Goldman Sachs Sees OPEC Keeping Oil In $80-$100 Price Range

Last weekend, the Saudi government reiterated its commitment to voluntary crude output cuts of 1 million barrels a day, saying that they would continue until at least the end of the year.

Goldman Sachs expects OPEC to not let oil prices slide too much below $80 per barrel next year and use its pricing power to keep them in the $80-$100 range, the bank said in a note this week, ahead of the OPEC+ meeting on November 26. Oil prices dived this week to their lowest level since July as market participants focused on concerns about the world’s two biggest economies—the United States and China. Goldman Sachs believes that OPEC will use its production policy to keep prices in the $80-$100 range. “We believe that OPEC [Organization of the Petroleum Exporting Countries] will ensure Brent in a $80-$100 range by leveraging its pricing power, with a $80 floor from the OPEC put, and a $100 ceiling from spare capacity,” Goldman Sachs’ commodities analysts led by Daan Struyven wrote in a note to clients, as carried by MarketWatch.

Oil prices fall further, WTI drops 5% on demand woes

Crude prices declined further on Thursday touching their lowest value in three months as concerns about the oil demand appeared to grow after the latest data showed that industrial production in the United States slowed more than expected in October. The Energy Information Administration previously revealed an oil inventory build-up in the United States, with the steep rise in crude inventories seemingly fueling worries about weakening commodity consumption in the country. The West Texas Intermediate (WTI) for December deliveries tumbled 5.04% to sell at $72.80 per barrel at 12:40 pm ET. Brent for January contracts plummeted 4.79% to trade at $77.25 a barrel. Both benchmarks dropped to their lowest levels not seen since mid-July. NN: In my opinion six months from now oil at these prices will be regarded as the bargain of the century

Yemen’s Houthis say they launched ballistic missiles on Israeli military targets

Yemen’s Houthi rebel group said on Tuesday evening that its forces launched a barrage of ballistic missiles toward the Israeli southern city of Eilat. “The operations of the Yemeni armed forces against the ‘Israeli’ enemy will not stop until the ‘Israeli’ aggression on our brothers in Gaza ceases,” the group stressed in a post on one of its Telegram channels. “This comes only 24 hours after another military operation carried out by our armed forces with drones on the same targets,” the statement read. Israel previously said that a missile was intercepted over the Red Sea, adding that the rocket did not cross into the Israeli territory. Houthi movement leader Abdul-Malik al-Houthi warned that its forces will continue to attack Israeli ships in the Red Sea.

 Yemen’s Houthi have launched a batch of ballistic missiles on various Israel targets, including sensitive ones in Israel’s Eilat, the group’s military spokesperson said on Tuesday. The launch came “after 24 hours of another military operation by drones on the same Israeli targets,” the spokesperson added. The spokesperson said that the group “will not hesitate to target any Israeli ship in the Red Sea or at any other place” the group could reach.

 

 

Unwarranted Demand Pessimism Could Lead to a Big Oil Price Rally

  • Oil prices fell to their lowest level since July last week.
  • Money-manager shorts across the four main Brent and WTI contracts rose w/w by 31.7 mb to 209.5 mb in the latest positioning data.
  • Standard Chartered: the current price weakness is a significant undershoot, and oil markets may soon record a big rally comparable to the May bull run.

Last week, oil prices logged a third straight weekly decline, sinking to the lowest level since mid-July as concerns about demand continue to replace the fear of production outages related to the Middle East conflict. Oil markets have been experiencing a shift in sentiment, with a significant decline in speculative buying also putting pressure on prices.  According to commodity analysts at Standard Chartered, the shorts have returned to the oil markets with a vengeance. Money-manager shorts across the four main Brent and WTI contracts rose w/w by 31.7 mb to 209.5 mb in the latest positioning data, while money-manager longs fell by 16.0 mb to 456.4 mb. In contrast, the volume of long positions in crude oil has decreased due to macroeconomic fears overshadowing traditional supply and demand factors. The long-short ratio in the Chicago Mercantile Exchange (CME) WTI contract has fallen to 2.0 in the latest data, a sharp decline from 11.4 six weeks ago. According to StanChart, concerns about weakening demand stem from confusion about seasonality and the relationship between exports and production. The analysts note that demand for air conditioning in the Middle East is lower now since the northern hemisphere summer is over, which has freed up higher volumes for export. Traders and speculators are [incorrectly] interpreting this increase in export availability as being indicative of higher supply and a loss of producer discipline. However, the analysts say that the scale of the current speculative move in oil is not justified by fundamental data. For one, India’s oil demand remains robust, climbing 211 kb/d in October to 5.004 million barrels per day (mb/d). Diesel demand was particularly strong, rising 9.3% y/y to 1.88 mb/d, while gasoline demand was up 4.8% y/y to 861kb/d. StanChart’s proprietary demand model shows global demand rising 2.02 mb/d y/y in October and have forecast demand growth will stay above 1.5 mb/d in November, December and January, while 2024 growth is likely to clock in at 1.5 mb/d. Good news for the oil bulls: StanChart notes that the extreme demand pessimism in the oil market back in May proved to be unfounded, and the undershoot in prices laid the ground for a rally that extended to over USD 25/bbl. The analysts have argued that the current price weakness is also a significant undershoot, and oil markets may soon record a big rally comparable to the May bull run. The strong demand growth being recorded in India might not be a fluke. Several analysts have predicted that India will replace China as the main driver of global oil demand growth in the near future. A rapidly growing population, which has likely surpassed China’s, is expected to be the main driver of consumption trends in India. Meanwhile, the country’s transition from traditional gasoline and diesel-fueled transport is expected to lag other regions, in sharp contrast to China’s skyrocketing adoption of electric vehicles and clean energy in general. China’s adoption of electric vehicles has been lightning fast, a trend that does not bode well for gasoline demand in the world’s biggest car market. EV sales in China nearly doubled to 6.1 million units in 2022, compared with just 48,000 units sold in  India, according to BloombergNEF. BNEF has revealed that EVs are already displacing over 1.4 million barrels a day of oil use globally.  On its part, India is in no hurry to ditch traditional fossil fuels. Earlier in the year, India’s coal minister Pralhad Joshi announced that coal will continue to play an important role in the country’s energy sector until at least 2040, referring to the fuel as an affordable source of energy for which demand has yet to peak in India. “Thus, no transition away from coal is happening in the foreseeable future in India,” Joshi said, adding the fuel will continue to play a big role until 2040 and beyond. However, India is unlikely to replicate the mammoth scale of China’s expansive oil network any time soon, with the latter currently consuming three times as much oil. India’s oil consumption grew by ~255,000 barrels per day (bpd) during the first seven months of the current year, helping to grow total consumption to 135 million metric tons in the first seven months of 2023 compared to 128 million metric tons for last year’s corresponding period. However, that growth clip was considerably slower than 415,000 bpd posted in 2021/22 as economies rebounded from the coronavirus pandemic and lockdowns.

U.S. to Tighten Sanctions on Iran’s Oil Industry Amid Israel-Hamas War

The United States will tighten sanctions on Iran’s oil industry amid the Israel-Hamas conflict aiming to bring exports down by more than 1 million bpd, White House energy security adviser Amos Hochstein told Bloomberg. “We are going to enforce those sanctions,” Hochstein said. “Those numbers will come down.”

Talk about tighter sanctions against Iran’s oil industry intensified in the wake of the latest war in the Middle East with hawks in Congress blaming Iran of helping plan the Hamas attacks and advising pre-emptive action against Tehran before it became more involved in the conflict.

Tehran has denied any involvement in the Hamas attacks on Israel that ignited the war. At the same time it has repeatedly warned that the violence will escalate. “If the Zionist aggressions do not stop, the hands of all parties in the region are on the trigger,” Foreign Minister Hossein Amirabdollahian said last month. Meanwhile, Congress recently passed legislation aimed at entities helping Iran export its oil. Dubbed the SHIP bill (Stop Harboring Iranian Petroleum) would sanction foreign ports and refineries processing Iranian petroleum illicitly exported. The bill requires passage by the Senate and presidential signing to become law. The bill “sends a clear and strong message to bad actors like China, Russia, and others – do not help Iran avoid sanctions and assist them in their funding of terror, or face the consequences,” one Republican representative said, as quoted by Reuters, at the time. There are also other bills that U.S. legislators are discussing, all aimed at pressuring Iran. Iranian oil exports declined for the second consecutive month in October, with the country loading 1.43 million barrels per day of crude and condensate, Bloomberg reported earlier this month, citing TankerTrackers.com data. The volume loaded for export in October was 194,000 bpd lower than September and reportedly the lowest export-loading volume since July. NN: Do you really believe this conflict will stay contained in Gaza?

Over 20 rockets fired from Lebanon toward Israel, IDF strikes Hezbollah

Over 20 rockets were fired from Lebanon toward Kiryat Shmona, Matat, Shlomit, and other areas along the Lebanese-Israeli border on Wednesday, according to the IDF Spokesperson’s Unit. Hezbollah took responsibility for the rocket fire toward Kiryat Shmona. The IDF responded to the rocket fire with artillery fire targeting several sites in southern Lebanon, including a Hezbollah observation point. Hezbollah additionally stated that it targeted an IDF post along the border near Mount Dov, another post near Yir’on, another post near Meiss al-Jabal, another post near Rmaych, and an additional post near Boustane on Wednesday afternoon and evening. The IDF has not confirmed the reports as of yet. Lebanese Foreign Minister Abdullah Bou Habib met with Iran’s ambassador in Lebanon Mojtaba Amani on Wednesday, telling him that “Israel is not defending itself today, but rather its obsession is blind revenge.” On Wednesday, UNIFIL commander Aroldo Lázaro briefed representatives of countries that provided troops for the peacekeeping mission about the situation in southern Lebanon. On Tuesday, Lázaro met with Lebanese Speaker of Parliament Nabih Berri and caretaker Prime Minister Najib Mikati, expressing his “deep concern” about the situation in southern Lebanon. NN: As you know my opinion is its only a matter of time until the battle with Lebanon and Syria rages. Every day the number of attacks on Israel increases.

Hamas ‘plan on attacking Israel again’: Joe Biden…. Biden sets no time limits for Israel-Hamas conflict

US President Joe Biden says Hamas “plan on attacking Israel again” and it is “not realistic” they will stop after Israel entered the largest hospital in Gaza which housed Hamas command centres. Israeli troops launched an operation on Gaza’s Al-Shifa Hospital on Wednesday, which Israel said sits on a large network of tunnels, where they have found weapons and other terrorist infrastructure.

“Hamas has already said publicly that they plan on attacking Israel again, like they did before, cutting off babies heads and burning women and children alive,” Mr Biden told a press conference in San Francisco on Wednesday (local time). “

The idea that they’re going to just stop and not do anything is unrealistic. “This is not a carpet bombing, it’s a different thing – they are going … into the hospital through tunnels.”

Biden sets no time limits for Israel-Hamas conflict

United States President Joe Biden said he “does not know” how long the conflict between Israel and Hamas is going to last. “I think it’s going to stop when Hamas no longer maintains the capacity to murder, abuse and do horrific things to the Israelis,” he told reporters. Biden said that the Israel Defense Forces (IDF) “acknowledge they have an obligation to use as much caution as they can in going after their targets” while occupying hospitals in Gaza. He claimed that “one thing that has been established is that Hamas does have headquarters, weapons, material below [the Al-Shifa] hospital and I suspect others.” He added that he is “mildly hopeful” about the prospect of liberating hostages held by Hamas. NN: You need to take a deep breath here and realize the simmering cauldron the global conflict a clash of civilizations is  about to boil over.

Netanyahu says Israel will have security control over Gaza after war

Prime Minister Benjamin Netanyahu has said Israel will have “overall security responsibility” for the Gaza Strip “for an indefinite period”.

Mr Netanyahu’s first comments on Israel’s plan for Gaza after the war came in an interview with the ABC News network in the US. However, he did not elaborate on the kind of security mechanism such a plan would involve. Israel says it aims to destroy Hamas, which has ruled Gaza since 2007. Hundreds of Hamas gunmen burst through the border and attacked Israeli communities and a music festival on 7 October, killing more than 1,400 people, Israeli authorities say, in the bloodiest such event in Israel’s history. Hamas – proscribed as a terrorist organisation by Israel and many Western governments, including the UK – also took 242 people hostage, the Israeli military says. Israel declared war on Hamas the same day and has been attacking Gaza from land, sea and air since then. The Hamas-run health ministry in Gaza says more more than 10,000 people have been killed since Israel began its operation. When asked who should govern Gaza – home to 2.2 million Palestinians – after the war, Mr Netanyahu said only “those who don’t want to continue the way of Hamas”. But he also declared that Israel must have security control. “I think Israel will, for an indefinite period, have the overall security responsibility, because we have seen what happens when we don’t have it. “When we don’t have that security responsibility, we have the eruption of Hamas terror on a scale that we couldn’t imagine.”

Israeli jets hit Hezbollah infrastructure in Lebanon

The Israel Defense Forces revealed that its fighter aircraft hit several “terror targets” in Lebanon, including “infrastructure and military posts belonging to the Hezbollah terrorist organization.” The Israeli armed forces also noted that a Lebanon-based Hezbollah group used rockets to target northern Israel. “In response, an IDF aircraft struck the terrorist cell and launch pad in Lebanon,” the Israeli military added. In his most recent public speech, Hezbollah Secretary-General Hassan Nasrallah vowed that “this front will remain active.” NN: You poke the Lion of Judea enough times and you will get bit. And misguided village people, WHO commies and UN advocates of Plasticineian disinformation social media be dammed.

Hamas antitank strikes show depth of ‘powerful’ arsenal facing Israel

https://youtu.be/CqncA56EzF8

JERUSALEM —The Washington Post. Story by William Booth, Judith Sudilovsky, Ellen Nakashima, Alex Horton. 

Early in Israel’s invasion of Gaza, an antitank missile fired by Palestinian militants struck an armored personnel carrier, killing — by incineration, concussion, shrapnel — at least nine Israeli soldiers. Other armored assets in the convoy were also hit. That Oct. 31 attack, on Gaza’s sandy northern periphery, represented the single largest cluster of Israeli casualties in the ground war. It also showed the evolution and expansion of Hamas’s firepower. Where years ago Israeli forces faced stones and molotov cocktails thrown by Palestinians, they now confront weapons such as laser-guided missiles and antitank munitions in Gaza. Hamas has been “arming itself to the teeth,” one military analyst said. The Israel Defense Forces is now inside Gaza City, fighting Hamas above and below ground — among civilians, around hospitals, schools and mosques — in areas the IDF says are honeycombed with tunnels. This is still asymmetrical warfare. Israel fields one of the best-armed, most technologically sophisticated forces in the world. Hamas brigades today may have advanced weapons, but they are clearly outmatched. But in the close-quarter fighting in Gaza, Hamas operatives have displayed some of their upgraded arsenal: a large number of shoulder-fired rocket-propelled grenade launchers and antitank missiles, military experts say. Many of the weapons have been smuggled into the Gaza Strip via tunnels, land crossings and the sea during the past decade, from the spillover of wars in Iraq, Libya, Syria and Sudan, and also manufactured by Iran and even North Korea. Variations of these weapons also have been assembled with increasing sophistication inside Gaza in underground factories. Analysts say Israel has been closely tracking the types of weapons held by Hamas: modern sniper rifles, paragliders, RPGs, “magnet bombs,” one-way attack drones, mini-subs, land mines, antitank missiles and the long-range rockets, which now can strike as far north as Haifa near the Lebanon border and as far south as Eilat on the Red Sea, though still without much accuracy. Hamas and its fighters — an estimated force of 30,000 or more — are so fully armed and well-trained that its brigades, designated as terrorist organizations by the United States, resemble “state armies,” said Michael Milshtein, former head of the Palestinian department in the IDF and a senior analyst at the Dayan Center at Tel Aviv University. Watching the first two weeks of the ground invasion unfold, Milshtein said, “There is actually nothing new or surprising in the weapons themselves. The main surprise is the quantity.”

Milshtein said Israel faces “a much more powerful Hamas.”

Though recent days have seen some limited “humanitarian pauses” in the fighting — alongside demands for an all-out cease-fire from regional powers — Israel shows no sign that it is stopping its offensive, as its tanks surrounded hospitals in northern Gaza this weekend and the medical facilities sheltering displaced people say they have come under fire.

(The IDF says Hamas “cynically” deploys clinics and patients as “human shields.”)

Israel security officials say tanks and troops have encircled several hospitals and they are demanding that staff and patients evacuate. Avi Melamed, a former Israeli intelligence official and the founder of Inside the Middle East, a nonprofit organization focused on education, said Israel will face “very challenging” conditions with Hamas and its armed allies in Gaza. “It is a massively armed enemy,” he said, “not a gang of little kids running around with pistols.” The deployment of large numbers of antitank units by Hamas is especially worrisome for Israeli forces — so much so that the IDF appears to be focusing its intelligence on finding targets for air and ground forces to wipe them out. Every few days, the IDF media office releases information about its troops targeting and killing Hamas antitank commanders. Hamas does not always confirm the deaths of its operatives, making the Israeli claims often impossible to independently verify. Yet it is already clear that this war in Gaza — compared with fighting in 2009, 2012, 2014 and 2021 — is the most deadly. Israeli bombing and ground assaults have killed more than 11,000 people, many of them women and children, according to the Gaza Health Ministry. On Oct. 7, the Hamas assault on farming communities, military bases and a rave concert along the Gaza border, at least 1,200 Israelis were killed and 240 others taken hostage.

Since the beginning of the ground invasion, 41 IDF soldiers have been killed in Gaza, Israel’s military said. The IDF says it would have lost more if it had not spent the last decade improving its armor defenses.

In a May 2021 war, primarily between Hamas and Israel, Hamas antitank missile teams were able to launch strikes that killed military personnel and civilians — proving more effective than drone attacks, said Behnam Ben Taleblu, senior fellow at the Foundation for Defense of Democracies, a think tank in Washington. “Hamas drones and rockets were intercepted,” he said. “Their unmanned midget subs were stopped. Cross-border tunnel operatives were detected.” But “their antitank forces punched through and landed blows,” he said. The antitank systems deployed by Hamas include the Bulsae-2, a North Korean copy of the Soviet-era Fagot; the RPG-7, also originally Russian; as well as a North Korean version called the F-7, military analysts said.  Other systems seen in Hamas videos in the past include the Russian-style Kornet and Konkurs, as well as the Iranian Raad, which is a version of the Soviet Malyutka.

“Together this cocktail of foreign weapons can complicate even the most high-tech of armies in an urban combat scenario,” Taleblu said.

He added: “Expect more, not less, of an emphasis on antitank weapons and antitank warfare by Hamas as the IDF moves further into Gaza.” During the past decade, many of the antitank weapons were smuggled into Gaza, through the tunnels from Egypt’s Sinai Desert into the Gaza Strip and via trucks traveling across the Rafah border crossing with Egypt, the analysts said. Yehoshua Kalisky, an arms expert and senior researcher at the Institute for National Security Studies in Tel Aviv, said the weapons can be disassembled and the individual parts hidden in food and aid shipments. Among the antitank weapons possessed by Hamas, some are produced inside the Strip, such as the Tandem 85 warhead, said Amael Kotlarski, a senior analyst and weapons expert at the defense intelligence firm Janes. These kinds of projectiles use two charges to punch through modern armored vehicles. They are Iran’s signature weapons provided to allied militants, such as Hamas, and were used to devastating effect against U.S. troops in Iraq. The propaganda arm of Hamas has released numerous edited images of militants firing rockets and missiles at Israeli vehicles. While the videos may show fiery explosions, it is sometimes unclear whether the hits have destroyed or damaged vehicles. Israel has developed a defense to these weapons called the Trophy active protection system, said Ryan Brobst of the Foundation for Defense of Democracies. It works by using radar to track incoming munitions and then intercepts them with its own defense projectiles. It’s been largely successful. But — as with missile barrages against Israel’s Iron Dome air defense — the Trophy system can be defeated by overwhelming it with large numbers of projectiles or projectiles fired at close range, Brobst said. Notably, Brobst said, the U.S. Army received Trophy systems for its Abrams tanks in 2019 and deployed them to Europe. Kalisky, the Israeli analyst, said that in the 1967 Israel-Arab war, Israel in Sinai needed three divisions to defeat the Egyptian army in six days. Now the IDF has been using the same force for almost a month with very different results in Gaza. “This is a different war. It is a very difficult war,” he said. “They are equipped.”

Nakashima and Horton reported from Washington. Hazem Balousha in Cairo contributed to this report.