Oil's end-game consists of pounding global risk assets lower on a monthly basis, until the "floor" is found...this could take a while...
Red line is the ratio of USO ETF / WTI, indicating the front month ground and pound just getting underway...
"That was above the 9.9 million-barrel increase reported by the American Petroleum Institute, and more than four times higher than the rise of 2.5 million barrels expected by analysts"
Oil inventories
S&P 500 with oil: I'm seeing a pattern here...
To see the net effect of the monthly "front month smash" we can look at the USO Oil ETF as a ratio of the 1 Month continuous futures contract. The ETF buys the front-month and then rides it to expiration. Always buying high and selling low...
We can see that the one month contango is widening every month as the spot oil market gets more saturated...
USO:WTI ratio (red) (with WTI in the background):
Rate of change, lower pane:
Oil bottoms ahead of each contract rollover/expiration, no doubt due to short-covering and storage arbitrage...
Rate of change overlaid with oil price:
Super Contango Visualized:
The gap between the spot and one month future will "widen"...
Red line is the USO:WTI ratio (the same ratio as the first chart above)
"That's not a bottom, THIS is a bottom"
As we see from rate of change (lower pane) immediately above, realized oil volatility will be 2-3x current levels.
This is implied oil volatility with stock market volatility (red)
(log scale). Usually stocks precede oil in bottoming, but this time it's the other way around...
