LONDON (Reuters) – Oil prices fell on Wednesday as an International Energy Agency (IEA) forecast of a market surplus in the first half of 2020 outweighed concerns about disruptions that have slashed Libya’s crude output. Brent crude LCOc1 was down 43 cents, or 0.7%, at $64.16 a barrel at 0941 GMT. West Texas Intermediate CLc1 also fell 43 cents to $57.95 a barrel, having declined 0.3% the day before. The head of the IEA, Fatih Birol, said he expects the market to be in surplus by one million barrels per day (bpd) in the first half of this year. “I see an abundance of energy supply in terms of oil and gas,” Birol told the Reuters Global Markets Forum on Tuesday, while attending the World Economic Forum meeting in Davos. “It’s the reason that recent incidents we have seen – with the Iranian general killed, Libya unrest – didn’t boost international oil prices,” Birol said, referring to the U.S. killing of an Iranian commander and retaliation by Tehran that boosted prices briefly earlier this month. Libya’s National Oil Corp on Monday declared force majeure on the loading of oil from two major oilfields after the latest development in a long-running military conflict. Unless oil facilities quickly return to operation, Libya’s oil output will be reduced about 72,000 barrels per day (bpd) from about 1.2 million bpd. Financial markets are also watching the emergence from China of a new strain of a coronavirus and the possible impact which a pandemic might have on global economic growth.[ Should the new virus develop dramatically and hit travel and growth, demand for oil could fall by 260,000 bpd, Goldman Sachs said in a note. “Demand concerns over a potential epidemic will counter concerns around supply disruptions in Libya, Iran and Iraq, driving spot price volatility in coming weeks,” Goldman said, although the “impact on oil fundamentals remains limited so far.” Supply is still likely to rise, with U.S. crude production in large shale deposits expected to rise to record highs in February, although the pace of increase is likely to be the lowest in about year, the U.S. Energy Information Administration (EIA) said on Tuesday. Inventories of crude oil in the U.S. are likely to have fallen for a second week last week, according to a Reuters poll, although gasoline stocks are forecast to have risen for an 11th week in a row. [EIA/S] Nick Note: The forces affecting oil are balanced on a knifes edge. I can make a case for oil going either way. Which means its a 50/50 proposition. Very fair odds. I don’t do fair or balanced. I need a 70%+ conviction rate to initiate a trade. And I want to be asshole…. You remember where that no dick no money broker tells you… Why that’s a stupid trade and GET OUT GET OUT before your wiped out. I am sure some of you have gotten those kind of calls. Usually right before the market trades our way and we make ANOTHER killing. So be patient my predator friends and soon the food animals will appear again so we can eat their lunch… Dinner and desert……
Russia plans to show OPEC+ compliance by excluding a key metric
MOSCOW (Bloomberg) – For the first time in Russia’s alliance with OPEC, the country is changing the way it makes oil-production cuts. This quarter, Russia — one of the architects of the original deal to curb oil output between the Organization of Petroleum Exporting Countries and its allies — will be allowed to exclude a type of light oil called condensate from the production data it submits to the group. The cartel has always excluded condensates from members’ production volumes, so it was an anomaly for it to be included for the other members of the OPEC+ group. This should help improve its implementation with the pact which has been insufficient throughout 2019 as its total crude and condensate output hit a post-Soviet record. Compliance with the deal has been patchy within Russia and Rosneft PJSC has criticized it saying it’s contrary to Russian interests. Monitoring compliance may now become even more challenging for Russian-oil watchers. Condensates are hydrocarbons which below ground are in the form of a gas but then condense into a liquid when they reach the earth’s surface. They are usually stabilized before being transported, by removing any remaining gas and very light liquids. They can then be blended with crude, processed to make petrochemicals or other high-value fuels or exported. Novatek PJSC exports stabilized condensates from its Yamal LNG project and processes most of the stable condensate from other operations in Ust-Luga on Russia’s Baltic Sea coast, with the remaining volumes sold in Russia and abroad. Russia’s condensate output has been growing as the nation’s biggest gas producers, Gazprom PJSC and Novatek, brought new fields online and ramped up output at existing ones. It’s part of a strategy to boost both piped and liquefied natural gas exports from Russia to Europe and Asia. This rising output has put pressure on Russia’s compliance with the OPEC+ deal, its currently acting energy minister Alexander Novak said in November. The country argues that its condensate, which accounts for 7%-8% of total oil output, should be also excluded from its production cuts target because countries within the cartel don’t include it. OPEC agreed, and during its December meeting allowed all non-OPEC allies to exclude condensate from their production data. It will, according to the country’s energy ministry. Excluding condensate, Russia’s production cut in December was 234,000 barrels a day, compared to the crude-only level for October 2018, the government said in a statement. That’s a deeper reduction than the nation was required to make under the OPEC+ deal. If you include condensate, the figure was 72,000 barrels a day above its output target.
Russia failed to fully comply with the pact for most of 2019, with condensate growth just one of the reasons given by the government. At the December OPEC+ meeting, Novak said exclusion of condensate is not a loophole allowing Russia to pump more oil and still claim compliance with the deal.
Under the new deal, lasting through March, Russia pledged to deepen its crude-only production cuts to some 300,000 barrels a day, from the revised October 2018 baseline which excludes condensate. Excluding condensate will make it more difficult to independently assess Russia’s implementation the OPEC+ deal. Previously, Russian oil-watchers — including Bloomberg — calculated the country’s output and compliance using detailed data from the Energy Ministry’s CDU-TEK unit. However, those figures don’t break down the split between condensate and crude. The ministry has promised to give the market data relevant to the new deal. Yet in December it didn’t disclose outright production numbers for crude and condensate, only the increase or decrease in output for each variety of oil. Separately, Novak told reporters the October 2018 baselines against which those changes are measured. This patchwork of data does allow oil watchers to know the following: In October 2018 Russia pumped 10.626 million barrels a day of crude and 795,000 barrels a day of condensate, according to Novak. As of December 2019, crude production had fallen 234,000 barrels a day from this level and condensate output had risen by 58,000 barrels a day, according to the ministry. The current output-cuts deal will be implemented throughout the first quarter of 2020. OPEC+ will decide on the future of the agreement at the beginning of March. If the pact is extended past then, and to include only crude output, knowing data on Russia’s total oil production is still useful for a wider understanding of its oil industry. have. Nick Note: Talk about liars poker. Production cuts are like dick size. Everyone claimes more then the really have. In the case of OPEC member claim bigger cuts then they are actually making. As expected size matters especially when we are talking oil production cuts.
China mystery virus claims sixth victim as holiday travel stokes risk
BEIJING (Reuters) – – The death toll from a mysterious flu-like virus in China climbed to six on Tuesday as new cases surged beyond 300 and authorities fretted about the added risk from millions of Chinese travelling for the Lunar New Year holiday. Round the world, airports tightened screening of travellers from China as officials confirmed the coronavirus strain is contagious between humans. The World Health Organization (WHO) called a meeting for Wednesday to consider declaring a global health emergency. The outbreak, which began in the central city of Wuhan, also sent shivers through financial markets as investors recalled the fallout from China’s Severe Acute Respiratory Syndrome (SARS) outbreak in 2002/2003 that it initially covered up. The SARS coronavirus killed nearly 800 people then. “We’ll stay at home during the holiday. I’m scared as I remember SARS very well,” said Zhang Xinyuan, who had been bound from Beijing for the Thai resort of Phuket before she and her husband decided to cancel their air tickets. Authorities have confirmed more than 300 cases in China, mostly in Wuhan, a provincial capital and transportation hub, where the virus may have originated at a seafood market. There have been six deaths in that city, Mayor Zhou Xianwang told Chinese state television on Tuesday. The virus has been spreading around other parts of China, however, including five cases in the national capital Beijing. Fifteen medical personnel are among those infected. Abroad, Thailand has reported two cases and South Korea one, all involving Chinese travellers from Wuhan. Japan and Taiwan also confirmed one case each, both nationals who had been to Wuhan. “Information about newly reported infections suggest there may now be sustained human-to-human transmission,” said WHO’s regional director for the western Pacific, Takeshi Kasai. Taiwan, the self-ruled island that China claims as its own, on Monday set up an epidemic response command centre. More than 1,000 beds were prepared in isolation wards in case the virus spreads further. Though the origin of the virus was yet to be identified, WHO said the primary source was probably animal. Chinese officials have linked the outbreak to Wuhan’s seafood market. The virus can cause pneumonia, with symptoms including fever and difficulty in breathing. As those symptoms are similar to many other respiratory diseases, extra screening is needed.
“The outbreak of a SARS-like coronavirus in Wuhan is developing into a major potential economic risk to the Asia-Pacific region now that there is medical evidence of human-to-human transmission,” said Rajiv Biswas, Asia Pacific Chief Economist for IHS Markit.
So far, the WHO has not recommended trade or travel restrictions but such measures could be discussed at Wednesday’s meeting. Airports in the United States, Australia and across Asia have begun screening passengers from Wuhan. In the city itself, officials have been using infrared thermometers to screen passengers at airports, railway stations and other passenger terminals since Jan. 14. The Lunar New Year is a major holiday for Chinese, many of whom travel to join family or have a foreign holiday. Nick Note: This bears watching. Your flue vaccine will not protect your from this one. As a matter of fact not much else this year. Masks and constant hand sanitizing is the order of the day. No one gets in my office with the sniffles and M.r FLIR cameras automatically take everyones temperature. You may laugh but gasping for air like a fish out of the water is not a fun way to die.
Trump ‘serious’ about EU auto tariffs unless deal is made
United States President Donald Trump said that he is “serious” about imposing tariffs on products from the European Union, and especially auto imports, unless Washington and Brussels reach a trade deal. The US president also stated that he warned France he would be prepared to tariff its wine with 100% and noted that the threat made Paris decide to stop insisting on digital tax and pause its implementation. Earlier, German officials confirmed that the US told the EU it would impose car tariffs unless it started the dispute mechanism process within the Iran nuclear deal. Additionally, France admitted that digital tax talks are hard while US Treasury Secretary Steven Mnuchin warned the United Kingdom and Italy that they could also face tariffs if the try to impose digital tax. Nick Note: Them their are fighting words…… Trump is itching for some impeachment mitigating headlines. A trade war might be just what the doctor ordered. Unless he can find someone else to assassinate to stir the pot
Fed Adds Just Over $90 Billion in Temporary Money to Markets
Intervention comes as overnight repo totaling $58.6 billion and 14-day repo totaling $32.2 billion
The Federal Reserve added $90.8 billion in short-term money to financial markets Tuesday. The Fed added money in two repurchase-agreement operations, or repos. The overnight intervention added $58.6 billion, while a 14-day repo added $32.2 billion. In both cases, eligible banks—called primary dealers—took less money than the Fed was willing to offer. Fed repo interventions take in U.S. Treasurys, agency and mortgage bonds from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by the securities. The banks tapping this cash are limited in the amount of liquidity they can take in exchange for their securities, and they pay interest to the central bank to get the funds. Fed money-market interventions are aimed at keeping the federal-funds rate within the 1.5%-to-1.75% range, and to limit the volatility of other money-market rates. The Fed restarted its repo operations in September after unexpected market volatility and steadily increased the sizes of its operations. Demand for Fed money has waxed and waned, and by and large the Fed has restored calm to markets. The Fed said this past Thursday that its balance sheet stood at $4.18 trillion as of Wednesday, versus $3.8 trillion in September. Peak Fed holdings were $4.5 trillion. About $229.5 billion in repo interventions were also outstanding on Wednesday, versus $210.6 billion on Jan. 9. The Fed had originally planned to wind down repo operations at the end of this month but will keep them going until at least mid-February. Many analysts expect them to go on for even longer. Nick Note: You must understand that their is a GREAT BIG behind the scenes crises. We know Wells Far goes your money is dead broke on life support. They are not the only ones to join the party. This will end in a couple of years in ANOTHER debt wipe out. Until then the condemned eat hearty. Feasting on here today gone Fed Funny Money. Money that will never be paid back.
Libyan commander’s forces choke oil flows, overshadowing peace summit
Sunday, 19 January Forces loyal to eastern commander Khalifa Haftar have shut off production at all Libya’s major oil fields, an escalation that threatened to strangle the country’s finances and overshadowed an international peace summit in Berlin on Sunday. U.N. envoy hopes for, but cannot predict, speedy reopening of Libya oil ports 01:14 The United Nations envoy to Libya said on Saturday he hoped but “could not predict” whether eastern oil ports shut ahead of a pending Berlin summit aimed at reaching a truce in Libya would be reopened soon. Emer McCarthy reports. The closing of Libya’s oil ports is “a huge step” by the Libyan people, the spokesman of Libyan forces loyal to eastern-based commander. Diplomats see the closures as a power play by the LNA aimed at ramping up pressure ahead of a conference on Sunday in Berlin where Germany wants to push for a lasting truce. The National Oil Corp (NOC) declared force majeure on oil exports from the eastern ports of Brega, Ras Lanuf, Hariga, Zueitina and Es Sider, saying the closures would result in the loss of 800,000 barrels (bpd) day in oil output. Some 600 tribesmen camping out in front of Zueitina port said they would keep the terminals shut until the east of the country was able to export its own oil, bypassing Tripoli. “We will not reopen the terminals without any international guarantees,” said Osman Saleh, a tribal leader, told Reuters at a tent where tribesmen sat drinking tea and listening to defiant speeches. Oil revenues are booked via NOC in Tripoli and benefit mainly the internationally recognised Tripoli-based government, although though some public servants in the east are also paid. To get a bigger share the LNA has several times tried to sell oil on its own only to be stopped by the United Nations as this violates an embargo, diplomats say. Salame said a fair distribution of oil revenues needed to be part of any peace settlement in Libya. Production in Libya, which was plunged into chaos with the toppling of longtime leader Muammar Gaddafi in 2011, was estimated at 1.3 million bpd last week. Salame said he hoped Haftar would be willing to consider extending a truce that has largely held for a week despite the two sides failing to sign a deal at indirect talks in Moscow mediated by Russia and Turkey on Monday. There have been a series of failed conferences and negotiations to stabilise Libya. Haftar and Tripoli-based Prime Minister Fayez al-Serraj are expected to be in Berlin for the summit, although the two are not expected to meet. The war over Tripoli has been backed by foreign powers with the LNA supported by the United Arab Emirates, Egypt and most recently Russian mercenaries, and Turkey sending troops and fighters from Syria’s civil war to help Serraj. “I can confirm the arrival of fighters from Syria,” Salame said, putting estimates at 1,000 to 2,000. Salame said he had started the process of a new intra-Libyan dialogue between the rival parliaments in Tripoli and the east, an approach that has failed since 2017. Nick Note: I was sure this would eventually happen. I am looking for disruptions to give us selling opportunities with a S.
Iran may stop cooperation with IAEA over EU pressure
![Speaker of the Iranian Parliament, Ali Larijani in Tehran, Iran on 13 November 2016 [Fatemeh Bahrami/Anadolu Agency]](https://i0.wp.com/www.middleeastmonitor.com/wp-content/uploads/2016/11/20161113_2_20119303_16000058-e1548934839871.jpg?resize=1200%2C800&quality=85&strip=all&ssl=1)
Iran will review its cooperation with the United Nations’ nuclear watchdog should it face “unjust” measures, Iranian parliament speaker Ali Larijani said, after EU powers last week triggered a dispute mechanism under Tehran’s 2015 nuclear deal, reported Reuters. The move by France, Britain and Germany amounts to formally accusing Iran of violating the terms of the deal and could lead eventually to reimposing UN sanctions that were lifted under the pact. “We state openly that if the European powers, for any reason, adopt an unfair approach in using the dispute mechanism, we will seriously reconsider our cooperation with the International Atomic Energy Agency,” state TV quoted Larijani as saying. Tehran has continued to gradually roll back its nuclear commitments under the pact in reaction to sanctions reimposed by Washington since the US quit the nuclear deal in 2018. Tehran said last week it would abandon limits on enriching uranium, though it would continue to cooperate with the UN nuclear watchdog (IAEA), which is policing the nuclear pact.President Hassan Rouhani, architect of the nuclear deal, has repeatedly said that Tehran’s nuclear steps were reversible if Tehran’s economy was shielded by other parties to the deal from US penalties. Under the deal between Iran and major powers, Tehran agreed to curb its nuclear programme in exchange for lifting international sanctions against the Islamic Republic. The three European nations said they still wanted the 2015 nuclear deal to succeed and were not joining a “maximum pressure” campaign by the United States. The mechanism involves a Joint Commission, whose members are Iran, Russia, China, Germany, France, Britain and the European Union, seeking to resolve the dispute. A group of Iranian lawmakers signed a statement on Sunday warning the European powers to “stop their hostile approach” toward Tehran, Iran’s semi-official Tasnim news agency reported. “Otherwise we, as representatives of the Iranian nation, will decide whether Iran should remain in the nuclear deal or whether it should continue its cooperation with the IAEA,” the lawmakers said. Iran’s Supreme Leader Ayatollah Ali Khamenei, not parliament, has the last say on state matters such as Tehran’s nuclear standoff with the West. The Tasnim report did not say how many lawmakers signed the statement, which also called on the government to consider downgrading its diplomatic ties with Britain after Iranian officials accused the UK envoy to Tehran of attending an illegal protest, which he denies. Nick Note: They did the same screwing about with Hitler and it ended up badly, Iran it will be worse. At the time Hitler was building planes, Tanks and Submarines. Iran is building ICBM’s and Nukes. Trump instead of making a marter for Islam should have taken out the Rocket test facilities and the Uranium enrichment centers….
Palladium sets new all-time high, tops $2,400
The price of palladium continued to surge on Friday by breaking a new record, setting the price of the commodity above the $2,400 mark. The surge in the price of the metal most widely used in the auto industry comes amid growing demand in the sector as a result of tighter emissions regulations that kicked in on January 1, 2020. In December, new car registrations rose 21.7% in the EU, reaching the figure of 1.26 million. The majority of palladium supplies are used for the production of catalytic converters which regulate exhaust emissions in vehicles. Palladium surged 3.87% at 9:10 am ET, to go for $2.407,32 per ounce. Year to date, the metal has rocketed 25.94%.
A Great Great Great short!
Huge New Field Sends Norway’s Oil Production To 9-Year-High
The start-up of the massive Johan Sverdrup oilfield sent Norway’s oil production rising to a nine-year high in December 2019, beating the authorities’ forecast by 12.7 percent, data from the Norwegian Petroleum Directorate (NPD) showed on Friday. In December 2019, the third month of operation of Equinor’s Johan Sverdrup oilfield in the North Sea, Norway’s oil production averaged 1.759 million barrels per day (bpd), the highest oil production offshore Norway since January 2011.
Norway’s oil production in December rose by 4.3 percent from November and jumped by 17 percent compared to December 2018.
Despite the Johan Sverdrup start-up, the average oil production in Norway in full-2019 was expected to be at its lowest level in three decades, the NPD has estimated previously. But Johan Sverdrup’s development will help Norway boost its oil production over next few years. The huge oilfield in Norway’s North Sea is already producing 350,000 barrels of oil per day, two months after coming on stream, a senior executive at Equinor told Reuters early last month. Daily oil production during the first phase of the Johan Sverdrup development is estimated at 440,000 bpd and is expected to be reached by the middle of this year. Peak production with the second development phase is expected to reach 660,000 bpd. At peak production, Johan Sverdrup will account for around a third of Norway’s crude oil production, operator Equinor says. Norway’s oil production is expected to jump in 2020 through 2023, thanks to the start up of Johan Sverdrup, which began pumping oil in early October 2019. But after Johan Sverdrup and after Johan Castberg in the Barents Sea scheduled for first oil in 2022, Norway doesn’t have major oil discoveries and projects to sustain its oil production after the middle of the 2020s. Nick Note: Oil production will soar this year out of Norway, England, Latin America and the good ole USA. We will be shorting on all bounces. can not cut enough. Now lets consider the fact that Russia and Nigeria are bitterly complaining about their quotes. Soon OPEC will realize the only way to cut global oil output is to cut the price. And that will dry up funding from very iffy and VERY VERY VERY nervous banker buddies.
U.S. industrial output falls 0.3% in December, third drop in past four months
Production down at 0.5% annual rate in Q4, down 1% on a year-on-year basis
The numbers: Industrial production fell 0.3% in December, the third decline in the past four months, the Federal Reserve reported Friday. The decline was in line with Wall Street expectations of a 0.3% fall, according to a MarketWatch survey. The softness in the factory sector was telegraphed in the December unemployment report released last week, where manufacturing shed 12,000 jobs. For the fourth quarter as a whole, industrial production was down at a 0.5% annual rate. Production was down in three of the four quarters of 2019. Output was down 1% on a year-over-year basis.
What happened: Manufacturing output rose 0.2% in December, but was down at a 1% rate for the fourth quarter. The gain in December came despite a 4.6% drop for output of motor vehicles and parts. Assemblies of cars fell to 10.3 million units in December from 11.2 million in the prior month. There have been reports that automakers are planning to reduce production in 2020 in face of projections of slower sales. Mining output rose 1.3% in December on higher oil and gas extraction. Utility output fell 5.6% as warmer weather reduced the demand for home heating. Capacity utilization fell to 77% in December, the second lowest reading in 27 months. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities. It’s still below pre-recession levels, above 80%, that economists believe could fan production costs and prices.
Big picture: The manufacturing sector hurt by the decline in global trade, trade tariffs with China and Boeing Co.’s problems with the 737 MAX airplane The ISM factory index sank in December to its lowest level since the Great Recession. Some economists think the sector could hit bottom in the first quarter.
What are they saying? “The trend in manufacturing output probably is about flat, with no real prospect of any serious improvement in the near term,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note prior to the data’s release.