Baltic Dry Index. 1064 -61 Brent Crude 65.25
As
democracy is perfected, the office of President represents, more and more
closely, the inner soul of the people. On some great and glorious day, the
plain folks of the land will reach their heart's desire at last and the White
House will be adorned by a downright moron.
H. L.
Mencken.
Ordinarily an oil
glut is good news for consumers and markets, but not this time. President Trump,
having set up the oil market for a shortage of crude oil with his renewed
sanctions against Iran’s oil exports on November 4th, suddenly
U-turned and granted everyone and his dog oil exemptions to continue importing
Iranian oil.
But, Saudi Arabia, Russia,
and the heavily indebted US shale oil fracking industry, had all ramped up production to
cover the anticipated shortage. Worse, most end users had stepped up purchases
to beat the new US sanctions. Nearly all speculators were long, looking for
higher prices. Few shale oil producers
were hedged against a price collapse. Who knew President Trump was about to do
another U-turn?
But this new oil glut
comes at a very bad time. Just as President Trump’s trade war seems to be
crashing the Asian economies, and with them their demand for even a normal
supply of oil.
Just how far the oil
rout goes is anyone’s guess, but US frackers have no choice but to continue
producing to service their mountains of unrepayable debt. The Saudis are under orders from President
Trump not to cut current production, and after a state sanctioned murder in the
Saudi consulate in Istanbul, are in a weak position to defy President Trump.
Russia is unlikely to cut much production in winter.
Below, when US
President’s randomly push and pull on the economic levers of power. How long before the first of the US fracking
industry go into default? How long before the stock market correction becomes a
1972-1974 bear market? Just a few weeks is my guess.
Oil extends slide from 7 percent slump the day before as outlook darkens
November 14, 2018 / 12:52 AM
SINGAPORE (Reuters) - Oil markets slipped
again on Wednesday, extending losses from a 7 percent plunge the previous
session as surging supply and the spectre of faltering demand scared off
investors.
U.S. West Texas Intermediate (WTI) crude oil futures were at $55.50 per
barrel at 0514 GMT, down 19 cents from their last settlement.
International benchmark Brent crude oil futures LCOc1 were down 22 cents
at $65.25 per barrel.
Crude oil has lost over a quarter of its value since early October in
what has become one of the biggest declines since prices collapsed in 2014.
The slump in spot prices has turned the entire forward curve for crude
oil upside down.
Spot prices in September were significantly higher than those for later
delivery, a structure known as backwardation that implies a tight market as it
is unattractive to put oil into storage.
By mid-November, the curve had flipped into contango, when crude prices
for immediate delivery are cheaper than those for later dispatch. That implies
an oversupplied market as it makes it attractive to store oil for later sale.
Oil markets are being pressured from two sides: a surge in supply and
increasing concerns about an economic slowdown.
More
5 reasons oil prices are in a history-setting tailspin
By Myra
P. Saefong Published: Nov 13, 2018
5:56 p.m. ET
U.S. oil prices have fallen for 12 consecutive sessions, something it has never done before
Rampant expectations for a global oil supply glut sent the U.S. benchmark to its lowest finish of the year.December West Texas Intermediate crude CLZ8, -0.65% dropped $4.24, or 7.1%, to settle at $55.69 a barrel on the New York Mercantile Exchange on Tuesday, marking a historic 12th straight decline, deepening a descent into a bear market, defined as a drop of at least 20% from a recent peak.
Here are some of the key reasons that oil prices have staged a gut-wrenching drop, after posting a 52-week high back on Oct. 3:
- Oversupply: The Organization of the Petroleum Exporting Countries raised its production in September by 100,000 barrels a day to 32.78 million barrels of oil a day—a one-year high, according to the International Energy Agency.
- A surprise: Trump granted waivers to eight countries, allowing them to temporarily continue buying Iranian oil despite U.S. sanctions on the country’s energy sector which took effect Nov. 4.
- Seasonality: A time of planned shutdowns at major crude-oil refineries for maintenance, is more active than normal, resulting in more crude in inventories amid a period that was already expected to see slowing demand
- Trump: President Donald Trump has been consistently advocating for lower oil prices and on Monday issued a tweet urging for even lower prices
- U.S. oil: U.S. production climbed by 400,000 barrels a day to a record 11.6 million barrels a day for the week ended Nov. 2, adding to oversupply worries
---- Oil’s convulsions down have rattled
investors, helping to engender fears of troubles in global economic growth and
uncertainty in trade
in the S&P 500 index SPX, -0.15%
the Dow Jones Industrial Average DJIA, -0.40%
and the Nasdaq Composite Index COMP, +0.00%
at a time when those equity benchmarks are already reeling from an
ugly October rout of their own.
More
Asia's weakening economies, record supply threaten to create oil glut
November 14, 2018 / 4:56 AM
SINGAPORE (Reuters) - Oil traders’ worries
over record supplies arriving in Asia just as the outlook for its key growth
economies weakens have pulled down global crude benchmarks by a quarter since
early October.
Ship-tracking data shows a record of more than 22 million barrels per day (bpd) of crude oil hitting Asia’s main markets in November, up around 15 percent since January 2017, and an increase of nearly 5 percent since the start of this year.
Much of this oil was ordered ahead of U.S. sanctions against Iran that were imposed this month, as refiners prepared for a sudden drop in supply.
But with unexpectedly broad exemptions granted by Washington that allow Asia’s main oil consumers to continue buying crude from Iran, the overall supply drop has not materialized.
Global supply has instead surged, led by soaring output from the world’s three-biggest producers - the United States, Russia and Saudi Arabia - who in October broke through joint output of 33 million bpd for the first time, meeting more than a third of total oil consumption.
That surge has so far been met by healthy demand, not only in Asia’s main emerging economies of China and India, but also in the mature markets of Japan and South Korea.
Now, though, the rising supplies are threatening to turn into a glut, triggering a 25 percent sell-off in spot crude contracts LCOc1 CLc1 since early October as financial traders pulled money out of oil markets.
Analysts warn the situation may get worse, with increasing signs of a slowdown across Asia’s biggest economies.
“Momentum still appears to be slowing across the region, reflecting a
combination of tighter financial conditions and slowing global trade,” said
Frederic Neumann, co-head of economic research for Asia at HSBC in Hong Kong.
China, Asia’s biggest economy, may see its first fall in car sales on
record in 2018 as consumption is stifled amid a trade war between Washington
and Beijing.
In Japan, the economy contracted in the third quarter, hit by natural
disasters but also by a decline in exports amid the rising protectionism that
is starting to take its toll on global trade.
And in India, a plunging rupee has resulted in surging import costs, including for oil, stifling purchases in one of Asia’s biggest emerging markets. India’s car sales are also set to register a fall this year.
More
Weaker retail sales loom over China's economy despite some bright spots
November 14, 2018 / 3:17 AM / Updated an
hour ago
BEIJING (Reuters) - China delivered a
mixed economic report card for October on Wednesday as softening retail sales
pointed to a consumption slowdown, even as a pick-up in industrial output and
investment suggested support measures may be starting to take hold.
Taken together with weak credit data the previous day, the latest
readings suggest the world’s second-largest economy will continue to cool in
the next few quarters.
Facing the weakest economic growth since the global financial crisis,
Chinese policymakers are fast-tracking billion-dollar road and rail projects,
pushing banks to increase lending, and cutting taxes to ease strains on
businesses. And more measures are widely believed to be on the way.
“Policy measures, including funding support for private firms, need some
time to show results. GDP growth in the fourth quarter could dip below 6.5
percent,” said Wang Jun, Beijing-based chief economist at Zhongyuan Bank.
Manufacturing has been supported by resilient exports as firms rush to
ship goods to the United States ahead of higher tariff rates, amid persistent
trade tensions between the world’s largest economies.
Investors are hoping for some progress from trade talks between U.S.
President Donald Trump and his Chinese counterpart Xi Jinping later this month.
But the bigger worry for China lies at home, with domestic consumption
starting to slow amid mounting household debt, while the real estate sector - a
major driver - continues to cool.
Retail sales rose 8.6 percent in October from a year earlier, the
National Bureau of Statistics (NBS) said, the slowest since May. Analysts had
expected only a marginal dip from 9.2 percent in September.
More
In
other news, Italy takes on Juncker’s European Commission. How long before the
whole EUSSR flies apart? Suddenly, all news is bad news, it seems.
Italy government sticks to budget targets despite EU pressure
November 13, 2018 / 10:15 PM / Updated 8
hours ago
(Reuters) - The Italian government will
maintain its deficit and economic growth forecasts for 2019 despite European
Commission demands for the budget plan to be revised, Deputy Prime Minister
Matteo Salvini said late on Tuesday.
The Commission last month rejected Italy’s
plan for a big increase in the deficit and described its growth forecast for
2019 as overly optimistic. It set Tuesday as a deadline for Rome to respond to
its objections.
In a statement released after a cabinet meeting, Salvini said the
deficit target would remain at 2.4 percent of economic output, and the growth
forecast at 1.5 percent, though asset sales would be beefed up and spending
closely monitored.
The International Monetary Fund said earlier that Italy’s fiscal
stimulus plans would leave the country vulnerable to higher interest rates that
could ultimately plunge it into recession, recommending instead a “modest”
fiscal consolidation to reduce financing costs.
The IMF said after an annual staff review of Italy’s economic policies
that any temporary, near-term growth gains from the stimulus is likely to be
outweighed by the “substantial risk” of a rapid deterioration.
The whole aim of practical politics is to
keep the populace alarmed (and hence clamorous to be led to safety) by an
endless series of hobgoblins, most of them imaginary.
H. L. Mencken.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Not the usual villains today.
Today Boeing. Will Boeing now go into a stall?
Boeing withheld crucial safety information on new 737 models, experts say
By Andy
Pasztor and Andrew
Tangel Published: Nov 12, 2018 11:34 p.m. ET
Boeing Co. withheld information about potential hazards associated with a
new flight-control feature suspected of playing a role in last month’s fatal
Lion Air jet crash, according to safety experts involved in the investigation,
as well as midlevel FAA officials and airline pilots.The automated stall-prevention system on Boeing 737 MAX 8 and MAX 9 models — intended to help cockpit crews avoid mistakenly raising a plane’s nose dangerously high — under unusual conditions can push it down unexpectedly and so strongly that flight crews can’t pull it back up. Such a scenario, Boeing BA, -3.33% told airlines in a worldwide safety bulletin roughly a week after the accident, can result in a steep dive or crash — even if pilots are manually flying the jetliner and don’t expect flight-control computers to kick in.
That warning came as a surprise to many pilots who fly the latest models for U.S carriers. Safety experts involved in and tracking the investigation said that at U.S. carriers, neither airline managers nor pilots had been told such a system had been added to the latest 737 variant — and therefore aviators typically weren’t prepared to cope with the possible risks.
“It’s
pretty asinine for them to put a system on an airplane and not tell the pilots
who are operating the airplane, especially when it deals with flight controls,”
said Capt. Mike Michaelis, chairman of the safety committee for the Allied
Pilots Association, which represents about 15,000 American Airlines pilots.
“Why weren’t they trained on it?”
Every
normal man must be tempted, at times, to spit on his hands, hoist the black
flag, and begin slitting throats.
H. L. Mencken.
Technology 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?
Graphene on the way to superconductivity
Date:
November 9, 2018
Source:
Helmholtz-Zentrum Berlin für Materialien und Energie
Summary:
Scientists have found evidence that double layers of graphene have a property
that may let them conduct current completely without resistance. They probed
the band structure at BESSY II with extremely high resolution ARPES and could
identify a flat area at a surprising location.
Carbon atoms have diverse possibilities to form bonds. Pure carbon can
therefore occur in many forms, as diamond, graphite, as nanotubes, football
molecules or as a honeycomb-net with hexagonal meshes, graphene. This exotic,
strictly two-dimensional material conducts electricity excellently, but is not
a superconductor. But perhaps this can be changed.
A complicated option for superconductivity
In April 2018, a group at MIT, USA, showed that it is possible to generate
a form of superconductivity in a system of two layers of graphene under very
specific conditions: To do this, the two hexagonal nets must be twisted against
each other by exactly the magic angle of 1.1°. Under this condition a flat band
forms in the electronic structure. The preparation of samples from two layers
of graphene with such an exactly adjusted twist is complex, and not suitable
for mass production. Nevertheless, the study has attracted a lot of attention
among experts.
The simple way to flat bands
But there is one more, much simpler way of flat band formation. This was
shown by a group at the HZB around Prof. Oliver Rader and Dr. Andrei Varykhalov
with investigations at BESSY II.
The samples were provided by Prof. Thomas Seyller, TU Chemnitz. There
they are produced using a process that is also suitable for the production of
larger areas and in large quantities: A silicon carbide crystal is heated until
silicon atoms evaporate from the surface, leaving first a single-layer of
graphene on the surface, and then a second layer of graphene. The two graphene
layers are not twisted against each other, but lie exactly on top of each
other.
Scanning the band structure with ARPES
At BESSY II, the physicists are able to scan the so-called band structure
of the sample. This band structure provides information on how the charge
carriers are distributed among the quantum-mechanically permitted states and
which charge carriers are available for transport at all. The angle-resolved
photoemission spectroscopy (ARPES) at BESSY II enables such measurements with
extremely high resolution.
More
The monthly Coppock Indicators finished October.
DJIA: 25,116 +176 Down. NASDAQ:
7,306 +232 Down. SP500: 2,712 +146 Down. All three slow indexes went sharply down in
October, suggesting there’s more of the correction to come.
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