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Did The World's Last Big Oil Price Support Just Falter?
China's trade balance surged once again, spiking to near the highest on record according to data released this weekend, driven by a collapse in imports (and a roughly in line export print). Exports dropped 2.5% YoY, dropping for the 4th month of last 5 but it was Imports that createred. Down a stunning 18.1% YoY (the 5th drop in a row) China imports collapse reflects both volume and price effects and crucially, as Goldman notes, volume effects may be even more critical. Hidden deep inside the data, China exposed the oil market's greatest fear - it appears to be done restocking its SPR.
As Goldman Sachs reports,
The weakness in import growth is likely to be a reflection of both price and volume effects (an official price index is not yet available for May) -- though volume effects might be more important this month amid modestly higher oil prices. Based on the released breakdown, the value of crude oil imports went down 50.3% yoy in May (vs. -43.9% yoy in April), cutting 6.3 percentage points from headline import yoy growth (in April it cut 5.6 pp). Imports of other major commodities such as steel and coal also declined further in yoy terms in May.
But while a lot of the drop in imports is related to price, it is the scale of plunge in volume that is of most concern...
The biggest YoY drop since 2013 and biggest MoM drop since 2010, strongly suggesting China is done (for now) filling its strategic petroleum reserve.
Which kicks yet another leg out from the under the "price of oil goes higher" meme.
Charts: Bloomberg
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Who cares when I get jewed at the pump still
Saudi princes control the price of oil, along with Puutie.
The comment demonstrates that you are dumber than the average muzzie.
The chart shows the most activity occurred when oil was below 50$.
The US chooses to refill the spr when oil is above 130$
So when oil goes up and gas goes up the Liberal Mentally ill Left Wing Freedom Hating Doomocratic Fuctard party does what???
They drain the SPR to relieve prices, once again leaving the country in an extremely vulnerable position.
Liberal Mentally ill Left Wing Freedom Hating Doomocratic Fuctard party does what???
damn near poetic :)
Gee, does this sound familiar to any of you gold producers out there? Hmmm...
There will always be something to fix in this 'market'
Not only that, major Middle East Oil producers and Russia both vow to increase production to fight for market share. The downward pressure should keep prices well under control. Loss of China demand is another downward factor. China loaded up on cheap oil, trading their fiat American dollars for real burnable black gold. A wise move!
The conspiracy theorists have told us time and again that oil price decline from too much production is directed by CIA to punish Russia. How did the CIA gain control of Puutie to get him to increase production and damage Russian economy? CIA spooks are pretty clever if they could do that, and also get the Iranians to participate.
Well, when they started buying it wasn't so cheap yet but I guess they were still able to get a decen deal overall. Plus they have some great Venezuelan Oil deals running that should keep them happy.
As I recall, the Chinese loaned several billion to Venezuela before they got the oil supply arranged. Considering that Venezuela will be soon bankrupt, the supply source may not be as cheap as planned.
troll on a roll today .
Agreed,, another factor and it's just my own anecdotal point, my petroleum/gas/electricity usage has dropped significantly - about 80%, I hardly drive since I started using my bike to commute 10miles each way, I got a Rocket Stove Mass Heater, wich is incredible, I didn't buy oil or gas last winter, I closed my gas (methane piped to house) account, the Rocket provided ALL heating requirements, I used it to boil water so my electric bill decreased, from 16kwh/day to about 5 (I am a single occupant), I used to use electric heaters occasionally, I will be getting a chest freezer and converting it to a fridge and switching to LED lighting and also getting some photovoltaic panels, I will use the panels to wind my meter backwards, -- My point is that I have just had my personal 'Peak Oil' - I estimate that I am consumiong approx 30,000 kwhs LESS in a year, this has been a conscious decision, it's like a hobby of mine now or whatever. Sometimes I see ZHers comments about going back to the big SUV or gas guzzlers to take advantage of the cheap oil - this is not the answer IMO. Let the storage facilities overflow, let them pump it back in the ground, we only need a fraction of what we are using now.
I'm sure there are many more out there that feel compelled to do the same/ thoughts anyone?
my thoughts? STARVE THE GD BEAST.
I SPEND NOTHING except food and essentials. corporations are the enemy now.
Agreed, AGAU. Personal habits do matter.
-downsized to very economical (fuel efficient) cars as opposed to the previously owned gas hogs
-driving the speed limit for reduced fuel consumption
-consolidating multiple trips into town into only one or two purposeful trips
-energy efficient lighting throughout the house supplemented with natural lighting controlled by blinds (light vs unwanted heat)
- efficient geothermal home heating and cooling when necessary
- Ceilings fans for use in every room when geothermal is off
- the use of natural breezes through opened house windows whenever outside temps are tolerable
-wood stove for heating the home in winter
- and so forth
The Saudi's etal are undoubtedly excited by this. The entire world market is starting to get pretty shaky, so it's time to BTFD and snort another line of hopium since things can't possibly go down the shitter.....
Off Topic
Remember the Liberty: June 8, 1967.
http://www.gtr5.com/index.html
I never heard about that before. Good stuff.
Let's see, China fills up it's reserves when oild is trading at $50 to $60 a barrel and the U.S stock it's reserves when oild id trading between $120 and $140 a barrel. That's our government looking out for you.....
We got more Kenesian bang-for-the-buck from our purchase because we spent more money.
I probably should have been paying more attention to my typing than to I was to my sandwich when I posted that comment.
We oild some folks...
That oil is not for you no matter what the price. ~ The Military.
Off Topic, but even ZH needs to get onto this unfolding story.
"
Northern Italian towns are ordered to stop accepting migrants because the situation ‘is like a bomb ready to go off’, as 6,000 refugees are rescued in one weekend desperately trying to reach Europe Not only Italy, thousands are being picked up at sea, thousands are shipping from Turkey to the Greek Islands. The Royal Navy just picked up thousands in one day. This is "The Coming Story of 2015". Over a million Africans are on the move right now, they seek to enter Europe before the doors get shut. A major crisis is being ignored by Brussels. But it is ready to explode!Brussels is licking its chops. Looking at the maps, they're trying to determine which African shithole (ahem "nation") gets fast tracked for EU membership and starts dealing in Euros.
Thanks to USA, USA, USA! Our bombing and droning policies are having the intended affect!
Stupid comment.
Those migrants are trying to escape the mizzie beheadings. The US is trying to reduce remaining numbers of the head choppers. While US is not doing a very good job on the muzzie slave traders, at least it is an attempt.
idiot they are running from libya courtesy USA ! freedom and democracy . facts must be hard for you to accept .
Egon von Greyerz spoke of what a massive catastrophe this is going to be & the civil unrest that will be caused by it.
The Italian president of the northern Italian region of Lombardy has said he will no longer allow any migrants to enter the region following the huge rise in people trafficking to Italy.
In comments supported by other senior leaders in the region, Roberto Maroni, former leader of the right-wing Lega Nord, said he had told mayors and other officials in Lombardy to refuse the central government's demand for the settling of migrants in the region.
Maroni, who has been the region's president since February 2013, has reinforced his demand by threatening to cut the funding to any municipalities who disobey his banning order.
This is the first sign of local revolt against EU acceptance of out off control illegal migration to Europe. Keep your eye on this, all hell is gonna break loose. "According to AFP, Veneto regional president Luca Zaia supported Maroni because 'the social tensions are absolutely crazy' in the regions affected by immigration in Italy.
I'm invited to stay in the Veneto for a few weeks during harvest. I will give ZH my full and firsthand account. Don't speak a lick of Italian (yet) but I'm sure I will figure out what the mood on the ground is. Heard a few comments from Italians here already who say their relatives back home are getting pissed at Brussels. Can Africans work like our Mexicans? I doubt it. Never seen an African landscaper or African maid, cook, nanny etc. The language is a huge problem too, I imagine.
The Italian president of the northern Italian region of Lombardy has said he will no longer allow any migrants to enter the region following the huge rise in people trafficking to Italy.
How unusual...a REAL president protecting his people from over immigration from immigrants.....Obama could use a lesson from this guy....
Nth ZH artilce attempting to knock down oil? Did they report US gas demand highest in 2 years up5%? NO. Did they mention that in April China gas demand accelerated to 6%? Nope. Need I continue...why dont we watch CNBC on their stock cheerleading as I see no difference as neither has objective news.....
Perhaps ZH is testing its readers?
I assume you're not another shill badmouthing this site?
The comments here rate with the best -- thanks all who contribute.
Oh, and thanks to you lbrecken for that info!
Ironic right at the time the USA becomes the world's biggest producer the price collapses.
We'll see if we can hold sixty.
China is by far the world's largest producer of coal and steel. Sorry but there is no such thing as "Chinese demand" for those two products.
If the Chinese economy really starts rolling over here...well, let's just say I would laugh out loud if the Fed really did start raising interest rates anyways.
In the longer term OIL is still on the downslide...
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
The internal combustion engine is going the way of the do-do bird insofar as the USA is concerned.
Oil always has value but I'd be wary of gasoline let alone diesel.
The collapse in coal prices is a tell in my view for those long only energy trading as their is no higher bttu content per given volume than coal.
Let's see...
Exports dropping by 2.5%
Imports down 18.8%
Since China imports virtually nothing except raw materials used for its manufacturing base, this tells me that China is burning up accumulated inventory and not restocking. Not a sign of confidence going forward but rather an indicator of an economy that is hanging on and waiting for things to miraculously turn around somehow.
Those science-fictional 7% growth numbers do not seem to be congruent with these import-export figures.
For those countries that have bet their future on being Chinese extraction colonies, the news is going to get especially dire.
same here...and i'd like to see some electric-usage and scrap-metal/rail-freight #s YOY & MOM...my bet is that they too signal something bleak for sino-land.
the jobs have been leaving china for viet nam (et al)
Nike pays 56 cents an hour in Viet nam, for all 330,000 workers they employ there..
for their $200 a pop sneakers. Boycott NIKE.
Here are some more signs of a coming recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
Here is the starting point.
http://michaelekelley.com/2015/04/28/next-recession-will-start-with-this-country/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
IDIOTS!....NEW YORK, June 8 (Reuters) - Oil production declines from the largest U.S. shale plays are forecast to deepen for the third consecutive month in July even as rig productivity remains high, data from the U.S. Energy Information Administration showed on Monday.