Yesterday’s market rout was made worse by a collapse in the OPEC+ oil coalition. Saudi Arabia wanted to cut production by 1.5 million barrels per day to deal with falling demand resulting from the coronavirus. Russia didn’t like the idea, complaining that the cut would be a gift to U.S. shale producers. Without participation from Russia, Saudi Arabia decided to reverse course and pump oil all-out into a market where demand is collapsing. Anticipating more supply and much less demand, traders shaved 25% off of the price of oil on Monday. Neither country’s decision makes a lot of economic … [Read more...]
This Billionaire is Buying up the Energy Sector
While most investors are retreating, billionaire Sam Zell is buying up the energy sector. Shawn Langlois reports at MarketWatch: That’s Chicago billionaire Sam Zell talking to CNBC “Squawk Box” on Thursday about how he’s navigating his investments in the coronavirus scare. The founder of Equity Group Investments said he has added to his ownership stakes in a couple companies, including one in the beaten-down energy sector, which was under heavy selling pressure even before the recent drop in the broader stock market. The S&P 500 energy sector is the only sector in an outright bear … [Read more...]
Alaskan Native Sees Right Through Goldman Sachs’ Righteous PR Stunt
In The Wall Street Journal, Mayor Harry Brower Jr., an Alaskan Native, calls out Goldman Sachs for the firm's recent PR announcement that it will no longer finance new oil projects in the Arctic. Brower pierces right through Goldman's argument that it is helping indigenous peoples with "stakeholder engagement." Brower is the mayor of the North Slope borough, a massive land area populated by many Alaskan natives, including Mr. Brower. Goldman, like BlackRock, is virtue signaling to its favored constituency, wealthy investors living in the elite enclaves of New York and San Francisco. Neither … [Read more...]
US Blacklists Chinese Shipper: Bolsters American Crude Exports
Efforts to enforce American sanctions on Iran have led the U.S. government to blacklist COSCO shipping, the world's largest shipping company, and the owner of 6% of the world's VLCC (very large crude carrier) fleet. The fallout from the blacklisting has created a boon for American oil exporters who have picked up the slack. Costas Paris reports at The Wall Street Journal: Shipping executives say the U.S. action late last month over allegations that the vessels were tied to illicit shipments of Iranian crude has hit more than 40 tankers operated by a subsidiary of Cosco Shipping Energy … [Read more...]
Trade Thaw? China Opens Up Soybean Purchases from the U.S.
In what might suggest a thaw in trade relations, the Chinese government has given new waivers for tariff-free soybean purchases from the United States. Distinct Logistics reports: The Chinese government has given new waivers to several domestic state and private companies to buy U.S. soybeans without being subject to retaliatory tariffs, according to people familiar with the situation. The companies received tariff waivers for between 2 million to 3 million tons of American soy, said the people, who asked not to be identified as the information is private. Some firms have already bought at … [Read more...]
Looks Like a Bull Market in Gold
Gold prices have broken out of a six year trading range. Gold is up over 11% YTD, and more than 21% since its August low. The chart below compares the performance of gold from its August 2018 low to the S&P 500. … [Read more...]
China’s Rare Earth Threat is a Symptom of the Problem Trump is Fighting
Bloomberg has reported that China is threatening to restrict the supplies of rare earth metals as part of its ongoing trade war with the United States. This isn't the first time China has used rare earths as a tool in its diplomacy. People who know the history of China's rare earths dominance should understand instantly why such a threat is indicative of why America must get tough on Chinese trade policies in the first place. China didn't come to dominate rare earth metals because of its natural endowment, but instead because the country subsidized production in order to eliminate … [Read more...]
Total Set to Become African Natural Gas Giant
As Occidental Petroleum attempts to purchase Anadarko Petroleum, it is raising funds for the deal by selling Anadarko's African natural gas assets to French oil major, Total SA. Neanda Salvaterra reports for The Wall Street Journal: Total SA’s TOT +0.88% deal to buy Anadarko Petroleum Corp.’s APC +0.26% assets in Africa cements the French oil major’s position as the world’s second-largest provider of liquefied natural gas while pushing its business deeper into dangerous parts of the world. Total said earlier this week that it agreed to buy Anadarko’s African assets for $8.8 billion in a … [Read more...]
Lumber Prices Chopped Down by Bad Weather
Bad weather in some key housing markets had tempered demand for lumber, as builders are slowed down. Some big mill owners have even trimmed their output in the face of lower product prices. Ryan Dezember reports for The Wall Street Journal: Lumber prices typically rise in the spring as builders stock up for construction season. But this year, they are being hit hard by bad weather and a decline in home building. The slump comes a year after lumber prices reached record levels and were climbing higher amid a resurgent U.S. housing market, a boom in spending on home renovations and … [Read more...]
Is There Plenty of Oil?
According to the White House, despite sanctions on Iranian oil, the market is well supplied. Saudi Arabia and the UAE, along with the U.S. have stepped in to fill the gaps left by the now-sanctioned Iranian crude. Reporting for Reuters, John Kemp writes that oil traders think differently: The decision to eliminate all remaining sanctions waivers for Iran’s oil buyers follows a round of top-level diplomatic contacts between the White House and leaders of Saudi Arabia and the United Arab Emirates. Tougher sanctions are likely contingent on a U.S. understanding that Saudi Arabia and the … [Read more...]
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