If You Are An Oil Bull, Don't Look At These 2 Charts

Tyler Durden's picture

It's getting worse... faster! These two stunning overnight developments in crude oil prices should shock investors...


First, OPEC - after its crude basket price dropped below $30 for the first time in 12 years - slashed its price overnight by $2 to $27.85 - the biggest single-day drop in history and lowest level since November 2003...


Is it any wonder the Saudis are trying to sell every national asset to subsidize this US Shale-crushing energy price?


Second, even closer to home, Canadian heavy crude oil collapse below $20 - a record low!!


As Bloomberg notes,

The low prices may push more of the highest-cost output offline. Producers including Baytex Energy Corp. and Canadian Natural Resources Ltd. have shut in more than 35,000 barrels a day of heavy oil and bitumen production capacity, according to company presentations and a report on the Alberta government website.


Current prices are “below shut-in levels,” said Tim Pickering, founder and chief investment officer of Auspice Capital Advisors Ltd. in Calgary. There’s no incentive to ship Canadian crude to the U.S. Gulf Coast and producers may start annual maintenance sooner than planned, he said. “We’re the last barrel produced and we’re the first barrel shut in.”

So record inventory surge in gasoline, global storage at its limits, price-war in Europe, Saudis in panic cash-flow "whatever it takes" mode, borrowing bases being slashed, credit risk at record highs, and Canada now facing widespread shut-ins... but apart from that, the bottom must be close right?

*  *  *

Bonus Chart: Venezuela lowers its crude below crucial $30 level - Feb 2004 lows...

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buzzsaw99's picture

we don't need to produce shit we have the FANG eCONoME now bitchez

Ham-bone's picture

If your bullish on much of anything...check the linked article and you'll be cured.


Then realize the worse the case for organic growth, the more activist the Fed and CB's will be because they have PhD's and stuff and know better than to allow a free market to set prices.  CB's are preparing to go full retard.

Uchtdorf's picture

Didn't we just have a ZH article about Kyle Bass being bullish on nickels or oil or something?

swass's picture

I'm becoming bullish oil. It looks like catch a falling knife, but I think we're almost at a bottom.  I believe there may be one more low after a short rally.

franzpick's picture

Players in the catch-a-falling-drillpipe game may wait for the varsity game scheduled at the $20 venue:


ptolemy_newit's picture

Not sure that oil will stay low very much longer?  There is no real shortage but flow can certainly damage a weak economy


British Pempire requested a war between Iran and Suad and the straights will close.


Ukrainbiden choose the wrong side and Russian oil and gas is the stable delivery Eastward.

swass's picture

Sorry, I don't group-think. I hate to say it, but as someone said below, everyone is an oil bear right now.  How is it after years of falling gold and silver that some here think it is going to rally but not oil? Talking from a purely technical pattern perspective, this looks like what I am looking for in a bottom.  At bottoms everyone only thinks it is going to get worse and go lower.

August's picture

They laughed at Houdini too.

buzzsaw99's picture

btw - if you're thinking about buying oil please buy it from me. light sweet. bring a truck.

RiverRoad's picture

Basket Price = Basket Case      Going to 10.00.

Truther's picture

Panic at $26 in February.

Wulfkind's picture

The FANGS are getting DE-fanged and the world is shitting BRICS.

38BWD22's picture



$32.79 (WTIC)

Most of the prices I need to check every day are here:


wmbz's picture

"Second, even closer to home, Canadian heavy crude oil collapse below $20 - a record low"!!

Yea! Looking good! Love a $20.00! Do I hear $15.00?

Dubaibanker's picture

Here comes 15 dollar oil.....

KnuckleDragger-X's picture

I don't think we'll drop that far, but mid 20's should be sufficient to kill everything as it is right now.......

de3de8's picture

Sure am glad reflected at the pump

Dubaibanker's picture

For the first time in 2013, since 2002, USA has been producing approx. 30% more oil that Saudi. This is the most critical thing though there are several other factors influencing the decine in the price of oil.

Please check each year of production here: https://www.eia.gov/beta/international/rankings/#?cy=2014


This chart is as of data from March 2015 (and I believe could be the most recent comparison chart that I could find) but will show why there is a massive decline in price of oil.

Energy superpower ‘Saudi America’ has been the world’s largest petroleum producer for 29 months in a row

And here are the fascinating detailed charts of everything you need to know on oil but on a 12 month average basis hence smoothening out a lot of noise, by Dr Yardeni.


Demand of oil is mostly led by China and India and to some extent by Latam. The rest of the world being US, EU and G-7 whatever is having lower demand for variety of reasons.

Since Nov 2015, approx, I believe the entire world's storage capacity has been maxed out, hence the price dropped below 40 and is struggling to rise.

We have seen 32 this week, once we drop below 30, we shall immediately see 25. Then again a pause for a few months and then we see below 20.

Due to so many variables, nothing is certain in the volatility of the price movement. But I believe we should see 15 or even lower due to geo-political reasons whereby Saudi, US and a few others simply do not wish to reduce production due to "ego" for "market share" and aim to crush oil producing nations and "punish" "Russia" and "Iran" but if those countries are well diversified in their exports and have started accepting yuan as their payment currency then those nations cannot and will not suffer as much as is anticipated by the silly western nations or their stupid analcysts working at top banks. 

On the positive side, except for the countries who depend solely on oil exports, it is a positive thing for countries like China, India, US, EU etc.

The ones that are dependent on oil export revenues can be divided into two categories:

1 Those who accept yuan in lieu of oil and have seen a rise in exports like Russia, Angola, Iran. In this group we can also add Venezuela etc who are backed by Chinese money instead of US money. Last year China bailed out Venezuela, Argentina, Zimbabwe, Pakistan etc all just with their one hand. On the other hand, China was holding US, EU and others and busy buying trillions in assets or their banks or buildings or media/enertainment companies or insurance companies or land.........

2. Those who do not accept yuan YET, for their oil which are Saudi, UAE and Kuwait, mostly Middle Eastern countries and such. Until they accept yuan, they will need to keep producing more because they depend so much on oil export revenues while their reserves drive them towards doom.

So let us see who blinks first, China / Russia / India / Iran / Syria / Angola / Nigeria / Venezuela / most other nations regardless of whether they produce oil or not.....or....US/Saudi/Middle East nations who DO NOT accept yuan YET.

Those who accept yuan for oil have seen a rise in oil exports and hence their revenues thus SOFTENING the impact of the oil price decline whereas the ones who are not yet accepting yuan are seeing a WORSENING of impact of the oil price decline. So the game is very simple : choose yuan and survive or choose US dollar and continue to die!

My view is that petro dollar will break and Saudi/Middle East oil producing nations will need to accept yuan until then. this song and dance will continue in their dreams and in their drive to have consistent or higher market share which is simply not possible if US is not importing and if China is not on their side (due to their reluctance to break the "petro dollar" system and accept yuan)

We shall, therefore, continue to see lower for longer which is the world introduced by Goldman in Sept 2015 and many other research houses are now using it as well though they refuse to admit that they are ALL WRONG and oil is way below their lower end projections which is mostly in the upper 30's to low 40's range which we passed months ago.

The tug of war between whether to accept yuan or not is the ultimate decision which is at the centre of this oil price decline and until we resolve it in favour of China (the largest growth leader), we shall keep seeing lower price of oil. This is what has led us to see a 70% drop in the price of oil and in the case of OPEC oil price basket by almost 80% for 19 months in a row which is the longest oil price decline in the history of oil since oil was at it's peak in June 2014!

LawsofPhysics's picture

Two things;

1) America is still importing over 7 million barrels per day, 1.2 from SA and over half from other OPEC nations.

2) There is NO true price discover, period.

Enjoy your discount while it lasts.

With the PBoC wanting ever more DEVALUTION why the fuck would anyone accept YUAN?!?!?

Dubaibanker's picture

While America is importing oil, but it's imports from Saudi have declined about 35%. 

After peaking anually at 647k thousand barrels in 2003 they were at 425k thousand barrels a decline of 35% approx until 2014. 2015 should be even lower.


As far as depreciation of currencies is concerned, let's see the result over the last 5 years:

EUR USD : Depreciation of 15.36%

GBPUSD : depreciation of 5.93%.

JPYUSD : depreciation of 29.33%


While there has been some depreciation of 5.24% over the last 1 year but over the last 10 years or 20 years, yuan is one of the rare top currencies which is positive. I expect the depreciation to halt for variety of reasons in the months ahead just like it has happened over the past 20 years.

In the short run, there has been volatility due to deglobalization, manipulation of FX, gold, libor etc and global instability......on a macro economic basis, despite all the negative headwinds, China is the only nation which is fundamentally growing by creating jobs to the tune of 14.5m last year, 10m pa over the last few years....plus their consumption metrics of electricity, car sales, cement, gold....anything ....is still strong and they are busy buying real assets globally instead of junk US treasury bonds!

Their middle class wealth is now greater than US and is at USD 7.3 trillion. India, which is a comparable country by population barely has 10% of China's middle class wealth!

Debt is a concern but thus far there have been no bail outs, no bank collapses. If that occurs, if that occurs then we shall see....

Meanwhile, look at AIG ....http://www.wptv.com/news/region-n-palm-beach-county/palm-beach-gardens/a...


ptolemy_newit's picture



With Yuan you get:

  • things made without exchange cost!
  • you get no middle skimming bankers!!
  • you get tarde with a billion consumers
  • you get eveything Apple (electronic)
  • you get freedom

With Yuan you think longer term and the next real economic cycle it will appreciate again.

Hollywood wants its slaves to think short term


nom deplune's picture


"For the first time in 2013, since 2002, USA has been producing approx. 30% more oil that Saudi. This is the most critical thing though there are several other factors influencing the decine in the price of oil.

Please check each year of production here: https://www.eia.gov/beta/international/rankings/#?cy=2014


This chart is as of data from March 2015 (and I believe could be the most recent comparison chart that I could find) but will show why there is a massive decline in price of oil.

Energy superpower ‘Saudi America’ has been the world’s largest petroleum producer for 29 months in a row"


Keep in mind the title of article from your first link was " Total Petroleum and Other Liquids Production" While oil is petroleum, petroleum also includes nat gas, lease condensates and distilled products. US imports crude oil and refines it for export. Refining one barrel crude results in more than one barrel of net product(s).


I understand your point about the price of crude but there is some distortion in the links you provide. Also saying that the US is "Saudi America" is just not true. Look at the EROEI difference between these two counties oil fields and it's clear that they are not similar. Gahaar doesn't equal Bakken or Eagle Ford.

All said and done US is net importer of crude


..and a net exporter of products.



Uncle Sugar's picture

Waiting for the dam to burst with the first good sized domestic e&p  company.  Who is it gonna be?  Whiting?

buzzsaw99's picture

the whiting's on the wall bitchez

KnuckleDragger-X's picture

I keep saying Chesapeake, but they keep pulling a rabbit out of their ass, so who knows........

Doubleguns's picture

...pulling a rabbit out of their ass...


Seems the FED has everyone well trained. 

blown income's picture

New overpriced homrs,,new cars trucks boat 4 wheelers golf carts restaurants packed with lines out the door retail everything 


Lafayette la  obviously didn't get the memo 



InflammatoryResponse's picture

when I was in LA going to college my roomate went home to Lafayette, one weekend and came back stunned after seeing how much stuff had closed down since he was there last.


that was 1986 or so.  got pretty ugly down there after that.


mandalou's picture

Everybody is an oil bear. Been that way since $40 was hit. Andy Hall was the biggest moron to be bullish. It is one of those trades where institutions and retail are just coasting down together for a long period. Eventually retail will get fleeced. Maybe soon.

U4 eee aaa's picture

Contrarians should never bet and fight against the crowd. The crowd is always right (because they set the prices) EXCEPT in the extremes.

That is where contrarians make their money

The blood is getting close to running in the streets in the oil industry and I think a lot of that blood will be Saudi

Temporalist's picture

Fortunately lower oil and higher oil are both moar gooder for economies!

GUS100CORRINA's picture

So we have a lot of oil. Isn't that a good thing? Oh ... I forgot we don't like to burn fossil fuels? So the worshiping of creation versus the Creator has created a surplus of oil and doomed the energy producing economies. Sounds like lies from the pit of hell. Satan probably loving this situation. Man made despair of a magnitude that even he (Satan) could never have imagined. 

We have looked at the problem in the mirror and realized 'we' are the problem. 

Thanks you Mr. President. You wanted to destroy America and it looks like a job well done.

mandalou's picture

And EU close, here comes the crude ramp correlated to pump equities. 31 point rip on NQ...lol with crude above $33 again. 32.66 IB on crude as those algos love them some initial balance retarded lines for crude. Gap fill on NQ then EU close, now ramp. Routine protocol.

James TraffiCan't's picture

Repeat after me..."Global Depression."

Now the question is?  Planned by Design? OR "Just Stupid People playing God?"


Beam me up!

__Usury__'s picture



“From now on, depressions will be scientifically created.” — Congressman Charles A. Lindbergh Sr. , 1913


Urban Roman's picture

It's that second thing. And, sorry, there's nobody up there to work the transporter controls.

It's offline, for another 2½ centuries, I believe.

Yen Cross's picture

  I'm sure CNBS will be parading the CL knife catchers next week. They've been sucking the APPL teet today.

Chuckster's picture

It's getting worse?  did $100 a barrel oil ever make sense to anybody?  Big oil must have the best marketing people on the planet (other than medical and politicians).

LawsofPhysics's picture

Yes, someday when all those fusion reactors come online oil will go the way of the buggy whip.

However, in the absence of price discovery, talking about prices is a fool's errand. Big oil enjoys big subsidization and big tax breaks...

What I do know is that with 7+ billion people competing for a higher standard of living, there is REAL VALUE in tranportable consumable calories...

unplugged's picture

cold fusion & fuel cells

why else do you think the Rocks sold 80% of their stake in Exxon-Mobile ?

LawsofPhysics's picture

Sure sure, how many cities get their power from fusion (not FISSION) again? ZERO.

The Rocks did the same thing before the last world war too, so what? Smart families in "the club" will always distance themselves to protect their real wealth before all hell break loose!!!!! The hydrocarbons in oil are used for numerous other applications in the modern world.

MalteseFalcon's picture

Bad news, bro.  6+ billion of those 7+ billion do not have any ability to compete, don't matter and never will.

Hope I didn't trash your paradigm.

LawsofPhysics's picture

My paradigm (evolve or DIE) is still very much intact, but thanks for your concern.

Jump you fuckers!!

MalteseFalcon's picture

Those of us in the top billion have nothing to worry about.

Gonna keep my gun well oiled and keep it that way.

venturen's picture

Goldman thought it made sense when they made 75% of their money from manipulating commodities...now they just have the FED printing it for them

LawsofPhysics's picture

Yes, yes, we all know about the "glut" and the "lack of demand" here in the U.S. yet we keep importing over 7 million barrels per day...

no price discovery means NO you stupid fucks!!!

the price could be $0 just as easily as it could be $500 per barrel!!!

The moral hazard that has been unleashed this time around is on a scale that mankind has never seen before!

Beam Me Up Scotty's picture

In other words, we were paying $150 a barrel for crude and $4+ for a gallon of gas just to line someones pockets then.  It had nothing to do with oil being "in short supply".    There could be infinite oil for all we know, and the price is simply controlled by how far they want to open the spigot on the hose coming out of the ground.