Ukrainian President Volodymyr Zelensky stated on Monday he and his administration have been informed February 16 will be the day Russia will launch an invasion on their country. Zelensky confirmed he had signed a decree and declared that date the Day of Unity. “This afternoon we will hang national flags, put on blue-yellow ribbons and show the world our unity,” he wrote in a post on Facebook. Zelensky stressed his administration will seek to solve the issue with Russia through diplomacy but also warned that Ukraine’s armed forces are ready for action if necessary as it is “already times stronger than the army eight years ago.” His statement comes after United States President Joe Biden reportedly told his allies Russia could attack Ukraine on February 16. His Russian counterpart Vladimir Putin responded such allegations are “provocative speculation.” Then, earlier in the day, British Prime Minister Boris Johnson said that Moscow is “at least planning for something that could take place as early as the next 48 hours.”
Oil could drop from $100 to $65 a barrel
- The head of commodity analysis at Citigroup believes that there has been a ‘colossal failure’ when it comes to analyzing the fundamentals of today’s oil markets.
- While plenty of analysts are calling for $100 oil, Citigroup sees oil prices falling to an average of $65 this year.
- Ed Morse believes the current undersupply is a seasonal phenomenon and sees the global oil balance moving back to a surplus in the second quarter. Bullishness across commodity markets is overwhelming. Goldman’s Jeffrey Currie summed it up earlier this week by saying “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.” Yet there is the occasional bear – and in oil, one bear is arguing that oil will fall in just a few months. Citi’s head of commodity analysis Ed Morse is a rare contrarian voice in a sea of commodity analysts predicting oil at $100. For a while now, Morse has argued that instead of rising much further, oil will actually fall this year, potentially averaging $65 per barrel by the end of the year. “I think there’s been a colossal failure of the analytical community to look at what’s happening on the ground, to look at projects that have been reaching final investment decisions, to look at where the efficiency of capital is, to be blindsided by a prejudice, which says not enough capital is being spent, and decline rates are going up,” Morse told Barron’s in a recent interview. According to Morse’s team’s projections for this year, global oil supply should increase by 5.5 million bpd, and this is excluding Iran, which seems to be nearing a chance to return to global oil markets if the ongoing talks about its nuclear program with the United States end with an agreement. As Bloomberg’s Xavier Blas noted in a recent column, Iran may already be exporting oil illicitly, and the lifting of U.S. sanctions may not change the amounts much, but the very news will be bearish for oil prices. Citi’s Morse is placing a specific focus on non-OPEC supply and specifically U.S. supply. Despite drillers’ continued financial discipline, Morse expects that U.S. crude oil production this year will rise by at least 800,000 bpd and further by more than a million barrels daily in 2023. That would bring it to a record of 13.9 million bpd, Barron’s notes in the interview with the Citi commodity expert. On this, Morse agrees with the Energy Information Administration. The agency wrote in its latest Short-Term Energy Outlook that it expected U.S. oil production to reach an average of 12 million bpd this year and 12.6 million bpd in 2023, a record high on an annual-average basis, the EIA noted. At the same time, however, the EIA revised up its oil price predictions for this year, suggesting demand will match increased supply if not continue exceeding it. For now, most analysts seem to think that there is a big threat of global undersupply of crude oil. Spare production capacity is the biggest problem fundamentally: it is frequently cited as a major reason for bullish oil price predictions. The global head of market analysis at Vitol, for example, recently said the commodity trader expected OPEC’s spare capacity to thin further this year until the only untapped spare capacity in the cartel remains in Saudi Arabia while global demand continues rising. “Demand is 100 million barrels a day with a spare capacity of 2.5 million,” Gunvor chief executive Torbjorn Tornqvist told Bloomberg recently. “That doesn’t sound like an oversupplied market, does it?” To Citi’s Morse, however, the undersupply is a temporary affair brought about by seasonal factors. “We see the near-term tightness as a winter phenomenon, and see global oil balances moving back to surplus in the second quarter,” he said as quoted by Bloomberg earlier this month.
To say that Morse is a rare voice among analysts would be correct. But he is not exactly alone. ConocoPhillips’ Ryan Lance said he was worried about the rate of production growth in the Permian. Per a Bloomberg report, Lance told investors that “I’m absolutely concerned about it. If you’re not worried about it, you should be.” Lance expects the Permian to add some 900,000 bpd this year, which, according to him, is cause for worry. Yet, according to other industry executives, such an increase would be unsustainable: the shale patch is running out of sweet spots. “You just can’t keep growing 15% to 20% a year,” Pioneer Natural Resources Scott Sheffield told the Wall Street Journal. “You’ll drill up your inventories. Even the good companies.” Predicting oil prices for any future moment is a tough undertaking because of the multiple factors constantly at play. Bloomberg’s Blas reviewed these recently in the context of Morse’s contrarian stance and noted that some of the Citi expert’s arguments that lower prices were coming instead of higher prices sound kind of far-fetched at this point. But, Blas also wrote, “when everyone is bullish, I get twitchy. I imagine someone, somewhere, quietly selling — and that contrarian strategy proving to be prescient in some dramatic way. Call it the oil version of ‘The Big Short,’ the book and the movie about the 2008 financial crisis.” NN: I want to be on record here. I see $60 oil before $120 oil and soon. Putin overplayed his had. I do not believe he will attack the Ukraine. And i believe a really really big drop in oil is in the cards. If possible i would like to start operations after oil breaches$100 if i can get it.
Fed’s Daly ready to raise rates in March
Federal Reserve Bank of San Francisco President Mary Daly said the central bank could raise interest rates as early as March to fight high inflation, but she cautioned against overreacting and tightening policy too quickly. “We are not behind the curve,” Daly said Monday in an interview during a Reuters Breakingviews event. “When you’re trying to get an economy from extraordinary support to one that’s going to just gradually put it on to a self-sustaining path, you have to be data-dependent — as we say — but you also have to be gradual and not disruptive.” Chair Jerome Powell said last week that officials were ready to raise rates in March to curb the strongest inflation in four decades. But he declined to give specific guidance on the policy path thereafter, saying it would depend on the economic data. His reticence has opened the door to hiking at every meeting this year if needed, though there is a wide spread of forecasts among top Wall Street banks, which have penciled in as many as seven quarter-point moves in 2022. Fed officials projected three rate increases this year in quarterly forecasts they published in December, though Powell said the inflation outlook had deteriorated somewhat since then.
Atlanta Fed President Raphael Bostic told the Financial Times in an interview that three 2022 hikes were still his outlook, but he would back doing more — including raising rates by 50 basis points — if warranted by the data.
Daly, who has been one of the Fed’s most dovish officials, avoided providing a prediction of how quickly the central bank would act. She also cautioned against making policy proclamations that extend beyond the span of the Fed’s forecasts, which she said would be a “mis-use of our transparency,” while arguing that the economy still faces risks amid the ongoing pandemic, including waning fiscal support. “You don’t want, in my judgment, to overreact and ratchet up the rate so quickly that, as the rates percolate through the economy, it bridles it more than you think.” Citing the Fed’s December forecasts, Daly noted that four increases this year — if that is what transpired — would lift rates to 1.25% and “that is quite a bit of tightening, but it is also quite a bit of accommodation.” Fed officials expect to begin shrinking their balance sheet $8.9 trillion balance sheet once rate increases commence. Kansas City Fed President Esther George, speaking separately, said the central bank could take less aggressive actions in raising interest rates by shrinking the balance sheet more forcefully. “More aggressive action on the balance sheet could allow for a shallower path for the policy rate,” George told the Economic Club of Indiana on Monday. “Alternatively, combining a relatively steep path of rate increases with relatively modest reductions in the balance sheet could flatten the yield curve and distort incentives.” NN: Big rate increases are comeing. What are they waiting for. Maybe their equations are predicting a miracle.That will never come.
U.S. Holding Call With Allies on Russia Tensions
Brent tops $95 for 1st time since 2014, up over 4%
International benchmark Brent crude futures surpassed $95 for the first time in over seven years after NBC News reported that Russian President Vladimir Putin made the decision to “invade” Ukraine and revealed his plans to the Russian military.Unnamed officials also said that “invasion” could begin “next week.” At, the same time, United Kingdom Foreign Office instructed its citizens located in Ukraine to “leave now while commercial means are still available.” Brent for April deliveries increased by 4.11% to go for $95.12 per barrel at 1:45 pm ET, while West Texas Intermediate (WTI) for settlements in March gained 4.72% to sell for $94.12 per barrel at the same time. Both prices were at levels unseen since late 2014.
S. Korea: Daily virus cases at new record of 54,941 Germany: 7-day incidence rate at new record of 1474.3
SEOUL, Feb. 12, 2022 (BSS/Xinhua) – South Korea’s daily number of COVID-19 cases hit a record high amid the spread of the Omicron variant, the health
authorities said on Saturday. According to the Korea Disease Control and Prevention Agency (KDCA), the country reported 54,941 more cases of COVID-19 for the past 24 hours, raising the total number of infections to 1,294,205. The daily caseload was up from 53,926 in the previous day, hovering above 50,000 for the third consecutive day. The recent resurgence was driven by infections in the Seoul metropolitan area amid the rapid spread of the Omicron variant, which became a dominant strain here. Of the new cases, 13,189 were Seoul residents. The number of the newly infected people living in Gyeonggi province and the
western port city of Incheon was 15,952 and 5,059 respectively. The virus spread also raged in the non-metropolitan region. The number of new
infections in the non-capital areas was 20,628, or 37.6 percent of the total local transmission.Among the new cases, 113 were imported from overseas, lifting the total to 27,090. The number of infected people who were in a serious condition stood
at 275, up four from the previous day. Thirty-three more deaths were confirmed, leaving the death toll at 7,045. The total fatality rate was 0.54 percent. The country has administered COVID-19 vaccines to 44,725,434 people, or 87.2 percent of the total population, and the number of the fully inoculated
people was 44,207,093, or 86.1 percent of the population. The number of those who received booster jabs was 29,244,945 people, or 57.0 percent of the population.
Germany: 7-day incidence rate at new record of 1474.3
Germany’s seven-day incidence rate, which counts the number of people infected with COVID-19 per 100,000 inhabitants, came in at 1474.3 on Saturday, setting a new record high. The figure for new cases of the virus registered daily declined in comparison to the previous days, standing at 209,789. The tally of people that contracted the disease since the beginning of the pandemic thus rose to 12,219,501. Meanwhile, the count of deaths linked to COVID-19 went up by 198 in the previous 24 hours to 119,877.
NN:I know the mandates are being lifted worldwide. But the lack of testing and underreporting of infections is political. I am still seeing to many hospitalizations to be consistent with the growing belief this tis over. Do not let your guard down.
Austria resists including Nord Stream 2 in EU package of Russia sanctions
VIENNA (Reuters) – Austria is sticking with its opposition to including the Nord Stream 2 gas pipeline in a package of sanctions against Moscow that the European Union is preparing in the event Russia invades Ukraine, Foreign Minister Alexander Schallenberg said on Friday. Austrian oil company OMV is one of Russian gas giant Gazprom’s partners in the pipeline project connecting Russia to Germany, which has been completed but is not yet operational as it is awaiting German and EU regulatory approval. Austria owns 31.5% of OMV and backs the project. U.S. President Joe Biden said on Monday the United States would “bring an end” einen eigentlich sehr erfreulichen, starken Konsens auf europaeischer ebene verspuert to the $11 billion project if Russia, which has amassed more than 100,000 troops near Ukraine, invades the country. Washington has long pushed against Nord Stream 2, saying it will only increase Europe’s dependence on Russian gas. “I once compared it to a car without an engine. It is not even operational,” Schallenberg told Reuters in a brief telephone interview. “To discuss it publicly in Europe as if it were a central element of a credible package of sanctions against Russia makes no sense to me logically,” he added. German Economy Minister Robert Habeck said earlier on Friday the Ukraine crisis would play a role in the approval process for the project, and Schallenberg argued sanctions would not be necessary. “It is unthinkable that the German authorities would grant the technical approval for operations if it comes to an act of military aggression,” Schallenberg said. Austria would, however, “support a consensus” regarding sanctions on the project, he said, without elaborating. In addition to depending on Russia for 80% of its natural gas, Vienna has a vested interest in Russia’s banking sector as the country is Austrian lender Raiffeisen Bank International’s biggest market. Raiffeisen has a total exposure to Russia of 22.9 billion euros ($26.1 billion). The European Union says it is ready to impose “massive” economic sanctions on Russia if it invades Ukraine, but officials say that depends on complex negotiations among member states that are far from complete. Schallenberg said discussions were “very advanced” and nothing was ruled out, but he declined to provide details. There was a “strong consensus,” he added. “There is no question that if there is military aggression, there must be a clear, unified and strong response from the West,” he said. NN: The temperature rises. Our oil trade is still on cook. We are now in the 90’s…. very soon we will start operations. Go in too soon and we could get creamed….
US consumer confidence lowest since 2011
U.S. consumer sentiment falls to ‘stunning’ decade low as inflation expectations hit 13-year high
The University of Michigan’s gauge of consumer sentiment fell to an initial February reading of 61.7, from January’s level of 67.2, the lowest reading since October of 2011. Economists were expecting a reading of 67, according to a Wall Street Journal survey.
Key details: Expectations for inflation over the next year rose to 5% from January’s expectation of 4.9%, the highest level since July of 2008, while inflation expectations over five years held steady at 3.1%.
Big picture: With consumer prices rising at a 40-year high of 7.5% last month, Americans remain pessimistic about their buying power, as even healthy wage gains have not kept pace with the cost of living.
What UMich said: “The recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government’s economic policies, and the least favorable long term economic outlook in a decade,” wrote Richard Curtin, chief economist of the UMich survey.
“The impact of higher inflation on personal finances was spontaneously cited by one-third of all consumers, with nearly half of all consumers expecting declines in their inflation adjusted incomes during the year ahead,” he added. “In addition, fewer households cited rising net household wealth since the pandemic low in May 2020, largely due to the falling likelihood of stock price increases in 2022.” NN: 70% of the US economy is consumer spending. And when consumer confidence is low they pull in their horns, spending decreases. And we now have the deeded skyrocketing inflationary expectations. This is what brings on recessions. Remember the cost of credit will go up by 3 to 4%.
Fed’s Bullard wants U.S. rates a full percentage point higher by July
January Inflation Soars to 7.5%, Highest Since 1982
As Inflation Soars; Fed Rate Hike Bets Accelerate
Inflation pressures show no signs of abating after the fastest annual increase since 1982, adding to pressures for a big rate hike from the Federal Reserve next month.
U.S. inflation accelerated to the fastest pace in four decades last month, data from the Bureau of Labor Statistics indicated Thursday, with underlying figures showing no signs of near-term relief for pinched American consumers.
The headline consumer price index for the month of January was estimated to have risen 7.5% from last year, up from the 7% pace in December and the fastest rate since June of 1982, powered largely by airfares and rental costs. On a monthly basis, inflation was up 0.6%, the BLS said, with both tallies topping Wall Street forecasts. So-called core inflation, which strips-out volatile components such as food and energy prices, rose 6% on the month, and 6% on the year, the highest since February of 1991, the report noted, with the annual reading coming in ahead of the Street consensus forecast. White House Press Secretary Jen Psaki told reporters during her regular media briefing Wednesday that President Joe Biden was “expecting a high year-over-year inflation rate” from the January data, but added that “leading outside forecasters continue to project that inflation is expected to decrease over the course and moderate over the course of this year.” NN: we got the dumbest bunch of assholes in positions of authority. Everything they touch they turn to shit. The military is dealing with white privilege instead of preparing for war. The school system taught kinds about sex and now they do no know what sen they are. They threw GOD out. No region to replace the Judea Christine foundation of the country with yoga and Tibetan soothing bells. In the plauge they cannot even provide the right medicines…. Shit they are still giving medical workers paper masks and half of them are geting infected. And trhe Fed is guaranteeing a depression with inflation out of control over a year now. Rates are still at zero and they are still pumping cash in to the economy…..