The oil price keeps falling. And most analysts seem convinced that they know the reason — it’s about supply, or demand, or Putin, or Saudi Arabia, or Syria or…
But what if it were something completely different, known only by top people at the world’s biggest banks. And you. That a new, clean and basically infinite energy source might replace oil (and gas, coal and nuclear).
Torkel Nyberg, who runs the blog Sifferkoll.se, has studied this hypothesis for several years. And half a year ago he got what looks like a smoking gun.
Sifferkoll.se was where the Lugano report on the 32-day test of the E-Cat was first published on October 8, 2014, and the interest turned out to be huge. As of today, the report has been downloaded about 150,000 times. Most downloads are made from the US, followed by Russia, Ukraine, China and Japan (see the diagram).
So who are all those people? Enthusiasts following the LENR topic? Researchers? Or maybe also some other kind of people?
Ratio between stock index Russel 2000 and oil price since 2012. Note October 8, 2014, when the Lugano report was released.
What Nyberg also noted was that at the exact time of the release of the report, the ratio between stock value (Russel 2000 index) and oil price (USO) took off like a rocket (see the graph). As of December 30, 2014, the increase was +84 percent.
And as you can see in the graph below, this was the first time in 22 years that stocks and oil were decoupled in that manner.
Now, Nyberg has also noted something else, which has not been publicized much. Since 2010/2011, when Rossi’s E-Cat was noticed publicly for the first time, the positions in oil futures and options at the commodity futures exchange NYMEX and the Intercontinental Exchange ICE have changed radically.
Ratio between S&P500 and oil price for the last 22 years.
There are basically four groups on these exchanges, Nyberg told me — oil producers, swap dealers (big banks), managed money (pension and saving funds), and others.
Earlier, oil producers had hedged their sales through contracts with a “short” position (contracts that let you earn money of the price falls). But since 2011, big banks like Goldman Sachs and JP Morgan have essentially overtaken this role. From initially having about 200,000 contracts with a “long” position (letting you earn money if the price increases), they have drastically changed strategy, moving to as much as 500,000 contracts with a short position, together with oil producers, securing the possibility to sale oil at $90-$95.
They have sold some of this but do still have almost 400,000 such contracts. With each contract applying to 1,000 barrels, and at an oil price at $45 per barrel, that corresponds to unrealized earnings of about $20 billion. And yet they seem to keep waiting. Which means that they expect the price to fall further.
The information is public at cftc.gov and yet few have commented on it. Nyberg wrote a piece on his findings on Oilprice.com two years ago, without much people picking up this data, although the post has had 38,000 hits by now. And since then the change has only been reinforced, Nyberg says.
The hypothesis is that big banks know about the E-Cat and LENR since 2010 (possibly because Rossi might have had early contacts with U.S. military), and that they act on this information but want to keep it secret as long as possible. The longer they can maintain the information advantage, the bigger gain they can make the day LENR reaches public awareness and oil price plunges to almost zero.
And the losers? Owners of large oil fields — mostly nations and oligarchs. And “Managed money” — i.e. savings and pension funds — that have long positions in oil. In other words, you and me.
As Nyberg points out, shale oil is the common explanation for why the banks don’t believe in an increased oil price. But as he also notes, it’s strange that analysts at the big funds don’t come to the same conclusion.
“We’re talking about oil analysts with basically the same job on Wall Street, just with different employers … Yet they make completely different analyses of such a well documented and publicized phenomenon as shale oil. Something must be wrong,” Nyberg says.
And indeed, pulling out the details on the banks’ positioning, together with the timing of the Lugano report, undoubtedly makes an intriguing case.
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BTW — I’m glad to see that Nyberg found this little mostly unnoticed update in the second edition of An Impossible Invention.
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This post was updated with the SP500/oil price graph, and a quote by Nyberg on February 2.
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UPDATE 2: Back in 2012, BlackRock Inc., the world’s largest asset management company, wrote in a report called ‘US Shale Boom: A Case of (Temporary) Indigestion’ (p 11): “We are closely following start-ups experimenting with new technologies such as low-energy nuclear reaction and fusion. If successful, these efforts could completely change the current status quo and hurt traditional energy producers. It is worth watching this space. People tend to overestimate what can be done in a year, but underestimate what can happen in a decade.”
Torkel Nyberg said that the Lugano report was downloaded by Blackrock minutes after it was released in October 2014.
UPDATE 3: Ooops — I forgot to mention the interest in LENR showed by Bill Gates (who received the first copy of my book in Stockholm on March 31, 2014). In November he went to visit ENEA, a renowned LENR lab in Italy, ‘on a personal trip to learn more about the innovative work the agency is doing’, and in the Annual Letter 2015 he was hinting about an energy source such as LENR.
Maybe it was just a coincidence that his close and longtime friend Warren Buffett sold off a $3.7 billion investment in Exxon Mobile during Q4, 2014?
AN IMPOSSIBLE INVENTION 
Oil prices will nver go down for one simple reason. Only half of crude oik=l is needed for energy. The other half will keep on being needed for plastics, chemicals and the other stuff that is not for energy. When synthetic oil is produced en masse from water, carbon dioxide and nitrogen then oil “might ” go down in price.
The blog post is now updated with the quote from Blackrock’s report.
Anony, I should add that this post is obviously quite speculative. I recommend you to read this one instead:
https://animpossibleinvention.com/2015/02/01/replication-attempts-are-heating-up-cold-fusion/
Yet, regarding the financial perspective it might be worth noting that the American multinational investment management corporation Blackrock wrote this in a paper on shale oil, already back in 2012 (!):
“We are closely following start-ups experimenting with new
technologies such as low-energy nuclear reaction and fusion.
If successful, these efforts could completely change the current
status quo and hurt traditional energy producers. It is worth
watching this space. People tend to overestimate what can be
done in a year, but underestimate what can happen in a decade.”
Click to access us-shale-boom-us-version.pdf
Thanks for your encouragement Anony 😉 Time will tell if your analysis was correct…
The world’s eccentrics love a good conspiracy theory. “Secret energy source disrupts multi-trillion dollar energy industry!” If I set up a blog site and documented the so-called impact of alien metallurgy on the U.S. military complex advancements you’d all lambast me to no end. Yet Rossi’s e-cat impact on the world is equivalent to the alien metals theory, that is, none. In fact, there is probably more evidence to the later than the former. Area51 and Roswell, NM pundits have had hundreds of “proofs” created and written up elaborating truth of their theories. More so than Rossi’s JONP nonsense. Yet do you believe in alien tech? Of course not. Only fools would believe such claptrap. Just as believing in Rossi is just as foolish.
Sometimes I wish time would just speed up 10 years and all you Rossi-farians would finally have to come to grips with your delusion.
Mats though, he’s the only one making out in this deal and I applaud him. Identify a controversy. Realize that there is unresolvable contention within it. Pick the supporting side. Write a book and sell it to both the believers, who’ll buy it to justify their biases. And to the skeptics who will buy it to see how foolish the arguments are. Genius. I hope you make enough $ to buy a house or send your kids to college. Something useful to come from all this nonsensical BS.
The oil price fall is a geopolitical move designed to squeeze marginal producers out of the game, and hit Russia, Venezuela et. in the pocket. Any effect that LENR may in future have on the oil price is well over a decade away.
@Broncobet @Sow Yes, I also think that these well-known mechanisms are the reasonable reason for the falling oil price, and it’s difficult to believe that LENR could influence. But again, try to explain what happened in the beginning of October 2014 that had such a huge impact on the stocks/oil price ratio, and continues to have that impact.
Probably something else, and probably it was just a coincidence that the Lugano report was released on October 8. But what was it?
My comment was meant as an answer to you, Roger.
As you well know, any LENR developments have a zero affect on the price of oil.
While I was initially thinking the EXACT same thing as you I’ve come to DISAGREE with this theory in whole.
While its definitely possible that some bankers know about this (and maybe some have reacted to this), they won’t ALL necessarily react to such a massive degree based on unmatured technology which is still yet to have any commercial product.
A move on this scale means there are bigger, more relevant issues.
The actual reason is simple – Saudi’s are trying to bankrupt the shale oil production in the US by keeping their supply levels very high in the midst of lowering demand. By keeping up the high supply in low demand period they will effectively bankrupt the massive investment the US has made in shale oil as their cost of production is very high compared to the saudi’s. If the Saudi’s adjust their output to match the demand, then oil prices would have pretty much stayed the same, but they didn’t. They are hoping that they (once again) be the key supplier of global oil production.
For a proper, logical understading of the issue. You can read this http://www.quora.com/Falling-Oil-Prices-2014-15/How-long-will-low-oil-prices-continue
I agree Rob. Yet the combined data set is intriguing. Kind of itches… And being a science person I have a sweet tooth for data.
Oil prices have collapsed more often in the past, even to $20 a barrel. If banks, big oil companies and big investment funds are well aware of LENR there would be other big effects to observe besides only oil and gas prices.
Take for instance Nickel prices or investments in wind and solar energy. I don’t see multiple economical effect on those fields correlated with the release date of the Lugano report. LENR fans (including me) may see things a bit biased if not careful.
Thanks Ian — interesting.
Dear Mats
The other major indicator is Big Oil’s asset position.
The fact is Big Oil sold their oil field assets I have made that clear in various posts for a couple of years:
http://oilprice.com/Latest-Energy-News/World-News/NASA-Expect-Low-Energy-Nuclear-Reactors-to-Replace-Domestic-Boilers.html
Shell has been on a massive divestment strategy on its oil field assets, from Africa to the Far East since September 2011, though as it was already tracking the Black Swan and has a department specifically tasked with watching this particular Black Swan develop, it knew before the others, it just speeded up its divestment of oil fields as the Black Swan became more visible.
http://www.thisdaylive.com/articles/official-shell-has-divested-from-eight-oil-fields-in-five-years/189166/
http://www.hydrocarbons-technology.com/news/newsshell-divests-stake-nigerian-oil-asset
http://www.ft.com/cms/s/0/9754d97c-2dbe-11e4-8346-00144feabdc0.html
http://www.telegraph.co.uk/finance/newsbysector/epic/rdsa/8496742/Shell-to-sell-Nigeria-oil-field-stake-for-600m.html
They accelerated the sales of their oil fields as a certain report from the town of Lugano in Switzerland started doing the rounds in the scientific circles in June July of 2014
http://www.ibtimes.co.uk/shell-speeds-nigeria-oilfields-5bn-sell-off-plans-1462810
Other Fossil Fuel companies on a divestment strategy since September 2011 include BP who sold their stakes in fields in the North Sea, Russia, the Arctic and the Gulf to name but a few, and not even batting an eyelid about being refused license to buy future assets in the Gulf.
http://www.bp.com/en/global/corporate/press/press-releases/bp-agrees-sale-interests-alaska-north-slope.html
http://www.ogj.com/articles/2014/04/bp-to-sell-to-hilcorp-its-interests-in-four-ans-assets.html
http://www.bbc.co.uk/news/business-20527045
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7081129
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7080956
http://indrus.in/articles/2012/11/29/rosneft_and_bp_to_develop_new_arctic_oil_fields_19411.html
http://www.forbes.com/sites/marketnewsvideo/2013/10/29/bp-commits-to-divesting-another-10b/
Connoco
http://www.nasdaq.com/article/conocophillips-to-sell-5-bln-stake-off-kazakhstan-to-incur-400-mln-q4-charge-20121126-00448
http://www.bidnessetc.com/25669-conocophillips-to-divest-north-sea-oilfield-stake/
http://online.wsj.com/articles/conocophillips-sells-nigerian-oil-assets-to-oando-1406741704
http://www.fool.com/investing/general/2013/12/06/big-oil-divests-nigerian-assets.aspx
ExxonMobil
http://www.thestar.com.my/business/business-news/2014/06/13/exxonmobil-sells-stake-in-seligi-oil-field/?style=biz
http://www.foxnews.com/world/2012/11/09/iraqi-official-says-exxon-mobil-is-trying-to-sell-stake-in-major-oil-field-by/
http://www.newsystocks.com/News/4108444/Weak-Demand-Outlook-Forces-Exxon-Mobil–XOM–to-Sell-Its-Japanese-Unit
http://www.reuters.com/article/2012/11/07/us-iraq-exxon-idUSBRE8A60Y420121107
Even the pipeline parts and refinery companies joined the rush to divest the fossil fuel business.
http://dcnonl.com/nw/32627/cb
http://online.wsj.com/article/SB10001424127887323830404578145611979409082.html?mod=googlenews_wsj
Some are trying to cover their strategy and the risk by divesting half of the asset others are just cashing in their chips.
http://www.digitaljournal.com/pr/536428
http://www.linkedin.com/groups/Chesapeake-spinoff-oil-field-services-1947337.S.5881791537699905537
http://in.reuters.com/article/2010/03/25/us-conoco-lukoil-idINTRE62N43M20100325
I could fill this page with how many oil fields Big Oil has dropped since September 2011.
Big Oil is in the Oil Business they still need oil for their oil refineries and business so what have they been doing to ensure supply?
They have been taking out (1)options to lease on (2)US fraking fields and Canadian tar sands.
Note that (1)”options to lease” They are renting. They have stopped owning and rent instead. You rent/lease an asset rather than buy it when you know the asset is about to take a big hit. That way those who own the asset bare the cost.
And that second part the assets they are leasing are based in the (2)”US fraking fields and Canadian tar sands” you move to a more expensive supplier and out of a cheaper third world asset when you know the asset is about to experience social unrest and disruption. The kind of disruption that comes with say a massive drop in the value of an asset they were relying on.
If big oil thinks oil has no future, why does anyone else think it has?
Kind Regards walker
The saudis also acts as if they think low oil prices are here to stay. Forecasts say that shale production will decrease due to depletion within in few years, se EIAs forecast here
http://www.energymanagertoday.com/aeo-2014-gas-to-overtake-coal-097676/
The glut is about 1-1.5 million barrels/day [mb/d]. World demand is about 93 mb/d. Both Russia and the saudis produce about 10 mb/d each. Still they go on producing, causing a glut that more than half their income, instead of reduce production by 1 mb/d making the market stable.
We know for a fact that Big Oil knows about LENR via Shell mostly. And I am relatively certain that they have been selling assets and turning around and leasing them in response to LENR announcements. But I fail to see why this would bring down the prices of oil/gasoline. When the price of oil goes to zero, I want to be around to buy it because we will still need oil for a long time to come, perhaps a couple of decades. And they ALL know this. So, please explain why LENR announcements are driving down the cost of oil/gas.