A "Flood" of new oil..........

[Polish_Silver]

end of Bricks?

If this commodity price slide continues it's Bye Bye BRICS...

Brazil and Russia may be commodity exporters, but China is a commodity importer.

I don't know about India.

[Polish_Silver]

Re: A "Flood" of new oil..........

Too early to tell if I am going to collect that Margaux, but looking somewhat more promising

Is this chart a result of increased crude production, or decreasing demand? I am thinking production is probably known, to at least some people, who can then deduce what the demand situation must be.

[GRG55]

Re: end of Bricks?

Brazil and Russia may be commodity exporters, but China is a commodity importer.

I don't know about India.

look beyond the simple commodity import/export status PS. what does china export, and to where. :-)

[Polish_Silver]

Re: end of Bricks?

look beyond the simple commodity import/export status PS. what does china export, and to where. :-)

Simplifying, I'll say, "china exports low cost mass market consumer goods to the US".

How is that business hurt by low commodity prices?

They are also exporting fertilizer to the US.

[Southernguy]

Re: end of Bricks?

Of BRICS I think only Russia is being hit hard by low oil prices.
As for China it is rebalancing it's economy towards higher consumption with a lower fixed capital formation as percent of GDP.
Anyway, hat tip for GRG for his mostly accurate prognostication about oil prices. If WTI reaches or not the 60 dollar mark is irrelevant as to evaluating the beauty of his prediction.
Brent seems to be following the trend quite exactly also. Can a bottom be asessed so as to get some actionable information?

[charliebrown]

Re: end of Bricks?

I bought a little DBO when WTI went under $90. What if the middle east unravels more? Problems in the house of Saud?

[ST]

Re: A "Flood" of new oil..........

Is this chart a result of increased crude production, or decreasing demand? I am thinking production is probably known, to at least some people, who can then deduce what the demand situation must be.

Increased crude production. Many factors can move the oil price in the short term. But, if keeping an eye on the long term the biggest factor is the marginal cost of production. Long term, the most expensive producer of crude whose oil is needed by the global market sets the price of crude. Same is true for natural gas though regionally. Again, long term. We've moved from $20/bbl to $100/bbl in costs over the past 20 years. The next in line producer for determining the next phase of marginal cost is oil sands expansion projects, then after that it is gas to liquids. OPEC spare capacity is generally kept in check but relegates itself to a short term factor for now - it's the lowest on the cost curve.

[touchring]

Re: end of Bricks?

Brazil and Russia may be commodity exporters, but China is a commodity importer.

I don't know about India.

If oil crashes, China will be the biggest winner.

Cheap oil means cheaper oil companies and reserves. We shouldn't be surprised if China sends their SOE around the world in places like Canada buying up oil fields and oil infrastructure. I will sell paper treasury anytime to buy cheap oil.

Doesn't matter if prices continues falling. China will just keep buying and leave it in the ground for future use.

We've been through this CON game once. A deflation is followed by an even more massive inflation.

[GRG55]

Re: end of Bricks?

If oil crashes, China will be the biggest winner.

Cheap oil means cheaper oil companies and reserves. We shouldn't be surprised if China sends their SOE around the world in places like Canada buying up oil fields and oil infrastructure. I will sell paper treasury anytime to buy cheap oil.

Doesn't matter if prices continues falling. China will just keep buying and leave it in the ground for future use.

We've been through this CON game once. A deflation is followed by an even more massive inflation.

China is unlikely to invest a great deal more in Canadian oil assets in that scenario. Already it is frustrated with the extensive environmental review, public hearings and First Nations consultation processes...none of which it has to deal with at home or in most other jurisdictions.

China is most likely to express renewed interest in developing nations that are heavily resource export dependent, such as much of Africa, Kazakstan and other Central Asian states, Russia, Brazil, Argentina and similar. These nations are/will suffer the greatest currency depreciations against the reserve currency in which commodities are priced, and thus offer the greatest negotiating leverage opportunity for China. The recent gas export announcement from Russia, with it's collapsing ruble, is an example.

[bill]

Re: end of Bricks?

China is most likely to express renewed interest in developing nations that are heavily resource export dependent,

Like this,,,,,

http://www.platts.com/latest-news/sh...tilus-27714124

Iraq bans entry of three tankers at its crude oil terminals

Singapore (Platts)--10Oct2014/330 am EDT/730 GMT


Iraq has banned three oil tankers -- two Suezmaxes and one Panamax -- from loading at its oil terminals in response to direct exports of crude by the Kurdistan Regional Government over the objections of Baghdad, shipping market sources said Friday.

"The United Carrier, the United Dynamic and the Nautilus will no longer be permitted to enter Iraqi oil terminals and other terminals to be used for export of Iraqi crude oil in future," Iraq's State Oil Marketing Organization, or SOMO, said in a notification seen by Platts.
.
.
KURDISH CRUDE DISCHARGED IN ASIA

Over the last couple of weeks, United Dynamic and another Suezmax managed by MMS, United Emblem, have apparently discharged two more cargoes of Kurdish crude around Southeast and North Asia, according to market sources familiar with the developments.

United Emblem did a ship-to-ship transfer in the South China Sea, a Singapore-based shipping agent said. "Very few [people] want to talk about it," the agent said with reference to the secrecy involved and sensitivity of the matter. Names of receivers of the cargoes were not immediately available.

"All this is being done under the radar for obvious reasons," said a VLCC broker in Singapore. The crude from Kurdistan is available at a heavy discount while shipowners charge higher freight for moving the cargoes, he said.

Unlike Iranian crude, shipping of which has been severely restricted by Western sanctions preventing ships getting insurance, KRG faces no such restrictions and Protection and Indemnity (P&I) clubs do provide cover for ships moving Kurdish crude, the broker said.

After ship-to-ship transfer, the crude gets blended with other grades so the origin cannot be traced and it is sold in smaller parcels to buyers in China and countries in Southeast Asia, market watchers said.

http://rudaw.net/english/kurdistan/19092014

ERBIL, Kurdistan Region – China is set to become the fifth and final permanent member of the UN Security Council to open an official representation in the Kurdistan Region, with the arrival of the consul general in Erbil.


“There’s chaos in some parts of Iraq, but business in Kurdistan is moving forward,” said Karwan Jamal Tahir, the Kurdish foreign relations official who welcomed Consul General Tan Bang Len on Wednesday.
The consul’s long anticipated arrival comes after years of planning by the Kurdistan Regional Government (KRG) and Chinese authorities. Tan will visit Prime Minister Nechirvan Barzani during a weeklong stay; KRG officials indicate he will return once a consulate is set up before the end of the year.

[touchring]

Re: end of Bricks?

China is unlikely to invest a great deal more in Canadian oil assets in that scenario. Already it is frustrated with the extensive environmental review, public hearings and First Nations consultation processes...none of which it has to deal with at home or in most other jurisdictions.

Agree that China will explore every opportunities.

As for Canada, not if Canadian oil industry goes bankrupt before Russia does with the high cost of oil sands and lack of oil pipelines.

http://www.bloomberg.com/news/2014-1...fter-rout.html

As with Ukraine, the allies get screwed more than the "enemy". I'm wondering if there is actually a covert operation to alienate America's allies. If you know what I mean. ;)

[bill]

Re: end of Bricks?

As with Ukraine, the allies get screwed more than the "enemy". I'm wondering if there is actually a covert operation to alienate America's allies. If you know what I mean. ;)

Penny's on it.....

http://online.wsj.com/articles/u-s-s...ade-1412268136
Commerce Secretary Penny Pritzker Says Building Trade Ties a Tool to Combat Terrorism

U.S. Commerce Secretary Penny Pritzker meeting Turkish President Recep Tayyip Erdogan in Ankara this week for trade talks.

ANKARA—The U.S.

has promised to boost trade and investment in Turkey this week as it tries to woo its long-standing ally into a more assertive role in fighting Islamic State.

Commerce Secretary Penny Pritzker has been meeting with businessmen and officials, including Turkey’s president Recep Tayyip Erdogan, since Tuesday to discuss defense cooperation, including a missile deal, as well as new investment and trade treaties. Bolstering economic ties is high on the agenda as they have lagged behind decades of security and diplomatic cooperation that underpin the North Atlantic Treaty Organization members’ relationship.

Turkey is the last stop after Ukraine and Poland on a “commercial diplomacy” mission, as Ms. Pritzker put it in an interview Thursday, seeking to reassure allies that the U.S. isn’t only committed to countering geopolitical risks, but also wants firmer ties driven by trade.

Washington’s push comes just as the parliament in Ankara debates legislation Thursday that would renew the Turkish military’s mandate to carry out cross-border operations, while also opening Turkey as a base for airstrikes and foreign troops to attack Islamist jihadists across its southern border in Syria and Iraq.

“Increasing commercial ties is a stabilizing force in any country,” Ms. Pritzker said. “By bringing U.S. businesses here...if they can bring economic opportunity, that is an effective tool to combat terrorism and promote peace.”

[touchring]

Re: end of Bricks?

Penny's on it.....

http://online.wsj.com/articles/u-s-s...ade-1412268136
Commerce Secretary Penny Pritzker Says Building Trade Ties a Tool to Combat Terrorism

MSM and fancy speeches can help you influence your political opponents, but they got no effect on ebola as the virus has got no ears - http://edition.cnn.com/2014/10/15/po...html?hpt=hp_t1

http://www.nbcnews.com/storyline/ebo...travel-n226796

[bill]

Re: end of Bricks?

has promised to boost trade and investment in Turkey this week as it tries to woo its long-standing ally into a more assertive role in fighting Islamic State.

Commerce Secretary Penny Pritzker has been meeting with businessmen and officials, ”

Financial machinery moves in…..
http://www.bloomberg.com/news/2014-1...used-pool.html
10-15-2014A group of Carlyle managers in Istanbul are planning to raise their own fund targeting Turkey with the firm’s support, said the people, who asked not to be named because the plan is confidential. The size of the fund will be determined later this year, the people added.
The fund will invest in mid-sized companies in Turkey as demand for investments in the nation is better than it is for other Middle East and North African countries, the people said. The Washington-based private-equity firm has two investments in Turkey, and has spent its first $500 million Middle East and North Africa fund.
“Carlyle will still seek out targeted opportunities in the region using both existing and new funds with a mandate to invest in those markets,” the buyout firm said in an e-mailed statement.

[GRG55]

Re: A "Flood" of new oil..........

I think my thesis is consistent with PCO. I made a wager that WTI would touch $60 some time during 2014 (and in behind the paywall posted a similar outlook some months ago). I have no idea if I will be proven correct, as I have also posted many, many times that forecasting oil prices over short time intervals is a mugs game.

However, here's my thinking...and why I do not think it inconsistent with PCO.

First I was specific about WTI. The differential between WTI and the most popular global index, Brent, is being influenced by factors that have nothing to do with global supply, demand or GDP, and everything to do with USA domestic pipeline, truck, rail, barge and refining capacity...all of which are presently overtaxed while the upstream industry does what it always does...drill baby, drill. I just got back from a short trip to Dallas and Midland, TX. I made a 2 hour drive northwest of Dallas to meet a biz associate. I had the rental car on cruise control at 75 mph in the right lane. Once I got out of Fort Worth I was being passed by an almost continuous line of trucks hauling drill pipe...I gave up counting them.

Then I flew from DFW to Midland. What I saw there and out in Pecos County confirmed what I expected. The big boys, Apache, Anadarko, and others similar are drilling up a storm. They won't stop until they, and industry as a whole, create a price drop...that is the usual scenario in pretty well every drilling boom. If Brent price cracks, WTI will probably be more volatile this time.

Second, I wagered "touch $60". If the oil price declines, but does it by way of a gentle drift down to perhaps $80ish, I'll lose the bet with my brother. Possible, but not a typical commodity (oil) price decline. Usually once the oil price cracks the speculators exit their long dated futures en masse creating a selling avalanche and oil overshoots to the downside. All that is needed is a single intraday trade settled at $60. If that happens I would expect a pretty healthy bounce in the oil price immediately after...but I will nevertheless be placing an order with my brother for an expensive bottle of Margaux.

Oil under pressure again this morning, WTI heading back towards $77. Going to be an interesting finish to the year...although $60 is still a loooong shot.