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WTI Surges Over $105 Ahead Of Margin-Hiker-In-Chief Speech

Tyler Durden's picture




 

The Brent-WTI spread has compressed under $14 for the first time in 10 weeks but it is being led by the margin-hiker-in-chief's most visible indication of dastardly speculation - the WTI contract as Brent remains close to unchanged. Perhaps, just perhaps, there really is little to no speculation (remember there is a speculative seller for every speculative buyer no matter how many speculator-surveilled market participants there are). As WTI breaks $105 for the first time in almost three weeks, we suppose this is not what Obama was hoping for and just as we pointed out earlier - just as every failed attempt at central planning, all Obama will achieve is another spike in crude prices - an hour later - we are proved right.

Brent (orange) remains quietly unchanged while WTI (black) surges to near three-week highs, breaks $105 and crushes the Brent-WTI spread back near $13...

Brent-WTI spread...

 

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Tue, 04/17/2012 - 09:31 | 2351111 Flakmeister
Flakmeister's picture

Umm...

Why the compression? It seems more driven by the Brent end....

Tue, 04/17/2012 - 09:32 | 2351116 CPL
CPL's picture

And what drives Brent?  There's your answer.

Tue, 04/17/2012 - 09:35 | 2351128 Flakmeister
Flakmeister's picture

Many things drive either WTI or Brent...

There have been some significant outages in Sudan and Nigeria, perhaps there is news on that front... 

Tue, 04/17/2012 - 09:41 | 2351148 GetZeeGold
GetZeeGold's picture

 

 

Had to go long this morning....we're clearly doomed after the speech.

 

Tue, 04/17/2012 - 09:50 | 2351173 CPL
CPL's picture

Either my trade platform is fucked up or the price action per barrel on WTI is going to 122 soon.  Yesterday, it was looking sideways and a steady bull climb.  Today, the Algo is saying $122.  What the fuck changed in 12 hours?

 

Probability - Intermediate trend possibly bullish, Sideways trend near lower support.
Probability - Oversold, odds favor long trades.
Probability - Short term typical pullback, pullback may start to slow.
Probability - Strong Down trend (1 month), may start to turn sideways.
Confirmation - at support

+8.5% at 120.67 ± 0.6, type double, strength 7
+18.5% at 122.57 is Target 1

Tue, 04/17/2012 - 09:55 | 2351185 SHEEPFUKKER
SHEEPFUKKER's picture

Can't the evildoers just naked short sell paper oil to death? Oh, but there's that little thing called unintended consequences.....like lower prices increasing demand and decreasing supply.  

Tue, 04/17/2012 - 10:02 | 2351222 CPL
CPL's picture

News says decreasing supply in all venues of oil production except Natural Gas.

 

Only thing I'm worried about is diesel.  Once it's gone, civilzation slows down to what you can carry on your person, local food and water boiling advisories.

Tue, 04/17/2012 - 11:46 | 2351670 AldousHuxley
AldousHuxley's picture

peak oil occured but still nothing is running out for another 100 years.

 

Tue, 04/17/2012 - 13:35 | 2352061 CPL
CPL's picture

Helium?

Tue, 04/17/2012 - 13:45 | 2352088 DaveyJones
DaveyJones's picture

it doesn't have to "run out" just stop growing to completely debilitate an exponenetial debt based economy and society 

Wed, 04/18/2012 - 01:19 | 2353797 MeelionDollerBogus
MeelionDollerBogus's picture

thankfully diesel engines can run off veg oil and plants aren't in short supply. If THAT happens then we're truly fucked.

 

Wed, 04/18/2012 - 01:17 | 2353793 MeelionDollerBogus
MeelionDollerBogus's picture

It's going to 122 very very soon. Maybe the math suggested here (rate of change) can help update your algo because I saw this coming some time ago. The date of photo upload is shown on flickr.

2012 feb 17 oil ROC look-ahead $brent $wtic

2012 apr 10 oil price trends | Flickr - goldpricemodel

Implications for the market: 2012 03 26 dow vs oil | Flickr - goldpricemodel

so .... wti 122 goes with dow = 14,670

Tue, 04/17/2012 - 10:02 | 2351215 CPL
CPL's picture

Maybe ANWAR dripped it's last drop?  It'll happen eventually, can only pump so much of the ocean into the big hole left to lift the oil to harvest it.

 

Or it might have to do with the IEA post-mortum...pardon, business scope and futures report that came out last night.

 

Appearently the rejigging of numbers has illustarted we've been down in production 4%-6% per year since 2008 and China has a massive energy gap they need to fill.

 

http://www.commodityonline.com/news/chinas-widening-crude-oil-supply-dem...

 

Just weird.  Big price flag like that popping up means something happened.

 

http://gregor.us/oil/global-oil-production-update-eia-revises-two-decade...

Tue, 04/17/2012 - 10:20 | 2351286 j0nx
j0nx's picture

It's ANWR and no it didn't just drip its last drop...

Tue, 04/17/2012 - 09:46 | 2351158 Eugend66
Eugend66's picture

It's ..... The Rest of the WORLD.

Tue, 04/17/2012 - 09:45 | 2351160 MillionDollarBonus_
MillionDollarBonus_'s picture

It is indisputable that speculators are the PRIMARY driver for oil prices. Most Democrats understand this very well and have been trying to stop speculators for decades, but sadly they have failed to overcome the mass of right-wing ignorance on this issue. Oil speculators also put downward pressure on many equities held by pension funds which is damaging peoples' retirement portfolios.

Tue, 04/17/2012 - 09:57 | 2351205 DaveyJones
DaveyJones's picture

How exactly did speculators create the height of discovery forty years ago and the height of production in 2008. How did they create the explosive demand and exponential growth of the population and its needs along with the rapid and exponential decline of the energy returned on the energy invested

Tue, 04/17/2012 - 10:00 | 2351209 Schmuck Raker
Schmuck Raker's picture

Hey, MDB, congratulations! I see your avatar's been upgraded to gold.

Also, you don't mention Libertarians in your post. How come?

Wed, 04/18/2012 - 01:14 | 2353789 MeelionDollerBogus
MeelionDollerBogus's picture

Indisputable?

O Rly?

How about this extreme correlation of Dow to WTI oil price?

Think maybe that suggests something of a centrally-controlled nature? I do.

2012 03 26 dow vs oil | Flickr - goldpricemodel

Tue, 04/17/2012 - 09:41 | 2351142 Tyler Durden
Tyler Durden's picture

Goldman got this one right in February. Recall:

Goldman's David Greely is no Tom Stolper. In fact his recommendations have been correct more often than not. Which is why we believe that when the market learns that the Goldman commodities strategist just opened a long September WTI position at $107.55, it will merely provide that extra oomph to send WTI up, up and away. Or maybe not: this could be another one of the "fade Goldman" calls. Alas, with the real impact of the recent $2 trillion balance sheet expansion becomes truly felt we have a distinct feeling Goldman is quite right on this one. Evil, evil speculators.

Repositioning our trade recommendation as Brent crosses $120/bbl

 

Brent crude oil prices have rallied $11.92/bbl this month, crossing our 3-month target of $120/bbl and reaching their highest levels since last spring. While we continue to see an upward trajectory for crude oil prices, we believe that with Brent prices having crossed our 3-month price target it is an opportune time to reassess our trading recommendation and we believe that the better trading opportunity may currently lie in WTI futures for the contract months following the scheduled June reversal of the Seaway pipeline to flow crude oil from Cushing to the US Gulf Coast. Brent prices have risen above our 3-month target, but we expect them to continue to rise to $127.50/bbl over the next 12 months

 

We continue to expect Brent crude oil prices to rise further this year in order to restrain demand growth, keeping it in line with available supplies. Further, we see the risks to our forecasts as skewed to the upside as world oil inventories have not been building despite Saudi Arabia pumping at its highest levels in 30 years and Libyan supplies returning to the market. This suggests that the increased supplies have been absorbed by the market and leaves the world in the unprecedented situation in which OPEC spare capacity is at a trough rather than at a peak just as the world economic recovery is getting on a more solid footing.

 

Taking profit on our long July 2012 Brent trading recommendation with a potential gain of $13.19/bbl, and opening a long September 2012 WTI crude oil futures trading recommendation

 

The Seaway pipeline is scheduled to be reversed in June to flow up to 150 thousand b/d of crude oil from Cushing to the US Gulf Coast, increasing to 400 thousand b/d by early next year. With the Seaway flowing crude from Cushing to the US Gulf Coast, we expect WTI prices will be closely tied to Brent prices, with WTI likely trading at a $3-$5/bbl discount, reflecting the pipeline tariff economics. Consequently, we expect that WTI prices for the contract months following the reversal of the Seaway will move upward with Brent prices over the next 12 months. However, because these WTI contracts continue to trade at a substantial discount to Brent, we believe they have additional upside from the narrowing of the WTI-Brent spread that we expect following the reversal. For example, the September 2012 WTI-Brent spread is trading at $11.28/bbl, whereas on a 6-month horizon we expect the WTI-Brent spread will narrow to $5.00/bbl.

Tue, 04/17/2012 - 09:56 | 2351198 Flakmeister
Flakmeister's picture

Yeah, good call.... and most people don't understand what Keystone XL really does for the WTI-Brent spread...

Tue, 04/17/2012 - 11:33 | 2351597 Beatscape
Beatscape's picture

I'm not sure if this has been discussed on this thread or not, but the main reason the WTI / Brent spread is compressing is that the Seaway pipeline is going to reverse the flow of oil earlier than the markets expected.  Now, instead of all North America oil flowing into Cushing with storage capacity overflowing, it will have a major new outlet to the gulf coast for much easier export.  This is good news for Canadian oil exporters as well.

 

 


Seaway Pipeline to begin oil shipments to Gulf on May 17

Published: Apr 16, 2012

BY AARON CLARK, BLOOMBERG

April 16 (Bloomberg) -- Enbridge Inc. and Enterprise Products Partners LP plan to start crude oil shipments on the Seaway pipeline from Cushing, Oklahoma, to the U.S. Gulf Coast on about May 17, according to a filing with regulators.

The initial transit time will be about 15 days on the 150,000-barrel-a-day line, said Rick Rainey, a Houston-based spokesman for Enterprise. The line will require about 2.5 million barrels of oil to fill.

The shipping duration will be reduced to about five days after the line’s capacity is boosted to about 400,000 barrels early next year, he said.

Uncommitted rates will be $3.82 a barrel for light crude and $4.32 for heavy crude, according to a proposal subject to approval from the Federal Energy Regulatory Commission.

“We are confident that the rates are just and reasonable,” said Rainey. “This is designed to give the market a little more guidance on what we are talking about in terms of rates for committed shippers versus non-committed shippers.”

A request for market-based rates for uncommitted shippers on the pipeline is still pending, he said.

Five-year committed agreements to ship light oil in volumes less than 100,000 barrels a day will cost between $2.75 and $3 a barrel. Ten-year agreements for the same grade of oil and the same volume will cost between $2.50 and $2.75.

The discount for West Texas Intermediate for June delivery compared with Brent narrowed $2.63 to $15.26 a barrel at 1:40 p.m. in New York, according to data compiled by Bloomberg.

Committed Shipper Costs

The rate to ship more than 100,000 barrels a day of light oil will cost $2 to $2.25 a barrel and a 10-year commitment is required, the filing showed. Five-year commitments to ship heavy oil on the pipeline will cost $3.25 to $3.50 to transport less than 100,000 barrels a day.

“The committed shippers rates are slightly below the market expectations of $3 per barrel,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said by phone.

Ten-year commitments to ship the same volume of heavy oil on the line are $3 to $3.25 a barrel. The price to ship more than 100,000 barrels a day of heavy oil is $2.35 to $2.75 a barrel with a 10-year agreement.

Enbridge and Enterprise received enough shipper commitments to increase the capacity of the Seaway pipeline by mid-2014, according to a statement issued March 27. The companies will add 450,000 barrels a day to the pipeline, boosting the system’s capacity to 850,000.

“As the Seaway system becomes operational and expands, the market should see the Brent-WTI spread narrow substantially,” Lipow said.

Tue, 04/17/2012 - 09:34 | 2351119 Dr. Engali
Dr. Engali's picture

I hope it climbs $5.00 while he is speaking. I'm sure that competing countries will love to pick up the extra business lost from our exchanges.

Tue, 04/17/2012 - 09:35 | 2351123 truont
truont's picture

On the bright side, Obama and Pelosi pounding the table on margin hikes will at least throw out the argument that speculators are driving commodity prices higher.  They will watch in horror as their efforts to spook speculators will only have a temporary effect, and then oil prices will lumber progressively higher. 

Who will the boogyman be next, if not the speculators?...

 

Tue, 04/17/2012 - 09:49 | 2351163 dwdollar
dwdollar's picture

One thing is for sure... the politicians will blame everyone but themselves and their string pullers. AND the people will believe them, not because they trust the politicians, but because the truth is too painful to accept.

Tue, 04/17/2012 - 11:58 | 2351723 AldousHuxley
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blaming others is part of playing politics

 

 

Tue, 04/17/2012 - 09:56 | 2351191 LawsofPhysics
LawsofPhysics's picture

Precisely.  Go ahead, make margins 100%!!!  I dare you.  If everyone has to take delivery of everything they buy, then who will the political scapegoat be when prices skyrocket?  There will be nothing else to look at except monetary policy, fucking bring it.

Tue, 04/17/2012 - 10:07 | 2351233 CPL
CPL's picture

amen...finish the shit show once and for all.

Tue, 04/17/2012 - 10:41 | 2351354 DaveyJones
DaveyJones's picture

"speculators" are the new "terrorists" and a new excuse to further control the markets, move citizens into submission and sacrifice, and bully other jurisdictions.

Tue, 04/17/2012 - 12:43 | 2351878 Dan Conway
Dan Conway's picture

Just like releasing oil from the strategic reserves, a couple days of decline followed by months of increases - that is until the economy declines and then ouch!

Tue, 04/17/2012 - 09:35 | 2351125 Shizzmoney
Shizzmoney's picture

Wait, MSNBC and FOX said that the prices would go down?

I want the fucking thing to go to $6.  Make all of the politican mother fuckers feel the heat.

Tue, 04/17/2012 - 09:55 | 2351186 jus_lite_reading
jus_lite_reading's picture

CNBS: Crude up $2 to $105 on recovery hopes...

MSNBC: Economy is rocking and a rollin' as oil goes higher...

Odumbo: We will release the SPR and bring oil back down to $10pb...

Tue, 04/17/2012 - 10:19 | 2351281 CPL
CPL's picture

If the Algos/HFT's have plans for WTI at 122, 6 dollars is cheap. 

 

The Tylers had a price spread of cost of barrel vs pump price.

Tue, 04/17/2012 - 09:34 | 2351126 Jack Sheet
Jack Sheet's picture

I don't understand. Why doesn't JPM just do a big naked short paper takedown like they do daily in gold and silver?

Tue, 04/17/2012 - 09:43 | 2351151 Monedas
Monedas's picture

Gold is one commodity where anyone with a moped can actually take delivery !   Monedas  2012   Comedy Jihad Commodity Trades

Tue, 04/17/2012 - 09:45 | 2351155 GetZeeGold
GetZeeGold's picture

 

 

Oil flows from everywhere. Not enough fingers for all the dykes.

 

Tue, 04/17/2012 - 10:21 | 2351287 CPL
CPL's picture

Greasy lesbians everywhere.

Tue, 04/17/2012 - 09:40 | 2351143 fonzannoon
fonzannoon's picture

Jack because they are too busy STOMPING on the miners.

Tue, 04/17/2012 - 09:46 | 2351162 francis_sawyer
francis_sawyer's picture

XOM is one of the largest components of the S&P... With AAPL tanking, they need something to prevent the index from crashing until they re-load the printer ink...

Tue, 04/17/2012 - 09:49 | 2351168 Catullus
Catullus's picture

Someone want to explain why charging more to pay to play is going to unbake this cookie.

Tue, 04/17/2012 - 10:07 | 2351236 Coldsun
Coldsun's picture

Because Obama said so and he is the smartest president ever. Surrounded by frickin idiots. Gawd...

On a serious note, that is an astute and relevant question that politicians don't even understand.

Tue, 04/17/2012 - 09:53 | 2351180 LawsofPhysics
LawsofPhysics's picture

"WTI surges over 105"

 

And for that, I thank you.  

Tue, 04/17/2012 - 10:44 | 2351360 ActionFive
ActionFive's picture

Wouldn't it be normal for them to take crude up for his speculator speech- so they make up new reasons to short it in the near future?

Tue, 04/17/2012 - 10:04 | 2351230 ceilidh_trail
ceilidh_trail's picture

Obammney gonna help make me rich. Glut of oil on this continent, record persistent high gas prices. Reversing pipeline and sending all that Bakken/oil sands oil away to asia= ? lower WTI? I'm staying long oil AND COAL. Coal only because this bunch of &#@%&# doesn't know wtf they are doing (maybe they do?). Might not be used here, but will be used in the rest of the world- unless we find a way to generate power from tulips and lollipops...

Tue, 04/17/2012 - 10:07 | 2351238 Spartan
Spartan's picture

Whats that (see link below), new money pouring into Brent on Iran war excitement....late lemmings burnt now leaving the building (for the time being)....

 

http://www.bloomberg.com/quote/ICCBBMMN:IND/chart/

 

 

Tue, 04/17/2012 - 10:15 | 2351264 SillySalesmanQu...
SillySalesmanQuestion's picture

Thou shall not have oil trading at less than $100.00/barrel.

Tue, 04/17/2012 - 10:17 | 2351272 PicassoInActions
PicassoInActions's picture

Oil is national security, let's nationalize it. Soon we won't be able to afford the oil for our f16's.

 

Tue, 04/17/2012 - 10:24 | 2351300 CPL
CPL's picture

The US has a massive debt, it CAN'T afford it now even if it was available.

 

New hot trend is carnival seating for flights.  Book 600 people on a 400 person plane and let them race to their seat.

Tue, 04/17/2012 - 10:29 | 2351318 GeneMarchbanks
GeneMarchbanks's picture

Guess women and children lose again, meanwhile the retard you responded to personally owns an 'f16' and is worried...

Back in reality, you won't be driving but they will be flying.

Another dingleberry with Stockholm Syndrome.

Tue, 04/17/2012 - 10:38 | 2351345 PicassoInActions
PicassoInActions's picture

if i had own an f16's i would be bothering to read your comments.

Tue, 04/17/2012 - 10:30 | 2351320 PicassoInActions
PicassoInActions's picture

You mean 400 mexicans for the price of 600. Are they legal or ilegal?

 

Tue, 04/17/2012 - 10:18 | 2351277 ceilidh_trail
ceilidh_trail's picture

What happened to my up/down arrows???

Tue, 04/17/2012 - 10:35 | 2351340 LawsofPhysics
LawsofPhysics's picture

re-hypothicated?

Tue, 04/17/2012 - 11:26 | 2351364 DaveyJones
DaveyJones's picture

This is the first time in human history where we will move (be forced to move) to an energy source that is LESS energy concentrated all while the population is at record exponential size. A unique predicament. Expect a unique government. 

 http://gregor.us/oil/global-oil-production-update-eia-revises-two-decades-of-oil-data/

Tue, 04/17/2012 - 11:30 | 2351577 CPL
CPL's picture

The 4-6% loss per year is pretty shocking in that.  Means that 2025 target of production collapse is now in 2013-2014.

 

It's not going to be pretty, with or without a government.

Tue, 04/17/2012 - 13:40 | 2352075 DaveyJones
DaveyJones's picture

Yup, a while back I was asking Flak where I was getting 2013 as a serious period. I kept hearing that in many sources. Notice, every time they re-evaluate, the source and time period shrinks. Like our debt, our increase debt votes, and other related items, the frequency keeps increasing in an exponential phenomenon. This will explode very soon. The cost of food is the most immediate fear. To have both inflation and a vital energy source hitting at once in a country completely reliant on artifical pricing leverage and global supply with a soon irrelevant army and fiat is hard to imagine.    

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