Posts belonging to Category Oil



Asian shares fall as China manufacturing data disappoints

Slower Chinese factory growth

Shares in Asia fell on Tuesday as readings on China’s manufacturing activity failed to meet expectations, underscoring weakness in the world’s second-largest economy despite Beijing’s attempts to spur growth.

Both official and private business surveys pointed to slower Chinese factory growth this month, dashing hopes for a steady reading or even a faster expansion. Data also showed a slower expansion in its services sector, adding to economic uncertainty.

The dollar-denominated MSCI index of Chinese shares dropped 0.8 percent. But Chinese blue chips in Shanghai and Shenzhen kept losses in check, losing less than 0.1 percent as investors maintained hopes for further measures to prop up the economy.

The weak manufacturing numbers suggest “stimulus is there to stay,” said Frances Cheung, head of macro strategy for Asia at Westpac. Upbeat data for March had prompted some analysts to scale back expectations of additional support measures.

http://www.reuters.com

Oil falls after record U.S. shale output forecast

Shale production alone will hit a record 8.4 million barrels per day next month

Oil fell on Wednesday after the U.S. government said shale output would rise to a record next month, denting a rally that sent prices to their highest this year. Brent futures eased by 53 cents to trade at $65.92 a barrel by 1312 GMT, still within sight of Monday’s high for the year of $66.83. U.S. futures were at $55.77 a barrel, down 31 cents, having touched a 2019 peak of $56.39 earlier.

The U.S. Energy Information Administration said in a monthly report on Tuesday shale production alone will hit a record 8.4 million barrels per day next month, suggesting little chance of a near-term slowdown in overall U.S. crude output.

http://www.reuters.com

Asian stocks retreat

U.S. political tumult adds to growth worry

Asian stock markets retreated again on Wednesday, extending a rout that began last week as U.S. political uncertainty exacerbated worries over slowing global economic growth.

Investors were unnerved by the U.S. federal government partial shutdown and President Donald Trump’s hostile stance toward the Federal Reserve chairman. U.S. Treasury Secretary Steven Mnuchin had also raised market concerns by convening a crisis group amid the pullback in stocks.

S&P 500 emini futures were last down 0.6 percent, pointing toward a lower start for Wall Street when the U.S. market reopens after Christmas Day, when many of the world’s financial markets were shut.

http://reuters.com

Nasdaq flirts with a bear market; Oil in free fall

Dow sinks below 23,000

The Dow dropped 464 points, or 2%, on Thursday. The index closed below 23,000 for the first time since October 2017. The Nasdaq lost 1.6% and only narrowly avoided closing in its first bear market since the Great Recession. The S&P 500 declined 1.6%.

And US oil prices are in free fall, ending below $46 a barrel for the first time since August 2017.
http://cnn.com

All Venezuelan Oil Will Be Sold In Petro Cryptocurrency

Experts see El Petro as nothing but a scam 

Venezuela’s President Nicolas Maduro said on state television that Venezuela would put in place in 2019 a program to sell all its oil production in the Petro cryptocurrency, which the leader is touting as the first state-backed oil-backed digital currency.

Gradually, Venezuela will sell all its oil production in Petro, Maduro said during a visit to Russia. For 2019, Venezuela will have a timetable to sell all its oil production in the cryptocurrency, its president said. In this way, Venezuela will free itself from the currency used by Washington “to create economic pain” to other countries, and to “persecute countries, as it does with Venezuela, Cuba, Iran, and Russia”, Maduro said.

El Petro, however, is seen by analysts and experts as nothing but a scam and another effort by Venezuela to skirt sanctions and mask the inability to overhaul the ailing domestic economy.

http://www.oilprice.com

 

Oil prices collapsed

Supply Glut Fears Return

Oil prices collapsed on Tuesday for the second time in a week. During midday trading, WTI fell below $55 per barrel and Brent dropped below $65 per barrel. Both benchmarks are off more than $20 per barrel from their October highs. “Oil prices are under pressure in the face of ample supply, falling stock markets and an increasingly gloomy economic outlook,” Commerzbank said on Tuesday.
Tuesday also saw a plunge in global equities, which is dragging down all sorts of different sectors, including oil prices. “I think you’re going to see a risk-off type of market,” Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, told Bloomberg. “It wouldn’t be surprising to see new lows being printed on oil” if crude stocks rise sharply. U.S. crude oil inventories likely rose by 3.5 million barrels last week, a sign that the surplus continues to build. In fact, concerns about a supply glut are growing by the day. The IEA said in its November Oil Market Report that the global surplus could average 0.7 million barrels per day (mb/d) in the fourth quarter.

The New Bear Market In Oil

U.S. shale production is skyrocketing

WTI dipped below $60 per barrel in early trading on Friday, the lowest price level in nearly a year. With prices down more than 20 percent from the October peak, WTI is now officially in a bear market.
Many of the factors that conspired to push oil prices up in recent months have all seemed to reverse course at exactly the same time.
First, U.S. shale production is skyrocketing. The EIA reported an unbelievable increase of 400,000 bpd in U.S. oil production in the first week of November, pushing output up to 11.6 million barrels per day (mb/d). The agency rounds off weekly estimates to the nearest hundred thousand barrels, somewhat obscuring the trajectory of growth, but the huge increase is notable by any standard.

US and Canada reach deal on NAFTA

The 3 country North American Free Trade Agreement is preserved

Canada has agreed to sign on to a trade deal between the United States and Mexico, preserving the three-country North American Free Trade Agreement after more than a year of tortuous negotiations.
The US and Canadian governments agreed to a deal that would allow US farmers greater access to Canada’s dairy market and address concerns about potential auto tariffs just hours before a self-imposed midnight deadline, a US official and a Canadian official told CNN late Sunday.
The new deal has a new name: the United States-Mexico-Canada Agreement.
http://www.cnn.com

Aramco listing plan halted

Oil giant disbands advisors

Saudi Arabia has called off both the domestic and international stock listing of state oil giant Aramco, billed as the biggest such deal in history, four senior industry sources said on Wednesday. The financial advisors working on the proposed listing have been disbanded, as Saudi Arabia shifts its attention to a proposed acquisition of a “strategic stake” in local petrochemicals maker Saudi Basic Industries Corp 2010.SE, two of the sources said.
“The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way – first delay then calling off,” a Saudi source familiar with the IPO plans said. Saudi Arabia’s energy minister denied that Aramco’s initial public offering would be called off, in a statement issued early on Thursday.
“The government remains committed to the initial public offering of Saudi Aramco, in accordance with the appropriate circumstances and appropriate time chosen by the Government,” Energy Minister Khalid al-Falih said in the statement.
https://www.reuters.com

Saudi Arabia bought 5% stake in Tesla

The Saudi Public Investment Fund bought the shares in secondary markets

Saudi Arabia’s sovereign wealth fund has acquired a significant position in Tesla shares, according to the Financial Times. The media outlet said the Saudi’s Public Investment Fund bought a 3 percent to 5 percent stake in the electric car maker, according to people with direct knowledge of the matter.
The stake is worth $1.9 billion to $3.2 billion at the company’s current share price. The Saudi fund approached CEO Elon Musk about buying newly issued shares, the report said, but Tesla declined. Instead the Public Investment Fund bought the shares in secondary markets.
Reuters later confirmed the Saudi fund bought a stake “at just below 5 percent” of the company, according to a source familiar with the matter.
https://www.cnbc.com/

Venezuela’s inflation rate may hit 1,000,000 percent

Hyperinflation in Venezuela

 When the International Monetary Fund predicted this year that hyperinflation in Venezuela could top 13,000 percent, it seemed as if the South American country’s economic outlook could not get any worse.

It just did. With the situation in the country deteriorating faster than expected, the IMF has unveiled a far more severe prognosis, saying that Venezuela’s hyperinflation is poised to reach an annualized rate of 1 million percent by year’s end. That inflation rate is set to catapult socialist Venezuela into a rogue’s gallery of nations that have suffered the worst inflation rates in history.

Venezuela’s “is one of the most severe hyperinflation situations that we’ve known about since the beginning of the 20th century,” said Robert Rennhack, deputy director of the IMF’s Western Hemisphere Department.

http://www.washingtonpost.com

Trump Is Fracturing OPEC

Trump tweets

Trump’s tweet over the weekend that Saudi Arabia agreed to add 2 million barrels per day (mb/d) of supply confused the oil markets, pushing prices down a bit on Monday. Most analysts dismissed the statement, concluding that Trump was confused when the Saudis told him they have 2 mb/d of spare capacity, and not that they had planned to bring that capacity online.
A few days on from that episode, however, it actually doesn’t look that black and white.
Indeed, Trump’s tweet suggests that he very much believes that 2 mb/d of Saudi supply is coming online, and despite the attempt by the Saudis to clarify, by stating that they have surplus capacity waiting to be used in the event of a pinch, the statement was interpreted in different ways by the oil market.
https://www.oilprice.com/

Morgan Stanley hikes oil price forecast to $85

Trump targets Iranian barrels

Oil prices will rise more than previously expected in the second half of 2018, as the Trump administration aims to wipe out Iranian crude exports by November, Morgan Stanley forecasts.
The tougher-than-anticipated U.S. policy means Iran’s production could fall by 1.1 million barrels per day (bpd) at a time of high oil demand. The bank also sees output declining more than it previously forecast in Libya and Angola, leaving the oil market undersupplied by about 600,000 bpd in the second half.
As a result, Morgan Stanley said it now believes international benchmark Brent crude will average $85 a barrel over the next six months. That’s $7.50 higher than its previous estimate.
https://www.cnbc.com/

The shipping industry is back

Indicator of the health of the global economy

90 percent of today’s global trade is carried by ship. The importance of shipping is why it’s one of the most useful indicators of the health of the global economy… And, more recently, the state of China’s economy – the largest consumer of a range of commodities, including iron ore, coal, copper, and zinc, and the largest importer of oil.
The Baltic Dry Index (BDI) tracks the price of shipping raw materials such as metals, grains and fossil fuels by sea. It takes into account the day-to-day changes in shipping rates for the three major carrier sizes: Capesize, Panamax and Supramax.
Shipping companies committed a classic boom/bust cycle mistake back in 2011. At the height of the commodity boom, they ordered a huge number of cargo ships. Global shipping capacity continued to expand by approximately a net 2.5 percent rate each and every year. Meanwhile, according to the World Bank, global trade of goods and services has declined by 7 percent from 2011 to 2016, as commodity prices collapsed.
https://www.businessinsider.com/

U.S. record oil exports bite into Russia, OPEC market share in Asia

U.S. crude production hit all-time highs

Record crude oil volumes exported from the United States will be heading to Asia in the next couple of months to take another piece of the market away from Russia and producers in the Organization of the Petroleum Exporting Countries (OPEC). The United States is set to export 2.3 million barrels per day (bpd) in June, of which 1.3 million bpd will head to Asia, estimated a senior executive with a key U.S. oil exporters.
Data from the Energy Information Administration shows U.S. oil exports peaked at 2.6 million bpd two weeks ago. [EIA/S] The record outbound volumes come as U.S. crude production hit all-time highs, depressing U.S. prices to discounts of more than $9 a barrel below Brent crude futures on Monday, the widest in more than three years and opening an arbitrage for excess supplies to other markets. WTCLc1-LCOc1
https://www.reuters.com/