Posts Tagged ‘OPEC’

Saudi Arabia to Target U.S. With Sharp Oil Export Cut, Sources Say

December 13, 2018

After flooding the U.S. market in recent months, Saudi Arabia plans to slash exports to the world’s largest oil market in the coming weeks in an effort to dampen visible build-ups in crude inventories.

American-based oil refiners have been told to expect much lower shipments from the kingdom in January than in recent months following the OPEC agreement to reduce production, according to people briefed on the plans of state oil company Saudi Aramco.

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Saudi crude shipments to the U.S. next month could even test the 30-year low set in late 2017 of 582,000 barrels a day, down about 40 percent from the most recent three-month average, the same people said, asking not to be named as the information isn’t public. The final figure could still change, they added.

By shifting the focus of Saudi export reductions toward the U.S., Riyadh hopes to show to the market it’s making good on its promise to cut supplies. Fluctuations in U.S. crude imports and stockpiles have an outsize impact on the market because data are available on a weekly basis. In other regions, oil traders only get official figures on a monthly basis, or not at all in the case of stockpiles in big consumers such as China and India.

The Saudi energy ministry didn’t respond to a request for comment.

While the plan to slash Saudi exports to America may ultimately convince a skeptical oil market about the kingdom’s resolution to bring supply and demand in line, it may anger U.S. President Donald Trump, who has used social media to ask the Saudis and OPEC to keep the taps open.

Donald J. Trump

@realDonaldTrump

Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!

31.9K people are talking about this

Saudi total exports are set to drop to around 7 million barrels a day in January, down from about 8 million barrels a day in November-December, one of the people said. Khalid Al-Falih, the kingdom’s energy minister, told reporters last week that Saudi production will drop in January to 10.2 million barrels a day, down from 11.1 million barrels a day in November.

The oil market has so far largely ignored the production cuts that OPEC and its allies announced in early December, a larger-than-expected 1.2 million barrels a day — or just over 1 percent of global demand. Despite the OPEC+ curbs, benchmark Brent crude has hovered near $60 a barrel. Futures in London jumped 2.2 percent Thursday on the prospect of lower Saudi shipments to the U.S., closing at $61.45. Prices are still down 7.7 percent for the year.

The export curbs, if fully implemented, will affect big U.S. refiners such as Valero Energy Corp., Phillips 66, Chevron Corp., Exxon Mobil Corp., and Marathon Petroleum Corp. forcing them to buy similar crude elsewhere, such as Mexico, Canada or Venezuela. They could also hit Motiva Enterprises LLC, the Saudi-owned company that operates the largest refinery in the U.S.

Saudi Arabia has shipped 860,000 barrels a day of crude to the U.S. on average so far this year, according to Bloomberg calculations based on weekly customs data. Saudi exports into America had run even higher in the second half of the year, with July-to-December shipments rising to an average of 975,000 barrels a day, according to Bloomberg calculations.

Inventories Scrutinized

Oil trader Andy Hall, who earned the nickname “God” for his prescient calls on pricing before closing his hedge fund after suffering losses last year, says the oil market is heavily influenced by data like the weekly U.S. stockpile figures.

“People look at these things, scrutinize them,” he said of the data on Bloomberg Television Thursday. “The fact is, they only cover the U.S., which is 25 percent of the world oil market. The data available for inventories elsewhere in the world is poor at best.”

Hall now serves on the advisory board of Orbital Insight, a Palo Alto-based provider of analytic platforms to translate satellite and aerial images into useful data, including global oil supplies.

https://www.bloomberg.com/

https://www.bloomberg.com/news/articles/2018-12-13/saudi-arabia-is-said-to-target-u-s-with-sharp-oil-export-cut

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Asian shares fall as Huawei arrest imperils China-US truce

December 10, 2018

Asian markets were broadly lower Monday after China protested the arrest of a senior executive of Chinese telecoms equipment maker Huawei who is suspected of trying to evade U.S. trade curbs on Iran.

KEEPING SCORE: Japan’s benchmark Nikkei 225 slid 2.1 percent to 21,219.50 after revised data showed that the economy shrank by a worse than expected 2.5 percent in the third quarter. South Korea’s Kospi fell 1.2 percent to 2,051.14. Hong Kong’s Hang Seng shed 1.2 percent to 25,747.06 and the Shanghai Composite index was 0.6 percent lower at 2,590.81. Australia’s S&P;/ASX 200 declined 2.3 percent to 5,552.50. Shares fell in Taiwan, Singapore, Indonesia and the Philippines.

A man walks past an electronic board showing Hong Kong share index outside a local bank in Hong Kong, Monday, Dec. 10, 2018. Asian markets were broadly lower Monday after China protested the arrest of a senior executive of Chinese electronics giant Huawei, who is suspected of trying to evade U.S. trade curbs on Iran.VINCENT YU AP PHOTO

WALL STREET: Stocks tumbled on Friday on weaker-than-expected jobs growth and worries that the U.S.-China trade dispute will not be resolved within the 90-day timeframe agreed upon by President Donald Trump and his Chinese counterpart Xi Jinping. The S&P; 500 index slipped 2.3 percent to 2,633.08 and the Dow Jones Industrial Average gave up 2.2 percent to 24,388.95. The Nasdaq composite tumbled 3 percent to 6,969.25. The Russell 2000 index of small-company stocks dropped 2 percent to 1,448.09.

HUAWEI ARREST: China has slammed as “extremely egregious” the detention of Huawei chief financial officer Meng Wanzhou and demanded that the U.S. cancel an order for her arrest, the official Xinhua News Agency reported on Sunday. Meng was arrested in Canada on Dec. 1. In a meeting with Terry Branstad, the U.S. ambassador to Beijing, Vice Foreign Minister Le Yucheng urged Washington to “immediately correct its wrong actions” and vowed to take further steps depending on the U.S. response, Xinhua said. The two countries recently agreed to hold off on imposing further tariffs for 90 days while they attempt to resolve a range of issues from trade to technology development.

ANALYST’S TAKE: Although the Huawei arrest “falls under the purview of independent courts, the timing of it is unfortunate and could jeopardize the truce that was just agreed,” Chang Wei Liang of Mizuho Bank said in a commentary. “Markets have correspondingly responded by reducing risk on the table, waiting to assess the extent of any political fallout.”

SLOWING CHINESE EXPORTS: On Saturday, Chinese customs data showed that exports rose 5.4 percent to $227.4

Associated Press

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AFP

Asian markets sank Monday as investors juggle a number of negative issues that have fuelled worries about the global outlook.

The China-US trade row, the Huawei crisis, signs of weakness in the Chinese and US economies, and Brexit are among the key matters depressing equities, though there was some upbeat news in OPEC’s decision to slash crude production.

On Sunday, China summoned the US ambassador to protest at the arrest of top Huawei executive Meng Wanzhou in Canada last week over allegations of fraud linked to the breaking of Iran sanctions.

An angry China has demanded Washington drop its extradition request, as investors fret that the arrest could throw a spanner in the works of a fragile trade war truce between Beijing and Washington.

“Huawei… will likely remain in the headlines for some time as China continues to pressure both Canada and US to withdraw charges,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“It’s more than apparent that US-China tensions are well beyond trade. And when combined with the fact ‘tariffs-limbo’ is likely to extend well into 2019, uncertainty is expected to remain high, and could still explode into a full-blown trade war.”

Still, US Trade Representative Robert Lighthizer said he did not expect the arrest to disrupt the talks.

Lighthizer, the man leading trade negotiations with China, also said he did not expect to see an extension past the March 1 deadline for a deal between the world’s top two economies.

Donald Trump and Xi Jinping agreed this month to a 90-day ceasefire in the multi-billion-dollar tariffs row that will allow officials to find a resolution. A threatened hike in levies on Chinese imports will be imposed if there is no agreement is reached.

Equity markets, which have been buffeted by the trade row this year — and were hammered by the arrest last week — were down on Monday, tracking heavy losses in New York.

– Weak data –

Shanghai fell 0.7 percent, Hong Kong shed 1.7 percent and Tokyo lost 2.3 percent by the break. Sydney shed two percent, Singapore gave up 1.3 percent and Seoul gave up 1.1 percent. There were also losses for Manila, Taipei and Wellington.

Adding to investor unease was Chinese data showing growth in exports and imports both slowed in November while factory inflation slowed — indicating demand remains weak. Also, the trade surplus with the US — a key point of irritation for Trump — ballooned to a record last month despite the imposition of tariffs.

“Although the resumption of trade negotiations between China and the US may reduce the risk of further escalation of trade friction, China’s domestic and external demand are under downward pressure,” said China International Capital Corporation economist Liu Liu.

That came after the US on Friday said job creation slowed and came in a lot lower than expected, while the International Monetary Fund’s top economist warned the world’s top economy would see growth slow next year.

“Uncertainty about US-China relations couple with concerns about the health of the US economy is hurting risk assets across the board,” said Innes. “Indeed, market sentiment remains fragile, and the US November employment report didn’t precisely provide a rosy outlook for the health of the US economy.”

Oil prices were boosted after OPEC and other key producers including Russia agreed at the weekend to cut output by 1.2 million barrels a day.

Russian Energy Minister Alexander Novak said the agreement “should help the market reach a balance” after prices plunged by about a third from their four-year highs seen at the start of October

The news lifted energy firms, with PetroChina jumping one percent in Hong Kong and Inpex 0.8 percent higher in Tokyo.

Attention is now on Tuesday’s key vote in Westminster, where Prime Minister Theresa May is struggling to win over MPs to back her Brexit agreement. There is talk that if she fails, her government will be toppled and the country could see another general election, fuelling further uncertainty.

The pound is stuck around 17-month lows against the dollar and could suffer further losses if May loses the vote.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 2.3 percent at 21,191.23 (break)

Hong Kong – Hang Seng: DOWN 1.7 percent at 25,634.80

Shanghai – Composite: DOWN 0.7 percent at 2,586.67

Euro/dollar: UP at $1.1416 from $1.1406 at 2200 GMT Friday

Dollar/yen: DOWN at 112.43 yen from 112.68 yen

Pound/dollar: DOWN at $1.2733 from $1.2742

Oil – West Texas Intermediate DOWN nine cents at $52.52 per barrel

Oil – Brent Crude: UP 36 cents at $62.03 per barrel

New York – Dow Jones: DOWN 2.2 percent at 24,388.95 (close)

London – FTSE 100: UP 1.1 percent at 6,778.11 (close)

Qatar Emir Snubs Saudi Summit Invite as Gulf Rift Festers

December 9, 2018

The invitation from Saudi Arabia’s King Salman to his Qatari counterpart to attend Sunday’s gathering of Gulf monarchies, after 18 months as a regional pariah, wasn’t enough to build a bridge between the feuding countries.

The overture, rejected by Emir Tamim Bin Hamad Al Thani, came as Saudi Arabia sought to defuse pressure over the killing of a vocal critic in Istanbul. Saudi Arabia’s leadership is also under pressure from the U.S. Congress to mend regional divisions and end its war in Yemen.

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Tamim bin Hamad al-Thani

But the rifts that prompted the Saudi-led boycott of Qatar in June 2017 haven’t gone away. If anything, they’ve deepened as the six-nation Gulf Cooperation Council meets.

“None of the parties to the dispute seem interested in a resolution or offering any significant concessions that could open a dialogue,” Graham Griffiths, a senior analyst at the Control Risks consultancy in Dubai, said.

Qatar’s ties with Shiite power Iran have strengthened, much to the dismay of the Sunni states that cited them when they initiated the embargo. Authorities in Doha, meanwhile, have brushed off accusations that they support terrorist groups, and have publicly done nothing to restrict the Al Jazeera television network whose coverage is a flashpoint.

The Saudi invitation had been extended as a formality, a Gulf official said, declining to be identified because the information wasn’t public. A Qatari minister of state represented the country at the summit, with the delegation seated between Kuwait and Oman, the only two members of the council that Qatar doesn’t have a spat with.

OPEC Exit

As the world’s biggest exporter of liquefied natural gas, Qatar has deep pockets. Flourishing alternative trade routes mean its economy is robust enough to cope with an extended stay out in the cold. The emirate stunned the oil world last week by announcing plans to quit OPEC after 57 years, a move analysts said was driven by increasing Saudi dominance of the grouping

“Both sides continue to take provocative steps that contribute to continued tensions,” including Qatar’s decision to quit OPEC, Griffiths said in emailed comments.

Read more on Gulf politics and oil…
Qatar’s OPEC Exit Shows Growing Sway of Moscow-Riyadh Oil Axis
Why the Breach Between Saudis, Qataris Goes On and On
Qatar’s Departure From OPEC Suggests Gulf Rift Is Here to Stay

The ink on King Salman’s invitation was barely dry when Bahrain’s foreign minister made it clear that Qatar’s attendance at the 39th GCC summit would have little impact on ending the standoff.

In an interview with a pan-Arab newspaper, Sheikh Khalid Al Khalifa questioned whether Qatar even belonged in the bloc given its policies. “It’s irrelevant if Qatar is there or absent, no matter who the person is in Qatar’s seat, because the issue is too big to solve with love and kisses,” he said. Kuwait, Oman and the United Arab Emirates complete the grouping.

After landing in Riyadh for the summit, Sheikh Khalifa tweeted that it “would’ve been best if Qatar accepted the fair demands” and attended the summit.

Yemen War

The U.A.E., Bahrain and Egypt aligned with Saudi Arabia against Qatar. Kuwait and Oman have stayed neutral in the worst spat the GCC has experienced since its foundation in 1981.

The feud within the Gulf club has hindered American efforts to present a united front with regional allies against Iran. Washington’s early efforts to end the dispute faltered, but they were re-energized after the murder of Saudi government critic Jamal Khashoggi shone a spotlight on the policies of the kingdom’s crown prince, Mohammed bin Salman.

A bipartisan group of U.S. senators have said that a classified briefing from the CIA convinced them that the prince played a role in the killing, with one describing the evidence as “a smoking saw.” That was a reference to the bone saw that Turkish investigators say was used to dismember Khashoggi’s body. Saudi investigators deny a bone saw was used.

The result could be a push for American sanctions against its chief Gulf ally, including restricting U.S. support for the Saudi military campaign in Yemen.

“The pressures coming out of Washington to end the war in Yemen, and to find some more transparency on what happened to Khashoggi, are strong and are building,” said Paul Sullivan, a Middle East expert at Georgetown University’s Center for Security Studies. “A sideshow to these may be to bring Qatar back into the GCC fold,” he said.

“But Qatar leaving OPEC is not a good sign for that. The reasons for the rift with Qatar go back way before the Yemen war and the nightmarish murder of Khashoggi.”

— With assistance by Nour Al Ali

Shadow of Jamal Khashoggi Hangs Over Gulf Summit in Saudi Arabia

December 9, 2018

Saudi Arabia hosts a summit of Arab Gulf leaders Sunday as crises brew over a bitter diplomatic dispute with Qatar, the war in Yemen and the murder of Saudi journalist Jamal Khashoggi.

Qatari Emir Sheikh Tamim bin Hamad al-Thani has been invited by Riyadh, which severed diplomatic ties with Doha in 2017 along with Bahrain and the United Arab Emirates, to the Gulf Cooperation Council talks.

But it was unclear if the emir would attend the annual gathering of the GCC, whose others members — Kuwait and Oman — have stayed out of the worst political fallout between the energy-rich Gulf powers.

Saudi Arabia and its allies accuse Qatar of supporting terrorism and fostering close ties with their regional rival Iran.

Saudi Crown Prince Mohammed bin Salman is under mounting pressure over the murder of journalist Jamal Khashoggi in the kingdom's Istanbul consulate

Saudi Crown Prince Mohammed bin Salman is under mounting pressure over the murder of journalist Jamal Khashoggi in the kingdom’s Istanbul consulate Saudi Crown Prince Mohammed bin Salman is under mounting pressure over the murder of journalist Jamal Khashoggi in the kingdom’s Istanbul consulate AFP/File

Doha — which announced this month it was quitting the Saudi-dominated OPEC oil cartel — denies the allegations, but the dispute has dragged on.

“Qatar has burned all the bridges enabling it to take back” its place within the GCC, Bahraini Foreign Minister Sheikh Khaled bin Ahmad Al-Khalifa said in the run-up to the summit.

The GCC was formed in 1981 at the height of the Iraq-Iran war and two years after the Islamic revolution in Tehran sparked concern in Sunni-led Gulf states, many of which have sizable Shiite populations, including in Bahrain.

GCC secretary general Abdellatif al-Zayani has said the 39th summit in Riyadh would review ties with Iran after the US reimposed an oil embargo and other sanctions on Tehran.

The US administration, which pulled out from a landmark 2015 nuclear deal between Tehran and major world powers in May, has vowed to reduce Iran’s oil sales to zero.

Saudi Arabia, along with allies UAE and Bahrain, accuses Tehran of fomenting unrest among Shiites in the Gulf, and has backed the US in piling pressure on Iran.

This contrasts with Kuwait and Oman which prefer normalising ties with the Islamic republic. Kuwait has also been mediating between its Gulf partners and Qatar.

– The Yemen war –

Sunday’s summit also comes as delegations from the Saudi-backed Yemeni government and Iran-linked Shiite rebels hold UN-brokered peace talks in Sweden.

Yemen’s capital has been held since 2014 by Huthi rebels who drove the government out and seized a string of ports.

The Yemeni government, based in the southern port city of Aden, has fought to drive back the rebels with support from a military coalition led by Riyadh and the UAE.

The conflict has killed nearly 10,000 people since 2015 when the coalition intervened, according to the World Health Organization, though some rights group say the toll could be five times higher.

The UN calls it the world’s worst humanitarian crisis, with as many as 20 million Yemeni’s facing acute food shortages.

This and images of massive devastation after coalition bombing raids on Yemen have sparked outrage among rights groups and prompted global players to demand an end to the conflict.

Pressure has been piling up on Riyadh to ease off its offensive, particularly an assault launched in June on the rebel-held port city of Hodeida, a key lifeline for aid entering Yemen.

The summit also comes with Saudi Arabia and its de facto ruler, Crown Prince Mohammed bin Salman, under mounting pressure over the murder of Washington Post columnist Khashoggi.

A critic of the crown prince, Khashoggi was killed by a hit squad in the Saudi consulate in Istanbul on October 2 in what Saudi Arabia described as a rogue operation.

Riyadh has steadfastly denied claims his grisly murder — he was reportedly dismembered — was ordered by Prince Mohammed.

AFP

Opec strikes a deal, CO2 emissions rise but Shell targets cuts, historic US oil exports and the positives of electric scooters

December 8, 2018

American energy dominance is within our grasp as a nation

The FT’s US energy editor Ed Crook takes a look at the week in energy

 

By Ed Crooks in New York

When they come to make the drama-documentary series about energy in the 21st century, one of the pivotal episodes should be based on cross-cutting between events in Vienna and in Katowice this week.

In the Austrian capital ministers from Opec members and their allies in what is often called the Opec+ group, including Russia and Kazakhstan, met to thrash out an agreement on how to maximise their revenues from the most-used fossil fuel, oil. In the Polish city, meanwhile, officials from about 195 countries, including the nations represented in Vienna, have been meeting to debate how the world should respond to the threat of catastrophic climate change created by the use of oil, coal and gas.

File/AFP

After 48 hours of sometimes fractious negotiations, the ministers from Opec and their non-Opec allies agreed to cut production by 1.2m barrels a day, effective from January, for six months. In a sign of the careful handling needed to deliver the deal, the precise breakdown of the 1.2m barrels a day between countries was not revealed, although it was specified in the official communiqué that the cartel’s members would cut by 800,000 b/d and the non-Opec countries by 400,000 b/d.

Iran, Venezuela and Libya were exempted from having to make reductions.

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The joint ministerial monitoring committee of the Opec+ group has been given the job of overseeing “the fair implementation” of the resolution, reporting back at their next meeting in Vienna in April.

Tofol Al-Nasr from Opec’s secretariat hinted at some of the uncertainty in the negotiations when she opened the press conference to announce the deal, congratulating the ministers on “reaching this historic agreement”.

The oil market reflected relief that there was a deal, but the response was muted: Brent crude and the US benchmark WTI first jumped as news of the production cut emerged, but then fell back and ended up rising only about 2 per cent and 1 per cent respectively for the day. Saudi Arabia was said to be a prime mover in pushing for a production cut, in spite of a series of tweets and statements from Donald Trump calling for it to keep its output high. The US president made a last-ditch appeal just before the meetings began, tweeting on Wednesday: “Hopefully Opec will be keeping oil flows as is.”

Now Mr Trump has been defied in such a public way, one thing to watch will be whether he seeks to retaliate, for example by changing his position on the involvement of Saudi Crown Prince Mohammed bin Salman in the death of the journalist Jamal Khashoggi.

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Legislation known as the NOPEC Act, which would make it possible for the US government to take action against Opec members for antitrust violations, has been introduced in Congress, and S&P Global Platts reported on Friday that a version of the bill could come up for a vote before the end of the year.

Past presidents have opposed such legislation, but if Mr Trump genuinely wanted to get tough with Saudi Arabia he might get a chance to sign the bill into law. For Opec member states with US assets that could be subject to penalties, particularly Saudi Arabia and Venezuela, that prospect is a real concern. The underlying issue for Saudi Arabia is broader, however: it is the shift in the economic relationship between the kingdom and the US caused by the American shale revolution and oil production boom.

Underlining the growing pressure on Saudi Arabia and other oil-dependent economies, the Energy Information Administration reported on Thursday that the US was a net exporter of crude oil and petroleum products last week, for the first time since 1949.

Adding to the pall hanging over the Vienna meetings, the US Geological Survey on the same day issued a press release setting out its assessment that the shale oil reserves that have been responsible for the US production boom still have plenty of life left in them.

The USGS estimates that the Wolfcamp shale and the Bone Spring formation, in the Delaware Basin on the western side of the larger Permian Basin region, hold an undiscovered but technically recoverable resource base of 46.3bn barrels of oil, as well as 281tn cubic feet of natural gas, and 20bn barrels of natural gas liquids.

That makes it the largest continuous oil and gas resource base ever assessed by the USGS, and is additional to a further 20bn barrels of oil and 16tn cubic feet of associated gas in the Midland Basin section of the Wolfcamp shale, over to the east.

Ryan Zinke, the US secretary of the interior, said the estimates showed that “American energy dominance is within our grasp as a nation”. US companies’ interest in developing these resources was highlighted by Chevron, the country’s second-largest oil group, which on Thursday set out its plans for $20bn of capital spending next year, including $3.6bn in the Permian Basin, up from $3.3bn for this year.

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Ryan Zinke,

The increased supplies of oil and gas that have come on to world markets as a result of the US shale revolution also cast a shadow over Katowice, where officials met for the first week of the two-week COP24 conference before the ministers arrive on Monday.

The biggest news of the week was a report from more than 70 scientists estimating that global carbon-dioxide emissions would rise at least as fast this year as they did last year, pushing the atmospheric concentration to a new record high, despite the pledge by the 195 countries that signed the Paris climate agreement in 2015 to limit global warming to well below 2C. Glen Peters, research director at the Cicero Centre for International Climate Research in Oslo, described the news as “a step backwards”.

Global oil and gas consumption have continued to grow steadily, while coal consumption, which hit a peak in 2015, has been rebounding. China is expected to account for almost half of the growth in emissions in 2018, with its coal consumption rising 4.5 per cent this year and its natural gas consumption surging 18 per cent. Mr Peters tied the increase directly to the strains on the Chinese economy.

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A tourist wears a face mask in Beijing’s Tiananmen Square. Image: AFP — FILE photo

“The government keeps propping up the economy by construction, and construction needs more coal and cement,” he said. Katowice is an old coal-mining town, in the heart of the rich coal reserves of Silesia, and the conference features many reminders of the importance of the mineral to the region and to Poland. There is a mine just three miles outside the conference centre and inside the town’s stand has a display of coal, including coal jewellery.

Poland-guido-mine

Coal mine museum in Zabrze, Silesia, Poland

A museum in a disused mine nearby is running an exhibition titled “Dark side of the coal”.

The not-so-subtle message is that while coal may be central to the growing risks of climate change over the coming decades, moving away from it poses an immediate threat to mining communities. The backlash against policies to curb greenhouse gas emissions has been on the rise in countries from Canada to China.

The FT’s environment and clean energy correspondent Leslie Hook wrote about how the rise of populism had made the Paris climate agreement look fragile, built as it was on “a set of ideals that now appear in short supply”.

Campaigners against environmental policies that raise energy costs won a resounding success in France this week, when President Emmanuel Macron’s government agreed to scrap the increases in fuel taxes scheduled for next year, after the “ gilets jaunes” (yellow vests) protests of the past month, which led to the worst riots in Paris for 50 years last weekend.

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Harriet Agnew and Ben Hall of the FT wrote about how the protests had evolved from an online campaign against surging fuel costs into “a nationwide social movement against high taxes, declining living standards, a self-serving political elite and a president deemed arrogant and out of touch”.

BuzzFeed carried an interesting story on the role played by Facebook in the protests.

Yet while governments are under pressure to pull back from climate policies, many businesses are still pushing ahead. Royal Dutch Shell this week announced that after pressure from its investors, it would be setting targets for cutting the greenhouse gas emissions from its operations and its products, and linking its executives’ pay to meeting those targets. It is the first company in the industry to link pay to emissions reductions.

Separately, Minneapolis-based Xcel Energy, which has acquired a reputation as one of the most innovative of US utility groups, this week announced a goal of providing 100 per cent carbon-free electricity by 2050, and cutting its emissions by 80 per cent from 2005 levels by 2030.

It is important to notice that the company said “carbon free”, not “renewable”.

Frank Prager, Xcel’s vice-president of policy and federal affairs, told Wisconsin Public Radio that the company did not expect to rely solely on wind and solar power, and would be working with research institutions and universities on new zero-carbon power sources.

The company already owns two nuclear plants, and could seek to join in the development of advanced nuclear technology. One of the great ironies of climate policy is that the US, the only signatory to the Paris agreement that has announced its intention to withdraw, has been cutting its CO2 emissions from energy.

The main reason for that has been the shift away from coal and towards gas and renewables for power generation, a trend that has continued despite the efforts of the Trump administration to stop it. The Energy Information Administration predicted this week that US coal consumption would this year be the lowest for 39 years, after a surge in the closures of coal-fired plants.

US emissions are still thought to have risen this year, however, because of an increase in oil and gas consumption. The Trump administration, meanwhile, has not given up hope of at least slowing the decline of coal. The Environmental Protection Agency this week proposed revisions to emissions regulations that would remove the requirement for new coal-fired power plants to capture some of the carbon dioxide they produce.

The American Coalition for Clean Coal Electricity, an industry group, welcomed the plan, saying that the new rule could lead to new coal-fired plants being built to replace at least some of the ones that are closing. The fact that existing coal-plants are finding it difficult to compete against gas plants and renewables suggests that the economics of new coal will be challenging, however, even if the relaxation of regulations is implemented.

There was another small piece of good news for the US coal industry in an appointment to the Federal Energy Regulatory Commission. The Trump administration last year set out a plan to subsidise coal-fired and nuclear plants, which was rejected by the FERC in January.

The emergence of a vacancy on the five-member commission allowed the administration to nominate Bruce McNamee, a vocal opponent of renewable energy and curbs on carbon-dioxide emissions, who worked on the bailout plan as head of policy at the Department of Energy.

Mr McNamee’s appointment was confirmed by the Senate on a 50-49 vote on Thursday. If the administration does try to bring back some version of a bailout plan, however, Mr McNamee would probably still find himself in a minority on the commission if he backed it, and would also face legal challenges.

Meanwhile, British Columbia has launched a plan to cut greenhouse gas emissions, raising questions about how that strategy fits with the Canadian province’s plan to become an exporter of LNG. And finally: the electric scooter boom of 2018 has raised concerns about safety and led to bans on the sharing companies such as Lime in several cities, including this week in Madrid.

But Umair Irfan of Vox emphasised the positive side of the craze, arguing that the scooters “are filling in gaps in transportation networks and addressing transit deserts”. On balance, he concluded, they “have improved American cities”.

https://www.ft.com/content/cde85f22-fa97-11e8-8b7c-6fa24bd5409c

Oil rallies after Opec agrees to cut output by 1.2m barrels a day

December 7, 2018

Brent crude jumps 5 per cent on news of pact

By David Sheppard in Vienna

Oil prices jumped 5 per cent as Opec broadly agreed a deal to cut oil production by 1.2m barrels a day.

One Opec delegate said the pact between cartel members had been reached for a combined cut with allies outside the group led by Russia. Iran has been granted an exemption from the cuts as it is under sanctions from the US, the delegate said. Brent was recently up 5 per cent to $63 a barrel.

More to come….

https://www.ft.com/content/490597a8-fa28-11e8-8b7c-6fa24bd5409c

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Oil dives after OPEC delays output decision

Saudi Arabia’s Energy Minister Khalid Al-Falih, left, at the OPEC conference in Vienna, Austria. (AFP)
Updated 07 December 2018
  • OPEC met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan
  • An OPEC delegate said the organization had agreed on a tentative deal to cut oil output but had not come up with a final figure

NEW YORK: Oil prices fell in choppy trading on Thursday after OPEC and allied exporting countries ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter on Friday.

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The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan.
An OPEC delegate said the organization had agreed on a tentative deal to cut oil output but had not come up with a final figure.

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Earlier, Saudi Energy Minister Khalid Al-Falih said OPEC needed Russia to cooperate, and said a decision was likely by Friday evening.

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“If everybody is not willing to join and contribute equally, we will wait until they are,” Al-Falih said.

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Market watchers had expected a joint cut of 1 million to 1.4 million barrels per day (bpd).

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Brent crude futures were down $2.57, or 4.2 percent, on the day to $58.99 a barrel by 4:41 p.m. GMT, off the session low of $58.36. US crude futures fell $2.37, or 4.5 percent, to $50.52 a barrel, bouncing off the session low of $50.08 a barrel.

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The crude benchmarks have slumped about 30 percent this quarter.

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Prices found support briefly after data showed US crude stockpiles declined last week for the first time in 11 weeks. The US became a net exporter of crude and refined products for the first time since at least 1991, data from the US Energy Information Administration showed.

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“Fears of a further escalation in the US-China trade war, and potential for OPEC+ not cutting oil production deep enough will continue to weigh on oil prices in today’s trading session,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

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“All eyes are now fixated on (an) OPEC+ joint declaration, and a combined output cut of at least 1 million barrels per day will be required to see a meaningful recovery in oil prices.”

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Led by Saudi Arabia, OPEC’s crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million bpd.

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European equities hit their lowest in two years and commodity-sensitive currencies such as the Russian rouble fell sharply, in part because of the slide in the oil price, but also with the arrest of a top executive of Chinese tech giant Huawei in Canada for extradition to the US. The arrest came just as Washington and Beijing prepare for crucial trade negotiations.

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Barclays said in its Global Outlook published on Thursday that “investors need to lower their expectations” and “2019 should be a period of lower returns and higher volatility.”

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Barclays said it expected “the global economy to slow over the next several quarters” although it added that “not one major economy is near recession.”

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US crude inventories have climbed steadily as domestic production surged to new peaks. Exports of US crude also jumped to a record 3.2 million barrels per day last week, adding to global supplies. Stockpiles at Cushing, Oklahoma, the delivery point for US crude futures, rose to the highest in nearly a year.

Reuters

OPEC yet to agree on final deal as Iran seeks exemptions

December 7, 2018

Saudi Arabia’s energy minister said he wasn’t confident OPEC would reach a deal on Friday to cut oil output as sources said the producer group’s leader had yet to agree on exemptions for sanctions-hit Iran.

Image result for iran, oil, flag, pictures

The Organization of the Petroleum Exporting Countries resumed discussions in Vienna at around 0900 GMT, before a meeting later in the day with non-OPEC oil producers led by Russia.

On Thursday, OPEC tentatively agreed an oil output cut but could not decide concrete parameters for reductions as it was waiting for a commitment from non-OPEC heavyweight Russia, sources from the group said.

On Friday, two OPEC sources said Saudi Arabia’s arch-rival Iran, which came under fresh U.S. sanctions in November, was also holding up a final deal.

“Iran will insist on an exception until sanctions are removed,” one of the OPEC sources said.

Saudi Arabia faces pressure from U.S. President Donald Trump to help the global economy by refraining from cutting supplies.

And with Trump seeking to squeeze Tehran with sanctions, an OPEC output cut would provide additional support to Iran by increasing the price of oil.

Saudi Energy Minister Khalid al-Falih, asked on Friday whether he was confident the day’s meetings would produce a deal, said: “No.”

OPEC’s battle to coax Russia to cut oil output as the US ramps up: tmsnrt.rs/2RzCE3J

Difference in OPEC oil output between Nov 2018 and Oct 2016: tmsnrt.rs/2RqgBMS

Possibly further complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.

U.S. special representative for Iran Brian Hook met Falih in Vienna this week, in an unprecedented development ahead of an OPEC meeting. Saudi Arabia first denied the Hook-Falih discussion took place but later confirmed it.

“U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market,” said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher.

(Graphic: Who might agree to an OPEC crude supply deal? – tmsnrt.rs/2Ru61od)

RUSSIAN DILEMMA

The price of crude LCOc1 has fallen almost a third since October to below $60 a barrel as Saudi Arabia, Russia and the United Arab Emirates raised output to offset lower exports from Iran, OPEC’s third-largest producer.

The price decline prompted OPEC and its allies to discuss output cuts, and Falih said on Thursday possible reductions by those involved ranged from 0.5-1.5 million bpd.

Oil producers’ budget-balancing act: tmsnrt.rs/2QfNS0J

“The Iran exemption is the biggest hurdle … If there is no agreement, the timeline for a deal will be pushed to the first quarter of 2019,” Energy Aspects said in a note.

A reduction of 1 million bpd would be acceptable and so far was the main scenario, Falih said, but he added that Russia needed to commit significant volumes.

Russian Energy Minister Alexander Novak met with President Vladimir Putin in St Petersburg on Thursday and returned to the Austrian capital on Friday morning.

OPEC delegates have said the group and its allies could cut by 1 million bpd if Russia contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

A Russian Energy Ministry source said on Friday Moscow was ready to contribute a cut of around 200,000 bpd and that Iran, not Russia, now seemed the main hurdle for a deal.

OPEC crude production in November – Reuters Survey: tmsnrt.rs/2RqgctQ

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.

On Thursday, U.S. government figures showed the country had become a net exporter of crude oil and refined products for the first time on record, underscoring how the surge in production has altered the supply equation in world markets.

Additional reporting by Shadia Nasralla and Alex Lawler; Writing by Dmitry Zhdannikov; Editing by Dale Hudson; Graphics by Amanda Cooper

Reuters

U.S. Stock Futures Buck Rebound in Europe and Asia

December 7, 2018
  •  Yield on 10-year Treasuries falls to 2.88%; crude retreats
  •  Italy bonds climb; emerging-market shares edge up; gold rises
Image result for Jamie Dimon, bloomberg, pictures
The Key Clues to Look for in the November Jobs Report

European stocks rebounded from the worst day in more than two years and Asian shares posted modest gains as investors sought to end a bruising week on a more upbeat note. Signs of stress remained, however, as U.S. equity futures declined and Treasuries rose.

The Stoxx Europe 600 Index, which on Thursday dropped the most since the U.K. voted to leave the EU in 2016, jumped as every sector rallied. S&P 500 futures came off their lows as the European session wore on, but remained in the red for a second day. Japanese equities outperformed as most Asian gauges nudged higher. Italian debt climbed as European bonds largely drifted. The dollar edged up and the pound fell as U.K. Prime Minister Theresa May was said to be weighing a plan to postpone the vote on her Brexit deal.

Financial markets remain on tenterhooks amid worries the trade truce between China and the U.S. won’t last after the arrest of the chief financial officer of Huawei. As traders start to doubt the Federal Reserve will raise rates in 2019, JPMorgan Chase & Co. CEO Jamie Dimon said while the focus has been on the central bank moving too quickly, there’s also a risk it does too little, too slowly.

For his part, Fed Chair Jerome Powell delivered a bullish assessment of the U.S. economy and the job market ahead of Friday’s labor report. It comes as market-implied U.S. rate expectations crumble amid the tumult in equities.

“The big question mark still is what’s going to happen in 2019” with the Fed, Omar Aguilar, CIO of equities and multi-asset strategies at Charles Schwab, told Bloomberg TV. “The jobs report could easily be the catalyst that will tell us a little more about what the path may be.”

Elsewhere, oil continued to be a drag on sentiment, with West Texas Intermediate trading below $51 a barrel as OPEC struggled to reach a deal on oil-production cuts. Cryptocurrencies continued their slide with a fresh bout of losses after U.S. regulators dashed hopes that a Bitcoin exchange-traded fund would appear before the end of this year.

Some of the key events investors will be focused on this week:

  • OPEC ministers meet again in Vienna Friday.
  • The U.S. monthly employment report for November is due.
  • China November trade data are due on Saturday.

And here are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index dipped 0.4 percent as of 9:42 a.m. London time, to the lowest in more than a week.
  • The Stoxx Europe 600 Index gained 1.4 percent, the biggest rise in more than five weeks.
  • The U.K.’s FTSE 100 Index increased 1.5 percent, the largest climb in 11 weeks.
  • Germany’s DAX Index gained 0.9 percent.
  • The MSCI Asia Pacific Index rose 0.2 percent.
  • The MSCI Emerging Market Index climbed 0.3 percent.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.1 percent.
  • The euro fell 0.1 percent to $1.1364.
  • The British pound declined 0.3 percent to $1.2747, the largest fall in a week.
  • The Japanese yen decreased 0.1 percent to 112.84 per dollar.

Bonds

  • The yield on 10-year Treasuries dipped two basis points to 2.88 percent, hitting the lowest in three months with its seventh straight decline.
  • Germany’s 10-year yield rose one basis point to 0.24 percent.
  • Britain’s 10-year yield climbed one basis point to 1.257 percent.
  • The spread of Italy’s 10-year bonds over Germany’s declined seven basis points to 2.9001 percentage points.

Commodities

  • West Texas Intermediate crude decreased 1.4 percent to $50.77 a barrel, the lowest in more than a week.
  • Gold rose 0.1 percent to $1,239.42 an ounce, the highest in more than 20 weeks.
 Updated on 

— With assistance by Adam Haigh

https://www.bloomberg.com/news/articles/2018-12-06/asia-signals-mixed-start-for-stocks-yields-drop-markets-wrap?srnd=premium

Oil price drops as Opec and Russia meet to agree production cut

December 7, 2018

Oil prices slipped below $60 a barrel on Friday as Opec and Russia work to overcome the last remaining obstacles to a production cut deal designed to bolster the market, in defiance of US president Donald Trump who has called on Saudi Arabia to keep production high.

By David Sheppard and Anjli Raval in Vienna

A meeting of Opec oil ministers ended on Thursday without agreement, with the cartel gathering again in Vienna on Friday morning ahead of talks with Russia and other global producers, who are seen as key to the success of any deal.

Even as Khalid Al Falih, Saudi Arabia’s energy minister reiterated on Friday he was “not confident” of an agreement, others have said they still believe oil producers will be able to secure a deal to remove around 1m barrels a day from the market, following the 30 per cent drop in prices in the last two months.

Saudi Energy Minister Khalid Al-Falih  (Reuters)

Brent crude fell nearly 3 per cent on Thursday and started Friday below $60 a barrel as the level of cuts being discussed is slightly below what most oil market analysts believe is necessary to balance the oil market. By early morning in London it was down 25 cents at $59.81 a barrel.

Saudi Arabia, Opec’s de facto leader and largest producer, has asked for all countries to contribute to curbs, even as Iran, Venezuela and Libya have sought exemptions because of hardship in their countries and sanctions against their economies. Russia, the biggest exporter outside of the cartel, has been less enthusiastic about a big cut to production but has still said it will co-operate with producers on oil policy, continuing an alliance in place with Saudi Arabia since 2016.

Alexander Novak, Russia’s energy minister, said he plans to meet his counterparts from Iran and Saudi Arabia on Friday ahead of talks between Opec and non-Opec countries later in the day. Saudi Arabia has ramped up production to record levels in recent months in response to demands from US president Donald Trump who has called on Opec to keep output high and prices low.

Yet the US’s decision to issue waivers to consumers of Iranian oil as it reimposed sanctions against Tehran has meant output from global producers, including the US, has overwhelmed demand and risks creating a new glut. Opec delegates said they believed it was possible to overcome objections to the countries seeking exemptions given their output has largely fallen below the level it was in 2016.

Oman, which is not an Opec member but carries sway as an interlocutor between various factions, cautioned countries against being “macho” on Thursday evening, warning of the risk of a further drop in prices without a deal.

Asian markets tentatively higher at end of volatile week

December 7, 2018

Huawei headline could not have come at a worse time

Asian investors battled to finish a volatile week on Friday with some stability as they weigh the outlook for China-US trade talks and uncertainty in oil markets, while looking ahead to the release of key US jobs data.

After the furious selling of the past two days, there was some optimism after a report said the Federal Reserve could slow down its pace of interest rate hikes next year, providing some much-needed relief to under-pressure dealers.

AFP/File / WANG ZHAO

The general mood across trading floors is of unease, just days after the euphoria of Donald Trump’s G20 tariffs ceasefire deal with China’s Xi Jinping that put the row off for 90 days while they try to resolve the crisis.

No sooner had the rally from that announcement run its course than questions began to be raised about the details and whether the world’s top two economies could actually resolve their differences.

That was compounded by news that a top executive at Chinese telecoms giant Huawei had been arrested in Canada and faces extradition to the US over allegations the firm had broken sanctions linked to Iran.

The apprehension of Meng Wanzhou fuelled concerns about already fraught relations between Washington and Beijing and the future of the trade talks.

Ren Zhengfei, Huawei founder and father of Meng Wanzhou.   Photographer: Jason Alden/Bloomberg

China on Thursday appeared to try to ease concerns by saying it would “immediately” implement measures agreed under the truce, while Trump later sent a tweet highlighting progress.

“Statement from China: ‘The teams of both sides are now having smooth communications and good cooperation with each other. We are full of confidence that an agreement can be reached within the next 90 days.’ I agree!,” he wrote.

In early trade Hong Kong and Shanghai each added 0.3 percent, while Tokyo went into the break 0.1 percent higher.

Sydney edged up 0.4 percent, Singapore gained 0.6 percent and Seoul added 0.3 percent, with Wellington and Taipei also higher.

– Overreaction? –

Providing some support were hopes the Fed will not hike borrowing costs as much as previously expected over the next year.

A report in the Wall Street Journal said the bank would take a wait-and-see approach to its decisions as signs point to a possible slowdown in the world’s top economy.

The prospect of rates continuing to rise for some time — making it more expensive to borrow to invest — has been a major reason for selling on world markets this year.

Bank head Jerome Powell, who has grown more dovish in recent weeks, remains upbeat and attention will be closely on the release of key non-farm payrolls figures Friday.

Analyst Neil Innes, head of Asia-Pacific trade at OANDA, suggested markets may have overreacted this week.

“The Huawei headline could not have come at a worse time, with the market reeling as confusion reigned over the G20 fallout,” he said.

“But when you laminate trade war issues with observed dovish shifts from major central banks, it merely adds a whole new level of unwanted confusion entering year-end.”

He added: “I’m trying to suggest… we were going through a market-driven event rather than a meaningful shift to the dark economic side that had all the doom and ‘gloomers’ coming out of their caves this week.”

Oil prices extended their losses on worries that a meeting of OPEC and non-OPEC producers will not see a hoped-for cut in output.

Markets have been spooked after the cartel called off a planned news conference Thursday that was expected to see a reduction announced, while Saudi Arabia oil minister Khalid Al-Falih said he was “not confident”.

Prices are now only slightly above last week’s levels, before a Monday-Tuesday rally sparked by comments from President Vladimir Putin that Russia and the Saudis had agreed to shut the taps in light of a production glut.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 21,524.02 (break)

Hong Kong – Hang Seng: UP 0.3 percent at 26,239.94

Shanghai – Composite: UP 0.3 percent at 2,611.66

Oil – West Texas Intermediate: DOWN 24 cents at $51.25 per barrel

Oil – Brent Crude: DOWN 39 cents at $59.67 per barrel

Euro/dollar: DOWN at $1.1373 from $1.1381 at 2130 GMT

Dollar/yen: UP at 112.72 yen from 112.69

Pound/dollar: DOWN at $1.2773 from $1.2783

New York – Dow Jones: DOWN 0.3 percent at 24,947.67 (close)

London – FTSE 100: DOWN 3.2 percent at 6,704.05 (close)

AFP

See also:

https://www.afp.com/en/news/15/top-huawei-executive-detained-canada-angering-china-doc-1bd6ka12