Baltic Dry Index. 912 -18 Brent Crude
48.61
The
quickest way of ending a war is to lose it.
George
Orwell.
The big news yesterday was Saudi Arabia surrendering in the oil wars. But it all has the feel of too little too late. The real winners out of this output cut, if it actually happens at the end of November, are the Russian, the Iranians and those US frackers that haven’t already gone bust. But this being lying, cheating, stealing OPEC, few think that this is the end of the oil wars.
Below, OPEC sort of reaches an agreement. There will be jam all round tomorrow, maybe.
OPEC reaches understanding on output cut
Published: Sept 28, 2016 3:11 p.m. ET
Cartel considers cut to between 32.5-33 million barrels a day
ALGIERS—OPEC on Wednesday reached an understanding that a crude-oil-production
cut is needed to lift petroleum prices, people familiar with the matter said,
but the cartel will wait until November to complete a plan to tackle a supply
glut that has lasted longer than expected.
The consensus was reached after a 4 1/2 hour meeting in the Algerian
capital. It represents the first acknowledgment from the Organization of the
Petroleum Exporting Countries that it needed to take action to alleviate an
oil-price slump that has wreaked havoc on the economies of oil producers. OPEC,
the 14-nation cartel that controls over a third of world oil output, has been
producing at record levels as its members compete among themselves for buyers.
A person familiar with the matter said the cartel was considering
cutting production to between 32.5 million barrels a day and 33 million barrels
a day—down from August levels of 33.2 million barrels a day.
Exactly how the production cuts would be achieved is unclear. The person
said a committee would be formed to study how to carry out the cuts and then
report to the cartel at its next meeting on Nov. 30 in Vienna.
In U-Turn, Saudis Choose Higher Prices Over Free Oil Markets
September 29, 2016 — 12:41 AM BST Updated on September 29, 2016 — 1:07
AM BST
It took the kingdom’s new oil minister, Khalid Al-Falih, just six months to
blink, ending the country’s two-year policy of pump-at-will.The decision at this week’s meeting of the Organization of Petroleum Exporting Countries in Algiers to cut production was necessitated by Saudi Arabia’s tattered finances. The kingdom has the highest budget deficit among the world’s 20 biggest economies, it’s enduring a delay in its first international bond issue and now faces fresh legal uncertainty as the U.S. Congress voted Wednesday to allow Americans to sue the country for its involvement in 9/11.
“Saudi Arabia wants higher prices,” said Amrita Sen, chief oil analyst
at consultancy firm Energy Aspects Ltd. in London.
The consequences could be vast. Giants such as Exxon Mobil Corp. may
soon be flush enough to revive abandoned projects. Finances of cash-strapped
OPEC countries like Venezuela will get a boost. Russia and other independent
oil-rich countries will have to decide whether to follow Saudi Arabia’s lead.
U.S. shale producers, which OPEC hoped it could push into bankruptcy, will use
higher prices to drill new wells, and American consumers, who’ve enjoyed the
lowest gasoline prices in more than a decade, will pay more at the pump.
More
Doubts linger over OPEC’s preliminary deal on oil output
Published: Sept 28, 2016 5:20 p.m. ET
The Organization of the Petroleum Exporting Countries has a preliminary
plan that would cap oil production slightly below its current pace, but traders
are debating whether it will make a lasting difference.
“Any production restraint is a big deal,” said Phil Flynn, senior market
analyst at Price Futures Group.
The 14-nation group of major oil producers is targeting a production cap
that would hold output to between 32.5 million and 33 million barrels a day.
OPEC’s latest monthly oil report pegged current member output at 33.24 million
barrels a day. But the output agreement won’t be completed until at least Nov.
30.
----“This downshift is likely to help” rebalance the global oil market, said Robert Haworth, senior investment strategist with U.S. Bank Wealth Management. But the market will still have to “work through the excess of U.S. and OECD oil inventories.”
“For now our view remains that upside here is limited, with prices above
$50 per barrel likely rekindling U.S. oil production and limiting further
prices gains,” he said.
The scale of the production cut isn’t terribly impressive, analysts
noted.
“A 2% cut in cartel production is a lawn chair off the Titanic with
regards to global supply. Unless OPEC follows up with announcements for the
methodology of the cut, the specific magnitude of it, and the intent to enact a
program that appreciably affects global supply going forward, expect to see the
spot price of oil settle back into the range it’s inhabited since the second
quarter of this year,” said Scott Cockerham, managing director at Huron.
More
Relief arrives for U.S. shale firms as OPEC folds in price battle
It was a moment U.S. shale oil producers have been waiting on for more
than two years: OPEC nations finally agreed to cut production on Wednesday in a
move that lifted low prices ravaging their budgets.
Two sources in the Organization of the Petroleum Exporting Countries
said the group would reduce output to 32.5 million barrels per day (bpd) from
current production of 33.24 million bpd, by around half the amount of global
oversupply.
The agreement effectively establishes a floor on prices near $50 a
barrel - around where many U.S. shale oil companies can make money and drill
new wells. The floor is twice as high as where oil languished in the depths of
the downturn.
"This gives U.S. producers more confidence,” said James West,
partner at the investment firm Evercore ISI in New York. “They may become a
touch more aggressive than they had planned to be.”
U.S. benchmark crude rose more than 5 percent to $47 a barrel on the news,
pending final details about the cut, which won't be known until after another
OPEC meeting in November.
One U.S. shale oil industry veteran likened the results of the prolonged
price war to a bruising 12-round boxing match that ended in a technical draw.
After OPEC in mid-2014 let oil prices fall as it sought to regain market
share, dozens of small and high-cost U.S. producers fell into bankruptcy.
Meanwhile, budgets of OPEC members from Venezuela to Angola shrank on a
60 percent slide in crude prices. And two days before the deal was announced,
Saudi Arabia cut ministers' salaries by 20 percent and scaled back financial
perks for public sector employees.
But in the United States the big shale companies - the ones responsible
for the bulk of all new onshore domestic crude output - survived. They
confounded OPEC by cutting costs and finding new ways to squeeze more oil from
rock.
More
The other big news yesterday was the US Congress declaring open season
on Saudi Arabia’s US assets. Yesterday Christmas came early for America’s tort
bar. Now comes the cat and mouse game of hide and try to find the hidden assets.
I would expect a whole lot of countries to pass similar legislation.
Congress rejects Obama veto, Saudi September 11 bill becomes law
Congress on Wednesday overwhelmingly rejected President Barack Obama's
veto of legislation allowing relatives of the victims of the Sept. 11 attacks
to sue Saudi Arabia, the first veto override of his presidency, just four
months before it ends.
The House of Representatives voted 348-77 against the veto, hours after
the Senate rejected it 97-1, meaning the "Justice Against Sponsors of
Terrorism Act" will become law.
The vote was a blow to Obama as well as to Saudi Arabia, one of the
United States' longest-standing allies in the Arab world, and some lawmakers
who supported the override already plan to revisit the issue.
Obama said he thought the Congress had made a mistake, reiterating his
belief that the legislation set a dangerous precedent and indicating that he
thought political considerations were behind the vote.
"If you're perceived as voting against 9/11 families right before
an election, not surprisingly, that's a hard vote for people to take. But it
would have been the right thing to do," he said on CNN.
Obama's 11 previous vetoes were all sustained. But this time almost all
his strongest Democratic supporters in Congress joined Republicans to oppose
him in one of their last actions before leaving Washington to campaign for the
Nov. 8 election.
---- The law, known as JASTA, passed the House and Senate without objections earlier this year.
Support was fueled by impatience in Congress with Saudi Arabia over its
human rights record, promotion of a severe form of Islam tied to militancy and
failure to do more to ease the international refugee crisis.
The law grants an exception to the legal principle of sovereign immunity
in cases of terrorism on U.S. soil, clearing the way for lawsuits seeking
damages from the Saudi government.
Riyadh has denied longstanding suspicions that it backed the hijackers
who attacked the United States in 2001. Fifteen of the 19 hijackers were Saudi
nationals.
----
Obama argued that JASTA could expose U.S. companies, troops and officials to
lawsuits if other countries passed reciprocal legislation, and may anger
important allies.
More
Q: How many US lawyers
does it take to screw in a light bulb?
A: Three, One to climb the ladder. One to shake it. And one to sue the ladder
company.
At the Comex silver depositories Wednesday final figures were: Registered
31.44 Moz,
Eligible 141.96 Moz, Total 173.40 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on Deutsche Bank’s long goodbye. The
on-again, off-again, long awaited rescue by Germany, seems to be off-again.
Officially there is no rescue Plan-B. As goes Deutsche Bank, so goes Italy’s
Three Card Monte di Sienna. Going once, going twice, …. But wait, will Turkey
come to the rescue of failing DB?
“On your resume you
wrote that for 3 years you worked as a pianist in a brothel.
Actually, I was a
Deutsche Bank banker, but I don’t like to talk about it.”
Germany denies preparing Deutsche Bank rescue plan
Deutsche is facing a $14 billion fine from the U.S. Department of Justice and concerns over its funding pushed its shares to a record low on Tuesday and heightened concerns about the health of the financial sector in Europe's largest economy.
The finance ministry dismissed a newspaper report that a rescue plan was being prepared in case Deutsche was unable to raise capital to pay for costly litigation.
Weekly Die Zeit had reported that the German government and financial authorities were working on possible steps to enable Deutsche to sell assets to other lenders at prices that would ease the strain on the lender.
The German government would even offer to take a direct stake of 25 percent in an extreme emergency, the paper said without saying where it got its information.
The government was still hoping Deutsche would not need state support and only scenarios for a potential rescue were being discussed so far, Die Zeit added.
"This report is wrong. The German government is not preparing any
rescue plan, there is no reason to speculate on such plans," the finance
ministry said in a statement.
Two sources close to the matter also said that German financial
regulator Bafin was not working on an emergency plan.
More
Deutsche Bank to Take €800 Million Hit on Abbey Life Sale
September
28, 2016 — 8:05 AM BST Updated on September 28, 2016 — 10:55 AM BST
Phoenix Group Holdings said it’s buying Deutsche Bank AG’s U.K.
insurance unit Abbey Life Assurance Co. for 935 million pounds ($1.2 billion).
The U.K. consolidator of closed-life insurance businesses said it will
fund the deal with a share sale along with a banking facility, according to a
statement Wednesday. The German lender said it will book a pretax loss of about
800 million euros ($895 million) from the sale.
Deutsche Bank CEO John Cryan, under pressure to shore up earnings
and bolster the balance sheet, is selling the unit after new European
regulations in January forced firms with insurance assets to hold more capital.
While the lender is losing money on the Abbey Life sale, the bank said the deal
is expected to lift its Common Equity Tier 1 capital ratio by about 10 basis
points from the June 30 level.
----Mounting
legal bills have led analysts to question the lender’s ability to avoid selling
assets or take other steps to raise capital. While a public offering of its
German Postbank consumer division has been put on hold, the debate over
Deutsche Bank’s finances intensified after it was disclosed that the U.S.
Justice Department is seeking $14 billion to resolve a probe of the lender’s
pre-crisis mortgage securities business.
More
Deutsche Bank Should Slash Bonuses of Staff, Autonomous Says
September
28, 2016 — 8:59 AM BST
Deutsche Bank AG could raise as much as 2.8 billion euros ($3.14
billion) by taking a tougher stance on employee compensation and not giving
bonuses to thousands of staff, according to Autonomous Research LLP.
“Being very tough on the 2016 bonus pool and requiring the forfeiture of
unvested shares could be helpful,” according a note this week by Autonomous’s
London-based Chief Executive Officer Stuart Graham seen by Bloomberg News. “This
would also provide a strong signal to long-suffering shareholders, who have
stumped up 13.5 billion euros of new equity” since the fourth quarter of 2009,
excluding capital raised to buy its German retail unit Postbank.
Deutsche Bank, which houses Europe’s largest investment bank, has
struggled to adapt to an era of tougher capital requirements and lagging
trading revenue. Since laying out his strategy last October, CEO John Cryan has
cut risky assets, eliminated thousands of jobs and suspended dividend payments
to preserve capital. However, that’s failed to stem a decline in its share
price which has slumped 53 percent this year.
Any move to make staff give up their shares could be subject to legal
challenges, Autonomous said, while a zero cash bonus could save Deutsche Bank
800 million euros after tax, the report said.
A less painful alternative would be “zeroing the bonus” for the top
3,000 staff, who in 2015 accounted for some 52 percent of the bonus pool,
according to the note.
More
Erdogan Adviser Says Turkey Should Consider Buying Deutsche Bank
September 28, 2016 — 3:53 PM BST
Deutsche Bank AG’s crashing share price is prompting takeover speculation
from unexpected places.Yigit Bulut, a chief adviser to Turkish President Recep Tayyip Erdogan, said the country must consider using a new wealth fund or a group of state-owned banks to buy the Frankfurt-based company. Bulut made the proposal on Tuesday via his Twitter account, saying Germany’s largest lender should be made into a Turkish bank.
The stock of Europe’s biggest investment bank has slumped by more than 50 percent over the past year, falling to a record low on Tuesday, over concerns about its weakening financial position and penalties in the U.S. tied to mortgage-backed securities. Bulut’s comments come after Moody’s Investors Service on Sept. 23 cut Turkey to junk, citing slowing economic growth and deteriorating credit fundamentals.
"For months on TV programs, I’ve been calling on Turkey’s private and public capital: ‘Some very good companies in the EU are going to fall into trouble and we need to be ready to buy a controlling stake in them,’” Bulut wrote on Twitter. "Wouldn’t you be happy to make Germany’s biggest bank into Turkish Bank!!"
More
Solar & Related Update.
With events
happening fast in the development of solar power and graphene, I’ve added this
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?
First quantum photonic circuit with an electrically driven light source
Date:
September 27, 2016
Source:
Karlsruhe Institute of Technology
Summary:
Whether for use in safe data encryption, ultrafast calculation of huge data
volumes or so-called quantum simulation of highly complex systems: Optical
quantum computers are a source of hope for tomorrow's computer technology. For
the first time, scientists now have succeeded in placing a complete quantum
optical structure on a chip. This fulfills one condition for the use of
photonic circuits in optical quantum computers.
Whether for use in safe data encryption, ultrafast calculation of huge
data volumes or so-called quantum simulation of highly complex systems: Optical
quantum computers are a source of hope for tomorrow's computer technology. For
the first time, scientists now have succeeded in placing a complete quantum
optical structure on a chip, as outlined in the Nature Photonics
journal. This fulfills one condition for the use of photonic circuits in optical
quantum computers.
"Experiments investigating the applicability of optical quantum
technology so far have often claimed whole laboratory spaces," explains
Professor Ralph Krupke of the KIT. "However, if this technology is to be
employed meaningfully, it must be accommodated on a minimum of space."
Participants in the study were scientists from Germany, Poland, and Russia
under the leadership of Professors Wolfram Pernice of the Westphalian Wilhelm
University of Münster (WWU) and Ralph Krupke, Manfred Kappes, and Carsten
Rockstuhl of the Karlsruhe Institute of Technology (KIT).
The light source for the quantum photonic circuit used by the scientists
for the first time were special nanotubes made of carbon. They have a diameter
100,000 times smaller than a human hair, and they emit single light particles
when excited by laser light. Light particles (photons) are also referred to as
light quanta. Hence the term "quantum photonics."
That carbon tubes emit single photons makes them attractive as
ultracompact light sources for optical quantum computers. "However, it is
not easily possible to accommodate the laser technology on a scalable
chip," admits physicist Wolfram Pernice. The scalability of a system, i.e.
the possibility to miniaturize components so as to be able to increase their
number, is a precondition for this technology to be used in powerful computers
up to an optical quantum computer.
As all elements on the chip now developed are triggered electrically, no
additional laser systems are required any more, which is a marked
simplification over the optical excitation normally used. "The development
of a scalable chip on which a single-photon source, detector, and waveguide are
combined, is an important step for research," emphasizes Ralph Krupke, who
conducts research at the KIT Institute for Nanotechnology and the Institute of
Materials Science of the Darmstadt Technical University. "As we were able
to show that single photons can be emitted also by electric excitation of the
carbon nanotubes, we have overcome a limiting factor so far preventing
potential applicability."
MoreThe monthly Coppock Indicators finished August.
DJIA: 18401
+18 Up NASDAQ: 5213 +16 Up. SP500: 2171 +18 Up.
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