I see the EE beat back crude by almost $1.00 after a negative oil inventory report came out. Check out the crude charts around 11:00 a.m.
How obvious is it, when crude spikes it is almost immediately beat back to keep the price from going to where it wants to?
The Obama administration wanted to go after and punish the speculators and had the margins raised etc. to accomplish the crude price control. But then they allow the EE to manipulate the commodities everyday in order to keep the public MOPE going that inflation is low and they point to falling oil prices as a yardstick, even though they won't use gasoline prices as a CPI index factor. How convenient.
Anyone notice how the stock market started to recover as soon as oil trading finished for the day? As if right on cue at 2:30 the markets started turning around. This was a another typical EE orchestrated short paper market overreaction to the IEA announcement today. Tomorrow could see a wicked reversal the other way.
Here we are one day later after I wrote the above post and look what happened with the IEA and their intervention and the price of crude.
60 million barrels??? Big deal.
That's about 3 days worth of U.S. consumption if it were to be used by the U.S. only. That 60 million barrels won't last long in the shared marketplace and should not have made that much of a market price impact overall given the relatively small size of the IEA crude bailout. This was all about keeping the futures and options market at bay before the real shortage or tight supply drives oil up over $100 for good.
I would be pissed off also if I were OPEC or a Saudi. 60 million barrels is short sighted and a panic induced knee jerk reaction by struggling world economies who are trying to manufacture and export their way out of a dire debt situation.
I have news for them...It won't matter how many exportable widgets you sell to whomever to close your trade deficits because your enormous debt is swallowing the entire budget up with every passing day of political gridlock and fear. They can't build enough widget factories or hire enough widget workers fast enough to export our way out of our budget imbalances. Everyone else makes almost the same widget and is trying to sell to the same markets. The notion that global trade and creating some type of favorable trade imbalance somehow is going to export our way to fiscal solvency is like a fairytale. Create jobs and people will spend and they will tax the new workers and things will be all better, right? I don't think so this time around.
I think they have no real clue or solution what to do and are scared shitless as they are about to lose control of it all.
With rising Chinese, Europe, U.S. and overall global demand, oil prices can't help but stay up based on supply and demand alone and production tightness. This was a political move and a market overreaction to that 60 million barrel pledge. We will see this $4 drop made up rather quickly.
An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246
I'm glad to see that Mike Krieger came out with a article later today on ZH that confirms a lot of what I said earlier about the IEA crude oil decision and the irrational panic that seemed to drive it. Make no mistake about it, someone is going to make a lot of money off of that previously unavailable oil when it it is sold and contracts and fee's of all types are geberated in it's transportation, delivery, storage and final destination and the foreign exchange during transactions etc. Plus lots of man hours and cost to the Governments actually in just moving that 60 million barrels in an effort to bring oil down and under control a bit longer. Where is the savings or benefit actually in such a small amount except for the market commotion in the futures and options and the entire commodities complex.
I believe that commodity price control was the main goal along with just chopping crude off at the knee's temporarily. The price of crude price gets away from them and any QE or bailouts become meaningless.
I see desperation and a panic mode in todays move. It sure did keep the MSM busy not talking about the lousy unemployment numbers that came out. How convenient.
It was all just one big head fake to shake out the longs. "They" are now saying that the IEA release of oil is going to be bullish for crude, because it will limit the buffer if crap really hits the fan and it will make the world more dependent on OPEC...and after this little shenanigan OPEC is probably pissed and will be hellbent on screwing the world over.
I'm just guessing here, but I think the IEA might sell 60 m bbls every month that the price is above $90, until Libya is back online.
All these gov'ts are all in on monetary and fiscal easing, so why stop there? It's all or nothing, IMHO.
Imagine if oil is trading in the 80s next month and the IEA does it again? Wow.
I'm not saying they will, but it's a possibility, and that's what they want, for spec longs to see that there is a possibility to lose, and lose big.
Just shorting the USD and being long any commodity isn't going to be a surefire way to make money anymore.
Anyway, I have a very small short oil position (long 1000 HOD at 7.42) which I plan to build on once the austerity vote in Greece passes. I expect oil will rebound, but should meet lots of resistance at 92.50 and 93.
If we suddenly start to see strong recovery numbers from the USA, that will change the game of course, but as long as numbers are weak I don't think we see $100 again.
Desperation could make them consider such a thing as humahuaca has suggested.
I agree that anything is possible at this point in the panic phase of "The Grand Ponzi".
If they did do such a thing, I believe OPEC would retaliate early on into the situation. I personally think the whole MENA situation is going to come to a head and oil prices will go way up due to that and global demand in of itself.
Iran is hugely dependent on the little oil production and revenue they squeeze out of their aged oil industry system and cheap oil would hit them pretty hard. If they decide to start up a real confrontation then oil goes crazy and the whole oil QE would have no effect any longer.
Just like the monetary QE was being drowned out and made ineffective by more debt and higher oil prices, so to will any oil QE due to a weakening USD and Euro relative to other world currencies. This oil market price control attempt by the U.S. and Europe will be short lived in the medium-long run.
Control of Libya for oil/petro-dollars is what they want ultimately.
Huma, I have HOD as well at the exact same price. I am a little jittery though with all this talk about the Saudi-less OPEC retaliating the IEA's decision by cutting production... though it seems hard to believe they would cut their production in such hard times considering they're so dependent on oil revenues for their economy.
Are you planning to hold HOD for a short while until Oil drops and consolidates to the 80s or in it for a quick profit? What do you see happening over the upcoming week, do you think we are stuck in the 90-93 range for a while?
That's too funny we both are in at the same price. I would rather have shorted oil when it was $100, haha, but I really don't feel too bad about it here.
As I said, I do think oil will bounce to $93, so depending how things go tomorrow, I might bail out of HOD in the hopes of getting in at a better price. I think something like $89 to $93 is the range for now, and if we get to $85 I will want to be long rather than short for sure. That will take some time though.
I just took a small position as it keeps me paying attention. I'm quite sure in a week HOD will be higher, but after thinking on it for the weekend, I think oil will recover Mon or Tues and that will be the time to get into HOD. Good luck.
I absolutely don't believe that any oil producer in OPEC or out will cut production now, and the ones who say they will are lying through their teeth and just playing politics.
I sold my HOD for a small profit, just think I will be able to buy it at a better level.
I still expect the greek austerity plan to pass, and that will be the time to short stocks and oil.
I think your right Huma...Any OPEC production cut would be a threat only and for MSM consumption and to disrupt the markets back up.
Something will happen soon enough that oil will rise due to risk -on in the region.
Same here Huma, sold HOD at 7.62, nice call there. Same game plan as you, pass the plan then short the S&P, oil or silver.
HOD is the only trade I have done in 3 days that looks good, uggghh.
Things are playing out as I thought though, both with oil and stocks. I didn't want to short stocks here, I'll wait for the rally once they have given the greek can one last big kick down the road.
TBT is surprising me...guess the auction today was not so good. Still think it can be bought lower at some point.
Very hard to trade with all this greece BS going on, looking forward to getting past this for a while.
but maybe a day early, heheh.
Very tempted to buy HOD here around 7.oo 7.10 ish, also tempted by SDS at 21.40.
Now, is being patient going to pay off and we'll get even better levels tomorrow after the vote passes?
Or is the yes vote already baked in and this is as good as it gets?
I think I will take the easy route and do nothing, as should still be a chance to get close to these prices tomorrow at some point.
Huma I'm leaning towards doing nothing, at least until the end of tomorrow's trading at the earliest. Oil looking to push 94, 95 on confirmation of the Greece vote you think? I'm sure the 1st vote will pass, but not sure about the 2nd. Have you gleaned any info on the possiblity of them not passing the 2nd vote regarding Greece selling pretty much all their assets? I've read somewhere that there's a good possibility they won't pass it, or if they do, all hells going to break loose in the public which may affect the markets?
Anyway I feel like I missed the boat once again on this little up turn in commodities, especially the miners they seem to be making higher lows rather than lower lows even though spot silver has tumbled, and higher highs when spot silver has not gone up that much. Not sure what I'm going to do, I've been very hesitant to pull the trigger lately even though I could kind of see what's coming and still decided not to act accordingly. Starting to get frustrated not being gutsy enough to take advantage of this whipsaw action.
For a short play on the S&P I have bought HVU.TO instead of SDS for larger gains, what do you think of that?
Rumors are already flying that OPEC will cut production if the IEA starts releasing massive amounts of oil. The other things to remember is that their reserves are limited, and hurricane season is upon us. One good storm in the Gulf (or just the threat of the Gulf getting whacked) will more than likely send the price back up. I'm thinking the overall trend in oil will be pretty clear by the 2nd week of July.
I thought $95 might be a little resistance for oil on the way up, I guess not. Oh well, I can afford a small loss on this one after the tidy profit on made on the CAD I bought.
I just sold all my CAD, at a much better level than I thought I would get. I am now 99% in cash and will try to be patient and stay out of this until there is a better level to short the S&P.
I'm probably dead wrong on shorting oil here, but I just thought maybe we'd get a little drop back to $93 at some point today or tomorrow?
If it doesn't look like it, I'll bail out and wait for a better level, but if it goes to $98 I probably won't want to short it. Better to wait for $115 or so.
Just hope I have the patience...
I am very wary of the VIX...it isn't all that easy to figure out, and I am not confident it moves the way I expect it to, so I avoid it.
I do think it SHOULD be a good thing to be long, but I don't trust it.
SDS is much more liquid, and has lots of options with good liquidity too.
Maybe look at HSD I thin k it isd, the betapro version of SDS.
which is still not great, lol.
re: not being gutsy right now, I have been scared out of a LOT of good trades recently, and it is annoying and frustrating as hell, but I really do think we are living in extraordinary times, and the financial world could literally collapse at any moment, so it makes things extremely difficult, you can really only go one way (short) and that is fighting an extremely strong trend.
So I think discretion is the better part of valor these days. Better safe than sorry, because sorry could really have extreme results.
The volatility is great for us addicted day traders, so I can't resist playing, but I am constantly reducing the size of my trades. Where I used to buy 3000 shares of SSO or 6000 of SDS, I now buy 1000 or 2000, and often in pieces. And I think I will cut that down further still, as we will see some big swings over the next month.
So don't feel bad being cautious right now.
One last thought, there will be a debt ceiling agreement one day this month, and stocks will soar that day, so another reason to be cautious shorting.