$1.2 BILLION DOLLARS.
That's how much was stolen from US consumers this week by the crooks who run their usual scam at the New York Mercantile Exchange (NYMEX) – the traders who set the price of our nation's oil and gasoline. The genius of the crime is that you, the American Consumer, only lose about $10 per week so – who's going to notice? Who's going to complain?
And that, my friends, is how they get away with it!
Americans used 10% LESS oil and gasoline than we used last year, when oil was $85.04 per barrel. Refineries used the same amount of oil as they used last year to stock up for the holiday weekend, despite the fact that we have 31M MORE barrels of oil in inventory than we did last year.
The refiners supplied 1.7Mb LESS refined products than they did last year but, somehow, there was a net draw in inventory reported of 14.7Mb (almost 10x) and that was the excuse they used to send oil prices back to $102 per barrel at yesterday's close. That's another $6 higher than the $11.32 higher than the $85.04 we paid last July 4th so now it's $15 PER WEEK being stolen from you – and THAT's assuming $85 a barrel is a fair price in the first place!
Of course, if you have two cars, then you're losing $30 a week and that's $1,560 a year – do you care now?
I'm sure you've heard that US Oil Production is on the RISE. In fact, we are now producing 7.267M barrels a day, that's up 19.2% from this time last year, adding 8.2M barrels a week to our weekly supply. That may lead you to ask the question: I
If we are producing 20% more oil than last year and using 10% less oil than last year – how can our inventories of oil be declining and why the heck is $1,500 being stolen from my family?
The answer is surprisingly simple: IMPORTS. The same crooks who set the prices on the NYMEX by creating BILLIONS of fake orders each month also CANCEL so many of those orders by delivery day that they actually are having 1.8Mb LESS oil delivered each day than they did last year. No, this is not a joke – 12.6Mb PER WEEK of oil, over 50M barrels PER MONTH are being cancelled at the NYMEX and THAT is creating an artificial shortage that drives up the price of oil and gasoline in America.
Not only are they cancelling our imports, but they are EXPORTING 671,000 barrels of refined product OUT of the country. Artificially creating the impression that there is 4.7Mb per week more demand than there actually is in the US. While it's a small bite of our 133M barrel weekly usage (3.5%), those who follow oil trading know that just a 1Mb swing in inventories one way or another can make a $5 difference in the week's oil prices. That's $20 out of YOUR pocket we're talking about, not some stranger's…
This is not just a crime, this is TREASON – this is the willful destruction of the United State's Energy Security while charging American's $102 per barrel instead of $85 per barrel by creating this artificial shortfall is costing the American Consumer (that's you, sucker) $9.69Bn per month and is sucking $116Bn a year out of the US economy (enough to fund 2.3M $50,000 jobs) – AND WE'RE HANDING A GOOD PORTION OF THAT MONEY OVER TO COUNTRIES THE FUND TERRORISTS!
Keep in mind that we're only focusing here on the $17 EXTRA that you are being charged over and above last year's $85 per barrel despite the fact that America is producing more of it's own oil (now the World's second largest producer of oil) and using 10% less (because we're buying smarter cars).
It's no coincidence that traders picked this week to send oil prices to the highest level since April of 2012 – which was just before prices collapsed (similar shenanigans) all the way down to $77.28, but not before robbing Americans of tens of Billions of Dollars. The same scam was run on consumers in April of 2011 ($114.84 to $75.72) and, unless you Email this article to your friends and tell them (and you!) to write your Congresspeople and complain about this (it takes 30 seconds to find your Representative, past a link to this article with your comment and hit send!) – nothing will ever change.
A crime is being committed here – oil prices are being manipulated by traders who are, at this very moment, pretending to order 250,000,000 barrels of oil for August delivery. In just 2 weeks from Monday, they will have cancelled roughly 95% of those orders to short-change America once again, to strangle our energy supply, create artificial supply shortfals and to rob your family of another $60 per car for the month.
I can only tell you you're being robbed – it's up to you to stop being a victim!
Oil draw – Seems to me more market manipulation (concerning yeaterday's inventories).
Savi – I sent you an email concerning the Vegas meetup. Just let me know that you have seen it.
FU oil manipulators!!
I needed to get that article off my chest. Tried to keep it simple as an introduction for friends and Congresspeople to read….
Futures are open this morning and up about 1% across the board on good news from Egypt but, mostly, because Draghi is talking easy money again. That's sent the Dollar all the way up to 84 and the Euro down to $1.29 but Japan is happy (/NKD 14,300) with the Yen now over 100 to the Dollar (weaker).
8:30 AM U.S. stock futures are enjoying a nice Independence Day rally along with equity markets across the globe, boosted by Portugal's government doing its best to stay alive and the ousting of Mohamed Morsi in Egypt. S&P (SPY) +0.6%, Nasdaq (QQQ) +1.1%, Dow (DIA)+0.85%.
8:38 AM ECB chief Mario Draghi is holding a press conference following the bank's decision to leave interest rates on hold at 0.5%. You can watch it and read a live blog here.
And, of course, we already knew GS's Mark Carney was going to "fix" things at the BOE:
7:02 AM As expected, the Bank of England leaves its monetary policy unchanged, with its benchmark interest rate remaining at 0.5% and its QE program on hold at £375B. This is the BOE's first policy decision with Mark Carney as Governor. (PR)
Mixed signals much? Anyway, the markets are loving it for now and we should have a positive open tomorrow but then it's earnings and we know how fast a 1% gain can be reversed in this market. The only saving grace the bulls have is 84 is a bit high on the Dollar and a drop back to 82.50 will cover a 2% dump in the markets – fantastic camoflague for the Fundies to make a run for the exits!
Speaking of heading for the exits: Here's a great TSLA chart from ITulip that sums things up nicely:
The commentary is also great (and you already know how I feel about this nonsense):
Note to Ilene – we need this guy on our writing team!
SCO / Phil – Down 13%. I have the Aug 36 Calls at 1.30 entry, currently 1.13. Not bad considering the pump the last 2 days. With /CL settling out, I don't see any reason to adjust. Do you agree?
I don't see any reason to rush an adjustment. We'll just see how this plays out. As I said when we opened our USOs – we'd love to see them push $105 so we can roll up cheaply and DD but, for now, we took a small entry so we wouldn't miss anything if they suddenly dropped instead.
SCO / Phil – Thanks. thinking out loud…. Would you cover and make a Bull Call Spread? If I sold the Aug 39's for .45, I would cap the gain but pickup the premium on the sold calls as /CL decreases. Also provide protection should /CL increase. Thoughts?
Non Sequitur Comic Strip, July 04, 2013 🙂
Dovish central banks trigger share surge
"Carney and Draghi stress need for low interest rates"
Happy Fourth of July — this looks like a glimmering of hope for ABX, it would seem.
Shouldn't Carney and Draghi comments help gold and the miners?
It's not that clear cut, I've concluded, because 1/ yes, cutting Euro rates can portend future inflation if both the Fed and the ECB are now printing money and throwing it out of helicopters [the Japanese don't even bother with the helicopters, they're using municipal garbage trucks to hand out money], but…….
2/….taken against the background of a modestly strenghening U.S. economy — which puts the U.S. in a global category of One, given that China's helicopters are also criss-crossing the Chinese countryside — this might mean that the dollar rockets big time. Would you rather go long the dollar or gold at this point, given that Bernanke is not likely to cut rates going forward?
For the moment, I'm playing my hand with a short oil position, did pretty well short FXE over the last few weeks, but gold? Meh — it's a fear trade, and I'm not feeling the fear right now, rather the contrary — China, the U.S. and Europe all seem to be getting along famously these days — after all, Snowden is still sitting in the the Moscow transit lounge, n'est pas?
Outflows from gold exchange-traded products totalled $4.1 billion in June and $28.2 billion year-to-date, according to data from BlackRock.
Phil / Samsung: Is this an AAPL buy signal?
From FT, 9:30 pm EDT:
"So the analysts who braved sticking their necks out to claim Samsung Electronics' Galaxy S4 was not selling like hotcakes were right. The Korean company and world's biggest smartphone maker has missed forecasts for its second quarter earnings because sales of its new flagship model were below expectations."
As a footnote, I did sell some AAPL $340 puts when it was @ $395 per your recce.
Phil good morning, trust you all had a nice 4th. We enjoyed the day with a visit to Maastricht a lovely dutch city.
Re. your oil comments. My question: oil is like any comodity and the price is getting ajusted by bidders.
Same as TSLA if you do not have any bidders you would not get a price of 115.00. Tha same with oil if no one offers 102 and pay 102 you would not get a price of 102. Same at the gas pump if the price at the one seller is 3.95 and a cross the road an other is selling it for 3.85 where do you go???
So there must be some idoits paying 102 that is why we buy the Aug 35 or 36 USO puts, because not to long they will run out of idiots. Am I wrong????
Still not sure how oil is only down 10 cents with Egypt uncertainty partiallyremoved and dollar so high.
I hope everyone had a good holiday.
Still with Draghi fever in our Futures and Asia popped last night with the Nikkei up 2% but that's only 14,420 on /NKD so really not as impressive as it sounds. The Hang Seng was up 1.9% and that's a bit better but Shanghai was disappointingly flat but holding the 2,000 line, for now. India put up half a point.
Europe, on the other hand, had enough excitement yesterday with their 2% pop and are flat now, except the UK up 0.5% balanced out by Spain down 0.5%.
The WSJ is pushing the rate story but we're back to square one with Draghi as this is more talk and still no action – 3rd month in the row people are falling for this nonsense. I stand by my original statement (as we push our highs each time) – that without ACTUAL NEW stimulus, we're not going to pop the top of our range.
Of course we have NFP at 8:30 so that's a big market-mover but is good news bad news or good news? I've lost track this week. It's all noise into earnings so let's just have fun today on what should be very light holiday trading (as sensible people are taking today off) and prepare ourselves for a lot of work next week.
Friday's economic calendar:
8:30 Non-farm payrolls
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
3:41 AM Asian shares surf the wave of joy sparked by the BOE and the ECB's Mario Draghi yesterday pledging to maintain their easy money policies for the foreseeable future, although there's been a bit of caution ahead of the U.S. nonfarm payrolls report later today. Japan+2.1%, Hong Kong +1.6%, China +0.1%, India +0.7%.
3:54 AM European shares (FEZ) are flat-to-higher as they build on yesterday's sharp gains after the BOE and the ECB's Mario Draghi injected rocket fuel into markets with their surprising decisions to say that super-low interest rates are here to stay. All eyes are now on the U.S. jobs report later, but given its potential impact on Fed tapering, who knows what the reaction will be. EU Stoxx 50 +0.1%, London+0.3%, Paris flat, Frankfurt +0.3%, Milan +0.2%, Madrid flat.
5:30 AM Some European indexes (FEZ) turn lower as the heady rush to the blood from Mario Draghi's comments yesterday wears off and some analysts provide critical analysis of his remarks, and as investors focus on the upcoming U.S. jobs data. "I think what we've seen once again is a commitment to nothing, and the markets have just taken the bait," says Alpari U.K.'s Craig Erlam. U.S. futures remain higher, though. EU Stoxx 50 -0.1%, London +0.3%, Paris-0.1%, Frankfurt flat, Milan -0.3%, Madrid -0.5%. Dow (DIA) +0.9%. S&P (SPY) +0.9%. Nasdaq (QQQ) +0.9%.
6:00 AM Overseas: Japan +2.1%. Hong Kong +1.9%. China +0.1%. India +0.5%. London +0.3%. Paris -0.2%. Frankfurt +0.1%.
SCO/Jfaw – Keep in mind the pressure at the NYMEX doesn't trigger until next week and, even so, they don't run into the very serious pressure until next month, when the December contract log-jam comes into play. Aside from the BS draw (and, of course the traders KNOW it's BS) in inventories, the price is jacked up on Egypt news, which is over already. If they don't get big driving numbers for the 4th (and most of my neighbors stayed home) then maybe a sharp correction next week so I'm just playing this just in case we miss a big drop. So, we are only committing $1,000 in the STP and looking to go about $2,000 – not taking a big risk but I'm not going to cap it into a vertical spread because then we can't take profits on the way down – that's the logic. At $105, I'd probably want to go for an SCO artificial buy/write but there's a reason we start with USO first.
ABX/ZZ – Dollar shot way up so, initially, bad for gold – especially if Bernanke doesn't ratchet up the rhetoric too.
Miners/Jabob – As above. Gold is priced in Dollars, not Euros. Weaken the Euro ($1.287) and the Dollar gets stronger and gold goes down (for the short-term). What you hope for (as a gold bull) if for people in Europe to see their currency getting weaker and stampede into buying gold to protect their assets. That takes time to get a reaction though.
Dollar/ZZ – Good point. Not sure the Dollar should be "rocketing" but certainly coulld get stronger if the ECB and BOJ keep going and we stop. Oops, sorry, now I'm falling for the BS – the ECB isn't doing ANYTHING – their rates are higher than ours (2x) and higher than Japan's (5x) and they are not doing any QE – it's all talk so far – as it has been for 3 months.
Gold/Jabob – That's a lot of dumping!
Samsung/ZZ – I think it's in-line with my theory that this is nothing more than the iPod cycle all over again as, one by one, competitors realize they can't compete with AAPL. Of course we have a slumping global economy and AAPL may be down too but, on the whole, if you read the Samsung report – it's all about the fact that NO ONE but AAPL can consistently manufacture high-tech do-dads at high margins. In the long run – that's what the game is all about and AAPL's product choices, now as they ever were, come down to margin, Margin and MARGIN. They simply don't make things that don't make money – they'd rather have a lower market share than sacrifice margin and that's why they make $40Bn a year on $160Bn in sales. That's also why they are vulnerable (as they always have been) to speculative attack on margin compression.
Maastricht/Yodi – Love that place. Was there for an art fair a while back. You are right about oil, idiots pay $102 but, as I explained recently, those idiots work for oil companies that are selling 90M barrels of oil per day Gobally so, if thy buy 10M contracts at $102 instead of $95, they overpay by $70M but then the price of oil is set at $102 and JUST THAT DAY the people pulling the strings and funding the traders make $630M extra. But it's not just one day, these pushes can keep prices higher for day's or weeks – so well worth it! The problem is you (and most people) keep thinking in terms that the traders are there to make money – they are not. Their function is to create an artificial environment to inflate the prices.
I'm sure you understand auctions. If you and just two friends conspired to bid up the prices at an auction – you know how to do it. Maybe you'll get stuck owning a few things but most things you will be able to drop on some sucker who gets caught up in the bidding excitemet. Well, think how many suckers there are out there speculating on oil and how few professionals you need to bid up the prices.
Oil/Jrom – Because their goal is to gouge US consumers over the WHOLE weekend and Egypt was just an excuse and I'll bet Morsi got a very fat check – as did his opposition – for staging this "coup" on the exact day of our biggest gas consumption period of the year. How much do you think they'd need? $10M, $20M? Peanuts…
I'm in on the oil shorts.
They floated a rumor on suez being in a state of emergency to pop oil up 1.00 then followed up 10 minutes later with suez operating normally
Good morning, hope everyone had a good 4th! 🙂
Thanks for heads up Bert – faster than me!
TSLA/Nicha – I think what's really funny is this PR that Elon Musk is the next Tony Stark. It's very clever as it leverages an existing marketing campaign now that we're on Iron Man 3 and it also plays off the fact that Americans have trouble distinguishing fact from fiction because the only way you can value Musk and TSLA the way they are valued is to compare them to fictional characters becase NEVER, in reality, has any individual (Huges, Edison, Moore, Jobs) been given so much benefit of the doubt by Wall Street.
Even this article assumes a long-term margin of 15% despite the fact that auto makers average 5% and that TSLA's expansion plan depends on introducing a lower-cost vehicle.
Still got a nice $200 per contract at $101.80 but Phil's right, it's tricky this morning.