by Mish

Oil’s Stint Above $50 Ends

Bloomberg reports Oil’s Stint Above $50 Ends.

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I do not know where Bloomberg got that caption from. Crude is not at its lowest price since December 2003.

I show crude at $26.05 in January of 2016.

Hedge Funds Pare Positions as Stockpiles Soar

It doesn’t help that U.S. crude stockpiles remain above their five-year average by more than 70 million barrels at a time when refineries are starting to shut for maintenance. Meanwhile, the top American shale plays, led by the Permian and Eagle Ford basins in Texas, are set to produce a record amount of crude this month.
Hedge funds reduced their WTI net-long position — the difference between bets on a price increase and wagers on a drop — 1 percent to 249,323 futures and options in the week ended Oct. 3, U.S. Commodity Futures Trading Commission data show.
As for Brent, the net-long position on the global benchmark declined 0.9 percent to 504,263 contracts, after reaching an all-time high the previous week, according to data from ICE Futures Europe.
“Oil’s had a heck of a run for the month of September,” Thummel said. “The continued concerns in the market that keeps the shorts active: Is OPEC compliance waning? Will their compliance start to be less? Will they start to cheat more?”

Crude Monthly Chart

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CPI Energy

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Year-over-year the CPI energy index is up nearly 12%. Although it’s October, the latest CPI is for August.

End of Inflationary Jump?

I don’t know if this is the end of the move over $50 or not, but fundamentals are poor just as hedge funds plowed into crude futures.

A move back towards $40 seems likely.

If so, inflation pressures may be peaking to the consternation of the Fed.

Mike “Mish” Shedlock

Crude Dives to $30, a Whopping $20 Below Cost of Production

Crude futures opened down a massive 31% today. Prices have recovered a bit, but price is well below cost of production.

Junk Bond Yields Highest in Four Years, Goldman Discusses Oil in Teens

Under $20 Oil? Oil dipped below $30 again today. As usual dip buyers or shorts covering pushed the price positive for a while. This time, however, the bounce did not last even one day. Oil is flirting with $29 and Junk Energy-Bond Costs Soar.

The Art of a Failed Oil Deal

West Texas Intermediate crude fell below the $20 mark again today. The Oil pact has failed already.

Crude Dips Below $48.00 First Time Since November 29: CPI Where to From Here?

Crude Daily Chart Passthrough price pressures due to rising oil are rapidly abating. A trio of charts on a daily, weekly, and monthly basis provide a good picture.

$50 Trillion Sideline Cash Conundrum?

Blackrock estimates there is a whopping $50 trillion in cash “sitting on the sidelines”.

CPI Jumps Most Since February 2013 on Energy: Did Gasoline Prices Really Rise 7.8% in January?

The BLS reports the CPI Increased 0.6 Percent in January. That’s the largest increase since February of 2013. As with the PPI, much of the jump is oil related.

Drone Strikes Shut Down Half of Saudi Arabia Oil Production

The Shutdown amounts to a loss of some five million barrels a day, roughly 5% of the world’s daily production of crude.

Oil Price War and Liquidity Crisis Coming

Saudi Arabia kicked off an all-out oil war on Saturday, Some expect oil at $36 when the futures open at 5:00PM Central.

Fed Did Nothing, Said Little: VIX Back Below 10, Yield Curve Flattens a Bit, Silver Jumps

The Fed upgraded its assessment of the economy from moderate to solid but held off on further rate hikes. Baby steps will continue in December. The market prices in a 97.7% chance of a quarter point hike next month.