Baltic Dry Index. 1418 -19
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“Those who don't know history are destined to repeat it.”
Edmund Burke
At APEC today, it’s the day that all of the top attendees get to tell us
how they “won” the latest round in the APEC war more than all the others, and
usually get to dress up in comical outfits for the final photo-op. Who gets to
stand where and next to who in the photo-op,
is crucial for 21st century “Kremlin watchers.” Who will take pity
on lame-duck President Obama and agree to stand beside him in the front row?
For China’s President Xi it’s usually obligatory. As for the others, who wants
to be seen poking China in the eye.
With APEC almost over for another year, most scatter like rats touring lesser Asia.
More photo-ops in the US led efforts to contain and undermine China. Elsewhere
the 21st century geo-pol “Great Game” rolls on into the end of the
month OPEC meeting and the new hot war in the recently US arms resupplied,
Ukraine. No recent updates on how many Academi, formerly Blackwater,
mercenaries the US has supplied to assist Kiev’s neo-Nazi militia, now
rebranded as the National Guard.
Up first, the harsh reality on the new bear market in energy. See
fracking Cracking in yesterday’s LIR. Once again a Great Oil Boom, is turning into another
debt fuelled Great Oil Boom Bust. The over indebted and over extended high cost
energy producers are all soon going to start going bust, unless OPEC cuts
drastically, but why would they do that? Thankfully, the canny Scottish voters
voted down independence and an oil bust poverty, even before they left the
Union and the EUSSR. In 1998, OPEC let the oil drop to $10 a barrel. Few oil
companies or countries, can stand its modern equivalent.
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
Daniel Webster
OPEC’s Choice Is Pricing Power or Sales in New Oil Order
Nov 11,
2014 4:24 AM GMT
The decision OPEC faces at this month’s meeting isn’t just over whether to
cut oil production. It’s a choice of whether the group is willing to fight to maintain
the sway it has had over crude markets for decades. The Organization of Petroleum Exporting Countries, buffeted by plunging prices, could reassert control by cutting output, said Societe Generale SA, ceding more market share to U.S. shale oil producers. The alternative -- waiting to see if lower prices choke off the North American shale boom -- would usher in a “new oil order” where pricing power is handed to drillers in Texas and North Dakota, according to Goldman Sachs Group Inc.
“We’ve not seen a turning point like this in decades,” Mike Wittner, Societe Generale’s head of oil market research in New York, said by phone yesterday. “Is OPEC going to abdicate its role in the market? If the Saudis do exactly what they’re signaling, and just let the market take care of the overproduction, then it could certainly become irrelevant.”
Oil plunged into a bear market last month, the result of a surge in shale drilling that has lifted U.S. production to a three-decade high as well as slowing growth in global demand. The drop has caused financial pain for some OPEC members, prompting Ecuador, Venezuela and Libya to call for action to halt the slide. Nigeria’s currency slumped to an all-time low last week and Venezuela’s benchmark bond fell yesterday to 56.63 cents on the dollar, the lowest level since March 2009.
The
group’s data show shale output has trimmed a percentage point from its market
share and will take it to the lowest in more than 25 years during this decade.
Reducing output is a tougher decision to make when there are more competitors
ready to supply clients cut off by OPEC.
More
Oil Falls for Second Day as U.S. Supplies Seen Expanding
Nov 11, 2014 5:22 AM GMT
West Texas Intermediate fell for a second day as forecasts for a sixth
weekly gain in U.S. crude stockpiles bolstered speculation that rising supply
is outpacing demand. Brent slid in London. Futures dropped as much as 0.7 percent in New York. Crude inventories in the U.S., the world’s biggest oil consumer, probably expanded by 1 million barrels last week, a Bloomberg News survey shows before a government report on Nov. 13. The Organization of Petroleum Exporting Countries won’t cut its collective output when it meets in Vienna this month and prices will stabilize once the surplus is absorbed, according to Kuwait Oil Minister Ali Al-Omair.
Crude is extending losses in a bear market amid signs that global supply is outpacing demand. Leading OPEC members are resisting calls to cut output and instead reducing export prices to the U.S., where they’re competing with the fastest pace of production in more than 30 years.
“There’s sufficient supply to meet demand,” said David Lennox, a resource analyst at Fat Prophets in Sydney who predicts OPEC will maintain its output target when it gathers on Nov. 27. “A substantial cut is needed to see prices rally.”
More
Brent Slumps to 4-Year Low on Concern OPEC in No Hurry
Nov 10, 2014 8:18 PM GMT
Brent crude slumped to a
four-year low on speculation the Organization of Petroleum Exporting Countries
is in no hurry to cut output to reverse a four-month slide in prices. West
Texas Intermediate crude also fell.
Crude has dropped into a bear
market this year amid a global glut. The largest OPEC producers are responding
by cutting prices, resisting calls to reduce supply as they compete with the
highest U.S. production in three decades. Kuwait’s oil minister said he doesn’t
expect the group to trim output at its next meeting in Vienna on Nov. 27.
Prices also retreated on plans by Libya to resume pumping at two fields within
days.
“There’s downward pressure here
to the extent that we are not seeing any real signs of an OPEC cutback,” said
John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that
focuses on energy. “This is what a bear market looks like, that it couldn’t
sustain any of the gains.”
Brent for December settlement
fell $1.05, or 1.3 percent, to $82.34 a barrel on the London-based ICE Futures
Europe exchange, the lowest close since Oct. 21, 2010. Prices slid for a
seventh week through Nov. 7, the longest weekly retreat since 2001. The volume
of all futures traded was 3.6 percent above the 100-day average for the time of
day.
More
Falling prices, a bear market? “We don’t care,” says American BP and France’s Total. “We’re barrelling ahead on all new projects,” pardon the pun. I suspect that this is far from reality, if as seems likely prices continue falling as China’s GDP is allowed to slow. Why would OPEC cut, if no one else is prepared to do the same?
Oil at $80 Is No Bar for BP, Total to Look for More Crude
Nov 11, 2014 4:19 AM GMT
Oil at $80 a barrel won’t stop BP
Plc (BP/) or Total SA (FP) from exploring and developing
crude deposits. Oil has dropped into a bear market this year, with prices falling almost 30 percent since June amid a global glut. OPEC won’t cut its collective output when it meets this month and global oil prices will stabilize once the surplus is absorbed, Kuwait Oil Minister Ali Al-Omair said at an oil conference in Abu Dhabi, the capital of United Arab Emirates, yesterday.
All projects under way now will go ahead with oil at $80 a barrel, London-based BP Chief Executive Officer Robert Dudley said at the conference. Total, based in Paris, can proceeed with its projects at $80, Arnaud Breuillac, president of exploration and production, also said in Abu Dhabi.
----“We have only sanctioned or approved projects based on an $80 oil price,” Dudley said. “We’ve been doing that three or four years so there isn’t any project that we’re working on today, particularly those big capital projects, that we have any different view of.”
BP produced 1.91 million barrels of oil a day in the first nine months this year, according to company data. It’s working to start at least five oil projects in Angola, the west of Shetlands, U.K. and Alaska in the next few years, it said. Five more may be approved, BP said.
Total is aiming for year-end output of 2.2 million barrels of oil equivalent a day after reporting an 8 percent
year-on-year slide to 2.1 million barrels in the third quarter. The French company has 14 projects set to start between the end of this year and 2017 ranging from the Shetland Islands to Australia and Angola. Almost a dozen more projects are slated to contribute production after 2017 including from the Canadian oil sands and Russian Arctic.
During a conference call on third-quarter earnings last month, Total Chief Executive Officer Patrick Pouyanne said the company would have to “adapt” projects should oil prices remain “lower for longer.”
These changes would include re-examining projects to get better terms from suppliers and service companies while at the same time lowering the company’s exploration budget and delaying some spending on projects it operates, he and Chief Financial Officer Patrick de La Chevardiere said during the call.
More
In march to World War Three news, the gloom deepens, danger rises. Global
insanity reigns. Stay long fully paid up physical precious metals held outside
of the UK and USA.
Russia braces for long economic war with the West
Russia's central bank warns that capital outflows will reach $128bn this year and slashes its growth forecast to zero for 2015 as the ceasefire collapses in Ukraine
Russia is battening down the
hatches for a long battle with the West, expecting sanctions to last until at
least 2017 and admitting that capital flight has been significantly higher than
previously claimed.
The central bank slashed its
growth forecast for next year to zero and warned of near-recession conditions
until late in the decade. It said capital outflows would reach $128bn this
year.
The new realism ends the pretence
that Russia is strong enough to weather the end of the commodity supercycle
without suffering serious damage, or that Western sanctions are little more
than an irritation. President Vladimir Putin had previously said the effect
would dissipate within months.
It comes as the ceasefire in
eastern Ukraine disintegrates and international monitors (OSCE) report large
incursions of heavy weapons, tanks and troops moving into the Donbass region,
clearly from Russia. The White House called it a “blatant violation” of the
Minsk accord agreed in September.
The rouble soared 3pc despite the
bad news after Mr Putin vowed to “take action” to stabilise the currency and
denied any plans to impose capital controls. The rouble closed at 45.74 against
the dollar, still down 32pc this year and clearly still in danger.
----The bank said the rouble would be allowed to float freely. This ends Russia’s dual-currency basket and its attempts to stem the currency slide with fixed dollops of intervention, $350m for every five kopecks, which became a one-way bet for traders. The bank has burned through $40bn of foreign reserves since the start of October.
Crucially, the bank vowed to act
with force against “financial stability threats”. It will tighten rouble
liquidity used by local speculators for bets on the dollar, evoking punishing
memories of the 2008 crisis, when overnight rates briefly punched to 3,000pc
and scorched those caught on the wrong side of the trade. “Rouble liquidity is
being used for games on the currency markets,” said Elvira Nabiulina, the
bank’s governor.
More
“Egol and Fabrice were way ahead of their time,” said one of the former Goldman workers.
“They saw the writing on the wall in this market as early as 2005.”
Goldmanite, quoted in The Times of London. November 8 2009
At the Comex silver
depositories Monday final figures were: Registered 66.20 Moz, Eligible 113.57
Moz, Total 179.77 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Not your usual crooks and scoundrels today, just
more fallout from the American War Party’s insane folly of the Kiev coup that’s
brought Ukraine into civil war, and the world to the path to World War Three.
Today’s list of collateral damage. Australian,
Canadian, and American gas frackers and LNG projects. Loaded up with debt and
rock bottom LNG prices to export to an Asian market which now looks like it won’t
include China, get ready for the great LNG bust in the west next year. One
silver lining though, at current prices and lacking a supporting
infrastructure, oil and gas fracking is now dead on arrival in the UK and
Europe.
Russia-China Natural Gas Ties Seen Leading to LNG Project Delays
Nov 11, 2014 4:25 AM GMT
Russia’s move to broaden
its energy ties to China is clouding the outlook for projects on the drawing
board in the U.S., Canada and Australia that are targeting exports of natural gas to Asia. Producers looking to approve liquefied natural gas developments in the next couple of years and start shipments toward the end of the decade will probably experience delays, according to energy consultants Tri-Zen International Inc.
Gas-supply agreements between Russia, the world’s largest energy exporter, and China, the biggest consumer, are adding to pressure on global projects that are already facing increasing competition, rising costs and the prospect of lower prices.
The two nations signed an initial gas accord two days ago, after a $400 billion deal earlier this year. This tie-up means that only one-in-20 proposed LNG projects targeting the 2020 market will be needed, according to Macquarie Group Ltd.
“It’s not good news for projects hoping to get to a final investment decision in the next year or two,” Tony Regan, a consultant at Singapore-based Tri-Zen, said today. “Those developers will need to think about the post 2020 market.”
The export of new supplies to Asia increases the possibility of a glut on global energy markets by early next decade. Once deliveries begin, China would supplant Germany as Russia’s biggest gas market, even as relations have soured with the U.S. and Europe over the Ukraine crisis.
One-in-five proposed LNG projects targeting 2025 sales will be required, while one-in-three will be needed by 2030, Macquarie said yesterday in a report.
“The Canadian ones are probably the most vulnerable,” Regan said by phone.
British Columbia is competing with the U.S., Australia and Mozambique to build mega-LNG projects as developers including Petroliam Nasional Bhd. evaluate whether to build plants in the province to ship the fuel to Asia.
Among projects in Australia that are under consideration are Woodside Petroleum Ltd. (WPL)’s Browse and Sunrise LNG ventures, with partners including Royal Dutch Shell Plc, and Exxon Mobil Corp. (XOM)’s Scarborough venture. Expansions of LNG developments including Exxon’s $19 billion project in Papua New Guinea are also being considered in the region.
Those proposed plants would follow seven Australian projects currently under construction for about $185 billion.
http://www.bloomberg.com/news/2014-11-11/russia-china-natural-gas-ties-seen-leading-to-lng-project-delays.html
Yes, gold doesn’t bear interest. Many,
including Warren Buffett, belittle its investment value. But, paintings or
antiques don’t bear interest either. When money supply is rising, anything
scarce tends to rise in value. Gold is the best scarce commodity in the world.
Andy Xie.
The monthly Coppock Indicators finished October.
DJIA: +137 Down. NASDAQ: +275 Down. SP500: +210 Down.
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