China's choice of Djibouti as the country that will host Beijing's first overseas military outpost has put the tiny African nation in the geopolitical spotlight. Situated on one of the planet's most critical oil chokepoints, and nestled amongst countries that serve as operations bases for some of the world's most notorious terror groups, Djibouti is set to become a focal point for power poltiics in the years ahead.
“They’ve stopped saying everything’s fine. I’ve got two words for ‘everything’s fine’: Flint, Michigan.” On February 18, SoCalGas and the national media declared the “worst methane gas leak in U.S. history” permanently sealed, but just over a month later, hundreds of Porter Ranch residents who evacuated — and are now returning home — are suffering the same symptoms they suffered when the gas leak was active.
Russia’s decision to greatly reduce its military presence in Syria, coming as it did with little warning, has left the world struggling for explanations. Russia is to maintain a military presence at its naval base in Tartous and at the Khmeymim airbase. In fact Russia is “withdrawing without withdrawing”. By re-establishing the Assad government in Syria, and permanently placing its forces at Syrian bases, the Russian’s have placed an impenetrable obstacle to the development of the Qatar gas pipeline.
Oil prices have climbed by about 50 percent from their February lows, topping $40 per barrel. But the rally could be reaching its limits, at least temporarily, as persistent oversupply and the prospect of new shale production caps any potential price increase.
- Brussels Rocked by Deadly Attacks With Blasts at Airport, Subway (BBG)
- Death count climbs in Brussels blasts (Reuters)
- Europe on High Alert After Blasts in Belgium (WSJ)
- Brussels Phone Users Urged to Text Not Call as Networks Jammed (BBG)
- U.S. Embassy Urges Citizens in Brussels to Shelter in Place (BBG)
- Oil prices swept lower after Brussels blasts spook investors (Reuters)
It’s spy thriller stuff; no one is talking. But there are indications Russia would not announce a partial withdrawal from Syria right before the Geneva negotiations ramp up unless a grand bargain with Washington had been struck. Tradeoffs seem to be imminent. And that would imply a power shift has taken place above Obama - who is essentially a messenger, a paperboy.
The timing of the Russian withdrawal could not be more fortuitous, as it occurs at the very pinnacle of the European refugee crisis, a crisis that was caused by Europe’s backing of the Saudi-Turkish attempt to overthrow Assad. Is Russia gambling on receiving some modicum of European gratitude for helping to stem the flight of refugees to its borders, with the pay-off in terms of easing sanction and enabling its long stalled pipeline projects to be completed.
- Global Stocks Slip Following Fed’s Cautious Tone (WSJ)
- Oil rallies towards $41, near 2016 high, on producer meeting (Reuters)
- Hamptons luxury home sales soften as Wall Street weakness takes a toll (Reuters)
- Obama picks centrist high court nominee; Republicans unmoved (Reuters)
- Allies See Challenges for Hillary Clinton in a General Election Campaign (WSJ)
The future of America's energy policies will heavily depend on who our next president is. Each presidential candidate has strong views on energy policy...
In the end, the oil attrition wars may lead us not into a future of North American triumphalism, nor even to a more modest Saudi version of the same, but into a strange new world in which an unlimited capacity to produce oil meets an increasingly crippled capitalist system without the capacity to absorb it. Think of it this way: in the conflagration of the take-no-prisoners war the Saudis let loose, a centuries-old world based on oil may be ending in both a glut and a hollowing out on an increasingly overheated planet. A war of attrition indeed.
For the 18th month in a row, US Import prices fell YoY (down 6.1% vs expectations of a 6.5% drop). This is the longest deflationary streak since 1999. Under the hood we see the first first rise in prices (ex food, fuel) since May 2014. Fuel price dropped 3.9% - the 8th consecutive drop - and foreign food product prices dropped 2% - the most since Feb 2012. Perhaps most crucially, China's forced deflationary wave continues to build with the index at its lowest since 2010.
- Shares bounce, euro fades after savage ECB reaction (Reuters)
- Trump's Islam comments draw attacks as Republicans discover civility (Reuters)
- Oil Prices Rise on Hopes Glut Will Ease (WSJ)
- IEA Says Oil Price May Have Bottomed as High-Cost Producers Cut (BBG)
- Why Euro-Area Inflation Will Be Low for Years, According to Draghi (BBG)
- Calmer markets, positive data prime Fed to push ahead with rate rises (Reuters)
The supermajors might be protecting their dividends, but they are also risking lower long-term oil production. For now, that is a problem for another day. Referring to his company’s first negative reserve-replacement ratio in 12 years, Shell’s CFO said in February: "While we're not entirely comfortable with a negative number, it's not the most important thing today.”
EIA's Dire Oil Forecast: $34 Crude Due To Far More Resilient Production, Oversupply And Lower DemandSubmitted by Tyler Durden on 03/08/2016 16:24 -0400
Brent crude oil prices are forecast to average $34/b in 2016 and $40/b in 2017, $3/b and $10/b lower than forecast in last month’s STEO, respectively. The lower forecast prices reflect oil production that has been more resilient than expected in a low-price environment and lower expectations for forecast oil demand growth.
There were hopes that China would announce a raft of fscal stimulus measures at the much ballyhooed NPC aimed boosting growth and taking some of the pressure off of montary policy. No such luck. The budget deficit came in at just 3%, an expansion from last year's 2.3%, but well below the 4% some analyasts were hoping for.