Tuesday, 19 January 2016

Oil – Worth Less, Worth Less, Worthless.

Baltic Dry Index. 369 -03        Brent Crude 29.08

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

If anything can go wrong, it will.

Murphy’s Law.

For more on worthless oil, scroll down to Crooks Corner.

We’re trying to stay positive today. How much of a boost will the global economy get from Iran coming in from the cold? Quite a lot it seems on the early appraisal, with much of the new business boost going to Asia and the EU. Somehow I expect Russia to get in on that boost too. As for John Bull and Uncle Scam, they seem to still be sulking in the bar.

Property will be damaged in direct proportion to its value.

Murphy’s Constant.

Airbus plan heralds Iran boom after sanctions lifted

Sun Jan 17, 2016 6:27pm EST
A purchase of more than 100 aircraft from Europe's Airbus may be one of Iran's first big deals in a trade and investment boom that could reshape the economy of the Middle East.

"The legs of Iran’s economy are now free of the chains of sanctions, and it’s time to build and grow,” President Hassan Rouhani tweeted on Sunday, a day after world powers lifted sanctions on Tehran in exchange for curbs on its nuclear program.

Hours earlier, his transport minister Abbas Akhoondi told the Tasnim news agency that Iran intended to buy 114 civil aircraft from Airbus (AIR.PA) - a deal that could be worth more than $10 billion at catalog prices.

Airbus said on Saturday it had not yet held commercial talks with Iran, and businesses operating in the Islamic republic will continue to face big obstacles for the foreseeable future.

Risks include indebted Iranian banks, a primitive legal system, corruption and an inflexible labor market. Many foreign companies will remain wary of investing in Iran because of concern that the sanctions could "snap back" if Tehran is later found not to be complying with the nuclear agreement.

Foreign companies ready for Iran's vast oil wealth

TAKESHI KUMON, Nikkei staff writer January 18, 2016 2:50 am JST
TEHRAN -- Foreign companies are ready to resume business with Iran as the country prepares to increase oil exports after the lifting of Western sanctions.
     Iran is one of the Middle East's biggest economies, with a population of around 78 million and a gross domestic product of some $400 billion. Plant engineering is one particular segment slated to benefit as the sanctions removal will simplify trade settlements.
     Petroleum Minister Bijan Namdar Zanganeh has stressed repeatedly that Iran will boost its crude oil exports by 500,000 barrels a day as soon as the sanctions are removed, and by 1 million barrels six months later. These exports fell to around 1.1 million barrels a day due to the sanctions. 
In November, Iran revamped the terms of oil field development, replacing a system unfavorable to foreign businesses. Iran appears eager to tap foreign capital and technologies as it moves to upgrade antiquated equipment and take on new projects. Plant engineering companies from Japan, Europe and elsewhere will see fresh business opportunities.
     Carlos Ghosn, chief executive of French automaker Renault, said Jan. 11 that Iran is a very promising market and that the Renault-Nissan alliance is ready to cautiously expand its manufacturing footprint there, AFP reported.
----  Medical equipment, urban infrastructure and power generation facilities are other areas in which the country seeks to modernize. Household products from developed countries are popular in Iran, especially among younger people. The country is eager to attract more foreign tourists as well.

Businesses hopeful after Iran sanctions lifting

Published : 2016-01-17 18:32 Updated : 2016-01-17 20:24
Following the lifting of international sanctions on Iran, Korean companies are expected to rush to explore business opportunities in the resources-rich country, with constructors and oil refineries at the vanguard.

The Korean government is also moving swiftly to respond, scrapping Sunday a local rule that forced Koreans to seek prior central bank permission for any financial transaction with Iran.

Korea, in September 2010, joined world powers in punishing Iran for its nuclear program, putting over a hundred Iranian organizations and 24 individuals, including Tehran-based Mellat Bank, on a list banning all financial transactions.

The sanctions ended Saturday following an agreement struck in Vienna between Iran and the U.S. and five other world powers.

“As of now, Korean companies are free to engage in trade with Iran with almost all items, with the exception of strategic goods such as arms and nuclear-related items,” the Finance Ministry said in a statement Sunday.

The news was hailed by Korean builders which have been grappling with a sharp drop in construction orders from the Middle East.

Overseas construction orders received by local firms in 2015 fell to the lowest level in five years, $46.1 billion, which was about 70 percent of the previous year’s level. Orders from the Middle East nearly halved to $16.5 billion, as oil-producing nations shun large construction projects on a free fall in crude prices.

This chart shows how long it could take Iran to get its oil production up to speed

Published: Jan 18, 2016 7:59 a.m. ET
Oil prices sputtered along on Monday, as the beaten-down commodity market began adjusting to the harsh new reality of Iran’s inclusion in the global oil production fold.

As expected, economic and financial sanctions on Iran came to an end on Saturday evening for that country’s work on curbing its nuclear-related infrastructure. It’s a moment that oil traders and investors have been dreading for months and comes as U.S. oil is down 20% year to date, on the heels of a 31% plunge in 2015. Brent oil is down 22% year-to-date and sank 35% last year.

When the Iran news finally reached the market in Asia on Monday, oil prices plunged, driving Brent crude LCOH6, +1.93%  to $27.67 a barrel. That’s the lowest level for Brent since November 2003, according to analysts at Commerzbank. Prices moved off that level to hover around $29 a barrel in European trading hours. U.S. WTI crude CLG6, +0.41%  also traded cautiously, last off around 11 cents to $28.83 a barrel.

While the Iran news was zero surprise for this market, that doesn’t mean it won’t be an excuse for bears to push oil prices even lower, said analysts. The U.S. Energy Information Administration has forecast OPEC crude production to rise by 500,000 barrels a day in 2016, with Iran expected to make up for the bulk of that rise.

With the Iran cat now out of the bag, investors will naturally start questioning how quickly the country will get its oil production back to normal. Naturally, more supply for an already overflowing market couldn’t come at a worse time, Eugen Weinberg, head of commodity research at Commerzbank and a team of analysts, said in a note on Monday.

Finally China. China’s official GDP hit the right number exactly again! Those lucky Chinese number crunchers dodged a bullet once again! What the real number is, is anyone’s guess.

China GDP Slows to Weakest Since 2009 on Manufacturing Slide

January 19, 2016 — 2:00 AM GMT Updated on January 19, 2016 — 4:38 AM GMT
China’s economy slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the Communist leadership struggles to manage a transition to consumer-led expansion.

Industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product rose 6.8 percent in the fourth quarter from a year earlier. Full-year growth of 6.9 percent, the least since 1990, was in line with the government’s target of about 7 percent.

Downward pressure on industry threatens to spread to consumption and services -- an unwelcome prospect for policy makers who must weigh the need for further monetary easing with the risk it would spur more weakness in the yuan and additional capital outflows. Another dilemma: cutting excess capacity that’s weighing on old industrial drivers without triggering a deeper slump.

----Industrial production posted one of the weakest gains in the past quarter century, increasing 5.9 percent in December from a year earlier. That compared with a 6 percent median estimate of analysts and November’s 6.2 percent.

Retail sales increased 11.1 percent from a year earlier, compared with the 11.3 percent projected by economists. Fixed-asset investment excluding rural areas expanded 10 percent last year, the slowest pace since 2000.

"This may complicate the fragile balance between carrying out reforms and maintaining growth," said Daili Wang, a Singapore-based economist at Roubini Global Economics LLC. "Fourth quarter growth was a mere 1.6 percent quarter-on-quarter, with annualized growth at 6.4 percent, already lower than the 6.5 percent growth target," citing his own calculations based on Tuesday’s data.

Left to themselves, things tend to go from bad to worse.


At the Comex silver depositories Friday final figures were: Registered 36.19 Moz, Eligible 122.86 Moz, Total 159.06 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Oil, how bad is bad? How low is low? Below, the North Dakota oil that’s worthless. And Iran hasn’t produced or sold one extra barrel yet.
It is impossible to make fiat money fool-proof, because fools are so pervasive, avaricious, and thick.
Gresham’s other law.

The North Dakota Crude Oil That's Worth Less Than Nothing

January 18, 2016 — 8:28 AM GMT
Oil is so plentiful and cheap in the U.S. that at least one buyer says it would need to be paid to take a certain type of low-quality crude.

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a list price posted on its website. That’s down from $13.50 a barrel a year ago and $47.60 in January 2014.

While the negative price is due to the lack of pipeline capacity for a particular variety of ultra low quality crude, it underscores how dire things are in the U.S. oil patch. U.S. benchmark oil prices have collapsed more than 70 percent in the past 18 months and West Texas Intermediate for February delivery fell as low as $28.36 a barrel on the New York Mercantile Exchange on Monday, the least in intraday trade since October 2003.

“Telling producers that they have to pay you to take away their oil certainly gives the producers a whole bunch of incentive to shut in their wells,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Flint Hills spokesman Jake Reint didn’t respond to a phone call and e-mail outside of work hours on Sunday to comment on the bulletin. The prices posted by Flint Hills Resources and rivals such as Plains All American Pipeline LP are used as benchmarks, setting reference prices for dozens of different crudes produced in the U.S.

Plains All American quoted two other varieties of American low quality crude at very low prices: South Texas Sour at $13.25 a barrel and Oklahoma Sour at $13.50 a barrel.

For every complex problem there is an answer that is clear, simple, and wrong.

H. L. Mencken.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this new section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Nano-hybrid materials create magnetic effect

Electromagnetic properties of graphene-boron nitride materials

Date: January 13, 2016

Source: Rice University

Summary: The electromagnetic properties of graphene and boron nitride hybrids has been defined by new research. The results provide a roadmap for new nano-engineered applications.

Developing novel materials from the atoms up goes faster when some of the trial and error is eliminated. A new Rice University and Montreal Polytechnic study aims to do that for graphene and boron nitride hybrids.
Rice materials scientist Rouzbeh Shahsavari and Farzaneh Shayeganfar, a postdoctoral researcher at Montreal Polytechnic, designed computer simulations that combine graphene, the atom-thick form of carbon, with either carbon or boron nitride nanotubes.
Their hope is that such hybrids can leverage the best aspects of their constituent materials. Defining the properties of various combinations would simplify development for manufacturers who want to use these exotic materials in next-generation electronics. The researchers found not only electronic but also magnetic properties that could be useful.
Their results appear in the journal Carbon.
Shahsavari's lab studies materials to see how they can be made more efficient, functional and environmentally friendly. They include macroscale materials like cement and ceramics as well as nanoscale hybrids with unique properties.
"Whether it's on the macro- or microscale, if we can know specifically what a hybrid will do before anyone goes to the trouble of fabricating it, we can save cost and time and perhaps enable new properties not possible with any of the constituents," Shahsavari said.
His lab's computer models simulate how the intrinsic energies of atoms influence each other as they bond into molecules. For the new work, the researchers modeled hybrid structures of graphene and carbon nanotubes and of graphene and boron nitride nanotubes.
"We wanted to investigate and compare the electronic and potentially magnetic properties of different junction configurations, including their stability, electronic band gaps and charge transfer," he said. "Then we designed three different nanostructures with different junction geometry."
Two were hybrids with graphene layers seamlessly joined to carbon nanotubes. The other was similar but, for the first time, they modeled a hybrid with boron nitride nanotubes. How the sheets and tubes merged determined the hybrid's properties. They also built versions with nanotubes sandwiched between graphene layers.

The monthly Coppock Indicators finished December

DJIA: +18 Down. NASDAQ: +110 Down. SP500: +36 Down. 

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