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Oil Hovers Near Crucial Technical Level As Rig Count Decline Slows, China Inventory Soars
Overnight weakness on the back of 8-month highs in Chinese crude inventory (combined with the recent plunge in super-tanker rates - i.e. China is no longer refilling its SPR) sent WTI Crude towards the critical $44 level (which has acted as support for 2 months). The China rate cut weakened crude further as PBOC admitted it was needed because of the state of the economy. And then Baker Hughes reported a total rig count unchanged 787 (lowest since April 2002) and an oil rig count decline of just 1 to 594 (the 8th weekly drop in a row). WTI slipped on the news.
China is getting full...China September Crude Inventory Climbs to Eight-Month High
(Bloomberg) -- Crude stockpile rose to 34.31m mt, accord. to Bloomberg calculation based on percentage-change data from Xinhua News Agency’s China Oil, Gas & Petrochemicals newsletter.
Sept. kerosene inventory at record high 1.92m mt, Sept. diesel stockpiles drop to 8-mo. low at 8.79m mt, Inventory data refers to commercial stockpiles excluding Strategic Petroleum Reserves
And the artificial SPR-refilling demand appears to have stopped...Benchmark Crude Oil Supertanker Rates Fall by Most This Year
(Bloomberg) -- Charter rates on Saudi Arabia-Japan VLCC route fall 11% to 61.54 Worldscale pts, according to Baltic Exchange data.
Equates to daily return of $68,921, lowest since Sept. 16
Baltic Dirty Tanker Index falls 1.3% to 739 pts
U.S. Gulf-Northwest Europe 38kt clean tanker rates rise 3.2% to 91.43 Worldscale pts, biggest change for ships hauling refined products
And then China cuts rates and the PBOC says...
- PBOC ECONOMIST SAYS RATE, RRR CUTS REFLECT ECONOMIC SITUATION
Hardly suggesting growth or demand anything like what GDP suggests.
And add to that the fact that Iran pklans to double crude oil sales to Japan post-sanctions (via hellenicshippingnews.com)
“We have reached a general agreement with Japan to increase oil sales but for political reasons, the Japanese are waiting for the complete removal of sanctions,” Mohsen Ghamsari, NIOC’s director for international affairs, was quoted as saying by oil ministry news service Shana.
Iranian oil minister Bijan Zanganeh told reporters on Monday that the exports would increase by at least 500,000 b/d on the day sanctions were removed. Six to seven months later, another 500,000 barrels will be added to the figure, he said.
“At the moment the National Iranian Oil Company is in talks with Showa Shell, a big Japanese refiner, to determine the Asian [crude] price,” he said.
He added that he welcomed the agreement for Idemitsu Kosan to take a 33% stake in Showa Shell and said the move was good for Iran because of its good relations with the two companies.
Which sent Crude to the edge of darkness at $44...
Citi's technical analysis team says there’s a huge level coming up right here in NYMEX crude. A daily close below USD44.00/bbl is very bearish
And then Baker Hughes reported a rig count
- *U.S. OIL RIG COUNT DOWN 1 TO 594, BAKER HUGHES SAYS
- *U.S. TOTAL RIG COUNT 787 , BAKER HUGHES SAYS
Oil's immediate reaction...
And notably Oil ETF and Oil Vol are recoupling...
Charts: Bloomberg
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This should be good for a few points up on the stock market. After all, nothing could possibly go wrong......
Next week's 7+ million bbl inventory build should be real interesting. Once WTI breaks $44, all the algos that have been keeping the price artificially high will start fading every uptick until it goes back to $37.
Please, there is no price discovery here, period. The true price of oil could be $0 as easily as it could be $1,500 per barrel.
In reality, the only thing that matters (with our current infrastructure) is that those commodity chemicals and calories are available, period.
If not, shit starts to go south in a fucking hurry.
We will look back one day and realize that removing the sanctions at this time from Iran was the single biggest mistake made by this administration.
In future interviews:
Q: When did the crisis actually start?
A: Poor economic policy leading to the removal of sanctions from Iran, coupled with a historic collapse in general oil prices, was the beginning of the end for the US economy...people shortly began rioting in the streets and then total anarchy set in.
Commercial break:
Subway....EAT FLESH!
Restart interview......
Citi's technical analysis team says there’s a huge level coming up right here in NYMEX crude. A daily close below USD44.00/bbl is very bearish
Weekly close for USD above 96.70 quite bullish and above 97.00 even more bullish . . . . . . . . . . but bear in mind ONLY if validated by Cramer's endorsement and the support of the guys on Fast Money.
The main plot of Back to the Future II should be changed from betting on sports to betting on stocks.
DOC: "IN THE FUTURE GOING INTO RECESSION IS THE MOST BULLISH THING FOR STOCKS!!!"
Marty: "No way Doc, that doesn't make any sense. That's like saying the Cubs will win the World Series."
I am still waiting for the long predicted implosion of the shale companies. The hedges were supposed to only run until Oct. and then they would start popping like ISIS' AA condoms. I see the rigs decline and all of that but the flat out bankruptcies have yet to materialize.
1. For every 1.5$ spent? You got 1$ oil/gas in return. That already during PEAK shale boom.
2. At the height of shale boom, companies must drill 2000 new wells to offset the 18-24 months old wells declines.
3. So, the only way to MAINTAINS this delusions?? Is to issue more debt. And hedge output concurrently.
Now. The latest situations.
1. Oils has been low for nearly 18 months.
2. Driller numbers are declining.
3. Capex are freezed to conserve cash. That's means no new drillings.
4. Some of the 18 months old wells? Start to decrease its output EXPONENTIALLY.
5. 1 YEAR oil/gas hedge already expired. 2 YEARS hedge? Next year.
6. According to RT articles interviewing rosneft boss? There arr 150 B$ debt that would be distress in the near future.
- - -
Now try to research, from where i got that info (it's not secret. And you're not need to have PhD in Petroleum Eng. All that you need is love to read).
So... you know what i share?? (From Forrest Gump movie) DIG IT...
Here's another one.
https://www.rt.com/news/319510-isis-oil-50mln-month/
There's your EXCESS 5 MILLIONS BARRELS COMING FROM!!
Somebody making a KILLINGS selling 10$ oils at 44$ market priceeeeeee....