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Weakened Saudi Arabia Could See Social Unrest After Economic Shakeup
Despite oil’s rebound from cyclical lows and the world’s exuberance that the energy space may be saved (on the basis of headline-reading algo pumping momentum into commodity futures products that only leveraged Chinese speculators could find value in), something ugly is occurring in Saudi Arabian money-markets. There appears to be a growing funding squeeze in The Kingdom as 3-month interbank rates spike above 2 percent for the first time since January 2009, prompting King Salman to approve a ‘post-oil economic plan’. (Click to enlarge) Whether this spike is responsible or not, The Kingdom is clearly seeking ways to reduce its reliance on crude. As Bloomberg reports, King Salman approved a blueprint for diversifying the country’s economy away from oil on Monday, a package of developmental, economic, social and other programs. Saudi Arabia’s plan for the post-hydrocarbon era will have to overcome habits developed over decades of relying on crude […]
Venezuela Starts Power Rationing, Oil Production Likely to Fall
Venezuela—home to the largest oil reserves in the world–will for the next 40 days experience a four-hour blackout every single day, and there are fears that the rationing could lead to unrest and trigger a decline in oil output at a time when the country is barely hanging on. The decision to ration electricity was brought about by a severe drought that has rendered the level of the Guri dam – the country’s major source of power generation – so low that if the weather doesn’t change, the authorities will have to shut it down. The blackouts will affect households and industrial users alike–and it’s very likely that oil production will drop. This drop, however, will not be too significant, especially in the current state of oversupply. The Financial Times last week quoted analysts as estimating that irregular power outages could lead to a daily decline in oil output […]
China Stockpiling Oil At Highest Rate In Over A Decade
China might be in the midst of another round of stockpiling, stepping up crude oil imports to fill its strategic petroleum reserve (SPR). The slowdown in oil demand in China is one of the chief concerns regarding the state of oversupply in global oil markets. Excess production has driven down prices, but soft demand in China over the past year or so has led to a protracted recovery. After a period of softness, oil imports could be rising once again. Bloomberg reports that the number of oil supertankers docking at Chinese ports is at a 16-month high. And there are 83 supertankers currently on their way to China, with a capacity of 166 million barrels of crude, the highest number in four months. In the first quarter of this year China diverted about 787,000 barrels per day into its strategic stockpile, the highest rate since Bloomberg has been tracking […]
Indonesia OPEC Governor: No Urgency To Freeze Output With Oil At $45
Indonesia’s governor to the Organization of the Petroleum Exporting Countries said on Monday that oil at $45 a barrel was “not bad” and that there would be no urgency to freeze output if crude remained at that price. Despite failure to reach a deal to curb oil output and support prices at an April 17 meeting of OPEC and non-OPEC producers, crude prices have maintained a general upward trend since hitting a 12-year trough in mid-January. Front-month Brent crude was trading at $44.75 per barrel at 0752 GMT, down 36 cents, or 0.8 percent, from its last settlement as traders took profits after three weeks of gains. “The price is $45, which is not […]
China Bans Some New Coal Power Plants
China’s government is banning construction of new coal-fired power plants in areas with surplus power supply, a move that could weigh on already-struggling coal markets . The new measures outlined Monday by China’s top economic planner, the National Development and Reform Commission, underscore the central government’s deep concern with overcapacity across China’s economy, a result of weakening industrial demand as growth slows. Beijing has previously said it aimed to curb thermal power overcapacity ; analysts said the fact that it now came from an official NDRC communiqué was the clearest signal yet that it won’t tolerate new coal capacity in regions that already have excess supply. Weaker demand for coal inside China could ultimately lead to higher exports, which would exacerbate the huge supplies of coal sloshing around global markets. The higher supplies could drive down global benchmark prices and hit the bottom lines of major U.S. and international […]
