Oil is crashing today but is now a buying opportunity?
Chris Temple joins me today to answer the question in the title with a resounding no. He outlines why he thinks there could be more downside and what factors will signify the sector is finally ready to turn.
Click here to visit Chris’s site and follow along with his market commentary.
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Well said DT – esp that last statement
Mr T – Good call a few weeks back, as Oil has now officially gone negative today on the May futures contract. You nailed it!
Oil just went from -24 to -34. This is absolutely bonkers!!
The gut check to come, though, is that it likely won’t take until the last minute for the June contract to also go negative. MAYBE the Texas RR Comm. will surprise us all tomorrow though if they do indeed come out with quotas. We’ll see. One thing is for sure: Probably won’t hear from The Orange Wonder on this any time soon.
Yes, agreed on the gut check to come. There were dozens of investors over at ceo.ca jumping back into Oil vehicles today, but I believe they are still going to get their hands slapped on some of those trades as this news gets digested by the markeplace.
Truly a historic day in the Oil markets!
Yes, great call, Chris. I didn’t come close to seeing this coming (and luckily I’ve had zero exposure to oil in recent months).
Wow!! What a wild day in the Oil markets. I don’t have any exposure and cleared out my Delphi Energy for a nice swing trade (before their capital crisis) and got out of XLE mostly the last week of March and finished the first week of April when Oil got back up to $26.
I’m keenly interested to go bottom fishing, but will be patient as I still don’t believe the reality of what these low Oil prices mean to the US and Canadian Producers, Developers and Oil Service companies has fully registered with traders yet.
This is one of the craziest closes in Oil I’ve seen, including the 2008 selloff.
Truly history in the making!
http://cdn.ceo.ca/1f9s06e-Crude%20Oil%20May%20Futures%20Contract.JPG
Oil closed negative -$35, down 291.6% on the day.
Don’t worry though folks, as Oil has since bounced to only -$31 and only down 270.8% on the day. (Green shoots!)
Oil appears to be the playground of the sick and famous. I am not going there.
Chris:
Bamboozled by the orange wonder. Great choice of words. Remember this? “One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.” Carl Sagan
I always wondered how Hitler came to power and was able to carry out absolute atrocities. Now I wonder if I had lived in that time, how many tried to stop it, and why they were not able to stop it happening.
If anyone hears them ring a bell at the bottom for SLB, RDS, XOM, and CVX, sing out.
I bought more PSLV@5.66 today. My hunch is that silver will triple before oil does.
Most of the problems with the oil crash began when Nixon with the nod from The Federal Reserve created The Petrodollar. Cartels initiate artificial fake pricing which has always had a bad effect on supply and demand like creating a Farm Board to regulate the price of foodstuffs. Anything that is counter to a real market always ends in failure. DT
Oil $5.58………who would have thought……
It hit $4.04. In year 2000 dollars, that’s under $1.00! In 1930s dollars, that’s about 7-8 cents.
Great info……..
Now……$2.43……..
And now Alaska, Bakken, and Edmonton are all trading negative
$1.15…..now……
It hit $0.01.
Now it is a minus $1.43. (-$1.43)
Look. Now it is minus $39.
DANG! Looks like I can put away my “Will Work for Crude” sign…
😮
Well, I was outside enjoy the sunshine……..and OIL really took a dive…..
.26 cents……..that is unbelievable…..
That is a crude joke…… 🙂
I was updating the oil prices overnight on the weekend show editorial, but have been tied up for the first part of the day. When I last looked earlier in the morning Oil had come down to $12, and now it looks like Oil is free.
We just need to buy it on the May contract store a few hundred million barrels and then sell it to a refinery in a few months. Who has access to a huge Oil tanker that we can fill up for team KER? 🙂
Wow!!
> How about a warehouse full of Tupperware containers then?
I’m willing to store this essentially free May $Oil and keep it until later in the summer, but want to keep it fresh. 😉
Hummmmm… I guess this means that the World is flat.
If only the gas prices would go negative at the pumps, then I’d volunteer to drive around to help do my civic duty to burn it and get paid.
no aliens have landed with free energy tech and oil is no longer needed?
and may be the world is flat and vaccines are safe
This is for Ron, Filet Mignon is a fish! DET
“Who has access to a huge Oil tanker that we can fill up for team KER?”
Start stashing it everywhere…even Mr. Big Al’s swimming pool and hot tub! 🙂
Ebolan – Already on it.
Some producer is paying me to fill up our bath tub with Oil right now with negatively priced May Oil contract. We’re just going to put some tinfoil over it and go down the block to the rest of the houses and fill up their tubs too.
I tell you Ex, this is yet another head exploding symptom of a very, very sick system. We are going into very dark times. Just wait for the next set of job numbers…in the words of Kuntsler will make the Great Depression look like a job fair.
All joking aside, I agree with you Ebolan. This is a symptom of a very sick system.
Hoping for the best, but preparing for the worst.
This is all playing out much like ” The Dirty Thirties”, only worse. The Red Scare will be forgotten as we are brought into Planet Socialism. DT
Socialism is a euphemism for totalitarianism, even when it comes in a ridiculous package like Trudeau.
Unlike the 1930s, we will not see much general price deflation.
You are right about Trudeau, but wrong in my opinion about general price deflation. The debt here is so huge and we have always followed The American model, general price deflation is all around us and just beginning. DT
The central banks can always destroy the purchasing power of their currencies so any general price deflation won’t last unless they want it to.
What they can’t stop is general price deflation versus gold. THAT is what we had in the 1930s.
Lassonde: “I think the market is way too optimistic in terms of getting out of this. The damage being done to small- and medium-sized businesses, which accounts for 70-75% of all jobs, is devastating and they are going to suffer the most.”
The gov/Trump is helping BIG business steal market share just as FDR did.
I agree with Lassonde’s point about the wiping out of the small businesses, and many of them are never coming back. I read somewhere recently that 40% of businesses that close down for over 3 months fail in the next year, and we are already a month 1/2 into this lockdown in many states.
With so many Millions losing their jobs, they are not going to have the disposable incomes to just run out and go to restaurants, bars, juice stores, sporting events, concerts, expensive barbers, gyms, tanning beds, nail salons, etc…. like they were before this, and that will just mean more permanent layoffs, more pain to main street, and more people sucking on the government teet.
Matthew you are exactly right that the big businesses will be the ones that benefit longer term, as the medium to small businesses capsize or get cannibalized by the bigger mega-corps.
Then with a huge bloated government with trillions in debt acting as a nanny state, and crony capitalists galore, and supply chains broken down, these globalists can start rationing off things like food, energy, water, and necessities (once you get the mandatory vaccine and digital tattoo from the Billuminati of course).
What are people going to go when food is more scarce and the restaurants are closing down…. they’ll put their heads down and get in a big government bread and soup lines for their family’s food rations…
This is going to hit Main Street so hard, that they’ll need to liquidate retirement plans early and sell their investments in Wall Street, and as that drives down the prices of the general markets, these parasites will be there to buy their shares on the cheap and as the government points bazookas of money at the bond and stock markets to keep them elevated, destroying their fiat buying power in the process.
Losing the small businesses is where middle America is erased, and that are left are 2 general classes of citizens. It’s sad and disgusting, and this was all avoidable by not doing these insane shut downs. The cure will be so much worse than the health crisis they’ve hyped and handled poorly, and it will not be possible to just hit the switch and turn everything back on again. This time the damage will be permanent.
It really makes you wonder what is premeditated or what is merely completing an agenda. If so, at what point do the victims, the people, draw the line and they stop it. Or…is this all fine to the victims and they enjoy being in that position. It seems that the majority thinks all this is OK…contrary to the Constitution and Laws of the US. Matters not.
Agreed David. It sure does make any rational person wonder how much of this was premeditated, to knock out middle America and the small business engine of the “middle class.” Now, more than ever, there are millions more of the most independent entrepreneurial types that have suddenly become dependent on the government for loans and relief and unemployment — many for the first times in their lives. Coincidence — I think not.
There are many that predicted 20-30 years ago in the 90’s that a global catastrophe, or pandemic, or war would be used to shut everyone down for business, and when things emerged again, the middle class would be gone, and all that would be left was a technocratic society at top using Big Data technology, tracking/surveillance, and fear to keep the rest of the citizens at the bottom in line and needing the government and mega corporations. We are dangerously close to that scenario now, and it never would have happened without the US and many other countries inflating the death and infection numbers, counting folks that had completely different issues but similar symptoms, and then using that Problem to create fear and lock down the world economy for 2 months, which simply should never have been allowed to happen. It is always fear that is used to manipulate the sheeple, pass new laws and erode individual liberties (that they’ll never get back) and they fall for it every time….
If our conclusions don’t align with the official narrative, chances are we will be labeled “Conspiracy Theorists.” These are sad facts. How ever there is only one way in which man can respond to them: By never relaxing for the search for truth.
Ludwig Von Mises–Human Action.
This brings me back to Mr. T’s commentary years ago that we would be needing wheelbarrows to haul the cash.
Looks like we’re here.
I remember posting that I wanted one to match my tin foil hat.
What a sad state of affairs we find ourselves in.
The World Gold Forum kicks off today. Here are the companies featured at the show:
Speaking of featured companies. Congrats to Cory & Big Al as it appears the number of KER site sponsors has grown quite a bit. Ever upward!
Yes Ex, Big Al lives close to the bank! DT
Now he’s banking it!
One cause of the end of the Great depression was WWII, now many are advocating a hot war against China as penalty, if they will not pay compensation for their released bioweapon.
https://www.scmp.com/comment/opinion/article/3080695/amid-us-hysteria-over-chinas-rise-world-need-more-voices-reason
May I suggest that no one wins a hot war; there are only losers. The US, however, by its spirit of free enterprise and innovation can win a cold war. My biggest worry for the future, however, is not troubles with the economy or China, but the very fact with blame-casting and demanding of handouts and crazy money being thrown at the problem, is that the U.S. appears to have turned into a Socialist/communist society right in front of my eyes.
Corrupt crony Republicans, handsomely bribed by lobbyists, giving aid to companies and power-hungry Democrats, desiring to have no borders in order to get more votes, will destroy the United States changing it into a third world country, such as normally found in South America. I cry not for Argentina, but for the USA, fast disappearing before my very eyes.
Yes the US does appear to have turned into a socialist society if by socialism you mean endless military spending. That’s where the taxpayer’s money goes. But, no, not communist. Fascist more accurately describes the US as it comes to resemble South American oligarchies run by the richest 100 families.
The U.S. has blended communism and fascism which is obviously better than pure communism.
https://www.thedailybell.com/all-articles/news-analysis/top-10-goals-in-the-communist-manifesto-accomplished-in-america/
Mathew, thanks for thedailybell article. Rather than engage over differences i have with it’s use of language i will observe only that some of it’s observations conflict with things as they are. Such as public education which is in sad decline today. I don’t think the nation is better for this.
Similarly public lands, especially the great plains, have been degraded, used as giant livestock feedlots benefiting what i’ll call ‘the industrial food complex’.
But yes, the ever acquisitive and inventive ways the government finds to reach into our pockets never ends.
A thought provoking article.
That’s Keynesian/mainstream BS that common sense and a basic understanding of economics destroys.
https://reason.com/2013/01/27/world-war-ii-spending-did-not-end-the-gr/
On net, war makes society poorer.
https://mises.org/library/broken-window-fallacy
Of course there are NO REAL winners in war.
However the factories built during the war, the mass mobilization of people to fight and produce at home, The loss of goods and economic life at home, created an environment that in 1945 ended any possibility of return to the great depression of the thirties.
You are still wrong. War makes society a net economic loser as it consumes capital that could have been put to productive rather than destructive use. War is economically NET NEGATIVE as it represents the worst of form of malinvestment.
Correlation/coincidence does not imply causation.
Your loss is a politicians gain. Anytime you hear war…it is bad and wrong. Always. Defense may be necessary but the war is wrong.
A great social and psychological experiment is at hand here in the United States. Since March, a variety of shutdowns, lock-downs, crackdowns and travel restrictions have swept across all 50 states with governors leading the charge. Basic liberties and constitutional rights many have come to take for granted have been pushed, stretched and then totally eliminated before our very eyes….
Yes, those in power are learning quite quickly how little difference there is between many Americans today and the German people of the 1930’s and 40’s. As Thomas Jefferson once said, “What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance?” Do enough of our fellow citizens preserve that spirit? Are we warning our rulers? We shall soon find out, but there are glimmers of revolution popping up around the country. Tracy Beanz.
Do people not realize the U.S. Constitution LIMITS the power of Government. It does NOT GRANT FREEDOMS to the people.
I demand my Government stay within the confines of its Constitution.
In case you missed my point above, Matthew:
I was saying “the change to society dominated by socialist ideology” is far more destructive than any war, in the long run.
War itself is a collectivist endeavor. Think about that.
Add Fascist. Two different things.
As an economic system, fascism is socialism with a capitalist veneer.
https://www.econlib.org/library/Enc/Fascism.html
The trouble we find ourselves in globally is due to the billions of people who do not understand what a wrecking ball socialism really is.
There is no ‘socialist ideology’ in the US, only socialism for the wealthy. Otherwise dog eat dog capitalism prevails for everybody else.
That “socialism for the wealthy” that you speak of IS the problem for everybody else, not capitalism.
That cause was lost,cfs, in 1865
He will not get that one…….failure to pay war debts to the fraudster money changers……. lol
The professor , only knows science…..I think…..which is ok….
But, history and govt. is not taught in the PUBLIC EDUCATION SYSTEM, and there is a reason for that……..keep the sheeple stupid, and keep them serving a FALSE GOVT.
Correct, CFS.
The constitution is a contract government officials give an oath to uphold. The constitution amendments 1-10 are our Bill of Rights! “We the Pdople” are ‘in charge’ of holding the public officials accountable.
That said: it only works when you live in a republic. ( which Donald Trump just gave you ).
Pdople= people (of course)
You will need to change some of the amendments…….in order to have the FREEDOM to all the “WE THE PEOPLE”……..
Ending the FAKE FED……, which , you said was NATIONALIZED…..
Next would be ending the FAKE collection agency……created for the FAKE FED/Central Bank
People need to understand , the USofA……..is BANKRUPT..
As long as YOU THINK YOU OWE……..you are still a DEBT SLAVE…..to a Corrupt GOVT
Wash away the right of the govt……to TAX REAL ESTATE…..and start with that.
You are right. The ammendments should be changed. The 13th should be changed back to original and the rest after the 13th should be removed.
The fed ” is in fact, nationalized “.
YES , I know I am RIGHT…………
People should understand, …..what happened in 1933…….with THE FED.
The NATIONALIZATION………of the FED AND TREASURY……
As long as the money keeps going to the TBTF……..nothing has been solved….
I would like to have a discussion on …………ARE THERE TWO CONSTITUTIONS…..
It’s being solved right in front of you. It’s just you can’t see it, yet.
Today is a huge day. Oil is flatlined at zero (0). Price discovery from today moving forward will be supply and demand. Not the derivatives market!
The futures traders got hammered with no place to deliver, and no place to take delivery. The option traders probably lost all, as they never met strike.
Either way, the oil market will have real fundamentals moving forward. It truly is, ‘a big deal’.
Yes, there are two different constitutions. But when you discuss it with people, most don’t care. They just want the bread and circus.
Chartster………..Thanks for the reply on the TWO CONSTITUTIONS………..
Sheeple better get this one……….in order to have WE THE PEOPLE, and FREEDOM.
IF,……..they(sheeple) understand…….that there are TWO CONSTITUTIONS……and the RIGHTs have been stolen, via, the Central Bank/money changers,……Then a true dialog can continue.
Hey, I want to thank you for…..waking me up……to the ACT of 1871…..
I will have one more question, …….which will continue to be….the Nationalization , of Treasury and Fed.
Even, though we have PRICE DISCOVERY…….does not END THE FED/nor Central Bank.
The gas stations should be paying consumers to FILLER “UP”. DT
I forgot to add LOL! DT
Negative oil prices should be ringing bells all over the place. Even the most uninformed should be asking how something tangible, that drives most developed economies, can have negative value. Supply and demand, sure. But all those still working and those ignoring the quarantine, still have to stop by the local gas station. For that product, there is still is a chain of production that cannot be achieved without cost. The lightbulb should come on that just maybe begs the question about how the system works and why is it broke. May be I give the average Corona carrier too much credit.
Well stated David. I doubt the average consumer pulling in to get gas and fill up their vehicle has the vaguest notion of the supply/demand picture in the oil markets, but at least the light-bulb should be going off for investors in the commodity & energy markets, and maybe even some of the generalist investors minds.
The cracks in the system are starting to become more obvious that they never fully put humpty dumpty back together again after the 08-09 Great Financial Crisis, and this time, what is unfolding is far more concerning.
The truth is that what has taken place in the oil market is more than a cyclical drop in prices; it is a major change in the national economy. DT
It seems that PMs have been suppressed over the years by the paper system in order to protect the paper Fiat System. It would seem that negative oil prices have highlighted the failure of the paper systems…the very problem they were trying to avoid. How long will they continue the charade when all about them crumbles. It would seem we are very close to a run up in PMs as further suppression only highlights the invalidity and criminality of government regulators.
David, an important point to remember is the establishment of OPEC should never have been allowed, you can’t artificially support prices and think it will work in the long run, it never has and it never will. DT
Stupid, will remain stupid………….going to take a long time for the sheeple to figure out anything…….
Ditto……..David had some great questions….of which can be solved….
Addressing that in a new commentary imminently.
Meaning David’s Q RE: how negative pricing for oil is even possible in the first place.
CT………just be careful using “Q”……they may think you are a trumpster fan.. 🙂
Hey……..anybody heard from Bill……….I want to know how the REITs are doing….
Not trying to be funny, just want to know….if they are still paying , or have folded yet.
Are they on the list of bail out money…….
Restaurants here are closing down at an alarming rate, for the longest time I have not been able to understand how this economy could support so many high end eating establishments. Even McDonalds is no longer cheap food fare. I’m sure people are defaulting on their credit cards, so much is changing so quickly. DT
I agree……….I never thought entire malls would be closed….Of, course we been talking about the over abundance of retail space for years…
The herd still thinks that there is little doubt that The Federal Reserve System can take all the necessary steps to ease the money market and so check the deflationary downtrend which they created and which we find ourselves in. Like prohibition the Fed has created an environment where the crooks get to make all the money.