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April 2024 DDD

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Oil News:

Friday, April 12th 2024

Inventory builds in the US, red-hot inflation numbers that may postpone the Federal Reserve’s interest rate cuts, and Iran's attempts to play down the risk of an attack on Israel helped to slow down the recent oil price rally. On Friday morning, Brent was trading above $90 per barrel and there is plenty of upside risk left in oil markets.

Trafigura to Buy France’s Fos Refinery. A consortium led by global trading house Trafigura has started exclusive negotiations to acquire ExxonMobil’s (NYSE:XOM) Fos-sur-Mer refinery in southern France as well as adjacent storage terminals, seeking to close the deal by the end of 2024.

DoJ Opens Investigation Into Nippon Steel. The US Department of Justice opened a comprehensive probe into Nippon Steel’s (TYO:5401) proposed $14.1 billion takeover of US Steel (NYSE:X), weeks after President Biden stated the US steelmaker “must remain domestically owned”.

Petrobras Hits Oil in Brazil’s Frontier Basin. Brazil’s state-controlled oil company Petrobras (NYSEBR) said it had discovered oil deposits in the ultra-deep waters of the Equatorial margin, the second discovery on record in the most promising frontier basin of the country.

For the First Time Ever, US Natgas Becomes Cheaper Than Coal. According to the EIA, US natural gas will be cheaper to burn than coal for the first time on record as its 2024 Henry Hub forecast averages only $2.15 per mmBtu compared to a $2.45 per mmBtu average for coal.

EU Opens Probe Into Chinese Wind Suppliers. The European Commission opened an investigation into subsidies received by Chinese suppliers of wind turbines destined for Europe, with China expressing its profound dissatisfaction after Brussels also launched an EV subsidy probe.

Chevron Relinquishes Myanmar Assets to Junta. US oil major Chevron (NYSE:CVX) relinquished its 41.1% stake in the Yadana natural gas field in Myanmar, two years after it signaled its intent to leave, with its stake redistributed to remaining shareholders PTT and Myanma Oil and Gas.

Hot US Inflation Stems Copper Price Rally. Hotter-than-expected US inflation data have stalled the copper price rally as the Federal Reserve would find it harder to justify rate cuts in June, with LME cash settlement prices falling back to $9,240 per metric tonne, down $120/mt from a 14-month peak reached earlier this week.

Colombia Wants to Clinch Venezuela Deals. Colombia’s President Gustavo Petro is working on a deal that would allow Ecopetrol (NYSE:EC) to develop high quality oil and gas assets in western Venezuela, in return exporting clean energy to its neighbor from the Caribbean coast.

Red Sea Crisis Hikes Shipping Emissions. Global shipping emissions are poised for a setback as the Red Sea shipping crisis led to an 8-10% increase in container ship usage due to longer routes, with container-related emissions potentially rising as high as 257 million tonnes of CO2 this year if the disruptions remain in place.

OPEC Lowers 2024 Supply Forecast. In its latest monthly report, OPEC kept its demand forecast for this year at 2.25 million b/d, however lowered non-OPEC liquids production growth in 2024 to 990,000 b/d, down 70,000 b/d from the previous month’s outlook.

Maduro Jails Former Venezuela Oil Minister. Venezuela has jailed former oil minister Tareck el Aissami on charges including treason and money laundering as part of an investigation into $23 billion missing government revenues that he allegedly funneled into cryptocurrencies.

China Builds Its Own Gas Pricing Index. China’s state-controlled pipeline giant PipeChina is developing the country’s first-ever proprietary natural gas price index as it wants to de-risk its own pricing from Asia’s benchmark Japan Korea Marker (JKM), saying it should better reflect its own supply/demand.

Texas Gas Prices Turn Negative Again. Depressed by continuously rising Permian basin oil output and higher associated gas flows, natural gas prices at the Waha hub in Texas slumped to a negative -$2 per mmBtu this week with most US gas production currently pricing below costs of production.



LOL. Are you fucki*g kidding me.



Observe the 2006-2008 period where LEIs turned down but it took a while for the SHTF.



LOL.



Pretty sad really. Spending what little you have on an almost guaranteed loss.



April, seasonally, is supposed to be good for stonks. Second half.

The week that was:





It's been a hell of a run. Time to pullback?

The banks are an example of good news being sold this morning. JPM was smashed closing down almost 7% on the day. WTF. If any bank will survive, it's JPM.

USD



Something serious is going on. I have no idea currently, but I will be endeavouring to find out over the w/e.

USD up, everything else down except oil/energy. Gold & Silver held up well, just giving back a little at the end there.

What I think has happened is this: Yellen had a visit to China early this week. I'm sure she pissed the Chinese off. She has not yet received the email that America is #2 and China is #1 and #1 doesn't give a toss what #2 thinks or wants.

Yellen at the San Francisco Accord enlisted China's help in lowering the USD.

At this visit, she has managed (via the above) to lose China's help and the USD is now moving higher rapidly. A high USD is a wrecking ball to everything except energy and gold, although gold may be sold...sell what you can when a liquidity crisis erupts.

Gold may get very volatile if we have another liquidity crisis in the UST market.

All the above is speculation currently. I'll sniff out any evidence if it exists.

jog on
duc
 
From last week:



For next week:



Only energy XLE remains at a +3. The biggest surprise were the financials XLF that got clobbered on Friday.



Gold & BTC remain the two ways to exit the fiat system. Whichever is your preference, choose one or both.

Retail sales on Monday will give some further insight to the strength of the consumer. After all an economy that is 70% consumer spending is in trouble if that falls away. With the market sitting at the glass is half empty, any weakness will likely get sold.

jog on
duc
 
Just Can't do BTC.......

Lucky I got alot of Gold and Oil Stocks

Gonna be interesting the escalating Iran /Israel situation.

Super thanks for posting all this. Most of it goes over my head. But that's my fault 'cause I am so short. Keep it up.

Happy Thai New Year.
 
So....



Mr fff is looking for a bounce:



Certainly possible, market internals are pretty stretched.

Looking now at Gold, Oil, Rates:



Gold and oil are still volatile, but moving in the same direction.



Oil and the 10yr are moving in the same direction.



US wants (needs) lower oil prices.

Obviously because higher oil currently = higher 10yr yields (which is killing the Treasury).

Now the question is: is higher gold leading oil higher or higher oil leading gold higher or neither, it's just a coincidence?

Two more charts:



Oil & 10yr to the USD.

And USD to Gold



This has moved from the traditional inverse relationship, to a positively correlated one.

Oil is the key.

Higher oil priced in USD drives a higher demand for USD as those countries that cannot yet buy oil in their own currencies (and float their currency against gold) increasingly have to use more of their USD to buy oil.

To do so they sell UST for USD to buy oil. Selling UST sends up 10yr yields.

Those countries that can use their own currencies to buy oil do so and settle net-net trade balances in gold. More physical gold is bought. POG rises as increased physical sales drive price higher and can no longer be capped by the Cartel of Banks.

So really an investigation into all the oil supply/demand issues is required.

jog on
duc
 
So Mr fff is positioned long for Monday. So far, so good, futures are moderately higher.

Desert Storm (war in the ME):



Chart from 1990



Now of course we don't even know if this blows up. But that Iran just launched...and nothing happens?

jog on
duc
 

Israel have to do something. Doesn't need to be such escalation that it starts WW3 but they can't let Iran know they can shoot at them and there's no response. Red line breached by Iran and Israel have been preparing for it for decades.
 


Through the $1T mark and rising.



A far better measure of inflation.


Funding markets are the Repo markets. Last place you want any hiccups.



Which is often the case. By the time Joe Sixpack wakes up to the necessity, gold has already gone. Even if it hadn't, it's unlikely he has the spare cash to buy even an ounce. But silver 'seems' affordable.

Now China is a different story. They were encouraged by the government 10yrs ago to start buying gold. They did and are. They are now noticing that silver is dirt cheap.

Silver is far more of a risk to the system than gold. Gold has no use other than its use as money (exclude jewellery). Silver on the other hand has many industrial uses. A too high silver price starts to play havoc.



Israel never sits still. The last time they sat still 6 million went to the gas chambers.



LOL. So much for the higher open.



Bonds collapsing. This is very BAD.



Very BAD.





Not the 'metals' referred to, however, back on the move.

jog on
duc
 
divs4ever said:
that is surprising , i would have thought we still had some down to endure

but if here we are ( in a correction ) where the heck are the bargains , some are just starting to look like fair value
Click to expand...


So the information posted is from my firm, for whom I am a prop. trader. They essentially follow a scoring system for the market. They are 'trend followers'. I post their analysis as when the trend is strong, they make lots of money. As trends transition, there is some give back. It's easy to recognise their stuff from the style of the screenshot.

After the last two trading days, and all of April for that matter, there are probably a lot of overexposed traders and investors hoping for an up day or two. We don’t know where the market will go from here in the short term, but at this point, the S&P 500 is only down 3.66% from its all-time closing high at the end of March. That’s not even close to what most people would call a correction, let alone a pullback.

While the current decline is the first of that magnitude since late last year, since 1953 there have been 455 declines of 3% or more on a closing basis without a 3% rally in between. That works out to about one every two months. In other words, the fact that we hadn’t had a pullback of 3% in over five months was more unusual than the fact that the S&P 500 is now down over 3% from its high. Since 1953, there have only been ten other periods where the S&P 500 went longer than the just-ended streak without falling 3% from a local closing high.


BAC Reported:



Starting to recognise CRE losses. Getting taken to the woodshed today and weighing on the financials.



No one is ready for normal volatility. When the market only goes in one direction, complacency sets in. A move in the other direction is amplified by poor positioning.

The market is over-valued. The fiscal situation is dire. It will collapse at some point. It is unlikely to start with a waterfall lower. That will come later. Currently we will see increased volatility (bigger daily ranges) and more up/down variation.



After decades of debasing the currency, the currency is showing signs of collapse. Hmmm.



The issue (as alluded to earlier) is if you are rational, you just don't want to BTD. This market is horribly over-valued. But...the catalyst for collapse has not yet arrived. Therefore, BTD is (hold your nose) is 'probably' the way to play this.

Of course it is easier if you have been selling on the way up, then you are simply taking profits. LOL.



It is time to have a correction. Long overdue.

The financials are definitely spooking the market. JPM, C, BAC, all showing 'good' earnings (manipulated or otherwise) and have been smashed lower. That will spook many.

Oil News:

For the first time in more than a year, the US count of drilled-but-uncompleted wells (DUCs) rose in March to 4,522, up 9 wells compared to February, signaling that US production growth is stalling.

- Usually, when companies start to build up fracklogs, it is an indication that companies wait for periods of higher prices or, in the case of the US, easier access to pipelines, but this year neither of those seems to be pertinent.

- The EIA expects US shale oil production to be steady at 9.86 million b/d, below the 10 million b/d record pace seen in December, with the Permian Basin stagnating, too.
- Only Niobrara and Eagle Ford saw their DUC count decline last month, even the Permian Basin which cleared more than 550 wells from its fracklog since 2022 saw its DUC count move up by 4 wells.

Market Movers

- US natural gas firm EQT (NYSE:EQT) agreed to sell its 40% non-operated interest in the Marcellus and Utica basins in exchange for Equinor’s (NYSE:EQNR) onshore assets in the Appalachian basin and $500 million in cash.

- French oil major TotalEnergies (NYSE:TTE) signed a memorandum of understanding with Algeria’s NOC Sonatrach to develop gas fields in the Timimoun region, concurrently expanding its LNG deal with Algeria through 2025.

- Brazil’s President Lula called off plans to sack Petrobras (NYSEBR) top executive Jean Paul Prates, but there is still no clarity on the company’s dividend policy ahead of its April 25 shareholder assembly.

Tuesday, April 16, 2024

The oil markets closely monitored Iran’s retaliatory strikes over the weekend and, at least for the time being, risks of a wider regional conflict have subsided this week, sending Brent back to $90 per barrel. There are still plenty of bullish factors to look out for, most notably the price might swing up should the US decide to sanction Venezuela again, a decision due on April 18th.

OPEC Woos Namibia to Replace Angola. Bouncing back from the loss of Angola, the OPEC+ oil group is actively courting Africa’s Namibia, a country yet to produce oil but set to rise to 700,000 b/d by 2030, seeking to get Namibian authorities to join its Charter of Cooperation just like Brazil did.

ADNOC Mulled BP Takeover. ADNOC, the national oil company of the United Arab Emirates, has reportedly considered buying UK oil major BP (NYSE:BP) after the 110 billion company underperformed its competitors for years, but talks did not progress beyond preliminary discussions.

India Asks Power Generators To Keep Producing. Powered by India’s stellar economic growth, the country has mandated coal-fired power plants to guarantee maximum electricity output until 15 October, poised to lift coal imports as temperatures are expected to be higher than average in the summer.

Earthquakes to Tighten Saltwater Control in the US. Shale oil producers might be facing further restrictions on saltwater disposal after a 4.4 magnitude earthquake shook Midland after the Railroad Commission of Texas already developed guidelines to avoid tremors over magnitude 3.5.

US, UK Ban Russian Metals Trading. The US and the United Kingdom banned metal-trading exchanges from accepting new aluminum, copper, and nickel produced in Russia, simultaneously prohibiting the imports of those metals into the two countries, impacting the LME and CME.

Nigeria’s Power Grid Collapses Again. Nigeria’s electricity grid collapsed for the fifth time this year already, just two weeks after the African country’s Tinubu administration raised power tariffs for wealthier consumers by 230%, trying to scrap the $2.6 billion worth of subsidies for the sector.

Investors Turn Bullish on US Gasoline. Money managers and other hedge funds have built up one of the largest bullish positions in US gasoline futures as sticky inflation and higher oil prices keep the pressure on gas prices, with net length rising to 84,926 contracts for Nymex RBOB, the highest since January 2021.

Kazakhstan Promises to Comply with OPEC+. Citing bad weather and heating season requirements, Kazakhstan admitted it exceeded its OPEC+ oil production quota by 131,000 b/d in March, pledging to compensate for the overproduction over Q3 alongside Iraq.

US Warns Venezuela to Stick to Plan. The US State Department warned Venezuela that the White House would not renew a temporary sanctions waiver on the Latin American country that expires on April 18 unless Maduro shows progress on political rights and fair elections to be held this July.

China Builds Stocks from Russian Imports. China’s state-run offshore giant CNOOC (HKG:0883) has been buying up Russia’s ESPO crude into a newly launched reserve base in east China’s Dongying port, boosting the Asian country’s strategic stocks with discounted oil.

Exxon Greenlights Guyana’s Sixth Project. The consortium led by ExxonMobil (NYSE:XOM) developing Guyana’s Stabroek block approved the $12.7 billion Whiptail project, the sixth development in the South American country, aiming 250,000 b/d of output starting from 2027.

Copper Rallies as Chinese Production Cuts Get Real. Copper futures are trading at their highest since June 2022, soaring to $9,650 per metric tonne, after satellite data confirmed that the inactivity of Chinese smelters rose to 8.5%, more than double the 4% rate in Q4 2023.

Oil Service Majors Feel the M&A Pressure. Following SLB’s $8 billion takeover of ChampionX, oil service giants Halliburton (NYSE:H) and Baker Hughes (NASDAQ:BKR) will see increased pressure to join the buying spree, also buoyed by the US’ slowdown in activity.





I'll have more on oil later in the week. Today is my early to work day.

jog on
duc

 


Having just been through all of my positions this morning, I would say that we are starting to stabilise on the selling. Some of my buys yesterday are up a few pennies etc.

The pivot at the move higher will be very important. Do we pivot below highs, above highs?



This is a market scoring system. Absolutely what I use.



Ok, interesting.




Which of course everybody who buys food already knows. The government is lying to you. Nothing new there.

The takeaway however is that Powell is now trapped. He has raised the FFR in record time to levels that were supposed to crush inflation. The reduction in the rate of change in inflation from lockdowns, exit lockdowns of course made him look like he knew what he was doing. That YoY change is now gone. What he is left with is the continued inflation that is again rising because the Fed and Treasury between them continue to add liquidity (cash) to the system to avert collapse.

Powell will of course need to cut rates. Keeping them high will accelerate the inflation. The interest on the debt is inflationary. It requires money creation as it is a deficit.

They (Yellen & Powell) have 1 shot with US Tax revenues coming in. Spend that down real fast and push the inflation down a little, declare victory and cut rates. LOL.



How the 2 compare during a 'risk off' period.

One is highly speculative, one is truly risk off.

jog on
duc
 
Here are a bunch of stats on this being a normal correction:



This is what I noticed this morning while trading my positions. The market was down harder than the individual (mostly) sector ETFs.








So these last 2 charts are looking at consumer spending. Now, the market is expecting discretionary spending to fall. Makes sense. High rates, high inflation, what's not to love.

For tomorrow:



I'm not expecting much from UE. The data is just so messed up now. However, given that the market seems to be adjusting to higher for longer, possibly higher job losses might be a positive.



Market model more defensive.

I'm more to the 0 area. I think that we are possibly stabilising for the moment.

jog on
duc
 
Probably have to do two posts.



Mr fff is a little melodramatic currently.

Sure the fiscal situation is dire and markets are horribly overvalued currently.

I think back to 2008. All through 2006, 2007, many were warning of the impending collapse. Going full out short in 2006 was not a good idea. Nor really was early 2007. Without the catalyst, markets have such a structural bullish bias that a crash is rare. They do happen and this one will likely have one, just not today.

Part 2
 
This set is more about oil, which is the CATALYST



Oil, debt, war and liquidity all form part of the catalyst that will eventually trigger a collapse in equities.

The last chart so perfectly sums up the issues.

The shale oil fields are now requiring $70/barrel to produce. If POO falls to that or below, it jack-knifes prices higher. Oil production is not an on/off switch. If it is shut down, it takes time and reduced recoverability to turn back on.

The East is fast solving the problem...settle in Gold. That way the POG fluctuates and POO is lower in fiat currency terms. For this to work, the POG needs to be multiples higher, ie +/- $30,000/oz. This number seems 'out there' but the number that is really out there is $157 Trillion of unfunded liabilities which is the US current position:



The IMF is concerned. The US controls the IMF. For that statement to be issued is an indication of just how bad the situation is.

So just like sub-prime, this will creep along slowly until it just explodes.

Meanwhile the Fed wants to slow QT. Mainly because liquidity is bad and a constant issue in the UST market.



Again reaching the danger zone.

The strong USD drives UST selling to obtain USD. If you combine that with a rising POO, then we have a highly combustible situation, which can ignite a contagion type of feed forward situation.

Hence the need to provide further liquidity.

jog on
duc
 
Probably need 2 posts today also:



Earnings are (so far) a really mixed bag. Financials are projected to fall. So far the biggies have done fine but their share prices have been chopped down.

Lots of conflicting information.

Next post:
 



The debt projections assume no recession. If there is a recession, those numbers just blow out huge.


USD is down very slightly, MOVE is down very slightly.




Liquidity continues to be a massive issue. As the Treasury accumulates tax receipts, liquidity should also be available from the TGA. Yellen wants (desperately needs) a lower USD.

Potentially look for spending down the TGA to weaken the USD.

Oil News:

Friday, April 19th 2024

The drastic seesawing of oil prices in recent trading sessions reflects the uncertainty surrounding the Israel-Iran conflict, with initial reports of Israeli strikes on Iranian soil ratcheting up Brent above $90 per barrel, only to see them plunge back to $86 per barrel following Tehran’s dismissal of their impact. The reimposition of oil sanctions on Venezuela was placed on the back burner by the market as geopolitics have reigned supreme lately.

US Reimposes Oil Sanctions on Venezuela. The US Department of State has let its 6-month waiver allowing Venezuela to freely trade its crude expire, claiming President Maduro failed to fulfill his pre-election commitments and provided oil companies a 45-day grace period to wind down operations in the country.

Congress Targets China’s Purchases of Iranian Oil. The US House of Representatives overwhelmingly (383-11) passed a bill countering China’s purchases of Iranian crude oil, seeking to sanction transactions between Chinese financial institutions and Iran, with the legislation moving to the Senate where it faces an uncertain fate.

UAE Sovereign Fund to Take Over Spanish Major. Abu Dhabi’s TAQA is in talks with the three largest shareholders of Spanish gas-focused energy firm Naturgy (BME:NTGY) over a possible takeover bid, with the company’s market value of $22 billion making it potentially the largest such deal by a sovereign fund.

EU to Sue Germany Over Its Gas Tariffs. The European Commission is expected to sue Germany for charging its neighbors an extra fee for buying gas from its storage sites, defying the EU’s single-market rules and tripling the “neutrality charge” fee since it was initially introduced in October 2022.

White House Mulls Summer SPR Releases. Senior White House adviser John Podesta claimed the Biden administration could release strategic petroleum stocks over the summer months to ensure affordable gasoline prices, just as high oil prices have halted the US Energy Department’s SPR replenishment plans.

Kazakhstan Claims $150 Billion From Oil Majors. The government of Kazakhstan has raised its arbitration claims against the NCOC consortium of international majors that developed its 13 Bbbls Kashagan supergiant field to $150 billion, claiming it recalculated the value of oil promised oil production that was not delivered.

Creditors Want Conoco to Take Over Citgo. Activist investor Elliott Investment Management has voiced its interest in Citgo Petroleum, operating three refineries with a capacity of 807,000 b/d, whilst the Centerview group of investors wants to lure ConocoPhillips (NYSE:COP) to spearhead their bid.

Decommissioning Costs Loom for US Producers. The US Department of Interior announced new BOEM offshore rules that require the oil and gas industry to raise some $7 billion in financial assurances for the decommissioning of offshore platforms, penalizing firms without sufficient proven reserves as they’d need to provide supplemental financial coverage.

White House Restricts Alaska Drilling and Mining. The Biden administration finalized a regulation to block oil and gas development on 40% of Alaska’s National Petroleum Reserve, also rejecting a proposal to connect the Ambler Mining district to the state’s road infrastructure.

European Gas Prices Firm on Israel-Iran Strikes. Europe’s benchmark TTF prices moved up to €31-32 per mmBtu ($11/mmBtu) as the missile and drone exchange between Israel and Iran alerted European buyers to the risks of a potential closure of the Strait of Hormuz.

Mexico Hands Over Key Gas Field to Carlos Slim. According to Mexican press reports, the country’s state oil company Pemex has agreed to hand over control of its key Lakach natural gas project in the Gulf of Mexico to Grupo Carso (BMV:GCARSO), the holding company of billionaire Carlos Slim.

Namibia to Set Up Sovereign Wealth Fund. Just as Shell (LON:SHEL) hit another oil discovery with its Enigma-1X exploration well in offshore Namibia, the African country announced it would create a sovereign wealth fund to reinvest its oil revenues, benefitting its meager $13 billion economy.

Saudi Arabia Wants a Share of Barrick’s Mega Mine. Saudi Arabia’s mining investment fund Manara Minerals is reportedly closing in on a deal to buy a minority stake in the $7 billion Reko Diq copper and gold mine operated by Barrick Gold (NYSE:GOLD), possibly buying out part of the Pakistani government’s equity.

Given that the Saudi's are using gold now as a settlement asset, buying a stake in a gold mine (GOLD) seems appropriate and timely given that the miners are lagging the POG.

More manipulation of the oil market, further releases from SPR. Election anyone? Can't be that much left in there. Meanwhile tension in the ME is pushing oil higher anyway.

They want to sanction China. Really? There really is no cure for stupid.

jog on
duc
 
So in preparation for next week:

Last week's sectors:






All sectors were downgraded (except Utilities which stays the same a t +2).

Energy will be a battleground with Biden talking about releasing (what's left of) the SPR. Last time this was done oil declined, see what happens this time.

A bounce is definitely on the cards for 2 reasons:

(i)



Just a bit oversold; and

(ii) If you go back to 2006, you will see that when stocks trade below their 50 day MA that this situation only holds for about 2 weeks to 3 months, UNLESS

It is the start of a recession.

While I am definitely in the 'recession is coming camp' or rather, we are in a recession, just that no-one actually realises it yet, that is still not a mainstream view. The mainstream view is that the economy is strong.

So for the moment, a bounce back towards/above the 50 day MA is on the cards.

If it is a recession, then that takes 1yr+ to return us to living above the 50 day MA.

Next week's events:



jog on
duc
 
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