Archive for February, 2011

Importance Of Libya For World Oil Production

Libya in unrest/civil war is having a mayor impact on the oil markets. Crude oil (brent) has yesterday reached post crisis high of 108.7 USD/bbl. The outcome of the Libya crisis is absolutely uncertain and together with other regional instability will be a strong factor for rising oil prices.

High oil price does not bode well with economic growth, so this could be large negative factor for economic growth and inflation.

According to OPEC January data Libya produces approximately 1.6 million barrels of crude per day. This is 3.9% of total OPEC production and 1.8% of world total demand.

Video Of The Day – Al Jazeera: Libya Bulletin

Huge, huge mess…with no resolution in sight…

New Week Intro – February 21, 2011

Weekly economic calendar.

Morning Reading – Monday, February 21, 2011

*** Al Jazzera: Live Blog – Libya ***
*** JESSE’S CAFÉ AMÉRICAIN: Silver Bankers May Be Sitting on Big Derivatives Losses and the Fed May Be Funding Them ***
*** JESSE’S CAFÉ AMÉRICAIN: Gold and Silver Options Expiration At the Comex This Week ***
*** Macro Man: Once more unto the breach, dear friends, once more… ***
*** FT Alphaville: A problem for Portugal, charted ***
*** Business Insider: The Simple Reason A Bahraini Revolution Could Trigger A Brand New Financial Crisis ***
*** Business Insider: Meredith Whitney’s Massive Gift To Jeff Gundlach ***
*** macrofudge: Intermezzo: Fun with the Big Mac Index ***
*** Deal Breaker: Hedge Fund Manager’s Decision To Take Blame For Performance Is Slightly Alarming ***
*** Stone Street Advisors: John Paulson’s Interview With the Financial Crisis Inquiry Commission: The Signs Were There ***
*** The Spectator Blog: How the West became so dominant ***
*** The Slope Of Hope: Perhaps There’s Hope Now ***

Dry Bulk Weekly – February 21, 2011

Baltic dry index rose 10.4% last week; Capesize Index was down 2.2%; Panamax Index rose 23.7%; Supramax Index increased 11.9%; Handysize Index rose 3.2%.

Shipping rates are rising after the lunar new year as Chinese buyers returned to the markets

Stockpiles of iron ore unchanged at record high, iron ore price rising. Steel inventories are going vertical and moving towards record highs. Thermal coal stockpiles ticked upwards.

I would expect further gains in rates because of low level from which the after holiday recovery started. Overall stockpile data paints kind of worrying picture of Chinese economy.

Longer term – I expect that rates will be on average bellow break-even (2.200 on BDI) for next couple of years on oversupply of vessels.

ECRI Weekly Leading Index Up 4.9%

ECRI Weekly Leading Index for week ending February 11, 2011 was reported up 4.9% y-o-y. Prior reading was at 4.6%.

Rig Count Weekly – February 19, 2011

Number of crude oil drilling rigs fell for 7; Number of natural gas drilling rigs fell for 1.

Tanker Weekly – February 19, 2011

Baltic Dirty Tanker Index rose 10.5%; Baltic Clean Tanker Index was up 3.6%.

The demand is somewhat stronger, but my guess is that supply will emerge and rates will remain range bound.

U.S. Freight Carloads Weekly – February 18, 2011

U.S. railroads originated 274,043 carloads, up 6.3% compared with the same week in 2010 and down 4.7% compared with 5-year average. Week over week change was 2.4%.

It doesn’t look particularly strong.

Morning Reading – Friday, February 18, 2011

*** FT BeyondBRICs: The end of the EM affair? ***
*** The Big Picture: Did Goldman Sachs Kill AIG ? ***
*** The Big Picture: Other central banks try to fight the Fed ***
*** Calculated Risk: The NAR Reponds to Questions of Overstating Sales ***
*** FT Alphaville: The hidden message in Asia’s FDI flows ***
*** The Reformed Broker: The Number One Rule of Market Punditry ***
*** Crossing Wall Street: “Weird Begets Weird” ***
*** The Aleph Blog: Goes Down Double-Speed ***

China’s Central Bank Again Raised Reserve Requirements

he People’s Bank of China raised the reserve requirement ratio for domestic banks by 0.5% to curb inflation.

U.S. Natural Gas Weekly – February 18, 2011

Working gas in storage fell 233 Bcf from previous week. The consensus was at 235 Bcf.

Storage level is 114 Bcf lower than same time year ago.

Heating season is nearing its end, the market is well supplied, so no fundamental reasons for natural gas price recovery.

Reason for price falling in recent week were milder weather forecasts. Technically natural gas is oversold, s I would not exclude price rebound despite unfavorable storage numbers.

U.S. Initial Jobless Claims At 410.000; Up 25.000

Initial jobless claims in the U.S. were reported at 410.000 vs. 400.000 consensus; last week revised (up 2.000) reading was at 385.000.

Lot of noise in data; Big weekly raise. Four weeks moving average unchanged.

U.S. Consumer Price Index Rose 0.4% In January

U.S. consumer price index rose 0.4% in January vs. 0.3% consensus and December reading of 0.5%. On year level CPI inflation is running at 1.7%.

U.S. Petroleum Weekly – February 17, 2011

Markets well supplied, demand weak, refiners cutting refining capacity and crude oil imports. Record high WTI – Brent pricing disparity.

 

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