Get our Free Trading Videos, Lessons and eBook today!
Norway's oil strike looks no closer to ending, with a government mediator saying workers and employers are still "far apart" in a dispute over pay and pensions. The industry association, which includes Exxon Mobil (XOM) and BP (BP), has threatened to halt all output from Tuesday. The tactic is probably designed to force the government to halt the strike, as it has done in the past.
Negotiations failed for a third time today.
From Bloomberg News.....
Norway’s oil strike continued for a 15th day after talks supervised by a state mediator failed to reach a compromise that would prevent the dispute from escalating to include all of the country’s offshore oil and gas production.
“There are no new talks planned and we don’t know where we will go from here,” Kristin Bremer Nebben, a spokeswoman for the Norwegian Oil Industry Association, which represents employers including Statoil ASA (STL), BP Plc (BP/) and Exxon Mobil Corp. (XOM), said in a phone interview today.
6 Things Successful Traders Have in Common
Sunday, July 8, 2012
Private Empire - Exxon Mobil And American Power
If you were expecting "Private Empire", the latest book by two time Pulitzer Prize winning author Steve Coll, to serve as a hit piece on Exxon Mobil (XOM) (and "big oil" in general) you'll be somewhat disappointed.
For anyone unfamiliar with his previous work, Steve Coll's earlier books include the highly recommended "Ghost Wars", arguably the definitive geopolitical account of the activities of the CIA and other national intelligence agencies in Afghanistan and Pakistan from the time of the Soviet invasion up to the eve of the 9-11. Ghost Wars won the Pulitzer Prize in 2004 for general non-fiction and was one of the books a newly elected President Barrack Obama was reported to be reading upon entering office.
Steve Coll describes in an interview with Charlie Rose what lead him to want to write Private Empire and how his original idea for the book was to tell a broader story about the oil industry in the style of Daniel Yergin's "The Prize". He soon realized, however, that he needed a central character and Exxon was for him the only logical choice.
Coll's portrait of Exxon begins in March 1989 with the Exxon Valdez oil spill in Prince William Sound, Alaska, an event which made the company the most reviled in the United Sates. The book's timeline spans the subsequent transformation of the company, which was led by CEO Lee "Iron Ass" Raymond, up through its present day stewardship by current CEO Rex Tillerson.
Along the way we learn a great deal about Exxon, including its somewhat peculiar cult like corporate culture, its blockbuster merger with Mobil, its controversial stance and efforts on global warning, the access it enjoyed to political leaders such as Vice President Dick Cheney, its somewhat misleading approach to reporting oil reserves, and the company's record setting financial success. The book in fact makes for a compelling business case study and students of business history, strategy and management will find much of interest.
Read The Polycapitalist entire review
Get our Free Trading Videos, Lessons and eBook today!
For anyone unfamiliar with his previous work, Steve Coll's earlier books include the highly recommended "Ghost Wars", arguably the definitive geopolitical account of the activities of the CIA and other national intelligence agencies in Afghanistan and Pakistan from the time of the Soviet invasion up to the eve of the 9-11. Ghost Wars won the Pulitzer Prize in 2004 for general non-fiction and was one of the books a newly elected President Barrack Obama was reported to be reading upon entering office.
Steve Coll describes in an interview with Charlie Rose what lead him to want to write Private Empire and how his original idea for the book was to tell a broader story about the oil industry in the style of Daniel Yergin's "The Prize". He soon realized, however, that he needed a central character and Exxon was for him the only logical choice.
Coll's portrait of Exxon begins in March 1989 with the Exxon Valdez oil spill in Prince William Sound, Alaska, an event which made the company the most reviled in the United Sates. The book's timeline spans the subsequent transformation of the company, which was led by CEO Lee "Iron Ass" Raymond, up through its present day stewardship by current CEO Rex Tillerson.
Along the way we learn a great deal about Exxon, including its somewhat peculiar cult like corporate culture, its blockbuster merger with Mobil, its controversial stance and efforts on global warning, the access it enjoyed to political leaders such as Vice President Dick Cheney, its somewhat misleading approach to reporting oil reserves, and the company's record setting financial success. The book in fact makes for a compelling business case study and students of business history, strategy and management will find much of interest.
Read The Polycapitalist entire review
Get our Free Trading Videos, Lessons and eBook today!
Friday, July 6, 2012
Crude Oil Distillation and the Definition of Refinery Capacity
A crude oil refinery is a group of industrial facilities that turns crude oil and other inputs into finished petroleum products. A refinery's capacity refers to the maximum amount of crude oil designed to flow into the distillation unit of a refinery, also known as the crude unit.
The diagram below presents a stylized version of the distillation process. Crude oil is made up of a mixture of hydrocarbons, and the distillation process aims to separate this crude oil into broad categories of its component hydrocarbons, or "fractions." Crude oil is first heated and then put into a distillation column, also known as a still, where different products boil off and are recovered at different temperatures.
Lighter products, such as butane and other liquid petroleum gases (LPG), gasoline blending components, and naphtha, are recovered at the lowest temperatures. Mid-range products include jet fuel, kerosene, and distillates (such as home heating oil and diesel fuel). The heaviest products such as residual fuel oil are recovered at temperatures sometimes over 1,000 degrees Fahrenheit.
The simplest refineries stop at this point. Although not shown in the simplified diagram above, most refineries in the United States reprocess the heavier fractions into lighter products to maximize the output of the most desirable products using more sophisticated refining equipment such as catalytic crackers, reformers, and cokers.
Get our Free Trading Videos, Lessons and eBook today!
The diagram below presents a stylized version of the distillation process. Crude oil is made up of a mixture of hydrocarbons, and the distillation process aims to separate this crude oil into broad categories of its component hydrocarbons, or "fractions." Crude oil is first heated and then put into a distillation column, also known as a still, where different products boil off and are recovered at different temperatures.
Source: U.S. Energy Information Administration.
Lighter products, such as butane and other liquid petroleum gases (LPG), gasoline blending components, and naphtha, are recovered at the lowest temperatures. Mid-range products include jet fuel, kerosene, and distillates (such as home heating oil and diesel fuel). The heaviest products such as residual fuel oil are recovered at temperatures sometimes over 1,000 degrees Fahrenheit.
The simplest refineries stop at this point. Although not shown in the simplified diagram above, most refineries in the United States reprocess the heavier fractions into lighter products to maximize the output of the most desirable products using more sophisticated refining equipment such as catalytic crackers, reformers, and cokers.
Get our Free Trading Videos, Lessons and eBook today!
CME Recap Energy Market Report For Friday July 6th
This morning's EIA natural gas storage report showed a smaller than expected weekly injection of 39 bcf. August natural gas garnered modest support in the moments following the report, but concerns that prices near the $3.00 level could reduce demand, relative to coal, pressured prices back below $2.80.
Get our Free Trading Videos, Lessons and eBook today!
A Shocking Bankers Coup in the Euro Crisis
On Friday, June 29th, German Chancellor Angela Merkel acquiesced to changes to a permanent Eurozone bailout fund—“before the ink was dry,” as critics complained. Besides easing the conditions under which bailouts would be given, the concessions included an agreement that funds intended for indebted governments could be funneled directly to stressed banks.
According to Gavin Hewitt, Europe editor for BBC News, the concessions mean that:
[T]he eurozone’s bailout fund (backed by taxpayers’ money) will be taking a stake in failed banks.
Risk has been increased. German taxpayers have increased their liabilities. In future a bank crash will no longer fall on the shoulders of national treasuries but on the European Stability Mechanism (ESM), a fund to which Germany contributes the most.
In the short term, these measures will ease pressure in the markets. However there is currently only 500bn euros assigned to the ESM. That may get swallowed up quickly and the markets may demand more. It is still unclear just how deep the holes in the eurozone’s banks are.
The ESM is now a permanent bailout fund for private banks, a sort of permanent “welfare for the rich.” There is no ceiling set on the obligations to be underwritten by the taxpayers, no room to negotiate, and no recourse in court. Its daunting provisions were summarized in a December 2011 youtube video originally posted in German, titled “The shocking truth of the pending EU collapse!”:
The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity. There are no independent reviewers and no existing laws apply. Governments cannot take action against it. Europe’s national budgets [are] in the hands of one single unelected intergovernmental organization.
Here is the text of some of the ESM’s provisions
Get our Free Trading Videos, Lessons and eBook today!
Norway's Statoil is preparing to shut down production on the Norwegian Continental Shelf (NCS) following a notice of lockout from the Norwegian Oil Industry Association (OLF), the company said Thursday in a statement.
A lockout means a complete shutdown of Norwegian oil and gas production, highly possible government intervention and an end to the strike, which is now running into 12 days.
The decision made by the OLF affects all 6,515 members of Industry Energy, the Organisation of Energy Personnel (SAFE) and the Norwegian Organisation of Managers and Executives (Lederne) who are covered by the offshore pay agreements.
"The conflict is deadlocked and the demands are unreasonable," chief negotiator of the OLF Jan Hodneland said in a statement.
The announced lockout will start on July 9, 2012 at 2400 local time (2200 GMT), and all production on the NCS will be halted, Statoil said.
"Statoil is planning a controlled shutdown of production and return of personnel to land from July 9, 2012 at 2400 [local time]. It will take one to four days to shut all production on the NCS, depending on the characteristics and complexity of each field," Statoil added.
The shutdown on the NCS means that Statoil will have to grapple with a production shortfall of 1.2 million barrels of oil equivalent per day. The group's lost revenue resulting from the production stoppage will amount to around $87 million (NOK 520 million) per day, up an eye-popping $57 million (NOK 340 million) from the OLF's earlier estimate on June 27, 2012.
The striking workers are demanding for an early retirement age for offshore workers at 62 but the OLF has argued that their demands are not in line with government reforms.
"The strike could be a short-term factor supporting Brent prices, but not in the long-term as there are ample crude supplies," IHS Pruvin & Gertz managing director Victor Shum told Rigzone.
The NCS contains 70 oil and gas producing fields sited on the following blocks: The North Sea 56, The Norwegian Sea 13 and The Barents Sea 1. Among the affected fields is the Oseberg field which is critical in the oil market as crude produced from it forms part of the Brent Index. The index represents the average price of trading in the 21-day BFOE (Brent Blend, Forties, Oseberg, Ekofisk) market in the relevant delivery month as reported by industry media.
Posted courtesy of Rigzone.Com
Thursday, July 5, 2012
China's Top Refineries Cut July Output on Weak Demand
Top Chinese refineries will cut crude oil processing runs in July, following gains in the previous two months, as sluggish demand, poor refining margins and high fuel stocks hurt operations, a Reuters poll showed.
The 12 plants, which make up nearly a third of the capacity in China, the world's No.2 oil consumer, are located mostly in coastal areas, and plan to process 2.88 million barrels per day (bpd) of crude oil this month, the poll showed.
The daily rate, which accounts for about 84 percent of their refining capacity, is expected to be 2 percent, or roughly 60,000 bpd, lower than the actual 2.94 million bpd in June.
Oil demand in China posted in April its first yearly fall in at least three years and edged up only 0.8 percent in May as economic growth slowed.
Get our Free Trading Videos, Lessons and eBook today!
The 12 plants, which make up nearly a third of the capacity in China, the world's No.2 oil consumer, are located mostly in coastal areas, and plan to process 2.88 million barrels per day (bpd) of crude oil this month, the poll showed.
The daily rate, which accounts for about 84 percent of their refining capacity, is expected to be 2 percent, or roughly 60,000 bpd, lower than the actual 2.94 million bpd in June.
Oil demand in China posted in April its first yearly fall in at least three years and edged up only 0.8 percent in May as economic growth slowed.
Get our Free Trading Videos, Lessons and eBook today!
Wednesday, July 4, 2012
Market Giving Major Correction Signs
The SP 500 has rallied up into the 1375/77 pivot areas as I had outlined to my subscribers about 10 days ago on the weekend update as possible highs for C wave up from the 1267 SP 500 lows of June. Many forecasters are now getting very bullish, but I continue to see divergences with The Elliott Wave counts and other indicators that are giving me some short term concerns, and then we can determine if these are long term issues still for the markets.
Today’s Independence Day update shows a new chart pointing out prior “Recovery rally highs” since the May 2011 1370 highs on the SP 500. In each case, a major market correction unfolded when we had the NYMOT indicators at these levels along with Stochastics, CCI, and other Fibonacci indicators I incorporate at various times. Currently, we have the NYMOT indicators at a reading of 307. To understand this in context, its the highest reading in the past two years. Higher than the 1292 SP 500 rally high in October 2011 (From 1074) and higher than any other rally high in the past 24 months.
Adding to that, we have the Stochatics indicators at extreme short term highs and the CCI index is nearing the levels it read at the recent 1363 pivot highs. Finally, further puzzle pieces continue to show divergences in the Elliott Wave patterns. The rally from 1267-the current 1375 levels can’t be interpreted in my opinion as a 5 wave rally (which would be bullish), instead its an overlapping 3 wave rally in my views., or a double zig zag. These types of rallies are corrective rallies against a prevailing trend, which was down in to early June.
The rally to 1375 areas is actually in the zone I discussed a few weeks ago, and still in the 1386 or lower Fibonacci zone I’ve outlined as a C wave target for an ABC rally from 1267 June 2012 lows. My work still gives a model of 1422-1267 as 5 waves down, and 1267-current as a zig zag corrective pattern up. The market will soon tip it’s hand I think after this holiday week is over and we see a bit more volume return next week.
With all of this said, it is difficult to be too bearish given the 52 week highs in many blue chip stocks as well as the strong advance-decline lines and recovery in some of the tech stocks of late. When you get a lot of conflicting signals like this, I try to fall back on a variety of indicators and clues to help clear up the clouds of the market.
In conclusion, near term I will be very surprised if at a minimum we do not have significant pullback in the market next week. The rally could sneak a bit higher during this holiday light volume week, so lets look to next week for volumes to return and tell the tale. Taking some gains off the table in the coming 1-2 trading days is probably not a bad move.
By David A. Banister- Chief Strategist The Market Trend Forecast
Get our Free Trading Videos, Lessons and eBook today!
Today’s Independence Day update shows a new chart pointing out prior “Recovery rally highs” since the May 2011 1370 highs on the SP 500. In each case, a major market correction unfolded when we had the NYMOT indicators at these levels along with Stochastics, CCI, and other Fibonacci indicators I incorporate at various times. Currently, we have the NYMOT indicators at a reading of 307. To understand this in context, its the highest reading in the past two years. Higher than the 1292 SP 500 rally high in October 2011 (From 1074) and higher than any other rally high in the past 24 months.
Adding to that, we have the Stochatics indicators at extreme short term highs and the CCI index is nearing the levels it read at the recent 1363 pivot highs. Finally, further puzzle pieces continue to show divergences in the Elliott Wave patterns. The rally from 1267-the current 1375 levels can’t be interpreted in my opinion as a 5 wave rally (which would be bullish), instead its an overlapping 3 wave rally in my views., or a double zig zag. These types of rallies are corrective rallies against a prevailing trend, which was down in to early June.
The rally to 1375 areas is actually in the zone I discussed a few weeks ago, and still in the 1386 or lower Fibonacci zone I’ve outlined as a C wave target for an ABC rally from 1267 June 2012 lows. My work still gives a model of 1422-1267 as 5 waves down, and 1267-current as a zig zag corrective pattern up. The market will soon tip it’s hand I think after this holiday week is over and we see a bit more volume return next week.
With all of this said, it is difficult to be too bearish given the 52 week highs in many blue chip stocks as well as the strong advance-decline lines and recovery in some of the tech stocks of late. When you get a lot of conflicting signals like this, I try to fall back on a variety of indicators and clues to help clear up the clouds of the market.
In conclusion, near term I will be very surprised if at a minimum we do not have significant pullback in the market next week. The rally could sneak a bit higher during this holiday light volume week, so lets look to next week for volumes to return and tell the tale. Taking some gains off the table in the coming 1-2 trading days is probably not a bad move.
By David A. Banister- Chief Strategist The Market Trend Forecast
Get our Free Trading Videos, Lessons and eBook today!
CME Group Energy Market Report Recap for July 4th
August crude oil prices traded sharply higher during the US session and climbed to their highest level since May 31st. There were a number of supportive features supporting the advance including, hopes that global central bankers might offer up more stimulus to bolster growth, mounting tensions in Iran and reduced North Sea output. Reports earlier that Iran had successfully test fired mid range missiles was seen contributing to the fear premium in the crude oil market, by raising the threat of supply disruptions.
This comes along with talk that lawmakers were working toward a bill to block oil tanker traffic through the Straits of Hormuz. The oil workers strike in Norway continues and has reduced North Sea production by around 250,000 barrels per day. Further support for the crude oil market might have come on expectations that this week's EIA crude stocks report will show a draw in the range of 2.25 to 2.5 million barrels, which is a bit larger than the five year average draw for this week of the year of 1.1 million barrels.
Get our Free Trading Videos, Lessons and eBook today!
Tuesday, July 3, 2012
Is the SP 500 Closing in on a Top?
Friday’s strong move to the upside caught a lot of traders on the wrong side of the market. Regardless of whether financial pundits refer to it as a short squeeze or simply panic level buying is largely irrelevant. Time and price are always the final arbiters of financial markets. Price on Friday was clearly telling us that too many market participants were shorting equities and the Euro.
The news coming out of the European Summit is what drove prices higher according to most media outlets. However, few traders have actually taken the time to research the fact that Germany has not technically agreed to the European Stability Mechanism legislation at this point.
The German Constitutional Court has delayed the passage of the ESM legislation on the grounds that this court needs to affirm the agreement is constitutional. Several high profile politicians in Germany have allegedly filed multiple law suits surrounding the new ESM law.
Should the German Constitutional Court determine the ESM legislation is unconstitutional a referendum will go before the German people. The last thing the Eurocratic blue bloods and their banking cartel minions want is regular people actually having a say in the outcome of the Eurozone project.
Ultimately the German people do not appear to be in favor of propping up the rest of Europe in exchange for more empty promises of austerity. Furthermore, the German people recognize that they are taking on a massive risk by loaning money to insolvent banks and other Eurozone sovereigns who have not proven to be prudent with managing their current fiscal conditions.
The decision made by the German high court could have a far-reaching impact on the price action in European financial markets as well as in U.S. domestic financial markets. The outcome of the forthcoming decision will carry far more weight than Friday’s June unemployment report. Already I am reading that should the unemployment number come in significantly weaker than expected Ben Bernanke may work to convert Operation Twist into full blown QE III at the next FOMC Meeting.
The addiction to cheap money by large institutional banks will not end until the Fed is no longer able or willing to continue to print money. Should economic data continue to weaken going into earnings season I am sure the banter regarding QE III will increase at lightning pace and bad news for the economy will be good news for stocks. Poor economic data will increase the likelihood for additional liquidity being provided through a 3rd Quantitative Easing initiative.
Leaving the macroeconomic data aside and focusing on market technicals, we find several unsettling situations in a variety of underlying assets and indicators. The warnings are largely falling on deaf ears as the equity bull parade continues. Before we talk about the S&P 500 Index directly, perhaps we should examine some of the indicators and underlying assets that are sending out bearish smoke signals.
The first chart I would draw your attention to is the McClellan Oscillator which is a widely followed and focuses on market breadth as a possible market indicator for tops and bottoms. Note the key high and low points of the Oscillator and how they correspond with the S&P 500 Index.
Read the entire article and see the charts for "Is the SP 500 Closing in on a Top?"
Get our Free Trading Videos, Lessons and eBook today!
The news coming out of the European Summit is what drove prices higher according to most media outlets. However, few traders have actually taken the time to research the fact that Germany has not technically agreed to the European Stability Mechanism legislation at this point.
The German Constitutional Court has delayed the passage of the ESM legislation on the grounds that this court needs to affirm the agreement is constitutional. Several high profile politicians in Germany have allegedly filed multiple law suits surrounding the new ESM law.
Should the German Constitutional Court determine the ESM legislation is unconstitutional a referendum will go before the German people. The last thing the Eurocratic blue bloods and their banking cartel minions want is regular people actually having a say in the outcome of the Eurozone project.
Ultimately the German people do not appear to be in favor of propping up the rest of Europe in exchange for more empty promises of austerity. Furthermore, the German people recognize that they are taking on a massive risk by loaning money to insolvent banks and other Eurozone sovereigns who have not proven to be prudent with managing their current fiscal conditions.
The decision made by the German high court could have a far-reaching impact on the price action in European financial markets as well as in U.S. domestic financial markets. The outcome of the forthcoming decision will carry far more weight than Friday’s June unemployment report. Already I am reading that should the unemployment number come in significantly weaker than expected Ben Bernanke may work to convert Operation Twist into full blown QE III at the next FOMC Meeting.
The addiction to cheap money by large institutional banks will not end until the Fed is no longer able or willing to continue to print money. Should economic data continue to weaken going into earnings season I am sure the banter regarding QE III will increase at lightning pace and bad news for the economy will be good news for stocks. Poor economic data will increase the likelihood for additional liquidity being provided through a 3rd Quantitative Easing initiative.
Leaving the macroeconomic data aside and focusing on market technicals, we find several unsettling situations in a variety of underlying assets and indicators. The warnings are largely falling on deaf ears as the equity bull parade continues. Before we talk about the S&P 500 Index directly, perhaps we should examine some of the indicators and underlying assets that are sending out bearish smoke signals.
The first chart I would draw your attention to is the McClellan Oscillator which is a widely followed and focuses on market breadth as a possible market indicator for tops and bottoms. Note the key high and low points of the Oscillator and how they correspond with the S&P 500 Index.
Read the entire article and see the charts for "Is the SP 500 Closing in on a Top?"
Get our Free Trading Videos, Lessons and eBook today!
Subscribe to:
Posts (Atom)
