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Monti's Bluffing Unleashes Bull Market In Crude

Tyler Durden's picture




 

Since the European Summit a mere six weeks ago, Crude oil prices have surged over 20%. It seems, if one looks at stock prices, that between Monti's 'bluff', Rajoy's 'threats', and Draghi's 'promise' that everything has been fixed in Europe and all-is-well in the world as Europe's stocks swing to a year-to-date gain of 5% (with Spain and Italy up 10-15% since the summit alone). However, if one considers for one moment what exactly they are supposed to have 'fixed' then it seems one of these markets is not like the others... 10Y Spanish spreads are 10bps wider than pre-summit, Italian 10Y is only 10bps tighter, Portugal 10Y is unchanged and the Bund has outperformed Treasuries by 15bps. European corporate and financial credit has rallied but has dramatically underperformed - especially post-Draghi - as it is clear that investor hope for more unsterilized Fed/ECB 'aid' is more than priced into equity markets and has had the aforementioned unintended consequence of spilling out into energy markets - with all the negative feedback implications that come with that.

Oil is up over 20% since the EU summit with Draghi's recent help pushing to new highs...while the USD is unchanged!

 

and year-to-date, things look a little different now...

 

and meanwhile stocks are broadly soaring on the back of hope that all is fixed and credit is 'ignoring' the ebullience for now...

 

but individual sovereign equity indices are soaring with Spain and Italy (and financials) booming higher post EU Summit (and post Draghi)...

 

and yet - in reality - the only thing that counts is the funding cost for European sovereigns - which is basically unchanged since the absolute nothing of the EU Summit...

 

So - who do you believe?

 

Charts: Bloomberg

 

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Wed, 08/08/2012 - 12:07 | 2687905 vinu02
vinu02's picture

Since last 8 month market is up only on hope and rumor, nothing has been done to save euro.

http://www.freefdawatchlist.com/2012/08/ecb-fine-tuning-operation-causing-one.html

Wed, 08/08/2012 - 12:16 | 2687943 slaughterer
slaughterer's picture

Energy traders are not 300 P/E idiots: they know that, with no unrest in the Middle East, WTI will settle below $90 in this hideous, depressionary economic environment.  I am sure Blythe is working overtime on the next crude raid.   

Wed, 08/08/2012 - 12:23 | 2687961 NotApplicable
NotApplicable's picture

So, is this the Monti Fall Paradox?

Wed, 08/08/2012 - 12:26 | 2687972 Quinvarius
Quinvarius's picture

Bankers vs oil companies.  Both crooked, devious, murdering, connected, and well monied.  I put my money on the oil companies.  They have been setting their crude currency exchange rate profitably for a long time.  Bankers are in the money losing business.

Wed, 08/08/2012 - 12:10 | 2687913 q99x2
q99x2's picture

Insiders know the mark has been put on Arabs again. Triggers about to be pulled.

Wed, 08/08/2012 - 12:31 | 2687931 Winston Churchill
Winston Churchill's picture

One more carrier group first,and let them make their peace with

Allah during Ramadan ,before the US 'liberates' their oil.

Oh so considerate.

 

Wed, 08/08/2012 - 12:10 | 2687919 tradewithdave
tradewithdave's picture

Is it true that the Waffle House is going to offer up Standard Chartered Bank on their hash brown menu?  Scattered, smothered and covered...

http://tradewithdave.com/?p=11424

 

 

Wed, 08/08/2012 - 12:10 | 2687920 dereksatkinson
dereksatkinson's picture

Too many people on one side of the boat..

 

 

Wed, 08/08/2012 - 12:11 | 2687922 bank guy in Brussels
bank guy in Brussels's picture

John Ward has a good perspective on the euro-farce on his 'The Slog'

Recent funny title

'GREEK DEBT: Hellenic Republic downgraded to ZZZZZZZZZZZZZZZZZZZ (+) -'

http://hat4uk.wordpress.com/2012/08/08/greek-debt-hellenic-republic-down...

Wed, 08/08/2012 - 12:25 | 2687970 Winston Churchill
Winston Churchill's picture

JW is good on the economics.

Falls down on the geo-politics,as he has never lived outside  the UK excepting

short trips and France(which is not like anywhere).

I post there under a different avatar.

 

Wed, 08/08/2012 - 12:11 | 2687926 Careless Whisper
Careless Whisper's picture

unintended consequence

oh really. oil up 20% in a few weeks makes a damn nice trade.

 

Wed, 08/08/2012 - 12:15 | 2687936 Quinvarius
Quinvarius's picture

I think there is a lot of latent bullishness in the crude market from our own printing.

Plus, as we can see, interventions in the crude market cause free market reactions.  Intervene in crude = blow up refiners hedges and cost them money = refiners burn down their refineries and collect the insurance.

Wed, 08/08/2012 - 12:27 | 2687976 Winston Churchill
Winston Churchill's picture

How dare you impugn a 'Jewish Stocktaking".

Wed, 08/08/2012 - 12:38 | 2688010 Quinvarius
Quinvarius's picture

If Obama had not intervened in crude two years running, we would not be in this mess.  He can't keep screwing with the refiners hedges and expect gasoline under $10 a gallon.  This is the kind of government policy that ends up in shortages.

At a minimum, Obama should make an attempt to understand WTF the futures market is used for before he sticks his ignorant hands in it.  He is an economic moron.

Wed, 08/08/2012 - 13:23 | 2688178 walküre
walküre's picture

The man may be a moron or not. He surely is a puppet just like the rest. Does it matter if he's also a moron?

If he had wanted REAL CHANGE he would have slain the banking and the oil cartels. But he would have died by trying.

There are no heroes in Washington.

Wed, 08/08/2012 - 12:16 | 2687945 Hype Alert
Hype Alert's picture

Even though those are bloomberg charts, they would like to misdirect the attention to: Drop in supply and tension in the Middle East. 

http://www.bloomberg.com/news/2012-08-08/oil-fluctuates-on-european-weakness-inventory-decline.html

Wed, 08/08/2012 - 12:18 | 2687951 stormsailor
stormsailor's picture

not that any of this stuff matters anymore, but the /es has a cup&handle pattern pointing at about 1415.  and why shouldn't it.

Wed, 08/08/2012 - 12:22 | 2687957 slewie the pi-rat
slewie the pi-rat's picture

personally i believe anyone who would say...

Unleashes Bull Market In Crude

over a chart like this:> Light Crude Oil Weekly Commodity Futures Price Chart

...is just a clickbait troll

but who asked slewie? 

Wed, 08/08/2012 - 12:23 | 2687960 101 years and c...
101 years and counting's picture

higher food and energy and now theyve backed themselves into a corner and can not print because of all their talk.  as europe continues to plunge further into depression and US has entered recession.  shanghai is at Mar, 2009 levels.  a report i saw this week sums up china this way "China demand is not soft, its invisible".

PRICELESS.

Wed, 08/08/2012 - 13:23 | 2688182 Phat Stax
Phat Stax's picture

agreed- what has a higher impact on the weath effect? gas prices or a 401(K)? 

Wed, 08/08/2012 - 12:25 | 2687969 orangegeek
orangegeek's picture

The bull move in WTI oil is merely wave 2 - corrective move after the big move down that started in March.

 

http://bullandbearmash.com/chart/spot-wti-oil-daily-august-01-2012/

 

Once wave 2 is complete, wave 3 will move oil even lower.

Wed, 08/08/2012 - 12:40 | 2688018 Quinvarius
Quinvarius's picture

Or it will keep moving up to $300 like people who can count have been saying ever since 2009.  We don't have deflation.  We have a bad economy and massive money creation.

Wed, 08/08/2012 - 12:34 | 2687998 slewie the pi-rat
slewie the pi-rat's picture

oh!  it's the banking licence, stoopid! 

angela?  whereRU hon?  ESM bankster licence for marioECB?  whacha gonna do when those bad boy banksters cum4U?

Wed, 08/08/2012 - 12:38 | 2688009 slewie the pi-rat
slewie the pi-rat's picture

 <--< 4U

 <--<  onU

choose 1 re bankster seminal flow & angela, BiCheZ!

Wed, 08/08/2012 - 12:40 | 2688015 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Well, Draghi did say several times that energy prices are going to go up.

Wed, 08/08/2012 - 12:54 | 2688060 Hype Alert
Wed, 08/08/2012 - 12:48 | 2688050 walküre
walküre's picture

Oil price may be up but oil exploration and related industries are suffering because demand is down.

Higher prices, less volume.

Let's see how long that will go on. Once the price cartell is broken up, oil will be sold at whatever bid.

Wed, 08/08/2012 - 12:51 | 2688054 Hype Alert
Hype Alert's picture

That's right, just like the airlines, when demand is down you lower capacity.  Stop drilling, supply drops and prices stabilize.  Unless or course there is QE (or open mouth operations out of Draghi) out the wazoo.

Wed, 08/08/2012 - 13:17 | 2688151 walküre
walküre's picture

There is way too much action in the markets based on a simple Draghi statement. None of the action is real. It is manipuluated like a classic pump and dump. Markets levitating higher and hoping that retail might feel the pinch to get "in on the action". Sure, for those who like being fleeced over and over and over again. Go for it! Just don't come knocking on the bank's door when you're trying to cash in and making a large withdrawal.

 

Wed, 08/08/2012 - 12:49 | 2688051 reader2010
reader2010's picture

Crude can go even higher.

 

Chinese warships in the Mediterranean

With the Syrian situation hotting up, Beijing couldn’t have chosen a curiouser moment to show the flag in the Eastern Mediterranean and pay “friendly calls” on NATO countries. Two Chinese warships including a guided missile destroyer arrived in Istanbul Sunday on a 4-day visit to Turkey in the first such call since 2002

http://blogs.rediff.com/mkbhadrakumar/2012/08/06/chinese-warships-in-the-mediterranean/

Wed, 08/08/2012 - 12:53 | 2688058 dead hobo
dead hobo's picture

I think the repos recently performed by the Fed corelate with surges in oil prices. To me, the relationship looks solid. I suspect when the recent 600 million is repurchased, the price will stabilize or drop a little. If another repo is performed, I would be surprised if the price did not surge once more unless there were strong offsetting factors that cause or imply a large reduction in market liquidity.

Wed, 08/08/2012 - 12:55 | 2688063 Blopper
Blopper's picture

I believe that as long as the central banks can print, I will never dare to sell, especially when hyperinflation is in the horizon.

Wed, 08/08/2012 - 13:18 | 2688157 walküre
walküre's picture

Do you own crude in the ground or in a tank? Otherwise what do you own?

Wed, 08/08/2012 - 13:12 | 2688132 steve from virginia
steve from virginia's picture

 

High crude prices are needed to bring new supplies to the market. (Rattle that saber, dude!)

 

Low crude prices are needed so that customers can afford to waste it. (Driving is always an optional activity.)

 

Because waste does not pay finance is deployed at (you guessed it) increasing/exponential cost. Meanwhile, customers are slowly going broke as credit costs increase and the supply of credit dries up.

 

Note: central banks haven't 'printed' a dime but commodities have bolted 20% in a few weeks. Why? Because finance can print all day and night without any restriction (and it does ... provided the establishment provides moral hazard).

 

Finance has been supporting the 'waste trade' since the 1930s. Every single crude cargo, every barrel has been and is bid and paid for with credit. It's a one-way trip for hundreds of billions of barrels, from the ground into the air with nothing to show for them, nothing flowing back but empty promises of 'progress'. Every dollar is issued out of thin air ... by Wall Street/City of London financiers.

 

All of this is part of the Great Unraveling.

Wed, 08/08/2012 - 13:20 | 2688172 walküre
walküre's picture

Don't forget that the World Bank gets a cut on every single barrel of crude traded in USD.

World goverments are broke. Could be that the World Bank is going broke as well? Higher prices on crude are a sure way to increase the bank's reserves.

Wed, 08/08/2012 - 13:21 | 2688173 Mountainview
Mountainview's picture

Which one of the bluffs you mean?

Wed, 08/08/2012 - 13:32 | 2688223 Remington IV
Remington IV's picture

So strange , yet so inviting

Wed, 08/08/2012 - 15:02 | 2688536 zrussell
zrussell's picture

The "official" statement from Chevron on the evening Bay Area TV news said it was a diesel fuel fire.

 

You couidn't tell what vehicle it was that was shooting fluid on the fire. Maybe they were Chevron gasolene trucks?

Wed, 08/08/2012 - 17:58 | 2689168 OhOh
OhOh's picture

I am so glad the sanctions aginst Iran are producing a result!

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