Oil price forecasts… WSJ

by Jim Colburn • Tuesday, May 31, 2016

Here is a look at a WSJ survey of investment banks’ oil price estimates:

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Here is the link:  http://www.wsj.com/articles/oil-price-forecasts-rise-as-oversupply-concerns-ease-1464674434

“Analysts cut their forecasts throughout the start of this year amid a glut of oil and concern over the Chinese economy, the world’s second biggest consumer of oil. But crude has rallied since it hit a decade low of below $30 early this year as U.S. output continued to decline and a series of production outages from Canada to Nigeria took barrels off the market. U.S. output has fallen from a peak of 9.7 million barrels a day in April 2015 to below 9 million barrels in recent weeks, according to government data.”

 

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“Teapot” refineries… WSJ

by Jim Colburn • Monday, May 30, 2016

The Wall Street Journal has a nice discussion on  “teapot” refineries in China here:

http://www.wsj.com/articles/teapot-refineries-shore-up-chinas-demand-for-crude-1464616123

“Already, the teapots are helping keep demand for oil high in the world’s second biggest crude-importing country, in turn supporting global oil prices. Last month, teapots imported 1.2 million barrels of oil a day, Energy Aspects estimates, around 15% of China’s total crude imports. Oil prices last week rose over $50 a barrel for the first time in six months.”

And this:

“For sure, analysts expect teapots to retain Beijing’s backing. While some have operated for around 30 years, their current prominence is partly the result of politics: Chinese President Xi Jinping has targeted major state-owned Chinese oil companies, purging their top leaders amid a crackdown on corruption.

“The [government]…sees competition from teapots as a way to impose discipline on the major national oil companies,” analysts at the Oxford Institute of Energy Studies said in a report.”

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One takeaway is that trying to determine China’s oil demand will be even harder now as more crude run through teapots could be consumed domestically, exported as oil products (gasoline, diesel, etc.) or stored…

 

 

 

 

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Economist James Hamilton looks at some oil trends…

by Jim Colburn • Monday, May 30, 2016

Here is the link:

http://econbrowser.com/archives/2016/05/trends-in-oil-supply-and-demand

Not much new, but I liked this chart, showing a flattening in mpg efficiency:

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Production outages…

by Jim Colburn • Monday, May 30, 2016

From the WSJ, http://www.wsj.com/articles/fueling-oils-push-to-50-fear-is-back-1464427980:

“About 3.5 million barrels a day worth of production is off line because of disruptions such as militant attacks in Nigeria, wildfires in Canada and political unrest in Libya—more than 3% of the global total, says research firm ClearView Energy Partners LLC. That is likely the highest since the Iraq war hit output there in 2003, says Jacques Rousseau, the firm’s managing director of oil and gas.”

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“Some think the rise in outages is in part a byproduct of depressed crude prices. When oil is cheap, producing nations’ budgets suffer. That makes it harder for some governments to boost spending to head off unrest and deprives oil facilities of money needed for maintenance and recovery.”

 

 

 

 

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Crude oil implied volatility plummets…

by Jim Colburn • Friday, May 27, 2016

Here is the chart:

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Implied volatility settled at 34.4 yesterday (based on at the money, second nearby month option), down from 79.2 on February 12…. The record high was made on 1/14/1991 at 135.4; the record low, 12.8, was made on 6/6/14…

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US distillate demand picking up…

by Jim Colburn • Friday, May 27, 2016

After a seasonally warm winter, US distillate demand is now above 4 mid… Here is the chart from the EIA:

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And, distillate cracks have improved from the recent low in January:

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Chart is from barchart.com…

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GDPNow +.4 from previous estimate, 2Q…

by Jim Colburn • Thursday, May 26, 2016

Based on recent economic data released, the Atlanta Fed has increased its 2Q GDP estimate up .4 to +2.9%…

“Latest forecast: 2.9 percent — May 26, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.9 percent on May 26, up from 2.5 percent on May 17. The forecast for second-quarter real gross private domestic investment growth increased from -0.3 percent to 0.4 percent following this morning’s durable manufacturing release from the U.S. Census Bureau. After yesterday’s advance report on international trade in goods from the Census Bureau, the forecast for the contribution of net exports to second-quarter real GDP growth increased from -0.04 percentage points to 0.16 percentage points.

The next GDPNow update is Tuesday, May 31. Please see the “Release Dates” tab below for a full list of upcoming releases.”

Here is the site: https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1

Here is the track of their estimates:

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And, FYI, Yale professor Ray Fair writes that current GDP data suggests a Republican win in November:

“Most economists believe the economy will grow at about a 3% annual rate between now and November 2016. If that happens, my equation predicts the Democrats will win about 46% of the vote in a two-party contest. In order for them to win more than 50%, the economy would need to grow at about 4%, and even in that case their predicted vote share would climb only slightly above the halfway mark.”

Here is the link:

http://www.latimes.com/opinion/op-ed/la-oe-0527-fair-election-prediction-20150527-story.html

 

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Technical Analysis, Jeff Degraff, podcast…

by Jim Colburn • Thursday, May 26, 2016

Excellent podcast on technical analysis here:

http://www.bloomberg.com/news/audio/2016-05-20/interview-with-jeff-degraaf-masters-in-business-audio

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Fed-ECB Divergence… DB via Ritholz…

by Jim Colburn • Thursday, May 26, 2016

From DB, via Ritholz http://ritholtz.com/2016/05/big-fed-ecb-divergence/

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Free trade, taking risk, drivers wanted…

by Jim Colburn • Wednesday, May 25, 2016

in Syria… This is from an excellent WSJ article on Syrians trying to survive by trading goods among warring factions:

“In wartime Syria, economic survival frequently trumps politics and ideology, prompting foes to trade across front lines that have carved up the nation. It is up to a band of gutsy and resourceful truck drivers to make that happen—to crisscross the battlefields delivering food, oil, cars, appliances, even livestock, in some of the most dangerous commercial transactions in the world.

Drivers are exposed to airstrikes from the regime of Syrian President Bashar al-Assad and the Russian warplanes lending him support. They also face Islamic State militants who require them to grow beards, and who mete out punishment for contraband such as cigarettes and alcohol.”

Read the whole thing from the WSJ: http://www.wsj.com/articles/in-syrias-mangled-economy-truckers-stitch-together-warring-regions-1464106368

Here is Syria carved up by different factions:

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Here is the oil part:

“At its peak, Islamic State was making between $40 million and $50 million a month from selling oil, according to Martin Reardon, an analyst with the Soufan Group, a security-consulting firm. That has declined to an estimated $24 million a month, contributing to a nearly 30% decline in Islamic State’s revenue, according to IHS Conflict Monitor, which conducts terrorism and insurgency analysis.”

 

 

 

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