One particular energy trader - a name well-known to Zero Hedge readers - Glencore, has built up a massive inventory stake in the Brent market where it now holds an unprecedented 30% position in Brent, which it is holding for offshore storage in its tankers in hopes of pushing the price of Brent, and thus the entire energy complex higher, by limiting supply.
We can now add two more major names succumbing to the Saudi onslaught against marginal shale producers when overnightfirst Linn Energy announced a prepackaged Chapter 11 deal, followed by Penn Virginia defaulting just hours later.
The impact of the transportation recession on railroads is now very visible. Here’s how Union Pacific is dealing with this issue, via Google Earth, on May 3: 292 engines idled on a siding west of Benson, Arizona, along I-10, for a stretch of nearly 4 miles. Note how the line of locomotives curves and fades into the left edge of the photo – an once majestic and haunting sight, all these powerful machines idled on a track in the Arizona desert...
The first U.S. shipment of liquefied natural gas (LNG) arrived in Portugal last week and Gazprom did not immediately cut its own gas prices for Europe. While European media has hailed the entry of U.S. gas into the market as a game-changer and a monopoly-breaker, in the short term, nothing has changed at all.
While markets remain relatively subdued ahead of tomorrow's nonfarm payrolls report, after several days of losses in US stocks which pushed the S&P500 to three week lows, overnight markets ignored the latest weak data out of China where the Caixin Services PMI was the latest indicator to disappoint (dropping from 52.2 to 51.8), and instead focused on crude, which rebounded from yesterday's post inventory-build lows and briefly printed above $45/bbl over uncertainty related to the impact of Canada wildfires on production and how long will last. The bounce in WTI has meant Brent briefly traded at parity with West Texas for the first time in 6 weeks.
Moments ago, the 2016 edition of the Sohn Investment Conference started, a feeding frenzy for traders and hedge fund managers such as Gundlach, Einhorn and Chanos who descend on this popular annual "round table" to pitch their best and worst ideas. As always, the moment a company's name is mentioned in a bullish or bearish context, its stock is sure to surge or slump, as the headline-hungry algos immediate pounce in the current reactionary market environment. But is following the advice of these hedge fund gurus such a good idea?
Overnight Australia finally admitted it has succumbed to the global economic weakness plaguing the rest of the world when in a "surprise" move, Australia’s central bank cut its benchmark interest rate for the first time in a year to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world. The move sent the local currency tumbling and local stocks climbing. Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent Tuesday, a move predicted by just 12 of 27 economists surveyed by Bloomberg. The announcement has, not surprisingly unleashed havoc across FX markets and broadly pushed global mood into its latest "risk off" phase.
Following this weekend's bankruptcies of Ultra Petroleum and Midstate Petroleum which added $3.1 billion to the mushrooming high-yield energy bond default volume tally, in addition to the $1.5 billion of credit facility defaults, the energy high-yield default has soared to a record 13% rate, surpassing the 9.7% mark set in 1999, according to Fitch Ratings.
Akin to ancient Rome, the United States has over-extended herself. She has created a climate that could easily be transformed into a war on a slight pretext. Wars, as it is well known are also a means a nation can extricate itself from debt and financial responsibility. The dying Petrodollar system has been on life support for some time, and it appears other nations such as the BRIC’s are taking the initiative to return to a true monetary standard. This is the same gold and silver standard that the U.S. should never have left in the first place.
It is increasingly certain that the future will not be like the past. Previous downturns have been equally devastating but the primary causes eventually reversed themselves; low commodity prices recovered and damaging government policies were rescinded. This recovery will be different for a variety of reasons which will combine to cap growth, opportunity and profits, even if oil and gas prices spike. The following major changes appear permanent...