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malignant tumor is diagnosed as bengin

Crude oil March 9,2016:The failure to diagnose growth in the financial institutions .The economic recession started in 2012 but it was camouflaged , by

A- Unprecedented growth in the financial market

B- The events in the middle east, Ukraine, Libya, Syria,,,,,,,

C- Central government’s strategies of boosting “market expectation “ using all means including statistical manipulations of data ( USA, in 2013 changed the definition of GDP adding 3%)

Now we are victims of “The Keynesian economic theory of investments“ which left USA and Europe without ammunition now to fight back the recession

The US Fed Bank have even talked themselves into “ baby steps hick in bank rate “, while , according to the classical economic theories, the rate should be lowered to encourage investments..Today , the definition of investment has changed from that of 1930’s .As recently as 2005 , new financial institutions have emerged , dealing with paper investments ,trading here dose not add employment to the economy,although it is considered as "investment" in GNP calculations.

The USA,UK, European central banks have poured trillions of cheap money (QE -quantities Easing) into their respective economies, to boost “investments (Read more

However, the data shows that most of the QE went into the financial institutions as “investment” leading to a boom in paper trading with little impact on physical investments ( except the shale oil) turning the economy into a big gambling casino.and income from Gambling is " Transfer money from the looser to the winner(except the fees,commissions..)

It would have made more economic sense had Central Banks given the money to the governments directly to investin in important points of growth instead ofthe bailout of these financial institutions just because they are “too big to fail”

. Odd enough today the talk is about breaking up these “too big to fail”. Today , only 5 majors banks in usa , owns 45% of all USA banking assets And futures contract for WTI have reach one million contracts ( of $1000 each )per day on Nymex alone Still, in GDP accounting this massive paper trading on these exchanges are classified as ” investments” , while it is only paper buying and selling and at the end of the expiry date of these contracts they are zeroed… and a new round of “ investments “ starts . Crude oil The emergence of futures market, and its fast growth since 2007 has changed the way crude oil prices are decided ‘A Game-Changer”, leaving the Major Oil Companies , the oil producing countries ,and Goverments as spectators. They were spectators during the first collapse of oil price in 2014 and again in 2015 and they will remain so in 2016, because the control over "Oil Price structure " has slipped or given away to the Futures Market since the day they used “ Net Back Formula in 1985 in pricing Oil ”.

Today We have lost control over "Production Of Crude Oil" as well since the day the the number of Oil Shale Barons owning source of Oil supply has increased ,and Cartalisation buried for good. The the major oil producers are now only too happy to keep their market share at 30-40 USD per barrel

some say that the price fall was a conspiracy !

. No , it is the market trend , ( My book :Capitlism has not Started yet).

The futures market by definition is an “open Conspiracy.”. “ It is paper Barrels with little physical wet barrels “it is based on a simple rule of " put/ call" and arbitrage, . The synchronized trades ( HFT- High Frequency trading) offering the opportunity to profit with little to no risk., they are the non –kenysian investors aided by technology , perhaps has not seen " How crude oil barrels are filled barrel by barrel and lined up on a rude oil tankerc ( What a sight)!!. .. and this is not confined to the oil industry, it also extends to every industry,, from health care, to commodities , metals.. services... and even to the finance houses themselves, and this trend is irreversible

As a result ,a new correlation is developing between most commodities traded on these exchanges. Stock prices tend to fall and increase in tandem ..not because of any economic or statistical correlation , but due to their correlations with the “ Market Sentiments “ Today, Unless you are a knife juggler ( HFT), the crude oil market is like trying to catch a falling knife….. Crude oil Crude oil it sounds scary ,but we already warned against this eventuality in our article three years ago

looking for a crude oil benchmark is like looking for a dead man-click here

to sum up, when the price of oil falls on the futures market for a prolonged period like the situation now, it bring the rest of metal, commodities down, in two ways

1- Firstly ,It create a bear market in all sectors and lowers market expectations for growth

2-Secondly , in practice, and specially in a recession , most companies , "passed-through" the cheap oil and energy prices to the consumers in order to gain market share which in turn brings down, CPI ( consumer price index ) i.e the rate of inflation and stagflation, and a surge in company bankruptcies.

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