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WTI Ignores Large EIA Crude Build, Gains on Dollar
Dollar dumpage is trumping fun-durr-mentals once again as WTI crude surges back to the highs of the day after its post-inventories plunge... The Algo correlation trades are all breaking down as carry comes undone...
USD weakness (EUR strength) is trumping any over-supply fundamentals in crude (for now)...
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EVERYTHING MUST GO UP....THE BUBBLE MUST INCREASE...WE WILL NOT BE DENIED.
Maybe the fundurrmentals aren't what you think them to be. Demand for refined products is up over last year by a large margin.
you mean we have so much extra we have to export gasoline to oil driller countries or that the Canada and the USA can produce almost enough oil for themselves and don't really need the rest of the oil world? There are over 3 Billion Barrel of product sitting around and we are pumping more than we use? or the 15% decreasse in gasoline use since 2005? Price has been too high and technology solved the supply problem. Wait till the full frack tech hits the entire world...we will litterly be swimming in it...never mind the tech change on the demand side. Too many money men pouring too much money into oil... Waiting for the rescued of the oil Billionaires
Most of the oil producers don't have the capacity to refine even 10% of what they produce. The US is the largest refiner of oil in the world. Anything wrong with that?
A big part of the problem is where the refineries are located. Both coasts have lost a lot of their refinery capacity due to the greenies loud whining and they are now in the process of killing their electrical grid.... Time for the south to secede again except this time we're the ones with all the industrial advantages....
do algos realize there may be a storage problem for that oil they are buying?
Do you read the report?
sure did. cushing inventories now 100% higher than 12 months ago.
So what? The report said a lot more than that.
such as the US exports almost 2 million barrels of products (distillates and gasoline) to europe everyday since the oil embargo on Iran in mid 2011.....and how that may be ending in 3-6 months when europe starts taking delivery of that oil from Iran again? so, when the US isnt exporting all that product, inventories will only grow more because refinery production will drop 10%.
THe report didn't say that. what it did say is the following.
Total products supplied over the last four-week period averaged over 19.1 million barrels per day, up by 2.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 8.8 million barrels per day, up by 0.4% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the last four weeks, up by 4.5% from the same period last year. Jet fuel product supplied is up 7.7% compared to the same four-week period last year.
The US exports refined product to Mexico and South America as well as Europe. As long as US oil is cheaper than world oil, that will continue to be the case. Demand for refined products is up and storage is down. That implies that production did not keep up with consmption even though production was rising. Iran has nthing at all to do with this as they do not export refined products to Europe. So why are you conflating where Europe gets it's crude inputs for refining with their imports of cheaper US refioned products? The US has the most refining capacity in the world so it's natural that we are an exporter of refined products. The demand for which is constantly rising and simply the domestic inputs to refineries would consume all the Cushing storage in only three days.
US production is up from 8.2MB/day to 9.4MB/day. thats an increase of 1.2MB/day while the amounts of products being supplied is up 400KB/Day. So, everyday that goes by sees an additional build of 800K barrels of oil into already brilling storage tanks. And when Europe stops importing US products, that build will only accelerate by almost 1MB/day. And cushing is quickly nearing its capacity. like i said at the beginning, good luck to the robots that buy oil and facing the inevitable liquidations when delivery nears and there is no where to put it.
Imports are 7.4mmbbl/day. Any mismatch in production and consumption that would lead to overflowing storage here in the US will be corrected by falling imports. Europe imports US refined product because it's cheaper than what they can produce. There was a $10 spread between Brent and WTI. What price do European refineries pay for their inputs and what price to US refiners pay for their inputs? The reason for the rise in US price is that the gap between Brent and WTI will close as imports decline. Someone is losing money selling imported oil to us at lower prices than it will fetch elsewhere. What part about that huge imported crude supply don't you understand?
So companies with fleets are buying up diesel at lower prices and airlines are buying up fuel at low prices but the average person is consuming about the same amount of gas even though it is much cheaper this year? That's what I get out of that unless I'm reading it totally wrong which is possible.
The average person shows how well the economy and where real demand is in my opinion. Once those with fleets and airlines top off their storage, if there isn't an increase in demand in the general economy, demand and most likely prices will plummet.
Over the last two weeks gasoline inventories have declined 6m barrels. To produce that much gasoline requires about 14m barrels of oil. During that time over 123m barrels of gasoline were produced. What this tells me is that either a lot of that has been exported or the US consumer is using more gasoline. I would have to say it's the latter given that the stocks in PADD3 have been stable to rising and that is where most of the export capacity exists.
No problem storing paper... digital ones and zeros... they buy and dump at the speed of light... almost, just chasing the momentum and harvesting stops. That is all these markets are now, nothing more. But I find it encouraging that gold is up in both EUR and USD.
Insanity - thy name is algo traders.
Algos whatever, the oil market want to go up
Yes some increase is due to the dollar but some is due to normal trading too...
http://www.kitco.com/kitco-gold-index.html
Look, if we run out of storage, the Fed will just buy the oil and dump it in the ocean. Problem solved.
Do you fools realise that it will be very good for ZeroHedge when Oil shoots up again?
Oil always had significant impact on inflation in Europa and America.
What happens when Inflation rises? Anyone???
Exactly ;D
WTI surging,while stocks tanking,indicates that QE 4 is coming sooner,rather than later.
According to The Office of Financial Research (OFR):
http://financialresearch.gov/briefs/files/OFRbr-2015-02-quicksilver-markets.pdf
March 17, 2015
Quicksilver Markets
by Ted Berg
One of the missions of the Office of Financial Research is to analyze asset market valuations and if there are excesses, explore the potential financial stability ramifications of a sharp correction. The author argues that U.S. stock prices today appear high by historical standards. Although he notes that the financial stability implications of a market correction could be moderate due to limited liquidity transformation in equity markets, he addresses other financial stability issues that may be more relevant, such as leverage, compressed pricing of risk, interconnectedness, and complexity.
Option-implied volatility is quite low today, but markets can change rapidly and unpredictably, a phenomenondescribed here as “quicksilver markets.” The volatility spikes in late 2014 and early 2015 may foreshadow more turbulent times ahead. Although no one can predict the timing of market shocks, we can identify periods when asset prices appear abnor-mally high, and we can address the potential implications for financial stability.
The bull market achieved an important milestone in March: its six-year anniversary. From the market bottom in March 2009 through the end of 2014, U.S. equity prices tripled. This gain has been largely driven by the recovery in corporate earnings, which have increased by a similar magnitude over this period. Although the positive trend could continue, the upturn has persisted much longer and prices have risen much higher than most historical bull markets, despite a weaker-than-normal macroeconomic recovery (see Figure 1).
This bull market has also benefited from unusually low interest rates. Some argue that the market’s price-to-earnings (PE) ratio is justifiably higher than the historical average given that interest rates are at historic lows. After all, the intrinsic value of a stock is the present value of its discounted future cash flows. And interest rates are a key factor in determining the discount rate. The lower the discount rate, the higher a stock’s present value. However, the relationship between interest rates and stock prices is more complex; a lower interest rate environment may portend a lower long-term growth rate for corporate earnings and cash flows. When estimating intrinsic value, it is naïve to simply reduce the estimated discount rate without also considering the potential adverse consequences for the growth rate of cash flows.
Many expect the Federal Reserve to begin increasing short-term rates later this year. This will have important implications for stock prices if longer-term rates begin to increase as well. Under one scenario, a slow and gradual increase in long-term rates would be bullish, reflecting investors’ positive expectations for higher U.S. economic and corporate earnings growth. In an alternative scenario, however, interest rates would increase dramatically and unexpectedly, which would adversely affect stock prices.
In light of this interest rate backdrop, the question is whether stock prices have run too far ahead of fundamentals. Although certain traditional valuation metrics, such as the market’s forward PE ratio, do not appear alarmingly high relative to historical averages, other metrics to be discussed — the cyclically adjusted PE ratio (“CAPE”), the Q-ratio, and the Buffett Indicator — are nearing extreme levels, defined as two standard deviations (or two-sigma) above historical means.1
Historically, periods of extreme valuations are eventually followed by large market price declines, some of which have contributed to systemic crises. On the other hand, extreme valuations have been known to persist for extended periods. For example, in a December 1996 speech, former Federal Reserve Chairman Alan Greenspan famously used the phrase “irrational exuberance” to describe investor enthusiasm for stocks. At that time, the forward PE ratio — the ratio of the market price to analysts’ consensus earnings forecasts for the next 12 months — was approximately 16 times. Although this was above the historical average, it was not alarmingly high. However, the CAPE ratio was much higher at 28 times. The S&P 500 more than doubled over the next three years, with valuations reaching all-time highs in March 2000, driven by the boom in technology stocks. The tech bubble eventually burst; the S&P 500 index decreased almost 50 percent and the tech-heavy Nasdaq index dropped nearly 80 percent from peak to trough.
ok, so the dollar dumps cause bad econ news strengthens the case that the fed will print moar worthless money.
how long untill some fed head jawbones moar about moar qe and the dow turns arount. i'm buying spy @ 2 oclockit always ramps in the afternoon.
OHHH THAT HURT! OH WELL
There is still a small part of me that wants to believe they aren't going to go full war-tard. The problem is every piece of evidence says otherwise.
What a shame...
Has anyone figured on the Strategic Reserve? Is this even in the storage totals?
The ones reported here are not inclusive of SPR but it hasn't been added to in a long time IIRC.
SPR has been above 95% for a long time
Maybe they are factoring the rising tensions in Yemen, and the fact that the largest fields in Saudi Arabia are near Yemen.
The Middle East war factor....Just sayin.
The largest (as well as essentially all) the Saudi Arabian oil fields are on the opposite side of the country from Yemen across the freakin empty quarter. Try to have a clue.
2 seconds on google would have shown you.
Why anyone wouldn't buy securities in WTI or OIL right now is beyond me.
Like I argued with a friend a few weeks ago, let's say it takes two, hell, even three years for a 'recovery' of the price. That's over 100% gain... People are somehow forgetting, it's still fucking oil! The most processed and consumed resource on the entire planet aside from food. We use 20 million barrels a day just in the U.S. FFS, every time you type you're touching something made from oil and watching the words appear on the screen that is also made with oil. As far as I'm concerned, this is not even debatable.