I am enjoying these annotated charts, via David, who asks:
“Why has copper advanced more than oil in the latest bounce? Where might copper be going from here, and why? And lastly, Where is oil going from here (and why)?”
click for ginormous chart
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Dollar depreciation leads to higher inflation and ultimately forces foreign creditors to question their rationale and indeed their sanity for continuing purchases of U.S. Treasuries." -Bill Gross
Signs continue that European markets are getting tired. The Spanish and Italian stock markets, big beneficiaries of the sharp decline in their bond yields over the past few months are falling to the lowest since Feb 1. The European bank index is at a 1 1/2 week low after earnings reports from Commerzbank and Credit Ag (RBS bouncing although reporting weaker than expected earnings) were disappointing. This market action is in spite of the German IFO business confidence figure which rose to a 7 month high coming in a touch above expectations and Italian consumer confidence which bounced more than...
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August 26th, 2009 at 11:59 am
I thought about this too the other day with all the money being created. I wonder if there are more speculators in copper and someone is putting the clamp on oil speculation now. just a thought I had.
August 26th, 2009 at 12:00 pm
Oil is lagging behind the advance of copper, no doubt, and again it comes back to Chinese demand of commodities – copper in particular. However somewhere in here one must add oil has been used a currency hedge as everyone has been screaming, “The dollar is falling! The dollar is falling!”
August 26th, 2009 at 12:01 pm
where’s the MACD?
August 26th, 2009 at 12:11 pm
Oil and copper are needed in military build-ups
August 26th, 2009 at 12:11 pm
Crude has topped, dollar seems like it is recovering from the bottom. We will see a short term reversal in the market post labor day.
August 26th, 2009 at 12:45 pm
arghhhhhhhhhh, copper has been my baine, fwiw, alot of mines shut mines last year at near the top, china was the buyer at 4 for two years, best guess they averaged down, lord knows we were not using more, imho, they just did too copper what they did to oil, they are storing it wherever they can, and imho it’s not just china it’s our favorite wall street houses probably have wearhouses everywhere, also an etf was started in 11-07, so anyone now can buy it outright, look at a weekly chart of it, the volume is well, spectacular, on an hourly it’s a perfect trendline, lately reports saying it will go too new highs past the 4′s into the 6′s, so, copper is just the new oil imho
August 26th, 2009 at 12:46 pm
All i know is we don’t want to be asking T-Bone Pickens or Goldman Sachs where oil is going.
August 26th, 2009 at 12:54 pm
I think we love predictions because if we make predictions, and/or concoct explanations for those events we predicted wrong, then we won’t feel like victims of randomness. We feel more in control. But are we more in control or just intoxicated by some illusion of control? Can we trade these commodities?
As a trend trader you just need movement and emotional investors, which is something we had in spades last year. Right now, we’re seeing some commodities move three steps forward and two steps back, when you’d rather see them move six steps forward.
August 26th, 2009 at 1:17 pm
For those who don’t know the commodities markets, copper is said to have a PhD in economics. This is because copper is used in so many industrial and consumer products that you know something is happening if demand for copper is rising. If you were to watch one indicator copper could be a reasonable one to follow.
August 26th, 2009 at 1:25 pm
Copper is more easily stored than oil. There is no additional room for oil left(they have filled the tankers), whereas copper has plenty of room. You can store $5.72 of copper per cubic centimeter, but only $.00044 of oil per cubic centimeter. If there is no additional room to store oil, then it cannot be bid above the current supply/demand point for a significant amount of time. Otherwise demand will fall too significantly, there will be an excess of oil on the market, and the price will have to fall. Copper can be put into a bubble regardless of storage capacity, but oil is limited by that.
August 26th, 2009 at 1:41 pm
I have no clue on where copper is heading. My best guess for oil is that it goes higher. I think we can all agree that oil is a finite resource. The last time the dxy was at .78 in 9-08, oil was at $100 a barrel. Now I realize that a lot has happened since then. Regardless of whether the economies of the world actually get better or the MSM make us all “feel” like it’s a recovery, eventually world consumers come back and with that so does the demand for oil. And last but not least, as McHappy points out, oil is being used as a currency hedge.
August 26th, 2009 at 1:50 pm
@HTCMSE
“you know something is happening if demand for copper is rising”
All anybody KNOWS is that the price of copper is going up.
That doesn’t necessarily mean that there is actual NEED for copper (vis-a-vis manufacturing products).
- Perhaps there is just stockpiling going up because some mines were shut down last year and someone wants to get in front of a perceived bottleneck 10 years down the line (as it takes time to start those things back up).
- Perhaps there is “speculation” in the price by GS (using free taxpayer money) to cause the illusion of demand for a “PhD in economics” commodity to get the sheeple to follow a tried and true economic trend and pull the rug out later.
- Perhaps there are actually “goods” being produced with it, but in the end, no buyers fro those goods will emerge, and the whole thing collapses.
As I said before…All anybody KNOWS is that the price of copper is going up.
August 26th, 2009 at 1:53 pm
It seems the old reliable Dr. Copper may be getting faked out by the new dynamics of the global economy and the monetary stimulus that is distorting markets. I think he’s an old fart who doesn’t understand the newfangled economy of Dr. Bernanke and the other CBers and their printing presses.
August 26th, 2009 at 1:57 pm
I’m thinking people are using copper as an inflation hedge…or more accurately, a devaluation hedge [?] and oil I believe is overpriced…
…there are a lot of powerful people who are vaguely aware that the internal combustion engine’s heyday is past.
It would take only one President w/congress that had some cojounes [not these clowns] to nail the coffin tight on wasteful polluting internal combustion engines. But it would take boldness for the common good. Trillions on TARP? Bush/Obama say yes. 10′s of billions on technology development to improve every aspect of our lives? Bush/Obama say no.
As an American Engineer, I find the lack of US leadership humiliating. Gore might not have talked like JFK, but he did have the “vision thing” going for him, these two clowns could carry his jock strap.
August 26th, 2009 at 2:03 pm
agree, worldwide economy was built on 20-30 barrell of oil, that’s in all spreadsheets, 140 broke the back, if GS and paulson and bernie are really in control, they must keep oil below 85 or all bets are off, note all these great earnings came from ultra cheap commodities compared fo 4 year average, the fact is with the volatility in commodities budgeting becomes almost impossible unless u have deep pockets, very deep, how many companies have that????
August 26th, 2009 at 2:10 pm
Al Gore would be getting boned by Bernanke, just like Obama/Bush, were he President. He’s like the second string quarterback everyone thinks is so good. But he was smart to retire from politics and write a manifesto for the oh-so-smarter-than-thous global warmists so that everyone can now pretend he’s some great statesman and prophet, when he’s really just a hick from Tennessee that inherited everything he ever got, including his own outsized carbon footprint.
Supply and demand fundamentals have very little to do with the price of copper and oil, unless you are talking about the supply and demand fundamentals of money, particularly American dollars.
August 26th, 2009 at 2:13 pm
Correction:
REF: Bush/Obama
“Gore might not have talked like JFK, but he did have the “vision thing” going for him, these two clowns could[n't] carry his jock strap.”
August 26th, 2009 at 2:16 pm
Too bad Al Gore doesn’t walk the way he himself talks…
August 26th, 2009 at 2:16 pm
S Brennan Says-
“As an American Engineer, I find the lack of US leadership humiliating. Gore might not have talked like JFK, but he did have the “vision thing” going for him, these two clowns could carry his jock strap.”
no doubt- I liked Gore- he did himself in because his person was a bit wooden and angry- but I 2nd your impression that he would have been better than the Bush/Obama- I would think we would be well on our way to energy independence had he been elected- and that’s throwing all the other debate out the window- such as global warming- true or not true- who cares- lets just get on with energy independence-
sometimes it cost more initially to make bold changes- but it sets yo up for a better future in the end-
look at Bazil for example
August 26th, 2009 at 2:23 pm
“You can store $5.72 of copper per cubic centimeter”
??
That seems rather high.
Are you going to force me to break out my periodic table??
:)
August 26th, 2009 at 2:39 pm
“A price surge and easy bank credit this year encouraged pig farmers, stock brokers and businessmen to buy copper and nickel for speculation, Liu Na, an analyst with Scotia Capital, wrote in a note dated Aug. 17, citing reports from the state-owned China Central Television.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWyu1gOpqXQo
August 26th, 2009 at 2:42 pm
If copper could go from 390 to 130….losing 2/3 of it’s “value” in some 7 months….
Is there any reason it couldn’t do the same again??
August 26th, 2009 at 3:38 pm
Someone else beat me to the punch: Copper is much more easy to store (hoard) than oil.
The 61.8% overhead is indeed important resistance. I see the 2.95-3.05 as a very stiff zone of resistance. Copper appears to have traced out a “double zig-zag” from the lows, so there is a completed wave model present. All we need, as with every other market, is to see some evidence of peaking action to confirm a major top for this year. A break down below the 2.62-2.52 from here would be pretty bearish. It would lead to a major correction in prices.
The other thing going on with copper, which is different than oil, is that it’s possible that copper’s actual peak was in 2006 and that we concluded a major correction with the lows beginning this year. Crude is much different. Unlike copper, there’s no chance we have concluded anything with crude–there is a very powerful leg down coming, which is maybe why it’s struggling to get to a 38.2% retracement…
August 26th, 2009 at 3:50 pm
@ Andy T:
that’s the dilemma… is the lag an opportunity for oil to make up ground to eventually mirror the copper move or is the fact that its so far behind indicative of its relative weakness vis a vis copper and its own innate weakness here… it is funny to talk about oil, having gone from 35 to 75, as being innately weak, but then again the S&P just went from 670 to 1030 and you can argue that its innately weak here itself…
August 26th, 2009 at 3:51 pm
Watching oil, C and XLF of late, they seem the most important signposts in these lazy hazy days of summer.
LB is not very interested in the ephemeral action in the zombie stocks, the GSEs, AIG etc.. and reckons once C and XLF roll over the rest will follow. JNK rolled over a while ago, spreads are widening for lower quality credit.
August 26th, 2009 at 5:55 pm
Singer:
My take is that crude oil is just demonstrating weakness. “Nearly” all the commodities bounced at the same time. My takes is that the ones that have bounced the weakest will be the ones to suffer the most on the next down leg.
There is a lot of historical correlation between copper and crude, but I personally would veer away from any sort of long CL/Short Copper strategy.
August 26th, 2009 at 7:46 pm
Late to this thread…
But in the long run… if it happens the way in which the world goes to electric cars (which I, frankly, am a skeptic of)… Nevertheless, if everyone PERCEIVES that the world is going to electric transportation, copper is more valuable than oil…
August 27th, 2009 at 1:24 am
@ cvienne Says: August 26th, 2009 at 1:50 pm
- Perhaps there is just stockpiling going up because some mines were shut down last year and someone wants to get in front of a perceived bottleneck 10 years down the line (as it takes time to start those things back up).
- Perhaps there is “speculation” in the price by GS (using free taxpayer money) to cause the illusion of demand for a “PhD in economics” commodity to get the sheeple to follow a tried and true economic trend and pull the rug out later.
- Perhaps there are actually “goods” being produced with it, but in the end, no buyers fro those goods will emerge, and the whole thing collapses.
As I said before…All anybody KNOWS is that the price of copper is going up.
Those are the valid counterpoints in a healthy debate. We all know China likes to stockpile in a way that can skew the market and wrongfoot everybody for a short period of time at least.
The counter to that argument is that copper is so ubiquitous that the market for it can only be manipulated for a short period of time. Even with the likes of China and GS playing around in the pool
@Onlooker from Troy Says: August 26th, 2009 at 1:53 pm
It seems the old reliable Dr. Copper may be getting faked out by the new dynamics of the global economy and the monetary stimulus that is distorting markets. I think he’s an old fart who doesn’t understand the newfangled economy of Dr. Bernanke and the other CBers and their printing presses.
I remember them saying the same thing about Dr. Yield Curve a few years back. ;)
August 27th, 2009 at 9:24 am
WHEN TRADING – DO YOUR OWN THINKING, MANAGE YOUR EXPOSURES AND EXPECT THE UNEXPECTED
http://viewpointsofacommoditytrader.com/372/are-you-trading-for-thrills-or-dollar-bills/