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Crude oil is on the launch pad for a moon shot…… Russian Oil Prices Jump Ahead Of Export Cut

  • The head of the International Energy Agency has said that energy prices could rise again this winter, potentially forcing governments to subsidize consumption.
  • A combination of China’s economic recovery and a harsh winter in the northern hemisphere has the potential to send energy demand climbing.
  • The warning from the IEA echoes the recent message from Germany’s energy regulator that the energy crisis isn’t over yet.

The BBC’s Fatih Birol said that if China’s economic recovery from the pandemic accelerated later this year and the winter in the northern hemisphere was harsher than last year’s, prices would rise. If that happens, governments would need to step in again and subsidize energy consumption, he said. “In a scenario where the Chinese economy is very strong, buys a lot of energy from the markets, and we have a harsh winter, we may see strong upward pressure under natural gas prices, which in turn will put an extra burden on consumers,” Birol told the BBC. What’s more, Birol said he could not rule out blackouts in the winter, which could be “part of the game”. Last month, the head of Germany’s energy regulator issued a similar warning for winter 2023/24. Speaking to local media, Klaus Mueller said the energy crisis in Europe was not over yet and if the winter was cold, supply could fall short of demand. “When it comes to storage (tank) filling, we are now at a different level to last year … But the biggest factor remains the weather,” Mueller said in early June, as quoted by Reuters. “The energy crisis is not over yet,” he added.

China remains the single biggest factor that will influence energy prices for the remainder of the year. So far, its economic recovery has been bumpier than initially expected, and this has led to lower energy prices on world markets.

But industrial activity might yet accelerate with the help of government support, and this would push prices higher for all buyers. Add to this the doubtful likelihood of a repeat of last year’s unusually warm winter and the potential for energy price—and supply—uncertainty rises significantly.

Russian Oil Prices Jump Ahead Of Export Cut

The price of Russian ESPO crude, which goes to China, rose to the highest in seven months as Chinese buyers rushed to buy it ahead of an announced 500,000-bpd cut in exports next month. Per Reuters, ESPO is currently trading at a $4 per-barrel discount to Brent crude, which puts it $6 above the G7 price cap. Before the announcement of the export cut, ESPO was trading at a discount of $4 to Brent crude, still above the price cap. ESPO has been trading consistently above the price cap because it is the preferred Russian blend of Chinese refiners. The ESPO blend is lighter and sweeter than the flagship Urals blend, which has normally traded at a more significant discount to Brent crude. This discount only deepened after the imposition of sanctions on Russian crude exports. Yet even the discount of Urals to Brent has narrowed lately, with the blend last trading at over $55 per barrel, compared with close to $76 for Brent at the time of writing. The trades with ESPO above the price cap suggest that, for months now, Russia has had the tankers and insurance firms to provide coverage and shipping for the ESPO grade, which can reach China from Russia’s Far East in less than a week. Demand is on the rise, too, as Chinese independent refiners get their new import quotas. “The price increase comes as the private refiners have just received new crude imports quotas. They are now out for shopping and Russian oil remains relatively cheap,” an unnamed trader told Reuters. Earlier this week, meanwhile, Russia announced it would further reduce its supply of oil. “As part of the efforts to ensure a balanced market, Russia will voluntarily reduce its oil supply in August by 500,000 barrels per day by cutting its exports to global markets by that quantity,” Russia’s Deputy Prime Minister and top OPEC negotiator Alexander Novak said earlier this week. The announcement came minutes after Saudi Arabia said it would extend its unilateral oil production cut of 1 million bpd into August. Novak went on to say that the cut in exports would also mean a cut in production but Reuters noted in a report earlier this week that Russian oil supply for the international markets would be already lower this month as refineries ramp up after the end of maintenance season. NN: I believe this will be one hell of a trade…

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OPEC+ Cutting Oil Production by OVER 5.36 Million Barrels Per Day

  • Saudi Arabia, on Monday morning, announced that it is extending its voluntary 1 million bpd production cut through August.
  •  OPEC and Saudi Arabia are preparing the ground for future oil price-supportive cuts in production when Asian demand growth disappoints.
  • OPEC and Saudi Arabia want oil prices much higher than they are now but know that the U.S. and its key allies in the West and the East want the opposite.
  • Total OPEC+ production cuts over5.36 MBPD

OPEC last week underlined that Asia’s continued strong economic growth would account for virtually all the growth in demand for oil this year. Saudi Aramco added that China and India will drive oil demand growth of more than 2 million barrels per day (bpd) in the period. Just prior to these two comments, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said that OPEC and its allies are in “a state of readiness” amid a divergence between the physical and futures oil markets. These actions, he added, would be “precautionary […,] part and parcel of what we call being proactive and pre-emptive.” For oil trading insiders what these comments add up to is

OPEC, and its de facto leader Saudi Arabia, setting the stage for further major ad hoc cuts in their oil production aimed at pushing oil prices much higher.

The traders didn’t have to wait long. Saudi Arabia, on Monday morning, announced that it was extending its voluntary 1 million bpd production cut through August, sending oil prices rising by 1%.  Oil prices are up over $6.00 from their May lows bases WTI. The market is in breakout mode with WTI trading over the key $71.00 bench mark. And BRENT trading over 75.00 a barrel. NN BlackMask Po Cast:

OPEC+ SAUDI FIREWORKS

 

 

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US 10-year/2-year yield gap widest since 1981…… Inverted yield curves like this ends in tears

The spread between the yield on the 10-year United States Treasury note and the two-year note was the highest since 1981 on Monday. This is known as a inverted yield cure. It is widely believed that a recession usually follows a period during which short-term Treasury yields are persistently higher than their longer-term counterparts. The protracted weakness in the US manufacturing sector has seemingly reaffirmed traders’ fears and affected bond trading. The return on the 10-year Treasury declined 0.6 basis points to 3.813% at 10:48 am ET. The yield on the two-year note rose by 1.1 basis points to 4.888% at the same time. The return on the 30-year bond decreased by 1.5 basis points to 3.839% a minute later. NN: This will end in another great depression.

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Novak: Russia to cut oil output by 500,000 bpd in August……. Oil up over 1% amid Russian, Saudi output cut talk

Russian Deputy Prime Minister Alexander Novak announced on Monday that Russia will decrease its oil output by 500,000 barrels per day (bpd) in August “to ensure market balance.” He said Russia intends to cut its exports after reports that Saudi Arabia will extend its own voluntary cuts for another month. In late June, Russian President Vladimir Putin extended measures prohibiting the sale of oil to states on the list of “unfriendly countries” following the implementation of a cap on Russian oil by Ukraine’s Western allies.

Oil up over 1% amid Russian, Saudi output cut talk

Crude futures climbed more than 1% on Monday as investors digested news that Russia and Saudi Arabia will cut production in August. Russian Deputy Prime Minister Alexander

Novak said his country will lower its output by 500,000 barrels per day (bpd) next month, while media reports suggested Riyadh will extend its voluntary putout cuts of 1 million bpd for another month.

International benchmark Brent for settlements in September rose 1.42% to sell for $76.49 per barrel at 5:44 am ET and West Texas Intermediate (WTI) for August delivery jumped 1.44% to $71.66 per barrel. NN: BlackMask Pod  Cast:

It looks like a upside breakout to me

 

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Wagner Cut Throat Mercenaries Regrouping in Osipovichi Belarus

https://youtu.be/uHk8W6DbfxU

Satellite images analyzed by The Associated Press on Saturday showed what appeared to be a newly built military-style camp in Belarus, with statements from a Belarusian guerrilla group and officials suggesting it may be used to house fighters from the Wagner mercenary group. The images provided by Planet Labs PLC suggest that dozens of tents were erected within the past two weeks at a former military base outside Osipovichi, a town 230 kilometers (142 miles) north of the Ukrainian border. A satellite photo taken on Jun. 15 shows no sign of the rows of white and green structures that are clearly visible in a later image, dated Jun. 30.

Aliaksandr Azarau, leader of the anti-Lukashenko BYPOL guerrilla group of former military members, told The Associated Press by phone on Thursday that construction of a site for Wagner mercenaries was underway near Osipovichi.

Wagner chief Yevgeny Prigozhin and his fighters escaped prosecution and were offered refuge in Belarus last week after Minsk helped broker a deal to end what appeared to be an armed insurrection by the mercenary group. The abortive revolt saw Wagner troops who had fought alongside Russia forces in Ukraine capture a military headquarters in southern Russia and march hundreds of kilometers (miles) toward Moscow, seemingly unimpeded. Belarus’ authoritarian president, Alexander Lukashenko, said his country, a close and dependent ally of Moscow, could use Wagner’s experience and expertise, and announced that he had offered the fighters an “abandoned military unit” to set up camp. Up to 8,000 fighters from Wagner’s private military force may be deployed in Belarus, a spokesperson for Ukraine’s border force told Ukrainian media Saturday. Speaking to the Ukrainska Pravda newspaper, Andriy Demchenko said Ukraine would strengthen its 1,084 kilometer (674 mile) border with Belarus in response. Lukashenko previously allowed the Kremlin to use Belarusian territory to send troops and weapons into Ukraine. He has also welcomed a continued Russian armed presence in Belarus, including joint military camps and exercises, as well as the deployment of some of Russia’s tactical nuclear weapons there. Demchenko told Ukrainska Pravda on Saturday that as of this week, some 2,000 troops from regular Russian army units remained stationed in Belarus. At a Friday evening gala marking the Belarusian Independence Day, Lukashenko said that the Belarusian armed forces could benefit from training by Wagner members, and asserted that the mercenaries were “not a threat” to Belarusians.

He also declared that he was “sure” Belarus would not have to use the nuclear weapons deployed to its territory, and would not get directly involved in Moscow’s war against Ukraine.

“The longer we live, the more we are convinced that (nuclear weapons) should be with us, in Belarus, in a safe place. And I am sure that we will never have to use them while we have them, and the enemy shall never set foot on our soil,” Lukashenko said.

Uncredited

NN: Look at the above picture and realize its a bloody mercenary army military base. Full of cutthroats that are guilty of unspeakable atrocities they committed in Ukraine. AND they damn near overthrew Putin. And they show up in Belarus that has a fresh stash of Russian Nuclear weapons. Looks to me the war is spreading….. They have a way of doing that.

 

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Russia’s Energy Markets Effected by Coup Attempt…….. Putin on his way OUT!tin

Crude oil prices are expected to soar due to all the uncertainty surrounding new developments within Russia. Oil closes at its highest price Prior to the Wagner Group’s advance toward Moscow, Russia restored its domestic crude oil processing to 5.49 million barrels a day in the

“Putin has total chaos now,” Yale professor and Russia expert Jeffrey Sonnenfeld told CNN.

Bizarre and chaotic 36 hours in Russia feels like the beginning of the end for Putin Russia has dropped out of the ranks of the top 10 economies in the world, with a gross domestic product roughly the size of Australia’s, but

it remains one of the biggest suppliers of energy to global markets — including China and India — despite Western sanctions imposed in the wake of its full-scale invasion of Ukraine in February 2022.

Analysts at Rystad Energy said bouts of geopolitical uncertainty in major oil-producing nations over the past 35 years — ranging from civil unrest to coup attempts, armed conflicts and changes of governments — had on average added 8% to the price of oil in the five days after the triggering event. Any meaningful loss of Russian energy would force China and India to compete with Western nations for supplies from other producers. If political chaos restricts exports of other commodities, such as grains or fertilizer, that could also send supply and demand out of whack. And that could push up prices for everyone.Richard Bronze, head of geopolitics and co-founder at Energy Aspects, said markets would now need to figure out the extent to which prices should rise to reflect the greater risk to Russian supply, a view shared by other analysts.

“This seemingly attempted coup only brings uncertainty, which could be reflected through into higher prices,” Matt Smith, lead Americas oil analyst at Kpler said. “Such upheaval and uncertainty as we have seen in recent days could bring support to prices given the potential for supply disruptions — and the fear of them — that wasn’t a consideration prior to the weekend.”

Global energy and food prices shot up in the wake of last year’s invasion of Ukraine, turbocharging inflation in Europe and the United States. It has fallen from multi-decade highs since, but the battle to control prices is not over and is now in a decisive phase. “The last leg of the journey to restore price stability will be the hardest,” the Bank for International Settlements — the bank for central banks — said in its annual report Sunday. There was a “material risk that an inflation psychology will take hold,” leading to what economists describe as a wage-price spiral, it said.

“The global economy is at a critical juncture. Stern challenges must be addressed,” general manager Agustin Carstens told the annual general meeting of the BIS in Basel.

Signs that global energy demand could weaken this year as economies slow have pushed US crude prices down by nearly 14% so far this year to just under $70 a barrel. (It peaked above $120 a year ago.) The international benchmark — Brent crude — is down by a similar margin.

But anything that could jeopardize Russia’s ability to keep supplying global energy markets will be watched anxiously by policymakers in the West, and by the country’s biggest customers in Asia.

“If anything … disrupts those flows, then that would definitely be a an upside risk for oil prices, particularly as we’re already moving into a part of the year when global demand for oil is expected to significantly exceed supply,” Bronze said. Russia is  important player in the enery markets. At just under 10 million barrels per day,

it produces about 10% of global crude oil demand. And with total oil exports of nearly 8 million barrels per day, Russia is the second biggest power by a wide margin after Saudi Arabia in the OPEC+ alliance of leading energy producers.

Western sanctions have had the desired effect of reducing the amount of money Moscow earns from energy, but Russia’s oil exports — in volume terms — have rebounded to levels seen before it invaded Ukraine as China and India mop up barrels shunned by G7 nations. Bronze, at Energy Aspects, was cautious about drawing parallels with Libya and Venezuela.

A better comparison would be the immediate aftermath of the fall of the Soviet Union. It took a long time for the Russian oil industry to recover from that.

“You had real issues in terms of investment and real issues in terms of stability in the oil sector, which had already been heavily damaged in the last years of the Soviet Union,” he added. Sonnenfeld told CNN that the risk that Russian upheaval could ripple out to weaken the global economy had fallen over the past 18 months. The Ukraine war had backfired by forcing Europe to pivot to alternative sources, he added. Though it is too early to say anything will happen or change, “this is by no means over, and so it does raise new questions about what might follow,” Bronze said. NN BlackMask Pod Cast:

Putin will be betrayed by the people he trusts the most

 

 

 

 

 

 

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Russia to cancel Black Sea grain deal…. The Fallout from the Mutiny has Started

MOSCOW (Reuters) -Russia said on Friday it saw no reason to extend the Black Sea grain deal beyond July 17 because the West had acted in such an “outrageous” way over the agreement, but assured poor countries that Russian grain exports would continue. The United Nations and Turkey brokered the Black Sea Grain Initiative last July to help tackle a global food crisis worsened by Moscow’s invasion of Ukraine – something it calls “a special military operation” – and its blockade of Ukrainian Black Sea ports. The deal allows food and fertilizer to be exported from three Ukrainian ports – Chornomorsk, Odesa and Pivdennyi (Yuzhny). The agreement has been extended three times.

“The attitude of the West towards this deal is outrageous,” Lavrov told reporters, pointing specifically to the positions of the United States and Britain.

Lavrov said one of the last straws for Russia was an attack on the Togliatti-Odesa ammonia pipeline, an attack he blamed on Ukraine which has in turn accused Russia of damaging it. “I don’t see what arguments there can be by those who would like to continue the Black Sea initiative,” Lavrov said. The United Nations on Friday said it was concerned no new ships had been registered under the Black Sea deal since June 26 – despite applications being made by 29 vessels – and called on all parties to “to commit to the continuation and effective implementation of the agreement without further delay.” U.N. spokesperson Farhan Haq said there are currently only 13 ships either loading in Ukrainian ports or travelling to and from Istanbul. “The parties must ensure that additional vessels are allowed to sail the maritime humanitarian corridor in the Black Sea, which serves as a global lifeline for food security,” Haq said. “The commencement of the harvest season underscores the urgency.”

Russia and Ukraine are two of the world’s top agricultural producers, and major players in the wheat, barley, maize, rapeseed, rapeseed oil, sunflower seed and sunflower oil markets. Russia is also dominant in the fertiliser market. If the deal collapses Russia will still export grain, Lavrov said. “If the Black Sea Initiative ceases to operate, we will provide grain deliveries of a comparable or larger size to the poorest countries at our own expense, free of charge,” Lavrov said. Between 2018–2020, Africa imported $3.7 billion in wheat (32% of total African wheat imports) from Russia and $1.4 billion from Ukraine (12% of total African wheat imports), according to the United Nations. To convince Russia to agree to the initiative, a three-year pact was also struck last July in which the United Nations agreed to help Moscow overcome any obstacles to its own food and fertilizer shipments.

Russia’s specific demands are that Russian Agricultural Bank (Rosselkhozbank) be reconnected to the SWIFT payment system, that supplies of agricultural machinery and parts to Russia be resumed, and that restrictions on insurance and reinsurance are lifted. Other demands include the resumption of the Togliatti-Odesa ammonia pipeline that lets Russia pump the chemical to Ukraine’s main Black Sea port, and the unblocking of assets and accounts of Russian companies involved in food and fertiliser exports.

Russia says there has been no progress on any of those issues. NN:  Russia has become the worlds biggest wild card. Do not be lulled to sleep this is not over until their is a power change in Russia. Said power change is in progress….. And it will have profound effects on the food and oil markets….. See next story and blog

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PCE price index increased by 3.8%, Core excluding food and energy UP 4.6% year over year

The personal consumption expenditures price index, one of the Feds preferred inflation gauges, rose 0.1% in May, Commerce Department figures showed Friday. From a year ago, the measure stepped down to 3.8%, the smallest annual advance in more than two years, Core excluding food and energy was UP 4.6% year over year. NN: Nothing has changed.. FED hikes will be the order of the day. The  Inflation lion has still not be tamed. Inflation is embedded and the FED will be pushing inflation rates to the moon.

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Andurand’s Oil Hedge Fund Crashes…. Trading is like a bloody cage fight

https://thetremendousblog.files.wordpress.com/2023/06/pierre-andurand.webp

After a wildly successful period amid soaring oil prices, legendary oil trader Pierre Andurand has seen his hedge fund suffer the worst ever loss after oil prices reversed course. Andurand’s main Andurand Commodities Discretionary Enhanced Fund, which makes leveraged bets, fell by another 7% in the current month through June 23 to bring year-to-date losses to 51%, a sharp contrast to the more than sevenfold return it recorded in the previous three years. The fund, which Andurand runs with no set risk limits, has suffered catastrophic losses after Andurand earlier this year predicted that oil prices may exceed $140 a barrel by the end of 2023. Unfortunately, elevated inventory levels, rising supplies by Russia, Iran and Venezuela, weak global demand and sub-par recovery by the Chinese economy have all taken a toll on oil prices. Surging volumes from Iran have been particularly worrying. Iranian crude exports exceeded 1.5 mb/d in May, the highest level since 2018 despite the country still being under U.S. sanctions. Last month,Tehran said it has boosted crude output to above 3 million bpd, again the highest since 2018. Oil prices tanked after reports emerged that the U.S. and Iran are making progress after resuming talks on a nuclear deal, a move that could ease sanctions on Iran’s oil exports. Israel’s Haaretz newspaper reported that the talks are moving forward more rapidly than expected, with the possibility of a deal being struck in a matter of weeks.( NB: i do not regard Haaretz as a reliable news source) Deal terms are likely to include Iran ceasing its 60% and higher uranium enrichment activities in return for permission to export as much as 1M bbl/day of oil. In early June, Goldman Sachs’ oil ultrabull Jeff Currie once again lowered his Brent forecast for December, this time to $86 a barrel from $95 and $100 before that. Currie cited increasing supply from Russia, Iran and Venezuela; growing recession fears and persistent headwinds to higher prices from higher interest rates for his growing bearishness. Analysts at Citi are also quite bearish, recently saying the Saudi cuts are unlikely to sustain a gain into the high $80s or low $90s thanks to lackluster demand and stronger non-OPEC supply by year-end. NN BlackMask Pod Cast

Trading is like a bloody cage fight. the winner is the one that can stand the most pain

 

n

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Wagner could withdraw as Prigozhin refused to sign contract

Leader of the mercenary Wagner Group Yevgeny Prigozhin has refused to sign a contract with the Russian Defense Ministry, meaning that Wagner could have to pull out of Ukraine, Russian media reported on Thursday. According to the Chairman of the State Duma Committee on Defense Andrey Kartapolov, Prigozhin was told that “all formations that perform combat missions must sign a contract” days before his attempted rebellion against the government. Kartapolov said that Prigozhin was the only one who did not agree to the contract and that he was informed Wagner will no longer receive funding or equipment from the Russian Defense Ministry.