CNBC Guest Blog
- Top Five Mistakes to Avoid in Online Dating
- Farr: Money, Jobs and Politics — We're Still in a State of Risk
- Bindi: Charm is Not Enough for Italy's Prime Minister Mario Monti
- Christakos: Getting Ready to Retire? Start by Rightsizing Your Home
- Morici: Curb Trade Deficit, Rev Up Oil to Engineer More Growth and Jobs
- Guest Blog: Tax Doesn't Have to Be Taxing
- How to Date a Wall Street Man
- Charfen: Hitting Bottom and Starting Over
- Scott: Can Being Bored Make You More Successful?
- CEO Blog: The Truth Behind Brand Building
- Tesla Unveils First SUV: Model X
- New York Fashion Week Hits the Runway as Colors Pop
- Mulling Buffett's Stock Advice? Get in With REITs: Fund Managers
- LinkedIn Earnings Bode Well for Hiring and Social Media
- Top Five Mistakes to Avoid in Online Dating
- Victor Cruz ‘Understands’ Gisele's Super Bowl Frustrations
- Tamminen: The United States of India
- Unusual Volume: Taleo Jumps After Oracle's $1.9 Billion Offer
- Warren Buffett: Stocks Will Outperform Gold and Bonds .. and They're Safer 'By Far'
- Stocks Looking Past Europe for a New Driver of the Rally
- Israel Likely to Bomb Iran This Year: Political Analyst
- Greeks on Strike as the Second Bailout Is in Limbo
- EU Agrees Rules for $700 Trillion Derivatives Market
- The World's Best Beers
- Citigroup Takes $50 Million Loss in Lending Rate Probe
- Barclays Warns May Miss Medium-Term Profit Goal
- Will Romney Regret Opposing Michigan Auto Bailout?
- In Europe, Stagnation as a Way of Life
RSS FEED
Schork Oil Outlook: Wall Street Speak Trumps Reality
Text Size 
Stephen Schork
Editor of
"The Schork Report"
ENERGY PRICES WERE STRONG ON THURSDAY… and what a difference 24 hours makes. On Wednesday we received a stark reminder from the DOE of how bad the fundamentals are, i.e. demand is weak and supplies are high and getting higher as a result.
But, that was sooo Wednesday.
Yesterday we saw that only 584,000 Americans filed for first time unemployment insurance claims… and apparently, that is a good thing?
 |
Demand, not only for gasoline, but for other major products markets as well, is going the wrong way, i.e. from the top left to the bottom right on today’s chart in The Schork Report.
Thus, Big Oil is straining under the weight of poor margins.
So far this earnings season we have the following lowlights from the second quarter:
- Repsol… profit down 62 percent
- Shell… profit down 67 percent
- BP… profit down 53 percent
- ExxonMobil… profit down 66 percent
- ConocoPhillips… profit down 76 percent
- Petro-Canada… profit down 95 percent
It is now hard to reconcile these earning’s reports, demand was lousy in the second quarter (and it not any better today). Yet, this market was being fed a fantastic lie back then… the less bad is good mantra. Thus, whereas spot crude oil on the NYMEX finished the first quarter just below $50 a barrel (49.66) it finished the second quarter just below $70 (69.89). Crude oil rallied 40 percent as profits at the world’s largest oil companies were tumbling.
Why? Because this market wanted to ignore the obvious and lull itself to sleep with silly pseudo-intellectual catchphrases… green shoots, crocuses, mustard seeds and this season’s rookie of the year… the second derivative.
Thus, while we were led to believe that demand for oil was rising in the second quarter, hence the justification for that 40 percent surge on the NYMEX, we now have the balance sheets from Exxon, Shell et al. that prove it was a lie.
 |
Look at the screenshot of headlines we pasted on the top of today’s issue of The Schork Report. Profits for Big Oil are down as demand is at generational lows. However, look at the very first headline, the NYMEX was higher yesterday because “… corporate earnings boost confidence…”
Huh? According to this one article, demand for oil and therefore profits for oil companies are down, but the NYMEX rallied yesterday because Motorola [MOT
Loading...
()
] (mobile phone maker) had a smaller than projected loss and Calphalon [NWL
Loading...
()
] (cookware) and Paper Mate [NWL
Loading...
()
] (writing instruments) had better than expected profits.
Does that make sense? Of course it doesn’t. And, if you are bearish you better be concerned. On Wednesday it took a large, countertrend build in crude oil supplies to pull the market down $3.88 a barrel. One day later it took absolutely nothing to push it right back up.
_________________________
Stephen Schork is the Editor of, "The Schork Report" and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.
Data is a real-time snapshot *Data is delayed at least 15 minutes
