Start with the oil news:
Oil prices held on at the end of the week, set to close out mostly flat from a week earlier. Oil prices are trapped between horrific downside risks, mostly in India, offset by growing optimism in the U.S. and to a lesser extent in Europe.
India’s oil demand in doubt. India posted several days of record-setting Covid-19 cases, and
Bloomberg reports that demand for fuels could plunge by 20% in April. “Given the grim situation, it’s likely that the lockdowns could be in place for several weeks or even a couple of months,” said Senthil Kumaran, head of South Asia oil at industry consultant FGE. “India’s total key oil products demand will see a significant pullback.”
Biden pledges 50-52% cut in GHG; other countries up commitments. President Biden announced a goal of cutting emissions by 50-52% by 2030 at the climate summit on Thursday. Canada boosted its target from a 30% cut to a 40-45% cut. Japan raised its target to 46%, up from 26%.
Natural gas rally over. Bank of America said that natural gas “throws in the towel,” noting that the month of March saw weaker-than-expected industrial demand and warm weather, leading inventories to end the month at 1.78 trillion cubic feet, higher than anticipated, which erased the inventory deficit relative to the five-year average.
Natural gas production on the rise. Even as demand hit a lull, production in natural gas is ramping back up after a roughly 18-month hiatus. Rystad Energy came out with a note predicting strong production gains for the next three years and beyond. Both Rystad and Bank of America said the Haynesville shale, in particular, is looking strong.
China promises pullback on coal. China’s Xi Jinping
said that China would “strictly limit” coal consumption over the next five years and then begin phasing it out after that.
U.S. Senate to repeal methane rollback. The U.S. Senate will
repeal the Trump-era pullback on methane regulations next week.
New York sues Big Oil. New York City
sued ExxonMobil (NYSE: XOM),
BP (NYSE: BP) and
Royal Dutch Shell (NYSE: RDS.A) for deceptive ads claiming their products were “emissions-reducing.”
Chevron lobbies U.S. against Myanmar sanctions. The New York Times reports that
Chevron (NYSE: CVX) is
lobbying the U.S. government to not place sanctions on Myanmar, following the military coup and brutal crackdown that has unfolded in the country since February. Chevron operates a large natural gas project in the country along with
Total (NYSE: TOT).
White House reveals climate finance strategy. The White House
unveiled its international climate finance strategy, which includes pushing lending arms of the government – U.S. International Development Finance Corporation, the Millennium Challenge Corporation and the Export-Import Bank – to virtually eliminate fossil fuel lending, except in extraordinary circumstances.
Small companies buy Big Oil’s assets. The supermajors are pledging billions in low-carbon energy investments and committing to net-zero goals over the next decade. Meanwhile, smaller oil and gas companies are
snapping up the shed assets.
Are peak demand forecasts accurate? Goldman Sachs believes oil demand will peak in 2026, while BP Plc believes the highest global demand growth is already over, and International Energy Agency (IEA) thinks the peak could come later, in 2030. However it’s framed, it is clear that the oil and gas industry is facing a
turbulent future.
UN-backed climate finance group managing $70 trillion announced. The Glasgow Financial Alliance for Net Zero (GFANZ), a UN-backed group of assets managers, banks, investors, and insurers
launched this week. The group's 160-plus members are responsible for over $70 trillion in assets, and “will work to mobilise the trillions of dollars necessary to build a global zero emissions economy and deliver the goals of the Paris Agreement," the announcement states. Participants include Barclays, Morgan Stanley, Citigroup, Munich Re, the Zurich Insurance Group and many others.
California to ban new fracking permits. California Gov. Gavin Newsom is
expected to announce a ban on new fracking projects beginning in 2024.
Lithium era just beginning. It’s been a big week for lithium, with a
multi-billion-dollar mega-merger, a new major production deal in Chile, and funding for Europe’s first large-scale lithium refinery in Chile. Things are looking up for the vital battery metal.
Halliburton sank on “moderating” fracking forecast.
Halliburton (NYSE: HAL) beat the consensus on earnings but saw its share price sink after it
said that it expects fracking activity to moderate in the U.S. in the second quarter.
Total terminating contracts in Mozambique. As militant attacks show no signs of going away,
Total (NYSE: TOT) is
terminating contracts with some companies in Mozambique related to its $20 billion LNG export project. Analysts say the delay on the project could be at least a year.
Biden admin unwinds Trump auto policy. The Biden administration will
restore the authority to California to set its own fuel economy standards tighter than federal standards, following the Trump administration’s effort to repeal that authority.
Public lands drilling pause extended. The U.S. Department of Interior
extended its drilling pause on federal lands through June, a policy that mostly only affects the southeastern corner of New Mexico.
12 states call for ICE ban. 12 U.S. states
called on the federal government to ban the sale of gasoline-powered vehicles by 2035.
Kinder Morgan $1 billion Texas windfall.
Kinder Morgan (NYSE: KMI) said that it took in a $1 billion windfall from the Texas electricity crisis in February. “[W]e view KMI’s large beat as a ‘zero-sum-game,’ meaning someone (i.e. buyers of the gas) had to pay the bill, which could make for some interesting utility earnings calls,” Citigroup said.
At week end:
Well the dip was aggressively bought. To get it, your timing would need to be absolutely perfect, buying the close yesterday.
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Overall for the week, the defensive sectors of the market were the place to be.
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Reflected:
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The still remaining question of inflation. Will it run hot or just right or not at all? At the moment, it is heating up from cold to tepid. Whether it makes the transition to warm and onto hot, we'll just have to wait and see. Certainly if the Fed has any say in the matter it will move to hot...then it remains to be seen if they can prevent it from boiling over.
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$TNX looks as if it has found short term support to move to higher yields on the daily.
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On the weekly, not so much:
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The stock market is (obviously) trading on the weekly and that rates will continue to (a) decline or (b) go nowhere for a while: ie. correct through time.
BTC:
I put this chart up in the BTC Bulls thread. Ignored.
Which rather infers their mindset and bias. Simply on a chart basis, BTC has run far and hard. We know (in the past) that it has demonstrated a propensity to return to the 50EMA at some point. Sometimes earlier, sometimes later. This would (could) be the later return. If so, that takes it to either a 20 handle or (total panic) an 11 handle.
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Mr flippe-floppe-flye has been true to his name:
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There are still divergences within the stock market in breadth, but, not important obviously to the BTD crowd. April is certainly living up to its seasonality projection, in fact (which is why I start the month with the seasonality projection) each month this year has followed its script almost to perfection.
I raise this issue simply because
@peter2 and
@Skate have touched on seasonality in their respective threads in the past 24hrs or so. All manner of analysts will follow cycles and cyclical theories, many very successful and intelligent (Felix Zulaf). The 'Sell in May and go away' is mentioned (Peter & Skate) and Mr Skate identifies the Sept/Oct period as being particularly dangerous (in the past) to his systems driven approach.
So examining this for a moment:
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What I do know is that the Sept/Oct. period was/is harvest time in the US. Historically, the banking system used to extend finance to farmers during this period, pulling back the availability of margin loans to the stock market. Absent margin to (presumably) BTD, declines would run far deeper in this period. Savvy stock market (manipulators) players would, at this time launch co-ordinated bear raids pushing the market lower aided by margin calls.
Seasonality was definitely a thing. Whether (or how much) it remains a thing, I am informally keeping track of, as can anyone simply by collecting the seasonality data as we progress through the year.
Which makes we curious: we have currently (in April) some really messy charts, many areas are overextended. Internals are horrible. Yet, the market has simply refused to break more than say 2%. May as a seasonality is not good (see start of this thread). April is 100% up. Yes 100% up. It is living to expectation so far. May however is a different story, not terrible, but less than April. June/July both 100%. Exit for the 3 worst months: Aug/Sept/Oct. Re-enter Nov/Dec.
I'd be interested to see a systems chap test it. It is supposed not to work.
jog on
duc