DDD March 2024

[ducati916]

There will be a double post today for all the charts.



Next post

 

[ducati916]

jog on
duc

 

[ducati916]

Oil News:

US gasoline futures have jumped sharply in the past two weeks, up more than 20% since the beginning of the year, as Red Sea disruptions, refinery force majeure events, and resurgent demand put the heat on fuel prices.

- With US gasoline prices now 60% higher than at the time of the 2020 presidential election, the Biden administration will be looking warily at RBOB front-month futures flirting with $2.6 per gallon.

- The two main refinery additions this year, Nigeria’s 650,000 b/d Dangote and Mexico’s 340,000 b/d Dos Bocas refinery, have been plagued by delays and are unlikely to have an impact on H1 gasoline supply, increasing the possibility of potential summer spikes.

- Premium gasoline will be particularly susceptible to price rallies as the NY Harbor RBOB octane spread, gauging the cost of high-octane blendstocks, soared to the highest-ever readings in March, at $0.42 per gallon.

Market Movers

- US natural gas producer EQT Corp (NYSE:EQT) agreed to purchase pipeline operator Equitrans Midstream (NYSE:ETRN) in an all-stock deal including debt that values the company at $14 billion.

- Saudi Aramco (TADAWUL:2222) increased its dividend by 30% to $97.8 billion, despite its net profit declining almost 25% last year on lower prices and production, providing more revenue to the state.

- UK oil major BP (NYSE:BP) decided to permanently close a third of its crude distillation capacity at the 257,000 b/d Gelsenkirchen refinery in Germany from 2025 onwards.

Tuesday, March 12, 2024

Oil markets are set for a busy week, but so far neither US inflation data nor the monthly OPEC report managed to disrupt the stagnation of oil prices, with ICE Brent still trading around the $82 per barrel mark. The end of US refinery maintenance, coupled with better-than-assumed demand figures, might be one of the key trends to watch out for. At the same time, drone strikes on Russian refineries could squeeze diesel markets. The wait for a sentiment shift continues.

Saudi Arabia Cuts Heavy Supply to Asia. Saudi Aramco (TADAWUL:2222) plans to cut Arab Heavy crude supply to Asia in April, citing oilfield maintenance, explaining why the heaviest Saudi grade saw the biggest month-on-month change in formula prices, up 30 cents per barrel.

OPEC Sticks to Its Bullish 2024 Outlook. The Organization of Petroleum Exporting Countries (OPEC) said world crude demand will increase by 2.25 million b/d in 2024 and by 1.85 million b/d next year, keeping its bullish forecasts unchanged from last month and raising its GDP forecasts.

Houthis Target Red Sea Shipping Again. Maritime warfare continues in the Red Sea as Houthi rebels fired several missiles at the Liberia-flagged container ship Pinocchio, en route to the Suez Canal, claiming the hit was accurate on what they believe is an American-owned tanker.

Mexico Elections See Heated Refinery Row. Mexico’s opposition candidate Xochitl Galvez vowed to close two of Mexico’s largest refineries, Cadereyta and Madero, within six months of taking office, arguing both plants are huge air, ground, and sea polluters.

India Cannot Get Enough of Coal. India’s coal-fired electricity soared to an all-time high of 115 TWh in January, up 10% year-on-year, leading to a concurrent increase in coal-powered emissions to 104.5 million metric tonnes of CO2 as renewable output dropped lower.

Tanker Damages Port Berth in India’s Key Port. Oil tanker Hafnia Seine, carrying alkylates to the Indian port of Sikka, hit the crude import facility of Bharat Petroleum (NSE:BPCL), damaging the single point mooring that is used by BPCL to supply its landlocked Bina refinery in central India.

Gulf Oil Giants Set Sights on Lithium. Following ExxonMobil’s move into Arkansas lithium, the Middle East’s largest oil producers Saudi Aramco and ADNOC are reportedly looking at ways to extract lithium from brine in their oilfields, without specifying what direct extraction they will use.

Petrobras Loses Appeal After Axed Dividend. Shares of Brazilian national oil firm Petrobras (NYSEBR) dropped by 12% week-on-week after the company’s board axed a 50% extraordinary dividend, saying that $8.8 billion would be better used reinvested in company operations.

Iron Ore Weakens on Faltering China Hopes. Iron ore futures declined to their lowest since October, dropping to ¥830 per metric tonne ($115/mt) at the Dalian Commodity Exchange, amidst higher-than-expected exports – Kpler data show 150 million tonnes in January, the highest on record.

Chinese Solar Stocks Rebound After Annus Horribilis. Shares of Chinese solar companies Xinyi Solar or Flat Glass jumped this week after rumors emerged that Beijing would lift the curtailment rate for solar-generated electricity from its current 5%, boosting 2024 growth.

European Majors Want US to Deny Venture Global Extension. European energy firms Shell (LON:SHEL), Edison, Repsol, Orlen SA, and Galp Energia asked US authorities to reject Venture Global’s one-year construction permit extension, believing the firm has completed the plant but failed to provide them with contracted cargoes.

Permian Gas Prices Turn Negative, Again. Spot natural gas prices at the Waha hub in west Texas returned to negative territory this week, averaging -10 cents per mmBtu, due to a combination of mild weather, higher-than-average inventories, and still rising gas production.

Algeria Expands LNG Export Infrastructure. The first-ever large-scale LNG carrier Ougarta loaded a cargo at the Skikda liquefaction terminal in Algeria, part of the African nation’s goal to expand LNG marketing opportunities after exporting a 13-year high of 13.5 million tonnes in 2023.

Changing the market position to more defensive.

Since I loaded the post, the market is off its daily high. The CPI surprised (to who?) to the upside, but initially the market shrugged it off.

At the moment we have a (relatively) tight monetary policy and a very loooose fiscal policy. The fiscal is a far stronger drive to CPI inflation than monetary policy is a constraint under usual circumstances.

But circumstances are not 'usual'. Monetary policy is also driving inflation higher. The higher interest rate on the debt drives fiscal deficits even faster.

The real issue is liquidity. The Repo market is the transmission mechanism for liquidity. ATM, it looks ok. It can however change very quickly.

jog on
duc

 

[ducati916]

So the Market Guy picks up the ISDA story.

Forget Powell and the Fed, they are doing nothing. The story or important variable to watch is the liquidity. The ISDA proposition gives the banks 'free money' (again) and solves (for the moment) the liquidity issue that plagues the UST market and by extension the stock market, not that the stock market seems to be paying much attention.

It is QE implemented by the banks rather than the Fed. The QT currently being implemented by the Fed is or has led to a shortage of UST collateral. Unbelievable, but true. The Repo market is constantly jittery for lack of collateral.



Full article: https://www.bloomberg.com/news/arti...website&utm_medium=share&utm_campaign=twitter

What it says:



Go back to yesterday's chart to see how underwater the banks balance sheets are. If the banks cannot buy the huge tsunami of UST roll over and new debt, who will?

The question is: will it be inflationary? QE after 2008 wasn't nearly as inflationary as it was thought to be. Will it be this time?

I'll be having a think about this.

jog on
duc

 

[ducati916]

Full article:

China’s Commodities Imports Surge But Demand May Yet Disappoint

China’s raw materials purchases surged in the first two months of the year, as importers took advantage of weaker prices for some commodities and prepared for more stimulus from Beijing to lift demand.

www.bloomberg.com

Yesterday I posed the question whether QE in the banking system as opposed to the Fed's Balance sheet would be inflationary. The answer is yes.

Two primary reasons.

(i) The US (Treasury) needs to sell huge amounts of new debt and roll over huge amounts of old(er) debt. Balance sheets around the world are constrained. Therefore, to prevent Japan, China, et al 'needing' to sell their UST holdings, the USD will be weakened on a secular basis. This is inflationary even if the banks simply create money to warehouse the UST.

(ii) But of course the Treasury is now supporting a very loose fiscal policy. That cash received for the UST will not lie idle. At the very least it will be spent on paying rocketing interest payments as the debt compounds at an alarming rate. There will as usual be no cuts made to the major expenditures, entitlements, military. That money therefore leaks out of the high powered money circuit.

jog on
duc

 

[qldfrog]

I fully follow the concept: Inflation ahead and USD maintained low (vs yuan,oil and gold)..no choice
But I have to sail my own boat: so AUD or NZD is what is critical in a selfish way.
The AUD or NZD have fallen vs the USD in the last years, should I expect this to continue: us being a us proxy .in worse..
Or should we expect a surge of the AUD as a gold/material proxy currency?
I think this is a question many are wondering about as the AUD USD rate is so critical to both assets values here and for many of the ASX 200 companies.
Sure, gold or silver could be a safe(r) play but manipulation is well known and there is only so much shiny bits you can own store

 

[ducati916]

I fully follow the concept: Inflation ahead and USD maintained low (vs yuan,oil and gold)..no choice
But I have to sail my own boat: so AUD or NZD is what is critical in a selfish way.
The AUD or NZD have fallen vs the USD in the last years, should I expect this to continue: us being a us proxy .in worse..
Or should we expect a surge of the AUD as a gold/material proxy currency?
I think this is a question many are wondering about as the AUD USD rate is so critical to both assets values here and for many of the ASX 200 companies.
Sure, gold or silver could be a safe(r) play but manipulation is well known and there is only so much shiny bits you can own store

Bonjour,

If the USD is weakened systematically, then all other currencies in theory should rise against it. Of course, other currencies may peg, may run even more radical policies, have import/export policies that encourage/discourage currency depreciation/appreciation.

How long is a piece of string?

Energy is where you can try and estimate the length of the string.

The larger the dependency on energy imports the larger the lean towards letting their currency strengthen against the USD. Of course counter-balancing that is how to earn USD on exports. Too strong a currency can impact export/import trade balances. Which is why a number of currencies have moved to buying energy in non USD and settling in net trade balances + gold. That way you can have a weak currency (for exports) and preserve your USD/UST reserves for any Eurodollar debt that you may carry.



Oil News:

Friday, March 15th 2024

Brent futures have broken through the $85 per barrel for the first time since November, indicating that the gradually improving sentiment, further buoyed by Ukrainian drone strikes on Russian refineries this week and declining US inventories, is here to stay.

White House Signals Discontent with US Steel Takeover. The Biden administration is rumored to have expressed concerns over Nippon Steel’s $14.9 billion takeover of iconic steelmaker US Steel (NYSE:X), citing national security concerns and a lack of trade union consultation.

Drone Strikes Lead to Higher Russian Oil Exports. After this week saw several large-scale drone attacks on Russian refineries in Nizhny Novgorod, Ryazan, and Novoshakhtinsk, Russia’s Energy Ministry said the country’s crude exports will rise, in defiance of OPEC+ commitments.

Glencore Mulls Moving Main Listing to Australia. Activist investor Tribeca Investment Partners has called on mining giant Glencore (LON:GLEN) to move its primary listing from London to Sydney and abort plans to spin off its lucrative coal business to boost its share price.

Mauritius Emerges as Key Bunkering Hub for Rerouted Tankers. After global traders Mercuria and Trafigura suspended refueling operations in South Africa over a tax dispute with local authorities, Mauritius has become the main refueling station for all tankers avoiding the Red Sea and going around the Cape of Good Hope.

US M&A Frenzy Still Far from Over. US investment firm Kimmeridge Energy Management made an improved $2.1 billion offer for Eagle Ford-focused oil and gas producer SilverBow Resources (NYSE:SBOW), proposing to create a combined company and pledging to provide the necessary financing.

China’s Leading Smelters Agree on Production Cuts. China’s leading copper smelters Jiangxi Copper, Tongling, Jinchuan Group, and China Copper are reported to have concluded a rare agreement to cut production as spot fees to process copper concentrate fell to their lowest in a decade.

Nord Stream Sues Insurers for $440 Million. Pipeline operator Nord Stream AG is seeking $440 million from its insurers Lloyd’s Insurance and Arch Insurance in a lawsuit filed at London’s High Court, weeks after both Sweden and Germany found traces of explosives relating to the incident.

The UK’s Ambitious Green Agenda Gets Gas Reality Check. The government of the United Kingdom is proposing to build new gas-fuelled power plants, with the Energy Ministry suggesting 5 GW of generation capacity would be needed to avoid blackouts amidst a renewables pivot.

Cutting Fuel Prices, India Prepares for Elections. India’s state fuel retailers are cutting the price of gasoline and diesel this week to 94.72 and 87.62 rupees per liter respectively, the first change in two years, ahead of the 2024 Indian general election in April-May.

US Commissions First Major Offshore Wind Farm. The first utility-scale offshore wind farm in the United States, the 132 MW South Fork Wind project operated by Orsted (CPH:ORSTED) and Eversource (NYSE:ES) some 35 miles from Long Island, NY, has been launched this week.

China Discovers Another Huge Oil Field. China’s offshore-focused state oil firm CNOOC reported the discovery of Kaiping South in deepwater South China Sea, with the find believed to contain more than 100 million tonnes of oil equivalent in recoverable volumes.

Venezuelan Gas Attracts Key Oil Major. Concurrently to Shell’s 3.2 TCf Dragon field, UK oil major BP (NYSE:BP) is in talks with Venezuela’s PDVSA to develop the Manakin-Cocuina gas field straddling the border of Venezuela and Trinidad and Tobago, to be fed into Atlantic LNG.

IEA Continues to Upgrade 2024 Demand Outlook. The International Energy Agency raised its view on 2024 oil demand growth for the fourth time since November, expecting it to rise 1.3 million b/d, up 110,000 b/d compared to its forecast from last month.



So this is a good point.

Let's look:



SMH (semi conductors) are running away. NVDA and others. Chasing them at this point, very dangerous.

XLY (consumer retail) should be a concern. Oft cited, the consumer is 70% +/- of the economy. We saw yesterday credit card defaults on the rise. Inflation (real) is probably hovering at a true 20%. My grocery bill each week has from 18mths ago literally doubled.

XLE on the rise. Oil back into an eight handle. Trend is up. Not good news.

1 week heat map:



Tepid.



SMH. Is this 'passive' allocation?





Then we have BTC. Still 'tethered' to the QQQ's.

This chap: https://www.goldpriceforecast.com/g...lver-key-invalidations-in-bitcoin-and-nasdaq/




From Palantir's CEO:

Us and Them​

Ok then! Yesterday produced a soundbite to remember, courtesy of Palantir Technologies, Inc. CEO Alex Karp on CNBC:

I love burning the short sellers. Almost nothing makes a human happier than taking the lines of cocaine away from these short sellers, who are going short on a truly great American company — not just ours — they just love pulling down great American companies so that they can pay for their coke.

And the best thing that can happen to them is, we will provide — we will lead their coke dealers — to their homes, after they can’t pay their bills. . . go ahead, do your thing, we’ll do our thing.

Yet those unloved skeptics have plainly exerted a dwindling hold on “great American companies” as the titanic bull market unfolds. Median short interest as a percentage of market capitalization within the S&P 500 (which does not include Palantir) stood at 1.7% last month per Goldman Sachs, down from roughly 2.6% as of 2016 and 3% as the financial crisis ebbed in 2010.

Karp’s business software concern has likewise shed its share of nonbelievers during its near 300%, post-2022 stock price rally, which has pushed its market cap to $54 billion. As Jim Chanos points out on X, short sellers have indeed helped furnish that levitation, purchasing a net 60 million shares since March 2023 as the short interest has receded to just under 5% of the float from 8% over that stretch.

Conversely, Palantir management has taken the other side of the order book, ringing the register with relish. Insiders sold $274 million of stock over the past three months, more than all but six of the 265 U.S. tech firms tracked by Bloomberg. Yesterday, co-founder Peter Thiel filed paperwork with the SEC to sell a further 7 million shares, equivalent to nearly $175 million in proceeds at current levels.

Ongoing dilution has helped furnish that lucrative activity: Share-based compensation registered at $1.82 billion during the three years through 2023, easily topping Palantir’s $1.11 billion of cumulative net income over that period. The company’s class-A common share count stood at 2.11 billion as of Feb. 13, up just over 20% from three years prior.

LOL. Sounds like 1999 again.

An article on China: So this chap is a hedge fund manager.

To understand what will happen in China and its impact on the global economy, we simply need to invert what happened over the last two decades. China has had the largest housing bubble in human (and possibly galactic) history, for a decade and a half. It has lasted much longer than any reasonable analyst, including yours truly, expected it could last. One thing about bubbles is that the longer you sustain them the bigger they get and the harder they implode. The China housing bubble is now bursting, putting immense strain on internal demand from consumers and its economy. The banking system and Chinese consumers will bear the brunt of this situation, but we’ll probably feel it across the world. It would obviously be wrong to say that all economic growth in China came from the building of ghost towns; China has tremendously improved its infrastructure and a large chunk of global manufacturing has moved there. However, capital investment as a percentage of GDP was above 40% for decades, double the level of the US. It is likely that capital investment will revert towards the US level, which in turn will reduce demand for industrial commodities (think iron and copper). Commodities are priced on incremental (marginal) demand; the last few percentage points of demand above the inelastic (short-term) supply are the ones that set prices. Secondary effects of a decline in the demand and prices of industrial commodities will be felt in countries like Australia and Brazil that benefited from China’s ascent. There are some factors that may offset the decline in Chinese appetite for industrial commodities. Selective deglobalization is forcing companies to bring factories out of China to more friendly countries, resulting in more construction and thus more demand for industrial commodities in those regions. The US has passed the Inflation Reduction Act, which should result in more spending on industrial goods. Lastly, India, the most populous country in the world, has one of the world's worst infrastructures, and it will be receiving upgrades. One bright spot in the Chinese economy was its tech sector (Alibaba, Tencent, and others), but Xi viewed it as a threat to the power of the Communist Party. Xi cracked down on these companies, reducing their competitiveness. Also, sanctions from the US have further damaged these businesses. The slowing (possibly shrinking) economy, an ocean of bad debt, enormous losses of life savings on investments in ghost towns, and a broken banking system all substantially increase the risk of social instability in China. China is becoming a more dangerous place to conduct business, as we are starting to see headlines about China not allowing capital and foreign employees to leave the country. Foreign investment into China likely peaked before the pandemic. In the past, companies emphasized their investments in China (think Starbucks, car companies); these investments will start looking like liabilities. China, not the overheating of its iPhone 15, is the biggest risk to Apple, not just from consumption but also from the production perspective. Tim Cook has to move production out of China without China noticing it – the most difficult magic trick ever performed. China also has troubling demographics. The one-child policy, which was revoked in 2015, created a drastic imbalance between males and females and caused the rapid aging of China’s workforce, thus limiting its economic growth. (On a sarcastic note, a marriage of inconvenience between Russia and China seems like a good idea – China has a lot of single men and Russia has a lot of single women.) We are no longer in the foothills of a Cold War with China; we are in that war. The Chinese navy may not have the same quality as the US’s, but it has definitely begun to dominate the US Navy in terms of quantity. The US has little commercial shipbuilding capacity, and we will likely need a bigger navy to counter the threat from China. Compared to the Soviet Union during the Cold War, China has a much bigger economy that is very good at building things. This is why we are doubling down on our defense stocks, especially the shipbuilders. A Chinese invasion of Taiwan is probably one of the most important geopolitical risks. There are two lines of thinking here: A weaker Chinese economy may diminish China's ability and willingness to start a war that would further isolate it from the West. However, it is the wounded animal that is dangerous, not the fat and happy one.

Not mentioned is that China is working with the US to weaken the USD as against the Yuan. This is the 'San Francisco Accord'. Much the same as Japan and the 'Plaza Accord" back in the day (referenced many times).

USD liquidity is crucial for the global economy. USD liquidity means a lower (weaker) USD. Which is why ISDA will pass, allowing US Banks to undertake a massive QE operation.

So @peter2 has a thread here: https://www.aussiestockforums.com/t...portfolio-wkly-dly.35039/page-63#post-1270250

BTD.

If equity markets dip and they do look that way, will they bounce and resume their trajectory higher? Or will a topping process begin?

I'm agnostic on the issue atm.

On the one hand, the powers that be definitely want equity markets to continue higher. On the other hand, with inflation heating up again the Fed (already delaying any cuts until June, originally February) may further delay rate cuts out to September+. The irony is of course, that the higher rates are driving inflationary pressures.

Your market ASX will follow (pretty much) the US markets as your interest rates are from the Fed. LOL.

We can see that the leverage is pretty high, with high entry prices having been paid. Any pullback will amplify the move down as leveraged players are forced by margin calls to liquidate. TSLA is a prime example currently.

US consumer (as indicated by XLY) is pretty much burned. This is an early warning/indication of recession biting far deeper. The vast majority of 'jobs' added have been of the low pay and shite variety. They will evaporate in any hint of a recession getting under way. That will push fiscal deficits (much) higher.

So will you BTD?

If it is phase ii of the bear, bear rallies are fast and furious. Any BTD stock can be sold into the rallies (assuming they move high enough) but 'timing' will become increasingly critical.

But what if? What if the bull just resumes?

jog on
duc

 

[ducati916]

Gundlach:



jog on
duc

 

[ducati916]

For next week:



Leverage high.



LOL.

Ok, so morons aside, what is keeping the market high(er)?

Passive flows. What keeps passive flows lubricated? Employment. Employment falls, passive flows diminish and stocks feel the reduction. Do passive flows falling, move equities into reverse? Probably.

QE liquidity. Make no mistake liquidity injections far outweighs QT removal of liquidity. With the ending of BTFP the loosening of the Fed Window has already been implemented allowing all banks to sip at the trough.

The issue here is not the banking system, but rather the shadow banking system being bailed out if they suffer a liquidity event. The shadow banking system is really opaque. It is magnitudes larger than most realise and will be a real issue if it blows up.

Then we have outright QE with the proposed ISDA SLR relaxation.

Oil needs to come back down and sit in the $70 range. Can't go too low, the shale industry blows up, can't go too high, the UST and USD markets blow up. Has to be just right.

Part of the problem monitoring all of this is that the data, CPI, payrolls, etc are all corrupted and pretty much useless. The markets themselves are now lagging indicators, and provide no hints.

When shite eventually hits the fan, the markets will be surprised from a high level, probably higher than we are today. Which means that value as a support is that much lower. By that time momo will blow through those support levels anyway.

Lower rates are not the salvation, they will be the problem this time.

What will arrest the fall?

This is where we will find out if BTC will provide the protection that it has touted.

jog on
duc

 

[ducati916]

Pretty much everything higher this morning:



USD needs to be lower.



A variant perception. Does it grow?

jog on
duc

 

[ducati916]

An early warning sign of a rotation into Staples.

jog on
duc

 

[ducati916]

Electricity shortage?

https://www.washingtonpost.com/business/2024/03/07/ai-data-centers-power/

Going nuclear:

Microsoft is going nuclear to power its AI ambitions

Microsoft is hiring someone to lead its nuclear strategy.

www.theverge.com

Amazon goes nuclear, acquires atomic datacenter for $650M

E-commerce giant on the hook for 480MW of power from Susquehanna plant

www.theregister.com

So what about BTC? The amount of energy these miners use is also very high. No electricity, no BTC. LOL.



Mr flippe floppe flye:




From JC:

​

Inflation is Back Baby!​ This is a great thing, but only if you allow it be great. Interest rates went out yesterday at their highest levels since November. Do you really believe that the 10-year yield keeps going up because interest rates are going down? There are people who actually believe that. So for us, who actually take the time to look, we know that it's the exact opposite. Commodities are heading higher. And Interest Rates are rising with them. Here is Gasoline looking to complete a huge base, and about to go much much higher. Meanwhile, the Bond market is already pricing in higher inflation.

​

​

Most investors are not ready for this. And by "most investors", I mean almost no investors. We have the data. There is a huge squeeze setting up and investors not prepared for these inflationary pressures are about to get steamrolled. I'm here for it. Our job as investors is to find the pain points and then press them hard. Right now the pain is coming from investors who own too much Tech, too many growth stocks, and not enough commodities. Things could get really nasty. Remember, this group's pain is our profit potential. But only if you're positioned correctly. And that's exactly what we discussed on last night's LIVE Conference Call for Premium Members of ASC. Which stocks will benefit most from rising inflationary pressures? How to buy the leaders and how to buy the laggards looking to play catch up? As a friendly reminder: This is NOT 2023 where you could just buy growth stocks and go play golf. This is the opposite of that, in case you hadn't noticed.

Two dangerous developments: rising USD and rising 10yr UST yield.

Just to finish it off:



Rising POO requires more USD to pay for it. Tick, USD demand increasing. How are USD obtained, sell UST (or eventually stocks) to obtain USD.

Rising yields or falling prices of UST creates bond market volatility.

Nothing of note yet:



Watching.

Oil News:

Prices of medium sour grades produced in the US Gulf of Mexico, most notably Mars, have shot up as US energy officials reiterated their plans to keep on replenishing SPR barrels over the summer months, with Mars now trading at a $0.90 per barrel premium to WTI.

- The announced plans of the Biden administration to keep on buying as long as oil stays at $79 per barrel or below might run into difficulties as front-month WTI futures have surged past $83 per barrel this week.

- The latest iteration from the US Energy Department called for bids to be delivered in August and September worth 3 million barrels, specifically targeted the recently revamped Bayou Choctaw storage site in Louisiana.

- As of mid-March, the Department of Energy has bought a total of 29.61 million barrels of crude, all of it going to the Big Hill SPR site, at an average price of $76.57 per barrel, equivalent to 16% of the 180 million barrels released back then.

Market Movers

- Argentina’s national oil firm YPF (NYSE:YPF) launched a tender for engineering works on a proposed floating LNG export terminal it intends to build alongside Petronas, a first step towards shipping its shale gas output abroad.

- Italy’s oil firm ENI (BIT:ENI) wants to spin off separate units specializing in carbon capture and biochemicals, eyeing to either attract investors or be listed on the stock exchange.

- France’s energy major TotalEnergies (NYSE:TTE) announced they would be expanding in the US shale patch with an upstream acquisition in Eagle Ford, eyeing an integration between their LNG and upstream positions.

Tuesday, March 19, 2024

Oil prices continue their gradual creep upwards, with this week seeing additional impetus coming from Ukraine’s drone strikes on Russian refineries as well as key OPEC+ members Saudi Arabia and Iraq agreeing to export less crude over the upcoming months. Saudi Arabia will be supplying less as it ramps up domestic refining, Iraq will be cutting its exports after several months of undercompliance with OPEC+ commitments. With the outlook on Chinese demand improving into the summer, $90 per barrel is no longer that far away.

U.S. to Replenish SPRs by Year-End. Despite the current pace of buying 3 million barrels each month, U.S. Energy Secretary Jennifer Granholm vowed that at the end of this year US strategic crude stockpiles would be at or exceeding the level prior to the 180-million-barrel release in 2022.

Saudi Aramco Warns Against Peak Oil Demand. Saudi Aramco CEO Amin Nasser said global oil demand will not peak for some time and policymakers around the world should abandon the “fantasy of phasing out fossil fuels”, expecting demand to reach a new high of 104 million b/d in 2024.

Iraq Ought to Compensate for Weak Compliance. Having produced significantly more than its 4 million b/d production quota, Iraq has pledged to cut its crude exports to 3.3 million b/d in the coming months to compensate for its overproduction, with Saudi Energy Minister Prince Abdulaziz in Baghdad this week.

Alberta Oil Producers Gauge Water Shortage Impact. Faced with drought for the fourth straight year, the government of Alberta started water-sharing negotiations among license holders that might impact oil production as scarce water resources would limit drilling.

Reverse Climate Activism Goes Full Steam. Three US right-wing groups have sued the Biden administration this week over its approval of Dominion Energy’s (NYSE) Coastal Virginia Offshore Wind project, saying it should be halted pending a new analysis of environmental risks to whales.

China’s Coal Output Lags Expectations. China’s production of thermal coal has dropped for the first time in years, down 4.2% from a year earlier at 705 million tonnes for January-February combined, with mine safety checks hindering output while coal-fired power generation keeps on rising.

Colombia Opts for Gas as Gasoline Subsidies End. After Colombia scrapped gasoline subsidies, the price of the fuel soared to $3.75 per gallon this month, prompting thousands of owners to retrofit their cars to natural gas with conversions already up by 63% last year and accelerating further in 2024.

The Season of Solar Layoffs Starts. The world’s largest solar manufacturer, Longi Green Technology (SHA:601012) said it would lay off about 5% of its employees amidst shrinking margins and global production overcapacity, however, will not fire 30% of its workforce as was rumoured.

Venezuela Prepares for Offshore Licensing Round. Venezuela’s Ministry of Petroleum signed a deal with a UK seismic surveyor to cover the country’s offshore waters, using the temporary respite in US sanctions to set the scene for an offshore licensing round geared towards gas fields.

Nippon Steel Wants to Appease White House. Confronted with the Biden administration’s opposition to a proposed $15-billion takeover of US Steel by Japan’s Nippon Steel (TYO:5401), the Japanese conglomerate vowed to move its US headquarters to Pittsburgh if the deal goes through.

Guyana Is the Gift that Keeps on Giving. US oil major ExxonMobil (NYSE:XOM) reported another oil and gas discovery in Guyana’s prolific Stabroek offshore block, with its recently spudded Bluefin well encountering 197 feet of hydrocarbon-bearing sandstone in 4,244 feet of water.

Russia to Install Defense Missile Systems at Oil Facilities. Russia intends to defend its oil and gas facilities with missile systems such as the Pantsir anti-aircraft weapon, with the most recent wave of Ukrainian drone attacks halting bringing the total shut-in refining capacity to 370,000 b/d.

Germany Signs Up for Emirati Gas. Germany’s state-controlled trading firm Sefe, formerly Gazprom Germany, signed a 15-year deal with the national oil company of the UAE, ADNOC, under which it will supply 1 million tonnes of LNG per year to Germany for 15 years beginning in 2028.




jog on
duc

 

[ducati916]

For tomorrow:



jog on
duc

 

[ducati916]

Nuclear power: https://www.masterresource.org/nuclear-power/nuclear-subsidies-galore/

Green:https://smeadcap.com/missives/saved...8cs&utm_content=298741556&utm_source=hs_email





So waiting on Godot.

Really the whole thing is pointless. The Fed are now pretty irrlevant. We know that eventually they or their agents (banks) will have to inflate via QE. The compounding nature of the debt is accelerating and consuming the US alive.

Rates will fall, QE will replace QT and the bond market will be unequivocally in a secular bear market for likely decades. Stocks will become very volatile.

Buy and hold will not be a great strategy.

One of the significant equity market supports, passive flows will persist until employment falls. When this goes into reverse, equities will have issues. The reported numbers are irrelevant. It is the deductions from paychecks that create the money that form the passive flows. That is a number that can't be fudged.

jog on
duc

 

[ducati916]

So interesting data on the last 3 Fed days. Once it was fade the initial move. Now it is go with the initial move.

As the RRP grind to zero, all eyes will be on Fed Reserves (bank reserves held at Fed) for issues. Previously QT 1 drained too fast. This time the Fed are slowing down. ISDA if it happens will be the way to prevent issues: ie. a licence to print money with no consequences for the banks, QE whatever and highly inflationary.

Sectors are getting over-extended. I'm starting to see some significant divergences in the sectors. For example Materials (XLB). I have been doing some selling (trimming) positions and taking profits. Of course, I could be too early, the momo is crazy to the upside atm.

jog on
duc

 

[ducati916]

Oil News:

Friday, March 22nd 2024

A potential ceasefire in Gaza is back on the agenda again, creating some downward momentum for ICE Brent as it slid back to $85 per barrel, whilst reports of the US urging Ukraine to halt strikes on Russian refineries will most probably curb another facet of geopolitical risk. Despite the downward correction, outlooks for the year keep on getting increasingly bullish with the EIA lifting its Brent forecast to $88 per barrel, up 4$ per barrel from last month.

TMX Starts Line Fill and Sells Its First Cargo. As line fill of Canada’s Trans Mountain Expansion pipeline is moving ahead, the first-ever cargo of Access Western Blend from TMX was bought by China’s refiner Sinochem, reportedly at a $5 per barrel discount to Brent on a delivered China basis.

Gold Hits All-time High. For the first time on record, the price of gold surpassed $2,200 per ounce this week after the US Federal Reserve stated it would seek to carry out three interest rate cuts this year despite inflation not dropping to the target rate of 2%, boosting the bullion’s safe-haven merits.

Two Freeport LNG Trains Down Until May. Freeport LNG said that liquefaction Train 2 has been down and Train 1 will be taken down imminently to carry out inspections that would last until May, saying the January cold snap damaged Train 3 motors, prompting the operator to check other trains as well.

CNOOC Joins the Battle for Hess’ Guyana Assets. Not wanting to be left out, China’s offshore-focused oil major CNOOC (HKG:0883) has started arbitrating proceedings at the International Chamber of Commerce, claiming it wants to exercise its right of first refusal over Hess’ stake in the Stabroek block.

16 States Sue the Federal Government. Sixteen US states including Texas, Louisiana and Florida have taken the federal government to court over the Biden administration’s freeze on approving applications for new LNG terminals, arguing the White House lacks the authority to outright deny new permits.

Saudi Aramco Becomes More Gassy. Saudi Arabia’s national oil company Saudi Aramco (TADAWUL:2222) will increase gas production by 60% by 2030, simultaneously developing its own shale gas fields at home and investing in LNG projects abroad.

Nigeria Reverses Scrapping of Fuel Subsidies. The reformist government of Bola Tinubu has partially reversed its decision to abandon fuel subsidies as fuel and electricity prices were capped recently amidst soaring inflation across the country, with the IMF warning this might cost Lagos up to 3% in GDP this year.

Suriname Fosters Cooperation Between Majors. Suriname’s state-owned oil firm Staatsolie has started talks with oil majors ExxonMobil (NYSE:XOM) and TotalEnergies (NYSE:TTE) to have them jointly develop natural gas fields straddling the border between Guyana and Suriname to cut capital costs.

Biden Tries Again with Wind Auction. Despite seeing only one bid during the inaugural US offshore wind development right auction in the Gulf of Mexico eight months ago, the White House has proposed a second licensing round to be held as soon as this year, offering 410,060 acres offshore Louisiana and Texas.

LNG Price Drop Triggers Buying Bonanza. Asian LNG prices have dropped to their lowest levels since April 2021, currently around $8.60 per mmBtu, prompting price-sensitive buyers in China and India to boost their imports with both countries expected to grow their LNG imports by more than 10% in 2024.

China Reduces Imports of Russian Coal. China’s reimposition of import levies on coal has sent Russian coal exports to the Asian powerhouse down 22% year-on-year to 11.5 million tonnes over January-February, although Indonesia managed to maintain its pace of supplies thanks to a free-trade deal.

Republican Senators Attack the IEA. Senior US Republican senators attacked the IEA, accusing it of becoming an “energy transition cheerleader” that undermines energy security by actively discouraging investment into oil and gas and calling for full disclosure of the US’ funding of the organization.

No Frontier-Opening Discoveries in Egypt. The offshore exploration well Orion-1X, spudded by Italy’s oil major ENI (BIT:ENI) in Egypt, has turned up dry, quashing hopes that it could open up a new drilling frontier in the Eastern Mediterranean and boost Egypt’s portfolio of offshore gas fields.



Can play via PHO



Green energy requires ZIRP to actually finance implementation.



So decision point arriving. Taken a position short.



I have posted the White Paper before (might have been on the blog).

But essentially if true, do you really think there is no backdoor?





MOVE index off of the lows and USD making a big move.

The USD will be rising against the US Treasury and Yellen (fighting) it to move lower. Yellen does not want a strong USD.

Why not?

Many reasons, but here is one:



If the US actually want to re-shore industry (and compete with China) a far weaker USD is required.

Why might they want to?



Because China supplies the US with munitions. LOL.



Possibly under-appreciated, the drone attacks against Russian refiners. If enough damage is done...oil higher? Which is highly inflationary particularly if USD is eventually manipulated lower.


jog on
duc

 

[divs4ever]

View attachment 173152View attachment 173151View attachment 173150View attachment 173149View attachment 173148View attachment 173147View attachment 173146View attachment 173145View attachment 173144View attachment 173143View attachment 173142View attachment 173141

So interesting data on the last 3 Fed days. Once it was fade the initial move. Now it is go with the initial move.

As the RRP grind to zero, all eyes will be on Fed Reserves (bank reserves held at Fed) for issues. Previously QT 1 drained too fast. This time the Fed are slowing down. ISDA if it happens will be the way to prevent issues: ie. a licence to print money with no consequences for the banks, QE whatever and highly inflationary.

Sectors are getting over-extended. I'm starting to see some significant divergences in the sectors. For example Materials (XLB). I have been doing some selling (trimming) positions and taking profits. Of course, I could be too early, the momo is crazy to the upside atm.

jog on
duc

expect US health stocks to be 'jaw-boned ' lower during the US election cycle , in a desperate bid to catch votes

( the healthcare/pharma industries are BIG donors , so don't expect any actual beneficial change after the election )

 

[ducati916]

Last week: go have a look at the on strength chart from last week.



For next week:

So I went bearish on health care. We'll see. It could be early.





Electricity is an issue: https://www.semafor.com/article/03/22/2024/electricity-bull-market

To me, this is one of the huge risk areas for BTC. You need the miners to complete transactions etc. You need Tether to trade this. You need someone willing to accept BTC, not everyone will. There are just too many moving parts and counter-parties.

BHP:



Not looking too clever atm. I saw @peter2 looking to buy.

jog on
duc

 

[divs4ever]

well i stick ASX listed health-care stocks

and while i am trying to carefully accumulate them , the issue is M&A activity in my selections ( they even got around to CAJ )

i suspect i will be mostly pushed out of the sector as i refuse to buy the over-priced large cap healthcare stocks

 

[divs4ever]

Last week: go have a look at the on strength chart from last week.

View attachment 173228

For next week:

So I went bearish on health care. We'll see. It could be early.

View attachment 173227

View attachment 173229

Electricity is an issue: https://www.semafor.com/article/03/22/2024/electricity-bull-market

To me, this is one of the huge risk areas for BTC. You need the miners to complete transactions etc. You need Tether to trade this. You need someone willing to accept BTC, not everyone will. There are just too many moving parts and counter-parties.

BHP:

View attachment 173226

Not looking too clever atm. I saw @peter2 looking to buy.

jog on
duc

sub $40 for BHP would have tempted me last week , but no cigar