Sun, 29th November 2015

Anirudh Sethi Report


Archives of “Crude” Category

Mint Money From All Corners :Nickel MCX-From 590 to 614.50.Look Crude MCX-From 2830 to 2892


US EIA weekly oil inventories 961K vs +1000K expected.Spike in Crude …on card

Weekly oil supply data from the Energy Information Administration:

  • Prior was +252K
  • API reported a +2600K reading
  • Gasoline 2478K vs 950K expected
  • Prior gasoline was +1009K
  • Distillates +1046K vs -750K expected
  • Refinery utilization +1.7% vs +0.4% exp
  • US production down 17k bpd to 9.165 million barrels per day

The oil data looks like it’s in-line but the market would have been looking for a larger build after yesterday’s API data. So it’s a bullish report for crude. That’s balanced by the unexpected rises in gasoline and distillate inventories.

Overall, US production is up 1.0% y/y — so much for a production bust. It just means that prices have to fall further before wells are shuttered.


Crude Slides After API Reports Another Huge Inventory Build At Cushing

Following last week’s modest inventory build, API reports another much larger-than-expected build in total crude inventories (+2.6mm barrels). This is the 9th weekly build in a row for total crude inventory but more worrisome is the 3rd weekly surge in Cushing inventories (+1.9mm build) as we warned previously, land storage fears are starting to rise.

Cushing and Total crude inventories surge…

Dramatically more than seasonally expected…

Observations from the Speculative Positioning in the Forex ,Crude Market

1.  The continued build of short currency futures positions characterizes the changes in the speculative positioning.  All the currency futures we track saw an increase in gross short positions. This is what drove the large net short positions.  One thing this means is that late shorts are in weak hands, and as we have seen in the Australian dollar, vulnerable to a squeeze.  
2.  There were five significant (10k+ contracts) gross currency adjustments in the CFTC reporting week ending November 17.  The gross short euro position jumped 21.1k contracts to 243.1k contracts.  The record high set in March was near 271k contracts.   The bears added another 11.1k short yen contracts to their gross short position, lifting it to 113.1k contracts.  
3.  The gross short Canadian dollar and Australian dollar futures positions grew by 10.2k (to 73.9k contracts) and 12.7k (to 111.4k contracts) respectively.  As of November 17, the gross short speculative Aussie position was nearly as large as the gross short yen position.   Short-covering likely helps explain part of the Australian dollar’s strength in the days since the reporting period ended.   
4.  The bears added 17k Mexican peso contracts to their gross short position, lifting it to 79.7k.  It was the largest increase since mid-year.  The peso was little changed over the reporting period, but has strengthened in the sessions since .  Here too, the late shorts were in vulnerable hands. 
5.   The gross long positions were little changed.  One changed by 4.5k contracts, but of the remaining seven, four changed by less than 1k contracts.  The gross longs were trimmed except for the Swiss franc and New Zealand dollar which rose by 100 and 1000 contracts respectively.  
6. The speculative net short 10-year Treasury futures position rose by 11.2k contracts to 48.1k.  This was a result of a 20.4k contract increase in the gross short position (to 469.1k contracts) partially offset by the 9.3k contract increase in gross long positions (to 421k contracts). 
7.  The speculative net long light sweet crude oil position was trimmed by 9.8k contracts, leaving 228.6k.  The bulls liquidated 4.8k contracts to 494.1k.  The bears added 4.9k contracts to their gross short position, bringing it up to 265k contracts.   

The Stunning Visualization Of The World’s 3 Billion Barrel Oil Glut

If the 3 billion barrels of crude oil gluttiness was put into tankers, the line would reach a stunning  530 kilometers…

As we previously noted, via Bloomberg

Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency.

This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry.

“Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.”

Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline, according to the agency.

The pace of gains slowed to 1.6 million barrels a day in the third quarter, from 2.3 million a day in the second, although growth remained “significantly above the historical average.” There are signs the some fuel-storage depots in the eastern hemisphere have been filled to capacity, it said.

Beware Buying Crude: Oil Storage Is “Increasingly Full”

If you follow geopolitics and the oil market (and really, you can’t follow the latter without following the former) you might be wondering whether the tragedy that took place in Paris last Friday may be enough to override the fundamentals for a while. 

That is, if ever there were a catalyst that had a chance of bringing about a sustained rally in crude, surely the prospect of World War III starting in the Middle East is it. 

Well, before you get any ideas about BTFD-ing via some nightmare of a triple leveraged crude ETF, you might want to consider that no matter how close we get to a global conflict in Syria, the world is simply awash in black gold and with more Iranian supply set to come online starting as early as Q1, the fundamental picture will likely overshadow all other concerns.