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Oil skyrockets more than 10% in biggest one-day rally since 2009

Oil skyrockets more than 10% in biggest one-day rally since 2009 thumbnail

Oil rocketed more than 10 per cent higher on Thursday, posting its biggest one-day rally in over six years, caught up in a relief rally that swept the globe as the U.S. economy grew more than predicted.

FP0828_BrentCrude_C_JR

West Texas Intermediate futures rose 10 per cent, the biggest gain since March 2009. U.S. gross domestic product grew at a 3.7 per cent annualized rate in the second quarter, exceeding all estimates of economists surveyed by Bloomberg. The Standard & Poor’s 500 Index headed for its biggest two-day gain since 2009 as Chinese shares snapped a five-day losing streak.

 

Prices extended gains after Royal Dutch Shell Plc issued a force majeure on Bonny Light exports from Nigeria as it worked to repair two crude pipelines shut because of thefts and a leak.

Oil had slumped below US$40 this week as concern over slowing demand in China fuelled volatility in global markets. Prices are down about 31 per cent from this year’s closing peak in June on speculation that a world supply glut will be prolonged. OPEC members are sustaining output while U.S. stockpiles remain more than 90 million barrels above the five-year seasonal average.

“We’re getting whiplash moves,” Matt Sallee, who helps manage US$17.7 billion in oil-related assets at Tortoise Capital Advisors in Leawood, Kansas, said by phone. “The shorts are skittish and whenever there’s any positive data they cover very quickly.”

Financial Post



34 Comments on "Oil skyrockets more than 10% in biggest one-day rally since 2009"

  1. Nony on Thu, 27th Aug 2015 6:47 pm 

    No! POD taking us from 39 to 42. Proof of scarcity. Dogs and cats living together. 🙁

  2. Boat on Thu, 27th Aug 2015 7:38 pm 

    The economy is growing to fast? Won’t that just drive resource depletion and end the world? Meanwhile back at the ranch the savings in the fuel bill bought sam a new saddle.

  3. JuanP on Thu, 27th Aug 2015 7:42 pm 

    “U.S. gross domestic product grew at a 3.7 per cent annualized rate in the second quarter”

    I find that very hard to believe, but we all know this number will be revised down twice in the future. Even if it were true, I wouldn’t necessarily consider it good news since the higher we rise the harder we’ll fall. I wish we’d stop growing now.

    We live in a make believe world, and I no longer believe anything anyone says, basically. It’s all lies and delusions, and nothing but lies and delusions everywhere I look.

  4. Makati1 on Thu, 27th Aug 2015 8:03 pm 

    JuanP, you have a very accurate picture of reality, it seems. It is too bad that so many here do not.

  5. Truth Has A Liberal Bias on Thu, 27th Aug 2015 8:05 pm 

    Brent will be $60 by within one week either side of Christmas 2015.

    Write that down.

  6. shortonoil on Thu, 27th Aug 2015 8:25 pm 

    Skyrocketed? Oil closed at $42.60 today. A long, long, long, way from the $100 needed to save shale, bitumen, ultra deep water, arctic, and high sulfur extra heavy.

    Sounds like a real blast off??

    PS: and about 10,000 stripper wells.

  7. Davy on Thu, 27th Aug 2015 10:47 pm 

    Folks the damage has been done. The markets can bounce around but that will not change the effects of the destabilization that has occurred. Deflation is now irreversible with demand and supply destruction. It is the convergence of multiple deflating markets, economic segments, and the end of the commodity super cycle. This economic deflation is in addition to population overshoot, ecological decline, and climate instability.

    One must remember it is just a range of a few percentage points of economic activity that we can consider a healthy range in our global economy. We can no longer maintain that average range. If we cannot maintain a certain economic activity the system begins to decay. We are decaying not fast but decay is everywhere and at some point the convergences will be catastrophic.

    If you are looking short term you may see at times what may appears to be a recovery but a real recovery is likely never to return. Let’s see how long the Feds attempt at normalization lasts if it even happens. Let’s see if China can salvage an economy. We will know in a few months. Grab some popcorn and enjoy the show.

  8. Bloomer on Fri, 28th Aug 2015 12:48 am 

    The North America oil complex has demonstrated resilience in the race to the bottom in oil production. In the short run this battle for petro market share will be good for the global economy.

    However, it won’t be long before capital disinvestment in future oil plays starts to catch up. Oversupply will be followed by shortages and once again the price of oil will overshoot. This will be very bad for the global economy.

  9. GregT on Fri, 28th Aug 2015 3:32 am 

    “Meanwhile back at the ranch the savings in the fuel bill bought sam a new saddle.”

    Willful ignorance and denial Boat, are well understood, and perfectly normal for the naked apes. Most people are incapable of intelligent thought, and revert to emotional responses. Spend some serious time contemplating your own death, which is going to happen very soon in the big scheme of things, and you just might be able to get beyond your fears.

    “No! POD taking us from 39 to 42. Proof of scarcity. Dogs and cats living together.”

    There are others here among us, unfortunately, that are completely fucking clueless, and are nothing more than a total waste of space. These are the fucktards that are driving our entire species to extinction. Hopefully there is life after this world, and they will get what they deserve.

  10. charmcitysking on Fri, 28th Aug 2015 4:04 am 

    “Meanwhile back at the ranch the savings in the fuel bill bought sam a new saddle”

    I spit coffee reading this one. Well played

  11. Davy on Fri, 28th Aug 2015 4:10 am 

    Bloomer said “However, it won’t be long before capital disinvestment in future oil plays starts to catch up. Oversupply will be followed by shortages and once again the price of oil will overshoot. This will be very bad for the global economy.”

    Bloomer, I would caution you on reflecting on our past history in regards to what is coming. I do agree we will very likely go into a period of excessive volatility with price and supply. This will likely be the end of our global economy. We are very close to a stress point systematically. We are very close to an economic bifurcation to a much lower economic activity level.

    We may also be now in a longer but equally economically killing deflationary descent of demand and supply destruction. We will cannibalize and abandon infrastructure, economic segments, and disenfranchise populations. Countries will fail and the global system will do much as the human body does when it experiences hypothermia.

    If we follow the longer route of demand and supply destruction which is equivalent to hypothermia we may feel that “paradoxical undressing” when people remove their cloths in confusion. The cloths we remove will be our economic abandonment of key structures of survival post fossil fuels. The confusion will be what we hear from the corns that all is well despite our slow death in progress. If your price volatility occurs we may crash and burn but we also may experience a slow death. Time will tell.

  12. Plantagenet on Fri, 28th Aug 2015 4:47 am 

    The 3.7% increase is US 2nd qtr GDP growth is a stunner. And it is unlikely to be revised much lower since the 3.7% number itself is a huge UPWARD revision.

    Another year of big GDP growth like this and the oil glut will be over.

  13. Davy on Fri, 28th Aug 2015 5:05 am 

    Please Planter spare me the dramatics. What is real and what is an illusion today. What growth are we talking about? Planter you are participating in more of the insanity. You can honestly tell me what is currently going on with the global system with markets, commodities, and debt is healthy and normal? If you say yes well I guess it is better I beat my head on a brick wall. This is unhealthy and you know it. If the fed could normalize and China was not in a nose dive of deflation and bad debt then I would have to reexamine my position. As it stands now no numbers are going to tell me we have economic health.

  14. trilli on Fri, 28th Aug 2015 5:08 am 

    Hey guys!

    I’m from Germany living at the coast of the North Sea and I’m trying to get to Norway somehow. The point is that I just finished highschool and without any further education I won’t be able to live in Norway. So do you think there are another 5 years to get this done? Meanwhile me and my family are prepping as good as we can.

  15. Davy on Fri, 28th Aug 2015 5:21 am 

    Trilli, I think you have time. I admire you for considering relocation but I would comment that German has many comparative advantages. The big disadvantage is the population density. I live there in 85 for 1 year. I lived in Nuremberg and work all over the south. Germany has a rich farm culture in the rural areas I remember. There is good soil and climate.

    Trilli, I see collapse as a process and we have so much from being at peak everything that I feel we could have a few years of cannibalization and still keep the global system intact. That said because we are so interconnected with so many problems a quick and catastrophic collapse is ever present. If a quick catastrophic collapse happens I doubt there will be many locations that will survive in one piece even Norway. Trilli, stick around our comment board we have many days where we discuss lots of prep topics that are very relevant to the coming descent.

  16. JuanP on Fri, 28th Aug 2015 6:16 am 

    Trilli, Consider learning organic farming, Permaculture, woodworking, or some other useful manual trade.

    When I was a teenager and first got into survivalism, camping, and prepping, I learnt a lot from Rudiger Nehberg, he was my first survival skills teacher after I left the Boy Scouts. I still have some of his books, all published in German, and I highly recommend them.
    https://en.m.wikipedia.org/wiki/R%C3%BCdiger_Nehberg

  17. trilli on Fri, 28th Aug 2015 8:49 am 

    JuanP, thanks for the post! I heard about him several times before and already read one of his books. We have a little garden (1300 m²) where we are planting lots of vegetables and just discussing about having chickens or not. Additionally we are trying to build a small community. What are your present preparation steps?

    Davy, I really like to read your posts here. Thanks for the answer! We are living in a “rural” area for German conditions. The population intensity is about one third of the German average. Also we live on one of the best soils of Europe. Big issue here in the north of Germany is climate change (rising sea levels). Maybe you would tell me how and where you are preparing. I’m looking forward to hearing from you.

  18. rockman on Fri, 28th Aug 2015 9:08 am 

    FYI for those that missed subtle detail in the article: thd price profucers receive for oil did not increase 10%. That was the increase in the price those in the futures market was willing to bet oil futures would be selling for on a set future date. And for every $ bet that the price will be correct someone is betting a $ that it won’t bd correct. In the next month I sell my next load of oil based on a complex formula that has WTI futures prices as just one component. And even that one relativy small metric will be averaged over a fixed period of time so that one day move will even have much less impact. In fact it may be totally negated by other price movements. And this only applies to contract sales. None of the current futures prices will have any impact on spec sales of oil.

    IOW that 10% futures price movement will not likely have any impact on the revenue from oil sales during the remainder of the year. Just as those 12 month futures trading for $90+/bbl during the summer of 2014 didn’t prefict the current sub-$50/bbl prices.

  19. ennui2 on Fri, 28th Aug 2015 9:08 am 

    “The 3.7% increase is US 2nd qtr GDP growth is a stunner. And it is unlikely to be revised much lower since the 3.7% number itself is a huge UPWARD revision.”

    Time for Plant to pin an award on Obama for saving the economy.

  20. JuanP on Fri, 28th Aug 2015 9:17 am 

    Trilli, Right now I am mostly focused on learning more about Permaculture design and applications. I am building a Permaculture micro farm in Uruguay with my family’s help because I live in Miami at the time. I am growing food organically here and practicing survival skills on a regular basis.

    It seems you are on the right path with your food gardening and community building. If you haven’t yet, go organic. Try learning more about off grid renewable energy, creating a perennial food forest, composting, breeding worms, beekeeping, and soil chemistry and microbes. There are many people here at Peak Oil interested in these things and hanging around here is a good idea. I have learnt a lot here from some of the other regulars.

  21. JuanP on Fri, 28th Aug 2015 9:29 am 

    And, Trilli, I agree about Davy’s comments. When he is not annoyingly fighting with Mak, he writes some extremely well digested systematic analyses. He is obviously smart, well educated, and knows what he is talking about. It is very important to connect all the dots and analyse things in a systematic way like he does.

  22. shortonoil on Fri, 28th Aug 2015 12:25 pm 

    The price spike appears to be a war premium. Saudi Arabia just sent ground troops into Yemen. It’s the old question of will or, will not the Middle East blow up?

  23. Boat on Fri, 28th Aug 2015 1:13 pm 

    short,
    Did you mean the Nigerian problem with oil stealing and leaks from sabotage?

  24. Davy on Fri, 28th Aug 2015 1:28 pm 

    Trille, I am worried about climate change also. My worry is drying out from the high heat in summer. I am in central Missouri. I suspect winters will be nicer but who knows. My strategy to deal with it is native warm season grasses that tolerate heat and drought for my cattle and goats. I have great water sources also.

    As far as the other preps. I have done all the short term preps. Of course there is always more to do but the basics are covered. My big effort now is longer term. This longer term is moving away from the fossils fuel culture as best I can with permaculture cattle and goat grazing. I am working on all the skills I can that were pre-industrial. I am buying books, tools, and learning skills.

    If you ever have any question please ask I enjoy offering advice. I have been at this for 10 years now and before that I was into farming and the outdoors.

  25. apneaman on Fri, 28th Aug 2015 1:39 pm 

    Davy, I have a question. Have you discussed any aspects of collapse with any of your neighbours? I’m curious if locals are making unofficial plans to collectively manage when changes come? I know the transition people do this, but I’m curious about those who are more on the conservative and rural side.

  26. Davy on Fri, 28th Aug 2015 2:56 pm 

    Ape Man, there are few people down here that are actually keyed into the collapse scenario unfolding. I will say this my neighbors are an independent lot. They are a close community that helps each other out. They have some good transition skills and don’t know it. For them it is just normal cultural activities. They still practice good animal husbandry, gardening, and home economics like canning as a short list. The usual country living stuff.

    This region never got wealthy so the damage done by the consumer culture is less. That said the basis of community and culture is under pressure from the usual demons of American life. This is true everywhere in America but less so in my area. I will be curious to see just how much of the skills and assets of this country living kick in when SHTF. I feel much better being here than somewhere like St Louis naturally. I personally am a loner and stay on the farm. When I get out it is for business like farm store or cattle barn. That is my socializing. I pretty much work all day 7 days a week. If you wonder how I am on this board it is the wonders of an IPhone.

  27. apneaman on Fri, 28th Aug 2015 3:24 pm 

    I was thinking it does not matter if folks know as much as you do as long as they know a change is coming and there is some planning, your all ahead of it at least a bit and won’t be frozen with shock. I’m always planting little seeds with a comment here and there. Too much at once and they shut down. Dooming is for freaks!

  28. Davy on Fri, 28th Aug 2015 3:35 pm 

    Yea, Ape Man, I plant seeds too. Those who show interest I give advice to. The people showing interest usually only understanding part of the picture. It is a tough subject because actually doom is so broad and systematic today. It is truly a global phenomenon of multiple issues and possible tipping points. Most people can’t get a handle on it.

    I can because it has been a passion of mine since college. I read and research daily. Many people were not able to get a degree like I did and even then didn’t take the classes I did. They specialized are screwed off. Many didn’t even go to school. I think sometimes we are too hard on the sheeples. Many were never given an opportunity to be enlightened. Society conspires to dumb them down.

  29. ghung on Fri, 28th Aug 2015 4:47 pm 

    Funny thing is, guys, I know plenty of folks who seem to get it; at least agree that society is circling the bowl, and that we’re trashing our planet and all that, but are doubling down on BAU, buying bigger cars and ICE toys; things like that. Very few are practising conservation and ‘personal contraction’; getting used to living on less and being more self-reliant. I keep a list of friends and family who are the “Grasshoppers” vs. those who are the “Ants”. I won’t be as accepting as the Ants in the fable, when the time comes. In reality, I think the Ants ate the Grasshopper, but what do I know? Hopefully, I won’t have to take it that far :-0

    I’ve had some folks who’ve said my place is their planned bug-out destination. I explain things to them, like how many times they’ve promised to come help on the farm,, and how many times they’ve actually shown up. I ended up building our 72’x30′ high tunnel (greenhouse) all on my own, even though a number of folks said they were going to help and had plenty of notice so they could plan ahead. Always something came up. Me? I’ve got a sense of accomplishment. They? May be fucked when the time comes, and will know exactly why.

  30. Apneaman on Fri, 28th Aug 2015 6:18 pm 

    ghung, I have similar thoughts on ignorance being overrated. You do not have to be an obsessed doomer to know some things are seriously wrong in the world in the same way that you do not have to be medical doctor to recognize when someone is seriously ill. I posted a link to a story about whiplash markets on the other thread with an accompanying comment about how systems often have extreme swings as they near a tipping point. I think we are seeing that in peoples behaviour. Extreme consumption on one end and prepping on the other. How long has that been going on for? 1 maybe 2 decades? The rabid consumers may seem irrational, but if you look at it from a cultural perspective it is actually rational. If you’re raised in a belief system that measures life meaning “happiness” and success by amount of consumption and purchasing high dopamine producing experiences then of course people who bought into it are going to go to extremes and try and cram in as much as they can if they sense that these things will soon be ending. I think some of it is intuitive and subconscious and if your peers are doing it then all the more reason. The “Grasshoppers” and “Ants” analogy is good, but part of that is based in biology – some people are naturally more conservative, cautious and think longer term. My guess is that preppers are by and large the kind of people that don’t get heavily indebted, live within their means, pay their bills on time, etc, so they are just responding according to how they view the world except their behaviour is not pathological. Sounds like a good dieback will weed out the reckless ones eh? I think fossil fuels have enabled the growth of reckless and stupid genes/people, just like insulin has with diabetics. Our massive wealth and goodies have enabled 15-20 generations of apes to bypass the universal law of punishment for the stupid. The Darwin awards are coming back in a big way. I’m not saying individuals don’t have any choice – because they do. Just that we all have inherent gifts and detriments we are stuck with. For example, intelligence and energy levels – your born with and can be tweaked with effort, whereas sloth is a choice.

    http://www.darwinawards.com/

  31. Truth Has A Liberal Bias on Fri, 28th Aug 2015 11:01 pm 

    Iran is not the only Middle Eastern state well versed in the use of proxies. Middle eastern states will continue to fight along the lines of Sunni-Shiite religious divides, Arab-Persian ethnic divides and Turk-Iranian-Kurd-Syrian nationalistic divides. For the sake of argument let’s call it the Balkanization of the Middle East. Or the Lebanonization if you prefer. Conflict in the region will increase not decrease. OPEC does not exist any more as a functioning cartel. In fact it could be suggested that some of its member nations are engaged in very aggressive economic warfare with one another as well as thinly veiled proxy war. Egypt will likely become a natural gas importer this year which all but assure the collapse of their economy. That’s another 70 million people with no prospects whatsoever to be added to the growing list. Radical Islamism has taken a decidedly nihilistic turn with the advent of ISIS, an organization that sits in stark contrast to its much more pious predecessor Al Qaeda. Few rationale statesmen, or their proxies, would pull the temple walls down upon themselves, but nihilists are an unpredictable lot. My prediction is a ever expanding Hobbesian scramble. And a mean one at that. In time the waves of unregulated mass migrants will arrive well armed. Not looking for salvation and handouts but to conquer. For many the terror has already begun. For many more it is soon to come. Americans will withdraw to their crisis cults and circus clowns. Too weak to respond with any meaningful defence. They make better fertilizer than you did men.

  32. Boat on Sat, 29th Aug 2015 12:31 am 

    Here we go with the weak US. Where is China, Japan, and the rest of the importers who need that oil. The US is not about killing people for the sake of killing people. The idea is world stability for the oil markets to prevent world wide disruption. The shiny tin star who outlaws will never respect.

    Your Hobbesian idea is just BAU. Check out deaths per violence per country and the Middle East is relatively safe compared to Africa and N Africa. They been killing each other for ever.
    You just like to conjure up fear in an ever peaceful world.

  33. GregT on Sat, 29th Aug 2015 2:05 am 

    “The US is not about killing people for the sake of killing people. The idea is world stability for the oil markets to prevent world wide disruption. ”

    I’m beginning to smell dirty socks, once again.

    World wide disruption is climate change, brought on by the ‘oil markets’. Killing people is wrong, period. Especially when killing those people aids the fossil fuel industry in killing off all life as we know it, for the short term benefit of a small minority of extremely greedy people.

    After everything that you have been subjected to here Boat, and given the fact that you have ignored absolutely all of it, it is very clear (to me at least) as to who you are, and what motivates you.

    You are a disgusting piece of shit Boat. I sincerely hope that you and your Ilk rot in hell for all of eternity.

  34. Roman on Sat, 29th Aug 2015 2:30 am 

    Nothing is a choice. Sloth is a natural instinct that most humans ignore. They increase complexity and waste energy over nothing. Overachieving(greed)(likely caused by pussy addiction) is what causes extinction.

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