Weekly West Texas Intermediate Chart
WTI Monthly Chart
Stockcharts does not have intraday prices but it does have nice looking charts. The chart shown does not have today’s plunge.
There could be a bounce at any time, but technically speaking, a bounce from the $33-$40 level seems more likely.
What’s Going On?
- The US and Russia are pumping record amounts of oil.
- Trump granted a number of nations exemptions on his Iran sanctions
- OPEC infighting
- Fallout from the brutal killing of a Saudi dissident journalist
- Slowing global economy
Mike “Mish” Shedlock
Central banks will never allow oil to drop below $40,that’s their trigger to start buying,that why earl went from $28 to $78 in 3 years with demand even with collapsing demand!
These prices are amazing! And he was only a jouralist… a muslim one at that. He was a citizen, but only an immigrant like ted cruz. I mean, really, who cares if they cut him up and dissolved him… have you SEEN the price of gas?
It was fairly stupid to let the assassination of Archduke Franz Ferdinand trigger World War 1. It would be extra-special stupid to let the murder of a Moslem Brotherhood member trigger anything at all today.
#5, slowing global economy, is the unpreventable cause of what’s going on, and will continue to go on – or should we say “stop”?
How long until there’s massive and serious systemic defaults in the shale oil producers? Can you say “hyperdeflation”? Can the US banking system really survive this kind of hit, along with everything else that’s likely to implode from the higher rates?
I think there’s a pretty fair chance there will be regional breakdowns in civilization when this all comes unstuck… especially when trump is ejected and the trumplings thow a trumpletantrum. I didn’t buy guns last time, but I think I will this time.
Shale production is about as resilient as any business anywhere this side of drugs. Every well is basically its own business case.
Some can produce at surprisingly low prices, while others have much higher break evens. And costs are very flexible as well. When times are good, labor gets bid up fast. As do equipment. But because the skills and machinery required are very specialized, once oil prices come down, so do labor and lease costs. And because so many of them remember the “good times” ( of two months ago… 🙂 ), actors are willing to tough it out on a pittance, hoping (the very) good times will return again…. It’s going to take a remarkably long period of sustained low prices; before the last holdouts of people, equipment and processes built up when prices were high, finally throw in the cards.
Anyone got any advice on how to distinguish speculative pressures from supply/demand pressures?
Then there is the question about what volumes of oil are actually changing hands at these prices versus at contracted prices? There are some indications that the volume of oil actually traded on the European Brent market is quite small — and let’s not forget that the world’s favorite oil company BP once paid what was then the largest fine in history for manipulating the Brent market.
And these days, one has to wonder about the shadowy Chinese project to create a strategic oil reserve. Have the Chinese stopped buying extra oil for storage?
Seems there are more questions than answers.
Speculative pressures thoroughly outweigh supply/demand. The number one way to demonstrate that is to point out Elliott waves appear in ALL major commodities, precious metals, general market indices, and widely traded stocks. The next best argument is price does not track commodity demand or corporate profits. There is a lot of price change between monthly energy use and quarterly shareholder reports. Price to earnings ratios over the last 25 years have been much higher than that of the previous 100 years.
It’s amazing to watch the world’s most crucial industrial commodity trade like a “pink sheets” penny stock.
If you like your “Casino Capitalism”, you can keep your “Casino Capitalism”.
#6 – US Frackers desperately producing at maximum output to be able to make interest payments on their junk bonds – and taking a loss on every barrel. Not hard to predict how this ends.
Each well is different. Prime wells in prime locations can produce profitably at very low cost. If current prices stick, new developments will slow pretty dramatically, though. But they’ll be back on line in virtually no time, if prices once again pick up.
Just as is the case with the hobgoblin that “China” can drive US companies out of business, and then jack up prices at will, the idea that Saudi can drive the frackers out of business, is just economically illiterate nonsense.
Even more so now, than earlier. Even the smallest operator now have much clearer and more detailed view of the costs required to bring back online any mothballed well, site, field…. And as soon as they can produce profitably, they will do so. Get the money out before the regulators can sweep in and take it, as they have done in every other sector of the oil business, once it has become sufficiently predictable.
It’s a similar story with labor. Like all boom/bust endeavors, it’s a business than, when it rains, it pours. Dollars. Plenty for everyone. After the last few booms, there are now thousands upon thousands of guys with frac site experience working menial jobs all across America; just waiting for that phonecall offering them the opportunity to get back in the patch and make six figures virtually overnight. The Saudis would have an easier time eradicating mosquitos from Alaska, than getting rid of the frackers.
Precisely.
Remember when the Saudis tried to crush U.S. fracking by raising production in a down market in late 2015?. Prices got down to around $36/barrel. All they succeeded in doing was to push out the weak players and force consolidation, effectively hardening U.S. producers.
And yet gas prices in Northern Calif are holding steady, hardly declining! Most gas stations are holding stead on pricing, maybe giving a 10 or 15 cent decline over the past 6 weeks, when the decline probably should have been closer to $1/gal. Even my local Costco (since early Aug) has only dropped 30 cents (high of $3.85 premium gas to current $3.55). This is anti-trust and collusion in full view.
The refiners may have purchased the crude some time ago for delivery on date certain. They may be firms that own their own wells, know their production costs, and are not going to sell at a loss.
You can blame the Democrats running California who have demanded that California has to have different blend of gas than rest of the US.
This leads to less refineries making California approved gas and making it in smaller amounts so price creeps up and since Democrats have forbidden bringing “wrong” kinds of gas to California from other US states the refineries making California Democrat approved gas have a captive market so of course they take as much profit as they can.
California’s high gas prices could be solved by voting out the Democrats and bringing in Republicans and making California use same gas blend as most other US states.
Yes, I suspect there’s collusion, but it’s among California politicians.
The majority of voters in CA just agreed with slimy Sacramento politicians to screw themselves. They voted down Prop #6 which would have rolled back the most recent ridiculous fuel tax and registration increases. It was advertised as going for road improvements; it was really for unwanted high speed rail and to save government worker’s bloated pensions.
Do you really suppose that petroleum producers and retailers set the price of motor fuel? If that is the case, then basic laws of economics have been broken! No, it is always the consumer who sets the price of everything. If gasoline were too expensive, it would not be purchased. Don’t blame conspiracy for things that are better explained by ignorance and decadence. (If you had 10,000 gallons of gasoline, would you rather sell it for $3.85 a gallon or $2.55 a gallon? Why lower the price if customers are still buying you inventory at the present price?)
If I had 10,000 gallons of gas, I’d rather sell them for $100 a pint. Which I could comfortably do, absent competition. Competition is what limits the prices producers charge. If oil prices drop, so do refined products. If the latter does not happen, somewhere there is a government enforced monopoly. Guaranteed.