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Oil Ain't Buying It
Yesterday's surge-pricing in US equities driven tick-for-tick by a remarkable rip in WTI crude prices (as despite 3 billion barrels of excess inventory, decided to rip on Mid-East war tensions) appears to be losing its anchor. Once again, USDJPY 123.00 will be all that matters...
Oil loses faith...
USDJPY remains the last best hope...
Charts: bloomberg
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You would think that the destruction of ISIS oil transport trucks would have caused a surge in oil prices. /s
I paid $1.81 a gallon for gas yesterday. I never thought I would see those prices again in my life time. So yeah, keep pumping bitchez!
Don't laugh too loud. Shale oil was the best chance white Americans not afraid of hard work had had at stable employment in a generation. Saudi oil dumping is ruining them.
Oil below fair value only benefits people who don't have to work for a living---EBT cardholders and the thieves in New York who thrust their community organizer into office.
They'll take a year off on welfare and be back filling their boots when SA collapses.
The US might even have to make friends with Russia to ensure security of supply.
Don't worry, when the petro-dollar collapses there will be plenty of opportunity to make a living in the oil patch. Until then, I'll take the savings I get from cheap gas any day.
There used to be a time when oil actually had a risk premium priced in due to MEast turmoil.
Any event that might impact oil production/transport from the MEast would send oil prices
sharply higher in knee jerk reaction justified or no. But when even the terrorists are selling oil,
when both 'sides' are going out of their way NOT to damage extensively the oilfields and
transport infrastructure, how can such a risk premium be justified? Oil, oil eveywhere and not a drop
is spilled.
More and more supply comes from US, Canada, Latin America so the hit to overall production from tension in the ME is lower. Price is more sensitive to USD strength as more buyers come from outside the US (China, India, etc).
Geographic diversfication of supply as well as geographic diversification of buying pressure. But when there
seems to be very low risk to oil supplies coming out of the MEast per both 'sides' selling oil, you would expect
oil prices NOT to respond to turmoil in the MEast except maybe in instances where appreciable supply IS cut off
and not just on fears that it might be cut off. Iraq continues to pomp more oil despite ISIS. And ISIS is interested
in commandeering the oilfields/transport infrastructure so it can sell the oil maybe at much lower than market
prices. USD strength/weakness is only part of it. Oil is a commod and it is still subject to supply/demand considerations.
Proposition:
In a ZIRP world, the real "policy instrument" used to prop up moribund welfare states and zombie banking systems is the price of oil, not the Fed Funds rate or even QE, which by now everyone has figured out doesn't work (not that they're ready to admit that).
The logic is: drive the price of gasoline low enough for long enough, and eventually the poors will start using the money they save to start buying crap they don't need again.
Discuss.
"...to start buying crap they don't need.."
You mean like Jack Daniels, Marlboro lites, Doritos and NFL SeasonPass?
But to many of us, some of these are staples.
Not to mention keep the price of gasoline and, by relationship, oil low enuf for long enuf
and you also get serious negative impact on oil producers who have less than a diversified economy.
Most MEast countries come to mind as do most OPEC countries as well as certain former USSR republics and
Uncle Vladdy's place itself. IOW, this is a FOREIGN POLICY tool as well.
Jack Daniels, Marlboros, Doritos...damn, now I want all those things. :)
I agree that it's a foreign policy tool as well. The plan was to knock out Putin.
Of course, the only important scalp they've taken was that of Stephen Harper, one of the very few NATO leaders with any claim to being a statesman.
(Bay Street had had it in for Alberta since the dirty Thirties, when Albertans gave Social Credit a mandate to reclaim their sovereign right to issue money.
Steve himself had worn out his welcome on Bay Street years ago, what with his open support of Israel and insistence on Canada's being allowed to sell oil to someone who wasn't Uncle Sugar. Hinting he would do something about Islam in Canada was the last straw. USD40 oil made it much easier to restore the House of Trudeau.)
ZH has not "bought" this rally sinec 2009, so as usual another useless fluff piece between oil and stocks, which have had zero correlation on over the last 3 years.
remember, all your really stupid articles about "Copper not buying it" ? 3 years back?
Idiots.
Seems to me that nobody is buying copper.
yeah but ZH argument was stocks gonna crash...for 3 years now because Copper was diverging. They find the silliest divergences over the most stupid time frames to make such inane arguments.
Great for a laugh though.
I think the correlation is based on the "Dr Copper" thesis (no pun intended); that is, copper is said to hold a PhD in economics based
on its historical tendency to lead the economy (or the market). When copper prices are in downtrend, it suggests that econ activity
is slowing and that the market will soon follow copper lower.
ZH is ALWAYS going to contend that stocks are going to crash/tank/collapse. It will maintain this contention at the next market bottom too
all the way thru to the next top and so on. Like the Energizer bunny only different. This is a doomhead/neghead/pessimist site. I got tired of
asshats like Cramit, Ken Fisher and others like them always contending the opposite: that markets ony go up. Some info here is useful.
Most is useless noise. Choose wisely.