(Bull) Market March 2021

[ducati916]

So the start of a new week:

Let's start with Mr flippe-floppe-flye, as his comments seem particularly relevant currently:

So defensives in two time frames.

The rotation into the defensives remains (currently) the thing. We are having a bounce today in Tech. with falling rates, but, while I think we have another few days of respite from rising rates, we need to confirm that rising rates are a thing of the past. I don't think so.

We need to keep eyes on this.

We also in the same vein have the rotation from growth to value: this looks altogether more ominous. So far, both sets are confirming one another.

So while Bonds are off today and potentially for the next few days, it will be important to observe the relationships. If the market 'thinks' the sell-off in Bonds is simply a STD opportunity, I would not expect much of a rotation back into risker stocks. The bounce, at some point, will be sold.

Just some info. on GDX:

I'm liking GDX (the leveraged version) currently. Time will tell.

I don't think gold is one of these necessarily, but copper etc. probably are.

Although, whether that continues unabated, again, time will tell. I think ultimately, if the world does transition to EV, then the metals will be in heavy demand for a very long period.

This then is very much a watch and wait type of market. The commodity area, long dominated by POO may have an addition in the metals markets to drive commodity based pricing, which, would increase the inflationary pressures and drive the 10yr higher in yield, irrespective of POO.

We also have a massive (again) real estate boom, which is starting to make some noise in the media. Now while POO and houses are excluded from the CPI and housing doesn't make the PPI, the market will certainly watch.

This market has the 'feel' of a market testing some big macro-trends. They may or may not transition, but until they do or don't, this is likely to remain an unsettled market.


jog on
duc

 

[Beaches]

(Bloomberg) -- Hedge funds have capitulated on their short-dollar bets after surging Treasury yields upended a favorite global macro strategy.

Leveraged funds flipped to become net buyers of the world’s reserve currency during the week to March 16 -- a tumultuous period that saw Treasury yields breaching key levels on feverish inflation fears. They added bearish bets on the yen and euro, and switched from bullish positions on the New Zealand dollar, data from Commodity Futures Trading Commission show.

An intensifying debate over the pace of inflation gains has split investors, with some seeing Treasury yields soaring to 2% amid a global recovery spurred by vaccine rollouts and stimulus spending. That in turn is trouncing one of Wall Street’s most popular macro calls of 2021.

The great unwind may just be gaining traction, some strategists said.

“It is the bond market that has been driving the U.S. dollar in the past couple of months, and it appears to be intensifying,” said Alvin T. Tan, head of Asia foreign-exchange strategy at RBC Capital Markets. “I would expect further short-covering versus the U.S. dollar.”

Holding dollar shorts would have served traders a 1.8% loss this year after being a profitable strategy in eight of the nine months through to December, Bloomberg data shows.

Dollar buying by hedge funds rose to the most since August 2014, according to an analysis by Australia & New Zealand Banking Group Ltd. strategists including Khoon Goh. “With U.S. 10-year bond yields poised to rise further, expect financial market volatility to increase,” he said.

Hedge funds’ long dollar positions climbed to 2,414 contracts, compared with shorts of 62,781 a week earlier, according to CFTC data on seven major currencies aggregated by Bloomberg. It is the first time they are bullish on the greenback since November.

Hedge Funds Capitulate on Dollar Short Bets as Losses Mount

(Bloomberg) -- Hedge funds have capitulated on their short-dollar bets after surging Treasury yields upended a favorite global macro strategy.Leveraged funds flipped to become net buyers of the world’s reserve currency during the week to March 16 -- a tumultuous period that saw Treasury yields...

au.finance.yahoo.com

 

[qldfrog]

So the start of a new week:

Let's start with Mr flippe-floppe-flye, as his comments seem particularly relevant currently:

View attachment 121743

So defensives in two time frames.

The rotation into the defensives remains (currently) the thing. We are having a bounce today in Tech. with falling rates, but, while I think we have another few days of respite from rising rates, we need to confirm that rising rates are a thing of the past. I don't think so.

We need to keep eyes on this.

View attachment 121746
View attachment 121747

We also in the same vein have the rotation from growth to value: this looks altogether more ominous. So far, both sets are confirming one another.

View attachment 121748View attachment 121749

So while Bonds are off today and potentially for the next few days, it will be important to observe the relationships. If the market 'thinks' the sell-off in Bonds is simply a STD opportunity, I would not expect much of a rotation back into risker stocks. The bounce, at some point, will be sold.

View attachment 121750

Just some info. on GDX:

View attachment 121744View attachment 121745

I'm liking GDX (the leveraged version) currently. Time will tell.

I don't think gold is one of these necessarily, but copper etc. probably are.

View attachment 121741

Although, whether that continues unabated, again, time will tell. I think ultimately, if the world does transition to EV, then the metals will be in heavy demand for a very long period.

View attachment 121742

This then is very much a watch and wait type of market. The commodity area, long dominated by POO may have an addition in the metals markets to drive commodity based pricing, which, would increase the inflationary pressures and drive the 10yr higher in yield, irrespective of POO.

We also have a massive (again) real estate boom, which is starting to make some noise in the media. Now while POO and houses are excluded from the CPI and housing doesn't make the PPI, the market will certainly watch.

This market has the 'feel' of a market testing some big macro-trends. They may or may not transition, but until they do or don't, this is likely to remain an unsettled market.


jog on
duc

Maybe anecdotal but i could not NOT SEE a fact on your gold miners chart:
Australian miners are shockingly negative vs the others?? USD/AUD play? But i would expect such a chart to be currency adjusted?

 

[ducati916]

Well we have lots of chop.

Pretty much everything is off other than DXY/10yr and Crypto.

Since my first coffee vol. picked up:

Stocks across the board are meh.

Breadth of declines a concern. This is yesterday's EOD chart, but it will look a little worse today at EOD I suspect.

Mr flippe-floppe-flye:

Essentially what seems to be happening is that two major macro trends are bumping into each other via investors/traders. One of these in the fullness of time will be proven wrong and one right. History (backtesting) will record the winner. Currently in the present, it cannot be said with any certainty, which thesis will win.

So we have (in no particular order) a declining DXY, which is inflationary, but by how much?
Rising commodities, but not yet a threat.
The 'pent-up demand' theory.
The lack of supply and badly disrupted supply chains.
Rising 10yr, which will cap. inflationary pressures, unless the Fed. caps it.

That is 1 macro trend, which is the inflationary trend.

The second is/are:

The re-opening of global trade.
Supply chains ready and able to re-supply.
Demographics.
Abundant supply of commodities.
A resumption of significant US trade deficits predominantly with China and China accumulating US Treasuries.


Some observations:

China has been diversifying away from DXY. I don't think that they will return any time soon, if ever, to the re-accumulation of US Treasuries. China is looking to grow internal consumption and create increased demand and assets across the globe. Add in the current cold war that exists and the former cosy relationship looks to be over. Thus, a weaker DXY over time looks inevitable.

A weaker DXY will be inflationary to commodity pricing for the US. This will impact in many industries, their COG line, potentially reducing profits and creating where possible a passing on of that cost to consumers. All inflationary.

We'll find out re. supply chains going forward, as we will re. the pent-up demand theory.

The Fed. will cap the yield curve. It's just a matter of how high will it go before they do. With rates still negative elsewhere, yield hogs will find US rates attractive and there may be no need to cap. That will keep the 10yr in bounds and DXY stronger, inflation lower.

Caught up in all of this are stocks.

The bottom line is: no-one really knows where any of this will end up. We probably drift higher, but with far more frequent minor declines and lots of rotation into and out of sectors.


jog on
duc

 

[ducati916]

More chop and churn:

Yields down, DXY up.

As for stocks, marginally up, but sectors more or less reversing on yesterday as commodities come back.

But underneath, stocks weakening. As this is an EOD chart, this is the situation as of yesterday. So a little bounce, but hardly convincing yet.

Airlines:

Hideous amounts of debt. This though has been a sector that has ripped higher.

We'll see how they go come re-opening. This was a sector that I didn't buy at the lows last year. The fundamentals made no sense, yet, they ripped higher. Will the fundamentals catch up when reality (re-opening) happens?

And Mr flippe-floppe-flye:

I'll probably have a post on gold later. There is all sorts of weird and contradictory prices in the gold markets currently. I still have a major Miners trade on, so some skin-in-the-game with the gold market. I also have some contingent orders sitting in the market waiting to execute if price reaches.

jog on
duc

 

[qldfrog]

A general comment for Mr Ducati:
Another proof of the chopping market: i read @ducati916 daily analysis when i wake up after looking at the US market figures and noticed recently a bit of difference in the couple of hours between the NZ post and my wake up in Oz check.
For example, today, market is down with Nasdaq at -1.9% so not insignificant.with only DJ 30 slightly green so a back to fundamentals rotation sign
we are in instable conditions indeed, and hard to see clearly.

 

[ducati916]

A general comment for Mr Ducati:
Another proof of the chopping market: i read @ducati916 daily analysis when i wake up after looking at the US market figures and noticed recently a bit of difference in the couple of hours between the NZ post and my wake up in Oz check.
For example, today, market is down with Nasdaq at -1.9% so not insignificant.with only DJ 30 slightly green so a back to fundamentals rotation sign
we are in instable conditions indeed, and hard to see clearly.

Very unstable:

The signals for 'risk off' trades:

The small caps:

Now I don't actually agree with this chart, but an interesting idea. I think the signal would be too late.

Energy had either a vicious bounce, or that dip was aggressively bought. The below chart suggests BTD.

Oil news:

Market Movers

• ConocoPhillips (NYSE: COP) and Occidental Petroleum (NYSE: OXY) have to hold shareholder votes on greenhouse gas emissions, according to an SEC ruling.

• Eni (NYSE: E) will acquire biogas producer FRI-EL in another move towards decarbonization.

• NextDecade Corp. will develop carbon capture and storage at its proposed Rio Grande LNG project in Texas. The move is intended to attract sufficient interest in the plant’s LNG capacity to greenlight the project.

Tuesday, March 23, 2021

Oil prices appeared to find their footing at the start of the week, after a huge selloff last week. “Oil (had) its worst week this year as concerns grow over a flaring up in COVID-19 cases across Europe,” Dutch bank ING said in a note. “This comes at a time when there are clear signs of weakness in the physical oil market.”

Oil prices resumed their slide on Tuesday after Covid-related restrictions in Europe multiplied. The price plunge was likely magnified by the rush by net-long investors to exit their positions. Long bets on futures had begun to look overstretched. WTI crashed as low as $58.60 on Tuesday morning.

Saudi Aramco to supply China for 50 years. Saudi Aramco (TADAWUL: 2222) will ensure China’s energy security is a top priority for the next half-century. “Ensuring the continuing security of China’s energy needs remains our highest priority – not just for the next five years but for the next 50 and beyond,” CEO Amin Nasser told the China Development Forum on Sunday.

Aramco’s profit tumbles. Aramco said its net profit fell by 44% to $49 billion in 2020. The company will spend $35 billion this year, down from a previous estimate of $40-$45 billion.

Biden sidelines Saudi Arabia. The U.S.’s new cornerstone strategy to counter growing Chinese influence in the Middle East’s oil and gas sector appears to barely involve Saudi Arabia at all.

U.S. gasoline demand nearing pre-pandemic levels. Gasoline demand last week was 1.8% above the year-ago level on the eve of the lockdown. “It’s been an impressive rebound in the last few weeks of demand and I continue to be surprised every day,” noted Patrick De Haan, head of petroleum analysis at GasBuddy.

Alberta’s oil workers wrestle with layoffs. CBC looks at contracting employment in Alberta’s oil industry and how it is coping.

California Senators press for ICE phase-out deadline. California’s two U.S. Senators are pressing the Biden administration to set a firm date for a phase-out of gasoline and diesel-powered vehicles. They urged the federal government to “follow California’s lead.”

The oil industry supports a carbon tax. In a meeting with the White House, top oil executives from ExxonMobil (NYSE: XOM) and Royal Dutch Shell (NYSE: RDS.A), as well as industry lobbyists, voiced support for a carbon tax. The meeting comes as the Biden administration is working on a $3 trillion infrastructure bill that could include a long list of climate provisions.

U.S. refiners hope for summer rebound. Refiners are betting on improving margins in the next few months. “Certainly by summer, we would expect that a good portion of the American public is able to get out and burn the fuels that we make, and that should lead to a more normal-type summer level,” Phillips 66 executive vice-president of refining Bob Herman said, according to Argus.

EIA: Jet fuel demand rebound will be slow. The EIA expects U.S. airline passenger demand to return to pre-pandemic levels by 2025, but jet fuel demand won’t rise in concert. Jet fuel demand won’t return to pre-pandemic levels until 2030 due to improved operational and fuel efficiency.

Struggling shale fortunes see renewed optimism. Energy and power companies have raised more than $20 billion in high-yield bonds so far this year, a record going back to 1996, according to Refinitiv. “At these levels a lot of companies can hedge future production and survive,” said John Dixon, a high-yield bond trader at Dinosaur Financial Group. “It’s the oil-linked names in high yield that have been among the best performers recently.”

Shale debt gets cheap again. More high-yield debt offerings demonstrate a renewed appetite for shale financing, despite years of red ink. “Many may not be able to resist the siren song of historically low-interest rates,” Spencer Cutter, an analyst at Bloomberg Intelligence, wrote Monday in a report. “As market conditions started to improve from the shock of negative oil prices in April, companies jumped at the chance to refinance debt.”

A natural gas pipeline in Venezuela explodes. A section of a natural gas pipeline in Venezuela exploded on Saturday, which the country’s energy minister blamed on an attack, Reuters reports, citing a document produced by state energy company PDVSA.

Clean energy resource war? What will the world look like when oil is no longer a leading force in global geopolitics? Many countries are sure to be left behind in the new green world order.

Annova LNG cancels the South Texas export project. Annova LNG canceled a proposed 6.5 mtpa export project in Brownsville, TX, which would have exported Eagle Ford and Permian gas. The company cited “changes in the global LNG market."

BP drops reserve-replacement ratio. The ratio of oil and gas reserve replacement has become the latest radical change UK supermajor BP (NYSE: BP) has made on its road to a net-zero future.

jog on
duc

 

[frugal.rock]

I'll probably have a post on gold later. There is all sorts of weird and contradictory prices in the gold markets currently. I still have a major Miners trade on, so some skin-in-the-game with the gold market.

Gold has me feeling like a flounder out of water flip flopping on a sandbank.

Eagerly awaiting an update on gold.
Currently sitting on the fence after going from bear to neutral very recently, but am hesitant either way as yet.

 

[ducati916]

So many charts today I may have to split them into 3 separate posts.

The first set of posts addresses how a stealth bear market operates.

Individual names currently:

Many of these were the darlings of the market coming off of the lows last year.

Look at the outliers. Those tails are very dangerous.

Mr flippe-floppe-flye

We have chop.

But that chop isn't really taking us higher. It is just chopping positions.This is not a market that you can be aggressive with for swing trades long or short. This has almost become a day trader market. If you know how to day trade or that you have a day trade strategy, then this is your market.

Why do we have chop? To be addressed in post #2.

Meanwhile BTC:

Looking dangerous. You Hodlers really don't want to see a break of the 50 day. I think in this market that could unleash some panic selling.

Some news:

Maybe this time.

This cold war is not a good thing. Some (a lot) of that Treasury selling, I'm sure is coming from China, although Japan is also a big seller.

Reopening. Keep that thought in mind as we move to post #2

jog on
duc

 

[ducati916]

Moving right along.

Why the chop?

DXY.

Global recessions/crises create safe-haven demand for the dollar. This is plainly visible in the grey 2008 – 2009 recession bar to the left (dollar peak in March 2009, right as global equity markets troughed) and again in March 2020 (again at a low for global equities).

The chart above also shows that global economic recoveries do see the dollar decline as capital goes off looking for better returns outside the US but this is a multiyear process, and the greenback can stage rallies over that time. Where are we currently? Are we at a reopening? Is it back to business as usual? Well if you know the answer to that, be sure to let me know.

If DXY does decline (for whatever reason) then pricing in DXY of commodities goes up. For the US that is inflation. When commodities go up, yield goes up (Bonds go down) and eventually, the stock market goes down. Why? Well there are a number of reasons, but here is the primary reason:

The ultra defensives, Utilities and Real Estate. Their earnings are in the US. A weak DXY impacts them only in so much as what they need to purchase from commodity markets where a weak DXY hurts them.

The dollar weakened by 11.8 percent from the March 2020 high through year end; that’s eerily close to the 12.3 percent 2010 drop noted above. Now, it’s been rallying since January 5th, 2021 and is up 1.8 percent from then. It should surprise no one if it adds another 3 percent in Trade Weighted Value Index terms, matching the 2010 move.

Just as in 2010, markets are reevaluating the pace of non-US global economic recovery. No other major country is spending what the US is shelling out to recover from the pandemic, and America’s vaccine rollout has been solid. A further move higher for the dollar in coming weeks would be logical. Or not.

Will it rather continue to lose value?

So while DXY sorts itself out, markets are roiling.

Commodities: reopening or not? Economic growth or not?

Stocks are shooting first asking questions later. We are in 'bounce' or BTD territory (this is yesterday's EOD chart) and into the w/e we may get some clarity, but I very much doubt it.

Interesting is the VIX.

2 time frames. We have this chop with the longer term VIX suggesting that at current vol. levels, we should be trading gently higher. The short term VIX rather indicates that there might well be an explosive move higher coming.

The thing is, it could go either way. My money is on an explosion higher. If the DXY starts to trade lower, commodities and rates will rip higher and stocks could collapse.

This scenario is eerily similar to 1987.

Big boys are in no doubt. Defensive all the way.

The interesting case of the dog that didn't bark, or known to us as gold, coming next.

jog on
duc

 

[ducati916]

Gold has me feeling like a flounder out of water flip flopping on a sandbank.

Eagerly awaiting an update on gold.
Currently sitting on the fence after going from bear to neutral very recently, but am hesitant either way as yet.

Gold.

To fully understand Commodities and DXY, it is necessary to understand the role that the gold market plays. This is true for primarily 2 reasons: first, of the 21 or more commodity markets in the CRB index, gold is the most sensitive (historically) to DXY trends. Second, the gold market leads trends in the CRB. Historically, a trend change in DXY will produce a trend change in gold, historically, in the opposite direction. As we will see, since 2019, this relationship has changed, which may be accounting for some of the weirdness in the gold market. This original relationship prior to 2019, goes back to the 1960's.

So let's look at this in chart form: (again this will likely have to be spread across 2 posts)

In this 15yr chart, you can see the opposite nature of DXY/Gold. All the way to 2019.

And zooming in:

Closer still:

And still closer:

So before moving on to DXY/CRB...what happened in 2019 that might account for the change? We had the Taper Tantrum. Was that sufficient? Nothing else of any note seems to jog my memory, so unless anyone has any other suggestions, I'll keep interest rates in mind.

Moving to DXY/CRB. They move opposite to one another. Hence a weak DXY correlates with strong CRB and a prima facie, inflationary environment.

Zooming in closer:

Closer still and we can see that (it looks like) commodities lead DXY. That commodities turned higher, after a long downtrend, after which DXY topped and headed lower.

So now we come to Gold/CRB. We know that historically, gold leads the CRB. That (below) is true. The thing that is confusing (well it was to me) is that gold led the CRB by such a huge margin in 2018 (and into the pandemic) that it seemed that this relationship had been lost. No. It is simply that the lead time and trend was magnified, to such an extent, it seemed to be broken.

Zooming out a bit further and the lead time from 2019 becomes clearer.

So far, we have a common year of 2019 for both GLD/DXY and GLD/CRB.

Zooming into the last year, GLD peaked in Aug. 2020 and the CRB motored forward, only weakening this month, March 2021.

Now we move onto our third relationship: Interest rates (TNX) and the CRB.

As can be seen, they mirror one another, even in the truly bizarre QE world. Which one leads, which one follows?

To find out, you'll have to go to post #2.

jog on
duc

 

[ducati916]

Which brings us directly to the question of inflation, which was topping the list in Hedge Fund Managers surveys.

Higher rates of interest, specifically, higher than the rate of inflation as measured by the CRB (not CPI), and we do not have an inflationary environment. Lower rates of interest than the inflationary rate of CRB and we have an inflationary environment.

This ratio chart measures the two variables in question:

The answer is clear: rates are now rising faster than the rate of inflation. Currently, there is no inflation. The system is working (as long as the FED doesn't f**k it up) at least at the long end. The short end of the curve is seriously broken.

So the takeaways:

(i) Gold, traditionally, is held as a store of value as against inflation. Currently there is no inflation and gold is declining, as should be expected. All the talk of Bullion Banks suppressing the price etc. would seem to be hyperbole or traders talking their book.

(ii) We should (unless things change, ie. the FED jump in at the long end) expect continued strength in DXY. Gold is currently the canary-in-the-coal-mine and is reacting faster than any other asset class. Remember all fiat currencies have been expanded. Therefore strength in DXY is not weird.

(iii) My rates model has stabilised at 1.5%. It was at one point going up almost every week. It topped out at 1.64%.

(iv) If rates have topped (at least for the moment) then CRB is set to decline. Therefore POO a significant commodity, has probably, for the moment topped out or will slow down in its rise.

(v) From all of the above, the market is saying that the global re-opening of trade will continue to see a disinflationary environment re-establish itself. The inflationary forces that existed going into 2020 are now not strong enough to overcome the forces of globalisation.

(vI) Markets (looking backwards into history) are always correct. This can be a trap. Things could change and change quickly if the FED jumps in. So while this is potentially the trend, it could end and we move to an inflationary environment, in which case, this would probably show up first in the inter-market relationships (a) GLD trend higher, (b) CRB outperform TNX, (c) DXY fall.


This might, should it occur, be referred to as a Black Swan.

A Black Swan is defined as:

(i) an unforeseen event, an outlier (a very low probability event);
(ii) that has non-linear effects (huge);
(iii) can be explained post hoc, ergo propter hoc.


This would not be a Black Swan event.

Summary:

Gold currently, is not going to resume its upwards trajectory. If things change (isn't that always true) then yes, it could well do. The GLD Miners are (obviously) tied to POG. With POG falling (predicted) than the Miners will decline. They will likely decline far more than POG. The reason is leverage (debt). That leverage pushes them down further in a declining market and higher in a rising market.


jog on
duc

 

[ducati916]

So for the week:

The market stayed defensive. Now here's the thing: if inflation isn't a thing atm. then growth is where you want to be positioned. This is a BTD in Tech etc. and take profits in the defensives. Rotate.

A bit of schadenfreude from this chart, although for the most part he is probably right.

US debt/GDP is always a macro-issue: suggesting it is manageable (at least currently).

BTC:

Looks to have held that 50EMA, which was very important to do.

And finally Mr flippe-floppe-flye:

jog on
duc

 

[ducati916]

Oil News:

Market Movers

- Chevron (NYSE: CVX) is the leading contender to purchase the 145,000-bpd Puget Sound refinery in Washington State from Royal Dutch Shell (NYSE: RDS.A).

- Devon Energy (NYSE: DVN) said its first-quarter production would decline by 8% due to the Texas freeze.

- Vine Energy (NYSE: VEI) announced a bond sale to raise $950 million in senior unsecured notes due in 2029. Vine Energy recently launched an IPO and raised less money than it had hoped.

Tuesday, March 30, 2021

Oil prices fell on Tuesday as the Suez Canal was cleared and concerns about global bottlenecks eased. Traders are now focused on the upcoming OPEC+ meeting, which most observers believe will result in an extension of cuts, and the impact of Covid-19 on oil demand in Europe.

OPEC+ poised to extend cuts. Saudi Arabia wants OPEC+ cuts extended through June. Russia, the leader of the non-OPEC group in OPEC+, favors a rollover of the alliance's oil production cuts while seeking a slight increase for itself to meet higher seasonal demand.

Total evacuates staff from Mozambique. Total (NYSE: TOT) and other international contractors evacuated some staff from Mozambique over the weekend as insurgents advanced to the coastal town of Palma, a hub for the country’s nascent LNG industry. Total’s $20 billion project is the largest foreign investment on the African continent but now appears to be at grave risk.

Iran and China sign an economic and security agreement. Iran and China signed a wide-ranging economic and security agreement, billed as a “strategic partnership” that will last 25 years. Details remain sparse, but the move likely paves the way for more Chinese investment in Iran’s oil sector and also open up more room for exports. The WSJ also says that the two countries could set up a joint bank that would help Iran evade U.S. sanctions. Reuters reports that Iranian oil exports are expected to continue to rise in March.

Sinopec to ramp up hydrogen investment. Sinopec, the largest oil refiner in Asia, announced plans to shift towards carbon neutrality by 2050, a plan that leans heavily on hydrogen.

Abu Dhabi debuts Murban contract. Abu Dhabi allowed trading in its futures contract, Murban, on the Intercontinental Exchange (ICE). The move is aimed at bolstering the emirate as an international oil trading hub.

Biden invites China and Russia to climate summit. President Joe Biden is including rivals Vladimir Putin of Russia and Xi Jinping of China among the invitees to the first big climate talks of his administration, according to the AP. The event will be held virtually April 22 and 23.

Exxon and Chevron cautious on shale drilling. ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) have dramatically scaled back drilling in the Permian compared to a year ago. According to Rystad, the two majors accounted for 28% of Permian drilling activity in the spring of 2020, a share that is now down to less than 5%. “We essentially hit a pause button,” said Chevron Chief Financial Officer Pierre Breber, according to Reuters.

Will U.S. shale exploration surge? Cheap financing and higher crude oil prices could kick off another round of drilling in U.S. shale, despite promises to exercise restraint.

Questions on Shell’s bet on LNG. The Wall Street Journal reports that massive billion-dollar bets on LNG appear riskier as the energy transition gains momentum. Royal Dutch Shell (NYSE: RDS.A) spent over $50 billion to purchase BG Group in 2015, a large wager on the future of LNG. But the gas era could be short-lived as countries leap frog to renewables. Shell has written down gas assets and lowered its forecast for demand growth.

Shell links executive pay to climate. Royal Dutch Shell (NYSE: RDS.A) has proposed linking director’s pay more closely to its climate performance, while also severing the link between LNG production.

Vanguard and BlackRock make net-zero emissions plans. BlackRock (NYSE: BLK) and Vanguard Group are among 43 investment firms managing more than $22 trillion in assets that are joining Net Zero Asset Managers initiative.

Natural gas prices are stuck. The U.S. natural gas benchmark is set for several months of below $3 MMBtu price analysts and EIA forecasters say. The agency cited declining demand for heating in the spring along with rising American dry natural gas production.

New Mexico adopts flaring regulations. New Mexico regulators adopted new regulations that end routine flaring from Permian drillers. They can still flare in the event of an emergency, but no longer simply as a fact of doing business.

Biden announces offshore wind push. The White House announced Monday an ambitious plan to expand wind farms along the East Coast and jumpstart the country’s nascent offshore wind industry. The Biden administration is targeting 30 GW of offshore wind by 2030.

Biden infrastructure plan to include orphan wells. One aspect of President Biden’s forthcoming $3-$4 trillion infrastructure proposal (to be unveiled Wednesday) is a big push to clean up abandoned oil and gas wells.

EIA: Battery boom on U.S. grid. The EIA laid out a long-term forecast for energy storage in the U.S., and in its reference case, the U.S. sees 59 GW of battery storage by 2050, a figure that could be much higher if renewables accelerate.

Aramco resists dividend cut. Despite a 44 percent drop in its 2020 profits, the Saudi Arabian government has instructed majority-state-owned Saudi Aramco to stick to the US$75 billion per year dividend payout for shareholders that it pledged at the time of its IPO.

jog on
duc