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Oil Plunges To Lowest Since March 2009 ($43 WTI) As EURUSD 1.05 Battle Continues
Update: *WTI CRUDE TRADES AT LOWEST INTRADAY PRICE SINCE MARCH 2009 - $43.57
Despite 'trouble' in Saudi Arabia, and chatter of SPR buying, it appears the re-opening of all Houston shipping channels, comments from Greenspan, yet another refinery shut (Exxon's Joliet lost power), and the rapidly filling storage capacity has awakened the realization that the month-long dead-cat-bounce is over in crude. Brent broke below $53.50 and WTI back to a $43 handle (close to the lowest levels in 6 years) at the open. One can only imagine the pressure on USO (Oil ETF) holders as the contango continues to gap wider. EURUSD is teasing the crucial 1.05 level again...
Tumble to a $43 handle briefly...
The lowest in the cycle (based on the April contract)...
as the contango blows sky high...
Looks a little different this time...
And EURUSD is teasing 1.05 once again...
Charts: Bloomberg
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Yes, that makes so much sense that it cannot be manipulation.
Instability in Saudi Arabia leads to free oil for all.
QE Wednesday?
listen zeroes. long uah short rub. thank me later
I think it should change from WTI Crude to WTF Crude...
It's not confusing if you've spent all of 20 mins doing research, which bulls haven't done. Their research goes like this:
"Ugh, oil at $50, has always been $100 methink, must go back to $100...me buy now, make big money when oil go to $100."
Oil has been $100 for all of 5-6 years, average price is $10-$40, this is called reversion to the mean, unless you're a bull, in which case it's called "confusing."
Thank you for the simple explanation. Oil was $35 before QE started. It only got to $100 because of QE. Now that QE is over it will be back to $35.
It's not instability in Saudi Arabia. The root cause is due to the Triffin Dilemma, and how a strong USD, implies stagnation for the rest of the world, borrowing with the reserve currency, and given that the EU is in the midst of QE. 11 Trillion USD have been loaned out since the Great Recession. Now servicing that debt, and dwindling capital flows to the rest of the world, because of a strong USD is resulting in global stagnation. The Fed has blown a credit bubble in the rest of the world, in order to manage domestic interest. Now that credit bubble is become unstable. Meanwhile, the Fed has to worry about runaway asset inflation visa via the stock, and bond market, which has been the main channels they have concentrated their policy towards, which is creating a vicious feedback loopback towards a stronger dollar, and greater global stagnation.
So..... servicing the debt is a BURDEN with interest rates at zero or below.
I"ll be glad to take a trillion of that ungodly burden off your hands.
"So..... servicing the debt is a BURDEN with interest rates at zero or below.
I"ll be glad to take a trillion of that ungodly burden off your hands. "
YOU will only be allowed/invited to borrow at insanely usurous rates FROM institutions that have the political influence required to access the published ZIRP rates.
Ask anyone trying to get a re-fi on a home with a healthy equity ratio or who is maintaining a credit card if ZIRP is a reality for common people.
Even with decent employment and/or a healthy equity ratio the rates are outrageous.
The spread between what banks borrow at and lend at has seldom been highr in the entire history of American banking...
ZIRP is for governments, big financials and industrial conglomerates, and a few uber-wealthy individuals with rentier incomes streams yielding waaaay above ZIRP and thus effectively free money.
Usury is for the rest. There is no ZIRP or near ZIRP money offered, nor will their be any ZIRP or near ZIRP money offered, to the common people and small businesses that make up much of the economy.
Oil production may be up in Texas, but oil-and-gas tax revenues are down an estimated 40 percent amid six-year low crude oil prices, according to a U.S. Energy Information Administration report released March 12.
http://www.bizjournals.com/houston/news/2015/03/12/oil-crash-taking-a-bi...
Rates are only zero for the chosen ones. On top of that, when you borrow in USD and the dollar appreciates 30% vs your currency, then you are screwed.
DormRoom
“The Fed has blown a credit bubble in the rest of the world, in order to manage domestic interest.”
Well stated, sir.
to allow treasury to borrow $8T in 6 years at nearly zero. If rates were normalized interest on debt would be #1 cost in budget
Nice. I agree fwiw. I stated that the drop in oil prices seems to be due to various national governments in a race to the bottom to compete for profit. All trying to service debt denominated in USD by increasing output. When everyone does that you end up with a price crash.
Also the US has a lot of excess capacity from shale etc. Probably really trying to supress the market to give Russia hell, and crash the Ruble.
It's a big clusterfuck. The "smart" regions will be using this price drop to top up their reserves. At this rate as a national government, I would be anticipating the potential for world war, or violent revolution. What a mess.
WHATTTTTTTTTT
I thought they were the smartest motherfuckas in the room????????
Consequences be damned, it doesnt apply to the USD and People, we are invincible, that what my 5th grade teacher taught me!!
WHATTTTTTTTTT
I thought they were the smartest motherfuckas in the room????????
Consequences be damned, it doesnt apply to the USD and People, we are unstoppable, that's what my 5th grade teacher taught me!!
Well said, DormRoom
"The Fed has blown a credit bubble in the rest of the world, in order to manage domestic interest."
"The Fed has blown a credit bubble in the rest of the world, in order to manage Wall St interest, not Main St interest." FIFY.
Otherwise spot on.
Paging Rick Santelli...
Stupid bulls, think this is just some random technical trade. The world's #1 energy source crashes in half and dumbass bulls don't find out why, just assume it's for no reason, coming back real soon.
Getting exactly what you deserve for being dumbfucks.
As a follically challenged chap liked to say, back in the day.
IT'S ON LIKE DONKEY KONG!
They lost power?! Wow. I hope that didn't damage the plant permanently.
ZORP?
Can't the Fed just buy oil futures to prop the price up? Are they unable or unwilling to do this?
They probably have been.They are not as all powerfull as many think.So many things
are swirling around the bowl right now, I'm sure they are fully committed elsewhere.
S&P at the 100 dma, EURUSD at (just below) a multiyear trend line, WTI just took out those lows- yeah I think Kevin has a full plate.
"Ordered to stand down" as it were. Too bad flailing at Russia like a little girl requires punking North Dakota and Texas in the process.
This has fuck-all to do with Russia.
The global propping is unable to overcome the strains of unsustainable leverage or reverse the demand collapse brought about by unsustainable leverage that has not been purged from the system.
The burden of unsustainable debt, both principal that has been misallocated economically and interest payment funding that was never created at the time of endless loan originations -and therefor does not exist and cannot possibly ever be fully paid, is diverting the stock of available wealth away from productive enetrprise and into desperate and costly debt mainanance payments.
The funds to repeay debts with interest DO NOT EXIST.
The global interlocked monetary system is designed for defauts and restructurings.
When defaults and restructurings are finally structured as they must inevitably be, the free cash flow that is being hoarded -and stolen- to prop unsustainable debt levels and onerous interest payment levels will flow back into the economy resulting in a new boom phase. The leverage must come out of the system.
The unsustainable debt is dragging the world economy into depression.
Less energy/oil is required for a diminished economy to function.
This bullshit propaganda story that the US and SA are purposefully manipulating the petroleum markets in order to damage Russia is pitifully transparent.
IMHO, the US and SA are simply not in control of the price of crude, and the price of oil simply reflects two realities: a global oil supply glut and a demand collapse due to excessie leverage and the directly associated economic depression.
That was a great theory...for 2010.
Unless I am eggregiously misinformed:
Inventories are near historic highs.
Debt is at historic highs.
Both are higher than in 2010.
Global forcasts for GDP continue to be lowered.
Declining GDP implies lower forward fuel/oil demand.
-Your counter-point being?
I don't doubt your call on deflation, only that the writing has been on the wall for a very long time and the crude price only faltered now.
Are you claiming that the captains of industry only recently became aware they are on a sinking ship?
I find it much more likely they've been propping it up and took their thumb off the scale to accomplish an end they've failed to by every other means.
QE starts:
USD down
commodities up
QE ends:
USD up
commodities down
Sounds like a good way to end up holding a large bag of unsellable commodities alright, but it's still not like it was a surprise.
Unlike stocks or bonds, commodities contracts have high carrying costs, and come due, which means they are delivered or at least settled on an unyielding schedule.
It can be done. Running stops is easier in commodities, but rigging the market long run is expensive and dangerous. You can have your ass handed to you, even if you have deep pockets.
But if you have endlessly deep pockets....
Just buy another sack of ones and zero's at the flea market.
...it's fun to watch;)
The best recent example is the Swiss Frank. You would think a central bank could do any damn thing they wanted with their own currency, but the leveraged players tend to think the same thing.
When elephants fight, the ants get trampled.
The bigger question is why would they want to? It gives them headroom to debase.
Wendigo, you're on the wrong blog
Statist govt tit suckers that way>>>>>>>>>>>>>>>>>>
You don't even know how to think anymore, just waiting for MAMA Government to feed you.
Global oil production is about 85 million bpd.
To move the price $10 for one year would cost:
85,000,000 x 365 x 10 = $310,250,000,000
To get it back to $75 would cost almost $1 trillion. Then collapse again.
How much to start a rally and then let the muppets and ETFs get carried away?
And somehow you forgot to mention gold down $3.
If SpaceX and the Air Force start launching reusable self landing rockets you'll be seeing more than just a flood of gold.
Asteroid mining? Not in my lifetime.
Even re-usable rockets need fuel on every launch...and you think terran gold miners have thin margins!
If I'm in the oil business I might want to start exploring interstellar transporters as a possible consumer.
Then you'd better move into uranium mining or anti-matter traps.
Vast distances between intersteallar bodies along with the limit of Light Speed for transmission of information makes any attempt for any short term solutions, using alien consumers, absolutely unfeasible....Antimatter or no antimatter.
And if a Space Faring Civilization has advanced to using antimatter then just why in the hell will they need to use Fossil Fuel's chemical energy?
Why did you even bother with that response?
Because he was talking about marketing oil and I suggested that he might try a commodity they'd actually be interested in purchasing.
You continue to make me laugh. Congrats.
We all need a good laugh now and then...
Yellen leaves "patient" Dow up 400, crude back to 50... Gold unch, of course, because they can
Exactly...It's all Bullshit!!! Even if she removes "patient", she'll do fedspeak at the press conference and say "raising rates in June is not a given blah blah BLAH")
FOMC Wednesday statement
Based upon new data, to wit our staff in Atlanta had the effing wild idea of telling us the truth ( Q 1 GDP up 0.6 %), S & P Earnings going in the effing tank, North Dakota falling into civil unrest (not really - but likely), China going down the tubes, a likely 40 % plunge in the S & P 500 stock index by Mid April,and King Obama siding more with Iran than against Isis, the FOMC has decided to become more forbearing with our view of normalizing interest rates. We also announce that as of Friday we shall enter into another round of QE to the tune of 7.69 Trillion $ over the next 18 months. We MUST salvage the dollar. Thank you
Considerable time changed to patient. Next word they use will be catatonic.
Down she goes and I ain't talking about a hooker on a John...
I don't see how all the oil services can continue to keep high dollar jobs that really don't warrant the pay...
Houston,Lafayette,Dakota's Buh buy.....
The proposed Keystone pipeline would in effect become one of the largest oil storage facilities in North America.
Imagine how many barrels the pipe will hold when it is full.
Keystone would have allowed oil to be effectively sequestered above ground while in transit.
At any given moment that the pipe is full it could be closed at both ends acting as a continent crossing storgage unit to rival a contigitous line of tanker trucks or rail cars stretching for hundreds of miles...
..well let's figure that out. 1600 miles of pipe, 40" in diameter; a little less than
1.1 million barrels.
The financial crisis of 2007 AKA "The Warm Up"
perhaps this would be a better investment
What it is, is a trader's gift now and an investor's gift later. We don't get many of either.
According to Cohn of Goldman Socks, most all of the demand for long WTI contracts is by USO, UWTI and the other Oil ETFs.
Today's price looks like it.
Whichever Zero is assigned Vlad's suicide watch tonight, please report to the gantry.
Let's keep the screw-ups to a minimum tonight, alright?
I hope he turns up in St. Petersburg tomorrow or all the Putin acolytes that post on this site will be despondent.
Rig count is massively down, I think OIL is due for a bounce here shortly! JMO
So maybe gas will be down $.02 tomorrow?
Sure shot up like a bat out of hell when oil went up a couple bucks a barrel. Been dropping all month and gas has continued to go up.
Oil will be at $35 and Californian's will still be paying $3.50 a gallon. Fucking awesome job Wall Street.
So what's the play for longs? Buy individual stocks like CVX, BP or RDS-A when rig count stabilizes? I ain't touching USO. That thing suffers from too much contango to be useful. Any ideas?
Crude's falling price has shocked those that don't understand that deflationary depression is responsible for the collapse. Crude will find a temporary bottom in the next few weeks and months, but the long-term bottom is years away....
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
The almost 20% price gap between WTI and Brent has to be murdering the competiveness of refiners using Brent priced crude.