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Inflation

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waterbottle said:
I'm sure I read that Russia was halting coal supply to the EU too....
Seems like the next down leg is only delayed until fossil fuel prices head up for the winter.
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i could be wrong but i thought the deal was coal for rubles ( to 'unfriendly nations ' ) but since some EU nations are Green-tinged they were stopping the import of Russian coal , which will be interesting to watch in Germany because they have dirty BROWN coal , in quality ( and they are closing down the last 3 nuclear power plants )
 
InsvestoBoy said:
The inflation rate you quote is already the YoY annual inflation rate. Annualising it is idiotically incorrect.

China inflation is low, not high.
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Correct. Idiotically is the correct word.
USA Monthly inflation came in at 0% and this hasn't even be mentioned. Hardly devastating as posted by one pundit with many agreeing comments.

Seems it doesn't fit a political narrative.
 
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Yep, first month-on-month that hadn't increased in at least a year:



Markets are obviously thinking goldilocks/inflection point at the moment.

Of particular note is the ppi vs cpi spread - inputs dropping at a greater rate than sale prices = higher margins

This also keeps improving:

 
Knobby22 said:
Correct. Idiotically is the correct word.
USA Monthly inflation came in at 0% and this hasn't even be mentioned. Hardly devastating as posted by one pundit with many agreeing comments.

Seems it doesn't fit a political narrative.
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Too many bull**** artists in economics.

In reality it does not matter if the inflation "rate" stayed at 0% for the next decade if prices are still high relative to what people earn and people that work, pay tax and contribute to the economy can't afford fuel, food and a roof over their head.
 
waterbottle said:
The main question will be whether or not price of oil can begin to head upwards again. Interested to hear what @over9k and @Smurf1976 have to say...
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The basic situation at present to the best of my knowledge:

Non-OPEC countries are essentially flat out with production, there's nothing to spare at all. With price being what it is, anyone in a free market economy able to produce oil is doing so, there's simply no reason not to unless something breaks etc.

For the OPEC members that's where it gets interesting. The "normal" problem within OPEC is individual member countries exceeding quotas for reasons of financial self-interest whereas in 2022 the opposite problem has emerged, quite a few are really struggling to even meet the quota.

Bearing in mind that the quotas are intended to hold production down not up, that's a bit like saying you've got no chance of being fined for speeding since your car can't actually get to 100 km/h anyway.

From OPEC published data, April 2022 quota versus production. Figures are million barrels per day.

OPEC members subject to quotas:
Algeria = 1.00 (actual) | 1.002 (quota)
Angola = 0.27 | 0.309
Equatorial Guinea = 0.09 | 0.121
Gabon = 0.18 | 0.177
Iraq = 4.42 | 4.414
Kuwait = 2.64 | 2.666
Nigeria = 1.40 | 1.735
Saudi Arabia = 10.40 | 10.436
UAE = 3.01 | 3.006

OPEC members exempt from quotas:
Iran = 2.58
Libya = 0.90
Venezuela = 0.75

Non-OPEC but participate in the quota system voluntarily:
Azerbaijan = 0.58 | 0.682
Bahrain = 0.20 | 0.195
Brunei = 0.08 | 0.097
Kazakhstan = 1.33 | 1.621
Malaysia = 0.40 | 0.565
Oman = 0.84 | 0.837
Russia = 9.14 | 10.436
Sudan = 0.06 | 0.072
South Sudan = 0.15 | 0.123

Total all OPEC+ with quotas excluding exempt members = 37.35 (actual) | 39.944 (quota)

So there's a definite shortfall in meeting quota which from an historic perspective is abnormal, the traditional problem being the opposite. Of the lot there's only one that's significantly exceeding quota in % terms whilst a number are well short.

In Russia's case the reason is obvious but for most the general consensus is the reasons are a lack of functional production capacity. That is, either everything they have is running or whatever isn't running has some sort of physical problem. There's nothing to spare that's actually able to pump oil right now.

Saudi Arabia claims its present production capacity is 12 million barrels per day meanwhile a look at historic data suggests Iran's is likely about 3.9 million barrels per day. For the rest, it seems that there's probably a bit of spare capacity in some of them but overall it's not much, they're struggling to get production up, they're not struggling to keep it down.

Then we have the US releasing 1 million barrels per day of physical oil from the Strategic Petroleum Reserve. That by its very nature is a short term unsustainable oil "supply" that can't continue indefinitely, it's simply emptying out a storage facility.

Putting that together, there is uncertainty due to the nature of data and politicisation of some of it but my overall thought is that the only way to get global production up is to lift all restrictions on Iran. Beyond that, the Saudi's really only seem to have enough spare to offset the inevitable ending of SPR withdrawals but that's it, and there's not much spare anywhere else.

Physical oil supply is a real constraint on economic activity going forward is my thinking. Price may well come down, potentially a lot, but only so long as demand doesn't breach capacity which appears to be barely higher than present production.

There's a lot of uncertainty there, nobody on earth likely has every detail with confidence that it's correct, but that's my interpretation of the situation with oil.

The real energy problem however is LNG. Natural gas "as gas" is OK in some countries not exposed to global markets but for LNG being shipped, the market is beyond stuffed at the moment. It's actually cheaper to fire a boiler with jet fuel than it is to fire it with LNG right now and that says it all really. It's extremely expensive, if you can even get it.
 
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And have not we been told that this US strategic reserve being depleted is also our Australian one?
That will simplify the US position if China ..or another black sawn..hits and we need our fuzl reserve within 30 days.
We won't need to wait 60 days for US tankers as our allotment will be gone?
 
Knobby22 said:
Correct. Idiotically is the correct word.
USA Monthly inflation came in at 0% and this hasn't even be mentioned. Hardly devastating as posted by one pundit with many agreeing comments.

Seems it doesn't fit a political narrative.
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The 0% is largely the effect of the POO coming off, have a look at everything else.

What was that about political narratives?

Worth noting much of the effect of previous high oil prices haven't even filtered through yet. In no was is the genie back in the bottle.
 
Joe Blow said:
It is reasonable to expect that criticism of someone else's post should at least be accompanied by a response that outlines the basis upon which that criticism is based.
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You are going to need a bigger database to store that amount of text.
 
On the Richter scale of internet conflicts, this ranks pretty low. But to be clear criticism should always be reasonable and explained, even if it is just a summary. And there is never any justification for insults because they add nothing to the discussion other than animosity.

It's pretty simple.
 
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