201711.17
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Chart of the Week; Deconstructing and Applying BRL

Last week’s Chart of the Week kicks off this week’s, though it will have to wait for a series of explanations to get us from that one to this. A week ago, we noted the growing divergence between leveraged loan prices and WTI, two risk indicators that used to be pretty well correlated for obvious…

201711.16 2

Huge Crude Stakes

There is a titanic struggle going on right now in the oil market. On the one side of the futures market are the usual pace setters, the money managers. Last week, the latest COT data available, they went the most net long since March. If it continues, it will close in on the most positive…

201711.14
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Globally Synchronized Downside Risks

Oil prices were riding high after several weeks of steady, significant gains. It’s never really clear what it is that might actually move markets in the short run, whether for crude it was Saudi Arabia’s escalating activities or other geopolitical concerns. Behind those, the idea of “globally synchronized growth” that is supposedly occurring for the…

201711.10
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Chart of the Week: Another Compelling Note of Caution

Leveraged loan prices and WTI tracked each other pretty well during the “rising dollar”, unsurprising given that the oil sector was over-represented in most new deals as the one truly booming part of the domestic US economy.  That was the case on the rebound, too, where leveraged loan prices rose at the same time oil…

201711.10
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COT Black: Crude Balance Here?

Oil prices have had a very good run for several months now. Dating back to the recent low reached June 21, WTI is up an impressive 35% to a new two-year high. Crude hasn’t traded at $57 since June 2015. During this latest increase, the oil futures curve has finally achieved backwardation (which isn’t necessarily…

201709.29
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Non-Transitory Meandering

Monetary officials continue to maintain that inflation will eventually meet their 2% target on a sustained basis. They have no other choice, really, because in a monetary regime of rational expectations for it not to happen would require a radical overhaul of several core theories. Outside of just the two months earlier this year, the…

201709.13
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Harvey’s Muted (Price) Impact On Oil

The impact of Hurricane Harvey on the Gulf energy region is becoming clear. There have been no surprises to date, even though the storm did considerable damage and shuttered or disrupted significant capacity. Most of that related to gasoline, which Americans have been feeling in pump prices. According to the US Department of Energy, as…

201709.11
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COT Report: Black (Crude) and Blue (UST’s)

Over the past month, crude prices have been pinned in a range $50 to the high side and ~$46 at the low. In the futures market, the price of crude is usually set by the money managers (how net long they shift). As discussed before, there have been notable exceptions to this paradigm including some…

201709.05
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Demand Dearth

The fundamental problem is that we don’t know what’s wrong. In many ways that is a worse condition because it is one step further removed from a solution. Even after ten years “we” still have to prove that the one thing everyone largely believes can’t be the depressing issue is. Earlier this year as the…

201708.18
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Commitment of Traders: Crude Confounding Confusion

The price of oil can’t seem to climb out of the $40’s despite a lot going for it at the moment. Oil prices matter right now as much as three years ago when they signaled serious trouble ahead. For them to get above $50 and then continue on would indicate for a lot of important…