sparky wrote:.one shouldn't worry too much about the Nymex WTI quoted price
it's a crappy index used as a plaything by speculators
from the financial Times on USO futures
"As of Friday, the fund held the equivalent of 146.5m barrels of WTI crude futures for June delivery on the New York Mercantile Exchange, a division of CME Group."
for memory the total oil production of the US is 13M/B.d , only a fraction of which is Cushing related
there is , what, twenty time more barrels being bought and sold than really exist
many of the investors don't even understand the mechanics of what they are investing or the industry itself
.........suckers !!!!!!
But that's true of a lot of futures markets. The market is there originally to help buyers and sellers of the commodities for their mainline business, manage pricing and cash flow risk. The speculators (of all sizes, shapes, and styles) jump on board to try to profit. On the plus side, it adds a LOT of liquidity to the market. But on the minus side, many speculators (including most of the retail market) are quite clueless, and you have more volume re contracts (sometimes MANY times more) than the actual commodity volume in existence.
Nothing new or special about that.
I just checked oil prices on oilprice.com, and aside from the Urals, it's a bloodbath across the board. Is Brent a "crappy index" too? And the OPEC Members' basket? Both are down over 20% today.
Looking at NYMEX WTI futures, they're ALL down. And for the next year out, they're ALL down pretty strongly, unlike yesterday where the further out months were relatively unscathed.
The overall contango is getting steeper, as was the case yesterday. But today, apparently the market has far less confidence that this is only a short term phenomenon.
Obviously the market could be wrong -- I'm just taking a look at the broader market data to point out that this isn't JUST a weird one-off thing due to a "manipulated" index (re the short term contracts, which is all USO plays in).
Making the imperfect the enemy of the good (i.e. imperfect oil indexes) is a mistake. Looking at one thing in isolation without sanity checking context re LOTS of other available data is, IMO, a mistake. (This is what leads doomers to make endless bad calls, year after year, and decade after decade).