Wed, 23rd August 2017

Anirudh Sethi Report


Archives of “1980s oil glut” Tag

Watch These Geopolitical Flashpoints Carefully

Anyone who has been involved in alternative geopolitical and economic analysis for a decent length of time understands that the establishment power structure thrives according to its ability to either exploit natural crises, or to engineer fabricated crises.

This is not that hard to comprehend, but for some reason there are a lot of people out there who simply assume that global sea-change events just happen “at random,” that the elites are stupid or oblivious, and that all outcomes are a matter of random chance rather than being directed or manipulated.  I call these people “intellectual idiots,” because they believe they are applying logic to every scenario but they are sabotaged by an inherent bias which causes them to deny the potential for “conspiracy.”

To clarify, their logic folds in on itself and becomes faulty.  They believe themselves objective, but they abandon objectivity when they staunchly refuse to consider the possibility of covert influence by organized special interests. When you internally dismiss the possibility of a thing, no amount of evidence will ever convince you of its reality.  This is how the “smartest” people in the room can end up being the dumbest people in the room.

Titans of oil world meet in Houston after two-year price war

The biggest names in the oil world come together this week for the largest industry gathering since the end of a two-year price war that pitted Middle East exporters against the firms that drove the shale energy revolution in the United States.

When OPEC in November joined with several non-OPEC producers to agree to a historic cut in output, the group called time on a fight for market share that drove oil prices to a 12-year low and many shale producers to the wall.

Oil prices are about 70 percent higher than they were the last time oil ministers and the chief executives of Big Oil met in Houston a year ago at CERAWeek, the largest annual industry meet in the Americas.

The ebullience as both sides enjoy higher revenues will be a welcome relief from the gloom of a year ago, near the depths of the price war.

“The oil market has been rebalancing and the powerful forces of supply and demand have been working,” said Dan Yergin, vice chairman of conference organizer IHS Markit and a Pulitzer Prize-winning oil historian.

“The mood will be different this year.”

OPEC Production Cut May Need to Be Extended: Oil Ministers

The oil ministers of Iran and Qatar have suggested that OPEC’s production cut agreement may have to be extended beyond the June deadline, despite an almost 100-percent compliance rate.

The comments come a day after the American Petroleum Institute reported the second-largest crude oil inventory increase in history, at 14.227 million barrels, which added fuel to worries that production cut efforts are not enough to rebalance the market.

US oil output to rise 1.3% in 2017, EIA says

US oil production has turned a corner after a long period of weak petroleum prices, the government said, with volumes rising for the first time since early 2015.

The Energy Information Administration forecast that oil output from the US will increase 1.3 per cent to 9m barrels per day in 2017, abandoning an earlier prediction of a 0.9 per cent fall.

In the first forecast for 2018 in its monthly Short-Term Energy Outlook, the statistical agency said US crude production will rise another 3.3 per cent, or 300,000 b/d, to 9.3m b/d. Production hit bottom last September, EIA said.

Overnight US Market :Dow closed +89 points.S&P 500 Up 16 points.

U.S. stocks jumped Monday as all four major U.S. indexes closed at new record highs.

Stocks got a lift from energy stocks as the price of oil jumped. Investors are hoping that OPEC countries will soon finalize a deal that would cut oil production and help support prices. The start of the week once again brought several corporate deals, with companies in the energy and technology industry making moves.

The Standard & Poor’s 500 index rose 16.28, or 0.8%, to close at a record 2198.18. The Dow Jones industrial average gained 88.76, or 0.5%, to a record close of 18,956.69. The Nasdaq composite index gained 47.35, or 0.9%, to close at an all-time high of 5368.86.  The Russell 2000, an index of smaller companies, rose 6.59, or 0.5%, to 1322.23.

For the past couple of weeks, the main driver in markets has been the election of Donald Trump as the next U.S. president and bullishness about possible pro-growth fiscal policies. In general, his victory has helped stocks and the dollar but weighed on bonds. But slowly attention is shifting onto other matters, including next month’s widely anticipated interest rate hike from the Federal Reserve.

Also generating attention is the next meeting of oil ministers from the OPEC oil cartel on Nov. 30 in Vienna, Austria. Expectations are growing that the ministers will push through a production cut following an indication recently that one was on the cards. That’s helped buoy oil prices in markets.

Benchmark U.S. crude oil rose to its highest price this month. It gained $1.80, or 3.9%, to $47.49 a barrel while Brent crude, the international standard, rose $2.04, or 4.4%, to $48.90 a barrel in London.


‘A false dawn’, ‘not as good as it sounds’ – analysts react to Opec deal

A deal is better than no deal, but just how good is Opec’s first agreement to limit production since the financial crisis?

To recap: In Algiers on Wednesday, the world’s major producer nations agreed on their first co-ordinated effort to control supply since 2008 and sent oil prices duly soaring by 6 per cent.

Details, including country-specific targets, will be released on November 30 but analysts and Opec-watchers have already raised concerns about how the burden to cut production will be spread and the prospect of backsliding among Opec’s members.

Here’s a round-up of what they make of it all.

The Algiers meeting is something of a “false dawn” says Hamza Khan, head of commodities strategy at ING who says the cut is still a shadow of the 1.5m b/d cut agreed in 2008. It will also pose problems for some Opec’s dissenters – including Iran, Nigeria and Libya, he added:

Saudi Arabia could have shouldered the bulk of cuts, likely reducing output of heavier blends from the Wafra oil field.

But the kingdom’s new crown prince and oil minister have been vocal about the prospects of a Saudi Aramco IPO in 2017/18, and such discretionary cuts would hurt investor confidence in such a listing.

Russia at the moment does not appear to be part of the agreement and continues to pump at record levels.

Analysts at Morgan Stanley have also doused a good deal of cold water on the deal, claiming the intervention is “not as good as it sounds” with execution still posing a major problem.

India to be hit by economic crisis if oil price crosses $60: Subramaniam Swamy

India will be hit by an economic crisis if crude oil price crosses $60 per barrel, BJPMP Subramaniam Swamy said today.

“Given the state of our economy, if crude oil price per barrel rises above $60 then we will be hit by an economic crisis,” he tweeted today.

US benchmark West Texas Intermediate is trading around $47 per barrel while Brent is at $49 currently.

The slump in oil prices last year is one of the factors that helped Indian economy notch up big gains by cutting its import bill and reining in inflation.

India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore ($1.36 billion) more every year for one dollar per barrel increase in crude oil. Besides, the rising crude oil trajectory impacts inflation and growth.

Overnight US Market :Dow closed up 49 points

U.S. stocks ended slightly higher after wavering on news that OPEC failed to seal a deal on oil production.

Markets also reacted to the European Central Bankleaving interest rates at current levels and private employers in the U.S. creating slightly more jobs than expected in May.

The Dow Jones industrial average ended up 49 points, or 0.3%. The broader Standard & Poor’s 500 stock index also gained 0.3%, while the Nasdaq composite climbed 0.4%.

All three indexes started the day in negative territory and passed above the break-even point around two hours before the 4 p.m. ET closing bell.

Most of the news investors watched came in as expected, offering little, if any, surprise factor to markets. The ECB was expected to stand pat and the 173,000 jobs created last month by private employers, according to payroll processor ADP, were basically right in line with the 170,000 estimate.

Wall Street also digested news that the Organization of Petroleum Exporting Countries (OPEC) could not strike a deal on capping or freezing daily oil production. The OPEC news, while not totally unexpected, initially hit oil prices as a lack of a supply cut or cap does little to help end the global oil glut. But oil pared its losses after the U.S. Energy Information Administration reported that U.S. crude oil inventories fell by 1.4 million barrels in the week ending May 27.

U.S.-produced crude was up 0.4% to $49.20 a barrel after being down as low as $47.97 earlier. Last week crude prices topped $50 per barrel for the first time since October.

Next up for Wall Street is the all-important May jobs report set for release Friday at 8:30 a.m. ET. Analysts are looking for 160,000 new jobs in May. The jobs report, of course, has key implications for the Federal Reserve, which has hinted to financial markets that the first quarter-point rate hike of 2016 is likely in coming months if data on jobs and the economy keep rolling in steady.

‘No end in sight’ for global economic misery, warns World Bank

The global growth slowdown has no end in sight as policymakers drag their heels on reforms and a “robot revolution” threatens living standards, the World Bank’s chief economist has warned.

Ahead of the International Monetary Fund and World Bank Spring meetings this week, Kaukshik Basu said he expected the global economy to expand by just 2.5pc this year.

This is down from the World Bank’s forecast in January of 2.9pc and well below the 4pc growth seen just before the crisis.

However, he was more upbeat about Britain’s prospects if it left the European Union, suggesting the country could thrive after a Brexit.

“You would probably see a short-term fall in exports from the UK [after Brexit], a weakening in the pound, but that should then cause a pick-up in exports in the medium term.”
Kaushik Basu

The chief economist indicated that Britain could be better off outside the EU if it forged new trade ties and cemented old ones.

India : Global Crude oil price of Indian Basket was US$ 31.01 per bbl on 25.02.2016

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 31.01 per barrel (bbl) on 25.02.2016. This was higher than the price of US$ 30.06 per bbl on previous publishing day of 24.02.2016.

In rupee terms, the price of Indian Basket increased to Rs 2127.01 per bbl on 25.02.2016 as compared to Rs 2061.21 per bbl on 24.02.2016. Rupee closed weaker at Rs 68.60 per US$ on 25.02.2016 as against Rs 68.57 per US$ on 24.02.2016. The table below gives details in this regard:

Particulars    UnitPrice on February 25, 2016 (Previous trading day i.e. 24.02.2016)                                                                  Pricing Fortnight for 16.02.2016

(28 Jan to  11 Feb, 2016)

Crude Oil (Indian Basket)($/bbl)              31.01             (30.06)                30.05
(Rs/bbl          2127.01         (2061.21)       2040.70
Exchange Rate  (Rs/$)              68.60             (68.57)    67.91