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NatGas Tanks Under $2, Crude Pushes 2-Month Lows After US SPR Decision & BP, Saudi Comments
The overnight tumble lows in most 'risk' assets is being revisited by oil and gas prices following unhelpful comments from Genel's Tony Hayward that "the next 6-12 months will become challenging" for many in the industry, more details emerging with regard US selling SPR crude to cover budget needs, and finally OPEC's Saudi officials proclaiming that crude prices should be set by the market. NatGas (Nov contract) tumbled under $2 and WTI (Dec) cracks to fresh 2-month lows, erasing well more than half of the August month-end panic-buying surge...
Genel’s Hayward Says Some Oil Companies Won’t Survive Next Yr
- Next 6-12 mos. will “become challenging” for many in industry, Chairman Tony Hayward says at conference in Cape Town.
- Capital mkts closed for many participants
- Mkt oversupplied by 2m-3m b/d
- Shale oil “completely overwhelmed” underlying demand
- Saudi production strategy “is working;” U.S. rig counts, output dropping
- Mkt will need 18-30 mos. to clear w/o intervention
- Supply-side “wild cards” include Iran, Libya: both could ramp up
- Oil prices will recover; $50 won’t sustain industry
Congressional leaders proposed to sell 58 million barrels of oil from U.S. emergency reserves over six years starting in fiscal 2018 to help pay for a budget deal that ends mandatory spending cuts, according to a copy of the bill posted to a congressional website.
Led to an ugly last 24 hours...
dragging crude to 2-month lows...
Charts: Bloomberg
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This will be covered in today's Fed minutes and they'll add a new button.
This is what happens when the Japs restart their nuclear program, they use less petroluem based fuels and the supply and demand kicks the price down, but we did'nt see that coming in the MSM, or did'nt want to report it as such, take your pick.
and 8:30am on the dot the monkeys are released to hammer the paper metals.
They don't even try to hide it anymore.
So .... they're going to sell the SPR "over six years starting in fiscal 2018 to help pay for a budget deal that ends mandatory spending cuts, according to a copy of the bill posted to a congressional website".
Does anybody but me get it that this is pure indication that there is not going to be any responsible budgeting?
They're already planning to spend more.
KABUKI THEATER
Buy high, sell low, but always twirling, twirling, twirling towards freedom.
I called $2 nat gas a long time ago... the day has come I see...
Dec is the lead contract NOT Nov.
nov gas options go off today and futs go off tomorrow... this is a contract liquidation move, not a fundamental move. the nov/dec spread is .03 wider... this is a major non event!
Russia must be punished for entering the war in Syria against the US-created jihadists known as ISIS
Stakes are high as US plays the oil card against Iran and Russia
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.
The Saudis did something similar in the mid-1980s. Then, the geopolitical motivation for a move that sent the oil price to below $10 a barrel was to destabilise Saddam Hussein’s regime. This time, according to Middle East specialists, the Saudis want to put pressure on Iran and to force Moscow to weaken its support for the Assad regime in Syria.
http://www.theguardian.com/business/economics-blog/2014/nov/09/us-iran-r...
That could be the reason. I'm most curious though if crude and gas tanking are the consequence of something or more a precursor for something?
1) Consequence: World economy going down the abyss?
2) Precursor: "Somebody" massively slamming the prices to hurt somebody else (or stash away more of it for the preparation of a war?)
more details emerging with regard US selling SPR crude to cover budget needs,
Selling the family silver is the start of eddy down the plug hole
Nice time time to be selling SPR. How about selling it at $100 levels next time geniuses ....
Yes, almost like the geniuses (read: morons) at the BOE selling all of its gold in the late 90s @ $300/oz. F*cking @$$hats.
The Federal Reserve's wizard of oz console is getting bigger with more buttons.
https://www.youtube.com/watch?v=s5ID15mv0gA
The best
Tony Hayward? Would that be "Captain" Tony Hayward, the world-renowned offshore sailboat racer who was momentarily inconvenienced by some incident in the Gulf of Mexico that required he miss his favorite regatta a few years ago?
Is this the same guy or an incredible naming coincidence?
It is indeed the same Tony Hayward from BP.
http://www.bloomberg.com/news/articles/2015-07-13/genel-s-new-chairman-h...
I have asked this before but where are the bankruptcies in the shale players? The rig counts are down but what is keeping these companies afloat?
Cash reserves, credit facilities...
"Cash reserves, credit facilities..."
Good money thrown in to save the bad money. Got it...
OPM, presumably...
and whatever tiny bits of hedges are still on the books.
RIG COUNT down by ONE last week--- ONE ! pump Baby pump !
Malcolm Turnbull's (Australian prime minister and Ex-Goldman Sachs Australia chairman) new Australian government science adviser has pushed a pro-nuclear agenda in his first speaking engagement since his appointment by that mincing poodle Christopher "I fucking hate you" Pine.
Best solar resources on the planet.
Metallurgical and power generating Coal for 200 + years.
Worlds most advanced and safest mines.
Technically educated population (except our own FSA of course).
Large gas reserves.
Clean environmental reputation.
Massive and lucrative export agriculture sector with hardly any GMOs.
Makes no fucking sense until you realize the nuclear rats must destroy everything for personal profit.
The US oil companies and OPEC are being used as the preverbal bat to swing at Russia and BRICS alliance. You just got to wonder when they are going to start hitting back, and how HARD? This might sting a little.
The energy complex is weak because the world is in a severe cyclical recession within a depression.
Somehow I think this cyclical recession might turn out to be a biblical depression if things keep progressing at this rate.
Let's sell some of that $120 oil we bought a while back - for $42?
We should be BUYING oil!
Buying for the strategic reserve is part of the reason oil got to over $100. Cartel rigged market...The USA does not need to own those reserves. The oil companies' reserves are the only reserves needed in the event of a war or emergency. The physical reserves do not disappear when they change hands unless they're shipped abroad and that is not cost effective. The need for the SPR was a based upon false logic...it was a manufactured crisis.
Why bother selling it? It's just Monopoly money anyways. Just pump it back into the ground, save on tank maintenance.
Where do you think the Strategic Oil Reserves are kept? Yep, underground in salt mines.
You have to have a place to store it. I wonder if it'll get low enough to ship it here, and then pump it back into the ground? LOL!
58 million barrels. $2.6 billion? $4B if they are selling forward now. its comical.
58mill barrels of oil from the SPR over a 6-yr period beginning int 2018??? That is 10mill/barrel per yr out of a reserve of 700mill barrels.
https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_%28United_Stat...
So. an 8.6% drawdown on the SPR over a 6-yr period beginning 2-3 yrs in the future is going
to impact the spot price of oil? bwahahahahahahahahahahahahahahahaha
A. Repeal. Of. The. Oil. Export. Ban. Is. Coming.
"Oil prices will recover; $50 won’t sustain industry."
Go fuck yourself. $50 will sustain the industry just fine, it won't sustain hedge funds and investment banks that need oil contracts to go up every day to allow them to make profit off contract churn.
$50 is more than double the long term average price per barrel. If you would have told someone 20 years ago that a per barrel price of $50 would be considered cheap, they would have died laughing and put you in an asylum.
You are not considering that most of the recent production increases have come about precisely because of higher oil prices. IE that most of these shale and sand fields became profitable at $100+.
Investment banks make precious little off oil contract trading in the context of their full business. Moreover, recent Basle 3 regulatory capital requirements have made commodity trading prohibitively expensive.
In short, you dont know what youre talking about.
If we get deflation across the material input/labor/manufacturing complex, $50 oil will be (easily) market clearing. And that doesnt include the benefits of shrinking .gov.
commenting on the nat gas price with the implication of a plunge having major broader mkt significance when the contract is well into its expiration cycle, options go off today and futures go off tomorrow, is an example of someone having little knowledge of this market. there are so many reasons the nov contract could have plunged today, most of which have nothing to do with the underlying fundamentals influencing price. simpy looking at the spread b/w nov & dec, which is out about .03 vs settlement ydy, supports this notion. be more careful on your commentary ...
Here is an article about investors feeling serious pain after feeling bullish re. oil and gas prices:
New Way To Bet On Oil & Gas Wipes Out Billions In Investor Savings
October 26, 2015 1:13 PM
http://dfw.cbslocal.com/2015/10/26/new-way-to-bet-on-oil-gas-wipes-out-b...