See attached Saudi output 9.8mpd for October, unchanged from Sep
The question remains, are they at their limits?
Saudi output
Category Archives: Commodities
Naimi Says Saudi Arabia, Gulf States Seeking Stable Oil Prices
This reads a lot like the Saudis have about run out of excess capacity?
Naimi Says Saudi Arabia, Gulf States Seeking Stable Oil Prices
By Deema Almashabi and Glen Carey
October 9 (Bloomberg) — Saudi Arabia, the world’s biggest exporter of crude oil, will help meet demand “fully” and will work with other member states of the Gulf Cooperation Council to try to stabilize prices, Oil Minister Ali al-Naimi said.
“We will work towards moderating the price,” al-Naimi told reporters in Riyadh today ahead of a conference of oil ministers from the council’s six members. “We will meet the market demands fully.”
Crude for November delivery climbed as much as $1 to $90.33 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.93 at 5:09 a.m. local time. Brent oil for November settlement gained 81 cents, or 0.7 percent, to $112.63 a barrel on the London-based ICE Futures Europe exchange.
Saudi Arabia is the largest nation in the GCC, a political and economic confederation that includes Kuwait, Qatar and the United Arab Emirates. The four states belong also to the Organization of Petroleum Exporting Countries. The GCC’s other members are Bahrain and Oman. Together, the council accounted for 24 percent of worldwide crude supply in 2011 and 30 percent of total reserves, according to BP Plc’s Statistical Review of World Energy, published in June 2012.
“Oil prices rose in March to levels not seen since 2008, which may adversely affect the global economy, particularly the economies of developing and emerging countries, as well as negatively impact global oil demand,” al-Naimi said in a speech at the conference.
“We continued our policy of allaying market fears, providing supplies when needed and limiting high price fluctuations during the ensuing months till this present day,” he said.
oil trader skirting sanctions
World’s Largest Oil Trader Skirting Iran Sanctions
Sept 26 (Reuters)
Crude price update
It’s about what price the Saudis want.
No telling what they are thinking, but the demand for their output remains high at about 10 million bpd.
Note that WTI supply tightened, indicating the Seaway pipeline is working down the oversupply in Cushing.
And refiners are coming back online after the storm shutdowns:
“While total U.S. crude stockpiles gained, inventories at Cushing, Oklahoma, the delivery point for the West Texas contract traded on Nymex, declined for a second week by 274,000 barrels to 43.8 million, the lowest level since April. Stockpiles of gasoline and of distillate fuel, a category that includes heating oil and diesel, declined. Refinery operating rates rose to 88.9 percent from the previous week’s 84.7 percent as plants resumed units idled when Hurricane Isaac made landfall on Aug. 28.”
Why is Putin stockpiling gold?
He’s probably afraid of Draghi’s policies?
Or got long gold in his personal account, has his CB run it up for him to sell?
No telling!
Why is Putin stockpiling gold?
By Brett Arends
September 5 (WSJ) — I can’t imagine it means anything cheerful that Vladimir Putin, the Russian czar, is stockpiling gold as fast as he can get his hands on it.
According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month.
It emerged last month that financial gurus George Soros and John Paulson had also increased their bullion exposure, but it’s Putin that’s really caught my eye.
No one else in the world plays global power politics as ruthlessly as Russia’s chilling strongman, the man who effectively stole a Super Bowl ring from Bob Kraft, the owner of the New England Patriots, when they met in Russia some years ago.
Putin’s moves may matter to your finances, because there are two ways to look at gold.
On the one hand, it’s an investment that by most modern standards seems to make no sense. It generates no cash flow and serves no practical purpose. Warren Buffett has pointed out that we dig it out of one hole in the ground only to stick it in another, and anyone watching this from Mars would be very confused.
You can forget claims that it’s “real” money. There’s no such thing. Money is just an accounting device, a way of keeping track of how much each of us produces and consumes. Gold is a shiny and somewhat tacky looking metal that is malleable, durable and heavy. A recent research paper by Duke University’s Campbell Harvey and co-author Claude Erb raised serious questions about most of the arguments in favor of gold as an investment.
But there’s another way to look at gold: As the most liquid reserve in times of turmoil, or worse.
The big story of our era is not that the Spanish government is broke, nor is it that Paul Ryan apparently feels the need to embellish his running record. It’s that the United States, which has dominated the world’s economy for several lifetimes, is in relative decline.
As was first reported here in April of last year, according to International Monetary Fund calculations, the U.S. is on track to lose its status as the world’s biggest economy—when measured in real, purchasing-power terms—to China by 2017.
We will soon be the first people in two hundred years to live in a world not dominated by either Pax Americana or Pax Britannica. This sort of changing of the guard has never been peaceful. The declines of the Spanish, French and British empires were all accompanied by conflict. The decline of British hegemony was a leading cause of the First and Second World Wars.
What will happen as the U.S. loses its pre-eminence?
Maybe this will turn out better than similar episodes in the past. Maybe the Chinese will embrace an open society and the rule of law. If you believe that, there is probably no reason to hold any gold.
Gold Near 6-Month High, Ahead of ECB Meeting
Looks to me like the central bankers are worried the outcome will be inflationary, or worse. Seems when gold goes up it turns out it was central bank buying of one sort or another.
For all practical purposes they have an unlimited budget to buy gold. It falls under what I call off balance sheet deficit spending. The central bankers buy in their own currency, paying for it with a credit to the account of the seller’s bank they enter on their own books. The gold is accounted for as the asset and the (new) funds credited the liability, no questions asked, no budget rules involved.
Saudi crude output
Remains high evidencing that there’s still a bid for that much crude at their posted prices, which also went up all month.
And, if Saudis are near ‘practical’ full capacity, that a relatively small supply disruption could cause a large spike in price.
Gasoline Rising to Holiday High as Storm Surge Presses Obama
Headwind for consumers again:
Gasoline Rising to Holiday High as Storm Surge Presses Obama
By Asjylyn Loder
August 28 (Bloomberg) — Hurricane Isaac and a deadly blast at Venezuela’s Amuay refinery pushed gasoline to an almost four- month high and threatened to revive a debate about energy costs in the run-up to the presidential election in November.
Futures jumped yesterday in New York as Isaac forced closures of Gulf Coast refineries and reduced rates at others. That market is also reeling from an Aug. 25 explosion in Venezuela that killed at least 48 people and closed the country’s largest fuel-making plant. Futures are up 23 percent since their 2012 settlement low of $2.5501 a gallon on June 21.
Prices at the pump will be the highest ever for the U.S. Labor Day holiday, AAA said yesterday. The surge reignites an issue that has pitted President Barack Obama, who has called for the elimination of billions of dollars of subsidies enjoyed by the oil and gas industry, against the presumptive Republican nominee Mitt Romney. It also spurs speculation that Obama will release supplies from the Strategic Petroleum Reserve to ease prices for consumers.
“Given this administration’s belligerent rhetoric against the oil industry, it’s going to be very easy for Romney to pin the blame on Obama,” said Stephen Schork, president of Schork Group Inc., a consulting firm in Villanova, Pennsylvania. “The White House will be on the defensive. It makes an SPR release likely sooner rather than later.”
Gasoline for September delivery advanced 7.68 cents, or 2.5 percent, to $3.1548 a gallon yesterday on the New York Mercantile Exchange, the highest level since April 30. Futures fell 2.87 cents, or 0.9 percent, to settle at $3.1261 today.
Retail Prices
Retail prices for regular grade increased 0.6 cent to $3.756 a gallon yesterday, the highest level since May 7, according to AAA, the largest U.S. motoring group. Gasoline at the pump cost $4.138 in California yesterday, $4.008 in Connecticut and $3.973 in New York.
The nationwide average fuel cost rose to $3.75 a gallon on Aug. 26, the highest price ever for that day, Michael Green, a spokesman for AAA in Washington, said in an e-mail.
“We expect the national average price of gasoline for Labor Day this year to be the highest ever for the holiday,” he said.
Drivers could be paying $4 a gallon by the end of September, Schork said. The first presidential debate is scheduled for Oct. 3.
Winter-Grade Fuel
Gasoline futures for October delivery fell 0.6 percent to settle at $2.9333 a gallon, 19.28 cents a gallon below the September contract. The discount reflects speculation that demand will slip as peak driving season ends with the Sept. 3 Labor Day holiday, and the switch to winter-grade fuel that doesn’t have to meet as stringent emissions rules and is cheaper to produce.
Obama has described his energy strategy, unveiled in March, as an “all-of-the-above” approach that encourages fossil fuel development, energy efficiency and renewable technology. He has also called for a repeal of what he estimated is $4 billion in subsidies every year.
Romney’s energy plan, released last week, faulted Obama for discouraging drilling on federal land, stifling offshore exploration, imposing costly regulations and subsidizing uncompetitive technology that can’t survive without government backing.
Solyndra LLC, a solar-panel maker in Fremont, California, that received a $535 million U.S. loan guarantee, sought bankruptcy protection in September and fired its 1,100 workers.
Refinery Shutdowns
Gasoline advanced yesterday as refiners including Exxon Mobil Corp., Phillips 66 (PSX) and Valero Energy Corp. (VLO) said they are temporarily shutting down Gulf Coast plants as Isaac churns toward the Louisiana coast.
Six plants with a combined ability to process about 1.15 million barrels of crude a day are shut, according to data compiled by Bloomberg. That’s 6.7 percent of U.S. capacity.
In addition, plants including Motiva Enterprises LLC’s Norco, Louisiana, Exxon’s Baton Rouge operations and Marathon Petroleum Corp.’s Garyville facility are at lower rates. Valero’s Memphis plant was said to be operating at minimum rates after Royal Dutch Shell Plc shut the Capline pipeline that transports crude oil from the Gulf to the Midwest.
“Right or wrong, higher gasoline prices don’t help Obama,” Kyle Cooper, director of research for IAF Advisors, a Houston consulting group, and Cypress Energy Management LP, a $20 million natural-gas hedge fund based in Houston, said by phone yesterday. “All Obama’s rhetoric and all his propaganda can’t do a thing if the refineries are flooded. He can’t change physics. And Romney will take the other side of it, but this storm is not Obama’s fault.”
they know nothing…
G7 Urges Oil Exporters to Increase Production
August 28 (Reuters) — The Group of Seven finance ministers urged oil-producing countries on Tuesday to raise output to ensure the market is well supplied, while warning that Western nations were ready to tap strategic oil reserves to offset rising prices that could hurt global growth.
“We stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied,” the G7 said in a statement. “The current rise in oil prices reflects geopolitical concerns and certain supply disruptions. We encourage oil-producing countries to increase their output to meet demand.”
Oil prices have strengthened as Hurricane Isaac approached the U.S. coast and the administration of President Barack Obama said separately on Tuesday that it was still open to a possible release from the Strategic Petroleum Reserve.
“That option has been on the table for some time, and remains on the table, but we have no announcements to make today,” White House spokesman Jay Carney told reporters traveling to Iowa with President Barack Obama.
Earlier this year, the White House considered tapping the reserve but held off after oil prices fell. Reuters reported this month the White House was dusting off those plans, and some energy experts viewed Isaac as a potential trigger for such a move.
Oil production in the U.S. Gulf of Mexico was down more than 90 percent on Tuesday as Hurricane Isaac headed toward the Louisiana as a Category 1 storm. The storm was expected to make landfall as early as Tuesday night.
Energy analysts do not expect extensive damage to oil and gas infrastructure if the storm stays in line with current projections.
Still, any supply disruptions could raise pressure for a release of emergency oil supplies.
“We remain vigilant of the risks to the global economy. In this context and mindful of the substantial risks posed by elevated oil prices, we are monitoring the situation in oil markets closely,” the G7 said.
Finance ministers also noted that Saudi Arabia had committed at a G20 meeting of world leaders in Mexico earlier this year to use its spare oil production capacity to ensure adequate supply.
The comments from the finance ministers is a strong signal that a release may be imminent, said Jan Stuart, head of energy research at Credit Suisse in New York.
“A significant group of industrialized countries now appears to be ready to make reserves available — they know that when you make statements at this level, you also need to be ready to follow through,” Stuart said.
Gold standard thoughts
>
> (email exchange)
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> On Fri, Aug 24, 2012 at 5:28 AM, Dave wrote:
>
> When you get a chance could you send a quick note out on problems with this type of
> thinking?
>
The reasons nations have gone off the gold standard isn’t because it was working so well and their economies were doing well. The reason they go off, like the US did in 1934, was because it was a disaster.
Historically nations suspend their gold standards in times of war, when they need their economies to function to the max. If a gold standard was so good for an economy, why suspend it when you need max economic performance? Obviously because it is not conducive of maximum real output.
The ideological issue is whether the primary function of the currency is to be an investment/savings vehicle, or a tool for provisioning government and optimizing real economic performance. In a market economy you can’t fix the price of two things without a relative value shift causing you to be buying one of them and running out of the other. Likewise, you can’t sustain full employment and a stable gold price if there is a shift in relative value between the two.
A gold standard is a fixed exchange rate policy, where the govt continuously offers to buy or sell gold at a fixed price.
This means the holder of a dollar, for example, has the option of ‘cashing it in’ for a fixed amount of gold from the govt, and a holder of gold has the option of selling it at a fixed price to the govt.
Therefore a new gold discovery which causes gold to be sold to the govt is inflationary and tends to increase output and employment, and a gold ship sinking in transit or a sudden desire to hoard gold is deflationary and tends to decrease output and employment. And there’s nothing that can be done about these relative value shifts, except to ride them out. The only public purpose served (by definition) is the stable nominal price of gold set by Congress.
With a gold standard, like any fixed fx regime, interest rates are necessarily set by market forces. With the govt’s spending being convertible currency, it is limited to spending only to the extent it has sufficient gold reserves backing the currency it spends. With gold reserves generally pretty much constant and not expandable in the short run, this means govt spending is limited to what it can tax and/or borrow. So when the govt wants to deficit spend, doing so by ‘printing’ new convertible dollars risks those dollars being ‘cashed in’ for gold. Govt borrowing, therefore, functions to remove that risk by delaying conversion privileges until the borrowings mature. This means the govt is competing with the right to convert when the govt borrows. In other words, the holder of the gold certificates has the option of either converting to gold or buying the treasury securities. The interest rate the treasury must pay therefore represents the indifference rate of holders of the convertible currency between cashing in the currency for gold now or earning the interest rate and not being able to convert until maturity. Note that it’s in fixed exchange rate environments that govt borrowing costs have soared to triple digits as govts have competed with their conversion features, and that govts generally lose those fights as the curve goes vertical expressing the fact that at that point there is no interest rate that can keep holders of the currency from wanting to convert.
Note that this also means the nations gold reserves are the net financial equity that supports the entire dollar credit structure, a source of continuous financial fragility and instability.
It’s all here in a paper I did in the late 1990’s.
Hope this helps!
A few more thoughts:
Being on the gold standard doesn’t prevent a financial crisis, but it makes the consequences far more severe.
We were on a gold standard when the roaring 20’s private sector debt boom lead to the crash of 1929 and the depression that followed. 4,000 banks closed before we went off gold in 1934, and it was only getting worse which is why we went off of it.
Gold would not have prevented the pre 2008 sub-prime boom, but it would have made the consequences far more severe. Including no Fed liquidity provision to offset a system wide shortage due to hoarding and banks bidding ever higher for funds that didn’t exist, most all firms losing inventory financing and being forced to liquidate inventories as rates spiked competing for funds that didn’t exist, and no deficit spending for unemployment comp as federal revenues fell from the collapse. In other words, the automatic fiscal stabilizers we rely on can’t be there. Instead it’s a deflationary disaster that only ends when prices fall sufficiently to reflect changes in relative value between gold and everything else.
Note that the recent decade of gold going from under $600 to over $1,600 is viewed as a sign ‘inflationary’ and a 250% ‘dollar devaluation’ as it takes 2.5x as many dollars to buy the same amount of gold. But if we were on a gold standard, and all else equal, and gold had been fixed at $600 back then, the same relative value shift would be manifested as the general price level falling that much in an unthinkable deflationary nightmare.