Crude Oil at $105 is signaling something

[neilgin1]

I don't know what its signaling, but it cant be anything good.

Take the Sep/Oct spread....Sep $1.45 over the Oct....I have not seen month to month, crude trade at such a premium in VERY long while.

Obviously their is tremendous buying of the physical NOW....that urgency?...what that indicates?....a big question mark.

the only guess I can throw out there is a conflict brewing.....Syria?....and Syria in an ever widening sense.

This is something to really be focused on. and it has EVERYTHING to do with PM's...PM's will definitely be impacted.

[68Camaro]

Believe it is concern/speculation about possible civil war in Egypt, and the effect on the canal.

[neilgin1]

Believe it is concern/speculation about possible civil war in Egypt, and the effect on the canal.

yep...roger that.....I haven't seen the front spreads trading with premiums like this in a dog's age...serious. month to month, like say Sep/Oct, we would call a "one piece" spread....or a Dec/Jun...would be a "six piece"....for a one piece to be trading $1.45 over?....there is some SERIOUS money be made or lost spreading crude right now.

I agree with you re; The Suez....but don't take your eye off Syria....it seems to me, that the Russians JUST MIGHT have a drawn a line in the sand on this one.

hope you're well my brother, neil

[reddirtcoins]

Believe it is concern/speculation about possible civil war in Egypt, and the effect on the canal.

+1

..... and I'll laugh every time I fill up at .88 cents a gallon...

[InfleXion]

The conundrum with oil is that the less refined Brent crude from the Middle East has traditionally been notably more expensive than the sweeter WTI crude out in Big T which seems backwards. Looking at prices today, not only are they on the rise, but that gap is closing. It used to be a $10-$20 difference and now it's a only a couple bucks. I would imagine that a conflict in MENA would cause Brent to spike more so than WTI but we are seeing the opposite. That tells me that speculation and price fixing may be taking a back seat to real demand for the good stuff. Peak oil could be rearing it's head, as it should be since new oil discoveries peaked in the 1960's, but I don't know for certain. There could be any number of explanations and I'm just thinking out loud

Either way, while it may cause pain at the pump, higher oil prices are bullish for metals where energy plays a vital role in cost of production.

[pennypicker]

Peak oil could be rearing it's head, as it should be since new oil discoveries peaked in the 1960's, but I don't know for certain.

I've always felt that it would either be staggering oil prices or crippling health care costs that the inevitably bring the American economy to it's knees. I'm not sure which will be the culprit but I'm guessing oil because, unlike healthcare, oil prices to a large extent will be out of America's control.

[Jonflyfish]

The conundrum with oil is that the less refined Brent crude from the Middle East has traditionally been notably more expensive than the sweeter WTI crude out in Big T which seems backwards. Looking at prices today, not only are they on the rise, but that gap is closing. It used to be a $10-$20 difference and now it's a only a couple bucks. I would imagine that a conflict in MENA would cause Brent to spike more so than WTI but we are seeing the opposite. That tells me that speculation and price fixing may be taking a back seat to real demand for the good stuff. Peak oil could be rearing it's head, as it should be since new oil discoveries peaked in the 1960's, but I don't know for certain. There could be any number of explanations and I'm just thinking out loud

Either way, while it may cause pain at the pump, higher oil prices are bullish for metals where energy plays a vital role in cost of production.

Traditionally, WTI has traded at a premium to Brent. It has been only the last few years where this has not been the case. Considering WTI is landlocked and has had a glut of supply in Cushing due to advances from dramatic Bakken supply increases, it doesn't participate in the global market. Additionally, there has been a limited reach for refining capacity in that region. It has only been since the reversal of the Seaway pipeline, pulling supply from Cushing and sending it down to the gulf, that we've seen the highly anticipated spread between Brent and WTI collapse.

Cheers!

[neilgin1]

I cant recall ever seeing a 20 mln barrel drawdown in crude stocks in the last two weeks. Jon's right in everything he wrote, I don't remember the last time we built ONE refinery. correct me if i'm wrong, but the majors regard cracking mogas as a pain in the butt loss leader.

with the EPA, and every tree hugger screaming and squalling, who wants to build a refinery?....to me, that's just BAD energy policy.....but I just found this at debka....seems the Brotherhood, tried to assassinate a senior tier Egyptian general near El Arish....the spooky thing about the whole thing was, they KNEW his travel plans, which means the Egyptian Army is shaky, riddled with salafi insurgents, who would close the Suez in a instant....here's the article:

"Israel Thursday July 11 approved a major Egyptian offensive for curbing the mounting aggression in Sinai of armed Salafis gangs, Muslim Brotherhood raiders and Hamas terrorists. A day earlier, Egypt’s Second Army commander, Maj.-Gen. Ahmad Wasfi, who is assigned to lead the offensive, escaped unhurt from an attempt on his life. Some of his bodyguards and soldiers were killed.

Maj.-Gen. Wasfi arrived in Sinai just four days ago to set up headquarters in the northern town of El Arish. He was targeted for the first attempt by radical Islamists to murder a high-ranking Egyptian general. As a close associate of Defense Minister Gen. Fattah El-Sisi, Wasfi took part in the military coup which ousted President Mohamed Morsi in Cairo on July 3.

Around 30 Islamist gunmen laid in ambush for his convoy Wednesday, debkafile's sources report. As the cars drove past Sheikh Zuwayed, southwest of El Arish, they came under a hail of RPG anti-tank rockets and explosive devices. A minivan then drove the length of the convoy shooting heavy machine guns and armor-piercing bullets, trapping the Egyptian troops and officers in the blazing vehicles and gunning down those who tried to escape.

A fierce shootout ensued in which a number of attackers suffered losses, Egyptian military sources say. The minivan’s driver was captured and is under interrogation.

Tuesday, at the same location, two buses carrying Colombian peacemakers serving with the multinational force-MFO at the Sheikh Zuwayed base were also waylaid and shot up.

Of deep concern to the Egyptian and Israeli high commands is the Salafist assailants’ prior knowledge of the timing and route taken by Gen. Wasfi’s convoy in Sinai, because it means that Islamist terrorists have penetrated Egypt’s military apparatus in Sinai and gained an inside track on its activities."

http://debka.com/article/23109/Israeli- ... an-general

all the best mates.

afternote....there's a LOT of info regarding Egypt at debka, an article outlining how the Sa-udi's and Emirate Kingdoms put Christmas stockings out for the Egyptian military, in counter opposition to American aims......rather than post every article...just go to the website and read. debka is not "gospel", but......
http://debka.com/

[alpacafarmer]

Believe it is concern/speculation about possible civil war in Egypt, and the effect on the canal.

+1

..... and I'll laugh every time I fill up at .88 cents a gallon...

I got you beat, I fill up for 8 cents a gallon.

[InfleXion]

Traditionally, WTI has traded at a premium to Brent. It has been only the last few years where this has not been the case. Considering WTI is landlocked and has had a glut of supply in Cushing due to advances from dramatic Bakken supply increases, it doesn't participate in the global market. Additionally, there has been a limited reach for refining capacity in that region. It has only been since the reversal of the Seaway pipeline, pulling supply from Cushing and sending it down to the gulf, that we've seen the highly anticipated spread between Brent and WTI collapse.

Cheers!

Good to know, thank you.

How do you see this being impacted by the Keystone Pipeline?

[rsk1963]

Believe it is concern/speculation about possible civil war in Egypt, and the effect on the canal.

+1

..... and I'll laugh every time I fill up at .88 cents a gallon...

I got you beat, I fill up for 8 cents a gallon.

Veggie oil I presume?

[alpacafarmer]

CNG from a well on my farm. The 8 cents is the electric it takes to run the compressor.

[neilgin1]

I want you guys to watch something...MAYBE kind of neat with me....and Jon Fly Fish, please feel free to join...this isn't ANY kind of "bait".....I was taken aback by the 20 mln barrel drawdown in crude oil stocks the last two weeks....NEVER saw anything like that before....who knows if its crude parked out on tankers...but I do KNOW this...right now, on an UP day Oct crude is trading 104.88....and Nov crude is trading at 103.42....Oct at a $1.46 premium....this is the markets way of telling you, "we want your crude NOW, we will pay you a premium to get it now".....but at this second, Oct is up .39 cents and Nov is up .43 cents, which means the spreaders are SELLING the spread, which means they are selling Oct Crude 1.46 over buying November Crude.

just watch this with me, now. this is called a one piece spread....Oct/Nov.....Jun/Dec is a six piece.......don't DO this.....crude is a monster market, but if I was still trading, I would be selling Oct Crude 1.46 over Nov, and looking to profit at Oct Crude 50 to 75 cents over....the stop would be wherever Jon says the last high in the Oct/Nov spread since I KNOW, he must have spread chart capabilities in the Crude........just a neat kind of way to follow along...the danger in this, is if the IJ's shut down the Suez,...or Israel attacks Iran.......yeh, its risky....but lets watch.

Jon, I AINT trying to bait you...do you think its a dunceski move?

[InfleXion]

Oil in backwardation, gold in increasing backwardation... the paper markets may be on borrowed time as they are obviously not allowing accurate price discovery. The underwater beachball, which I will refer to going forward as Wilson, is growing increasingly restless. You can fight the laws of nature, but nature will always win. Standing on one foot and defying gravity is easy, but try doing it for 24 hours straight.

[68Camaro]

Yeah, good analogy - that's the layman's definition of an inherently unstable system under external control. A low level of instabilty can be maintained for a long period of time, for a certain effort. A modest level of instabiltiy can be maintained but for a limited/shorter time at a greater effort. A high level of instability requires extraordinary effort to control and can only be maintained for a very limited time until something causes loss of control.

[neilgin1]

I want you guys to watch something...MAYBE kind of neat with me....and Jon Fly Fish, please feel free to join...this isn't ANY kind of "bait".....I was taken aback by the 20 mln barrel drawdown in crude oil stocks the last two weeks....NEVER saw anything like that before....who knows if its crude parked out on tankers...but I do KNOW this...right now, on an UP day Oct crude is trading 104.88....and Nov crude is trading at 103.42....Oct at a $1.46 premium....this is the markets way of telling you, "we want your crude NOW, we will pay you a premium to get it now".....but at this second, Oct is up .39 cents and Nov is up .43 cents, which means the spreaders are SELLING the spread, which means they are selling Oct Crude 1.46 over buying November Crude.

just watch this with me, now. this is called a one piece spread....Oct/Nov.....Jun/Dec is a six piece.......don't DO this.....crude is a monster market, but if I was still trading, I would be selling Oct Crude 1.46 over Nov, and looking to profit at Oct Crude 50 to 75 cents over....the stop would be wherever Jon says the last high in the Oct/Nov spread since I KNOW, he must have spread chart capabilities in the Crude........just a neat kind of way to follow along...the danger in this, is if the IJ's shut down the Suez,...or Israel attacks Iran.......yeh, its risky....but lets watch.

Jon, I AINT trying to bait you...do you think its a dunceski move?

18 July and now Oct Crude is trading $1.68 over Nov crude, so I would be out 22 cents on just a one piece spread, so.......not EXACTLY a dunceski move, but a loser trade for sure...something is up, but I don't know what it is........i'm praying for peace, but.......

[Computer Jones]

When the basic concept of supply (more here) and demand (slightly less here) don't produce the the results Econ 101 say should happen, all bets are are off.

What's happening ain't right!!!
I'm afraid the Fox is in charge of the Hen House.

I just I hope I have enough resources to make it thru until a proper free market takes hold allowing the true market to kick in and we realize manipulation free price discovery.

[johnbrickner]

<snipped>

What's happening ain't right!!!
I'm afraid the Fox is in charge of the Hen House.

I just I hope I have enough resources to make it thru until a proper free market takes hold allowing the true market to kick in and we realize manipulation free price discovery.

(Emphasis mine)

"A proper free market". Interesting concept. I'm afraid it may only exist in books of libertarian fiction/economics.

Let me put forward a proper free market vs (what I am seeing now as) resource competition by way of fascism from civilization's millennia of practiced inequality, elitism, and authoritarianism. The free market you are talking about we are seeing less and less of. Kind of like our Natural, God given, (each individual a) Sovereign Rights.

Fascism as a marriage between the corporate hierarchy and government using the military to obtain their desires, I'm seeing it grow more and more as time passes. Kind of like a bacteria in a Petri dish full of agar or humanity on the planet earth. I believe that sooner or later both will out grow their ability to continue at current rates.

Comp. Jones, may I suggest you not hope regarding your resources as I don't see a proper free market having a chance of being born until the one we have stops working. $105/barrel? We haven't seen nothing yet! I'm not saying it's going ballistic but we will see ups and then downs as demand and production decrease from the last significant up tick. Once the price (value) slides a bit down, demand and production will go back up as will the price (value). It's the current cycle. However, the trend has been and will continue to be up for time to come. Unless the miracle of a technological breakthrough happens. I wouldn't bet the farm on it.

We are living the dawning days of peak world oil production. What we (the average American) have lived and recently experienced financially and personal standard of living decline will continue and be experienced by our children (already happening) and their children. We have a lot of long-term thinking and changes to make if we want to make our world not a shat-hole place for them. Them? Yea, forget us. Our selfishness and extravagance with our finite resources got us where we are today.

We (the human species) are definitely in denial.

It's a Jungle out there,

[dannan14]

CNG from a well on my farm. The 8 cents is the electric it takes to run the compressor.

but what is the opportunity cost of not selling it? That is a factor in the actual cost you're paying.

[neilgin1]

[quote="johnbrickner
We (the human species) are definitely in denial.

It's a Jungle out there,[/quote]

yep, sure nuff true.......same thing what Computer Jones wrote.

its all rather disheartening, but as Winston said, "Lets KBO!".....(Keep Buggering On)

think of him what you may, but President Carter was quoted on Der Spiegel the other day, that we no longer have a functioning democracy, not only him, but Justice Souter and another Justice, I cannot recall....I'll find the articles.

the sad thing is MOST of our fellow country men and women are staying blissfully ignorant. on a sleeping people, you can pull anything, and I think that's what we're seeing. They might not wake up until their bellies are emptied, and hungry people do stupid things. You can compare the American Revolution of the 1770's and the French Revolution of the 1790's, to see the difference. ....and the difference is stark and striking. The 'guillotine' is NOT justice.

but, its 0545 and I want to grab this laundry, head into town and git 'er done!!....my boy and his elven cousin are headed out here to Bag End next week.....she likes this place, coz, quote, she gets to "drive tractors and shoot guns"....lol

[IdahoCopper]

I think we are still not close to peak oil. For the last 40 years it has been US policy to curtail domestic oil extraction and import oil paid for with worthless dollars. Recently, that has changed as the end of the dollar empire looms close, domestic production has greatly increased.

"True price discovery" has always been a goal not a reality. There are always too many protected manipulators bending the markets to their own profits.

[johnbrickner]

According to the Post, Reason, NPR, BP, Forbes, Politico, freerequblic.com and a host of others, the reason behind our current increased production of domestic oil is . . . fracking shale. Currently at about the 1995 - 1997 rate, we are still significantly down from our peak in 1970 - '71.

http://en.wikipedia.org/wiki/File:US_Cr ... _Curve.png