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Crude Awakening: Why Next Week Could Be Carnage For Oil ETFs
Don’t look now, but the sharp slide in crude prices may be leading the proverbial sheep to slaughter. Investors have piled into the market’s largest crude ETF over the last several months sending the number of shares outstanding to the highest level since 2009. We suspect many of these “investors” might be unaware that they’re currently staring down the most severe decoupling between second- and first- month contracts in four years.
"normal" knife catching BTFD'ers piled into USO for the bounce...
The last 2 times such an extreme contango occurred, USO volatility was gappy and extreme.
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Sell low, buy high anyone?
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As of 3:15 p.m. ET, the Dow Jones industrial average was down 270 points.
time for the PPPT
text me when its 2700 or more
202-452-3000 (or any wall where dutch boys are advertised)
Plus one for the phone number, I see what you did there! :)
Time for goldbugs to join crude, copper and the rest of the real productive economy in the pain trade.
And yes, Crude is going to 38 either by a strong dollar or the collapse & catch down to the US export numbers by terminal exports from the US industrials.
Sunday night OPEC will announce cuts in production, propelling USO higher. Every day is a good day for market manipulation.
It might be good for a temporary idiot's rally, but everyone knows OPEC members cheat and OPEC oil production will actually increase if prices increase. More oil will flood the market as demand keeps decreasing. The only country growing GDP now is China and it's 3% at best. Everyone else is in contraction or struggling to avoid deflation.
"And yes, Crude is going to 38 either by a strong dollar or the collapse & catch down to the US export numbers by terminal exports from the US industrials."
If it goes to 38, it won't be for those reasons...
It will be because of MANIPULATION, Plain and simple!
deja vu (3 days ago)
Saudi Arabia has a bit of a problem. They have a huge welfare state that functions to keep their Wahabi extremist elements mellow. They need money, and lots of it.
Lower prices will force them to increase output, because there is simply no possibility of cutting the Saudi entitlement programs without losing the Kingdom. And if it gets too desperate, US involvement, especially THERE in the home of Mecca and Medina, would lead to the kind of thing that would shut down the world oil markets for awhile.
So, the US won't really be able to do much if the House of Saud loses their grip on power. I'm sure they know that. So, it's drill baby, drill...gotta keep that money flowing in, and the jihadis flush with bennies.
Sunday night OPEC will announce cuts in production, propelling USO higher. Every day is a good day for market manipulation.
OPEC? I thought it died Thanksgiving Day 2014.
The same OPEC that took all of 20 mins to counter Nigeria's suggestion of cuts?
Bulls getting desperate.
FOOD for thought.. "
ETF SSF Volume -59% v yr ago"http://hedgeaccordingly.com/2015/03/single-stock-futures-exch-onechicago...
ETF vol -59% from previous yr
SSF vol +53% from previous yr
I suspect gold might follow these trades and start moving up.
Funny they wont let gold go up period the sane people might get rich cause we played it safe so never
Get the butter....
Never have I seen soooo many investors, both professional and rookies talk about how Oil is the place to be..i.e. "it can ONLY GO UP"? lmao
Watch the butt clowns on TV, believe what they say, do what they say, lose your ass, repeat.....
Its been working for the USD for at least 6 months. Wall Street and the financial talking heads have been dollar bullish for months and have been absolutely correct. Sometimes we let our confirmation bias get the best of us.
QE bias is all that matters.
End QE= strong dollar, weak oil.
Next QE= strong oil, weak dollar.
Assuming QE actually works to increase velocity and quantity of money in circulation (liquidity).
You seem to be forgetting that it’s only US oil and that the fracking wells will start to deplete in 6 months from now causing a massive shortage Of oil.
And the stockmarket? It’s mostly 6 months trading into the future, not at what’s happening now, that’s what simple investors don’t grasp.
But what if six month projections for the stock market are wrong? What if growth continues to fail and oil demand continues to fall. Trends can be self fulfilling. I find it annoying that we presume ANYONE buying stock knows anything more than anyone else? Their belief in future growth can actually create some growth in a relatively healthy market, but that ain't this. Their optimism can definitely take the stock market higher but be meaningless to the real economy. Oil markets are real as we actually consume oil. No one consumes stock so it can be absolutely faked. When oil is stockpiled everywhere, at some point no one will buy. You just can't fake demand for long.
I’ve been in 6 European capital cities in Europe in the last 2 weeks and bizz is a bit down yes but traffic jams are rampant everywhere and trucks line the highways everywhere to.
and they use oil. A shitload of it.
And if you have 400 million cars driving the road, using 10 to 20 gallons a week, those reserves mean nothing.
I you live in the bush you can say: hmmm... not much economic activity here....
But in the big cities... man o man!
Don't be fooled. People see you're in town and tell each other to look busy.
Those same wells that there's 1400 of, waiting to be popped?
Ignore SD, he's been calling for $200 oil for, what, 6 months buddy?
no he has never called for $200 oil. In fact I don't recall anyone on ZH(outside of jokes or passing trolls) ever calling for $200 oil.
if you can't even quote anyone accurately or honestly, it's time for everyone to start ignoring you for what you are, troll.
and just because $50, $100, $200 sound the same to you doesn't make it so, either get a clue or fuck off.
A lot of the negative oil sentiment is really more short-term in nature. You are very likely right when looking 6-12 months out (or longer, depending on how bad global demand is cratering).
The problem that I see in convert trading is that there has been a lot of demand (institutional and retail) for the beaten-down, over-leveraged E&P companies. Many of these guys are still walking dead and a leg down in oil to $40 with a 6-month stay there will surely bankrupt many of these players. They are pumping just to keep the lights on at these prices as it is.
There are likely to be more tears shed before we close the chapter in this book....
If ZH says it will fall, that's a guaranteed rise.
maybe in the short run ... but global economy swings the biggest d!ck ... and swing it will
I hope you stick around on these message boards for a while. I'm looking forward to your clever commentary if/when oil really does have a 30-handle.
What other sites do you stink up the message boards on? If you're so smart and ZH is dead wrong about everything, then why are you here at all...?
There must be some other site for smart people like you....
biggest weekly inventory build since 2001
biggest inventory (for this time of year) in 80 years
what, me worry?
still waiting for that to affect my gas price (now $2.47/gal)
Hmmmm, 80 years ago we would be building our reserves for what?
Funny, that was in he middle of a depression, too.
Maybe it's a coinicidence.
WTI $30 and the carnage begins. I 'll hoard some beer and frozen Pizza. When Wall Street starts to panic, I'll be enjoying myself enormously.
crude going lower ... a lot lower
reason?
production. inventory so high because little/no production cut backs in the face of slumping demand
production is one thing
the cost of production is another
speaking of production, how many producing countries have peaked?
http://peak-oil.org/peak-oil-reference/peak-oil-data/production-and-peak-dates-by-country/
this is all a temporary game
a very short sighted stupid game with the most important "commodity" in the world
Wait, supply and demand is now considered a very short sighted stupid game?
is it just me or when the 2nd/1st premium fell back down in 2011, USO seemed to do pretty well (I'm assuming that second chart is price)
USO underperforms during contango and outperforms during backwardation.
On another note, Boy would I hate to be A HUGE diesel, jet fuel user that locked in 6 month future contracts back in Sept 2014 to the tune of millions of gallons when it was at 80-100bbl...yikes
The gangbanksters are robbing ETF's like these by trading futures intermarket calendar spreads against the ETF.
There probably should be a law against it but you know how that goes.
Please explain.
Yesterday, Thursday, the price of some lease acres in the Bakken--Bakken hot zone 4 county area--- went to ZERO. YES, HOT ZONE LEASE ACRE PRICE WENT TO ZERO. How? Lease acres bought late last year and the buyer "elected" to participate in the costs of drilling these acres. Now, he doesn't want to cover his share of the drilling costs and wanted to sell his acres.....no buyers at any price. He offered to give the acres ....give them away.....nobody would take them.
And that my friends is unheard of out here in the Bakken.......truly incredible.
He owned 2% of the lease acres; the well was going to cost $8million; he didn't want to pony up $160,000.00 only to watch the well, maybe, sit there as "bored but not fracked" and not knowing how or when he could get his cash back.
Brutal out here in the prairie wind.
2% for 160,00.00, I'd be out also. Idiots game....
and this, boys and girls, is how leverage kills productivity
I remember when oil prices were running up, and I looked at the US oil fund. They couldn't keep up. The problem is they roll over their contracts in a predictable period, which led to them getting front run every month. If the fund gets larger the opportunity and losses for long term holders gets even worse. Don't know if they ever fixed the issue. I haven't considered an oil investment in a long time.
ETF's behave similar to their underlying options. Short term only. They will never keep up. Built in bankster skim.
Right - you always lost money on USO due to contango, USL was a better "buy and hold" option then... not sure about it now though...
is it time to take out a car loan and buy oil? can someone check CNBC
Only if you buy a VW TDI Diesel. They're practically giving them away. Great mileage with high price diesel, umm, never mind. How 'bout an F150? You ownly have to pay list price...
Don't know about your tdi (if you have one) but the cost per mile on mine is a lot lower than I could get with a comparable gas car. In most instances now diesel is within 40 cents of the cheapest ethanol blend gasoline.
Shhh. The PTB don't want the sheep to know about those TDIs...they want the proles to buying Teslas and Chitvy Volts.
Miss Barrie here. Yes! Take that car loan. There is too much oil in the world today. Why it is even being stored offshore in tankers! This oil will spoil if not used (/s). Using my pen and phone, beginning next week, the less fortunate of our citizens will receive The Oil EBT, good at any US gas station!
My Oil EO will put people back to work, operate our refineries, and give the less fortunate Free Gas!
front month higher than the back we call backwardation...so think the writer drank bit too much
because of the cold in the US we have short term backward market, watch the spreads collapse in 2 months
and see CONTaNGO as big as in 2008/9 (for the writer...front lower than backs...)
sorry..talking 10 ppm diesel europe...backwardated
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I'll do some "chart teaching" before I nap.
Mustabeen Greek ? (afterlife)
Okay Bitchez, look at the top (2) charts :exhibits.
What deviates?
Chart#1 shows a spike that doesn't correlate with chart#2/ WHY?
Shares "outstanding" #A plunged vs "shares -Premium" #B last month.
WTF? Margin/ Margin why? Currency War!
Despite the fall in the price of crude, any fall is offset here in Europe by the increase in the value of the dollar, which means that prices at the pump have actually increased since the Euro fell against the dollar
Can't buy a break anywhere these days
Lets discuss this chart? United States Oil Fund (USO) Stock Chart - NASDAQ.com
I'm sure they'll be happy by the end of the year when oil will be back over a $100.00.
What year is that? Not this one for sure.
I doubt that. Oil went down for reasons that make a rise back to 100 unlikely, for a long time. The only thing that can do it is a bout of serious inflation that takes everything else up, in which case it wouldn't really be an increase, just keeping up.
We are in the age of lowered expectations, all around.
I bought some oil stawks today... but only because I believe the islamofacists/cia are about to get all blowuppy again and will attack an oil field or two that's "controlled by the infidel"... and the second that happens hello $100+ oil again.
I hope I'm wrong but it seems like this is a prime opportunity for moar war :-/
100$ ? First they have to take it to 20$ to ruin everyone invested at 100$. Then, they will take it to 200$ to fuck everyone else.
That's how they roll.
Let's see...
Yearly Chart of USO down ~50%.
Crude oil pricing approaching multi year lows (you think it will go to zero? Or maybe the oil companies will "NIRP" us and pay us to use it?!?!)
And you want me to go short?
lMAO
Well Done
I suggested $usd softness last week? Look at my posts
Excluding CL contango? I'd be long CL for about 2-3 hours.
CL is going lower. MUCH lower.
You may be right. Miss Barrie may give out 'oil EBTs' to the FSA.
"He gonna fill mah tank!"
Thank You. Miss the ETF chart. Even if the contango is supported by yield chasing funds, these funds (I believe) will wake up to safer terrains to pick pennies. Will act. Building shorts on RMB. Any caution here ?
Why not short USO and buy forward month CL?
Every sausage has only one end, you see?!
And now for a new episode of Cryler's "Sad Money." Be sure and sell low!
How bout screwed both ways, backwardation for the sellers and contango for the buyers, expectation of future price is wrong for both:)
WHAT IS THE ORIGIN OF THIS CHART????? When I look at futures quotes as of 0926 Monday 3/9/15 I see April Crude at 4955 vs May Crude at 5130 which equals a 1 vs 2 contango of 175 NOT 400