Reply to thread

Oil News:

Friday, November 15th, 2024

Steep gasoline and diesel inventory draws in the United States have helped offset the overwhelmingly bearish sentiment in the oil market, although it wasn’t enough to halt the decline in oil prices. With China posting its seventh successive month of refinery run declines and Jerome Powell cooling down expectations on U.S. interest rate cuts, Brent below $72 per barrel feels justified.

 

Chinese Refinery Runs Keep on Falling. China’s refinery throughput in October fell by 4.6% year-over-year to 14.02 million b/d, the seventh consecutive month of year-over-year declines, with independent teapot refiners in Shandong province bearing the brunt of that pain as their utilization rates plunged to 58%, almost 20 percentage points lower than they were a year ago.

 

OPEC Cuts Oil Demand Growth Projections Again. OPEC has trimmed its global demand growth forecasts for 2024 and 2025 for a fourth month in a row, mostly through lowering China’s consumption upside to 450,000 b/d from 580,000 b/d from last month’s monthly oil report, expecting 2024 demand growth to come in at 1.82 million b/d.

 

US Top LNG Developer Eyes IPO. Venture Global LNG plans to raise around $3 billion from its initial public offering that could happen as soon as this year, with the Virginia-based firm working with Goldman Sachs and JPMorgan Chase on the listing, potentially one of the biggest IPO’s of either 2024 or 2025.

Germany Blocks Arrival of Russian LNG Cargo. Despite there being no EU-wide ban on Russian LNG, Germany has refused to allow a Russian LNG shipment at its Brunsbuettel terminal in northern Germany, saying the country does not import Russian gas as a matter of principle without specifying who was the buyer.

 

IEA Warns of Extreme Oversupply in 2025. The International Energy Agency believes that global oil supply would exceed demand by a whopping 1 million b/d in 2025, equal to almost 1% of total production worldwide, driven by the U.S., Guyana and Canada, keeping its demand projection for next year unchanged at 990,000 b/d.

 

White House Sets Methane Fee Guidelines. In one of its last policy moves, the Biden administration has finalized a methane fee for oil and gas producers, starting at $900 per metric tonne of methane emitted and increasing to $1,500 per metric tonne in 2026, as mandated by the 2022 Inflation Reduction Act.

North Sea Drillers Are Fighting for Projects. Equinor’s state oil firm Equinor (NYSE:EQNR) and energy major Shell (LON:SHEL) urged the Edinburgh court to uphold their Rosebank and Jackdaw projects, respectively, as they are both fighting a legal challenge from environmental campaigners Greenpeace that claim the two projects were greenlightes unlawfully.

 

Gazprom’s Arbitration Quagmire Sends Europe Gas Soaring. Europe’s benchmark TTF natural gas futures jumped to their highest level in 2024 so far, hitting €45 per MWh this week (the equivalent of $15 per mmBtu), after Austria’s energy company OMV announced it would enforce the arbitrage award of $240 million against Russia’s Gazprom and not pay for delivered gas volumes.

 

E&P Markets Jittery on Exxon’s Angola Prospect. US oil major ExxonMobil (NYSE:XOM) started drilling its Arcturus-1 exploration well in Angola’s untapped Namibe basin in late July with the drill ship Valaris DS-9 coming off location in late October, however it is still yet to announce anything, fueling speculation that it might’ve opened a new frontier play.

Surging Ethanol Output in U.S. Lifts Stocks. US ethanol production rose to an all-time high in the week ended 8 November, reaching 1.11 million b/d and marking a 6.3% year-over-year increase, as the current oversupply boosted U.S. inventories that jumped to 22 million barrels, with a particularly robust jump in U.S. Gulf stocks.

 

Oil Majors to Finance Energy Access Improvements. Europe’s leading oil companies TotalEnergies (NYSE:TTE), Shell (LON:SHEL), BP (NYSE:BP) and Equinor (NYSE:EQNR) have committed to a joint $500 million fund to improve universal energy access in sub-Saharan Africa and Southeast Asia over the coming years, as part of their COP29 climate pledges.

 

Beijing Slashes Export Tax Rebates. China finance Ministry announced in a surprise move that it would scrap or reduce export tax rebates for a wide range of commodities, cancelling the rebate altogether for aluminum and copper products whilst oil products would see a cut from 13% to 9%.

Mali Detainment of Mining Firm Executive Turns Ugly. The military junta in Mali has detained the chief executive and two other employees of Australian mining firm Resolute Mining (ASX:RSG), demanding $160 million from the company for their release as they insist the miner did not pay its share of back taxes at its Syama gold mine in the country.

[ATTACH=full]188054[/ATTACH][ATTACH=full]188053[/ATTACH][ATTACH=full]188052[/ATTACH][ATTACH=full]188051[/ATTACH]

[ATTACH=full]188056[/ATTACH]

Trump’s victory triggered significant rallies in certain asset classes, led by Bitcoin, which surged to a new all-time high as renewed optimism in digital assets drew investors to cryptocurrencies. US equities also reacted positively, with small-cap stocks outperforming as investor optimism favoured growth-focused domestic assets. This highlights optimism in sectors more closely tied to the US economy, reflecting expectations that Trump’s policies could favour domestic industries. 

In contrast, traditional safe-haven assets such as gold, crude oil and emerging market (EM) equities saw declines. Gold faced selling pressure as investors reallocated toward higher-risk assets expected to benefit from potential growth-friendly policies. Crude oil’s decline mirrors similar investor shifts. Chinese and European equities also underperformed, a sign of apprehension over potential trade realignments and economic impacts stemming from renewed US policies. 

[ATTACH=full]188057[/ATTACH]

Trump’s election victory triggered a post-election wave of euphoria in the crypto market, led by high-profile coins like Bitcoin and Dogecoin, which captured much of the spotlight as investors redirected funds towards these major assets. This shift toward major coins had been developing since early 2023, driven by a cooling crypto market and regulatory shifts, such as the SEC's approval of spot Bitcoin ETFs. 

Historically, altcoins have been highly volatile and even occasionally outperformed major coins, as seen during the 2022 crypto rally. But the trend reversed in 2023, as broader market slowdowns and changing investor sentiment favoured more established cryptocurrencies. Trump’s re-election further amplified this trend, with major coins reacting more strongly than altcoins in the recent post-election rally.

[ATTACH=full]188058[/ATTACH]

Trump’s decisive victory removed a major source of uncertainty from the stock market, resulting in a drop in the VIX index, a.k.a. the market’s "fear gauge." Last Thursday, the VIX dropped to 15.20 and has since fallen further, dipping below 15, indicating reduced risk perceptions among equity investors. The MOVE Index provides a complementary view, showing how both equity and bond market investors are adjusting their expectations in the post-election environment.

[ATTACH=full]188059[/ATTACH]

The end of the Bretton Woods system in the 1970s marked the start of a more market-driven exchange rate era. During this period, trade liberalization expanded, particularly in emerging markets where trade barriers were gradually lowered. These developments fostered greater economic integration, leading to a steady rise in global trade openness and annual trade growth rates averaging around 10%.

However, since the GFC, trade reforms have slowed, influenced by US-China trade tensions and other geopolitical conflicts. This has led to increased regionalization and slower growth – a phenomenon often referred to as “slowbalization.” The trend reflects a move away from rapid globalization toward more regionally focused trade networks, with global trade openness stagnating and trade growth slowing since 2018. 

[ATTACH=full]188061[/ATTACH][ATTACH=full]188060[/ATTACH]

The week:

[ATTACH=full]188062[/ATTACH]

Pretty ugly actually.

What if,

There is no gold at Ft. Knox?

The thing is that with the rest of the world re-monetising gold, revaluing gold higher helps everyone. With the stroke of a pen the debt issue is solved. Everyone is supportive as it helps them also.

Yet the US actively tries to suppress the POG and is now actively trying to monetise BTC which only works if others (sovereign governments) hold BTC, which they likely don't. At least not in any worthwhile size.

We know JPM holds the physical gold attached to the GLD ETF and will simply steal that if necessary, but that's a long way short of the 8000 tons supposed to be held at Ft. Knox.

Interesting.

Meanwhile the inevitable recession, put off through endless strategems via the complicity of the Fed draws ever closer. Disaster is an arithmetical certainty under the laws of compounding.

At some point, someone makes a rush for the door. Buffett is already exiting (exited) and others will be sure to follow. Confidence is a funny thing. The speed of a crash will be so much faster now. Look at August. It only lasted 1 day but it was panic for a couple of hours. If the bleeding cannot be halted, huge losses will blow up Hedge Funds which underpin the UST market.

Normally or in the past, market tops tended to be a bit of a drawn out affair and if you knew what to look for, you could get out mostly whole. 2020 was an example of the newer faster bear.

The problem will be that cutting rates will not work this time. They are cutting the short end currently, yet the long end continues to rise. That is not supposed to happen. There is no Balance Sheet large enough to soak up the supply currently. Gradually it is entering a death spiral where the Fed will have to step in and outright print.

jog on

duc