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Saturday, October 24, 2009

The New Whirled Disorder

In the chaos of a kill, while the startled stampede, scavengers lurk in the dark periphery seeking to capitalize on the carnage.

Oil holds above $81 as global economy recovers


Oct 23, 8:41 AM (ET)

By PABLO GORONDI


Oil prices held above $81 a barrel Friday, just below a one-year high, as signs the global economic recovery is gathering pace fueled investor optimism.

By early afternoon in Europe, benchmark crude for December delivery was up 8 cents to $81.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 18 cents to settle at $81.19 on Thursday.

Investors have taken heart from evidence that recovery from the global recession is gathering pace. China said Thursday that its economy grew 8.9 percent in the third quarter, building on recent improvements in industrial production, retail sales and commodity imports.

"So far the path of recovery has surprised to the upside," Barclays Capital said in a report. "The groundwork for a sustainable move into higher price ranges has been laid."

Crude traders are also eyeing gains on global stock markets, which tend to reflect overall investor sentiment. The Dow Jones industrial average jumped 1.3 percent on Thursday and most Asian and European indexes rose Friday.

Prices soared to $82 a barrel earlier this week, the highest since October 2008, from $32 in December.

Many analysts have been warning for the past weeks that the current rally has been driven not by fundamental factors like supply and demand but by the position of the dollar against other currencies and trading related to speculative positions.

As the dollar falls, commodities like oil and gold - which are priced in dollars - become cheaper.

Olivier Jakob of Petromatrix in Switzerland said that higher oil prices could motivate some producers to increase output, adding supply to an already glutted market.

"It is difficult to call the top in a market that is under the influence of the dollar ... but the higher the prices go now, the higher the risk of more supply coming on top of still large stock layers," Jakob said.

On Friday, the euro was up to $1.5041 from $1.5026 late Thursday in New York, although the dollar was slightly stronger against the British pound and the Japanese yen.

The euro broke above the psychologically important level of $1.50 on Wednesday for the first time in more than a year.

In other Nymex trading, heating oil was down 0.41 cent to $2.0905 a gallon. Gasoline for November delivery lost 0.09 cent to $2.0433 a gallon, while natural gas for November delivery jumped 4.2 cents to $4.993 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 16 cents to $79.67 on the ICE Futures exchange.


One year after the whirl's economic collapse and a 77% tumble in oil prices, we stumble in the dark.

Despite the loss of an estimated $6 trillion in wealth, market hyenas and jackals prey on what remains of the whirl's liquid assets. Compounding the misery, other night creatures of humanity have come from the far corners of darkness. Sensing opportunity, the bitter branch of mankind, (the socialists, the anarchists, the anti-capitalists) has renewed it's eternal efforts to impose it's dysfunctional, malcontent view of society. The whirled is in a dark place of chaos and uncertainty stumbling on a rocky path to a still unknown "new normal".

Welcome to the
New Whirled Disorder.




54 comments:

  1. And in far off R'lyeh Cthulha is dead but dreaming. And Yog Sothoth and the other Great Old Ones of the Necronomican stir. Azathoth, the blind mad god, prepares to send forth his minions from the lost city to wreak havoc on mankind.

    Past Orion, the Eldar Gods rest, unaware of the imminent choas facing the world.

    Good heavens 2164th, a little glum on this Saturday morning aren't we?

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  2. It is whit with the poor outllok, quirk.

    Not taking to heart the good news in his own link.

    "So far the path of recovery has surprised to the upside," Barclays Capital said in a report. "The groundwork for a sustainable move into higher price ranges has been laid."

    Team Obamaerica, obviously, making the "right" moves, if we've laid the groundwork for sustainable moves to higher price ranges in equities.

    If the markets are not providing sustainable value, that is to argue against the thrust of the linked article.

    It is a partisan quandary, I do believe.

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  3. Sorry, 2164th. Should have known.

    With regard to your point, Rat, Team Obamaerica, ah yes, the minions of the blind, idiot god Azathoth.

    Lovecraft would have loved it.

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  4. Obamamerica's "recovery" can come crashing down in a heartbeat, if Israel bombs Iran and Iran retaliates by closing the Strait of Hormuz, sending oil to $200

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  5. The White House Friday highlighted a new multi-million-dollar technology fund for Muslim nations, following a pledge made by President Barack Obama in his landmark speech to the Islamic world.
    The White House said the US Overseas Private Investment Corporation (OPIC) had issued a call for proposals for the fund, which will provide financing of between 25 and 150 million dollars for selected projects and funds.

    The Global Technology and Innovation Fund will "catalyze and facilitate private sector investments" throughout Asia, the Middle East and Africa, the White House said in a statement.

    Eligible projects would advance economic opportunity and create jobs in areas like technology, education, telecoms, media, business services and clean technology, the White House said.

    OPIC said sample projects could help foster the development of new computer technology or telecommunications businesses, or widen access to broadband Internet services.

    Proposals must be submitted by the end of November, and managers of funds that make a final short list will make presentations in Washington in January.

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  6. Teresita said...
    Obamamerica's "recovery" can come crashing down in a heartbeat, if Israel bombs Iran and Iran retaliates by closing the Strait of Hormuz, sending oil to $200


    oil's going to 200 with or without israel... all part of obama's plan for downgrading the usa...

    notice no real teeth about energy independence since he took office...

    5-6 dollar a gallon gas is coming...

    bet on it...

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  7. Yes, Ms T, the myth believing Abrahamics may bring the material world crashing down around them.

    To bad they're not kissin' cousins.

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  8. DR: Yes, Ms T, the myth believing Abrahamics may bring the material world crashing down around them.

    All they gotta do is start lobbing Silkworms at shipping in the Strait, and Peace Prize winner Maobama will go to the UN seeking sanctions. "Stop, or I'll yell 'stop' again!"

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  9. The only "spare capacity" in the world worth mentioning is in Saudi Arabia, and a lot of folks put that at less (some, much less) than 2 million bpd.

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  10. The "Crazy" Card in this is China. They've had a jump in demand this year WAY above what anyone considered possible. They've gone from importing about a half a million barrels/day to 1.7 million bpd virtually, overnight. It has "Everyone" scratching their heads.

    Opec's use of oil is increasing 7.9%, annually. Remember, it's Not about production, but "Exports."

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  11. I misstated the "China" story. They import about four million bpd. The JUMP was in the Rate of Increase.

    The Amount they import has been Increasing about .5 Million bpd, annually. That Increase jumped to 1.7 Million bpd just recently.

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  12. The GOOD News is, we're not in nearly as bad a quandary as it sometime looks. There's hardly a "County" in the United States that couldn't be self-sufficient in energy within, say, 10 years. (Less if we recognized a Full-blown "Emergency.)

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  13. The BAD News is Both Political Parties would rather eat razor blades than see all energy production be "Local."

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  14. Could it be that China's rate of increase is due to an anticipated recovery and Chinese stimulus spending?

    I've heard reports that the Chinese have been rehiring but whether this is due to foreign orders or internal stimulus spending, I don't know. Another thing - China has been building highways, internally and abroad. This could account for a portion of the increase.

    Keep in mind that, currently, 'the level' is more important than the rate of increase.

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  15. Another thing to consider is that since China has a huge cash reserve - it would make sense for them to have bought oil on the recent dip.

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  16. Whit, China's not very transparent, to say the least. However, we do know ONE thing. They ARE selling a Million Cars a Month, now. They ARE the No 1 Car Market in the World.

    If they WERE to continue to increase their Oil Imports by 1.7 mbd, annually, it Would be an "Oh Shit" moment for everyone who's ever tried to model future global demand.

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  17. They estimate the contraction for oil demand will be an average of 1.75 billion barrels for this year when all the data comes in. OPEC can't hold their quotas when oil is already over $80, it's too much temptation. And this will be an El Nino winter so heating oil demand will be way down. This is another bubble.

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  18. Rufus, look it up, those cars are fleet orders, directed from the center in Beijing, gas consumption does not come near to matching the increased sales of cars, they are sitting on lots so the politburo can make their claims.

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  19. The "existing" oil wells in the world are exhibiting an approximate 6% decline in production, annually. That comes out to about 4.5 million barrel per day that won't be here next year.

    The Wiki Megaprojects page lists 3.6 mbpd coming online in 2010. That puts us about a million bpd behind the curve if everyone's consumption remains frozen in place.

    But, it looks like we'll need at least 2.0 millin bpd, more, just for Opec, China, and India.

    And, counterintuitively, perhaps, all the little, poor third-world nations are increasing consumption, also. Figure, .5 million bpd more, for them.

    That puts us 3.5 million bpd behind the curve before WE start trying to grow, again. It get Uglier in 2011, and even Uglier in 2012.

    Buy a flexfuel.

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  20. I'm afraid you're believing in fairy tales, T. If the cars are sitting on lots, where is the extra oil going? We know they are increasing, somewhat, their storage capacity; but it's nothing like that.

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  21. T, that 1.75 is ALL from the OECD countries. To wit, the U.S., Eurozone, and Japan. We're the only one of the bunch starting to use more oil, at the moment, but they will, if they're going to ever get out of recession, have to follow. Meanwhile, the Rest of the world is "Increasing" their fuel consumption.

    T, it is in EVERYONE'S vested interest to Lie to you. It's in Your interest to not be "taken in."

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  22. As for "El Nino" winters: If it's a moderate to "weak" El Nino, which it appears to be, it might be a very "cold" winter. Betting the "weather" is a good way to get poor.

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  23. We normally use about 4.5 million barrels of diesel/distillates every day. We are, at present, using about 3.5 mbpd.

    The folks ain't buyin, and the trucks ain't runnin. Even "Rail" freight is down 20%, or so.

    To come "out of recession" That 1.0 Million bpd has to come back.

    Even, after accounting for biofuels, we're still using .5 million bpd less gasoline than before. That will come back (if we come out of recession.)

    Europe is down about 1.5 million bpd. Japan, the same.

    You'll notice, T, that I gave non-Saudi Opec credit for virtually NO spare capacity. They are, pretty much, producing at capacity. If it could be "proven" (which it can't,) I'd bet my favorite chair that Saudi Arabia couldn't pump an "extra" 2 million barrels next year if it killed the king.

    A Saudi ex. They have a field named Manifa. It "could" conceivably, produce, some day, a million bpd. HOWEVER, it is the sorriest, sourest, most sulfur ridden, heaviest crap in the history of the world. They will have to build a New Refinery just to refine it. They count Manifa as 1.2 million bpd "Spare Capacity." That's just ONE example.

    The Saud's will, literally, behead anyone who gives out "unauthorized" information on the oil industry. All we know, for sure, is that it is in their best interests for the world to believe that Saudi Arabia can supply us "Forever."

    We, also, know that, "when their lips are moving, They're Lying."

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  24. Pakistani Army Captures Taliban Stronghold

    The capture of Kotkai in South Waziristan represented the first notable sign of progress in the army’s weeklong offensive against militants.

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  25. Market's gains mirror dollar's loss plus our money given to Wall Street.
    'Rat blows BS.

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  26. "I'd bet my favorite chair..."

    That's the motorized one he drives down to the EB.

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  27. :)

    I saw that, too. I started to link it, but got distracted.

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  28. (when he hit the Dodge and got busted)

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  29. 0.29

    The guy had to be way too drunk to walk home.

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  30. They busted some poor guy somewhere out west last year for riding his horse drunk.

    The country's going to hell, I tells ya.

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  31. I don't think I was ever able to blow a .29

    An accomplished imbiber, he is.

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  32. I can't describe This. You'll just have to Trust me, and Read it.

    Jeez

    Coming soon to "Your State."

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  33. "The strikes, likely carried out by Predators or Reapers, struck underground bunkers..."
    ---
    What do we have that a predator can carry that works against bunkers?

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  34. Busted in his Blue Dress:

    Another former Gitmo detainee killed in a shootout

    Guantanamo detainee Yousef Mohammed al Shihri was killed in an Oct. 13 shootout at a checkpoint along the Saudi-Yemeni border.

    He was reportedly dressed like a woman and planned to commit a suicide attack. Prior to being transferred from Guantanamo, al Shihri allegedly made it clear that he hated all Americans.

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  35. "he hated all Americans"
    ---
    All but The One, of course.

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  36. This is what I don't unnerstand. Please, splain

    As of the summer of 2008, al Qaeda and the Taliban operated 157 known training camps in the tribal areas and the Northwest Frontier Province.

    WTF

    If they're Known, why are they still There.

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  37. T, here's the problem I have with the "Bubble" theme:

    You need proper conditions to "blow a bubble." What conditions do we have now?

    We're in a recession. Unemployment is rising.

    Demand is down.

    Inventories are high.

    Refinery utilization is down to 81%.

    Rumors of Millions of barrels sitting on ships.

    Stories of Millions, and millions of barrels of "spare" capacity.

    And, the Price keeps rising?

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  38. If you are Goldman Sachs, or Morgan Stanley, and you have millions of barrels of oil, on which you have, already, made tens of millions of dollars, sitting on ships Why wouldn't you Sell it NOW?

    You have the best informatiion in the world; why are you still holding onto that oil (and, paying a dollar/month/barrel storage fees?)

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  39. Meanwhile in more important news, tuning into the Voice of the Vandals, I find two things;

    1) beautiful day for football in Reno

    2) the cultural revolution takes hold at U of I--- a fairly well made ad for the first women's studies (we've had that), gender equalities, and transgender learning program.

    But what about the School of Mines, and men's studies?

    Go Vandals!

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  40. Cause they are expecting a price collapse, need a tax write-off, and are going to take advantage of the situation,Ruf. :)


    Idaho is a 13 point underdog.

    Don't bet against them till it's 21.

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  41. Bobal:

    Science Major: "Why does it work?"

    Engineering Major: "How does it work?"

    Women's Studies Major: "You want fries with that?"

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  42. Rufus, it's a self-licking ice cream cone. All that needs to happen is a little uptick in the dollar, which will happen when Bernanke takes (interesit rates up 25-50 basis points to deal with the very inflation caused by too many dollars chasing to few goods in a recovering economy) and the speculation cycle will burst. Traders were betting it would hit $75, and now they need to buy it to cover their bets, which creates "demand" that doesn't exist in the economy at large. It's a sucker's play.

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  43. T, I think the "sucker's play" for Me, and Thee, is to try to "outthink" the Traders.

    But, it's not a bad idea to be on the same side as the "Investors:" and the "Investors" are buying oil, and storing it on Tankers.

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  44. T, while the Dollar was losing 20% against the Euro, Oil was Gaining 900%.

    20%

    900%

    It's NOT the Dollar, T.

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  45. Rufus, as soon as our economy is moving again, and they stop printing dollars to avoid deflation, and China's trillion dollar stimulus of a four trillion dollar economy ends, you'll see oil trading at the non-bubble price and it won't be $80-85, it will be $50-55. But this level is okay too, for now, it "stimulates" more exploration and test drilling. Long term, it's gonna look like 1984-1989 all over again.

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  46. Look at it This way: While the Euro was Gaining 20% against the Dollar, it was Losing 700% Against Oil. Or somesuch.

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  47. T, virtually the only oil they are "Finding," now, is seven miles down, 200 miles "offshore."

    The Norwegians, and the Brazilians, have, both, drilled $150 Million Dry Holes in the last year.

    When one of these wells do hit a pocket of oil it takes anywhere from 5 years to 10 years to start pumping significant oil.

    Saudi Arabia is scuffling around looking for "sub-salt" oil (seven miles down under a mile of salt) in the Red Sea. Thunderhorse took over Ten Years to get online, and it's already (in less than a year) in Decline.

    The Loneliest Man in Town isn't the Maytag Repairman any longer. It's the guy trying to rent out a deep sea drilling platform.

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  48. I can't win against you Rufus, you know what you're talking about, but I just think some of the peaker fear is overblown, it's 2009 and oil is sub $100.

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  49. T, it might be. I might be nuttier than a fruitcake. We'll just have to wait and see.



    Oh, have I mentioned I bought a "flexfuel" car?

    :)

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