$60 Crude = 80 cent Loonie

Commodity Marketing

Tools

$60 Crude = 80 cent Loonie

Jan 2, 2018 | 16:21 1 WTI crude oil is now surging above $60 per barrel pulling the loonie to 80 cents and possibly higher (IMO).

Recent stiff fallout in the U.S. dollar (USD) is contributing to Cdn dollar strength as well. This may be a rough year for the American greenback as the U.S. budgetary crisis broils and the Fed may be hard pressed to make their promised 4 rate hikes in 2018 while unwinding their massive $4.5 trillion balance sheet. Talking-the-talk is a lot easier than walking-the-walk . . . . Neither will happen in 2018 in my view.

There also appears to be a genuine threat of an incoming U.S. recession which could trigger more desperation of renewed money printing stateside (QE4). Shrinking bond yield spreads now telling a story.

Power of global central banks are definitely fading, gradually losing their manipulative market influence.

Welcome to 2018 . . . . Reply With Quote
Jan 2, 2018 | 18:57 2 Riots in Iran pushing up crude oil price? Reply With Quote
Jan 2, 2018 | 19:19 3 What is the discounted price of crude feeding the western Canadian refineries?


Pretty important point.... Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 19:28 4 Remember when crude was about $145 a barrel and gas prices were about $1.24/liter

Now gas prices are a bit over a buck and crude 60....

That important detail? If that argument is even relevant.....I'm sure there's a legitimate explanation. Reply With Quote
Jan 2, 2018 | 19:58 5
Quote Originally Posted by Oliver88 View Post
Riots in Iran pushing up crude oil price?
Believe Libya pipeline explosion shutting day 70,000 to 100,000 barrels per day contributing to oil price strength. Reply With Quote
Jan 2, 2018 | 21:06 6
Quote Originally Posted by farmaholic View Post
Remember when crude was about $145 a barrel and gas prices were about $1.24/liter

Now gas prices are a bit over a buck and crude 60....

That important detail? If that argument is even relevant.....I'm sure there's a legitimate explanation.
Cad was 1.10 early 2008 Reply With Quote
ajl
Jan 2, 2018 | 22:08 7 Crude is peaking here. Cold snap is over, keystone is back in action which will narrow spread between Alberta sludge and west Texas, US pumping oil with all its might so oil will be back under $50 by late Feb. Good place to short loon here as $USD rises from here. I doubt there will be 4 raises in US interest rates in 18 as well, one or two more likely. I just hope that there will be at least one rate rise in Canuckistan this year. If there are farms with $126 million dollar mortgages here, we need rising rates badly. Reply With Quote
Jan 2, 2018 | 23:01 8 ajl, I agree. CAD will have a tough time getting over 80 and could easily lose a penny in here. Oil might have another 3-5% in it but is ripe for a pullback

Wheat is interesting. A combination of a lower USD and cold weather created enough energy for a small gap up in Chicago and KC. MW didn't put in a showing. I would keep my eye on Kansas wheat for a while.
Drought conditions ongoing in some areas.

Gold doing well too. Should match the sept 17 high with a shot at the summer 2016 high Reply With Quote
Jan 2, 2018 | 23:42 9 Will eventually be traded with bitcoin so possible it won't matter what any individual country economy is doing. The value will be set world wide? That is unless the people with the money change the rules. Reply With Quote
Jan 2, 2018 | 23:56 10 It pays to elect idiots so that the dollar doesn't increase. We know what we re doing!! HahahHa Reply With Quote
Jan 4, 2018 | 08:35 11 Errol,
Do you sell gold futures? NO offense, but the only other person I hear talk the way you do, sell gold and precious metals on the radio on Sunday morning Reply With Quote
Jan 4, 2018 | 09:00 12
Quote Originally Posted by Redone View Post
Errol,
Do you sell gold futures? NO offense, but the only other person I hear talk the way you do, sell gold and precious metals on the radio on Sunday morning
Gold suffers from global deflationary pressures and a sharp decline in physical gold buying demand by India consumers. Precious metal prices have done very little over the past five years and remains 30% below highs seen in 2012 during the China economic miracle period.

Recent temporary jumps in gold have been driven by geo-political events driving spec buying ie: North Korea. Gold prices needs the support of global inflation to thrive and maintain strength. Spec buying alone will not maintain gold rallies (IMO) . . . . Reply With Quote
Jan 4, 2018 | 09:22 13 errol what effect will cryptos have on gold and any other market for that matter. There is only so much money to invest.
I think there is an initial time frame where cryptos are an investment then shouldn't they become a normal price stable as that value is figured out for each currency?
What are your thoughts? Reply With Quote
Jan 4, 2018 | 09:59 14
Quote Originally Posted by the big wheel View Post
errol what effect will cryptos have on gold and any other market for that matter. There is only so much money to invest.
I think there is an initial time frame where cryptos are an investment then shouldn't they become a normal price stable as that value is figured out for each currency?
What are your thoughts?
If this occurs, banks and the banking system may be under pressure. Really have no idea right now as cryptos are now targeted by criminal money and unregulated. Reply With Quote
Jan 4, 2018 | 11:22 15 That's true the value of them likely will be determined by how they are regulated or if not. if they catch on worldwide what would be the value of holding gold? Good backs money does crypto need to be backed? It's always there. No bank to go broke or no worry about the country go broke either. It's interesting stuff. Reply With Quote
Jan 4, 2018 | 21:32 16 It appears is putting the pedal to the floor with approving offshore drilling....Al Gore fan club will undoubtedly lose their mind.

http://abcnews.go.com/Politics/trump-administration-seeks-expand-offshore-drilling-federal-waters/story?id=52141264

I’m assuming this is part of the USA energy independence America First plan....which should reduce funding terrorist friendly countries. Reply With Quote
Jan 5, 2018 | 07:52 17 December job data in both Canada and U.S. released this morning . . . .

U.S. unemployment remains at 4.1% with a 45 year low labour participation rate of 62.7%
Dec jobs created 148,000, well below the average consensus of 190,000 jobs. Biggest losses in retail.

Canada superstar report . . . . Dec jobs created approach 80,000, well above the average estimate of 1,000 jobs . . . say huh? Our unemployment has declined to 5.7%.

Translation, huge move higher in the Cdn dollar after release. Loonie now approaching 81 cents U.S. Reply With Quote
Jan 5, 2018 | 21:50 18 Errol, what sectors are these jobs being created in? I don't see many new jobs in the wealth creating category ie. Ag, mining, resources, construction, manufacturing are all these jobs low paying service sector and public sector jobs? Reply With Quote
Jan 6, 2018 | 06:50 19
Quote Originally Posted by Misterjade9 View Post
Errol, what sectors are these jobs being created in? I don't see many new jobs in the wealth creating category ie. Ag, mining, resources, construction, manufacturing are all these jobs low paying service sector and public sector jobs?
Have to take the amazing Cdn jobs report with a grain-of-salt. Part-time jobs were more than doubled. Banking jobs up amazing 25,000 at a time consumer lending is tightening. Really? But Canada’s growth is chugging along at around 2 to 2.25 percent.

Lot of talk now of a BOC rate hike soon due to this number. Don’t count on it. Cdn economy is in for some headwinds in 2018. View this report as highly skewed . . . . Reply With Quote
Jan 6, 2018 | 20:00 20 Tired of all the winning yet? lol

Reply With Quote
Jan 7, 2018 | 09:10 21 Errol if CDN $ is tied to price of oil expect it to go down.

It’s cheaper and easier than ever to produce oil, and natural gas. Fracking is easier and better than ever, horizontal drilling, exploration, etc. Company costs are way down, cost per barrel way down,

Trump isn’t going to import oil any more, he is going to be full out oil drilling and self sufficiency, ( they buy lots from Canada) drilling in the US gulf, Alaska and the Arctic, usa protected reserves, etc

And we will have carbon tax ☹️ Reply With Quote
Jan 7, 2018 | 14:55 22
Quote Originally Posted by Rareearth View Post
Errol if CDN $ is tied to price of oil expect it to go down.

It’s cheaper and easier than ever to produce oil, and natural gas. Fracking is easier and better than ever, horizontal drilling, exploration, etc. Company costs are way down, cost per barrel way down,

Trump isn’t going to import oil any more, he is going to be full out oil drilling and self sufficiency, ( they buy lots from Canada) drilling in the US gulf, Alaska and the Arctic, usa protected reserves, etc

And we will have carbon tax ☹️
Personally feel the U.S. dollar is in for some rough waters through 2018. The U.S. is at-risk of falling into recession despite a record-breaking stock market. Quite an economic irony. But the astronomical U.S. debt is insurmountable and will cost growth for the next generation.

And the Fed wants to hike rates 4X in 2018 while beginning to unwind their $4.5 trillion balance sheet (sell bonds) at the same time? In my opinion, 'not a hope-in-hell'. The U.S. economy is in no state to handle the training wheels coming off this fast. A wrong move by the Fed could quickly spark a recession. And the next recession could be a dandy as the Federal Reserve has now run out of economic life jackets.

Global oil is priced in U.S. dollars. A weakening USD supports oil prices. Realize the economic hurdles in Canada, but investment money is now flowing out of the U.S. and away from the USD (IMO). The loonie may get support by accident from international investment osmosis (if that makes any sense).

It's truly a crazy economic world out there . . . . Reply With Quote
Jan 7, 2018 | 14:59 23 Won't they just switch to crypto currencies and the crisis will be averted?


My sides hurt too from laughing so hard. Reply With Quote
Jan 9, 2018 | 13:43 24 If crude holds 62.6 Friday we ratchet to the next level. Starting to wonder if .91 CAD is a possibility. Timing showing April next major turn if higher here on CAD.
Last edited by macdon02; Jan 9, 2018 at 13:49.
Reply With Quote
Jan 10, 2018 | 17:42 25 That's off the table... for now Reply With Quote
Jan 10, 2018 | 22:12 26 Heard a lot of talk this afternoon about the NAFTA talks breaking down. Canada trying to get ahead of this by taking the USA to the WTO for complaints. USA putting tariffs on pulp newsprint. The suggestion that the USA would call a halt to trade talks. Non of that sounds good for the Canadian dollar. What if they halt shipments of crude to the US? maybe grain? manufactured goods? any scenario like that won't help our dollar either.
Last edited by danny W1M; Jan 10, 2018 at 22:17.
Reply With Quote
Jan 10, 2018 | 23:23 27
Quote Originally Posted by macdon02 View Post
That's off the table... for now
Searching for new indicators here. Best guess is CAD more or less sideways/channel for now. Gut feeling is it should be going down but it keeps surprising by hanging in there. Still, long term indicators are saying 82 plus is the level it has to go above and stay above if it is going higher.
While a pullback in oil would not be surprising, what would be surprising is if it cratered. I think over the next year WTI will continue to rise or at least hold its own. The products have potential for more upside too. Gas over diesel Reply With Quote
Jan 10, 2018 | 23:27 28 All over print news online this evening that Canada suspects Trump to cancel NAFTA at end of month after next trade talks 23-28th (can't remember exact days). Canada not going to budge on US demands so down the shitter it goes. Maybe Trump can reopen the Canada-US trade agreement afterwards and really make Dumbo squirm. Reply With Quote