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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vinu02's picture

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

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.   

NotApplicable's picture

So, is this the Monti Fall Paradox?

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.

q99x2's picture

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

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.


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...



dereksatkinson's picture

Too many people on one side of the boat..



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 (+) -'

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.


Careless Whisper's picture

unintended consequence

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


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.

Winston Churchill's picture

How dare you impugn a 'Jewish Stocktaking".

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.

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.

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.

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.

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 just a clickbait troll

but who asked slewie? 

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".


Phat Stax's picture

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

orangegeek's picture

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


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

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.

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?

slewie the pi-rat's picture

 <--< 4U

 <--<  onU

choose 1 re bankster seminal flow & angela, BiCheZ!

Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

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

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.

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.

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.


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

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.

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.

walküre's picture

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

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.

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.

Mountainview's picture

Which one of the bluffs you mean?

Remington IV's picture

So strange , yet so inviting

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?

OhOh's picture

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