Having legged higher at the opens of Asia, Europe, and US markets, WTI is extending gains overnight on middle-east tensions… Brent is trading above $62 amid anti-corruption drive led by Saudi Crown Prince Mohammed bin Salman, which may consolidate his control in OPEC’s largest oil producer, and WTI has pushed above $57 as producers such as Nigeria, Saudi Arabia signal they support a potential extension of OPEC output cuts.
This post was published at Zero Hedge on Nov 6, 2017.
New York City real estate, particularly the luxury market, is a popular refugee for world’s corrupt, self-dealing public servants and the crooked businessmen who bribe them. China cracked down on wealthy citizens seeking to stash their wealth in international real estate by adding several deterrents to its capital controls earlier this year (Among them, Chinese investors moving money out of the country must now sign a pledge saying it won’t be used to buy real estate, or investment securities). Shortly after, the New York real-estate – literally half a world away – was rattled by a crush of stalled deals. So, it’s unsurprising that the mystery behind the largest residential foreclosure auction in NYC history would have this kind of sordid backstory. Last month, we met Kola Aluko, a Nigerian oil magnate and the purported owner of One57’s Apartment 79, a $50 million apartment that will be sold next week in what appears to be the largest foreclosure auction in New York City history.
This post was published at Zero Hedge on Jul 16, 2017.
It appears that at least one “Nigerian prince” had the cash to back his claims. Nigeria’s anti-corruption unit discovered more than $43 million in US dollars at an upscale apartment in Lagos, after receiving an anonymous tip. As CTV News reports, the Economic and Financial Crimes Commission received a tip from a whistleblower who reported suspicious activity when they noticed someone moving bags in and out of the apartment, according to a Facebook post.
This post was published at Zero Hedge on Apr 16, 2017.
Summary Seadelta loaded Libyan crude, headed to China. Sudden rise expected in exports from Libya and Nigeria. Other producers expected to increase production as OPEC meets this week. Potential additions on the order of 1.4 billion barrels. February low in crude prices may be tested. I recently wrote that OPEC’s ‘production risks to the upside,’ as OPEC’s hopes for a supply-demand balance for 2017 have faded. I specifically mentioned that Libya and Nigeria want to restore production if and when they can. Mohamed Oun, the country’s envoy to the Organization of the Petroleum Exporting Countries, said in an interview today, ‘Definitely, we will not agree to a freeze without reaching our quota from before,’ which is 1.6 million barrels per day. On Thursday, a ‘Black Swan Event’ appeared in the news, that Libya was ready to double its production to 600,000 b/d within 4 weeks and to 950,000 b/d by year-end. At the same time, Nigeria was planning to restore more than 500,000 b/d of exports within days. I assessed that this scenario, if it materializes, could cause the crude oil market to re-test its lows of last February.
Amid the most enduring global oil glut in decades, two OPEC crude producers whose supplies have been crushed by domestic conflicts are preparing to add hundreds of thousands of barrels to world markets within weeks. Libya’s state oil company on Wednesday lifted curbs on crude sales from the ports of Ras Lanuf, Es Sider and Zueitina, potentially unlocking 300,000 barrels a day of supply. In Nigeria, Exxon Mobil Corp. was said to be ready to resume shipments of Qua Iboe crude, the country’s biggest export grade, which averaged about 340,000 barrels a day in shipments last year, according to Bloomberg estimates. On top of that, a second Nigerian grade operated by Royal Dutch Shell Plc is scheduled to restart about 200,000 barrels a day of flow within days. While there are reasons to be cautious about whether the barrels will actually flow as anticipated, a resumption of those supplies – more than 800,000 barrels a day in all – could more than triple the global surplus that has kept prices at less than half their levels in 2014. It would also come just as members of the Organization of Petroleum Exporting Countries and Russia are set to meet in Algiers later this month to discuss a possible output freeze to steady world oil markets. ‘If you have some restart of Nigeria and some restart of Libya, then the rebalancing gets pushed even further out,’ Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by phone. ‘It complicates matters a lot before the meeting in Algeria.’
This post was published at David Stockmans Contra Corner By Laura Hurst, Elisha Bala-Gbogbo and Angelina Rascouet, Bloomberg Business ‘ September 15, 2016.
After buying as much crude as they could in the first quarter because of the low price of oil, Asian refiners are starting to cut back on buying crude, as the region is now oversupplied with crude and refined products. A poll by Reuters of 61 economists found that economic growth in China dropped to 6.6 percent in the second quarter, the lowest level in 7 years. Under normal conditions, this time of the year Asian refiners would have boosted utilization rates starting in July in order to meet increased demand for gasoline and diesel, which climbs in the summer season. But because of the crude acquisitions in the first quarter, there is more than enough to meet demand, which is another reason they’re cutting back on runs. A final factor is while oil has pulled back over the last couple of months, it’s still a lot higher from February lows of just over $26 per barrel. That has shrunk margins, which is cutting back on profits for the refineries. Together this has lowered Asian demand, with some companies in the Middle East lowering prices to generate more interest. Combined with an increase in oil rigs in the U. S., this could put pressure on oil prices going forward as shale production slowly ramps up. Consequently, the price of oil will probably remain level, and possibly test the $43 mark or lower. Add to this the increase in oil from Nigeria, Libya and Canada, along with added supply from Iran and Saudi Arabia, and it’s setting up a scenario where supply could exceed demand once again, resulting an increase in inventory. Asian slowdown Most of us are aware Asia, and China in particular, has been experiencing an economic slowdown. The 6.6 percent growth rate in China may be even more optimistic than warranted, but it does confirm the growth trajectory of China is flattening, and with it the rest of Asia.
One of the pillars of oil’s recovery from the lowest price in 12 years may be on the verge of crumbling. China is likely close to filling its strategic petroleum reserves after doubling purchases for it this year as prices plunged, JPMorgan Chase & Co. analysts including Ying Wang wrote in a June 29 research note. Stopping shipments for the reserve would wipe out about 15 percent of the country’s imports, according to the bank. Chinese crude imports have risen 16 percent this year, and the country is rivaling the U. S. as the world’s biggest oil purchaser. That demand, along with supply disruptions from Canada to Nigeria, has helped boost oil prices about 80 percent since January. ‘China has taken the opportunity of lower oil prices since early-2015 to accelerate the strategic petroleum reserve builds,’ Wang said in the report. ‘This volume might be close to the capacity limit, in our view, and together with potential teapot utilization pullback and slower-than-expected demand from China could increase near-term risks to global oil prices.’
Back in February 2015, the price of West Texas Intermediate stood at about $52 per barrel, half of its 2014 peak. I argued then that a renewed decline was coming that could drive it below $20, a scenario regarded by oil bulls as unthinkable. But prices did fall further, dropping all the way to a low of $26 in February. Since then, crude rallied to spend several weeks flirting with $50 per barrel, a level not seen since last year. But it won’t last; I’m sticking to my call for prices to decline anew to $10 to $20 per barrel. Recent gains have little to do with the fundamentals that led to the collapse in the first place. Wildfires in the oil-sands region in Canada, output cuts in Nigeria and Venezuela due to political unrest, and hopes that American hydraulic fracturing would run out of steam are the primary causes of the recent spurt. But the world continues to be awash in crude, and American frackers have replaced the Organization of Petroleum Exporting Countries as the world’s swing producers. The once-feared oil cartel is, to my mind, pretty much finished as an effective price enforcer. Even OPEC’s leader, Saudi Arabia, is acknowledging the new reality by quashing recent attempts to freeze output, borrowing from banks and preparing to sell a stake in its Aramco oil company as it tries to find new sources of non-oil revenue.
If the oil market needed a theme song for now, it might turn to the one where Taylor Swift nervously sings: ‘Are we out of the woods yet?’ A slump in U. S. production, unexpected cuts in output from Nigeria to Colombia and rising gasoline demand have helped drive a major rally since mid-February. As investors boost their bullish bets, analysts from UBS Group AG to Morgan Stanley and Goldman Sachs Group Inc. see pitfalls ahead. The global crude glut has spread to diesel and will threaten gasoline after the peak summer driving season. Unplanned outages may be resolved in coming months, boosting supplies as Iran seeks to regain market share andSaudi Arabia defends its turf. Demand is ‘underwhelming’ in emerging markets, says Morgan Stanley. Goldman Sachs warns U. S. output may rebound if prices rally too quickly. ‘Oil fundamentals are improving but the market is still apprehensive,’ said Ehsan Ul-Haq, a senior consultant at KBC Advanced Technologies in London. ‘Only when refiners start complaining about the lack of supply will we see a sustainable recovery.’
Asia’s two biggest stock markets are jostling for an ignominious prize. Japan’s Topix index and China’s Shanghai Composite Index have tumbled more than 13 percent in 2016 to rank along Nigerian and Mongolian shares as the world’s worst performers. In the two years through the end of December, the Asian gauges outperformed MSCI’s global measure by at least 20 percentage points. The Bank of Japan stood pat on monetary policy Thursday, sending Tokyo stocks tumbling, while the Shanghai measure fell to a one-month low. The benchmark gauges in two of the world’s largest stock markets, which have a combined value of almost $11 trillion, are declining as investors detect a reduced appetite from policy makers to boost monetary stimulus. Thursday’s BOJ decision was the first under Governor Haruhiko Kuroda where a majority of economists expected easing that didn’t materialize, while strategists now see China’s central bank keeping its main interest rate on hold until the fourth quarter. ‘Neither China nor Japan have a solid plan on dealing with their slowing economies,’ said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. ‘There is still scope for easing, and as for Japan there are fiscal policies they can carry out. There’s still hope. But today there was just too much hope on the BOJ.’
Submitted by Irina Slav via OilPrice.com, Depressed oil prices, rampant corruption, and pipeline vandalism are only parts of Nigeria’s oil problem. It’s now losing a massive 400,000 barrels of crude daily to pirates in the Gulf of Guinea, an amount equal to the entire daily export capacity of its Forcados terminal. Overall damage from piracy, theft and fraud for Africa’s largest oil exporter is estimated at some $1.5 billion a month, according to U. S. deputy ambassador to the UN, Michele Sison, citing a Chatham House report. Attempts by local governments and the UN to put a stop to piracy have met with some success, but the practice continues – shifting location and adapting to new security measures, so now the UN Security Council is calling for a comprehensive framework of measures aimed at eradicating it.
This post was published at Zero Hedge on 04/29/2016 –.
The Saudis may go public, OPEC’s in disarray, the U. S. is suddenly a global exporter, and shale drillers are seeking lifelines from investors as banks abandon them. Welcome to oil’s new world order, full of stresses, strains and fractures. For leaders gathering in Houston next week at the IHS CERAWeek conference – often dubbed the Davos of the energy industry – a key question is: what will break first? Will it be the balance sheets of big U. S. shale companies? The treasuries of Venezuela and Nigeria? The resolve of Saudi Arabia, whoserecent deal with Russia to freeze output levels offered the first hint of a rethink? After watching prices crash through floor after floor in the worst slump for a generation, the industry is eager for answers. Insiders say it’s not too hard to visualize what markets might look like after the storm – say five years down the line, when today’s cost-cutting creates a supply vacuum that will push up prices. But it’s what happens in the meantime that’s got them scratching their heads. ‘This is a weird thing for a market analyst to say because it’s usually the opposite case, but I have more conviction in my five-year outlook than my one-year outlook,’ said Mike Wittner, head of oil market research for Societe Generale SA. ‘Maybe I’m letting my head get turned upside down by the last couple months.’
Having urged “don’t panic” just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all. In September, Nigerian central bank Governor Godwin Emefiele ruled out a naira devaluation on Thursday and told people not to panic about a government order which risks draining billions of dollars from the financial system. In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a “Treasury Single Account” (TSA) at the central bank. The policy is part of new President Muhammadu Buhari’s drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa’s biggest economy – playing havoc with banks’ liquidity ratios.
This post was published at Zero Hedge on 01/31/2016 –.
Following the recent move by Goldman Sachs in closing its BRICS fund, the future of this economic A-team seems uncertain. What does the future hold for the BRICS? And can we still expect a credible alternative to the Western-created IMF and World Bank to emerge? Face: [the team’s plane is starting to malfunction] Uh, Murdock, what’s going to happen? Murdock: Looks like we’re going to crash.’ Face: No, what’s *really* going to happen? Murdock: Looks like we’re going to crash and die. Could we be seeing a similar script unfolding for the international economic A-team? Well, according to Goldman Sachs, yes. It comes as little surprise to some institutional investors that Goldman decided to pull the plug on their depreciating investment product. Assets under management have dwindled to approximately $100 million, from a peak of $800 million at the end of 2010. However, it does seem ironic that the institution that first gave life to the idea of the BRICs (later turned BRICS to accommodate South Africa) has now decided to kill its own creation. But in the game of international finance economic, Darwinism is the name of the game. BRICS Who? In 2001 Lord Jim O’Neill, the then chief economist at Goldman Sachs, noted that the real GDP among Brazil, Russia, India, and China had surpassed that of the G7 group of mature economies. This informal association of nations, he stated, were the ‘strategic pillars’ of a supposedly entirely new international system. And thus voil ! A new investment angle opened up to the world. This awkward arranged marriage served as a powerful inspiration not only for investors who rushed to place their bets on big emerging markets, but also for political scientists and academics who sought to understand how this new goliath will operate as a political entity. They were not disappointed. Listen to: Stratfor’s Reva Bhalla: BRICS in Trouble; Russia a “Huge Concern” Brazil, Russia, India, and China make up half the world population, one-fifth of the world’s GDP, and one-quarter of the world’s land mass, so yes, a force to be reckoned with it is. In 2006 this partnership was solidified following a series of meetings on the side-lines of a UN General Assembly summit in New York. South Africa joined the party in 2010 following a political move to include an African nation as the group couldn’t possibly represent the idea of emerging economies without an African representative. Nigeria and South Africa were shortlisted with South Africa winning out as it fit the acronym.
Over the last 30 years, a near constant flow of cash has inundated China and other emerging markets. It has lifted those economies, pulled hundreds of millions of people out of poverty, and dictated corporate expansion plans worldwide. That wave is now ebbing. This year will see the first net outflow of capital from emerging markets in 27 years, according to the Institute of International Finance, a trade group representing international bankers. The group expects more than $500 billion worth of cash previously invested in things like Chinese factories, Brazilian government bonds, and Nigerian stocks to cascade out of such markets this year. What’s going on? In a word: China. In a profound change of narrative for both the global economy and markets that are closely tied to it, the story of fast Chinese growth – a story that has soothed investors and corporate managers around the world since the 1980s – is looking increasingly tough to square with the evidence. And it’s even tougher to imagine anything else like China – a billion new consumers joining the global economy – emerging any time soon. GDP growth in the People’s Republic fell to 7% per year in the second quarter, according to official numbers – some of the most most sluggish growth since the 2008 global financial crisis.
Back in May, John Cantlie, a journalist held captive by ISIS, laid out the sum of all fears thesis in the group’s English-language online magazine Dabiq. To wit: Let me throw a hypothetical operation onto the table. The Islamic State has billions of dollars in the bank, so they call on their wilayah in Pakistan to purchase a nuclear device through weapons dealers with links to corrupt officials in the region. The weapon is then transported overland until it makes it to Libya, where the muj?hid?n move it south to Nigeria. Drug shipments from Colombia bound for Europe pass through West Africa, so moving other types of contraband from East to West is just as possible. The nuke and accompanying mujahideen arrive on the shorelines of South America and are transported through the porous borders of Central America before arriving in Mexico and up to the border with the United States. From there it’s just a quick hop through a smuggling tunnel and hey presto, they’re mingling with another 12 million ‘illegal’ aliens in America with a nuclear bomb in the trunk of their car. Ok, got that?
This post was published at Zero Hedge on 10/07/2015.
Africa’s most populous nation has just achieved something very important. This week Nigeria’s voters handed a landslide victory to former president, Muhammadu Buhari. Equally impressive, the incumbent president, Goodluck Jonathan, became the first Nigerian leader in 55 years to democratically cede power to his rival. President-elect Buhari, a dour, ascetic, unsmiling former general, proclaimed his primary goal is to attack all-pervasive corruption and crush the Boko Haram uprising in the north. Interestingly, Buhari, a Muslim, received substantial support in the Christian south in this normally religiously-divided nation of 177 million. Nigeria is one of the world’s most corrupt nations. The rating site Transparency International puts it 144 out of 177 most corrupt nations, just ahead of DR Congo and Haiti. But I disagree. I think Nigeria may be the most corrupt nation in Africa and likely on earth. Since independence from Britain in 1960, Nigeria has received over $400 billion in aid from Europe and the US, six times the post-WWII Marshall Plan that helped rebuild western Europe. Nearly all of it was stolen.
Watching formerly risk-averse investors adapt to a negative interest rate world is almost as much fun as watching Europe try to keep Greece and Germany in the same financial family. In each case, success depends on all the parties becoming something they really don’t want to be. On the negative interest rate front, consider this from yesterday’s Bloomberg: No Risk Too Big as Traders Plot Escape From Negative Yields Norway’s $870 billion sovereign wealth fund said this month that it added Nigeria and lifted its share of lower-rated company debt to the highest since at least 2006. Allianz SE, Europe’s biggest insurer, is shifting from German bunds to bulk up on mortgages. JPMorgan Asset Management is buying speculative-grade corporate debt to boost returns. Norges Bank Investment Management, the world’s largest sovereign wealth fund, increased corporate bonds rated BBB or lower to 8.3 percent of its debt assets at the end of last year from 7.5 percent in the prior quarter, the fund said March 13. Among those assets are about $200 million of bonds issued by Petroleo Brasiliero SA. Brazil’s state-controlled oil company, the biggest corporate debt issuer in emerging markets, has seen its benchmark 2024 bonds tumble almost 10 percent since allegations of kickbacks and bribes emerged in November.