Crude continues to crash, but that's no surprise to me. I've been warning of where oil would be heading as headline inflation and broader macro data continue to decelerate.
"Global synchronized recovery" turns to "Global synchronized margin call." The real-time market commodities + FX components in are now down over 15 percent since early October with crude being down into a bear market.
To wit in "Winter Is Coming:"
"There is currently a 19.8% premium versus the 20-year seasonality , and there's over a 24 percent gap from where crude currently stands and the 5- and 10-year seasonality , respectively. Looking at the futures market, large speculators positioning (on a 5-year percentile) has been sloping lower as price diverges."
"However, now growth is expected to slow along with inflation which is a bad mix. I have been pointing out since early summer, my DRIP-model (disinflation/reflation/inflation proxy in pink) has been pointing to lower-lows in U.S. inflation . In turn, consumer prices fell from a five-year high of 2.9% to 2.3%
Given how market conditions are building, and the recent action in crude, the U.S. could be facing inflation under 2% and that has serious implications when concerning Fed policy."
This evening, API reports a massive 7.8 m/bl build in inventories. This is something I mentioned to expect as we rotate into winter.
"Historically, crude prices under-perform from September to January: -.04% (Sept.), -1% (Oct.), -1.2% (Nov), -.5% (Dec.) and -.7% (Jan.)."