|Day's Range||38.54 - 40.77|
(Bloomberg) -- Libya’s oil industry was thrown into deeper confusion with military commander Khalifa Haftar, a key player in the nation’s civil war, warning he would continue to blockade ports and fields, barely a day after the state energy company said exports could resume.Haftar’s Libyan National Army had allowed a tanker to load about 730,000 barrels of crude from the eastern port of Es Sider on Friday, with the cargo bound for Italy. That was an exception and other shipments will be banned until the warring sides agree to distribute oil money more fairly and to audit the Tripoli-based central bank, which handles energy revenue, the LNA’s spokesman, Ahmed al-Mismari, said in a televised statement posted on Facebook on Saturday night.The National Oil Corp., also based in Tripoli, lifted force majeure on all terminals and fields on Friday, shortly before the Aframax vessel Kriti Bastion entered Es Sider. The NOC didn’t immediately respond to questions on whether force majeure, a legal status protecting a party if it can’t fulfill a contract for reasons beyond its control, would be reimposed.At least three oil firms stopped production or canceled plans to restart. The operators at the western field of Sharara, Libya’s biggest, were set to pump 40,000 barrels a day from Sunday but held back after Haftar’s announcement, according to people with knowledge of the matter. Harouge Oil Operations halted Amal, an eastern deposit that had only just reopened.The reversal reflects the chaos that has engulfed Libya, an OPEC member and home to Africa’s largest crude reserves.Haftar’s blockade in January sent Libyan crude production crashing to about 100,000 barrels a day from 1.2 million and has cost the country $7 billion in lost revenue, according to the central bank. Libya’s output was as high as 1.6 million barrels daily in early 2011 before an uprising ousted longtime leader Moammar Qaddafi and led to the civil war.The United Nations-recognized government, which is located in Tripoli in the west and led by Prime Minister Fayez al-Sarraj, is vying for control of the country with Haftar’s eastern-based forces.The two sides are poised to square off near the central city of Sirte, in what could be a decisive battle. Turkey, which backs Sarraj, said he won’t agree to a cease-fire until Haftar’s fighters retreat from Sirte and the nearby area of Jufra. Haftar’s supporters include Russia, Egypt and the United Arab Emirates.“Both sides seem very confident when it comes to military solutions,” said Jalel Harchaoui, a researcher at the Clingendael Institute, which is based in The Hague. “In terms of having some kind of diplomatic mechanism to avoid a violent solution and share revenues, there’s no real progress. Neither side is being sincere.”Libya’s oil facilities have been at the heart of the conflict, with different groups repeatedly closing them. The shutdowns and lack of maintenance have severely damaged fields and wells. Repairs will cost hundreds of millions of dollars and take months even if fighting stops soon, NOC Chairman Mustafa Sanalla said in an interview last month.Any increase in supply from Libya could undermine efforts by the Organization of Petroleum Exporting Countries and its allies to rebalance the oil market and prop up prices amid the coronavirus pandemic. The group, known as OPEC+ and led by Saudi Arabia and Russia, agreed on record cuts to production in April. Libya is exempt from those because of its strife.(Updates from fourth paragraph with production halts.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Is the world underestimating the demand for oil amid the new explosion in coronavirus cases? Latest International Energy Agency stats suggest so, with the IEA forecasting more consumption that could help rebalancing. OPEC, meanwhile, is going the opposite way, calling for higher output from end-August that could lead to a tug-of-war in prices.
An index tracking the performance of leading commodities reached a four-month high this week with the sector being supported by gains among industrial metals and grains, most noticeably wheat and copper. Gold meanwhile made a small but nevertheless very important move higher to the highest level since 2011 above $1800/oz. However, the index weakened ahead of the weekend as the market grew increasingly nervous about the surging coronavirus cases around the world
(Bloomberg) -- Saudi Oil Minister Prince Abdulaziz bin Salman likes the idea of OPEC+ acting as the central bank of oil. And he expresses admiration for Alan Greenspan, former chairman of the U.S. Federal Reserve.The challenge now confronting the oil producers’ club is one that’s all too familiar to the Fed: how to avoid a “taper tantrum,” the market panic that ensued when the institution proposed tightening monetary policy in 2013.Having successfully doubled crude prices over the past few months through unprecedented output cuts, the OPEC+ alliance led by the Saudis and Russia is poised to begin unwinding these stimulus measures. As fuel demand recovers with the lifting of coronavirus lockdowns, the producers are about to open the taps a little.But as Greenspan’s successors discovered seven years ago, taking away the punch bowl carries its own risks.A second wave of the pandemic threatens another slump in oil consumption, while the billion-barrel mountain of inventories that piled up during the first outbreak still looms. If OPEC+ increases supply just as the market falters then prices could crash once again.“When they look at prices over the quarter, when they look at green shoots of demand pick-up, I think they feel good,” said Helima Croft, head of commodity strategy at RBC Capital Markets LLC. “I do think they are cognizant though of some of the potential clouds on the horizon.”It’s a balancing act that Prince Abdulaziz and his counterparts must weigh on July 15, when they hold an online meeting of the Joint Ministerial Monitoring Committee, the panel that reviews OPEC+’s progress.Easing the CutsThe JMMC will consider whether the 23-nation alliance should keep 9.6 million barrels of daily output off the market for another month, or restore some supplies as originally planned, tapering the cutback to 7.7 million barrels.As the demand recovery gains traction, members are leaning toward the latter option, according to several national delegates who asked not to be identified. Shipping schedules for August are already being set, so the course is more or less locked in, one said.In Russia, the most influential non-OPEC member of the alliance, major oil companies are preparing to increase production next month in the absence of other guidance from the Energy Ministry, according to two people from the industry who spoke on condition of anonymity.Russian Energy Minister Alexander Novak said on July 2 that no position on an extension had been taken yet, but stressed that it’s better if OPEC+ sticks to its previous decisions.OPEC+ can go ahead with the designated increase without inundating the market, said Bob McNally, founder of consultant Rapidan Energy Group and a former White House official. Global demand will rebound by 18% this quarter to 95.7 million barrels a day as economic activity resumes, he predicts. That will whittle away inventories at a brisk clip of 5.6 million barrels a day.“Our balances show hefty deficits in the third and fourth quarters, even with a tapering,” McNally said. “I think the market will handle it pretty well.”Fragile MarketYet the strategy is not without risks.While oil prices have recovered to $43 a barrel in London, from a two-decade low of $15.98 in late April, sentiment in the market remains fragile.The acceleration of the pandemic in the U.S., where infections hit a record last week, and its re-emergence in Asia is “casting a shadow over the outlook,” the International Energy Agency warned in a report on Friday. The Paris-based agency advises major economies on energy policy.There’s also still a price discount on prompt crude futures -- known as a contango -- in the U.S. and Europe, suggesting the wider market hasn’t yet tightened. Crude inventories in the U.S. and China are near record levels, government and satellite data show.“The kind of recovery that people would have expected maybe by now has not materialized,” said Mohammad Darwazah, an analyst at Medley Global Advisors. “There’s no doubt the consensus is we will get a tightening of the market, we’re just not quite there yet.”As a result, Riyadh is expected to insist that if output is restored, countries abide by their mandated limits -- and that exporters who haven’t yet made their share of the cutbacks atone for it.Falling in LineIraq, Nigeria, Kazakhstan and Angola are among laggards who have promised “compensation cuts” over the next few months to make up for cheating in May, which equate to about 420,000 barrels a day each month. That should offset some of the group’s scheduled 2 million-barrel surge, and the JMMC could impose further reparations for overproduction in June.How far the likes of Baghdad and Lagos, which have a poor track record of adhering to OPEC+ agreements, go in their atonement is debatable, but Prince Abdulaziz has scored a victory in pressing them to deliver a surprisingly strong performance last month. He is unlikely to relax his vigilance when the producers gather on Wednesday.“While relieved and satisfied so far, ministers realize they are not out of the woods yet,” Rapidan’s McNally said. “Compliance is the No. 1 priority.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The rising COVID-19 count is making investors nervous, driving them into Treasurys, which is pushing yields lower, and gold higher.
The next major move in the AUD/USD will be determined by how investors handle the two 50% levels at .6921 and .6889.
This trio of energy names got a big daily boost from oil prices, but that's just part of a much larger story here.
Demand and Supply in 2019 were records
Oil prices fell on Thursday as COVID-19 cases continued to spike in the U.S., which the IEA highlighted as a major threat to oil markets in today’s report, but prices were quick to return to the $40 mark on Friday.
We’re going to be watching a minor pivot at 25787 into the close on Friday.
Stock markets rallied during the week, with the S&P; 500 being no exception. We broke above the top of a couple of shooting stars which is a bullish sign.
Crude oil markets had a bouncy week, but at the end of the session on Friday it looks as if we have stabilized. That is a good sign.
S&P; 500 initially pulled back on Friday again, but then turned around to show signs of life again. This is a market that continues to show extreme resiliency.
Crude oil markets initially dipped on Friday but turned around to show signs of resiliency yet again. They have more of an upward bias than anything else.
Silver markets have continued to hover at a major level, in the form of the $19 level during the trading session on Friday.
Natural gas markets initially dipped a below the 50 day EMA on Friday but turned around. This is a market that looks like it is trying to continue going higher.
Gold markets struggled to follow through during the trading session on Friday after pulling back on Thursday.
Oil rebounds back to the key $40 level after Gilead Sciences reports promising data on COVID-19 drug.
British pound has had a very bullish week, as we continue to see a rally. Every time it looks as if it is going to fall, buyer step in to pick up yet again.
The Euro initially rally during the week, pulled back from the 200 week EMA, and then rallied again to close out a choppy week. This is normal for this pair.
The global energy agency that rarely helps the positive case in oil has given a friendly boost to those long crude, just as the week comes to an end. Crude prices jumped more than 1% on Friday after the International Energy Agency bumped up its 2020 forecast for global oil demand, lifting a market that took its worst hammering in six weeks in the previous session. The IEA’s outlook on oil has typically been dour over the past few years, putting it at odds with the Saudi-dominated OPEC — or Organization of the Petroleum Exporting Countries — whose members are determined to keep crude prices supported under any condition.
Silver did not manage to get above $19.00 but maintains solid upside momentum.
The British pound initially fell a bit on Friday but continues to find support as we broke back above the 200 day EMA by the time New York got online.
The Australian dollar initially sold off on Friday but found buyers two show signs of resiliency yet again. We have a massive amount of resistance just above.