It is Tuesday which only means that whatever oil trading takes place today will be easily overwhelmed by whatever interpretation about inventory levels released tomorrow dominates. However, the last week has been interesting in the respect of a shift in the behavior of the futures curve for WTI. Up until then, almost all volatility was concentrated in the front months, [...]
Lost amid last week’s stock euphoria was the collapse in both the ISM’s Chicago Business Barometer (which I covered here) and construction spending. While sentiment surveys are hard to judge, it wasn’t a huge intuitive leap to suggest that both data points may be related to the energy sector. While that will remain unanswered for Chicago, the construction figures are [...]
The price of WTI index crude has fallen back below $50 again as inventories rise far more than expected. That has been the theme of late despite the recent retracement in crude. However, looking at WTI via the futures curve, trading habits are increasingly locking in the outer years (especially past 2016) around $65 - $70 per barrel. That is [...]
There wasn’t anything out of China that would explain, even partially, the big hit to copper today. Every commentator tasked with offering an opinion has linked copper to China and only China, yet the only economic news of note today was retail sales in the US. The World Bank did its part by cutting growth expectations largely on Asia and [...]
Turning attention to that last bastion of monetary surety, equities, the oil slump might be the greatest challenge yet to the non-stop stock escalator. Earnings especially for the S&P 500 are being revised lower as energy companies weigh on results. And while there may be a tendency to dismiss energy as its own problem, there is much deeper unwinding underneath [...]
The primacy of the monetary pyramid in 2015 is not really about money as it is all ideology. If you believe that monetary policy provides “stimulus” then you immediately remove all thoughts of any economic decline during times when monetarism is most active. Since “it works” then all else must fall into place. Contrary indications are thus given extraordinary lengths [...]
As my colleague Joe Calhoun continually reminds us, everything that happens has happened before. The ongoing “struggle” to define what is driving crude oil prices lower is perhaps another instance of a past “cycle” being reborn. With oil prices now heading much closer to the $40’s than the $60’s, consistent commentary is increasingly swept aside. The move in crude these [...]
For most commentary on the recent and sharp decline in oil prices, there is a serious ceteris paribus to it especially from those that don’t recognize that there are much deeper financial forces. The following is excerpted as an example of the closed system approach, as if there is a world of difference that can allow “decoupling.” What matters is [...]
Though they still refer to “supply” in almost every written piece about the recent oil price action, it is now more of a background note. Instead, the narrative is being forced by reality to adjust. Finally recognizing the role of demand in oil prices, the excuse morphs into “it’s only temporary.” Global oil markets are experiencing “temporary” instability caused mainly [...]
Given the attention to oil prices lately, it sure seems as if the media is determined to make a case for supply causation rather than anything of demand that might harm the established recovery narrative. In almost every major financial outlet, and more than a few “mainstream” “news” centers, there is a uniform tale of how lower oil prices are [...]
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