a clandestine accessory in the asshole of the Ferrari driving Wall Street speculators who ran up the price of oil with money from thin air and Bernanke's ass. Position the ass with lightbulb into the driver's seat, ass facing forward.
It's true. I'll never buy copper again.