Monday, July 20, 2009

Oil steadies at $63 per barrel

Greetings good citizen,

While we were all ‘distracted’ by ‘earnings week’ as stocks took off at the slightest provocation. The markets posted 2, 150+ point days and neither rally was driven by particularly (nor genuinely) good news.

Yes, while the equities markets were making ‘irrational gains’, the ‘contrary indicators’ of gold and oil prices were rising as well.

Usually, stock prices move in tandem with value of the dollar…but not this time. The dollar fell while stocks, gold and oil rose, which once again raises the question of just how ‘useful’ an indicator the stock market really is?

A question made that much more pertinent by recent, confidence shattering revelations regarding the ease with which the markets can be manipulated these days by the big trading desks…

Yes, for a brief time it appeared oil was headed back down to more reasonable levels as investors began to question the validity of ‘green shoots’ across the global economy.

Well, don’t look now good citizen but guess what’s ‘back’?

Oil Steadies Above $63

Published: July 19, 2009

Filed at 9:36 p.m. ET

PERTH (Reuters) - Oil steadied above $63 a barrel on Monday, pausing from last session's 2.5 percent rally, as a more bullish outlook on the economy was countered by still high U.S. gasoline inventories. [Which leads us to a WTF moment because there is much more bullshit than bull in the current market conditions!]

Oil gained 6.1 percent last week -- its first weekly gain in a month -- thanks to a series of positive economic data[?] and a rally in the equities markets, which came on the back of better-than-expected U.S. financials corporate earnings. [Corporate reports to date have been pitiful and beating already low-balled earnings estimates is no big deal…]

U.S. crude oil for August delivery slipped 13 cents to $63.43 a barrel by 2:11 a.m. British time, after settling up $1.54 at $63.56 on Friday.

London Brent crude for September dipped 7 cents to $65.31.

"The positive flow of macroeconomic data last week has lifted oil prices and I think most of the expectations for an economic improvement are already priced in," said Ben Westmore, a commodities analyst at the National Bank of Australia. [This sort of ‘happy drivel’ automatically assumes one is neither looking too closely at ‘economic improvement’ nor defining it in anything resembling solid terms.]

"The market is now returning to look at fundamentals and the key issue lingering on investors' minds is the high U.S. gasoline stockpiles." [Um, rising prices for gas that is sitting idle has another name, it’s called ‘windfall profits’. Which is also known by another common term, ‘price gouging’.]

Oil's gains on Friday were boosted by a government report that showed construction of new homes and the issue of building permits in the United States rose more than expected in June, signaling a potential economic recovery. [More ‘quackery’ that ignores the serious uptick in both foreclosures and falling prices for an ever growing number of existing homes. Seriously, what kind of idiot is building new homes in this market?]

Worries about a tropical wave in the Central Atlantic, which has a small chance of developing into a tropical cyclone -- also helped buoy oil prices. [And ooooo, there were clouds…lots and lots of scary looking clouds!]

Without clear direction, analysts said oil prices are likely to track movements in the equities markets on Monday, while increased tensions in Iran, the world's fifth-largest crude exporter, would also keep prices supported. [In a seriously undereported story it appears Exxon drilled a ‘dry hole’ in its first attempt to tap the unproven reserves off the coast of Brazil…]

Asian stocks could edge higher as an improved outlook from IBM , the world's top technology services provider, boost sentiment. But gains may be modest as a set of U.S. corporate earnings on Friday included disappointments.

Iran's President Mahmoud Ahmadinejad has come under fire from leading hardliners for naming as his top deputy a man who said Iran was friends with everyone, including arch-foe Israel, local media said on Sunday.

In a sign that investors were now more bullish on oil prices, crude oil speculators on the New York Mercantile Exchange increased their net long positions in the week to July 14, according to data from the Commodity Futures Trading Commission released on Friday.

Open interest was concentrated at the $65 and $70 September call crude oil option and at the $60 put option, according to Reuters data on Friday.

You know good citizen, it would be one thing if the only people getting slammed here were the freakin’ feckless investors that are driving up prices for all of us…but that’s not how it is.

You pull up to the pumps and its not the station owner that is sticking a gun in your face, its Wall Street!

Stick ‘em up! The entire economy is suffering all because some idiot in Washington pushed legislation that allows people with more money than brains to ‘speculate’ on the price of the essentials of life! They have no need or intention to ‘take delivery’ of the commodities they bid on…but that doesn’t prevent them from running up the price you and I must pay.

You know good citizen, every time you look at anything in this screwy economy of ours you see something not just a little off but usually it is way off.

I can hardly write a new piece without pointing to some new ‘anomaly’ that results in most of us getting it stuck up our backsides and broken off!

I’m sure I speak for the many regarding the ‘fatigue factor’ we are experiencing as the media repeatedly spews ‘happy talk’ from obviously ‘self-interested’ sources while totally ignoring the impact this is having on the ‘real economy’.

The entire economy is barreling down the chute and all we get from the MSM is ‘cheerleading’.

I’ve laid this out before and I feel compelled to lay it out again. The idiot investors can’t find investments that provide a good return so they’re piling into the one thing we all ‘have to’ buy…commodities.

You may not buy a new car but you will buy oil (indirectly) even if you live in an all electric home (because a certain percentage of all power grids use oil fired generators.)

Investors won’t invest in a business that has no/insufficient paying customers except when it is a ‘game’ of ‘the greater fool’ like the now defunct ‘tech bubble’.

Real Estate is gone for at least another decade, commerce is now largely an import/export game, (with jobs out and goods in) retail is sinking like a rock, bond are tanking left and right so what’s left? Commodities.

Understand good citizen, if these reckless bastards ‘blow up’ the commodities markets like they’ve done to the tech and real estate markets and by extension, the credit markets, civilization goes bye-bye!

Again, we cannot use ‘absolutes’…some poor devils will survive. The bizarre factor at play here is the monied elite believes it will be them!

Exploitation for the sake of self-enrichment has driven our shared eco-system to its limits. There is no way forward and those who benefit from the current system aren’t about to accept a reshuffling of the deck.

The unanswered question here is how far the elite are willing to go to protect their stolen inheritance?

Sadly, it looks like they wouldn’t stop at a global famine caused by pricing the bulk of us out of the food market…and, as I have pointed out many times before, food grows for free.

The only way to ‘save’ capitalism is to ‘eliminate’ the surplus population. Fortunately for most of us, there are other ways of organizing society so it isn’t ‘necessary’ to ‘save’ capitalism.

I’d even go as far as to posit that if there is a ‘line in the sand’ being drawn by the elite, that line is defined as ‘capitalists vs. the rest of us.’

Where I will once again remind you, no matter how much you ‘like’ capitalism, if you don’t ‘own capital’, you aren’t a capitalist (and no, owning your own house doesn’t count.)

As a tie in to last night’s piece, most ‘capitalists’ only own a tiny fraction of the capital they lord over and lend their names to, most capital is ‘owned’ by banks.

The future, as it stands, is frightening beyond belief. The ‘good news’ (such as it is) is that we have arrived at a point where things can’t go on like they have any longer.

I know this and they know this, the question is do you know this?

Thanks for letting me inside your head,


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