Brent/WTI Spread Sets Record @ $20
$this->bbcode_second_pass_quote('', '[')url=http://www.ft.com/cms/s/0/fca9fa12-95ca-11e0-8f82-00144feab49a.html#ixzz1PAe1hISI]Financial Times[/url] The spread between Brent crude and West Texas Intermediate hit $20 a barrel for the first time on Monday, highlighting the relative weakness in the US-based contract as stocks at its Cushing hub suppress prices. ... Judging by recent trends in futures betting, investors are getting less bullish on the WTI price as US growth falters. Net long speculative positions on Nymex are at their lowest since the start of February, and the chart below shows what looks like the formation of a bearish triangle. One thing that could help WTI maintain its longer-term bullish trend would be a rally in general risk appetite, as portrayed by a bounce for the S&P 500.
PeakOil is You
THE Brent Crude Thread (merged)
Re: THE Brent Crude Thread (merged)
by Daniel_Plainview » Mon 13 Jun 2011, 11:39:27
-
Daniel_Plainview - Prognosticator
- Posts: 4220
- Joined: Tue 06 May 2008, 03:00:00
- Location: 7035 Hollis ... Near the Observatory ... Just down the way, tucked back in the small woods
Re: THE Brent Crude Thread (merged)
by rockdoc123 » Mon 13 Jun 2011, 11:58:14
At some point this situation can't be sustainable. You would think that there has to be a price at which producers will think of shipping to other markets.
Something I noticed that is interesting is the disconnect between oil and gas company share price and the price of both WTI and Brent but moreso Brent. Since January the two have been strongly diverging with oil company share price levelling off and now falling rapidly whereas oil prices rose continuously and have only just fallen somewhat. A few of the companies I follow have the same share price now as when oil was at $80/bbl. Could be that the investment community has decided to sit on the sidelines for the next few months and hope to see some positive signal in the economic data.
Something I noticed that is interesting is the disconnect between oil and gas company share price and the price of both WTI and Brent but moreso Brent. Since January the two have been strongly diverging with oil company share price levelling off and now falling rapidly whereas oil prices rose continuously and have only just fallen somewhat. A few of the companies I follow have the same share price now as when oil was at $80/bbl. Could be that the investment community has decided to sit on the sidelines for the next few months and hope to see some positive signal in the economic data.
-
rockdoc123 - Expert
- Posts: 7685
- Joined: Mon 16 May 2005, 03:00:00
Re: THE Brent Crude Thread (merged)
by rockdoc123 » Mon 13 Jun 2011, 14:21:24
$this->bbcode_second_pass_quote('', 'M')aybe that's because no one makes money off difficult oil?
Uh, not according to annual reports and the market reports I see. Oil company margins seem to be very similar to what they have been for the past 10 years. They certainly haven't changed in the past 6 months when the divergence started. It's a market sentiment thing, not underlying fundamentals.
-
rockdoc123 - Expert
- Posts: 7685
- Joined: Mon 16 May 2005, 03:00:00
Re: THE Brent Crude Thread (merged)
by Outcast_Searcher » Mon 13 Jun 2011, 22:12:11
$this->bbcode_second_pass_quote('rockdoc123', 'A')t some point this situation can't be sustainable. You would think that there has to be a price at which producers will think of shipping to other markets.
Something I noticed that is interesting is the disconnect between oil and gas company share price and the price of both WTI and Brent but moreso Brent. Since January the two have been strongly diverging with oil company share price levelling off and now falling rapidly whereas oil prices rose continuously and have only just fallen somewhat. A few of the companies I follow have the same share price now as when oil was at $80/bbl. Could be that the investment community has decided to sit on the sidelines for the next few months and hope to see some positive signal in the economic data.
Something I noticed that is interesting is the disconnect between oil and gas company share price and the price of both WTI and Brent but moreso Brent. Since January the two have been strongly diverging with oil company share price levelling off and now falling rapidly whereas oil prices rose continuously and have only just fallen somewhat. A few of the companies I follow have the same share price now as when oil was at $80/bbl. Could be that the investment community has decided to sit on the sidelines for the next few months and hope to see some positive signal in the economic data.
Rock, maybe I'm missing something, but to me, generally, gasoline and oil share prices seem to have correlated better with Brent than with WTI. This makes me think that until Cushing is no longer landlocked (and pipeline locked to a port) that the price of WTI is essentially irrelevant to the GLOBAL oil markets, overall.
Recently someone mentioned how weak the US economy seems to be acting and the likely negative impact on WTI. I agree. I also wonder if the SHORT TERM perception that the dollar may be relatively strong, given the fiasco in Euro-land might also be depressing WTI (along with other commodities prices in US dollars).
What is fascinating to me is:
1). How far some type of divergence like this can run, after it came from basically nowhere. (In Feb, the pundits said it COULDN'T pass $7, then whoops, $12, then whoops, then $15, and MANY said it COULDN'T pass $20. Wrong, wrong, wrong, and (I sense a pattern here) -- wrong!
2). How hard and DANGEROUS it is to try to fade this type of "it MUST return to near parity" trade. Consider that with WTI in contango and often in steep contango, how expensive it was to try to be long WTI and short Brent month by month starting in Feb, when the pundits like idiot Gary Kaminsky on CNBC were raving about how great that trade was. (Gary Kaminsky is a clown without the orange nose and the silly shoes -- who CLAIMS to far outperform passive indexes, though OF COURSE -- he doesn't publish fully audited long term results to prove that...).
(So -- super -- lose monthly on carrying costs AND now many dollars down on the spread to boot. Brilliant. No wonder that "brilliant trader" wears a suit to work and spews idiocy at the camera daily instead of trading for a living).
(Sorry for the rant -- to me such self-serving pundits are just as corrupt as bankers who thrive on fraud and collect large bonuses to boot - all legally, apparently).
(And yes, I see the irony in my personal punditry here - but I don't make a cent off of it, I admit it when I don't know stuff or am guessing, and therefore, IMO, I am exempt from wearing clown shoes and deserving jail time).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
-
Outcast_Searcher - COB
- Posts: 10142
- Joined: Sat 27 Jun 2009, 21:26:42
- Location: Central KY
Re: THE Brent Crude Thread (merged)
by Daniel_Plainview » Tue 14 Jun 2011, 07:44:54
$this->bbcode_second_pass_quote('Outcast_Searcher', 'R')ecently someone mentioned how weak the US economy seems to be acting and the likely negative impact on WTI. I agree.
Yes, the US economy is weak, while Asian economies are strong, exacerbating the spread between WTI and Brent:
Reuters: "China's implied oil demand in May rose above the 9 million barrel-per-day mark for the seventh month in a row, suggesting brisk consumption persisted ... Any oil price strength has been concentrated on the Brent contract, which has notched up record premiums to its U.S. counterpart. Early on Tuesday, Brent's premium to U.S. crude reached a record $22.22 a barrel, reflecting oversupply in the U.S. market and relatively tight supplies in Europe, analysts said."
-
Daniel_Plainview - Prognosticator
- Posts: 4220
- Joined: Tue 06 May 2008, 03:00:00
- Location: 7035 Hollis ... Near the Observatory ... Just down the way, tucked back in the small woods
