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Wednesday, February 03, 2016

Of market plays, reality and other oily bits...

Surprise!

You must be wondering exactly what goes through an oil speculator's head whenever we see what we've witnessed today in the oil markets. In spite of the breaking news the last couple of hours today, speculators still can't grasp the simple facts that lay before them that keeps them hedging their bets into a radically changed market.

It's simply not the same place since OPEC first played their lot in 1997. That was the year they wrenched production downwards in their effort to increase the price on a barrel. Succeed they did, but only to have others to explore with different tools into long-known shale resources that they thought would never be tapped.

How wrong they were when the advent of slickwater did them in starting in 2008! The markets simply haven't been the same since.

But today's market news simply tells the state of the speculator, playing with God only knows who's money, but playing with it nonetheless.

If you're Stateside, you're 401K is taking a beating.

So, here traders were, from last Friday, dealing with "news" that Russia and Saudi Arabia were into some sort of talks on a concerted market action to raise prices, because you know, every time your country goes to war, you have to have a way of paying for it. So, you don't say "no" to the course of action.

Oil rises as a result of said "talks on a production cut". Both countries neither confirm, nor deny...

Iran enters and puts the kibosh on those talks late Friday and the electronic sell-off into Monday and Tuesday squares away the reality again. All is in balance...

Then today...

In spite of the latest US Energy Information Administration's report, and the promise held within of the market reality of declining storage, excess supply and slack demand for refined products and a world awash in crude oil, prices increase markedly...

Why?...

That "nasty" rumour of OPEC master Saudi Arabia and Russia talking again.

No confirmation.

No denial.

Oil rises...

But it's your investments! You expect a "return" because that's for retirement and returns are supposed to happen, right?...

Deal with reality. EIA results showing 503 million barrels in storage, a record high not seen in eighty years!

Gasoline inventories up another 5.9 million barrels, well ahead of the summer driving season when the speculators start to turn their attention to a peak in gasoline demand, all in spite of refinery capacity down to a low of 86.6 per cent!

Consumers simply aren't burning the stuff, and depending what side of the ecological fence you're on, that's either a good or bad thing. Yes, Mr. Speculator, you're really starting to run out of places to put the oily bits down on. Seems with oil, it's both out of luck and out of time.

Take some worthy advice.

"Put your bucks into alternative energies and let it ride..."

*******************

George
Twitter @GeorgeMurphyOIl





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