Archive - Feb 21, 2011

Italy oil producer Eni SpA, which also happens to be the largest foreign oil producer in Libya, plunged over 5% on concerns the company's output will be crippled, after the company announced it is following BP in relocating all non-essential (for now) personnel away from Libya. Per Bloomberg: "Eni, which produced 244,000 barrels of oil equivalent a day in Libya in 2009, fell as much as 5 percent, the most since May. The company said in a statement that production is continuing as normal. BP has no producing assets in Libya and is evacuating families and non-essential staff, said David Nicholas, a spokesman for Europe’s second-largest oil company." As we have reported on numerous occasions in the past, unlike Egypt Libya has a substantial amount of oil reserves: in fact, it holds the largest crude reserves on the entire continent, and Europe, particularly Italy and Spain are primary beneficiaries, which explains the plunge in those two stock markets.

As many are always quick to point out, any talk of a record price in silver is preliminary as long as the Hunt Brothers nominal high of $50 set in 1980 remains in the history books. However, when priced in EURs, this is not exactly the case. As can be seen on the chart below, our European readers have full permission to say that silver is now at an all time high, with no caveats or footnotes.

Emerging reports early Feb. 21 indicate the unrest in Libya is spreading from eastern Libya to the capital of Tripoli. According to initial reports, heavy gunfire was heard in central Tripoli and in other districts with Al Jazeera reporting 61 people killed in Tripoli on Feb. 21. Other unconfirmed reports say that protesters attacked the headquarters of Al-Jamahiriya Two television and Al-Shababia as well as other government buildings in Tripoli overnight. According to Saudi-owned al-Arabiya, the government-owned People’s Conference Centre where the General People’s Congress (parliament) meets when it is in session in Tripoli was set on fire. U.K. energy firm British Petroleum reportedly said it would evacuate its personnel from Libya and suspend its activities due to massive unrest. Spain’s Foreign Minister Trinidad Jimenez said on Feb. 21 that the EU member states are coordinating possible evacuations of European nationals from Libya. A Turkish Airlines flight was arranged to evacuate Turkish citizens from Benghazi but was denied the opportunity to land by Libyan authorities and returned to Turkey.

Is this one of those "who could have possibly seen it coming" moments? As events in Libya overnight spiralled out of control, with dozens if not hundreds killed, the parliament buildng in Tripoli on fire, and output at one of the country's oil fields reported to have been stopped by a workers' strike, BP has said it will soon begin evacuating some of its personnel from the 9th largest producer of oil. And just to complete the total chaos, Iran warships are now going to pass the Suez on Tuesday instead of today, to the full glory of a fully open US stock market. The result: gold over $1,400; silver over $33.50; Crude front month over $93; Brent over $105; etc. Luckily, the US stock market is closed, meaning all this will be "priced in" by tomorrow, and the HFT levitation can resume tomorrow as if today never happened...

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 21/02/11

As we pointed out earlier, the upcoming week will be quiet on economic and market events. What it, however, will be heavy on is revolutions, riots and the good old ultraviolence. Below is a useful primer from Stratfor for what is becoming an increasingly more complex geopolitical chess game, for the time being confined in the Maghreb, but soon spreading all across the Muslim crescent and soon thereafter into East Asia.