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How Far Can Oil Rally? Options Investors Bet on Surge Above $100
Oil investors are buying contracts that will only pay out if crude rises well above $100 a barrel over the next four years — a clear sign some believe today’s bust is sowing the seeds of the next boom. The options deals, which brokers said bear the hallmarks of trades made by hedge funds, appear to be based on the belief that current low prices will generate a supply crunch as oil companies cut billions of dollars in spending on developing fields. The International Energy Agency forecasts that non-OPEC supply will suffer its biggest decline in more than two decades this year. “The market faces a supply crunch in the next 24 months,” said Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York. “Some hedge funds are betting that oil prices will need to rise sharply to bring demand down again — that’s […]
Saudi Arabia To Tax Foreign Residence As Oil Crisis Continues
The troubles that Saudi Arabia has been facing due to the plunge in oil prices have been discussed many times, most recently when Saudi authorities ordered banks to stop allowing speculators to bet against the Riyal. Liquidity worries have also surfaced, as late last month Saudi Arabia indicated that it was considering paying contractors with government issued bonds – read: IOUs. GDP growth has slowed significantly… (Click to enlarge) While debt to GDP has soared relative to prior years And Riyal forwards have plunged as bets on devaluation soar (despite government bans) (Click to enlarge) Against that backdrop, although oil has rebounded from recent lows, budgets are still light and in an attempt to help raise revenues in the short term (and transition away from dependency on oil in the longer term), the government is weighing an income tax on expat workers. As Bloomberg reports , in […]
Saudi Aramco IPO: Wall Street’s White Whale
Some deals only happen once in a blue moon. Others only come around once in a generation. But the one Wall Street bankers are eyeing in the deserts of Saudi Arabia is going to need a new set of superlatives. That would be the planned initial public offering of state-owned oil giant Saudi Aramco, by virtually any measure one of the largest enterprises on earth. The kingdom has said that Saudi Arabian Oil Co., as it is formally known, could be worth $2 trillion to $3 trillion—roughly equal at its midpoint to the total market value of every other publicly traded oil and gas company in the world, according to S&P Global Market Intelligence. The prospect of a deal that could generate $1 billion in fees has senior bankers at the world’s largest financial […]
Venezuela Opposition Tells Wall Street It’s Referendum or Crisis
One of Venezuela’s top opposition figures is warning Wall Street that a recall referendum is the only way of staving off a full-blown crisis in the South American nation already gripped by deep recession, runaway inflation and chronic shortages of basic staples. Henri Falcon, governor of Lara state, has met with with investors in the U.S. this week, as Venezuela’s opposition ramps-up its efforts to oust President Nicolas Maduro from office before his term ends in 2019. In those meetings, Falcon was accompanied by Francisco Rodriguez, a Harvard-trained, Venezuelan economist formerly with Bank of America Corp. “The referendum is an escape valve,” Falcon said in an interview Thursday in New York. “We are not only betting for the referendum, we understand that is the only democratic, constitutional way out.” Accusing the government of intentionally dragging its feet, Venezuela’s opposition has staged a slew of nationwide demonstrations in recent weeks, […]
Peak oil is so yesterday; now it’s all about peak auto
Remember peak oil theory? It was all the rage just a few years ago. Serious books were devoted to the idea that the world was running out of crude. Deep thinkers pontificated about its potentially dire impact on human civilization. But then all that peak oil talk peaked. Thanks to the fracking revolution, it became clear that the world actually has plenty of oil. Supplies can now be turned on or off almost at will, as prices rise and fall. Turns out the future is a lot harder to predict than the peakists thought. But once a peakist, always a peakist. It seems to be a tough habit to break. Now they’re busy predicting other peaks. Such as: the planet’s peak carrying capacity; peak sustainable population levels; peak food production; peak allowable carbon emissions levels; peak stock market levels; and of course, peak auto. Yep, peak auto. It’s a […]
