Helping you navigate the new normal
Volatility continues to dominate oil markets, as the above chart confirms. Some weeks have seen prices move by over 18%. These are extraordinary moves in a market which is very well supplied, with near-record inventory levels. Some recent daily moves are equally extraordinary, with prices jumping $2.50/bbl on Tuesday. The volatility highlights the power of […]
It only took 2 days for a shocking example to confirm my concern on Monday about the volatility being created by central bank stimulus: As the Wall Street Journal (WSJ) chart shows, a major oil price move took place early in Wednesday’s trading US WTI oil had been trading below $44/bbl, when suddenly prices jumped from […]
Central banks have acted as the proverbial tooth fairy towards financial markets in recent years. But they have not just left a small amount of money under the pillow when a child lost its first tooth. Instead they have printed trillions of dollars via Quantitative Easing (QE), to persuade investors to buy shares and commodities, […]
Whisper it quietly to your friends in the futures markets, who are convinced oil prices will soon surge higher. We don’t want to upset them as they work at their spreadsheets, and send their electronic trades down specially constructed lines at near the speed of light. But global oil demand growth has already more than […]
An astonishing coup appears to have begun 10 days ago, in the last 45 minutes of trading in US oil markets. Yet we still don’t know who master-minded it, or their full objectives. . What happened to oil prices? Prices jumped 8% in the last 45 minutes of trading on Friday 30 January, taking Brent to $53/bbl and […]
In olden days, highwaymen would hang around stagecoach inns, waiting to see when wealthy people were travelling. Then they would hide out along their likely route, getting wet and cold, in order to take their cash. Today the arrival of electronic trading has changed all this. High-Frequency Traders (HFT) now have computer programmes to act as their lookouts, […]
The blog is busy preparing its presentations for its World Aromatics and Derivatives Conference later this month, co-organised as always with ICIS. As well as looking at the impact of the transition to the New Normal, it will be investigating the current state of benzene markets. These are always an excellent leading indicator for the global […]
The blog was very pleased to see the Nobel Prize awarded jointly to Robert Shiller, whose words of wisdom on housing and stock markets it has cited many times. Shiller’s key insight, in his book Irrational Expectations and since, has been to confirm Ben Graham’s famous saying: “In the short term, the market is a […]
As the Financial Times wrote on Saturday:
“Earlier this year, it all seemed so straightforward. Central banks printed money and proffered soothing words, and markets went up. Now, it’s getting more complicated.”
In fact, nervous readers might want t…
Do any blog readers routinely trade on the basis of Twitter comments? Or more specifically, do any trade within milliseconds of receiving a tweet? The answer of course is “no”, as readers have no ability to trade in milliseconds.
But last week the c…
Trading volumes in financial markets are very low these days. Many ordinary investors are on holiday, and others are focused on the Olympics. So it is easy for the high-frequency computers to create major volatility – and large profits for their owne…
The story of the 1989 US movie Field of Dreams summed up the happy days of the economic supercycle that was then getting underway. Starring A-list players such as Kevin Costner and Burt Lancaster, its theme that “if you build it, they will come” came …
There has never been any fundamental basis for the rise in oil prices over the past 3 years:
• At no time has there been any actual shortage of product
• In fact, inventories have always been at comfortable levels
They rose only for two reasons:
…
A blog reader has kindly forwarded an important UNCTAD paper (UN Conference on Trade and Development), analysing the growth and impact of high-frequency trading (HFT) on oil and financial markets.
It provides important “new evidence regarding the fi…
The other side of the short-term volatility in oil markets, as discussed yesterday, is that price movements are still trapped in their long-term triangle pattern.
As the chart shows, Tuesday’s $3/bbl move was not part of a break-out to new high ground…
The chemical industry, like many others, continues to be badly affected by the volatility of financial markets. Yesterday (Tuesday), for example, saw a 3% jump in US stock prices and crude oil prices.
The ‘justification’ for the surge was a minor ris…
The blog was almost alone at the end of April, when it launched the IeC Downturn Alert. Today, its fear that we are close to a global downturn has become mainstream.
As the American Chemistry Council report, “fears of another global recession are …