Thursday, 1 December 2016

OPEC Cuts!



Baltic Dry Index. 1204 +02   Brent Crude 50.47

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

Eurasian Snow cover. (How bad will winter be?)

"It is always the best policy to speak the truth, unless of course, you are an exceptionally good liar."

Jerome K. Jerome.

Yesterday, OPEC, the oil cartel of liars and cheats, gave American frackers and Canadian tar sands a get out of jail card. OPEC says it agreed a production cut among its members, while non-member Russia will also cut its record production, maybe, “conditional on its technical abilities.” But no one to cut before January. The short covering rally began immediately. So now everyone begins guessing how long before one or more of the liar’s cartel cheats. Since higher oil prices acts as a drag on most of the world’s economies, how long before some of the G-20 start to go under? No matter how Italy votes this weekend, is Italy now salvageable at all?

Below, more on OPEC’s big day.

OPEC Confounds Skeptics, Agrees to First Oil Cuts in 8 Years

November 30, 2016 — 8:25 AM EST November 30, 2016 — 10:54 PM EST
The deal, designed to drain record global oil inventories, overcame disagreements between the group’s three largest producers -- Saudi Arabia, Iran and Iraq -- and ended a flirtation with free markets that started in 2014. It was also broader than many had expected, extending beyond OPEC. Most strikingly, Russia agreed to unprecedented cuts to its own output.

The impact on the energy world was immediate: benchmark oil prices gained as much as 10 percent in New York and the share prices of energy companies around the globe jumped alongside the currencies of large exporters. Whether that’s sustained will depend on how strictly members of the Organization of Petroleum Exporting Countries stick to the agreement, something they haven’t always done in the past.

“This should be a wake-up call for skeptics who have argued the death of OPEC,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. “The group wants to push inventories down.”

OPEC will reduce output by about 1.2 million barrels a day by January, the group said, fulfilling a plan sketched out in Algiers in September to cut its production to 32.5 million barrels. The agreement exempted Nigeria and Libya, but gave Iraq its first quotas since the 1990s. West Texas Intermediate crude futures rose 0.3 percent to $49.61 a barrel at 11:44 a.m. Singapore time after gaining 9.3 percent Wednesday, the biggest one-day gain since Feb. 12.

After weeks of often tense negotiations, the eventual alignment of OPEC’s biggest producers points to the increasing dominance of Iran among the group’s top ranks. It’s allowed to raise output to about 3.8 million barrels a day, a victory for a country that’s long sought special treatment as it recovers from sanctions. Saudi Arabia previously proposed that its regional rival limit output to 3.707 million barrels a day, delegates said.

Read more: Riyadh finds its power waning against a resurgent Iran and Iraq

The economics of the deal are “incredibly appealing,” Jeff Currie, global head of commodities research at Goldman Sachs Group Inc., said in an interview with Bloomberg Television. The main aim of the cuts is “inventory normalization,” he said.

Across the U.S. shale path, the OPEC cut trigger a huge equity rally. Whiting Petroleum Corp. rose as much as 32 percent -- its biggest one-day jump in 13 years -- while Continental Resources Inc., the company founded by Donald Trump’s adviser Harold Hamm, gained as much as 25 percent, the most since 2008.
Saudi Arabia, which raised oil production to a record this year, will reduce output by 486,000 barrels a day to 10.058 million a day, an OPEC document shows. Iraq, OPEC’s second-largest producer, agreed to cut by 210,000 barrels a day from October levels. The country had previously pushed for special consideration, citing the urgency of its offensive against Islamic State.

The United Arab Emirates and Kuwait will reduce output by 139,000 barrels a day and 131,000 a day, respectively, the document shows. Non-member Russia, also pumping at a post-Soviet record, will cut by as much as 300,000 barrels a day “conditional on its technical abilities,” Energy Minister Alexander Novak said in Moscow.

“What was announced so far is bullish, but January is still far away,” said Giovanni Staunovo, an analyst at UBS Group AG. “December will still see ongoing record production, but market participants might ignore it. It does seem as though Russia will cut, which if implemented is also positive.”
More

Leaner and meaner: U.S. shale greater threat to OPEC after oil price war

Wed Nov 30, 2016 | 1:34am EST
NEW YORK/HOUSTON In a corner of the prolific Bakken shale play in North Dakota, oil companies can now pump crude at a price almost as low as that enjoyed by OPEC giants Iran and Iraq.
Until a few years ago it was unprofitable to produce oil from shale in the United States. The steep slide in costs could encourage more U.S. shale output if OPEC members cut supplies, undermining the producer group's ability to boost prices. OPEC ministers meet Wednesday to weigh output cuts to end a two-year glut that has pressured global oil prices.
In shale fields from Texas to North Dakota, production costs have roughly halved since 2014, when Saudi Arabia signaled an output free-for-all in an attempt to drive higher-cost shale producers out of the market.
Rather than killing the U.S. shale industry, the ensuing two-year price war made shale a stronger rival, even in the current low-price environment.
In Dunn County, North Dakota, there are around 2,000 square miles where the cost to produce Bakken shale is $15 a barrel and falling, according to Lynn Helms, head of the state's Department of Mineral Resources.
"The success in Dunn County has been fantastic," said Ron Ness, president of the North Dakota Petroleum Council.
Dunn County's cost is about the same as Iran's, and a little higher than Iraq's. Dunn County produces about 200,000 barrels of oil a day, about a fifth of daily production in the state.
It is North Dakota's sweet spot because it boasts the lowest costs in the state, yet improved technology and drilling techniques have boosted efficiency for the whole state and the entire U.S. oil industry.
The breakeven cost per barrel, on average, to produce Bakken shale at the wellhead has fallen to $29.44 in 2016 from $59.03 in 2014, according to consultancy Rystad Energy. It added that in terms of wellhead prices, Bakken is the most competitive of major U.S. shale plays.
Wood Mackenzie said technology advances should further reduce breakeven points.
Landlocked Bakken producers still need a substantially higher international price than their breakeven cost to make a profit, since they pay more to transport crude to market than producers in most other U.S. regions.
International oil prices of $45 a barrel are enough for some Bakken producers to profit, Ness said, and $55 would encourage production growth.
More

In other news, China offers incoming President Trump an olive branch. So far so good, as the man falling from the Empire State building said,  as he passed the 30th floor.

China says it wants smooth military ties with Trump

Wed Nov 30, 2016 | 5:55am EST
China said on Wednesday it wanted to develop smooth military-to-military ties with the new U.S. administration of Donald Trump.
While the world's two largest economies are frequently at odds over issues like the disputed South China Sea, both have been trying to improve trust between their armed forces to reduce the risk of misunderstanding in any encounters.
This month, China and the United States staged a three-day humanitarian relief military drill as part of that trust-building exercise.
New concern looms with Trump's election as U.S. president. He lambasted China on the campaign trail and has suggested Japan and South Korea be allowed to develop nuclear weapons.
Asked about Trump's election, Chinese Defence Ministry spokesman Yang Yujun said it went without saying there were tensions in the military relationship and China hoped the United States would respect its core interests and concerns.
"China is willing to work hard together with the defense department of the next U.S. government to promote the healthy and stable development of military-to-military relations," Yang told a monthly news briefing.

Finally, Cuba. What will the next few years bring? New brooms are coming to Washington and Havana.

After Castro's death, attention turns to Cuba's heir apparent

Wed Nov 30, 2016 | 1:24am EST
With revolutionary leader Fidel Castro dead and his brother Raul vowing to step down as president in 15 months, it will soon be the hour of heir apparent Miguel Diaz-Canel, an advocate for modernizing Cuba's state-run media and abysmal internet access.
Fidel Castro died last Friday aged 90 and the 85-year-old Raul Castro, who took over as president in 2008, says he will step down in February 2018 at the end of his second five-year term.
Diaz-Canel was elevated to the position of first vice-president in 2013, putting him next in line for the presidency.
At 56, he is a relative youngster in the ruling Communist Party's leadership and will need to appeal to younger generations if Cuban communism is to thrive beyond the Castro brothers.
He has already established press and internet freedom as signature concerns, a potentially disruptive change in a one-party state that has monopolized the media for nearly 58 years.
Otherwise, however, he has a much weaker public profile than the Castros and it is not clear what policy changes he would push through.
Until now, he has held to the party line or avoided public comment on key issues such as economic and political reforms or relations with the United States, which were overhauled by Raul Castro and U.S. President Barack Obama over the past two years.
Still, experts say his position as heir apparent is solid and that he would have to stumble badly for someone else to leapfrog him and become the next president in Cuba's arcane system for choosing its leader.
Born after the Castros took power in 1959, Diaz-Canel is a child of their revolution who rose through the Communist Party by cultivating relationships within the political elite while avoiding the show-boating that ended the careers of other pretenders.
"He has the advantage of having outlived his predecessors (as heir apparent)," Christopher Sabatini, a Cuba expert at Columbia University's School of International and Public Affairs, said on Monday.
Other apparent successors to the Castros have emerged over the years only to fall suddenly.
Among them were Carlos Lage, then 57 and one of Cuba's secondary vice-presidents, and Felipe Perez Roque, then 43 and foreign minister. They were both sacked in 2009 as part of a purge by Raul Castro for appearing too ambitious, unwittingly collaborating with Spanish intelligence agents and for speaking ill of older leaders.
Diaz-Canel has been careful not to eclipse Raul Castro and is so cautious as to come off as dull and gray, his public statements largely unmemorable.
More

At the Comex silver depositories Wednesday final figures were: Registered 32.35 Moz, Eligible 146.59 Moz, Total 178.94 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Below, when crony casino capitalism goes wrong, friends fall out. Davos man turns miser.
"We shouldn't pour cold water on everything.  We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

Merkel Coalition Targets Deutsche Bank’s Ex-CEO in Bonus Feud

Birgit Jennen November 30, 2016 — 5:39 AM EST
German Chancellor Angela Merkel’s coalition is taking aim at former Deutsche Bank AG Chief Executive Officer Josef Ackermann in a dispute over bonuses, distancing her government from the bank’s legacy in an election year.

As the country’s biggest bank faces a U.S. government probe tied to residential mortgage-backed securities, the criticism in Berlin is a sign of encouragement for changes at Deutsche Bank being pursued by CEO John Cryan, including job cuts and a shift toward core banking tasks. German policy makers associate the old business model and its perceived excesses with Ackermann, 68, who stepped down in 2012 and this month questioned whether executives should forfeit bonuses.

“It isn’t a happy situation when someone causes damage to a bank and then wants to be rewarded on top of that,” Ralph Brinkhaus, a deputy caucus head of Merkel’s Christian Democrat-led bloc in parliament, said in an interview. Bonuses “are performance-based compensation” and “should be clawed back if someone performed badly,” said Carsten Schneider, a finance lawmaker for the Social Democrats, Merkel’s junior coalition partner.

Ackermann’s comments ignited a spat with German Finance Minister Wolfgang Schaeuble, who was quoted by German newswire Deutsche Presse-Agentur as criticizing executives who are reluctant to forgo bonuses. When that prompted a rebuke by Ackermann for turning the matter into a public dispute, Schaeuble responded he could “live with” it.

As Merkel seeks a fourth term in next year’s German election, her government’s history of clashes with Deutsche Bank during her and Schaeuble’s 11 years in power still resonates. Government officials have said that Germany would welcome a smaller Deutsche Bank as a way to reduce the lender’s capital requirements amid misconduct fines and stricter capital rules.
“The government wants to show that it isn’t on board with Ackermann’s business model,” said Hans-Peter Burghof, professor of finance at Hohenheim University near Stuttgart. “Schaeuble’s criticism signals that the German government is keeping its distance from the Ackermann era.”
Ackermann, who was CEO between 2002 and 2012, helped build Deutsche Bank into a global investment bank, steering the company through the 2008 credit crunch and Europe’s subsequent sovereign-debt crisis without taking direct state aid.
In his comments to a conference in Berlin, he said it would be hard to forfeit bonuses because it would place the bank’s more junior executives at a disadvantage.
More
“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those [CDS] transactions.”
Joseph J. Cassano, a former A.I.G. executive, August 2007, on Credit Default Swaps that wiped out A.I.G in 2008.

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?

Graphene technology enables fully flexible NFC antennas

Date: November 29, 2016

Source: Graphene Flagship

Summary: Graphene is currently one of the most extensively studied materials in the world, both on a scientific and industrial level. The world’s first two-dimensional material, this single layer of carbon atoms arranged in a hexagonal lattice has a series of unique and outstanding properties. As well as being the thinnest, strongest and lightest known material, graphene is flexible, impermeable and extremely electrically and thermally conductive. All properties well suited for next generation NFC antennas.

Graphene is currently one of the most extensively studied materials in the world, both on a scientific and industrial level. The world's first two-dimensional material, this single layer of carbon atoms arranged in a hexagonal lattice has a series of unique and outstanding properties. As well as being the thinnest, strongest and lightest known material, graphene is flexible, impermeable and extremely electrically and thermally conductive. All properties well suited for next generation NFC antennas.
Near-field communication (NFC) is a set of communication protocols that enables two electronic devices to transfer data. The most distinctive characteristic of NFC is the fact that it can transmit small amounts of data wireless only within a close range while other methods, such as Bluetooth and Wi-Fi, have a wide transmit range of up to 10 or even 100m. The reason why NFC technology is used to identify objects is that, with such a close transmitting range, it is more secure and less vulnerable to data hijacking. Application areas are tracking and managing inventories, assets, people, animals, contactless payment systems, security cards and social networking.
The Graphene Flagship Italian partner CNR-ISOF's research shows that it is possible to use graphene to produce fully flexible NFC antennas. By combining material characterization, computer modelling and engineering of the device, the Graphene Flagship researchers designed an antenna that could exchange information with near-field communication devices such as a mobile phone, matching the performance of conventional metallic antennas. The graphene-based NFC antennas are chemically inert, highly resistant to thousands of bending cycles and can be deposited on different standard polymeric substrates or silk tissues.
Vincenzo Palermo, Graphene Flagship leader of the Polymer Composites research area and group leader of the Nano-Chemistry laboratory in the Institute for Organic Synthesis and Photoreactivity of National Research Council (CNR) says: "A key target for modern technology is to replace metals with lighter, cheaper, less energy-consuming and better recyclable materials. Due to its unique combination of superior properties, graphene can be used to produce fully flexible NFC antennas."
"The possibility to produce fully flexible graphene based NFC antennas showcases future applications such as wearable NFC tags interacting with smartphones and other devices. We have developed a NFC antenna with different graphene derivatives. Several designs, materials and configurations were studied and tested. The graphene antennas was laminated on different substrates like PET, PVC, Kapton, furthermore a silk/graphene paper wearable antenna was prepared. This technology could be developed further within the field of flexible electronics and communication technology."
The fully flexible graphene NFC device demonstrators were tested with a smartphone through the NFC reader App by the Graphene Flagship partner STMicroelectronics, showing good functionality whether flat or fixed on curved objects.
"We demonstrate that, if this approach is performed in the right way, the graphene antennas can be used directly in working devices, with no additional tuning of, for example, software or hardware of the interacting devices. Finally, some fully working graphene smart cards were prepared in order to be used as electronic keys, business cards and other typical NFC applications. We are exhibiting at the Composite Europe 2016 to find new industrial collaboration partners to develop the graphene based NFC antennas into large scale production," says Vincenzo Palermo.

The monthly Coppock Indicators finished November

DJIA: 19124  +53 Up NASDAQ:  5324 +51 Up. SP500: 2199 +58 Up.

1 comment:

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