With the US Shale Oil industry up in arms, Venezuela screaming, and Russia awkwardly quiet (as the Ruble slides with the falling oil price stabilizing domestic inflows), the 'secret' Saudi-US oil deal that pressured prices for crude down to $80 (18-month lows today) has 'hurt' a lot of the world's producer nations. However, as Bloomberg reports, there is one nation that is very grateful. The number of supertankers sailing toward China’s ports surged to a nine-month high as over 80 very large crude carriers (VLCCs) - the industry’s biggest ships - sail toward the Asian country’s ports. At an average of 2 million barrels each, the 160 million barrels will help refill China's 727 million barrel SPR which it started in 2012.
"There is nothing good to say about the state of Venezuela’s economy, and this isn’t helping," warns Danske's Lars Christensen as tumbling prices for Venezuela’s oil are threatening to choke off funds (oil is 95% of exports) needed to pay debt.. and that is clear from the collapse of bond prices. The Maduro government desperately needs a rise in oil prices, but Saudi Arabia has so far rebuffed calls for an emergency meeting as it pursues a strategy of waiting out higher cost competitors. OPEC does not plan on meeting until Nov. 27. That is an eternity for a country that is beginning to unravel.
For the fourth consecutive night, futures attempted to storm higher, and were halted in their tracks when the USDJPY failed to rebound from the recalibrated 107 tractor beam, following a statement by the BOJ's former chief economist and executive director (until March 2013) who said that now is the time for the Bank of Japan to begin tapering. Needless to say, there could be no worse news to bailout and liquidity-addicted equities as the last thing a global rigged market can sustain now that QE is about to end in two weeks, is the BOJ also reducing its liquidity injections in the fungible world. This promptly took away spring in the ES' overnight bounce. Not helping matters is the continuing selloff in oil, which as we reported first yesterday, has hit the most oversold levels ever, is not helping and we can only imagine the margin calls the likes of Andy Hall and other commodity funds (ahem Bridgewater -3% in September due to "commodities") are suffering. But the nail in the coffin of the latest attempt by algos to bounce back was the news which hit two hours ago that a second Ebola case has been confirmed in Texas, and just as fears that the worst is over, had started to dissipate.
As the US-Saudi 'secret' oil deal continues to depress the price of oil, pressure Russian revenues, squeeze European budgets, and raise doubts about the status quo (OPEC and the rest of the world), not all of The Kingdom's elites are happy. Infamous billionaire Prince Alwaleed bin Talal has written an open letter to Oil Minister Ali al-Naimi and other ministers, as Reuters reports, saying the world's top oil exporter should start worrying about the recent slide in global oil prices and warned against the negative effect of such a drop on the state revenue: "Ninety percent of the 2014 budget is based on it (oil), so to underestimate (these implications) is in itself a disaster which cannot pass unnoticed," he wrote in the letter.
We’ve landed in the next phase of what arguably started in 2007, but what you could place back many years before that, an economic system based on the fantasy that is debt driven growth, inflated by a factor of a trillion, give or take a few zeros. That system is in the process of dying. And the people who have tried to make you believe, and succeeded, that it would all be fine in the end, are now jockeying for position in the aftermath of the demise of a world built on debt. And they are the same people who built that world, profited from it to an insane degree, and want to use those profits to hang on to power in a world that will be dramatically different from the one they called the shots in. And that doesn’t bode well; it tells us violent clashes will be on the horizon.
Thesis: Oil supply is where the pressure is coming from and the China-Russian oil deal has not undermined the dollar, but OPEC.
- Liberian Rubber Farm Becomes Sanctuary Against Ebola (WSJ)
- The World’s Most Powerful Central Banker: Janet Who? (BBG)
- Islamic State moves into south west of Syrian Kurdish town (Reuters)
- Waldorf to Be Biggest Chinese Property Purchase in U.S. (BBG)
- Spain Seeks People in Contact With Ebola-Infected Nurse (BBG)
- Hong Kong protests at crossroads as traffic, frustration pile up (Reuters)
- Immigration: Grim Caseload at the Border (WSJ)
- China Cuts Thousands of ‘Phantom’ Workers From State Payroll (BBG)
- U.S., U.K. Regulators Push to Settle Deutsche Bank Libor Case This Year (WSJ)
- Wall Street Moles Go to NY’s Top Cop, Spurning SEC Cash (BBG)
- Pimco's outflow headaches only just beginning (Reuters)
- Japan Lawmakers Flag Need for Exit Strategy as Yen Falls (BBG)
- Ebola Patient Fights for Life as Contacts are Monitored (BBG)
- GPIF Unlikely To Announce New Portfolio Until November: Delay Could Rattle Investors Hoping Fund Will Invest More in Stocks (WSJ)
- High risk Ebola could reach France and UK by end-October, scientists calculate (Reuters)
- Neves to Face Rousseff in Brazil in Surprise Comeback (BBG)
- Hong Kong democracy protests fade, face test of stamina (Reuters); A Hong Kong Protest Run on Fumes and Instant Noodles (WSJ)
- Putin Clans Said Gridlocked Over Arrest as Sanctions Bite (BBG)
- Surging dollar may be triple whammy for U.S. earnings (Reuters)
- Lloyds Said to Cut Thousands of Jobs as CEO Cuts Costs (BBG)
Next time you get into your car and drive to the supermarket, think about how much energy you consume on an annual basis. It is widely assumed that Westerners are some of the world’s worst energy pigs. While Americans make up just 5 percent of the global population, they use 20 percent of its energy, eat 15 percent of its meat, and produce 40 percent of the earth’s garbage. Europeans and people in the Middle East, it turns out, aren't winning any awards for energy conservation, either. Oilprice.com set out to discover which countries use the most energy and why. While some of the guilty parties are obvious, others may surprise you.
US imperialism was once a fearsome force - mainly for ill. Under the latter heading, Washington’s savage destruction of Vietnam four decades ago comes readily to mind. But now the American Imperium has become just a gong show on the Potomac - even as its weapons have gotten more lethal and its purposes more spurious and convoluted. There is no more conspicuous proof than Obama’s quixotic “war” on ISIS.
For a mass of people so easily terrified by guys in caves funded and armed by our intelligence services and “allies” in the Persian Gulf, the American public talks with such armchair bravado when it comes to launching bombs from drones and sending other people’s children to die. Makes you wonder though, which one is it? Is the American public actually the tough guy soldier it pretends to be when cheering overseas military interventions, or is it really a scared, propagandized, coward hiding in one of our nation’s endless cubicle rows? Unfortunately, based on recent opinion polls demonstrating approval for military action against ISIS, it appears to be the latter. The former is merely a front put on by that terrified, economically insecure, silently suffering automaton.
For the terrorist group known as the Islamic State, Syria and Iraq were a good place to start their campaign, but in order to survive and prosper it knew from the outset that it had no choice but to set its sights on the ultimate prize: the oil fields of Saudi Arabia.
From Arab Spring-related uprisings in Libya or Egypt, to a civil war in Syria and now violence in Iraq and the Ukraine, geopolitics are impacting oil. True, geopolitical risk measured by combat deaths does not always correlate well with market volatility. But wars and conflict are easy to spot on an oil price series. With combat deaths rising four fold in the last 10 years, oil markets should prepare for more turmoil. BofA 's Francisco Blanch asks "Can the US preserve geopolitical stability?" America still takes up 38% of global military spending, but appetite for foreign adventures has been low. As an example, a drop in US combat deaths in recent years has been mirrored by a rise elsewhere. Following a drop to multi-decade lows, implied vol in long dated oil options at 15% looks cheap. Oil after US hegemony may not be as steady.
The humanitarian situation was cynically manipulated by the Obama administration -- and echoed by the US media -- to provide a reason for the president to attack Iraq again. This time it was about yet another regime change, breaking Kurdistan away from Iraq and protection of the rich oil reserves there, and acceptance of a new US military presence on the ground in the country. President Obama has started another war in Iraq and Congress is completely silent. No declaration, no authorization, not even a debate. After 24 years we are back where we started. Isn’t it about time to re-think this failed interventionist policy? Isn’t it time to stop trusting the government and its war propaganda? Isn’t it time to leave Iraq alone?
... Who America and Her Close Allies SUPPORT (the Terrorists, That Is) ...