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WTI Plunges To $45 Handle - Lowest Since January
While none of the catalysts are new (IEA warning temporary stabilization amid rising oil glut and increased US production), it appears the February bounce is done as our discussions of storage limitations gains traction among the ETF-driven knife-catchers. April WTI Crude futures have collapsed in the last few days from over $52 to a $45 handle now - the lowest since January and only marginally above cycle lows... As oil cratered so EURUSD slipped and S&P futures fell.
Crude Carnage...
And EURUSD algos hit another trigger point
Oil prices might have stabilized only temporarily because the global oil glut is worsening and U.S. production shows no sign of slowing, the International Energy Agency said on Friday.
"On the face of it, the oil price appears to be stabilizing. What a precarious balance it is, however," the Paris-based IEA said in its monthly report.
"Behind the façade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly."
"Yet U.S. supply so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations," the IEA said.
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MOAR OIL TANKS!
Unambiguously good, yeah...
BTW the shale shill oil and gas producers are REALLY between the rock and hard place. And soon they will be in place where the Sun never shines.
Took a lot of manipulation to keep up that price level, now that the bite the dusters have finally bit the dust, true price discovery lay ahead.
I agree, but my paranoid mind came up with a question:
Will the PTB start a war to save the shale shill oil and gas producers, or they will start a war to save the fiat US$?
The war began long ago, so, I don't know.
So demand declined, production increased, and oil companies all over the world decided kamikaze production policy’s, trying to bankrupt their competition goes bankrupt is a good business plan.
Excellent. This will do wonders for the junk bond market.
While I do think there is a global demand problem and I also think oil can go lower, that chart with the "Biryani Ruler" isn't realistict. Just looking at the chart, there is a seasonality to flows (net add/net draw down) at Cushing. About this time every year it turns to drawdown, which my undesrtand is refineries coming back online after maintenance season and gearing up for the higher demand of summer driving.
Robert Rapier has a pretty good write up and also has some good comments at the end.
http://www.energytrendsinsider.com/2015/03/11/is-the-u-s-running-out-of-...
If one wants to be conspiratorial, this is just the insiders pushing the oil-collapse-Cushing-fill meme (I read this same idea in a lot of places) to get folks on the short side so they can add longs and invade a Middle Eastern country.
Regards,
Cooter
@ negative
I meant a hot war somewhere in Saudi Arabia.
thank you for the link, so the overall oil storage(Cushing et al) is only 60% full...
Sounds alot like the iron ore markets as well Haus.
If oil gets any cheaper we can just start burning Canadians to bring the demand back. It would be legal..right?
http://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-20/latest/rsc-1985-c-...
RIPS
But gas prices have been rising....there's a clip of about 30 TV reporters announcing it.....they couldn't all be wrong could they?
Check out http://www.gasbuddy.com/
You can search your area. See for yourself if gas prices are rising or falling in your town. Thats what I do as I can not stomach much MSM.
Around my area (mid-cities DFW) prices seem to hit a ceiling of about 2.29, then creep lower. $2.13 this morning.
Since Lehman - ?
Since when ??
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Sounds great!
Just send me your SS#, birthdate, mother's madian name, bank routing information and your home address, that should be enough for me to get started with your great opportunity!
problem is storage tanks are filling up quicker than anyone is admitting. oil inventories already 10% higher than at any point in history. going into this glut, did anyone ever plan for oil hitting 450-500MB, and build the storage capabilities for this? i seriously doubt it. demand just cant keep up. the global despression has taken care of that.
Yet gas still going up day by day. Total disconnect.
There is a lot of disconnect running around these days.
Playbook!
Refinery strikes + seasonal blend changes
Oil is not RBOB
btw rbob has gone from 1.90 to 1.79 since Sunday so gas is going down.
Well there have been refinery disruptions,fires, etc. that would lessen the gas that goes to market, hence the price increase.
you are so simple gasoline is up because.....well....because the cracker emitter thing at the end of the pipleline....because OH screw it....BECAUSE HEDGIES CAN!
There are plenty of empty iron ore ships that could be filled up with crude and parked for a few years.
There are plenty of empty Salt Domes In Texas.
At these prices the USA can refill the Strategic Oil Reserves.
Hell they need Yellen to order up some new printing right away.
Pump that sludge right back in the ground. (At least they will not have to frack it out of Shale.)
But they want to bring the price of Oil down in order to cause Russia headaches.
Anyone invested here is just "collateral damage" and the USA is ready to sacrifice YOUR LIFE without a care.
Your life, especially in a Nuclear Holocaust, is an acceptable loss to the maniacs who are running YOUR Government.
I'd place my trust in their wisdom when it comes down to killing me. After all...They are the CHOSEN and they have the brains, right?
Can we start pricing oil in Yuan instead of $'s to get ahead of the game please?
Moar layoffs and less demand.
Obama carbon credit going as planned.
Moar food stamps, social security disability and welfare.
How about another round of cash for clunckers?
Shit, I'm down.
Same thing for tanker leasing.
http://www.harperpetersen.com/harpex/harpexVP.do
The problem will be how long te price stays down. At ~$38k per day to rent a tanker, if someone doesnt get ridmof their oil at ahigher price, there will be alot of people running out of $ and defaulting. Or the tanker company just seizes the cargo,as payment. Not a bad play in the tanker leasing sector these days. Look for idled railcars to be the next to be filled up and stashed some where. These mobile storage 'units' would also make a juicy target if someone wanted to create a bit of a panic.
Open up a new SOR (Strategic Oil Reserve) on the Gulf and put a big sign that says CASH for OIL, and pay 50% of the WTI futures price.
and maybe put a guy on the corner with funny hat and and sandwich board sign that says, "we buy oil, we buy gold, we buy diamonds"
"Default" is no longer allowed. Please refer to NON-GAAP to solve all financing issues.
Bring back the big Bly block v8!.
How about a modern LS-series engine on a LSX block with 454 cubic inches, making 707HP with a single carburetor? No blower, no turbo. Straight from the GM mothership with a warranty!
http://www.chevrolet.com/performance/crate-engines/lsx-454-r.html
Do you think I could squeeze that into my S10?
if its an 88 or older, a few mods for the motor mounts and you can get a 350 in there no problem
Its nice but no thanks, its still n/a. Turbos are the future. Give me a Ford Aluminator and 20 pounds of boost that makes around 1700 hp.
What can not be sustained, won't be, straight 6 wit a rear end drive automatic, preferably diesel.
Peak oil? oh wait..would be nice to own a salt dome right about now.
Gee wheres everyone going to spend this savings....Oh wait.
On I watch's...lol
Oh, so this is why gas is up!?!?!
....... storage limit...... what is the total storage limit vs the daily consumption vs the potential for supply collapse with all the fucking around we are currently engaged in...... just a thought...... just a thought.....
We're 80% full. No we're 60% full. Rig counts matter. Rig counts don't matter. Break even is $90. Break even is $35. We're going to $20. No we're going back up. Demand is down. No demand is stable. EIA said this. IEA said that.
How anyone keeps up with any of the BS I'll never know.
You're doing pretty good actually.....keep it up.
don't worry the geniuses have too much supply so they are going to stock pile it to wait for the price to go up...in the face of massive supply increases... Ready to rescue oil companies...well really the banks/hedgies/PEQ that finances them?
Actually, that was a nice succint summary.
Cushing is pretty amazing place. Went last year and the police/military presence is carefully hidden there. Used to be sleepy little town. They know a stranger in about five seconds...
This is really quite extraordinary...and no, computer trading strategies have nothing to do with this. Just an ability to count is sufficient.
This is a tremendous economic driver both now and going forward for the USA. The "eventualities" in the currency markes are however of enormous concern. I simply can't think of any time when modern history when all other monies were so completely worthless.
Goods are clearly seeking a home in the last market standing (the USA) ...I find it almost impossible to believe that we will get a recession print here.
Government spending alone...which is truly massive right now...should be sufficient to drive at least a 4% number.
Interestingly...incredibly really...this is not happening.
We have reached the tipping point in the use of oil. We will soon use only a fraction of the oil we are presently using.
Let’s look at some examples of what is happening to demand and learn why demand will not return to its former level nor increase again. Here are some examples of what has occurred, what is occurring, and what will occur in the world of oil:
1.
Every year Boeing and Airbus each build 700 aircraft. These new aircraft are 20% more efficient than the airplanes they replace. The airplanes being replaced were designed in the 1960s and the 1070s.
2.
In addition, airlines are switching from petroleum fuel to a 50/50 blend of bio fuel and petroleum fuel. This results in a fuel reduction of an additional 10%.
3.
A similar thing is occurring in the shipping industry. Today, ships are being fitted with what is called an AIR LUBRICATION system. Cruise lines are currently testing air lubrication systems on their ships with outstanding, almost unbelievable results in terms of fuel consumption. RCCL has the system installed on several of their cruise ships and they anticipate that when the system is installed on all their ships they will reduce their fleet fuel consumption by 10%. This will reduce their fuel bill by 10 million dollars per year.
The reduction of fuel consumption for other large ships such as fuel carriers and cargo ships is expected to be as much as 20%.
It takes about two weeks to install an air lubrication system on a ship. Shipyards will soon be filled with ships undergoing system installs.
4.
The automobile industry is continually improving the fuel consumption of vehicles. I recently traded in a 10 year old auto for a new vehicle. The old car got 24 mpg. The new car is larger and gets 34 mpg. A total fill up of my new car is now 10 gallons.
5 The trucking industry is doing its part. Look at the 18 wheelers you pass on the highway and take note of the air deflectors attached to the bottom of the trailers. Those air deflectors reduce drag and result in fuel savings of 10%.
How big is this you ask? There are 300,000 18 wheel trucks in the US and Canada. They each drive 250,000 miles per year. They typically get six miles per gallon at highway speed. Do the math and this is a potential fuel use reduction of 125,000,000 gallons per year.
It is truly astounding that a simple and inexpensive wind deflector installed on 18 wheeler trailers will result in a fuel savings of more than $3,750,000,000 each year for the North American trucking industry. When the avoided production and distribution costs of this much fuel is included in the equation the potential annual savings come to $4,000,000,000.
6.
The future of oil just became immensely bleaker.
The Lockheed Martin Skunk Works has an unrivaled reputation of producing cutting edge technology on time and under budget. Recently Lockheed Martin Skunk Works announced they will produce a working prototype fusion reactor in less than five years.
See:
http://www.forbes.com/sites/williampentland/2014/10/15/lockhe
ed-martin-claims-fusion-breakthrough-that-could-change-world-forever/
The Skunk Works fusion reactor will eliminate the need for 90% of the petroleum products being produced today.
The oil based world economy is coming to an end.
You mean rupert murdoch and forbes had the answer the whole fucking time?
I know skunkworks engineers and forbes is full o shit!
RIPS
Good analysis. Thanks.
Is all this oil stored right next to all the gold in Fort Knox?