En Español

Very usefull links


News links




Dow Jones

Oil price



Views and News





OPEC talks tough and traders decide to bite - The Daily Prophet

Data from the U.S. Commodity Futures Trading Commission show net-long positions fell by 34,290 contracts to 168,814 in the week ended May 9. Net-long positions on Brent fell by 41,879 to 280,678.

Petroleumworld 05 17 2017

To understand what happened in global markets today, you only needed to look at the price of oil. Crude jumped to its highest level in more than two weeks, flirting with the psychologically important $50 a barrel level, after Saudi Arabian and Russian energy ministers reaffirmed their commitment to production cuts in an effort to support prices.  

There's no doubt that in the days ahead there will be lots of skepticism about whether OPEC can actually stick to its plan to curb output, and oil did pull back from its highs of the day, but the show of solidarity rippled across most all asset classes. Stocks jumped to new highs, led by energy producers. Government bonds fell on concern higher oil prices may spark faster inflation. Currencies of commodity-producing nations such as Russia, Canada and Mexico jumped. According to Bloomberg News' Mark Shenk, there are a few big problems: An increase in Libyan output, together with a surge in U.S. production and signs of recovery in Nigeria, may undercut OPEC's strategy to re-balance the market and boost prices .

"When Saudi Arabia and Russia come out together it sends a very strong signal to the market," said Mike Wittner, head of commodities research at Societe Generale in New York. "With these two countries behind the extension of the accord, chances are very high that they will get all of OPEC behind it." The move in oil may have been an overreaction, reflecting money managers jumping back in after the latest data showed they had cut their bullish Nymex West Texas Intermediate bets back to where they were before OPEC agreed to cut output. Data from the U.S. Commodity Futures Trading Commission show net-long positions fell by 34,290 contracts to 168,814 in the week ended May 9. Net-long positions on Brent fell by 41,879 to 280,678.


No matter where you look in markets these days, volatility is suppressed far below norms. There is no shortage of explanations, with the pessimists saying it's a sure sign of complacency and the optimists saying it's a reflection of a world where central banks will do whatever it takes to keep assets prices from melting down. Bloomberg News' Luke Kawa took a look across many markets and found that volatility is lowest in equities -- namely the S&P 500 Index -- relative to historical trends. Only WTI crude oil -- ironically, the only asset class which is being actively managed in a bid for stability -- is seeing levels of 13-week realized volatility above its 10-year average. "We do not consider all risk premia too low, and do not see that much risk in the future," a team of JPMorgan Chase strategists led by Jan Loeys, head of global asset allocation, wrote in a research note. But if there is a nasty wake-up call ahead, look for the bond market to sound the alarm, they warn.


The greenback is fading fast. The Bloomberg Dollar Index fell for a fourth day, it's longest slump since March. The gauge is now down 4.73 percent from its high this year on Jan. 3. Whether it's a referendum on the U.S. political situation (Russian President Vladimir Putin said Monday in Beijing that political uncertainties in the U.S. and the European Union are weighing on the global economy ), or a sign currency traders don't believe the Federal Reserve will raise interest rates two more times this year, or jawboning by the Trump administration bemoaning the dollar's relative strength, the greenback's performance is hardly representative of a stable economy Hedge funds and other large speculators cut their long dollar positions in the week ended May 9 by 42 percent, the most in a year, CFTC data show.  


The good news is U.S. banks are suddenly regaining their appetite for making commercial and industrial loans. The bad news is that they are losing their appetite for Treasuries and government-backed mortgage securities. The latest Fed data released late on Friday show that loans outstanding just had their biggest two-week increase since March 2016, after a period of no growth between early November and late February and a big drop at the end of last quarter. That bodes well for economic activity. The problem is, banks' holdings of high-quality bonds have been little changed since the start of November at about $2.44 trillion. If they aren't buying, there's a risk that bond yields could rise, raising the cost to borrowers. JPMorgan Chief Executive Officer Jamie Dimon, who's voiced support for many of President Donald Trump's plans to stoke the economy, last month cautioned analysts not to overreact to slowing growth in commercial and industrial lending. Consumers and businesses are healthy, he said. “There will be ups and downs, wins and losses, stuff like that," he said. "But it is a pro-growth agenda.”


Cotton prices extended a rally to their highest level since June 2014 amid buoyant demand for U.S. exports and signs of a squeeze in the futures market. Bullish options jumped for the second straight session as volume surged, according to Bloomberg News' Shruti Date Singh, Megan Durisin and Jeff Wilson. On ICE Futures U.S. in New York, cotton futures for July delivery climbed 2.76 cents, or 3.4 percent, to 84.82 cents a pound at 1:54 p.m. Earlier, the price surged by the expanded exchange limit of 5 cents to 87.18 cents. The U.S. is the world's top exporter of cotton. Through May 4, U.S. export shipments in the season that ends July 31 have climbed 76 percent to the highest in six years, according to government data. World inventory is forecast to shrink for the third straight year amid falling stockpiles in China, the largest consumer. Merchandisers sold a lot of cotton forward and never “fixed” the price, and they now face a rising market with short positions, according to Jim Nunn, president of Nunn Cotton Co. in Brownville, Tennessee.


When the Commerce Department on Tuesday releases its data on U.S. housing starts for April, it should show a nice rebound from March's drop to a four-month low in March. The median estimate of economists surveyed by Bloomberg News is for an increase of 3.7 percent to 1.26 million on an annualized basis. But don't be surprised if there is some disappointment. The Mortgage Bankers Association said today that its index of mortgage applications for new home purchases fell 20 percent from March and declined 4.3 percent from a year earlier. It was the first time in 2017 that applications, which aren't seasonally adjusted, dropped from the same month in 2016. Builders are nonplussed. An index of homebuilder sentiment compiled by the National Association of Home Builders/Wells Fargo rose to 70 for May, the second-highest level since 2005, from 68 in April. When aren't real estate folks optimistic?

If you'd like to get The Daily Prophet in e-mail form, right in your inbox, please subscribe to  this link . Thanks!

Story by Robert Burgess from Bloomberg.

bloomberg.com 10 15 2017

We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

IESA l Instituto de
Estudios Superiores
de Administración,



May 24-25, La Jolla, California







Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.