Contango

Is OPEC Playing The Oil Markets Again?

OPEC has once again succeeded in jaw-boning the oil market, and Goldman Sachs hiked its oil price forecast this week by a substantial amount, but the optimism has not trickled over into the oil futures market, at least not yet as the contango'd curve still does not look very good.

Oil Slides After Bigger Than Expected Gasoline Build

After a day of frenetic OPEC headlines being all that matters, oil traders may briefly focus on fundamentals as API reports an unexpectedly large build in gasoline inventories ( +2.68mm vs 900k exp). Overall crude, cushing, and distillates saw inventory draws which left wti slightly lower post-data.

Glut Fears Spike As Europe Runs Out Of On-Land Oil Storage

Oil majors in northwest Europe have booked tankers to store 9 million barrels of oil as the international supply glut grows in size, according to a ship-operator who spoke to Bloomberg. The companies have resorted to using tankers as storage as signs emerge that onshore storage is filling up on the land-starved continent.

The Fallacy Of Central Planning (Exposed By South Park's Underpants Gnomes)

In the 1980s, the Fed decided that economists had learned sufficiently from the grave, global mistakes of the Great Inflation such that they would compensate for the evolution of money by controlling just a single interest rate. It was, essentially, an underpants gnome schematic: "1. Target federal funds rate. 2. .... 3. Control Economy."

Not Even An OPEC Deal Will Stop Oil Going Lower, Goldman Warns

Continuing to pile on the bearish oil case, Goldman warns today that not even an OPEC deal would stop oil going lower, adding that "we remain sceptical of its impact. For one, our production forecast continues to reflect a seasonal Saudi production decline into year-end, with no growth elsewhere. Second, even with this OPEC help, our updated oil supply-demand forecast now points to a renewed build in inventories in 4Q 2016 vs. a forecast for a draw only last month.

Goldman Cuts Oil Price Target From $50 To $43 On Rising Global Surplus

While we await every new headline out of Algiers, overnight Goldman threw in the towel on its "transitory" oil market bullishness, and in a note by Damien Courvalin looking "Beyond Algiers, Weakening Oil Fundamentals", the bank cut its Q4 oil price target from $50 to $43, as the bank admits the previously anticipated rebalancing will take longer to achieve, and now expects "a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously."

Options Traders Have Never Been More Bullish

With speculative positioning in VIX futures at record shorts (most bullish), and speculative longs in Dow and Nasdaq at or near record highs, we have one more "most hated rally" statistic to add to the pile of exuberance. The open interest in S&P 500 ETF (SPY) call options has never been higher as the last few days panic-buying leveraged long positions lifted exposure above summer 2011 highs...