Is Something Blowing Up In OIL?

Tyler Durden's picture

A week ago we warned of some insane movements and mysterious bid in OIL (the Barclays iPath oil tracking ETN) as it traded a stunning 36% rich to its underlying NAV. Well with oil resurgent today, as contracts roll, something just imploded in OIL...

 

 

As Barrons noted, the sharp performance divergence stems from the ETN’s massive price premium over the value of the index it tracks.

Pravit Chintawongvanich, head derivatives strategist at Macro Risk Advisors, notes that OIL’s premium rose sharply in recent days and accelerated to 48% by Wednesday’s close. He told Barron’s that institutional traders noticed the extreme premium and are now betting against OIL on the premise that the unusually large premium will revert to normal. Trading volume in OIL was already more than triple the average over the past month on Thursday with three hours left in the trading day.

Even after today’s drop, OIL is still at a roughly 20% premium to its underlying index.

Chintawongvanich says that it’s not too late for investors who own OIL to ditch it for USO: “You don’t want to be stuck holding the bag when this drops to NAV.”

*  *  *

Simply put - retail moms and pops who piled into OIL without thinking about NAV or technical flows just got f##ked!

As we concluded previously, The current situation is eerily reminiscent to the heyday of the mortgage market in 2007, when mortgage defaults started to pick up, and yet the credit default swaps that tracked them continued to decline, bringing losses to those brave enough to trade against the crowd.

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EddieLomax's picture

Definitely agree, American beers are much improved from 10 years ago, and it is the same with the UK.

I'm not a serious drinker, but over the past 10 years a lot of pubs in the UK have closed down, and those that are still open though have swapped from generic John smiths/fosters etc to real ales, and the difference is night and day, beer that actually tastes good.  On my trip over to the US a few years ago and seeing the American beers that make it into the supermarket beer shelves I can see something good has happened to the American beer scene even from the UK, there is good stuff at a reasonable price to be found quite easily, at least in NJ.

IridiumRebel's picture

http://www.chinawhisper.com/the-10-most-expensive-cigarettes-in-china/
8500 RMB for a carton of 1300 USD.
6.25 a cigarette. Shits better taste good.'

janus's picture

Iridiumrebel,

they're amazing.  i have one more left.  i'm about to smoke it now, saved the last available for my first morning smoke.  it's hard to believe that one cig could cost @$10 (well, if i do the math in my head, i guess it's 'only' about 6.50 per cig...but, still, that's crazy-expensive for cigs).

if any of you smokers ever come across one of these things...do yourself a favor and beg for one.

janus

chubbyjjfong's picture

Stop it! All of you, just stop it! The mocking, the teasing of my beautiful Janet. It's just horrible. She's bold, she's strong, she's intelligent and beautiful. It breaks my heart to read these horrible comments. Don't worry Janet, I was always believe in you!! Your greatest fan.. chubby x

bamawatson's picture

you, sir, are a gentleman and a scholar

BarkingCat's picture

Jenet ot Catlin??

I get these 2 brave and bald beauties confused.

knukles's picture

Caitlin the other day on some entertainment site said that she's now dating guys.
Y'all're aware are you not, she still has her boy plumbing ain'tcha?
Hmmmm....  Daughter thinks it's all a shit show and she reverts to Brucie soon when the money stops rolling in.

bilbert's picture

I dunno, knuks - what kind of guy is into dating another guy, let alone one that is manly enuf to sweep Kaitlyn off her size 12 feet?  

That aside, AND having to teach her how to drive??

This is like some acid-induced nightmare involving Rock Hudson, Scarlett O'Hara, Chucky, and Richard Simmons, revolving in a VERY low orbit around Planet Kardashian - this is just too fucking strange for me to even think about........

It's hard to unsee, unhear, and unread stuff.

LaLaLaLaLaLaLaLa!

Iam_Silverman's picture

"Y'all're aware are you not, she still has her boy plumbing ain'tcha?"

 

Ewwww, gross - a long neck pussy!  Yuck.

The Saint's picture

I see the problem.  She needs a joystick.

Arnold's picture

http://www.barchart.com/futures/expirations.php

 

Today is the 22nd  though.

Why would someone pay a large premium?

Frontrunning the gaggle of swan?

 

http://blogs.barrons.com/focusonfunds/2016/01/21/why-this-oil-etn-is-plu...

"Traders may remember that a similar situation cropped up in the VelocityShares Daily 2x VIX Short-Term ETN (TVIX) in 2012. Back then, the ETN stopped tracking its underlying index when it reached a pre-set limit of shares outstanding. Since creating and retiring shares is the grease with which arbitrageurs keep the wheels spinning, TVIX rose to a premium of as much as 89% before plunging violently after the issuing bank announced that it would reopen issuance."

 

 

DeathMerchant's picture

I just tried to go back to work but discovered I had been replaced by some Pakistani fellow.

RichardENixon's picture

I'm calling BS on that one. They make you train those guys before they replace you

Implied Violins's picture

Yeah, they tried that with me. Thankfully, I'm in the suicide vest business.

FireBrander's picture

What happened to "Peak Oil"?

 

~~~~~~~~~~

Google: "When will we reach peak oil?"

Expert Consensus:

"There is a general consensus between industry leaders and analysts that world oil production peaked or will peak between 2010 and 2030, with a significant chance that the peak will occur before 2020. Dates after 2030 are considered implausible."

~~~~~~~

Global Warming?

National Science Board in 1972:

 "Judging from the record of the past interglacial ages, the present time of high temperatures should be drawing to an end . . . leading into the next glacial age." -

Newsweek in 1975:

"Meteorologists disagree about the cause and extent of the cooling trend… But they are almost unanimous in the view that the trend will reduce agricultural productivity for the rest of the century."

~~~~~~~~~~

In 1975, the data leading up to 1975 clearly shows cooling....in 2016, the data leading up to 1975 and further to 2016 clearly shows "end of the world as we know it" warming...WTF?



BurningFuld's picture

Remember the funding and "research" money that went into that conclusion. Give me enough money and I can support the fact that Unicorns are real but just very shy.

Winston Churchill's picture

I already got that grant.

Absolutely conculisve that they've never seen because of that shyness,not because they a

myth.

froze25's picture

Don't get upset. They make it up as they go along. For example they use Climate Change now since it covers both cooling and warming. They use what ever terminology they think will make you except having more money taken out of your pocket in the form of taxes under threat of incarceration for noncompliance.

lincolnsteffens's picture

The global warming BS - I saw a cyclical chart today of warming and cooling since 2500 BC. Now granted we don't have official daily temperature data from reporters on the ground since the 1890' AD but the study or tree rings, soil core and ice core samples give a good idea of what has happened.

In spite of the "RECORD RECORDED HEAT WAVE" of last year there is the un-wittnessed data that shows temperatures from about 1400 - 800 BC temperatures were above last year and peaked way above last year in about 1150 BC. Then there is another peak high in 1300 AD rapidly declining to the trough of the last mini ice age about the time of the founding of the James Town settlement in Viginia in 1607 AD.

Check it out. I love this site.                                      https://www.youtube.com/watch?v=1740DZJzV3o      They have daily videos about the effect of the sun and planets on the earth's weather, volcanoes and earth quakes.

Rusty Shorts's picture

S.O. is just a Parrot, here's the real deal...to bad he pass away a couple years ago, This guy Chris Todd really had the inside scoop, be sure to read video information below videos.

 

https://www.youtube.com/user/Chris2191970/videos

 

 

More Ammo's picture

"to bad he pass away a couple years ago"???

Was there a nail gun involved or a sudden stop or just simple "heart failure"???

Inquiring minds want to know...

Rusty Shorts's picture

From what I hear, Heart Failure

LoneStarHog's picture

Oil is soooooooo yesterday...Let's discuss pork bellies, bacon...Ya know, Kardashian's pork that is still in a bubble.

ParkAveFlasher's picture

We Chintawongvanich'd some folks!

BigRedRider's picture

I'd rather get slonged...DJT agrees.

jmcadg's picture

So 20% discount is signalling $23.50 approx?

Deathrips's picture

Im glad im in cash looking for a position.

 

think 32-33 short term top..then back down low 20s.

 

If not back down, SP goes to shit.

 

RIPS

Haole's picture

Awww, you're kidding, right?   /s

Donald J. Trump's picture

Pravit Chintawongvanich.  I think Tyler makes these names up.

Sages wife's picture

Not made up. He's the bank manager on the Simpsons.

Dr Ongo's picture

And its..........................Gone............next please

Bay of Pigs's picture

"we slathered some people in oil and cornholed some folks..."

Kaiser Sousa's picture

looks like the Feds "operation Dow 16,000" is faltering...

last hours of "trading" in the Rotten Apple should be quite the show...

DEATH TO THE MONEYCHANGERS..........

adr's picture

I really want to kill the moneychangers. Instead of tossing them out of the temple, Jesus should have slit their throats. It's only murder when you kill a fellow human being, I don't think the moneychangers count as human.

I want to be able to do honest business again. I'm sick and tired of this bullshit game of inventory stuffing publicly traded corporations and CIA money laundering operations.

Winston Churchill's picture

How about a crucifiction every at every milepost down I95.Every hundred yards around the beltway

of course.Apt.

Iam_Silverman's picture

"How about a crucifiction every at every milepost down I95."

If you run out of crosses, there are many, many more billboards posting the exact mileage to South Of The Border you can use.  Heck, you'd run out of money market managers before you run out of signs advertising Pedro's tourist trap.

Whalley World's picture

Hey
I am in fx and I resemble that remark

FireBrander's picture

"If you don't have hatred in your heart; then what's driving you?" - Greenpeace Founder.

Kaiser Sousa's picture

thats the spirit brother...

channel ur anger towards them....it makes u stronger...

and that aint got nothing to do with the Dark Side...

RadioFlyer's picture

No caps or F bombs.  I'm disappointed!

Kaiser Sousa's picture

just wait...

THEY ARRIVED....

to be continued.......

lehmen_sisters's picture

Just wait for the 3:30 ramp, thats what builds pressure in the Kaiser chamber. 

Pareto's picture

No way Sousa!  Not today.  Today the money fuck changers are taking a reprieve.  Today is your day man!

MoHillbilly's picture

If I knew what the hell that means, I would be pissed