Tuesday Links: The Ultimate Cheat Sheet for Selling Anything

Some items you may find interesting this morning…

Futures Links

Time to buy coffee? Many traders have scalded themselves trying to catch a bull trend (DragonFlyCap)

Fed introducing plans to limit banks’ commodity activities (Bloomberg)

China continues to buy U.S. soybeans despite the looming Brazil harvest (Agriculture.com)

The Vampire Squid calls crop futures a bad bet for 2014 (Agrimoney.com)

WTI crude looking at its worst start to a year since 2009 (Bloomberg)

Sugar stares down a four-year low (Investing.com)

Other Fun Stuff

Did you know that dating to 1990 the S&P 500 has dropped one percent an average of 32 times a year? In 2013 it did so 17 times (Avondale Asset Management)

The ultimate cheat sheet for selling anything (James Altucher)


Monday Links: U.S. Oil and Gas Production Shoots to the Moon

A handful of links to start this holiday week…

Futures Links

oil and gas production shoots to the moon (Frank Holmes)

American farmers move 1.6 million acres of conservation land into production (NPR)

The California gold rush of 1849 vs. the North Dakota oil boom of 2013 (Business Insider)

British Columbia lumber exports to China sets record in 2013, topping $1.17 billion (Stockhouse)

U.S. farmland prices drop for the first time in four years (Agrimoney.com)

Cotton rides strong export numbers higher (Lubbock Online)

Other Fun Stuff

A high IQ doesn’t automatically correlate to trading success (Martin Kronicle)

Retail traders won’t escape the CME price hikes…bummer (Trader Planet)

Wednesday Links: Can Spinach Save the Florida Orange Juice Industry?

Today’s links begin with a bit of parody: the definitive chart on bubble physiology. Hat tip to @ACTOFCONGRESS on StockTwits.

 bubble chart

Futures Links

The end of the Mexican state oil monopoly could add 2.5 million barrels a day of production, but don’t expect immediate results (Bloomberg)

China rejects 30 percent of U.S. corn shipped due to unapproved GMO strain (Reuters)

Rabobank sees cocoa as top performer and soybeans the worst in 2014 (Agrimoney.com)

A look at how Chinese agriculture reforms may affect the prices of cotton (Agrimoney.com)

Scientists look to GMO to save Florida’s orange crop (BusinessWeek)

Other Stuff

A convincing bear argument for a corporate earnings retreat (John Hussman)

What will it take to keep the stock market flying in 2014? (Market Watch)

Boca Biff: the man who has lived the above “Happy Trading…” chart multiple times (Doug Kass)

Taper expectations: September versus today (Money Beat)

Tuesday Links: To Taper or Not to Taper? That is the Question…

Howdy y’all, I’m back after two weeks away with a fresh set of links. I was on holiday in Africa and am planning a quick post soon about what I learned about investing while on safari.

But before I get to that, I’m introducing a slight tweak in my daily links. I’ll now be dividing out the commodities/futures specific links with other stuff I find interesting. As this is primarily a futures trading blog, I’m listing the former first.

Let me know if you have any feedback on this new approach or have any other ideas. I love to hear from you.

Thanks for reading!

Futures Links

It is time for a fun bubble in commodities (Financial Times)

Contrarians are getting that shiny look in their eyes for gold (Market Beat)

Arabica coffee jumps to two-month high… of course it does when I’m away (Business Recorder)

The oil market sits around waiting for the Fed taper decision (Investing.com)

Corn can’t break the pressure as GMO concerns and the South American harvest loom (Business Recorder)

Other Fun Stuff

To taper or not to taper? That is the question… (Tim Duy)

A nice list of investing-themed books from 2013 (Reading the Markets)

I look forward to this every year…investments fads and themes 1996-2013 (Reformed Broker)


Abundant Supplies of Shale Oil Hold Down NYMEX Crude Prices

Much like how oil lubricates the engine of your car, oil is the single most important input for lubricating the global economic engine. As such, a host of fundamental factors can influence its price, making crude oil arguably one of the most complex commodities to trade. Even ex-traders from the supposed masters of the universe, Goldman Sachs, were torched trading the spread between Brent and West Texas Intermediate in October. Thinking it would shrink, it rose as oil shale production in the U.S. defied expectations and headlines in the Middle East pushed up Brent prices among many other factors I have no clue about.

Further pressuring WTI crude prices, last month the U.S. surpassed Saudi Arabia as the world’s largest producer of hydrocarbon products. Saudi Arabia and Russia still produce 3 million barrels more crude than the United States; but in the long-term, the U.S. will pass both in crude production after 2020 continuing until around 2030. That is if you believe the current projections for the amount of recoverable oil still in the ground.

Presently, at least, oil is overflowing in Cushing, Oklahoma, the WTI futures contract deliver point, as the United States Energy Information Administration noted that crude stockpiles have risen for nine straight weeks.

Perfectly illustrating American’s oil production renaissance is this nighttime satellite image of Earth taken last year, below, highlighting the immense size and scale of the North Dakota shale boom. In most cases, the bright orbs represent dense population centers where lights are the brightest, such as Denver or Los Angeles. Not so in the northwestern corner of North Dakota. That bright (circled) spot represents the drilling operations at the Bakken Formation composed mostly of natural gas burn-off.

North Dakota Shale Oil & Gas Wells Light Up the Night Sky

North Dakota Shale Oil & Gas Wells Light Up the Night Sky

High Prices Cure Themselves

In the previous decade, oil was a one-way bet as prices rose from 2002 to 2008, rising from $20 a barrel to more than $147. But as is often the case, the best cure for high prices is… high prices. The oil industry introduced new techniques to tap into oil that was previously cost prohibitive to drill and now no one is quite sure how much unconventional oil can be produced and for how long.

Looking at the big picture, crude oil, at least the WTI variety, is bearish and prices are reflecting this sentiment. After peaking at $112 on August 28, WTI crude has shaved off nearly $18 in the front month contract. The unrelenting flow of supply has overshadowed all other factors, including an improving economy, changes to the ethanol mandate and on-going turmoil in the Middle East, as demonstrated by the orderly downtrend in the three-month daily chart, below.

Crude Oil Prices in the U.S. are sinking under record supply

Crude Oil Prices in the U.S. are sinking under record supply

WTI Crude to the $80s?

In the past two weeks NYMEX oil has consolidated between $93 and $96 per barrel. Following the old adage that prices follow the path of least resistance, once can reasonably assume a continuation of a drown trend. If that happens, prices must pass through long-term support at $92 and $90 before breaking into the $80s. Barring any sort of supply shock or an airstrike on Iran, WTI prices will remain under pressure for the time being.