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Crude Supplies Surge To Highest Since At Least 1982
EIA Inventory build was double expectations at 8.87 million barrels...
With Total Crude Supply at its highest since at least 1982...
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Remember how exuberant yesterday's small gains in Crude Oil were perceived to be? Yeah - that's all over, with WTI back near a $44 handle - following a large 12.7 million barrel inventory build according to API (EIA reports the 'main event' at 1030ET today - which Saxo Bank warns "a bigger-than-expected build would likely push the mkt over the cliff edge.") Additional weakness overnight is also likely due to Goldman's shift to a 'sell' for the next 3 months.
Goldman downgrades to "sell"
We downgrade commodities to Underweight on a 3-month basis and upgrade to Overweight on a 12-month basis. Despite the large declines in commodity prices, we see risks as still skewed to the downside over the near-term. Lower oil prices are also driving cost deflation across the broader commodity complex. And roll yields remain negative for most commodity markets, weighing on returns. We expect WTI oil prices close to $40/bbl for most of 1H 2015, which should slow supply growth and balance the global oil market by 2016. We then expect oil prices to move to the marginal cost of production (US$65 for WTI and US$70 for Brent). This suggests a strong recovery from current prices, but the timing is uncertain and we would wait for signs of stabilisation (less inventory build and better roll yields) before shifting to a more positive stance on commodities.
But, as Bloomberg reports, the market is “waiting on the main event of the day, which is the EIA inventory data,” says Saxo Bank head of commodity strategy Ole Hansen.
“A bigger-than-expected build would likely push the mkt over the cliff edge, while a not so strong build could be the ammunition the bulls need to trigger some sort of recovery”
“The mkt is stuck in a tight range, looking for a breakout, but it is unclear in which direction that breakout will be,” says Hansen. “The mkt is torn between general belief you don’t want to miss the opportunity to buy, while at the same time the fundamentals don’t support the recovery”
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Hope springs eternal though...
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$40-42 is just days away:
http://www.investing.com/commodities/crude-oil-advanced-chart
The boobs don't give a shit. They're stocking up on beer and nachos for the Super Bowl. The sixth extinction marchs on.
“Goldman's shift to a 'sell' for the next 3 months”
Which means they are accumulating.
Buy ALL dips.
JYellen is coming to town.
Looks like a Goldman inspired selling frenzy -- a classic blow-off bottom -- so that Goldman can load up. Sounds just like their $200 oil call when oil was $140.
Oil was $10/barrel in 1999. I remember filling up with 91 octane for 97 cents per gallon.
Of course, that was before The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999 was signed into law by cocksucker-in-chief Clinton, as passed by CONgress.
TRUTH < actual year was 2000, the month before coksuker-in-chief left office >
I doubt we will hit 10 again, but I'm looking for 25. When it hits 25 and seems to be showing signs of a bottom, I'll go long crude.
It was going for 2 cents a barrel in parts of East Texas in 1931.
and the cocksucker in cheif of citi all but bj'd the bjer(receivee) in cheif. bye bye glass steg...
Which "crude" does GS mean when they talk about "oil"? The sweet light crude or the heavy-sour crude? Or both? And who is the consumer of the respective type? What about the refineries? Or is this all irrelevant?
More precision please, Goldmann. Back to work.
In a similar vein, I was thinking, "Since when do the ZH skeptics listen to GS?"
"Which means they are accumulating."
I have to agree. With Algos acting on headline meta data, headline releases are one tool in the toolbox of price manipulation.
"Sixth extinction" or third rectification of the Vuldrani?
I agree...perhaps far lower.
Shocked by the Apple numbers....that will suck dollars away from not just the oil patch but commodities in general.
Some of the numbers certain Chinese are paying for real estate in the USA right now are "far out dude." 40 million plus for "living space."
Market chop if not outright correction dead ahead...but even that might not happen.
Defense budget is plain criminal. Good luck getting that thing under control. Yemen, Libya, Kurdistan, Russia...everything is on the table.
Although there will likely be further downward creep, instead of linking to some random futures page, let me recommend that you cut and paste the following:
"Will oil go to the $40-42 range?"
Into a better authority for oil price predictions:
http://www.magic-8-ball.org/
Make oil free, I mean how hard is it to get this stuff anyway and who really needs reduced hydrocarbons these days?
/s
I need free gas so I can go to my free community college.....where I plan on majoring in economics.
FREE GAS FRIDAYS!
LOL!!!
It's the dreaded double post. I swear I hit that thing one time.
What happens to me, is I type my snarky response in the textbox, hit save and then it formats it to html. Sometimes I click save again while its doing this and double post.
Must be the first sign of inflation.
we have oil all over the place what a disaster
We need to stuff a bunch of it into the SPR.
SPR is full. Has been for a long time time.
Maybe we should build more SPR? Remember every time prices spiked they'd call for a release from the SPR? Do it in reverse- every time prices drop, gov't buys more of it and socks it away inside some giant underground cavern somewhere.
Or how about this- pay somebody to pump it back INTO the ground. One company pumps it out, another one pumps it back in. Keynesian nirvana.
Not to worry.. there is plenty of need for lube at this end of the “market”.
"Neo-Keynesian Nirvana"
"re pump it back into the ground"- lol of the day, ha...
refractured..
Who cares it's just oil...Messy stuff.
APPL is king of the world that's what's important.
The laborers over at Foxx Conn just aren't feeling the love though. Wonder why?
YELLOW?
BLACK?
GOLD/OIL RATIO remains at extreme levels almost 30.
Something has to give sooner or later.
I love the early market smell of Financial Porn.
probably be the pattern before all Fed meetings. Create deflationary back drop so interest rate hold is justified. Threaten to raise in between meetings with misleading stats that assure traders they are gong to raise and then deflate. Numbers all very soft for this meeting and dollar at 94-95.
Deflation is a bitch. But, with help from the government, it can be transformed into merely a stage toward inflation. Lots of inflation.
Only Goldman can have a 'sell' and a 'buy' on the same product and not crack a smile.
Oracle of Delphi anyone?
the political oil game. There is oil, there isn't, There is, Wait Al quade just blew up a well, there isn't. Oil such a political tool. Who knows the real story.
Remember how exuberant yesterday's small gains in Crude Oil were perceived to be? Yeah
Oil just brings out the Quenten Tarrantino in captalists.
Remember the market is volatile at the moment.
Old yeller will make his grandiose appearance today and all will be well. Party on bitches.
We then expect oil prices to move to the marginal cost of production (US$65 for WTI and US$70 for Brent).
NONSENSE...it is more like $30-40..this is just more pro-inflation propaganda.
Let me recommend thinking in terms of supply and demand. Oilprice.com might be a good start.
You don't speak Goldmanese, do you? Let me translate into English for you. -- "The Marginal Cost of Production varies for each oilfield, but $65 to $70 is the price that includes the cost of production - plus OUR share of the profit"
35. Bet a silver eagle on it.
I'll start buying oil companies after the share price drops a bit more. Oil stocks have rallied even though oil hasn't. Oil can either rise to match the stock price or stocks can fall to match the oil price. I'm betting on the latter.
Unless stocks crash, that isn't going to happen. Better bets are DBO, USO, or HZOZD
I'm nibbling on oil services stocks. There is no way Goldman is going to let me pump $1.80 gas this summer. All it takes is a strong stomach, patience, and some dry powder to buy on big dips like today. I smell a big V once we see the Fed minutes.
Just out of curiousity, why do you think that the Fed announcement might affect crude prices? Way I see it, this is a supply/demand issue at this point. Unless, of course you expect "considerable patience" to be the new mantra!
More patience on the Fed's part, and any statement about concern for the strength of the dollar could mean a drop in the dollar, which would benefit oil prices. Any statements on easing or more QE would obviously help oil. The main thing I am looking for is repeating their dovish comments such that the market does what is always does after an FOMC meeting -- it spikes higher, and that will take oil and oil prices higher.
Yep, I can see that. I'm assuming status quo...as of late that may not be the best ASSumption on myy part!
I agree, and I think there is a 100% chance of doves showing up. Problem is most people are thinking that so will it generate a pop?
I also think BTFD, WTI seems stuck at $45/bbl no matter what news is happening like growing inventory. Everyone knows inventory is growing, but prob wont pay less at this point
FYI it $1.50 Galveston
Paraphrasing one of the most famous ZH comments:
Yup. Only $5.
And another $25 to $125 a barrel to get the pipes, pump and other drilling and delivery infrastructure in place.
This is why I love the fuckin Internet.
Singed,
1980s & 1990s
16 oz. Bottled water < $6.00/gallon; gasoline $2.04/gallon...Long water/short oil! Just saying...
IMF set for lively debate this year on adding yuan to SDR baskethttp://www.reuters.com/article/2015/01/26/us-imf-yuan-idUSKBN0KZ1AJ20150126
They need 85% of votes to get in USA holds 16.7 of all votes, not getting in unless the USA wants it.
Team " Knife Catcher" is all in trying to save the 44 handle in CL.
Looks like its working :)
Everyone see that price action BEFORE the data was released? The priviledged front ran the shit out it. What a fucking scam.
Of course a bigger looming issue maybe storage. No place to store and buyers stop buying... Just imagine that event....
Just keep the concept of physical oil separate from paper oil. Just like gold, I doubt there is as much selling of physical oil at this price as the paper contracts and magically invented inventory reports show.
The inventory isn't the issue, it's who owns it and it's not the dumbasses selling short conracts on the futures markets.
I saw on EconoPray that commercial inventories haven't been this high for 80 years.
Bullish. Or something.
Throwing a water balloon filled with oil at a black person counts as black on black crime.
The big question of the day is whether these numbers were leaked to Goldman ahead of time so that they could short oil and oil stocks -- or whether Goldman shorted oil and oil stocks then wrote the content of both inventory reports and passed them on to EIA and DOE to release.
It's always diffiuclt finding an oil leak
Nice!
Thanks - Somebody didn't agree though and doesn't seem to agree much with anything I write..
I say FUCK HIM and look, here's a big fat downgrade for the skanky troll (________) Ha ha
WANKER !
I came for the info but I stayed for the humor.
+++++++++++++++++++++++++++++++
Real Arab Spring - sans $18T
Really need to normalize these charts for increased storage capacity over the last 23 years and always show the demand curve on here too which should show the same or more demand (so having a bigger supply backup would be reasonable)...
The markets seem to have embraced T Boone Pickens prediction that rig counts will drop --- yet ignore his prediction that oil will be $80 again by Q4 of 2015.
7500 flights grounded and manandatory evacuation of all roadways for 2 inches of snow in NY probably added another million barrels to the glut... lol
Hard to tell -- some of the actual planes were moved out of the way (empty) and now need to come back to the Northeast (empty). We'll have to listen to the airlines moan before we know the net plus or minus.
Should make for lower manufaturing cost for who's making all those barrels. Inturn they can make more barrels which will be filled with oil and more will be needed so your car steel may go to $100 per car (up from $50) so that's good for the homeless guy carring around that 87 buick fender. Can anyone get cows to drink oil? That may lower the price of beef. Anyway GS will be buying stock in the barrel makers. Let's hope the Germans stock pile more for Kesler this time (Robert Shaws dead tho). Then you've got Dow Chemical that has to provide paint for the barrels while destroying the enviroment (where's the epa on that one right?). And a never ending supply of poision ink to go on your junkmail you toss out. Electric cars should learn how to run on oil but not coal or garbage so we can go to far away universise with that tech and GE can run that one.
Price. The only thing that matters. I would be reluctant to read too much into the last couple of large builds as there has been speculation that large traders have been storing cheap crude at cushing for future sales...this stock is not intended for market at the moment. We may have a monster short squeeze coming.
Perfect time for Israel to hit the nuclear facilities in Iran. The threat of blocking the Strait of Hormuz is no longer much of a threat. As a matter of fact many countries would love the attack. It might double the price of oil and make Russia very happy.
Durden neglects to mention what happened to the 80's in crude. Demand went up, so the price went up. Supply is only bearish when there's flat or decreasing demand. Global population growth plus endless central money printing will take crude up over time, by definition.
Another takeaway is that US production increased again, this time another 27,000 barrels a day change week-over-week. Domestic production now up to a whopping 9.2 million barrels a day. Hard to see prices going up with so much in inventories, so much domestic production, and with a strong dollar continuing to incentivize imports of foreign oil.