Posted Tuesday, December 16, 2014 10:31 AM
Posted Tuesday, August 20, 2013 12:37 PM
As I type this, the WTI front month crude oil futures on the CME Globex is trading at 54.25$ per contract. Symbol is CL, active month currently trading is January: CL 01-15.
Pretty much the whole world has watched as crude has sold off from the 100$ level to what is now a price threatening 50$. The transfer of wealth over this period has been monumental. if not historical. Moreover, the selloff represents a major shift in the economic power structure of the world, and it has only taken 6 months.
Here is the story that the media is floating as being the reasons for the selloff: http://www.msn.com/en-us/money/mutualfunds/why-oil-is-down-by-half-what-it-means-for-you/ar-BBgPQdy
I am an active futures trader, and everyday I trade Crude oil, gold, natural gas, and the mini s&p. From my vantage point, nearly every reason outlined in the story concerning the pricing of crude oil is complete BS.
Point/Counterpoint on the topic, reasons for the decline in crude oil value from the article:
1) "A drop off in Global demand". There have been no "unexpected" fluctuations in global demand for crude oil. It is true that China has been the horse pulling the wagon as far as demand goes for sometime now; and yes they are facing some tough economic times as their real estate bubble is thought to be popping, and is "expected" to be several times worse that the US real estate market failure in 2008. STILL, China's government is actively securing crude oil supplies from anyone whom will deal with them. Also, there is some drop off from some smaller players in the global consumption model, but Japan and a few European countries are easily offset by the development going on in Brazil and South America. Demand being down as a reason for global decline in crude oil pricing is complete BS.
2) "Excess Supply" This idea that there is excess "supply" hitting the market all of a sudden is also a fallacy. Supposedly the excess supply is coming mainly out of the Bakken region in the Dakotas, Eastern Montana, and central Canada as a result of Fracking operations. I have worked in the Bakken, and have seen it first hand back in 2012. Even then, it was estimated that there would be 1 million barrels per day coming out of the region by 2015. Well guess what? At last count there was 900k barrels per day being generated (if you can ever depend on an estimate of that nature), and it is nearly 2015....on par with the other fracking operations in North America. This spike in global volume was priced into the market years ago; the Bakken and central Canada shale oil is no surprise to anyone whom follows these markets, and is not the reason for the precipitous price fall in crude.
3) "The Supply/Demand Argument in General" In essence, the Supply/Demand explanations for the sell off are bedtime stories that are supposed to ease the common investor's mind. I am sorry, but we live in a new age of finance. The old models of traditional finance do not apply. It is a time of unbelievable leverage, huge pools of capital which are mutually exclusive from one another, and electronic markets that are opaque in nature; in reality it is very difficult to find out whom is doing what in the market with any sort of timeliness. Selling feeds selling......and the big boys around the world are selling crude oil.
What has happened:
1) CL has been sold off heavily in 2 phases. From 9/30 to 11/20 we moved from the 95$ range to 75$ range. From 11/21 until today we have moved from 75$ to the low $50's.
2) This selloff in CL mirrors the sell off in Gold (GC) from a few years back. Anyone remember when Gold was at 1880$ per ounce. It was sold off to 1100$ in short order, and now trades at 1200ish.
3) As with the Gold selloff, the small oil producers have taken a bath, especially in the fracking operations that are prevalent here in north America. Simply put, it is too expensive to frack....with prices currently in the 50's for a barrel of oil, it is costing the producers an all in cost of nearly 10$ per barrel OVER MARKET PRICE to bring crude out of the ground. The small guy is sunk.
4) Big oil isn't realizing the same losses. Remember that it is legal for these guys to trade their own products (in a speculative manner) in the derivatives markets. Shell, BP, Hess, Exxon....these firms can secure financing and take short positions in order to profit, and cover losses from operations. So, while it appears that anyone in the oil business is taking it hard, remember that the shorting of CL on a large scale can simply make these firms more cash heavy, and actually still profitable.
5) OPEC is also not taking it in the rear. Remember, the infrastructure in the middle eastern oil fields is old (rebuilt after gulf war 1), and largely paid for. The Saudis are huge players in our derivative energy markets. They will simply limit production, and ride the wave by shorting.
6) Russia is taking it hard. No way to sugar coat this one....energy production is the entire economy for Russia. (80% energy based). A few guys at the top will pocket any monies to cover themselves, and the workers will be left to starve....much the way it has always been in Russia.
So, WHY has this crude oil sell off taken place?
1) Institutional money is taking an intermediate term short position.
2) Individual traders around the world are pounding every technical level to the short side, nearly every day.
3) The big players in the world wide oil markets have decided that it is time to trim the fat and consolidate the market even further (the players are OPEC, Shell, BP, Exxon, Hess, Russian czars), which isn't so much behaving in a sinister fashion, as it is them protecting their own interests. This sustained selling will eliminate small drillers and producers, put the squeeze on certain eastern block countries, and may spell the end of Fracking here in north America for the near term. Basically, profits will be returning to the entities whom have always demanded them. Basic boom and bust.
Posted Friday, August 09, 2013 12:05 AM
Some of the most entertaining football is when the 1A "bigboys" have to play the 1AA squads.....and yes the dirty little secret is this: other than the top 10 teams in 1A, there just isn't that much separation anymore between 11-40 when in comparison with the Top 10 teams in 1AA.
One of my favorite things to do is watch a headcoach sweat when his supposed "tune-up game" turns into a potential reason for termination..........
Lets see if we can spot a few week one 1A/1AA matchups that can cause a few ulcers.........lines are taken from 5dimes:
1) North Dakota State (+14) @ K-State The back to back national champs of 1AA go to K-state for a Friday night matchup. NDSU has a bunch of guys back, and are quickly becoming one of the most dominate squads in recent memory.......KSU has lost a huge amount of talent from last year....no more Optimus Klein, no more solid defense. This game boils down to Snyder's JC recruiting class vs a 1AA juggernaut. I am going with the Bizon here.......NDSU +14
2) Old Dominion (+13) @ East Carolina ODU throws the ball all over the field......and then they throw it some more. East Carolina has a slew of guys back 9/9 on each side of the ball. I actually watched Georgia Southern come back from 21 down to beat ODU in the round of 8 last season........the defense is far from impressive for ODU, and if that no-huddle passing game bogs down, then those are some fast three and outs. I would like to see an over number here......Lean ECU
3) Eastern Washington (+24) @ Oregon State I would have loved to see this matchup last season..... EWU lost several key guys to the NFL, and even though they will go hard and put some pressure on, Oregon State is solid this season. However, if you are going to get the Beavs, you can get them early in the season.....Don't get caught nappin OSU, Ewash still has enough offensive firepower and attitude to hang around for awhile........ EWU (+24) in backdoor style
4) Appalachian St @ Montana (-2) This one is an all 1AA matchup, but one heck of a rivalry. You can tell by my avatar that I am biased on this one, and I will be in Washington-Grizzly Stadium for this one......a rare 7:05 start time. The Griz got their QB back (acquitted from rape charges) and the defense and O-line are stacked. It may be a homer pick, but I wouldn't bet against the Griz in this one.......they are hungry and ready for a title run this season. Montana by 14.
Posted Friday, May 10, 2013 12:12 PM
Man, I like this one a lot. Obviously, QB play is paramount to the Cowboys having success, but with 2 guys that are capable in Clint Chelf and JW Walsh, that looks to be taken care of......even though I would have liked Wes Lunt at the trigger instead of transferring out.
Could this be the year that OSU puts a top-flight defense on the field? Tough to put up any eye -popping D numbers in the Big 12, but this unit should be able to average in the 24-28ppg allowed range....and that is enough to get them 10 wins.
Here is what I got on the Pokes' season:
1) Miss State not sure they cover the 12.5, and Reliant stadium can play a little slow, but should post 35 on MSU.W
2) @UTSA I like Larry Coker, and UTSA is bowl capable, but this is apples and oranges. Pokes' roll. W
3) Lamar this game shouldn't be played. 70+ W
5) @West Virginia The Mountaineers will miss Geno, and Clint Trickett doesn't fit the bill. W
6) Kansas St. Tough to like KSU to do much this year, especially in Stillwater with a rebuilt D. DD Win. W
8) TCU I like TCU to make some noise this year with Pachall back and a solid D....but on home turf, TCU will find it tough to score enough. W.
9) @Iowa State The Pokes' should remember the loss at Ames 2 years ago that may have cost them a shot at the National Title. Week 9, Iowa State is not deep..... DD W
10) @Texas Tech At Tech, late in the season......history tells us that anything can happen in Lubbock. 1st year coach Kliff Kingsbury should be comfortable by now....TOSSUP
11) Kansas I like Heaps at QB for KU, and Weiss will have the Jayhawks better than last year, but this is an azz-kicking. Blowout W.
12) @Texas Obviously, a loseable game for OSU....but I am not drinking the Texas cool-aid until I see David Ash play like a Division 1 Quarterback. Would not be surprised at all to see OSU favored in this one. TOSSUP
13) Baylor Light up the scoreboard boys......OSU in a shootout, but the margin is still 2 td's. W
15) Oklahoma Stoops' and the boys haven't won a big game in so long I can't remember. I expect OU's bowl fate to already be determined, and OSU playing for a shot at the Big 12 title. Also, I think that there is a very good chance that big game Bob is coaching in his last regular season game. Not even going to rank this one as a "toss up". W
To recap: 10 wins, 2 tossups. The biggest thing that I like about the Pokes' is the schedule. It looks like 3-0 going into a bye, and then a trip to WVU for a measuring stick game, then back to Stillwater for a favorable matchup vs KSU. At this point, 5-0 or even 4-1 is acceptable in my book, then the stretch run begins with big tests at Tech and at Texas....then another bye before Bedlam.
The Defense should be even better this season, with experience nearly every where.....and if it is, then that will be enough to hold serve in several of these Big 12 shootouts.
Oklahoma State Cowboys OVER 9 wins (-130)
Posted Sunday, September 09, 2012 12:54 PM
I think it is safe to say that there is a bit of collusion going on here.......looks to me like the Corporation's stance on letting Tebow play in the NFL is to run him to Canada or the Arena League.
It is very hard for me to believe that there is no one out there that will give a proven winner a chance....no, he is not the prettiest passer.....but the guy wins games, and brings a compete level that few QB's in the league do.
Seriously, can you remember a QB that has had a winning record in his first year as a starter and won a playoff game, that has been chucked to the gutter by everyone in the "League".
It appears that no one really cares about winning any longer. Is success defined by how your team looks, as opposed to how it preforms? Nothing better than getting the guy that can throw the ball 60 yds from his knee at the combine, but is a clusterf***k when the chips are down. The sad part is that Jamarcus Russell has gotten more positive press for his comeback effort over the last month than Tebow has for his charity work during the same period. Pretty telling on whom is writing the sports columns these days.
If a team is all set at QB then do not even consider Tebow...but the following squads have no excuse, other than they are scared of the NFL/ESPN media machine: Bills, Dolphins, Cleveland, Jax, Tennessee, KC, Oakland, Eagles, Vikings, Tampa, Arizona.
These teams stink, and usually are nowhere near a contender year in and year out. It is humorous in a way...the Raiders love controversy and public guys....but won't go near the biggest controversial public guy of them all. Good luck with Terrell Pryor....looks like 4-12.
Probably the best fit for Tebow would be in Philly under Chip Kelly. He is big and fast, and could be a dangerous player in an unconventional offense. Vick will most likely be hurt early in the year, and will not be a run threat down the stretch...good luck Philly....7-9 at best.
Tebow is better than Jake Locker right now, and the rest of the teams on the list need some guts.
But hey, Ryan Fitzpatrick has a perfect release point and a cannon arm. Good luck with your 3-13 Buffalo.
So, my point is this: it does not make logical sense that Tebow is not going to be given a legit shot at starting in the NFL this fall. Usually, when things do not make sense, there is some political BS going on behind the scenes, and in this case it looks to be the big libs over at ESPN and in the front office of the NFL do not like the idea of a squeaky clean, openly religious starting QB in their "League".
The idea of a Tim Tebow as a public face of the NFL is too 1950's and not enough 2013 for the "League". It simply is too risky to let him play....
Teams that were impressive in my eyes:
1) Arizona RichRod has a keeper in his QB Scott..that guy can run and throw...good stable of RB's, Arizona is dangerous.
2) LSU I get it...everyone out there is saying no shit...but they hammered a pretty good offensive team in UW. The LSU offense is much better than last year with the new QB.
3) Alabama Another no shit call. But they are good. Real good.
4) Oklahoma State Even though they got beaten handily @ Zona, Wes Lunt QB can play for OSU. Yeah, there were some turnovers, but OSU is fast and physical, and as early as next season Lunt will have them in the top 5.
5)North Dakota State NDSU at Colorado State yesterday made me a nice wad of cash. This is an FCS team that can compete at the FBS level. The NCAA should put them in a bowl game. Colorado St scored on their first possession...and they didn't score again...NDSU 22-7, and it could have been worse.
6) Georgia Nice win for Georgia......lots left to prove.
7) Kansas State They played great...Collin Klien takes a ton of hits, but the K-State defense was nasty to the Canes....I was impressed, that was a dominant performance.
Teams that Disappointed:
1) Arkansas John L Smith is bad. They should have looked the other way on firing Bobby P.
2) The ENTIRE BIG 10. I would break them all out one by one but that would be incredibly redundant. Wisconsin can't throw, Nebraska D is shitty, Michigan is lazy, Penn State is snakebit, Iowa may have the worst offense through two weeks that I have ever seen. Michigan St and Ohio State are both 2-0, but I am not buying that trash yet. And don't forget the Illini getting crushed late last night either to ASU.
3) Oregon. I know they are good, but they aren't covering at home....and that is something new for the Ducks.
4) Utah Uninspired, horrible offense. Keep on running the wildcat formation and wasting 2nd down. They had huge advantages on the outside vs Utah State and refused to take the matchup.......embarassing play calling by new OC Brian Johnson. Get aggressive or quit.
5) Iowa I had to mention them again. 4th year senior QB and no fucking TD's through two weeks. Shame on you Iowa.
6) Notre Dame Nice win vs Purdue. Way to pull your starting QB again Kelly......here comes the carousel. Amazing....history repeating.
Fun week. Back to the Grind.