Notes on energy.
I now think a chunk of the oil and energy rally (maybe 7 bucks?) is speculator driven. Using COT numbers, we see they've gone from long 1,418 on Jan. 11th, to 188,070 this week. In fact if you read my posts on energy from Dec., I called for this to happen.
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But now it's long in the tooth, and is getting to be just another Mr. Crescote Bubble trade. They can, and probably will go solidly over 200,000, but it's now day by day and red alert IMO.
I am actually leaning now towards the view that the Fed and Wizards are starting to engage in a little more aggressive Bubble popping behavior. They've been erratic, but on the other hand they haven't done a coupon pass since 12/8. Debt monetizing? No, quite the opposite: since Jan. 6th they've actually drained, and sold $286 million in securities, and it's been $384 million over the last four weeks. I just don't think you can call that "measured" anymore, the pace has quickened, and yet everybody is drinking with party hats on at the punch bowl, like it's still heavily spiked.
I think the consensus is finally looking at the big Asian demand growth, and figuring they can actually absorb it, and maintain their economies. Their timing is off once again, as $55, is a different animal than $40. And if it goes even higher, the more so. I don't think Asia will be able to support the incremental new demand this year, as in my scenario is that they hit the wall, and soon.
Meanwhile take a look at US inventory figures.
Petroleum inventories are now longer out of line, see page 1.
raymondjamesecm.com
There is actually a glut of gasoline, see page 3, and with the home as ATM abating, the consumer will start cutting back. Fuel is getting to be too big a part of his budget, no free rides left:
idorfman.com
I'm even toying with the idea of shorting unleaded as the seasonal pattern winds down over the next month (heart of the Train Wreck) or so, and if there is more price spike:
tradefutures.cc
There's all this talk coming from the scam oriented trading desks about "refinery" shutdowns and problems, but a glance at the historical (page 5) suggests it's within normal ranges, and just a seasonal downturn. So a lot of this CNBC-like energy talk/propaganda, just doesn't meet my smell test. |
