Blame the Algorithms… WSJ

by Jim Colburn • Monday, July 10, 2017

Stephanie Yang and Timothy Puko at the Wall Street Journal discuss the increasing role of algorithms in oil market here… Here is a nice chart:

Many are quoted in the article, but this one I like:

“Goldman Sachs said CTAs can create trading opportunities. “Fundamental traders shouldn’t be afraid of the CTAs, but rather view them as creating opportunities when they push markets away from fundamentals,” the firm wrote in a commodities research report from June 29.”

Fundamentals are difficult to figure out, too: http://www.zerohedge.com/news/2017-06-28/how-did-it-go-so-wrong-goldman-asks-it-slashes-oil-price-target

One more thing… There was a day when locals ruled, trading around two thirds of daily volume… Some algorithms have been written to mimic locals as market makers and liquidity providers, so they should be expected to dominate trading volume… And, of course, locals were often blamed for price moves that could not be explained by analysts…

 

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Talking one’s position?

by Jim Colburn • Monday, July 10, 2017

From today’s WSJ, “Saudi Aramco Chief Predicts Oil Shortage…”

“Mr. Nasser said the dearth of investment now would lead to fewer barrels in future, even with shale production. He said the world needs 20 million barrels a day of new production in the next five years to meet demand.

“Investments in smaller increments such as shale oil will just not cut it,” Mr. Nasser said.

Saudi Aramco is preparing to publicly list up to 5% of its shares in what could be the most valuable IPO ever. Mr. Nasser said the company remained committed to a $300 billion spending plan over the next 10 years.”

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Are commodities cheap?… Visual Capitalist

by Jim Colburn • Saturday, July 8, 2017

An interesting chart from Visual Capitalist:

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Commodity prices, year to date… EIA

by Jim Colburn • Saturday, July 8, 2017

In Today in Energy, the EIA compares energy prices to other commodities, year to date:

I’m guessing we won’t see the McRib sandwich very soon:

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CTA funds using quant strategies at record levels… Bloomberg

by Jim Colburn • Friday, July 7, 2017

A Barclays chart, via Bloomberg, shows a continued rise is assets under management by commodity trading advisors (CTA’s):

But they are not doing too well:

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Interesting charts on oil from Market Realist…

by Jim Colburn • Friday, July 7, 2017

Here are some interesting charts from Market Realist:

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Days supply, US crude, gasoline, distillates… EIA

by Jim Colburn • Friday, July 7, 2017

From This Week in Petroleum we can look at current stock levels compared to current demand by looking at the days supply measure:

All have improved this week (from a bull’s perspective), and only gasoline is still above last year… A strong driving season and perhaps strength in gasoline exports should reduce the days supply measure below last year…

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Energy Markets podcast for July…

by Jim Colburn • Thursday, July 6, 2017

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Fossil fuels, renewables, US energy mix… EIA

by Jim Colburn • Tuesday, July 4, 2017

Here are some takeaways from the EIA’s Today in Energy:

“In 2016, fossil fuels accounted for 81% of total U.S. energy consumption, the lowest fossil fuel share in the past century…

In 2016, the renewable share of energy consumption in the United States was 10.5%. This was the largest renewable share since the 1930s, when overall energy consumption was lower and the amount of biomass consumption (mainly wood) was relatively high…”

 

 

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OPEC’s Output Rose to Highest This Year… Bloomberg

by Jim Colburn • Tuesday, July 4, 2017

Here is Bloomberg:

“Members of the Organization of Petroleum Exporting Countries boosted their output by 260,000 barrels a day compared with May, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Half of the increase came from Libya and Nigeria, which are exempt from making cuts under the deal agreed between OPEC and its allies.”

“Over the first half of the year, the 11 OPEC members bound by the output curbs were fully compliant with their pledges, the survey showed. Counting Nigeria and Libya, total OPEC output remained about 390,000 barrels a day above the target set out in the Nov. 30 production agreement, putting the group only about 71 percent of the way toward its goal, according to data compiled by Bloomberg.”

 

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