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US economy looking great? Really?
"Prices dropping below the $36.50 a barrel mark could signal a further downturn."
WTI 35.39 -0.31 -0.87%
WTI 36.87 +0.08 +0.22%
WTI 36.31 -0.37 -1.01%
19.16 right now.
WTI $37.06
WTI $38.45
Saudi Arabia expects to construct solar cell arrays in order to provide electricity and cut back on burning oil to generate electricity for domestic consumption.
Apparently they are now burning 25% of their oil to generate electricity for which they charge their citizens less than a penny per kiloWattHour. This low price means a lot gets wasted..
This is important because, the talked about "freeze" is a "production freeze", not an "exporting freeze". The more solar cells they install, they more oil they will export.
Meet the millennials looking to get rich or die tryin’ with one of Wall Street’s riskiest oil plays
By Sally French and Shawn Langlois
Published: Mar 30, 2016 10:32 a.m. ET
“Y-O-F**KING-LO,” the teen wrote, flashing his trading statement. “900 to 55K in 12 days!”
On Reddit, he’s known as “World Chaos,” a Florida high schooler who earlier this year multiplied his money by betting against the S&P 500. His real name is Jeffrey Rozanski, and the 18-year-old’s appetite for risk would make many seasoned market players facepalm.
In one corner of the Internet, though, praise rained down. “You magnificent bastard,” read one reply. “Sailing away on your yacht while the rest of us f**kers who went long are looking for the nearest window.”
That was peak “WallStreetBets,” the Reddit forum where “YOLO” is the war cry, Martin Shkreli is a role model, and irreverent traders trawl for tickets to quick wealth. It has become what one member calls “the beating heart of millennial day traders.”
“It’s tasteless, hilarious and subversive,” said Erik Johnson, a 28-year-old manufacturing worker and forum regular from Boston. “And you definitely need to have a thick skin to partake.”
The latest obsession on WallStreetBets is UWTI UWTI, +7.15% an exchange-traded note that has become a favorite of younger investors — thanks, in part, to the Reddit forum. It is a near-perfect embodiment of the YOLO spirit: Highly volatile, it uses a combination of derivatives and debt to amplify bets on oil, creating opportunities for quick profits.
And, of course, wrenching losses.
Reddit as financial adviser
Reddit, which calls itself the “front page of the Internet,” hosts a collection of discussion boards that operate more like hive mind than social network. Users vet posts through a system of “upvoting” and “downvoting,” and they have proven both dedicated to ideals of free speech and impervious to political correctness.
While fewer than 10% of U.S. adults say they use Reddit, it has become an influential sounding board of super-engaged users, nearly 70% of whom are male, while 56% are between 18 and 29.
In other words, it’s just the kind of place you might expect rowdy young traders to gather in 2016.
A screen capture of the header image on WallStreetBets
Another Reddit forum, or subreddit, called Investing has more members — more than 183,000, compared with about 38,000 “YOLOers,” which WallStreetBets calls its subscribers. (“YOLO,” short for “You Only Live Once,” became a popular term in 2011 after Drake used it in a song.)
But WallStreetBets is lively, engaged and growing. It was in the top 1% of Reddit’s more than 824,000 subreddits in new-subscriber growth over the past 90 days, according to RedditMetrics.com, and its more than 2 million monthly page views represent more traffic than all of the other stock-related subreddits combined.
Jaime Rogozinski, a 34-year-old who has worked in international banking and recently moved to Mexico City to work in finance with early-stage startups, created WallStreetBets after getting “downvoted” for discussing risky bets on the Investing subreddit.
If the Investing subreddit is a mild-mannered financial adviser who advocates diversification and dividend stocks, WallStreetBets personifies a foul-mouthed, risk-taking day trader.
The forums are “kind of like archnemeses,” said Rogozinski.
WallStreetBets also claims a famous alum: “Pharma bro” Shkreli was once a moderator, though he deleted his Reddit account after his social-media accounts were hacked.
“This subreddit, they love Martin Shkreli,” said Asad Butt, a 25-year-old Pennsylvania trader who posts frequently to WallStreetBets. “He is living their dream. He got rich. He might have lied and cheated along the way, but [on the forum] that’s encouraged.”
“People want yachts,” Butt said. “They want to be rich. The joke is we are all aspiring millionaires. Shkreli actually did it. He’s a hero.”
All aboard the ‘YOLO’ train
Each day, WallStreetBets moderators ask subscribers their planned moves for the session. “All aboard the yolo train,” one recently replied. “Full disclosure I did a bunch of Xanax and drank a bunch of coffee 30 minutes ago.”
Talk of “YOLOing” — going all in on a huge bet — is frequent, if not constant. On March 7, one member announced a move into the penny stock Triangle Petroleum Corp. “Jumped into $TPLM and currently sitting on a mountain of $YOLO waiting for a gap up tomorrow.”
“If you find anything volatile and high risk, that’s where you’ll see people flocking,” Rogozinski said. “Are we encouraging risky behavior? Yes.”
For the past year, the gamble of choice for WallStreetBets followers has been the VelocityShares 3X Long Crude ETN known by ticker as UWTI, which tracks futures contracts on WTI crude oil CLK6, +3.58% (ETNs are unsecured debt notes, so investors can lose everything if the underwriter goes bankrupt.)
“UWTI for LIFE baby!!” a subscriber named DrFreshh wrote in December. “History tells you all the patterns. It’s a big time win! Been researching for 20 hours straight (except for the occasional cigarettes). This is it boys and girls! Life savings on the line, we have hit the gold mine. Ask me anything and I can tell you why its bullish like none other, or the yacht is on me.”
When asked how many shares he intended to trade, DrFreshh responded, “100,000. 200,000. that’s pennies. This is an opportunity of a lifetime! I’m gonna invest like its get rich or die tryin.”
Reddit mentions of UWTI, counted by posts with the ticker in the title, went from one in 2013 and 12 in 2014 to 381 in 2015, according to a MarketWatch analysis. In just the first two months of 2016, 124 post included “UWTI” in the title. Most were on WallStreetBets.
UWTI ranked fifth in TD Ameritrade’s top 10 list of shares most traded by millennials in 2015; it wasn’t among the top 10 most traded by older investors. That’s no coincidence, according to Rogozinski.
UWTI is “the 3x leveraged high-risk abstract synthetic derivative of the month for beginners right now,” Rogozinski said. (He has not traded it himself: “I’ve made it past this stage,” he said. “That’s not to say I didn’t trade something similar when I went through my crash course for Wall Street.”)
Most traders don’t hold UWTI for more than a few days; in some cases, they are in and out in minutes. On Jan. 25, it lost more than 22%. On Sept. 1, it sank 21%. Over the past 12 months alone, it’s dropped double-digit percentages on 27 different days, according to FactSet data. Volume, meanwhile, has skyrocketed in 2016.
There were plenty of days with upside, too. UWTI rose more than 13% one day in March. Still, UWTI is down more than 90% in the past 12 months and is now just above $21 per share. In May 2015, when oil was trading above $60 a barrel, UWTI had reached $428.
Even high schooler Rozanski lost on UWTI. He put $500 on it after reading about it on WallStreetBets, losing 20% before selling. But he then booked his big win, riding option bets against the S&P 500 SPX, +0.78% to earn his notorious $900-to-$55,000 profit. (He posted a screenshot to WallStreetBets as proof.)
WallStreetBets has become a “platform for millennials like us to learn about UWTI and lose money,” Rozanski said.
‘No Pity Parties’
The promise of quick money has long been a draw for investors with big ambitions and high tolerances for risk.
“It’s the gambler’s dilemma,” said Jeff Fischer, a longtime adviser for the Motley Fool, who calls the action in WallStreetBet reminiscent of the late 1990s, when traders flocked to the Raging Bull and Silicon Investor sites to tout positions. “As long as you’re making money, you want to keep playing. Almost everyone only stops after they’ve lost.”
F.S. Comeau, a Montreal-area 30-something, recently hung up his WallStreetBets mouse after a stretch that landed him in the doctor’s office. “I lost well over $150,000 on oil from 2014 to 2015,” said Comeau, in an email.
Trade-related stress was making Comeau, who said he made most of that money back trading options on Apple AAPL, +2.12% , miserable — and sick. “I was down by so much I didn’t see my portfolio recovering within years, if ever. I hadn’t slept in 2½ days and I was barely hanging on due to caffeine.”
Reddit might look lawless to an outsider, but each board enforces its own “Reddiquette,” homegrown rules that are near-inviolate on some subreddits. On WallStreetBets, there are two rules: “No Pity Parties” and “Do be responsible giving and taking advice.”
And so while the forum’s tone is gung-ho, many members express concern for their fellow investors, offering protective, if blunt, sentiments. Rogozinski, for his part, said he worries that a huge early win can give new traders a false sense of confidence. “The faster you go up at the beginning, the harder you fall,” he said.
And when one post earlier this year labeled “New to investing” asked about the potential for UWTI to rise to $300 in two years, many responses instead explained that leveraged ETFs decay over time, as well as why UWTI isn't meant to be a long-term holding.
“No offense, but the question posed proves you aren’t ready to make that trade because you clearly haven’t researched what the hell you’d even be buying into,” one commenter responded.
Comeau trades less frequently now, though he doesn’t rule out an eventual return to WallStreetBets. “I’ve spent enough sleepless nights, and I’ve laid long enough in bed with my heart pumping,” he said. “Unless you’ve personally experienced it, you have no idea how hard it is and the toll it can take on your body.”
Young investors are generally encouraged to take on more risk, since time is on their side. But big, all-or-nothing bets on UWTI are particularly dangerous. “Believe me,” said Comeau, “Most of them, if not all of them, will be losing money trading it.”
Teen trader Rozanski, meanwhile, admitted that his big win was “pretty much dumb luck.” He thought about buying a Ford Mustang with his haul, he said, but decided to keep the money to fund future investments, celebrating modestly: His mom took him out to see “The Big Short,” and he bought a new computer with two monitors.
“So I can trade better,” he explained.
Katie Marriner contributed to this article.
http://www.marketwatch.com/story/the-millennials-looking-to-get-rich-or-die-tryin-off-one-of-wall-streets-riskiest-oil-plays-2016-03-30?siteid=yhoof2
WTI $37.74
WTI $37.91
WTI $38.19
Yellen’s remarks spooked oil
Fed Head Has Impact By Stilling Discordant Voices
Tuesday March 29, 2016 18:12
When the head of the Fed speaks, people tend to listen more than they do to the secondary (non-voting) members. And today, Federal Reserve Chairwoman Janet Yellen delivered a crystal clear message.
The time is now less propitious than this past December when the Fed dared to raise rates. Here are a few words and phrases that she used to describe conditions and how the Fed would probably act in the near term: cautiously; too early to tell; the inflation outlook has also become somewhat more uncertain; market turbulence, and, slightly weaker.
Not exactly party-hat talk, is it? Yet there are many observers – some within the Fed – that are interpreting Yellen’s speech before the Economic Club of New York as neutral, as opposed to dovish. (The prepared remarks certainly weren’t hawkish.)
We feel it is a strong affirmation of the new release outlook and comments following the last FOMC meeting in mid March. The “slightly weaker” cited above refers to the condition of the global economy although there was some verbal shilly-shally regarding just how important that weakness is to the U.S. economy. It’s hard to believe a weaker world would help the American economy.
U.S. markets took a decidedly undecided stance. Equities seemed to like Yellen’s words, all three major indexes up on the day, even if not terribly strongly.
Somewhat counter-intuitively, gold rose significantly, even if much of the gain was from a weaker U.S. dollar. The entire precious metals complex was up on the session, platinum grabbing the title as strongest in show with a 2.45% uptick.
The dollar weakness was ranged across the whole spectrum of the currency basket. The buck was down against the yen, which implies the Japanese currency is being utilized as a haven. The same scenario held true for the Swiss franc, another haven currency.
Over in the bond department, yields on the 10-year Treasury fell, another sign that haven, or at least breathing room, was being purchased. Face prices would naturally be up.
Crude oil took a beating today, the biggest loser due mostly to the news that Iran is considered now not planning to freeze output in the near to mid term.
We have been saying for some time that there is far too much crude already in the marketplace and an impressive amount “out there,” just waiting to be tapped. Where either the souped-up demand or a serious reduction in production and supply might come from truly escapes us.
Interestingly, Yellen’s remarks spooked oil as well as she said we should be prepared for oil prices to go lower again. This is, no doubt related to her appraisal that the world economy is still slowing.
West Texas Intermediate and Brent North Sea oils were both down around 2.5% in late afternoon trading.
http://www.kitco.com/commentaries/2016-03-29/Fed-Head-Has-Impact-By-Stilling-Discordant-Voices.html
Yellen says caution on rate hikes is justified and takes negative rates off table
By Greg Robb
Published: Mar 29, 2016 12:20 p.m. ET
Yellen says too early to tell if inflation pick up will last
WASHINGTON (MarketWatch) — Federal Reserve Chairwoman Janet Yellen on Tuesday defended the U.S. central bank’s decision to move cautiously on interest rates hikes given the risky outlook, as she also revealed the toolkit in case the economy stumbles.
“Global developments have increased the risks” to the outlook, with economic and financial conditions still less favorable than in December when the Fed engineered its first rate hike in a decade, Yellen said in a speech to the Economic Club of New York.
“Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy,” she said. She did not mention a month for when the Fed could lift interest rates.
Also see: Live blog of Yellen Q&A with economists
Yellen said the overall fallout from market turmoil in the first seven weeks of 2016 will most likely be limited, but said this was still uncertain.
The Fed chairwoman repeated her doubts that the pickup in core inflation since the beginning of the year was the start of an upward trend.
“It is too early to tell if this recent faster pace will prove durable,” Yellen said.
In an unexpected twist to the speech, Yellen tried to bolster investor confidence that the Fed was not powerless to aid the economy in the event of another recession even though the central bank can’t cut rates very much.
She said the Fed could make promises, or what she calls “forward guidance” on interest rates, and also mentioned the possibility of buying more bonds or exchanging short-term bonds for longer-dated ones.
Yellen made no mention of negative interest rates as a possible response.
http://www.marketwatch.com/story/yellen-says-caution-on-rate-hikes-is-justified-and-takes-negative-rates-off-the-table-2016-03-29
WTI 37.99 -1.40 -3.55%
WTI 38.06 -1.33 -3.38%
Added some UWTI at 21.41.
WTI 38.40 -0.99 -2.51%
WTI 38.46 -0.93 -2.36%
WTI 39.16 -0.23
WTI 39.21 -0.18 -0.46%
UWTI has not done well in the last week.
WTI 39.14 -0.32 -0.81%
WTI - 39.38 -0.08 -0.18%
Saudi Arabia expects to construct solar cell arrays in order to provide electricity and cut back on burning oil to generate electricity for domestic consumption.
Apparently they are now burning 25% of their oil to generate electricity for which they charge their citizens less than a penny per kiloWattHour. This low price means a lot gets wasted..
This is important because, the talked about "freeze" is a "production freeze", not an "exporting freeze". The more solar cells they install, they more oil they will export.
What Oil Production Freeze: Russia Just Revealed The Laughable Loophole In The OPEC "Agreement"
Submitted by Tyler Durden on 03/24/2016 14:27 -0400
B+ Contango Crude Crude Oil Iran OPEC Reality Reuters Saudi Arabia
The main catalyst that pushed the price of oil from a 13 year low in early February, when crude briefly traded in the mid-$20 to well over 50% higher less than one month later in one of the world's most furious short squeezes, was the recurring infatuation with the fabricated narrative that OPEC would if not cut production then, then at least freeze it.
We mocked this, as recently as one month ago, when we wrote "About That "Oil Freeze": Russian Crude Production Sets New Post-Soviet Record In February" an article which was self-explanatory:
... according to calculations by Bloomberg's Julian Lee, Russian crude and condensate production just set new post-Soviet daily record of 10.92m bbl yesterday.
He notes that the monthly estimate is based on daily data from Energy Ministry’s CDU-TEK for 1st 25 days, and applies the average rate over last week for final 4 days. And since this compares with a revised 10.91m b/d for January, it means that Russia took the production "freeze" seriously: by freezing at a new record high level of production.
What was even more entertaining, is that the so-called "production freeze" came at a time when both Saudi Arabia and Russia, the two most important oil exporters in the world, were already producing crude at the highest recorded level - they couldn't produce more even if they wanted to.
Then this so-called "freeze" took on a truly bizarre twist one week ago when we first heard what we thought at the time was a cruel rumor, namely that while OPEC production may indeed be frozen, there is absolutely no limitation on exports. In fact, the lower the domestic demand for oil, the greater (and in the case of Saudi Arabia and Russia, even more record) the exports would be:
* * *
Moments ago we learned that this was not in fact a "cruel rumor" but was the whole truth, when Reuters reported that "Russia will export more oil to Europe in April than it has in any month since 2013 - despite Moscow's plan to sign a global agreement on freezing production in a bid to lift the price of crude."
Asked what would be covered by the agreement, Russian Energy Minister Alexander Novak told reporters: "The discussion is only about freezing production. And not exports."
The high level of Russian oil exports next month was confirmed to Reuters on Wednesday by export pipeline monopoly Transneft. According to the company, Russia is set to export 7 million tonnes from Baltic Sea ports in April, the largest volume since October 2013. That marks a 9 percent increase on the 6.41 million tonnes planned for export in March.
Oops.
At this point Reuters confirms what we have said all along: that the "production freeze" is just a farce, designed to jawbone the price of oil higher when in reality not only will it not limit supply but may very well boost it as exports increase to offset declining domestic demand (which is to be expected among the depressed oil-exporting countries):
The fact Russian exports are rising illustrates how hard it will be to enforce the deal, due to be finalised on April 17 in Qatar, and shows the potential for countries to use loopholes to keep exporting crude, blunting the intended impact on prices.
Russia can raise exports while keeping production flat by re-routing some oil away from refineries and into exports. Moscow says the freeze covers production, not sales abroad.
The joke is now only on the algos: as we noted yesterday, even the IEA admits the production freeze "deal may be meaningless."
It gets even better: Iran and Libya have said they will not participate, at least for now, and they plan to raise production. It gets better: Nigeria, the top oil producer in Africa, has said it expects oil exporters to agree a supply freeze in Doha next month but that it plans to boost its own output.
In other words, not only is there not a deal, but this is merely the latest validation that OPEC no longer can enforce anything, and has effectively lost its cartel status.
Reuters confirms what we said in a tweet one week ago: "the increase in Russian exports is mainly because of planned maintenance at refineries that reduced their capacity to process crude. It also reflects Russia's economic slump, which has reduced domestic demand for refined products."
But another factor, according to one trader, is a desire by Russian producers to protect their share of the crude oil market in Europe, where Russia's traditional dominance is under threat from newly arriving Saudi supplies.
"Of course, no one said those markets belong to Mother Russia. This is purely commercial trade," said the trader, who spoke on condition of anonymity because he is not authorised to talk to the media. "But a marketplace is a marketplace, no one is going to give it up."
But what is most laughable, is that in addition to the 30+ million in offshore barrels that will soon have to be unloaded on land as the contango no longer makes offshore storage economical (as described yesterday) the global supply glut is about to get even worse thanks to the likes of Russia, who are about to unleash an unprecedented export flood on the rest of the world.
According to Reuters calculations based on Energy Ministry data, Russia will have as much as 4.3 million tonnes of idle refining capacity next month, more than twice the 1.9 million tonnes unused in March.Russian refineries traditionally have the largest offline capacity in April, as companies scramble to finish maintenance before consumption of oil products peaks in summer.
This forces producers to divert crude towards exports, because there is nowhere to store the oil that otherwise would have gone to refineries.
This means that as soon as next month, there will be an extra 2.4 million tonnes of extra oil being exported by Russia; how this oil will be sold to some willing end buyer without crushing oil prices in what is already a 3 million barrel/daily oversupplied market, is unknown.
http://www.zerohedge.com/news/2016-03-24/what-oil-production-freeze-russia-just-revealed-laughable-loophole-opec-agreement
Climate Change Proposal? LOL
Kuwait oil company says it's found new oil and gas field
MIDDLE EAST
Published March 24, 2016 Associated Press
KUWAIT CITY – Kuwait's state oil company says it has discovered a new oil and gas field in the Western part of the country.
Kuwait Oil Company said in a statement to the country's state news agency Thursday that preliminary tests suggest the new field in the al-Jathatheel region will provide a significant boost to the country's resource reserves.
It says company teams are currently carrying out tests at the field.
The statement gave no estimate on the size of the field, and a company spokesman did not immediately respond to a request for comment.
According to the U.S. Energy Information Administration, Kuwait has the sixth largest crude oil reserves worldwide. Kuwait is a member of OPEC bordering Iraq and Saudi Arabia at the northern end of the Persian Gulf.
http://www.foxnews.com/world/2016/03/24/kuwait-oil-company-says-it-found-new-oil-and-gas-field.html
UWTI is not a stock.