Crude Oil Day
Belisarius is annoyed with united horn blowing on dollar going further down and gold going further up. So annoyed it is on the brinks of placing a short gold and long dollar trade. I’ll cool down and think on that again. Such unified consensus always leads to opposite outcome. One of the reasons is (for the time being) strong Asian demand for both U.S. dollar and U.S. treasuries. Especially enlightening views from Japanese investors which shared similar near death experience during the Japan’s lost decade. Bloomberg story: Japan Tops China Buying Treasuries After Lost Decade. I completely agree on the positions for the following quarter. Longer term view here.
Asia ended higher, Europe is trading almost flat, some moderation after yesterdays “stimulus party”.
Today International Energy Agency presented it’s World Energy Outlook 2009. A lot of attention to the Guardian article yesterday on validity of the forecasts: Key oil figures were distorted by US pressure, says whistle blower. Nothing new, usual peak oil theory advocates claims which were (at least in part) confirmed by the IEA itself by a downward revision of 2030 production from 120 million barrels in 2005 to this years 105 million barrels. Presentation. WSJ story: IEA: Climate Deal Would Cut Oil-Demand Growth.
Highlights:
Global crude demand may grow by just four million barrels a day from current levels to 89 million barrels a day by 2030 if a major agreement to cut greenhouse gas emissions is signed and implemented by nations.
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Without any new climate change deal and developments in nonoil transport technology like electric vehicles, global oil demand by 2030 is expected rise to 105 million barrels a day, which represents a downward revision of 1 million barrels a day from the IEA’s forecast a year ago.
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Sometimes criticized by industry analysts for overoptimistic demand forecasts in recent years, the agency said global oil consumption over the next five years is now expected to grow to just 88 million barrels a day, well below the 94 million barrels a day the IEA forecast a year ago for total demand in 2015.
Nothing bullish for mid term oil price there, in my view. Back to the short term considerations. OPEC signaling that it won’t raise production. Bloomberg story: OPEC Won’t Raise Output as Stocks Rise, Qabazard Says. And hurricane Ida weakened. WSJ story: Ida Weakens but Idles Rigs in Gulf. Again, nothing bullish there.
German investor confidence fell to 51.1 from 56 in October. The consensus was at 55. Bloobmerg story: German Investor Confidence Drops on Weaker Outlook. Again, bad macro data on U.K. with deficits of various kind and AAA removal threat. Bloobmerg story: Fitch Says U.K. Rating Most at Risk Among Top-Rated.
And a look on China aligned with my views. WSJ story: In China’s Growth Story, Credit as Villain?
Highlights:
That flood of borrowed cash has been channeled into new infrastructure and production capacity. These investments will account for up to half of China’s gross domestic product this year, according to some estimates.
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A key question is whether China needs all of this investment. Analysts at the London hedge fund Pivot Capital Management say that China already has enough idle steel-production capacity, for example, to match the steel output of Japan and South Korea combined.
China, Crude Oil, German Investor Confidence, IEA, Japan, OPEC