Oil & Gold Pop, Stocks Drop As Saudis Intercept Houthi Missiles Over Riyadh

Update: After an initial dip on a big surprise crude build and new record crude production, WTI just spiked to its highest since Dec 2014...

It appears to be a reaction to Saudi air defense forces intercepting rockets over Riyadh.

Arabiya TV reports Saudi Air Defense Forces intercept and destroy a ballistic missile fired by Al-Houthi militia towards Riyadh

  • Bloomberg reporter hears blasts in Saudi Arabian capital Riyadh.
  • AFP also reports explosions heard "over capital"

And WTI spiked to the highest since Dec 2014.

 

As the energy complex spikes so did Gold prices and stocks are sliding...

The last Saudi missile intercept was on March 25th.

All major US equity indices are now red on the day...

*  *  *

WTI/RBOB prices are higher once again amid escalating tensions over Syria, despite dipping on a surprise build from API; but when DOE confirmed a big surprise crude build, WTI/RBOB prices slid. US crude production also rose once again to a new record high.

Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that WTI discounts to Brent of more than $5 a barrel continue to drive crude exports, helping to pull U.S. oil stockpiles down.

Skeptics would argue that crude production is rising to meet demand, fed by near-term enthusiasm for higher prices, encouraging even more output.

API

  • Crude +1.758mm  (-1.25mm exp)

  • Cushing +1.452mm (+2mm exp)

  • Gasoline +2.005mm

  • Distillates -3.849mm

DOE

  • Crude +3.306mm (-1.25mm exp)

  • Cushing +1.129mm (+2mm exp)

  • Gasoline +458k

  • Distillates -1.044mm

API's surprise crude build was confirmed by DOE (and was even larger) and Gasoline also saw inventories build.

 

Once again US crude production is on everyone's mind and it rose once again to a new record high...jumping 0.62% to over 10.5mm b/d

 

WTI/RBOB prices are higher, after dipping on API data last night, following further escalating rhetoric from Trump regarding Syria, and Eurocontrol, an air traffic agency in Europe, asked airlines to apply caution on flights to the eastern Mediterranean region because of possible air strikes in Syria over the next 72 hours.

But prices slid after DOE confirmed the crude build...

“We are pricing the expectation of a strike on Syria,” said Olivier Jakob, managing director of consultants Petromatrix GmbH in Zug, Switzerland.

“Then we need to reassess once it has been done to see how much of an escalation that we have.”

As a reminder, crude spiked in April 2017 when Trump fired the Tomahawks at Syria, then reversed... and then ran higher once again...

Comments

rccalhoun strannick Wed, 04/11/2018 - 11:06 Permalink

hello inflation!  

the FANGS (including amazon distribution--whose fuel surcharges are subsidized by the USPS) should see sales and margin expansion as more types of commerce and recreation/socializing is done from the internet, while those archaic companies that still rely on fossil fuels (lol) will suffer margin pressures.

In reply to by strannick

1033eruth Wed, 04/11/2018 - 10:39 Permalink

The orders from above are to keep the price of crude above $60 a barrel, no matter what.  Doesn't matter how much crude we're floating in.  

Ink Pusher Wed, 04/11/2018 - 10:44 Permalink

"Big Surprise "  - NOT A FUCKIN' "SURPRISE" At All .

*Whomever was surprised by this and every other "surprise" build or draw-down that has been reported  must be drinking water from tailing ponds !

 

MuffDiver69 Wed, 04/11/2018 - 10:46 Permalink

The Permian Shale is very light and desirable to many overseas refineries. Ours are configured for a heavier crude and its simple to do a search on this. Hopefully some of the new refineries are being built to handle that and this export in a time of crisis could be used for internal consumption more readily....As is its a good balance. Our continuing to import at smaller levels does keep the price stable and it makes it harder for OPEC to bitch as we literaly just open the valves from the graph above of rig count and production.

Sapere aude MuffDiver69 Wed, 04/11/2018 - 11:41 Permalink

No the Eagle Ford is the very light oil, the permian is light sweet crude, and that is not what overseas refineries are geared up. Most need low grade crude. Both are heavy NGL producers the least valuable in the hydrocarbon string.

The API of Bakken was predominantly 40-45deg.

The API of Eagle Ford has far more ultra light with condensate at 50+deg.

The API of Permian has little of the ultra light 50+deg. and the majority is 35-45deg. So the Permian has less light oil than the Bakken pro rata.

Still none of the shale producers are making a profit, so carry on squandering the ever decreasing resource as it will soon be gone with legacy wells eating up all available drilling space and proving once again that the reserves for the Permian, like the Eagle Ford like the Marcellus have been vastly overstated.

In reply to by MuffDiver69

GreatUncle Wed, 04/11/2018 - 10:56 Permalink

Through war & strife create fear of potential oil shortages and up the price.

Of course the Saudi government has been burning through reserves as the oil price collapsed.

lunaticfringe Wed, 04/11/2018 - 11:03 Permalink

In other news, despite the fact that every product and every human being in the US relies heavily on oil and the price of oil seeps into every corner, government "core" CPI rose .1 or .2 according to whatever bullshit narrative they currently need to screw over the US consumer or SS recipient.

Consuelo Wed, 04/11/2018 - 11:13 Permalink

The Asymmetry of the Yemeni attacks on Saudi are interesting.   The asymmetrical aspect of course being that both China and Russia are operating in the shadows to nip at the heels of prince Salman whilst he aligns himself with U.S./Israeli policy.     The prize being that Salman eventually (and he will) bend to using the Yuan in oil trade.

earleflorida Wed, 04/11/2018 - 11:14 Permalink

here's the deal folks...

if ussa does attack Syria---... Iran will get pinn'd with the 'tail-on-the-donkey' from the chosen Zionist as an excuse to bomb away (for it is all the Iranians fault, after all [LOL]), and, in doing so will draw China into the fray as it escalates.

its all about the 'Golan Heights'!

the wildcard being turkey?

'Russia will not back down--- there are 'Red Lines' for Russia that just can't be crossed.

jmo

Ps. Destroying Syria's airfields won't happen, (self explanatory [think Egypt 1967 war]) and Assad & Putin are well aware of this critical fact!!!

katagorikal Wed, 04/11/2018 - 11:22 Permalink

Definitely 3 loud explosions over Riyadh about 17:50 local time.
These sounded close to the city center, rather than out at the airport. 

Obviously not yet sure if they were 'interceptions' or 
just Patriots just slamming into the ground as usual.

A salvo of medium-range ballistic missiles is 
unlikely to be more dangerous than the local traffic
(4-5 fatalities and 20 serious injuries per day).

At least one explosion was 'low and loud',
consistent with claims that target was MoD about 2km away.

Mr.Danglemeat Wed, 04/11/2018 - 13:24 Permalink

I mean, how weird would that be? You're mindlessly strolling down Main Street when, literally "out of the Blue" some giant flying thing explodes right over your head and blows all of the windows in the neighborhood out. WTF!!?!

I had that happen to me once and I've never quite felt completely at peace again...loud noises scare me.. body parts hanging in the branches...the sudden realization that the slippery stuff on the sidewalk is body fat....and the smell...don't forget the smells...war has a little something for everybody..