Oil Price – Traders Are No Longer In Panic Mode To Find Buyers For Unwanted Oil As Demand Ticks Up



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Oil markets are returning to relative normality, the once yawning gap between the price of an actual physical barrel of oil and futures prices has narrowed sharply.

At its worst in April, a barrel of oil in the North Sea cost $10 less than the price on a Brent oil futures contract, a decade-high gap for the world’s benchmark oil price, according to S&P Global Platts. Now, the gap has shrunk to less than $2 a barrel as the oil market rebalances and traders are no longer in panic mode to find buyers for unwanted crude.

“A few weeks ago, we had armageddon pricing when nobody wanted physical barrels apart from for storage,” said Richard Fullarton, chief investment officer at hedge fund Matilda Capital Management Ltd.

The price of physical oil slipped far below futures prices last month when oil storage ran short and the cost to store crude jumped. The two prices tend to collide ahead of the expiration of futures contracts.

The return to health in the physical oil markets reflects several factors. Oil producers have made large, coordinated cuts in production. China’s economy has restarted and lockdowns in Europe and the U.S. eased, creating an uptick in demand. And a shortage of oil storage, which at one point drove U.S. oil futures prices into negative territory, appears to have peaked.

Oil prices, both physical and futures, have almost doubled since their April nadir, though they slipped Friday after China abandoned its yearly gross domestic product growth target.

Front-month futures for Brent crude, the global benchmark, fell 2.6% to $35.13 a barrel Friday, having rebounded from their $19.33-a-barrel low on April 21. Its physical counterpart was priced at $34.13 a barrel late Thursday.



Physical oil tends to be traded by major commodities trading houses, oil companies and refiners who have the financial heft and logistical capacity to store large amounts of oil in case they need to wait for a better pricing environment.

One of the largest independent traders, Trafigura Group Pte., has been on a buying spree. The Swiss company snapped up at least 15 cargoes of North Sea crude—amounting to 9 million barrels of oil—between May 13 and 21, according to S&P Global Platts. Trafigura declined to comment on its bet on North Sea crude, which was reported by Reuters.

Smaller traders also buy physical barrels of oil or refined products, for instance by filling fleets of tanker trucks with gasoline, selling it on to gas stations when prices move higher.

Overall, the gap between physical oil and futures was more pronounced in international markets than the U.S. As a largely seaborne crude, Brent producers could rush to store oil on massive tanker ships. Sellers of the largely landlocked U.S. benchmark, West Texas Intermediate, had to pay buyers to take it off their hands when futures prices turned negative on April 20.

Unlike Brent oil futures, which are all cash settled, some WTI futures contracts require their owners to take delivery of physical oil when the contracts settle. Even so, physical WTI at the end of March was $6 less a barrel than the futures market.



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That gap is now close to gone. The storage conditions were feared to be most acute in Cushing, Okla., where WTI contracts are settled.

“We didn’t see tank tops at Cushing. Instead we’ve seen phenomenal levels of shut-ins,” said Edward Marshall, a commodities trader at Global Risk Management, referring to the act of oil producers turning off wells to choke supply.

A pickup in refiner demand to supply Americans getting back on the road has helped WTI’s recovery. Pipeline flows from Cushing to Midwestern refiners are 400,000 barrels a day higher than they were in early April, according to commodity-market information provider Genscape.



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Oil Outlook Vastly Different Than When It Plunged Into Negative Territory A Month Ago

The fortunes of the oil market have turned around dramatically in the past month. This time last month, investors were watching the futures market in disbelief. The May contract for West Texas Intermediate oil was set to expire, and prices did the unthinkable — they plunged 300% in one day, deep into negative territory. In the spot market all across North America, prices also turned negative, meaning people literally couldn’t even give oil away.



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There were dire forecasts of much more pain ahead, and a recurrence of the wild trading was feared for the June contract. But now the outlook is much improved, as the June contract is set to expire Tuesday. The world has changed, and the ugly crisis created by both oversupply and a sudden lack of demand is beginning to reverse.

“We think fundamental right steps have been taken to get us on sounder footing,” said Helima Croft, head of global commodities strategy at RBC. Croft said the “green shoots of recovery in place,” as Chinese and U.S. demand are improving, and OPEC plus ended its feuding and agreed to sharply cut output.

China has been buying more oil, and its demand is clearly strengthening. U.S. drivers are getting back into their cars as coronavirus shutdown restrictions lift. On the supply side, Saudi Arabia last week added another 1 million barrels a day cut of its own to the OPEC plus deal for a 9.7 million barrel reduction, and America’s oil industry has cut its production quickly and sharply.

Oil prices jumped sharply Monday, rising on the positive developments and a rally in risk markets sparked by Fed Chairman Jerome Powell’s comments that the Fed will can do more to support markets and the economy. WTI futures for June were up 7.4% at $31.62 per barrel in afternoon trading.

Now, the demand side of the market and the supply side are improving in tandem, to reduce the oil glut that was close to filling all available storage facilities, including ships at sea. The fact that the world was running out of places to store oil in April was behind the sharp drop in the futures contract. Investors were unable or unwilling to take delivery of oil, and there were also investors who became trapped in the trade as the selling spiraled. Interactive Brokers took a $109.3 million hit to cover its customers’ losses.

Oil is now trading above $30 for the first time since March 17, and RBOB gasoline futures have risen above $1 per gallon for the first time since March 13. The strong move higher in the June contract is also forcing some investors to cover short positions, adding to the rise.







The United States Oil Fund ETF, based on futures contracts, was up more than 8% Monday. Some investors initially blamed USO for causing the market disruption last month, but the fund had already rolled out of the May contract before the market began to crater. A popular oil play for retail investors, USO has since restructured its holdings to distribute them more evenly across later dated contracts, rather than holding them in the front month.

As the June contract gets set to expire, the landscape has changed dramatically for the U.S. oil industry. U.S. production was at a record high in March, and has cut back by 1.5 million barrels a day in just about six weeks, to 11.6 million barrels a day, according to the Energy Information Administration’s latest weekly data. Analysts expect production could be down by another 500,000 to 1 million barrels soon.

“It’s just a massive response by the U.S. industry,” said John Kilduff, partner with Again Capital. “This is a remarkable plunge in activity. … It’s pretty clear the U.S. is now the swing producer.”

Baker Hughes reported that another 34 oil rigs went out of service last week, leaving just 258 active oil rigs, about a third of the rig count last year.

“Storage at Cushing actually fell last week. That was the whole mechanism last month that drove the negative pricing,” said Kilduff. “There were barrels to take in and no place to put them.” Cushing, Oklahoma is the storage hub for WTI, so the market watches storage levels there closely.

“The pace was such that it would have been topped out by the end of June,” Kilduff said, but that seems to have reversed. Traders said oil prices were also lifted Monday by a report from Genscape that showed another big drop in Cushing storage levels. Government data on the latest storage levels will be released Wednesday.

The weekly U.S. government data shows implied demand for gasoline was also up sharply, with demand at 7.4 million barrels a day, from the early April trough of 5.1 million barrels a day. Normal demand for this time of year is about 9.5 million barrels a day, and it peaks ahead of the July 4 holiday. Analysts said the government data overstates retail demand, which is more like 6.5 million barrels a day in mid-May.

Analysts say demand has improved and as of last week, it was off by about 30% from normal levels, much better than the approximately 50% drop in demand in early April. U.S. gasoline demand is key because it is typically equal to about 10% of global oil demand.

Francisco Blanch, head of global commodities and derivatives at Bank of America, said he expects the rally to continue for now, but prices will not go that much higher. “This is a recovery that has a pretty low ceiling. My sense is that if prices approach $40 a barrel, then production will come back pretty quickly,” he said.

Oil prices were also helped Thursday by a news report that Chinese demand has returned to levels near where it was before the lockdown there.

RBC has been tracking Chinese data, including on airline flights, and it expects demand will recover an average 9% this quarter, 17% in the third quarter and 25% in the fourth quarter from the lows seen during the first quarter. Croft expects the recovery in China to be the quickest, relative to other global regions.



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Oil Prices Boosted By Saudi Arabia Pledge To Deepen Output Cut

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June in a bid to help drain the glut in the global market that has built up as the coronavirus pandemic crushed fuel demand.

Brent crude (LCOc1) futures advanced 0.5%, or 15 cents, to $29.78 at 0500 GMT, after hitting an intraday high of $30.11 a barrel.

U.S. West Texas Intermediate (WTI) crude (CLc1) futures were up 1%, or 26 cents, at $24.40 after touching an intraday high of $24.77.


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Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.

“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note. OPEC+ is a group comprised of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia.

The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total. Kazakhstan has also ordered producers in large and mid-sized oil fields including Tengiz and Kashagan to cut oil output by around 22% in the May to June period.

Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.

“It was so sudden and so significant, it was just seen as: ‘Is this a proactive policy or just a reaction to weak demand?'” said Vivek Dhar, Commonwealth Bank’s mining and energy economist.



The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.

However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of COVID-19 cases spurring renewed lockdowns.

Data showing China’s April factory prices fell at the sharpest rate in four years also added to investor jitters as it revealed weak industrial demand.

“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” said Commonwealth Bank’s Dhar.

Inventory data this week will be key to extending the recent rally in oil prices, analysts said.


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U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.



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Crude Oil Volatile – Dysfunction In The Oil Market Intensified, Sending The Most Popularly Traded U.S. Oil Contract To A Fresh Low

Oil prices recovered some losses Tuesday after traders scrambled to avoid the worst of the damage wrought by volatile markets. The world is awash with too much oil at a time when coronavirus lockdowns on driving, flying and industrial activity has all but eliminated the need for the stuff.


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June futures contracts for West Texas Intermediate—the main U.S. bellwether—dropped nearly 20% and touched $10.24 a barrel before regaining ground to around $13.56 a barrel, up 6% on the day. Brent crude was up 2.9% at $23.72 a barrel. WTI traded at a massive difference to its European counterpart because of severe bottlenecks in storing oil in Cushing, Okla., where WTI contracts are settled.

The earlier drop in WTI briefly put it on track for the lowest closing level for an actively traded contract since at least 1986, according to data provider FactSet. WTI has only ever settled the day below $11 on six occasions, according to FactSet records, which stretch back to 1986. The last time was in 1998. The all-time low was March 31, 1986, when oil traded for $10.42.

A lightly traded futures contract for WTI traded for negative prices last week, spooking markets, and prompting investors to race out of contracts that require them to take delivery of oil in the coming months. Most oil watchers consider the most actively traded contract at any given time as the price that best reflects market conditions.

The selloff picked up steam Tuesday as investors sold the June contract and into ones that are tied to oil delivered in months down the road, said Giovanni Staunovo, commodity analyst at UBS’s Chief Investment Office.

“Everyone’s running out of the contract and they don’t want to be the last ones on the train, so that’s not helping prices,” Mr. Staunovo said.

S&P Dow Jones Indices said in a statement after Monday’s market close that it would remove the June U.S. crude contract during Tuesday trading hours from its widely followed indexes that track the oil market and switch to the July contract.

The move, which S&P said would include the S&P Goldman Sachs Com modity Index, comes earlier in the trading month than usual, and was “based on the potential for the June 2020 WTI Crude Oil contract to price at or below zero,” the index announcement said. BlackRock’s iShares S&P GSCI Commodity-Indexed Trust exchange-traded fund tracks that index and had around $400 million of assets as of April 27, according to the fund website.

BlackRock didn’t immediately respond to a request for comment.

That followed a decision by the United States Oil Fund —the largest exchange-traded fund that attempts to track oil prices—to sell its positions in the June contract and purchase positions in contracts several months away.

The crash in prices, and the dip into negative territory for the May contract last week, highlighted the dangers associated with holding oil futures that expire soon. Some WTI contracts require owners to take delivery of oil when the contracts expire. With oil tanks and pipelines full, some oil investors were forced to unload the right to collect that oil and pay the buyer to do so.



Many fear that negative oil prices could happen again. Prices on WTI contracts for July delivery have also come down in recent days to $18.99 a barrel. Contracts for delivery at the end of the year are at about $27 a barrel.

Government-imposed lockdowns aimed at preventing the spread of the coronavirus have suffocated global oil demand. Oil majors, frackers and national oil companies around the world have raced to shut off wells. A deal among major oil-producing nations to cut due to take effect Friday that will hold back approximately 13% of global supply.

But investors worry these measures won’t relieve the supply glut fast enough.

A lack of space to store oil onshore in the largely landlocked U.S. market has pushed WTI prices lower, said Bjarne Schieldrop, chief commodities analyst at SEB Markets. The hit to Brent prices, which are tied to oil produced in the North Sea, has been less severe. The Brent market is largely seaborne and space to store oil offshore remains. But as long as production continues amid weakening demand, space will run out, Mr. Schieldrop added.

“The final crunch point in time is still ahead of us,” he said. “Supply and demand will be forced to align meaning that production will have to shut down. That will be the final low point, but we are not there yet.”

Investors will keep a close watch on U.S. inventory data due out this week, with American Petroleum Institute stock-level data expected later Tuesday.




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Oil Glut Swells Off Asian Trading Hub On Global Storage Scramble

A narrow waterway off Singapore has become even more congested as oil-laden tankers wait out a slump in global fuel consumption that’s crimped demand and boosted the use of ships to store cargoes.

About 60 clean fuel tankers are currently anchored along the busy strait, up from the usual 30-40 ships, according to Rahul Kapoor, head of commodity analytics and research at IHS Markit. Some vessels are being used to hoard fuel at sea as onshore tanks fill up. Others are probably parked, waiting to be redirected to any willing buyer across Asia and the world as the coronavirus pummels economies worldwide.



Ships filled with gasoline to jet fuel are moving from major refinery hubs such as South Korea and China due to a crash in domestic demand and swelling stockpiles. These tankers are finding their way to the Singapore Strait, where the glut is being compounded by offloading delays at the city state. Vessels currently have to wait about two weeks to discharge cargoes in Singapore, compared to the typical 4-5 days, according to shipbrokers and traders, leaving ships stranded in local waters.

Storage options are dwindling globally as onshore tanks rapidly fill to capacity, prompting traders, refiners and infrastructure companies to seek alternatives such as pipelines and ships. Bloomberg earlier reported that those who managed to snag some highly-coveted tanks in Singapore were being charged much higher rates, even as the nation stopped leasing out space to new customers.

Major fuel-exporting countries are facing difficulties finding homes for their surplus barrels,” said Sri Paravaikkarasu, Asia oil head at industry consultant FGE. In Singapore, crude processing rates at refineries have probably dropped to around 60% of capacity, and may drop further to as low as 50% during the second quarter, she said.

The onshore storage squeeze is being seen across the region. In India, tanks were 95% full as of last week as refiners scrambled to find space to hold their excess fuel, even turning to pump stations and depots. In Singapore, fuel stockpiles rose to a four-year high in mid-April.


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Utilizing tankers has become the next best option, with analytics firm Vortexa estimating floating crude oil storage in Asia at a four-year high. Taking into account the waters off Singapore as well as Malaysia, data intelligence firm Kpler saw a 45% month-on-month increase in the volume of clean fuels — comprising naphtha, gasoline, jet fuel and diesel — stored on ships to 6.64 million barrels as of April 23.

Across the world, freight rates for both clean as well as dirty tankers have surged dramatically along with rising demand for floating storage. Also, shippers are using a strategy known as slow steaming, where they deliberately reduce the speed of tankers to increase the shipments’ transit time while awaiting the emergence of buying interest from customers, or save on fuel.




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U.S. Crude Futures Turn Positive After Historic Plunge

U.S. oil prices hobbled back into positive territory on Tuesday after sinking below $0 for the first time ever, but international benchmark Brent dipped as the global coronavirus crisis severely reduces demand for crude.

U.S. West Texas Intermediate (WTI) crude for May delivery (CLc1) was up $38.99 in thin trade at $1.36 a barrel by 0622 GMT after settling down at a discount of $37.63 a barrel in the previous session. The May contract expires on Tuesday and the more-active June contract rose 94 cents, or 4.6%, to $21.37 a barrel.



Global benchmark Brent crude for June delivery was down 48 cents, or 1.9%, at $25.09 per barrel.

“Demand destruction from COVID-19 will see a slower than expected reopening of the U.S. economy,” said Edward Moya, senior market analyst at broker OANDA, predicting a weak period for oil prices. “The WTI crude June contract was able to hold the $20 a barrel level and is seeing a modest gain following the painful rollover of the May contract.”

Oil prices have skidded as travel restrictions and lockdowns to contain the spread of the coronavirus curbed global fuel use, with demand down 30% worldwide. That has resulted in growing crude stockpiles with storage space becoming harder to find.

The main U.S. storage hub in Cushing, Oklahoma, the delivery point for the U.S. West Texas Intermediate (WTI) contract, is now expected to be full within a matter of weeks.

Following the collapse in oil prices, U.S. President Donald Trump said on Monday that his administration was considering halting Saudi crude oil imports as a way to help the U.S. drilling industry.

Today it’s pretty clear that a major issue in the market is a glut in the United States and lack of storage capacity,” said Michael McCarthy, chief market strategist, CMC Markets in Sydney.

Faced with the situation, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a grouping known as OPEC+, have agreed to cut output by 9.7 million barrels per day (bpd). But that will not take place before May, and the size of the cut is not viewed as big enough to restore market balance.

Supply and inventories are expected to tighten in the second half of the year, while “severe storage distress is likely to drive wild price realizations,” in the next 4-6 weeks, Citi Research said in a note.

Meanwhile, U.S. crude inventories were expected to rise by about 16.1 million barrels in the week to April 17 after posting the biggest one-week build in history, according to five analysts polled by Reuters. Analysts expected gasoline stocks to rise by 3.7 million barrels last week.

The American Petroleum Institute is set to release its data at 4:30 p.m. (2030 GMT) on Tuesday, and the weekly report by the U.S. Energy Information Administration is due at 10:30 a.m. on Wednesday.



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Oil’s Spectacular Collapse Continues

Oil prices extended the gloom on Monday after a Saudi-Russian price war and an equities meltdown sparked by the coronavirus pandemic saw their biggest weekly losses in more than a decade. US benchmark West Texas Intermediate (WTI) briefly fell below $30 a barrel, or 5.5 percent, in morning Asian trade before regaining its footing.


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It was trading at $31.13 a barrel at around 0530 GMT, down nearly two percent from Friday’s close. The Brent global benchmark was down 3.28 percent at $32.74 a barrel.

Last week’s price war began after Saudi Arabia and other members of an informal alliance of major crude producers led by the OPEC oil cartel pushed for an output cut to combat the impact of the virus outbreak.


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But alliance partner and non-OPEC member Russia, the world’s second-biggest oil producer, refused — prompting Riyadh to drive through massive price cuts and pledge to boost production.

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The COVID-19 outbreak added to downward pressure as it throttled global equities, with growing concerns over a potential worldwide recession and escalating travel restrictions prompting a crash in demand forecasts.

Prices made a feeble rally late last week after US President Donald Trump announced $50 billion in Federal spending to stem the damage from the coronavirus and plans to buy “large quantities of crude oil” to top up strategic reserves.

But both benchmarks still fell by around 25 percent in the biggest weekly drop since the global financial crisis in 2008, and more losses are expected.

Rallies will likely continue to fade so long as the market continues to weigh the double-whammy of the COVID-19… and the massive jump in supply,” said Stephen Innes, global chief markets strategist at AxiCorp.

“The rare combination of severe shocks to both supply and demand has caused the crude market to collapse as producers… steel themselves for an unexpected glut of oil in coming weeks,” added Sukrit Vijayakar of Trifecta Consultants.








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OPEC Agrees To Drastic Oil Cuts

The plan approved Thursday by the Organization of the Petroleum Exporting Countries would involve production cuts of 1 million barrels a day through the end of June to be shared among its 13 member nations. It also calls for another 500,000 barrels of daily cuts to be divided among the cartel’s 10 Russia-led oil-producing allies.

OPEC earlier in the day had agreed to only a three-month cut. But Saudi Arabia decided it wanted to force Russia into a more ambitious effort. Other OPEC members worried that the plan announced earlier in the day had failed to stimulate flagging prices, cartel delegates said.

“It’s a gamble,” one delegate said.

Brent crude, the global benchmark oil price, ended the day down 2.2%.

The production cuts would come on top of 500,000 barrels a day of existing curbs, which OPEC has agreed to carry through the end of the year, the cartel said. Saudi Arabia and other Persian Gulf producers are also considering additional production cuts outside the group, delegates said.

The coronavirus’s impact on oil demand has weighed heavily on recent talks among members of the so-called OPEC+ alliance led by Saudi Arabia and Russia. Brent is down 23% so far this year, as the virus outbreak hammers global demand.

The epidemic is expected to diminish global crude demand by as much as 2.1 million barrels a day in the first half of 2020, according to an estimate from Goldman Sachs. Meanwhile, IHS Markit and Standard Chartered forecast a decline in demand for 2020’s first two quarters by around 2 million barrels a day from the same period a year earlier. Gulf nations’ additional cuts would take OPEC+’s cuts to 2.1 million barrels a day.

“It’s not just about bleeding demand growth,” said Mohammad Darwazah, director for geopolitics and energy at Medley Global Advisors. “We’ve had inventories building through this whole period and it’s about cleaning up the market and 2.1 [million barrels in cuts] would go a long way to reversing these builds.”

oil-cuts

The OPEC plan needs the approval of Russia and other non-OPEC allies, which are set to weigh the proposal on Friday. Russia has agreed in principle to reduce its output but hasn’t approved any production figure, OPEC officials said.

“Tomorrow, everything depends on a non-OPEC agreement,” Iran’s oil minister, Bijan Zanganeh, told reporters as he exited the meeting. “If [Russia] doesn’t accept it, we have no deal…We have no plan.”

Russian Energy Minister Alexander Novak refused to endorse the Saudi-backed plan at a technical meeting Wednesday and flew back to Moscow to consult with President Vladimir Putin, according to OPEC delegates. Mr. Novak also wants Russia to increase output this summer, a move that contradicts the cartel’s nine-months plan, according to one delegate.


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An OPEC official who attended Wednesday’s gathering said Moscow’s delays are negotiation tactics aimed at securing a deal that would have Russia cut relatively little. Russia is now seeking cuts of about 100,000 barrels a day, leaving Saudi Arabia to bear the brunt of the reduction effort, OPEC officials said.

Russia’s hard bargaining is increasingly wearing down Saudi Arabia and its Gulf allies, casting a cloud on the future of their four-year alliance. “Maybe it’s time to consider the whole point of non-OPEC,” said one Persian Gulf official.

The Saudis’ commitment to carry the bulk of the cuts on their own could lead to further complacency among OPEC nations, some of which have historically flouted production cut agreements.

“The Saudis want collective action, and going above and beyond means they may only encourage more free-riding,” said Medley Global Advisors’ Mr. Darwazah.

Oil prices swung higher following the news that Saudi and its Gulf neighbors were considering their own additional cuts, before quickly reversing those gains.





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Is It A Currency? A Commodity? Bitcoin Has An Identity Crisis

So bitcoin’s a currency, right? Well, yes, it can be used to buy, sell and price goods much like dollars and euros.

A commodity? Come to think of it, it does behave a lot like oil and gold – it can be bought and sold in cash markets or via derivatives such as futures.

What about a security? Many cryptocurrencies are, in a way. They’re issued like stocks in “initial coin offerings” and used to represent shares in online projects.

The debate may appear abstract, with little bearing on the hard-boiled world of finance, but it is attracting increasing interest from economists and lawyers who say it could have major implications for the future of cryptocurrencies.

How bitcoin and other digital coins are defined could shape how they are regulated around the world. In turn, the rules they are subject to could determine whether they make the leap from a niche to a mainstream asset.

So how will regulators treat them?

In the United States, federal watchdogs say they see elements of both securities and commodities, but like most major economies have not come up with a set of rules. The European Union, however, will outline a framework this year, which could see crypto wedged into existing regulations, or a whole new set of rules created.

For market players, how bitcoin and its kin are regulated will have serious ramifications.

Commodity markets operate with relatively little regulatory oversight. Securities, on the other hand, are typically subject to more onerous rules on price transparency, trade reporting and market abuse.

“When we’re going through the security process, we spend a lot of fees and lawyers to make sure we’re in compliance,” said Benjamin Tsai, president of Wave Financial, an investment manager in Los Angeles overseeing $40 million in crypto.

“It’s a lot more of a pain in the butt.”



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CHARACTER CLUES

Some of the cryptocurrency identity crisis lies in the fact that bitcoin was originally conceived as a means of payment, but now rarely bears the hallmarks of dollars, euros or pounds.

It’s of little use as a store of value because of its volatility, and is hampered as a means of exchange by its slow network and high transfer costs.

A booming bitcoin lending market is offering clues to its character.

Bitcoin lending offers lines of credit to crypto firms earning money in cryptocurrencies, such as payment processors or miners, looking to secure traditional money for covering expenses. Also, traders who don’t want to sell their bitcoin holdings use them as collateral to borrow cash for use in algorithmic or high-frequency trading.

For those lending money, relatively high yields are an attractive proposition in an era of rock-bottom rates.

Key characteristics of this market, such as market-led price discovery and the motivation to seek liquidity, mirror that of commodities leasing, according to market players and economists.

“The commodities markets (analogy) is very fitting,” said Deeksha Gupta, an assistant professor of finance at the Carnegie Mellon University in Pittsburgh who has researched crypto.

“One of the biggest similarities is that they are also driven by people wanting to be able to get liquidity.”

The bitcoin lending market has grown quietly as an opaque corner of the cryptocurrency sector, which itself is notorious for its lack of transparency. While there’s little data with which to gauge the size of the lending market, it is widely seen to have expanded rapidly over the past year.

New York-based Genesis Capital, one of the biggest lenders in the market, said its outstanding loans soared late last year to around $545 million compared with $100 million a year earlier.

Implied interest rates in these markets – the price of borrowing bitcoin – stand at around 4-5%, Genesis CEO Michael Moro said. On platforms for people to lend cash against bitcoin, rates are as high as 8%.

FINANCIAL INSTRUMENTS

Cryptocurrencies’ kinship to securities arises largely from their issuance and function in initial coin offerings, or ICOs, where they are used to raise traditional money.

ICOs are often held by companies seeking to raise funds for blockchain-related or other online projects. They raise capital by issuing digital coins, which grant holders access to the new system or software or a share in profits generated.

For instance, Switzerland-based Aragon – a management platform for decentralised organizations – raised about $25 million in 2017 issuing tokens that gave voting rights on how the system is developed.


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Regulators may choose to treat different cryptocurrencies differently, depending on their specific characteristics, an approach taken by Britain last year.

Some players say any designation of cryptocurrencies as financial instruments akin to securities may be positive, with burdensome oversight balanced by the potential to allow funds to market cryptocurrencies to a wider pool of investors.

“If they were somehow classified as a financial instrument, then that would have the knock-on effect that they would be eligible for retail funds,” said Nic Niedermowwe, CEO of crypto fund Prime Factor Capital in London.



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Gold Traded Near a Seven-Year High On Concern That The Coronavirus Outbreak Will Retard Global Growth

Bullion is rising at a time U.S. stocks are at an all-time high even as traders weigh the disease’s impact. While Hubei, the center of the outbreak, reported fewer cases after another revision, there are signs of deepening economic damage. In addition, two deaths were reported in Iran and two people from a quarantined ship in Japan died, highlighting the threat outside China.

The traditional haven has climbed more than 6% this year amid mounting concern over the effects of the virus, with companies from Apple Inc. to Burberry Group Plc cutting guidance. While minutes from the latest Fed meeting showed that officials indicated they could leave rates unchanged for many months, futures traders maintained expectations for at least one cut over 2020.


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“Support for the yellow metal is driven by economic uncertainty related to the coronavirus – i.e. how long could the pandemic last and what will its ultimate impact be on world economic growth?” Gavin Wendt, senior resource analyst at MineLife Pty in Sydney, said in an email.

“Importantly, we’ve seen gold performing strongly in a range of currencies, hitting new all-time highs during 2019 and 2020,” said Wendt. That reflects not only investor uncertainty, but also a likelihood more stimulus will be required, including lower rates, to boost activity in a post-coronavirus world, he said.

Spot gold was steady at $1,610.43 an ounce at 11:27 a.m. in Singapore, near Wednesday’s peak of $1,612.98, which was the highest since March 2013. Holdings in global exchange-traded funds backed by bullion have risen to a record, and are on course for a sixth weekly expansion.

Prices may top $1,650 over the coming weeks, according to UBS Group AG’s Global Wealth Management unit, which says it remains long on the precious metal.

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“With U.S. equity valuations elevated, any further upsets could see another bout of volatility, a further rally in government bonds and a higher gold price,” analysts Wayne Gordon and Giovanni Staunovo wrote in a report dated Feb. 19.

Palladium climbed 0.5% to $2,731.09 an ounce. The metal used to curb emissions from vehicles touched an all-time high of $2,849.61 on Wednesday on concerns over a widening global deficit, and as the Chinese government pledged to stabilize car demand in the country.

Among other main precious metals, silver was flat, while platinum dropped.


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OPEC Wants To Raise Oil Prices


◊ OPEC and Oil Prices News ◊


⇑⇓ StockMarketNews.Today ⇓⇑


The coronavirus outbreak has interrupted economic activity in China with entire cities on lockdown and travel restrictions putting a huge dent in demand for oil. Quite how much this will hit crude demand is unclear — but Chinese energy executives have said oil consumption in the country in February could be 25 per cent lower than a year earlier. That is the equivalent of a 3 per cent drop in global consumption.

As uncertainty lingers about when the transmission of the virus will peak, oil prices have tumbled more than 15 per cent since the beginning of the year to trade around $55 a barrel, a level at which many smaller producers struggle to remain profitable.

The demand shock and resulting price plunge is jolting Opec nations led by Saudi Arabia and ally producers including Russia into action to support prices. The group’s advisory body has recommended that they deepen their existing supply cuts by 600,000 barrels a day to a total of 2.7m b/d for the first half of 2020.



The question for oil traders is whether this will be enough to steady the oil market and push prices higher. Optimism in the market is hard to find. “It may prove to be a damp squib,” said Stephen Brennock of PVM, a broker. “After all, a hefty supply imbalance prevailed even before the outbreak of the coronavirus. There is therefore no guarantee that the proposed cuts will rid the oil market of its current malaise.” Moscow is also sceptical about supporting the cuts until there is more clarity.

The suggestion of Opec’s advisory body that the extra 600,000 b/d of cuts last through the second quarter of 2020 reflects some optimism about how quickly the impact of the virus outbreak will be contained. But it risks underwhelming the market even if it can be agreed. Harry Dempsey

Will China’s central bank step up measures to offset the coronavirus impact?
As China battles to contain its health crisis, many economists are pencilling in a substantial hit to the economy in the first quarter. This has increased speculation that the country’s central bank could ease monetary policy more to soften the blow.

But with consumer inflation still near a seven-year high, it has limited room to cut interest rates further. On Monday investors will get their first hint at the answer when Beijing releases January readings for its consumer and producer price indices.

Serious easing would entail the People’s Bank of China trying to guide the country’s new, more market-driven lending benchmark lower. But at 4.15 per cent, the so-called loan prime rate is already below December’s consumer price index reading of 4.5 per cent. If consumer inflation does pick up, it could leave China grappling with negative real interest rates should the central bank decide to ease.

Last week, the PBoC announced it would pump extra cash into China’s financial system as part of a package of emergency measures to shield the economy from the effects of the coronavirus outbreak. It said it would provide Rmb1.2tn ($173bn) in additional liquidity to money markets.

But as the death toll continues to mount and the economic impact deepens, analysts are predicting even stronger action from the central bank.

Beijing is likely to “step up” its policy easing when there are signs that the outbreak is proving a headwind to economic growth, Prashant Bhayani, BNP Paribas Wealth Management’s Asia chief investment officer, said in a note. Hudson Lockett

Will cost of living data increase US inflation fears?
The US will receive its own inflation reading on Thursday, with the release of the consumer price index (CPI), which tracks common goods such as food, housing and fuel.

The cost of living as measured by CPI has increased in the past year, with price rises at 2.3 per cent year on year as of December. Yet, despite this uptick, officials at the Federal Reserve remain profoundly concerned about the low level of inflation in the US.

On a separate measure — the Fed’s preferred — the problem looks much more pronounced. The personal consumption expenditures (PCE) price index, at 1.6 per cent year-on-year, remains well below the central bank’s target of 2 per cent.

Jay Powell, Fed chairman, stressed this issue at his first post-meeting press conference of 2020, stating that the central bank was not comfortable with inflation running so persistently below its 2 per cent target.



Moreover, he resolved to act to ensure the US evades the low-inflation trap that has ensnared the likes of Europe and Japan. “We have seen this dynamic play out in other economies around the world, and we are determined to avoid it here in the United States,” he said.

One solution that has gained traction is a so-called “make-up strategy”, in which the central bank commits to raising its inflation target after periods of undershooting in order to make up for lost inflation.

The Fed is nearing the end of a once-in-a-decade review of its monetary policy toolkit, and such a change could be announced when that is released.




Stock Market – Top 5 Things to Watch This Week


⇑⇓ StockMarketNews.Today ⇓⇑


Coronavirus headlines could hang over the market in the coming week, as China reported an additional 89 deaths on Sunday, bringing the total number of deaths in the mainland to 811.

The global death toll from the new coronavirus is now at 813, higher than that of SARS.



There will also be important testimony from Federal Reserve Chair Jerome Powell, who appears Tuesday and Wednesday before congressional panels on the economy and monetary policy.

Meanwhile, on the data front, market players will pay attention to this week’s U.S. consumer price data, which should give clearer signs on the pace of inflation.

There are also U.S. retail sales figures for January, which investors will be eyeing for further signs on the strength of the American consumer.

In earnings, there are 68 S&P 500 companies reporting results in the week ahead, as the earnings season on Wall Street starts to wind down.

1. Coronavirus Headlines

China reported an additional 89 deaths on Sunday, bringing the total number of people killed by the fast-spreading coronavirus to 811 in the mainland. The global death toll for the new coronavirus currently stands at 813, including one death in the Philippines and another in Hong Kong.

That number exceeds the global number of deaths from SARS, which killed at least 774 people and infected 8,096 people worldwide in 2002 and 2003, according to data from the World Health Organization.

The National Health Commission said on its website that 2,656 new cases were confirmed as of end Saturday. This brings the total number to 37,198 in mainland China.

Hubei province, the epicenter of the outbreak, accounts for most of the deaths and cases around the world.

The cumulative number of deaths in the province reached 780 after an additional 81 deaths were recorded as of end Saturday. The Hubei Provincial Health Committee said there was an additional 2,147 new cases, bringing the total of confirmed cases to 27,100.

The Chinese economy will sputter towards normal on Monday after the coronavirus outbreak forced an extended holiday, although numerous stores and factories will remain shut and many white-collar employees will continue working from home.

The toll on China’s already-slowing economy has been heavy, with Goldman Sachs (NYSE:GS) cutting its first quarter GDP target to 4% from 5.6% previously and saying an even deeper hit is possible.

2. Fed Chair Powell Testifies

Federal Reserve Chair Jerome Powell is set to deliver his semi-annual monetary policy testimony on the economy before Senate and House committees in Washington DC.

Powell is scheduled to testify before the House Financial Services Committee at 10:00AM ET (1500GMT) Tuesday. On Wednesday, he will appear in front the Senate Banking Committee, also at 10AM ET.

Text of the testimony will be released 90 minutes before he starts speaking.

The Fed chair is expected to reinforce the signal that policy is on hold given the labor market continues to tighten and private consumption growth remains solid.

3. U.S. Inflation

The Commerce Department will publish January inflation figures at 8:30AM ET (1330GMT) Thursday.

Consumer prices are expected to have risen 0.2% last month, according to estimates, matching the increase seen for December. On a yearly base, CPI is projected to climb 2.5%, up from 2.3% a month earlier.

Excluding the cost of food and fuel, core inflation prices are forecast to have gained 0.2% last month and 2.2% over the prior year.

Rising inflation would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently expected. Weakening inflation will likely add to expectations that the U.S. central bank will need to slow its pace of rate hikes.

4. U.S. Retail Sales

The Commerce Department will release data on retail sales for January at 8:30AM ET (1330GMT) Friday.

The consensus forecast is that the report will show retail sales rose 0.3% last month, after rising at the same pace in December. Excluding the automobile sector, sales are also expected to increase 0.3%.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.

5. Earnings Season Starts to Wind Down

Earnings season on Wall Street moves into its final stretch.

Results from Restaurant Brands International, Allergan (NYSE:AGN), and Loews (NYSE:L) will capture the market’s attention on Monday.

Lyft (NASDAQ:LYFT), UnderArmour, AutoNation (NYSE:AN), Hilton, Hasbro (NASDAQ:HAS), Dominion Energy, and Lattice Semiconductor are on the agenda for Tuesday.

CVS Health (NYSE:CVS), Shopify, Cisco (NASDAQ:CSCO), Applied Materials (NASDAQ:AMAT), CyberArk, CME Group (NASDAQ:CME), Barrick Gold, Teva Pharma, and MGM Resorts report results on Wednesday.

Thursday sees Alibaba (NYSE:BABA), Nvidia, Pepsico (NASDAQ:PEP), Kraft Heinz (NASDAQ:KHC), Roku, AIG (NYSE:AIG), Expedia (NASDAQ:EXPE), Mattel (NASDAQ:MAT), Wyndham Hotels, and post earnings.

Finally, Canopy Growth, and Newell Brands are among the few reporting on Friday.







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Turmoil In Global Gas Market


◊ Natural Gas News China


⇑⇓ StockMarketNews.Today ⇓⇑


Chinese importers threatening to cancel up to 70 per cent of seaborne imports in February as demand collapses and companies struggle to staff ports. The move by China, the world’s second-largest importer of liquefied natural gas, has sent prices to their lowest level on record and sparked a row with suppliers, which claim the Chinese companies are breaching their contracts to secure lower prices on the spot market.

The stand-off is the latest sign of the economic damage being wreaked by the coronavirus outbreak, which is expected to curtail global growth as large parts of the world’s second-largest economy essentially are in lockdown.

Lower gas prices are a potential boon for manufacturers and consumers but a problem for energy companies, which have warned of a big hit to profits in the first half of this year. Oil demand in China is also estimated to have fallen by as much as a quarter in February, as big cities have been quarantined, flights cancelled and public holidays extended to try to contain the spread of the virus, which has killed more than 600 people and infected more than 31,000.



Two of China’s largest energy groups have already declared “force majeure” on at least 14 LNG import cargoes, invoking a clause usually reserved for natural disasters or war that frees both sides from the contract. Chinese LNG buyers are likely to issue more such notices in the coming days, according to people with knowledge of the transactions.

Some LNG tankers are said to have been diverted from southern Chinese ports to the north. But analysts say other large markets in Asia and Europe are saturated amid a global supply surfeit, meaning ships are likely to anchor off Chinese shores as floating storage. Wholesale gas prices in the UK are close to the lowest level since the financial crisis.

“The prospect of a flotilla of diverted LNG carriers sailing around the world looking for a home only adds to the bearish sentiment,” said Frank Harris, global head of LNG at consultancy Wood Mackenzie.

A glut of natural gas has already depressed Asian LNG prices to a historic low of $2.95 per million British thermal units. LNG sellers complain that China’s use of the force majeure clause is at least partly motivated by importers’ desire to buy at cheaper spot prices instead of cargoes imported under their long-term contracts.

The LNG market has grown rapidly in recent years, boosted by greater supplies from the US and Australia. The rise in seaborne gas trade has connected regional markets and brought prices closer together, meaning a drop in Asia can now mean cheaper prices in Europe, and vice versa.

Of the cargoes already cancelled under force majeure, 10 were issued by China National Offshore Oil Corporation (Cnooc) to Royal Dutch Shell, with PetroChina refusing to take two cargoes from Qatar and two from Malaysia — including one due for delivery in March — according to people with knowledge of the contracts.

As many as 50 cargoes, or 70 per cent of February’s total imports, are now thought to be at risk of cancellation over the coming days, as buyers including Sinopec have sent out notices saying they will struggle to take them.

China imported an average of almost 7bn cubic metres a month of the supercooled fuel last year, according to consultancy Energy Aspects. Although China has expanded its storage in recent years, capacity remained limited, analysts at ANZ said. LNG suppliers, traders and lawyers are questioning the legitimacy of declaring force majeure due to a drop in demand following the spread of the coronavirus.

“There are substantial questions about whether it’s appropriate,” said Jason Feer, global head of business intelligence at Poten & Partners, a broker. “They’re getting a lot of pushback from suppliers saying low prices and full tanks is not a force majeure event.”

France’s Total said it had rejected a majeure notice from one Chinese company.

“Our legal analysis is that there is no force majeure,” said Philippe Sauquet, Total’s president of gas, renewables and power. “We have to be careful because if there is a real quarantine in a loading or unloading port, there will be a real case for force majeure in China.”




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Tesla Resume Production In Shanghai



U.S. electric carmaker Tesla‘s factory in China’s financial hub of Shanghai will resume production on Feb. 10 with assistance to help it cope with a spreading epidemic of coronavirus, a Shanghai government official said on Saturday.

Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future

Many factories across China shut in late January for the Lunar New Year holiday that was originally due to end on Jan. 30 but which was extended in a bid to contain the spread of the new flu-like virus that has killed more than 700 people.

Tesla warned on Jan. 30 that it would see a 1-1.5 week delay in the ramp-up of Shanghai-built Model 3 cars as a result of the epidemic, which has severely disrupted communications and supply chains across China.

Tesla Vice President Tao Lin said this week that production would restart on Feb. 10.

“In view of the practical difficulties key manufacturing firms including Tesla have faced in resuming production, we will coordinate to make all efforts to help companies resume production as soon as possible,” Shanghai municipal government spokesman Xu Wei said.

The $2 billion Shanghai factory is Tesla’s first outside the United States and was built with support from local authorities. It started production in October and began deliveries last month.

The Shanghai government also said on Saturday it would ask banks to extend loans with preferential rates to small companies and exempt firms in hard-hit sectors like hospitality from value-added tax, among other measures to prop up businesses during the epidemic.

Such assistance would also apply to foreign companies, it added.




Best Books For Making Money In The Stock Market


#1 – The Intelligent Investor. (Revised Edition)

This classic text is annotated to update Graham’s timeless wisdom for today’s market conditions… The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing” — which shields investors from substantial error and teaches them to develop long-term strategies — has made The Intelligent Investor the stock market bible ever since its original publication in 1949.

Over the years, market developments have proven the wisdom of Graham’s strategies. While preserving the integrity of Graham’s original text, this revised edition includes updated commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today’s market, draws parallels between Graham’s examples and today’s financial headlines, and gives readers a more thorough understanding of how to apply Graham’s principles.

Vital and indispensable, this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.



#2 – Encyclopedia of Chart Patterns

In this revised and expanded second edition of the bestselling Encyclopedia of Chart Patterns, Thomas Bulkowski updates the classic with new performance statistics for both bull and bear markets and 23 new patterns, including a second section devoted to ten event patterns. Bulkowski tells you how to trade the significant events — such as quarterly earnings announcements, retail sales, stock upgrades and downgrades — that shape today?s trading and uses statistics to back up his approach. This comprehensive new edition is a must-have reference if you’re a technical investor or trader. Place your order today.
“The most complete reference to chart patterns available. It goes where no one has gone before. Bulkowski gives hard data on how good and bad the patterns are. A must-read for anyone that’s ever looked at a chart and wondered what was happening.”
— Larry Williams, trader and author of Long-Term Secrets to Short-Term Trading.



#3 – How to Make Money in Stocks

Anyone can learn to invest wisely with this bestselling investment system!… Through every type of market, William J. O’Neil’s national bestseller, How to Make Money in Stocks, has shown over 2 million investors the secrets to building wealth. O’Neil’s powerful CAN SLIM® Investing System―a proven 7-step process for minimizing risk and maximizing gains―has influenced generations of investors.

Based on a major study of market winners from 1880 to 2009, this expanded edition gives you:

>Proven techniques for finding winning stocks before they make big price gains
>Tips on picking the best stocks, mutual funds, and ETFs to maximize your gains
>100 new charts to help you spot today’s most profitable trends
>PLUS strategies to help you avoid the 21 most common investor mistakes!

“I dedicated the 2004 Stock Trader’s Almanac to Bill O’Neil: ‘His foresight, innovation, and disciplined approach to stock market investing will influence investors and traders for generations to come.’”
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China Energy Executives Braced For 25% Fall In Domestic Oil Demand


⇑⇓ China Oil Demand ⇓⇑


Executives at some of the country’s largest refineries expect that nationwide demand will fall by a staggering 3.2m barrels a day in February from last year — a drop equivalent to more than 3 per cent of global consumption.

Oil prices have already crashed on expectations of plunging demand as the Chinese authorities quarantined cities, restricted air and road travel, and extended factory closures following the lunar new year holiday.

But the projections of senior executives in China — the world’s top oil importer — are likely to undermine market confidence further.

Chinese oil demand in February 2019 was just under 13m barrels a day, according to the International Energy Agency.

Opec countries and allies including Russia are scrambling to thrash out a response to a demand shock that could rival the drop in consumption witnessed at the nadir of the global financial crisis in 2008.




Trade Oil: Crude Oil Trading and Price Charts




The oil major BP warned this week that the coronavirus outbreak could cut global oil demand by 300,000-500,000 barrels a day on average this year.

Brent crude, the international benchmark, has dropped more than 20 per cent since early January, falling below $55 a barrel earlier this week. It rebounded slightly on Wednesday amid hopes that a treatment for the virus would be found.

Chinese refiners, which process crude to create fuels such as petrol and diesel, are facing a big hit to sales as Beijing struggles to control the spread of the virus.

“The epidemic has dealt a huge blow to our business,” said one executive at a Chinese refinery, who asked not to be identified because of the sensitivity of the issue.

An executive at another refinery said that if the spread of the virus peaked in the coming weeks, China’s oil demand could remain at least 10 per cent lower in March than a year ago.

“We are highly likely to see a 3-4m b/d impact [this month] when you consider the economy has virtually ground to a halt,” said Michal Meidan at the Oxford Institute for Energy Studies.

“Industrial activity is down, passenger movement is down 70 per cent, freight movement is down 50 per cent. The timing question is key. We know for sure there is an effective standstill for two weeks at least.”

If China can quickly contain the spread of the virus, less dramatic forecasts about the demand hit are more likely to prove correct. Chevron said last week it saw a hit of 200,000 b/d on average for the year.

The Opec grouping is considering calling an emergency meeting to decide on the next steps to stop oil prices falling further. Talks are ongoing about whether they need to cut production by 500,000 b/d or more but no decision has yet been made.

Independent Chinese refiners have been particularly hard hit, cutting crude processing rates by at least half, one of the executives said.

They said daily sales of products such as fuel oil and asphalt have dropped by 90 per cent since the end of January, as logistics have been hampered by road restrictions. This has prompted inventories to rise by more than 50 per cent and put pressure on cash flows.

The country’s gasoline and diesel consumption fell almost two-thirds during the new year holiday from a year earlier, said another executive.

The average capacity utilisation rate among independent refineries in Shandong — a centre of the refining trade — has fallen to between 40 per cent and 50 per cent, a historical low, two of the executives said.

“Everyone is waiting for the turning point but no one knows when,” said a refinery executive.




Trade Oil: Crude Oil Trading and Price Charts




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Goldman Says Oil Rally Likely Shortlived



⇑⇓ STOCK MARKET NEWS TODAY — BUSINESS & FINANCIAL NEWS ⇓⇑

StockMarketNews.Today — A flare-up in U.S.-Iran tension may be keeping oil elevated, but an actual disruption to global crude supplies is needed to keep prices at current levels, according to Goldman Sachs Group Inc .

Price risks for Brent, which has surged about 6% since the U.S. strike killed a top Iranian general, are skewed to the downside in the coming weeks without a major supply disruption, Goldman said in a note dated Jan. 6. Oil was already trading above the bank’s fundamental fair value of $63 a barrel prior to the attack, buoyed by an “over-enthusiastic December risk-on rally” despite limited evidence of an acceleration in global growth, they said.

“It is not a given that any potential retaliation by Iran would target oil producing assets,” Goldman analysts including Jeff Currie said. “The recent incident at the U.S. embassy in Iraq occurred while there was no disruption to neighboring oil fields.”

Brent rallied above $70 a barrel and New York crude edged closer to $65 on Monday as the U.S. warned that there’s a “heightened risk” of missile attacks near military bases and energy facilities in Saudi Arabia, while Iran stated it no longer considers itself bound by the 2015 nuclear pact.

The rhetoric turned even more hostile after President Trump warned Iran of major U.S. retaliation “in a disproportionate manner”, and threatened heavy sanctions on its ally Iraq after its parliament voted to expel American troops from the country in response to the Baghdad attack.

The September strike on key oil producing facilities in Saudi Arabia indicated that the market has significant supply flexibility, according to Goldman. There is only “moderate upside” from current levels, even if an attack on oil assets actually occur, the bank said.

Being long gold is a better hedge than oil to such geopolitical risks, according to Goldman, adding that history shows under most outcomes, the precious metal will likely rally well beyond current levels. The bank maintained its three-, six- and 12-month forecast at $1,600 a ounce.



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◊ Best Books For Making Money ◊


#1 – The Book on Making Money


After skipping college, Steve Oliverez worked a series of low-paying jobs before setting a remarkable goal for himself – to double his income every year. In The Book On Making Money, he reveals what he learned while successfully hitting this goal for seven years in a row, growing his annual income to more than $1 million. Walking readers through the steps he took to reach his goal, he shows how they can apply the same techniques to greatly increase their own income, whether they work for someone else or run their own business. Oliverez spells out his disagreements with the traditional wisdom that tells young adults to go to school, get good grades and find a safe, steady job – advice that has left many Americans with tens or hundreds of thousands of dollars in student loans, credit card debt or mortgages on homes they can’t afford. He also assaults the idea of saving one’s way to wealth as absurd and counterproductive, using his own experience of trying to save money while poor as an example. Instead of promoting an austere lifestyle of clipping coupons and spending as little as possible, he shows how those habits can actually prevent people from becoming wealthy.


#2 – ABCs of Making Money


International Bestseller. The largely word-of-mouth success is due to its unique approach: instead of just giving the reader the usual do’s and don’ts of managing money – which it does in very clear, actionable terms – this invaluable book walks readers through the psychology of money. Do you ever wonder what makes some people successful while others are destined to struggle their whole lives? … The difference is in their Attitudes toward money. If you don’t examine this issue first, then all the self-help books and courses in the world will be a waste. The ABCs of Making Money is a simple, step-by-step guide for everyone. This common sense approach contains lots of simple checklists, self-directed exercises and tips. It demystifies the secrets of making money while providing proven strategies for the average person to painlessly create wealth. It has already helped hundreds of thousands of people and been acclaimed by universities and charities in the U.S. Amongst other things you will learn: how to achieve financial freedom, gain control of your life, eliminate financial stress and stop living paycheck to paycheck.


#3 – A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today


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Commodity Market Insights

Prospects for a “mini” trade deal between the U.S. and China leading to further progress have lifted agricultural commodities, taken the wind out of gold and left energy markets unimpressed.


Energy


CRUDE OIL prices fell for the first time in four days yesterday despite the announcement of the first steps in a trade deal at the end of last week, which would have lifted hopes for global growth. Customs data from China showed its crude oil imports for September were 2.2% lower than a month earlier at 41.2 million tons. Russia’s energy minister Alexander Novak was in Jeddah yesterday to sign a long-term charter with OPEC. He commented that it was important that OPEC+ can react quickly to market changes.

Meanwhile, Saudi Arabia said that all damages from the September 14 attacks had been repaired and that production was back to pre-attack levels at 9.9 million barrels per day (bpd). The number of U.S. rigs producing oil rose for the first time in eight weeks, hitting 712 as at last Friday. Speculative accounts trimmed net long positions for a fourth straight week in the week to October 8, the latest data from CFTC show. Net longs are now the lowest since the week of June 11. West Texas Intermediate (WTI) remains capped by the 55- and 100-day moving averages at $55.40 and $55.73 respectively. The 100-day average has capped prices on a closing basis since September 24.

NATURAL GAS is in the process of staging a recovery from the seven-week lows struck last Friday amid forecasts for colder weather across the U.S. in the October 19-23 period. Prices have risen for the past three days and are edging toward the 55- and 100-day moving averages at 2.3229 and 2.3281, respectively. China’s headline imports for September showed a sharp deterioration but imports of natural gas were 8.2 million tons, bringing the year-to-date total to 71.2 million tons, a 10% increase from the previous year. Last week’s inventory data to October 4 showed a smaller total of 98 billion cubic feet (bcf) compared with 112 bcf the previous week. That’s still above the 5-year average of 89 bcf.


Precious Metals


GOLD is holding steady after a two-day decline at the end of last week as U.S. President Trump announced a “mini” trade deal with China dubbed Phase 1. The deal is seen as a major breakthrough and paves the way for a partial trade deal, though China have been quick to state that a lot of work still needs to be done. The improvement in sentiment took its toll on gold and the Thursday/Friday losses tipped the precious metal into negative for the week. It’s still trading within the downward-sloping channel mentioned last week, with the outer limits now approximately at 1,447 and 1,513. Exchange-traded funds (ETFs) added to gold holdings for a 20th session, Bloomberg reported yesterday. That’s the longest buying streak in a decade.


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SILVER has fared a tad better than gold, rallying for the past three days with exchange-traded funds adding to their existing holdings for the past six sessions, according to Bloomberg reports, bringing total net purchases for 2019 to 108 million ounces. Speculative investors had also been net bullish at the last reporting date on October 8, turning net buyers for the first time in five weeks, according to CFTC data.

PLATINUM continues its retreat from two-week highs as the metal struggles to sustain a move above the 55-day moving average attempted on Thursday. That moving average is now at 898.65 with platinum currently trading at 894.48.

PALLADIUM reached a new record high yesterday as the implications for some sort of trade deal boosted the metal. The assumption is that a deal would improve the prospects for global growth, which in turn would increase demand for cars and hence boost demand for the metal in pollution control devices in those cars. Speculative investors were well positioned for the latest record-breaking rally, having increased net long positions for the past six weeks, lifting net longs to the highest in more than seven months.


Base Metals


COPPER’s rally after the mini trade deal announcement is currently stalling at the 100-day moving average at 2.6293. That moving average has held on a closing basis since September 13. China’s headline import and export data for September were dismal, with a three-year equaling low 8.5% contraction. However, copper imports were a bright spot in the report, rising to the highest this year at 445,000 tons, but still down 15% from a year earlier. Copper stocks at warehouses monitored by the London Metal Exchange (LME) were higher for a second straight week, the first time this has happened since July. Speculative investors remain a bit skeptical about the industrial metal’s rise, having increased net short positions for a third straight week, according to the latest report to October 8 from CFTC. Net shorts are now at a five-week high.


Agriculturals


U.S. President Trump said that China has agreed to increase purchases of U.S. agricultural products to $40-$50 billion annually under the “Phase 1” trade agreement. This compares with the 2017 U.S. exports total of $19.5 billion. It was inevitable therefore that agricultural commodities rose, with SOYBEANS an outperformer. The commodity hit a 16-month high of 9.38 yesterday, having risen for seven consecutive days. Soybeans were given an additional boost from the recent World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture on Friday, which pegged U.S. soybean supply lower than expected. Speculative investors were already bullish on the commodity prior to the latest surge, having boosted net long positions for a fourth straight week to hit the highest since June 2018.

CORN also benefitted from the trade deal announcement, rising to the highest since August 12 yesterday. The rally hit the 100-day moving average at 3.9568 but failed to trade above it. That moving average has capped prices for nine weeks. Speculative investors trimmed net short positions for a second straight week, reducing them to the lowest since September 3.

SUGAR is consolidating gains made since the beginning of September as the market faces a supply shortage for this season. The International Sugar Organisation (ISO) has pegged the 2019/20 season deficit at nearly five million tons, which is helping to support prices. However, the shortfall comes after two straight years of surpluses and the ISO reckons there is still a 95 million ton backlog to clear.

WHEAT prices touched a near three-month high yesterday following last week’s trade deal framework. Prices have stalled near the 61.8% Fibonacci retracement of the drop from June 27 to September 3 at 5.109 and could be facing their first down-day in three today.




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Saudi Arabia Oil Attacks Were Launched From Iran

Saudi Arabia Oil Attacks – Stock Market News — American intelligence indicates Iran was the staging ground for a debilitating attack on Saudi Arabia’s oil industry, people familiar with the discussions said Monday, as Washington and the kingdom weighed how to respond.

The assessment, which the U.S. hasn’t shared publicly, comes as President Trump raised the prospect of a joint U.S.-Saudi retaliatory strike on Iran, a scenario that risks quickly broadening into a regional armed conflict.


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U.S. officials shared with Saudi Arabia the images, intelligence reports, and their assessment that Iran launched more than 20 drones and at least a dozen ballistic missiles at the Saudi oil facilities on Saturday, the people familiar said.

The Saudi-led coalition leading the war in Yemen said Monday the weapons used to hit the kingdom were Iranian, in its first assessment of the weekend attacks. The coalition dismissed Yemeni Houthi rebels’ claims of responsibility for the strikes. And Secretary of State Mike Pompeo told Iraqi leaders that the U.S. didn’t believe their country was used to carry out the attacks.


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But Saudi officials said the Americans didn’t provide enough proof to conclude that Iran was the staging ground and didn’t blame Iran, indicating the U.S. information wasn’t definitive. U.S. officials said they planned to share more information with Riyadh in the coming days. Unless Riydah makes the same determination, the U.S. would have trouble in its attempt to galvanize regional support for a unified response, said Western officials and analysts in the region.

Asked by reporters on Monday whether Iran is responsible for the attacks, Mr. Trump said: “Well, it’s looking that way.” Mr. Trump, who had been scheduled to meet with the Crown Prince of Bahrain on Monday, before the attacks took place, said that the U.S. is prepared for war “if we have to go that way.”


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“With all that being said, we’d certainly like to avoid it,” he added, noting that diplomacy is “never exhausted until the final 12 seconds.” Mr. Trump noted that the Saudis “very much” want U.S. protection but he expects them to take a significant role if any action is taken. He said he took the decision Sunday to release the country’s strategic oil reserves “Just in case we ran a little bit low on oil.”

After weighing the Trump administration information, Saudi Arabia announced that it was going to invite United Nations experts to come investigate the attacks, a decision likely to prolong the debate over any military response. Saudi Arabia said it would wait for the results of any such investigation before deciding how to respond.

In Washington and Riyadh, government officials are split over how to respond. Some want to strike Iran military, while others worry that an attack could trigger a wider regional fight, said officials in both countries.

The Saturday attack hit the heart of Saudi Arabia’s oil industry with a series of drone and missile strikes that left Riyadh reeling. The country is struggling repair the damage and limit the fallout to the energy industry.

Brent crude, the international benchmark for crude prices, was up over 14% on Monday at $68.51, one of the biggest one-day increases in memory. Higher fuel prices pose another threat to the world economy amid a U.S.-China trade dispute, although Saudi and U.S. officials said they would ensure that the oil market remains well supplied.

As a result of the attack, Saudi Arabia is considering whether to delay plans by Aramco, Saudi Arabia’s state oil-and-gas company, for an initial public offering, The Wall Street Journal reported Monday, citing people familiar with the matter.

The developments have already undermined efforts to broker a meeting between Mr. Trump and Iranian President Hassan Rouhani next week at the United Nations General Assembly. Iran said on Monday that its president wouldn’t meet Mr. Trump after the U.S. said it was open to such a meeting.

Mr. Rouhani on Monday said the attack was an act of self-defence by Yemeni Houthi rebels, who are allied with Tehran. “Every day, Yemen is being bombed and peaceful civilians are dying,” Mr. Rouhani said during a trilateral summit with Russian and Turkish counterparts in Ankara. “When security is restored in Yemen, then it will be possible again to produce oil safely in [Saudi Arabia].”


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The latest attacks pose a critical test for the U.S.-Saudi relationship, especially for Mr. Trump and Saudi Crown Prince Mohammed bin Salman, the country’s de facto ruler. They have both shifted their country’s foreign policies toward confrontation with Iran.

Mr. Trump met Monday with his national security team to discuss the attacks on Saudi Arabia and escalating tensions in the Middle East, said a person familiar with the meetings.

Mr. Trump and his team, which included Secretary of Defense Mark Esper and acting national security adviser Charles Kupperman, discussed possible military action against Iran, but made no decisions, said a second person familiar with the discussions.

Mr. Trump has warned that the U.S. is “locked and loaded,” but that it is waiting for Saudi Arabia’s assessment of the attacks before deciding what to do next. “Both President Trump and Mohammed bin Salman feel the need to respond but neither wants war,” said Robert Malley, president of International Crisis Group and former White House Middle East coordinator under President Obama. “The question is how they achieve the former without provoking the latter.”

The U.S. has taken the lead in providing security for the Persian Gulf monarchies for decades in part out of a strategy of protecting the world’s oil supply. As a result, observers of the region expect Saudi Arabia might defer any military action to the U.S.

“At the end of the day, conventional military action is a last resort for any state, and it is something that would be done in coordination with regional and international stakeholders,” said Mohamed Alyahya, a Saudi political analyst and editor of the English website of Saudi-owned al-Arabiya television.


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“Any reaction whatsoever, or lack thereof, will have significant consequences on the future of the region,” he said. On Monday, Mr. Trump tweeted a reminder of Iran’s behavior when it shot down a U.S. drone in June, a strike that led the U.S. to prepare a military strike against Iran. Mr. Trump called off the strike after having second thoughts.

“Remember when Iran shot down a drone, saying knowingly that it was in their ‘airspace’ when, in fact, it was nowhere close,” he said. “They stuck strongly to that story knowing that it was a very big lie. Now they say they had nothing to do with the attack on Saudi Arabia. We’ll see?”

The weekend strikes marked the most significant attack in a simmering conflict pitting America and its Middle East allies against Iran and its proxies around the region.

Mr. Trump imposed crippling sanctions on Iran that have delivered a blow to the country’s economy. Iran’s crude oil production capacity was nearly 4 million barrels a day before the revival of U.S. sanctions, making it a leading oil supplier. The country’s refining capacity now is roughly half that amount.

In recent months, the U.S. has accused Iran of carrying out a series of attacks in the region, including blasts that crippled several tankers in the Persian Gulf.

The prospect of U.S. military action drew divergent reactions from lawmakers. Sen. Lindsey Graham (R., S.C.) called over the weekend for the U.S. to put an attack on Iranian oil refineries “on the table.”

Others cautioned against military action. Sen. Mitt Romney (R., Utah) warned on Twitter Monday that any “direct engagement by U.S. military in response to Iran’s attacks on Saudi oil infrastructure would be a grave mistake.”

Sen. Tim Kaine (D., Va.) was more blunt: “The U.S. should never go to war to protect Saudi oil,” he tweeted on Sunday.

Saturday’s strikes demonstrated how a war with Iran could be devastating for Saudi Arabia, with the lifeblood of the kingdom’s economy vulnerable to attack despite hundreds of billions of dollars spent on its military.


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The attacks have amplified the pressure on the Saudi government to respond. Its air defenses have failed to stop the attacks on Saturday and other incidents involving the Houthis in the months before, despite the kingdom having the world’s third-largest military budget. The Saudis have spent hundreds of billions of dollars spent over the years on tanks, jet fighters and other hardware.

Among other weapons, the kingdom has both American-made Patriot and Hawk missile systems, both of which failed to stop a series of drone and missile attacks since May. The Saudi government says it has shot down several drones in the past.



 

Precious Metals Enjoy Resurgence in Negative-Yield World


♦ Precious Metals – Stock Market News Today ♦ … – Gold purchases by everyone from central banks to retail buyers have boosted the metal to its highest level in six years, with a coterie of famous investors now touting its role as a haven from market turmoil. Silver and platinum have outpaced all other major asset classes so far in the third quarter, while palladium is up about 30% this year.


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The sudden interest in precious metals follows years of sideways trading as investors bet that steady growth would allow the world’s central banks to raise interest rates and end an era of miserly debt yields.

Instead, a deepening trade war between the U.S. and China has weighed on the outlook of nearly every major economy, adding pressure on many central banks to further cut rates—even those that already stand below zero.

Precious metals fell sharply Thursday as stocks and other risky investments rallied on hopes that coming trade talks will relieve some pressure on the world economy. Gold, silver and platinum each dipped 2% or more, trimming some of their sizable quarter-to-date gains.

Metall

While these nonyield-bearing assets struggle to compete with bonds when the outlook for the world economy is stable, their appeal has risen as negative rates have proliferated in Europe and Japan. It also has boosted interest in stocks that are expected to pay high dividends even when growth slows, such as shares of utilities and makers of consumer products.

“There is so much flight to safety right now and metals is where a lot of that money is going,” said Bob Haberkorn, senior commodities broker with RJO Futures in Chicago.

“Traders that had been out of the metals market are coming back…and there’s been a lot of buying from new accounts,” Mr. Haberkorn said. “It’s been great, great for business.”

Another factor boosting them this summer: falling yields and growth fears have dragged a long list of currencies, from the euro and British pound to the Chinese yuan, to their lowest levels in years. Unlike currencies, gold and other precious metals aren’t under the sway of any global central bank, further heightening their appeal.

Additionally, while stocks remain near records, a recent burst of market volatility has unsettled many investors. So has a steady world-wide decline in bond yields that many believe is a harbinger of weaker growth.

Although they rebounded Thursday, yields on the U.S. 10-year Treasury note dropped near a record low earlier in the week as disappointing manufacturing data and trade tensions pushed investors into government bonds and other safe assets. Yields fall as bond prices rise.

In Europe and Japan, some bond yields have been negative for years, and investors expect they will fall further as the European Central Bank and Bank of Japan unleash more monetary stimulus. More than $15 trillion in government debt around the world now has a negative yield, meaning essentially that savers holding these bonds are paying the government to store their money.

“Gold yields zero, but zero is still much better than negative,” said Bart Melek, head of commodity strategy at TD Securities.

Hedge funds and other speculative investors are wagering on further gains. They have pushed net bullish bets on gold to their highest level since 2006, as far back as Commodity Futures Trading Commission figures go. They also have lifted bullish wagers on platinum and silver, which both are on track for their best quarter in several years, according to Dow Jones Market Data.


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Their advance comes after years of tepid investor interest, particularly in platinum, which is used as a component in auto exhaust filters for diesel engines. Platinum prices had previously tumbled as environmental concerns cut demand for diesel vehicles across the world.

But the precious-metals rally spread to platinum in July, and prices logged their biggest weekly gain in eight years last week, advancing nearly 9%.

The gains have rippled to shares of companies that mine the metals, in part because mining stocks offer individual investors easier exposure to the sector than trading metals futures contracts.

The NYSE Arca Gold Miners Index is up about 40% this year, and shares of some smaller precious-metals producers have risen even more than that. Royal Gold Inc. is up 58% for the year, while First Majestic Silver Corp. has climbed 70%.

After an extended stretch of rangebound trading, the combination of falling rates and sluggish economic activity set up the sector’s rally this quarter, said Rhona O’Connell, head of market analysis for Europe, the Middle East, Africa and Asia at INTL FCStone.


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“It was looking a bit like a pressure cooker,” she said. “It’s a sharp move that becomes self-fulfilling because you get the momentum traders involved.”

Gold Falls as Risk Appetite Grows


{ Gold Price News – Stock Market News } … The Federal Reserve’s upcoming Jackson Hole, Wyo. retreat Is expected to boost gold prices on speculation of an imminent rate cut. But creeping risk appetite in the meantime is spoiling the party for longs in the yellow metal.

Spot gold, reflective of trades in bullion, was down $15.22, or 1%, at $1,498.32 per ounce by 2:10 PM ET (18:10 GMT), extending Friday’s 0.8% loss.


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Gold futures for December delivery, traded on the Comex division of the New York Mercantile Exchange, settled down $12, or 0.8%, at $1,511.60. On Friday, gold futures fell 0.5%. Monday’s decline came as stocks were mostly higher around the world.



Still, gold futures are up about 18% this year… The Fed’s annual gathering of central bankers and policymakers from Thursday through Saturday is expected to lend direction on when the next U.S. rate cut will be.

While Fed Chairman Jay Powell’s speech on Friday will be a highlight of the gathering, other discussions that even remotely touch on interest rates can trigger significant market moves, especially with investors psyched up for another Fed cut in September. The Fed’s last rate change was a 25-basis-point reduction in July and any hints of further cuts will almost certainly boost gold prices.


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Ahead of the Wyoming event, the Fed on Wednesday will publish minutes of its July 30-31 meeting. The meeting ended with the Federal Open Market Committee, the Fed’s rate-setting body, cutting the key federal funds rate for the first time in a decade.

Jackson Hole aside, there will be more central bank watching this week, with the European Central Bank reporting its July minutes on Thursday, a day after the Fed’s.

While the ECB left rates unchanged last month, it did adjust its forward guidance to indicate that rates could go lower. That essentially means the ground has been laid for a potential September cut. It also indicated that it could revive its quantitative easing program in coming months.

Fed Rate Monitor Tool suggests a 96.2% chance the Fed will cut the fed funds rate to 1.75% to 2% from 2% to 2.25% now. President Donald Trump has been calling for deeper rate cuts. But until Wednesday, the bullion market is expected to take its cue from a wide variety of drivers.


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“A combination of a firmer U.S. dollar and modestly higher real U.S. yields is weighing on gold at the moment,” said John Reade, chief market strategist at the World Gold Council.

Some expected more volatility instead of gains by Friday.

“Given the policy uncertainties that may or may not unfold later in the week from the Jackson Hole symposium, gold could consolidate with a downward bias before eventually resuming its upward momentum,” Stephen Innes, managing partner at VM Markets, said in a note.




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Trump Wants to Buy Greenland … But Why?


{ Trump Confirms Interest in Greenland – Stock Market News } … Mr. Trump has become entranced by the idea of the U.S. buying this vast, ice-shrouded island on the roof of the world, people familiar with discussions said. President Trump on Sunday confirmed his interest in potentially purchasing Greenland, but said it wasn’t a priority. The territory’s appeal seems rooted in its natural resources in addition to providing the U.S. with another doorstep to the Arctic as the ice sheet shrinks.


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But the president’s interest has drawn mixed reactions in Nuuk, the country’s capital, a sparse city just 150 miles south of the Arctic Circle. Lapped by the Labrador Sea, its low-rise, brightly painted houses and apartment blocks are home to around a third of Greenland’s 56,000 inhabitants.

For some, the idea of buying and selling their homeland is a highhanded reminder of a painful and unresolved colonial legacy, which saw its indigenous inhabitants’ culture and language suppressed during centuries of rule from faraway Copenhagen. Others discern in the president’s apparent fascination a sign of the geostrategic importance of the self-governing territory, which is part of the Kingdom of Denmark. Many simply see it as a joke.


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All insist that Greenland isn’t for sale, as do its political leaders. Greenland is the world’s largest island, covering more than 800,000 square miles in the North Atlantic and Arctic Sea northeast of Canada. It is larger than Mexico and around the same size as Saudi Arabia. Around 80% of the country is cloaked in ice, with human settlements hugging the coast. A network of airstrips and helipads, some dating from World War II, allow residents to jump from city to city in the absence of major roads.

Its economy is sustained by shrimp and fish exports and a $591 million annual subsidy from Denmark. Growing industries include tourism and mining. Active mines churn out rubies and minerals used to make fiberglass, and projects are under way to assess the feasibility of mining rare earths and uranium, Greenlandic officials say.

The abundant resources mean any buyer for Greenland would struggle to make a fair offer for the country…

Whether the president’s aspiration is serious or not, Washington will continue to view Greenland as vital to American national-security interests. A decades-old defense treaty between Denmark and the U.S. gives the U.S. military virtually unlimited rights in Greenland at America’s northernmost base, Thule Air Base, which houses part of a U.S. ballistic missile early-warning system.

Greenland’s strategic importance to the U.S. was underscored further last year when the Pentagon worked successfully to block China from financing three airports on the island. With American prodding, Denmark’s government instead asked a consortium led by Danske Bank to help assemble an alternative financing package.

In Copenhagen, which still sets Greenland’s foreign and defense policies, news of Mr. Trump’s enthusiasm for the territory has been interpreted as the latest signal from Washington that the U.S. is an engaged player in the Arctic, a zone of increasing economic and strategic rivalry with both China and Russia.

“The U.S. wants to make everyone aware the U.S. is an Arctic power,” said Nils Wang, a retired Royal Danish Navy rear admiral and director of Naval Team Denmark, an association for navy suppliers.

Denmark, too, aims to explore new research and economic opportunities as the Arctic opens up, and has warned that Greenland will lose its annual subsidy if it pushes for independence. Mr. Trump is due to meet the Danish and Greenlandic premiers during a previously planned visit to Copenhagen next month, alongside the leader of the Faroe Islands, another autonomous Danish region.


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Múte Bourup Egede, leader of the left-wing, pro-independence Inuit Ataqatigiit party in Greenland’s parliament, said such strategic games—and Mr. Trump’s icebound fantasy—serve to remind Greenlanders of their country’s outsize importance in world affairs.



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U.S. Agriculture


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China is the fourth largest market for U.S. farm exports, behind Canada, Mexico and Japan. Former Iowa Lt. Gov. Patty Judge said the loss of a trading partner like China sets up a “dangerous situation.” …  With China officially pulling out of buying U.S. agricultural products, American farmers are losing one of their biggest customers. It could be a devastating blow in an already tough year for crops and commodity prices. It may also dent U.S. gross domestic product and hurt companies like Deere, whose business is directly tied to farming in the Heartland.


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“Sales have already been lower this crop year because of the existing tariffs. If we went all the way to no China exports whatsoever, that would of course result in even larger market and price impacts,” said Pat Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri. “Cutting China completely out of the market would be a very big deal.”

China made up $5.9 billion in U.S. farm product exports in 2018, according to the U.S. Census. It’s the world’s top buyer of soybeans and purchased roughly 60 percent of U.S. soybean exports last year. Westhoff estimated that soybean prices have already dropped 9% since the trade war began last July. From September 2017 to May 2018, soybeans exports to China totaled 27.7 million tons. That number dropped by more than 70% to 7 million tons during the same nine-month period in 2018 and 2019, according to an analysis by University of Missouri.

Westhoff estimated an additional $4 billion drop on soybean exports after the effects of tariffs but before the total loss of China as a customer. Tariffs also have a ripple effect across other crops, he said. With less demand for soybeans, farmers end up planting more crops like corn. That results in lower corn prices because there’s much more supply.

Former Iowa Lt. Gov. Patty Judge said the loss of a trading partner like China sets up a “dangerous situation.” … “There are going to be some serious repercussions for farmers,” Judge said.

China is the fourth largest market for U.S. farm exports, behind Canada, Mexico and Japan. She also highlighted a “languishing” trade pact with Canada and Mexico that has yet to be signed. New tariffs are another “financial whammy on top,” said Judge, who was also Iowa’s secretary of Agriculture.

While farming exports are a relatively small portion of the United States’ annual $20 trillion in GDP, Judge said it will directly hit farmers and exacerbate other problems they were already facing.

U.S. net farm income has been falling in the past six years, well before the effect of tariffs. Income has dropped 45 percent since a high of $123.4 billion in 2013 to about $63 billion last year, according to the U.S. Department of Agriculture.

In addition to tariffs, farmers were faced with floods and African swine fever this year, which has softened demand for soybean and farm products that pigs feed on. The White House began rolling out a $16 billion federal aid package in May to help farmers weather the trade war and other circumstances. But Judge said much of that bailout has skipped over small farmers and isn’t widely embraced as a permanent solution — at least in Iowa.

“Farmers want to have a fair profit at the end of the year— they would like to do that in the marketplace rather than through a government program,” Judge said, adding that it’s also difficult for small farmers to get access to loans if they don’t have certainty of customer demand to pay it off.


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On Tuesday, President Trump tweeted that farmers know that China “will not be able to hurt them,” since “their President has stood with them.”

Election issue… Agriculture has been a sensitive issue for President Donald Trump. He claimed he had secured large quantities of agricultural purchases when he met with President Xi Jinping at the G-20 summit in June, then later accused China of not following through with those purchases. That led Trump to announce last week 10% tariffs on the remaining $300 billion in Chinese imports that had escaped his previous duties.

On Monday, a spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to Trump’s surprise tariffs. “This is a serious violation of the meeting between the heads of state of China and the United States,” the ministry said in a statement Monday, as translated via Google.

John Rutledge, chief investment officer of global principal investment house Safanad, said it’s no mistake that agriculture was China’s weapon of choice in upping the trade war ante. On one hand, It hurts GDP and Trump’s political base of small farmers — but perhaps more importantly, it hurts corporate farming companies that tend to be huge Republican donors.

“Clearly this was retaliatory,” Rutledge said. “It’s a really serious area to go after.” Rutledge, who said he has met with the Trump administration’s core trade team on multiple occasions this year, said Trump “cannot allow the trade war to end before the next election” because of its political value.

China’s end to agricultural buying may also hurt sales at U.S. companies like Deere and Caterpillar, which rely on farmers for much of their business. Deere said in May that farmers were delaying buying products based on uncertainty. Shares of Moline, Illinois-based Deere dropped 4.8% Monday after reports that China would stop buying U.S. farm products.


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Judge pointed to the farm crisis in the 1980s, when low crop prices led to farm operators falling behind on land and equipment loans. Based on few signs of progress in trade talks, Judge said she fears a repeat of the painful decade for farmers.

“We don’t want to see people losing their farms and people unable to meet your financial obligations,” she said. “But it doesn’t look like trade is going to get any better, so I think we’re in for a very rough ride.”

Corn Is America’s Largest Crop In 2019


Farmers have planted 91.7 million acres of corn in 2019, according to the National Agricultural Statistics Service (NASS).

USDA’s Economic Research Service (ERS) publishes a monthly Feed Outlook report that analyzes supply and demand data to provide information on expected prices, production, exports, and feed uses for corn and other feed grains. The following is just some of the information available.

Corn farmers faced one of the most challenging planting seasons in recent memory, and while the corn did get planted, farmers planted much of it later than usual. In early July, 57 percent of the crop was reported to be in good or excellent condition, while last year 75 percent was reported good or excellent by that time.


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Based on the late start to the crop and the continued cool weather, USDA is forecasting slightly lower yields than last year. At present, however, USDA forecasts that corn supplies will be sufficient to meet demand because farmers have plenty of corn stored from last year’s crop. That ear of corn on the cob you may enjoy at a summer picnic is just one of many uses of corn. Here are a few more:

About a third of America’s corn crop is used for feeding cattle, hogs, and poultry in the U.S. Corn provides the “carbs” in animal feed, while soybeans provide the protein. It takes a couple of bushels of American corn to make corn-fed steak; by some estimates, a beef cow can eat a ton of corn if raised in a feedlot. Both dairy cows and beef cows also consume silage, which is fermented corn stalks and other green plants.

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Just over a third of the corn crop is used to make ethanol, which serves as a renewable fuel additive to gasoline. The Renewable Fuel Standard requires that 10% of gasoline be renewable fuel, but you can find E15 (15 percent ethanol) or E85 (85 percent) ethanol in some areas, particularly in the Midwest.


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The rest of the corn crop is used for human food, beverages, and industrial uses in the U.S., or exported to other countries for food or feed use. Corn has hundreds of uses. It is used to make breakfast cereal, tortilla chips, grits, canned beer, soda, cooking oil, and bio-degradable packing materials. It’s the key ingredient in the growing medium for life-saving medicines including penicillin. Corn gluten meal is used on flower beds to prevent weeds.

America’s biggest customers are Mexico, South Korea, Japan, and Colombia. U.S. white corn is particularly prized in Mexico and Colombia as a high quality food ingredient, while Japan and South Korea pay a premium for high quality, USDA-inspected feed corn for poultry and beef.

Why does corn have the most acres of any major crop in the U.S.? It can be grown in nearly every State in the U.S. Seed companies provide hybrid, organic, and bio-engineered varieties that are specially bred to be the best for different soil and weather conditions. Seed companies have developed different corn varieties for different end uses, including feed corn, sweet corn, white corn, and popcorn.

You can learn more about corn from a variety of USDA sources. ERS maintains a feed grains database with historical information on production, trade, prices, livestock feed demand, and many other data items.



The Agricultural Research Service (ARS) researches insect and weed pests, and new crop varieties. The World Agricultural Outlook Board, part of the Office of the Chief Economist, coordinates economic analysis from across USDA to provide monthly reports on the supply and demand of corn and other crops, while the Foreign Agricultural Service (FAS) and ERS also publish more detailed analysis of specific issues like ethanol usage and foreign demand for feed and food corn and many other crops.

Update: In July, USDA’s National Agricultural Statistics Service (NASS) collected updated information on 2019 acres planted to corn, cotton, sorghum, and soybeans in 14 states. NASS previously collected planted acreage information during the first two weeks of June, with the results published in the June 28 Acreage report.

Excessive rainfall had prevented planting at the time of the survey, leaving a portion of acres still to be planted for corn in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New York, North Dakota, Ohio, South Dakota, and Wisconsin; cotton in Arkansas; sorghum in Kansas; and soybeans in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New York, North Dakota, Ohio, South Dakota, and Wisconsin.


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If the newly collected data justify any changes, NASS will publish updated acreage estimates in the Crop Production report to be released at noon ET on Monday, Aug. 12. It will be available online at www.nass.usda.gov/Publications.

How To Start Commodity Trading


◊ Commodity Trading ◊


Trading commodities online is a relatively simple process, but it is not an activity that you should pursue without doing lots of homework. The traditional method of calling a commodity broker to place orders and waiting for a call back to give you a filled order price is less efficient than online trading. Therefore, if you want to trade commodities online, there are some important factors to keep in mind.

Choosing a Commodity Broker… The first job is to pick a commodity broker. Almost all commodity brokers offer online trading, but there are some that specialize in online trading. Plus500 offers one such platform. Plus500 offers a versatile trading platform when it comes to charts, quotes, strategy analysis, as well as order entry. Many other online brokers offer an excellent product, good service, and low commission rates.


COMMODITIES ›

Commodities Account Paperwork… Every commodity broker requires documentation to open an account. The forms require disclosure of financial information and identify the risks involved in trading commodities. Financial data is critical because commodities are highly leveraged assets.

Not everyone who completes the account forms is suitable to open a commodities account. A broker may use discretion on whether a potential customer is an acceptable risk and is suited to trade commodities. Sufficient income, trading experience, and credit are critical elements of suitability

Before You Start Trading Commodities Online… Once you select an online commodity broker, and you receive approval for trading, the next step is to fund the account. It is up to the individual as to the amount of funding or account size when you open an account. One’s comfort level and risk tolerance are important considerations when funding an account.



Before you commence trading with real money, it is important to develop a well-researched trading plan. Many commodity brokers offer simulations to practice with before you put capital to work. Training and simulations will familiarize you with placing orders and could save the prospective trader from making critical order entry errors while helping with the development of a coherent and efficient plan for approaching markets.

Keep in mind that before you begin trading commodities online, choose your trades wisely and avoid overtrading. If you find yourself placing many trades, and the results are not profitable, it is likely that you are overtrading. One of the greatest downfalls of many commodity traders is not being selective and doing too many trades.​

More Advice for the New Online Commodities Trader… As with any new venture, you must do your homework and understand the ins and outs of the markets you decide to trade. When it comes to commodities, there are so many important factors to consider. First, remember that futures and options markets are derivatives of the actual market for the physical delivery of the commodity in question.

Therefore, it is important to learn all you can about the underlying supply and demand fundamentals for that asset. There is a wealth of information available for free from the commodity exchanges as well as from a variety of trade organizations and government agencies that supply commodity data free of charge.

In the energy markets, the API and EIA are excellent sources of information. In grains, soft commodity, and animal protein markets, the U.S. Department of Agriculture issues weekly and monthly reports that include invaluable data and analysis.

Understanding commodities will require particular attention to supply and demand or fundamental analysis. At the same time, the futures and options markets in commodities are laden with risk. There is a tremendous amount of leverage in these instruments. While the opportunity exists to make huge gains, where there is the potential for rewards there are also commensurate risks.

Trading futures requires a good-faith deposit or margin. In many cases a trader, speculator, or investor can control vast amounts of a commodity and bet that the price is going higher or lower with a 5–10% margin deposit or less. However, given the gearing of these contracts and the volatility of the markets, margin calls requiring additional capital are likely. When it comes to options, buyers have time value risk, and sellers act as insurance companies, they risk a lot for small potential profits.

Exercise caution in the commodity markets, do your homework, and approach these volatile instruments with care and trepidation. While fortunes can come from commodities trading, the potential for losses is just as great. Online trading has increased the speed and efficiency of execution. Remember to approach online trading as a business with discipline and be precise.

The most successful traders are masters of efficiency. Mastering online trading requires a level of expertise that comes from hard work and study. Most online trading platforms have many resources for their customers. Make sure you use all of the information that is at your disposal. The platforms want you to succeed because a successful customer is one who will be in the markets and trading for the long haul.


INSIGHTS ›

 

Today Is A Good Time To Invest In Latin American Mining


After Latin American countries gained independence, roughly 200 years ago, international mining investors had to change their approach. But the lure of Latin America’s mining sector remains just as strong. It has the planet’s largest reserves of copper, lithium and silver with plenty of gold to boot. While modest local demand – it has less than 10% of both world population and GDP – makes it a natural exporter.

Latin America has emerged as a mining-friendly jurisdiction with a wide range of international mining companies listed on Canadian, US, Australian and British stockmarkets. The development of solid democracies across the region since the 1980s has allowed many Latin American countries to finally develop fair systems to manage international mining investment.

The best thing about Latin America for mining investors is that it is incredibly rich in base and precious metals. The region’s mining powerhouses of Chile, Peru, Brazil and Mexico are particularly blessed. According to the US Geological Survey, Chile has the world’s largest reserves of both copper and lithium and the seventh-largest silver reserves.


INSIGHTS ›

Peru has the world’s largest silver reserves, third-largest copper reserves, third-largest zinc reserves, fourth-largest nickel reserves and fifth-largest gold reserves. Mexico has the world’s fourth-largest zinc reserves, fifth-largest lead reserves, sixth-largest copper reserves, sixth-largest silver reserves and is also a top-ten gold producer. Finally, Brazil has the world’s second-largest reserves of iron ore, third-largest reserves of nickel and fourth-largest reserves of tin and seventh-largest reserves of gold.

Outside of the established powerhouses, you also have world-class metal deposits scattered around the region. So, for example, the Dominican Republic has the world’s third-largest gold mine, while Guatemala has its second-largest silver mine. Argentina and Bolivia form part of the ‘lithium triangle’ with Chile that together holds around 54% of global resources -that is to say potential reserves. While Bolivia also has top ten reserves of zinc and lead.

Moreover, it is likely that Latin America has even more mineral wealth than the official statistics suggest as a mix of political and economic factors have prevented international miners from extensive exploration in Argentina and Ecuador. Given that most of Peru and Chile’s largest mines are found in the Andes, it seems reasonable to suppose that their neighbour’s stretches of the mountain range are also rich in minerals.

Latin America isn’t just rich in metals – it’s rich in the right metals. Copper and lithium have exciting medium-term prospects while gold miners present an interesting opportunity. That’s confirmed by in a recent study from the market intelligence division of ratings agency, S&P Global, which notes that “for the first time since 2014, base metals matched gold as the top Latin American exploration target, with each garnering 42% of planned spending.” The rise in base metals exploration is being driven by bullish long-term views on copper.

As the commodity supercycle began to unwind in 2012, investors turned sour on copper. Its rise had been powered by massive Chinese demand but conventional thinking figured that the infrastructure glut in the Middle Kingdom, combined with efforts to move its economy away from heavy industry, would limit future global copper use.

However, the rapid growth in electric vehicles has transformed the outlook for the red metal. A battery-powered electric vehicle uses about 83 kg of copper compared to just 23 kg in an internal combustion engine. Hybrid vehicles, like the Prius are normally somewhere in the middle.

Consultant McKinnsey estimates that yearly electric vehicle sales will hit 4.5 million in 2020, up from 1.2 million in 2017. That would still just be 5% of annual light electric vehicle sales, leaving plenty of room for further growth. Copper has been hit by worries of a trade war between China and the US, and prices are still 40% below their 2011 peak.

Another clear winner from the transition to low carbon energy systems is lithium. It’s already established as the battery of choice for electric vehicles. While the search for renewable energy’s holy grail – a cheap efficient battery that can store excess electricity produced by intermittent sources such as wind farms and solar panels – may yet give lithium another boost.

At present Australia has managed to become the world’s largest producer despite the fact its lithium is made mined from ore – a more expensive process than extracting it from the lithium-heavy salt brines found in the lithium triangle. That’s because historically Australian has been more welcoming to lithium investors than Chile, which treats the white metal differently to copper, Argentina or Bolivia. Now that’s starting to change, with Argentina in particular receiving a mix of international investment.

Finally, you have gold. Alex Black, a mining industry veteran who helped investors strike rich in Peru when he turned Rio Alto, his last company, from a penny stock gold explorer into a billion-dollar miner, told us that he’s never seen such tough financing conditions. “Trying to raise $20million for mine development now is like asking for $250million in 2014. We have more than 5 million ounces and a market cap of less than $50million, so investors can get an ounce of gold for under $10.”

Of course, a CEO is going to talk up his company to a journalist but the S&P Global report backs him up. “Although financings are moving in the right direction, the $9.6billion raised in 2017 and $9.4billion raised in 2018 remain well below the $19.4billion raised in 2011.

Capital offerings targeted primarily for exploration purposes in 2018 were down slightly compared with 2017 and 2016, with the totals for all three years returning to 2012 levels, when equity markets were just beginning to shun the industry.” One theory is that the proliferation of cannabis stocks and crypto currencies have diverted more speculative capital from gold explorers. Gold’s main use is not industrial, so it’s impossible to know if the price will be higher or lower in a few years’ time.


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Mining investors judge potential projects on ‘above ground’ and ‘below ground’ risk. Latin America’s geology means it has plenty of exciting mining projects yet the above ground risks have often made it difficult them difficult to realise. Latin America was blighted by political instability ever since independence, with frequent periods of military rule and most countries only returning to democracy within the last 40 years.

The political instability hindered mining investment in the region because you need a relatively stable and efficient state to create a fair mechanism for the ongoing transaction between the country’s citizens – the ultimate owners of the metal – and the mining company Mining has a massive environmental impact on local citizens, while there are also political and economic consequences of extracting a non-renewable resource to export for profit.

In many Latin American countries, the state’s role as arbiter is complicated by the fact that strong indigenous populations have alternative concepts of land ownership, such as ancestral community territories. Those community rights are recognised in many Latin American post dictatorship constitutions but not clearly defined, leading to a legal standoff as miners and locals vie for a greater share of profits in proposed projects.

These political issues can have a direct hit on investors’ pockets. Investors in US-listed precious metals miner, Tahoe Resources, learnt that first-hand when it was forced to cease operating Escobal, the world’s second largest silver mine, because of opposition in Guatemala. Its shares plummeted and was bought out by a rival for a knockdown price earlier this year.

Even well-established mining jurisdictions, such as Peru, can have problems. For example, one of the country’s most important mining investments, the $7billion Las Bambas copper mine, has spent two months this year under a blockade from angry members of the neighbouring communities.

Those costly lessons have taught mining companies that they need to get community relations right. That begins when they assess a potential project, as there are big differences in local attitudes to mining. For example, central Peru, which has a longer mining tradition, typically sees less protests than the north or south of the country. But ultimately miners need to follow the minerals, so it’s also important for investors to pick firms that have a well-thought out community strategy.

Last month in Lima we interviewed Victor Gobitz, CEO of Buenaventura, a Peruvian non-ferrous metals miner, and he explained how the firm has learned to work with local groups. “If a miner just tries to exchange money for lands it is a big mistake. You need to create a long-term relationship based on generating employment for local workers and providing some social infrastructure such as drinking water, energy, sewerage and so on.”

Not only are miners becoming more adept at handling these issues, there are also signs that most Latin American states are improving their ability to regulate this complex transaction between investors and the citizens. The Fraser Institute is a Canadian think tank that publishes a global ranking of mining jurisdictions. It judges both the mineral endowment and the policy framework to score the overall attractiveness for investors.

Latin America and the Caribbean was the standout performer in the latest report, with the region’s median investment attractiveness jumping 16% in 2018, more than any other region. That’s even more impressive considering the negative weighting of disaster cases such as Venezuela, Nicaragua and Guatemala.

Unsurprisingly Chile, Peru and Mexico were in the top three. However, Ecuador and Colombia also made big improvements, jumping into the top half of the regional table and overtaking Brazil. However, just as with community protests, the reality of mining policy can differ greatly within countries. Argentina’s national score was poor, dragged down by the extreme anti mining policies of some individual provinces, yet others, such as Catamarca scored excellently. So, investors need to understand the local reality of a company’s projects.


INSIGHTS ›

This improving policy landscape isn’t down to luck. It reflects the trend of general improvement in Latin American institutions as the young democracies across the region begin to mature. Barring sad cases, such as Venezuela, most other states in the region are gradually becoming more efficient, less bureaucratic and now, thanks to the repercussions of long-running, region-wide graft scandal, slightly less corrupt.

The fact that industry insiders are targeting Latin America for future projects shows that the region is fertile ground for profit-hunting investors.

Oil Gains As Gulf Tanker Seizure Raises Tensions


Stock Market News Today… Oil prices rose on Monday on concerns that Iran’s seizure of a British tanker last week may lead to supply disruptions in the Middle East Gulf, although gains were capped as Libya resumed output at its largest oil field.


Brent crude futures climbed 88 cents, or 1.4%, to $63.35 a barrel by 07:07 GMT.

West Texas Intermediate (WTI) crude futures were up 58 cents, or 1%, at $56.21 a barrel.

WTI fell over 7% and Brent fell more than 6% last week.


“Falling global demand and rising U.S. stockpiles have helped turn oil charts very bearish, but that may not last as tensions remain high in the Persian Gulf,” Edward Moya, senior market analyst at OANDA in New York, said in a note.

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Iran’s Revolutionary Guards said on Friday they had captured a British-flagged oil tanker in the Gulf in response to Britain’s seizure of an Iranian tanker earlier this month.

The move has increased the fear of potential supply disruptions in the Strait of Hormuz at the mouth of Gulf, through which flows about one-fifth of the world’s oil supplies.

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Britain was weighing its next moves on Sunday, with few good options apparent as a recording emerged showing that the Iranian military defied a British warship when it boarded and seized the ship.

Meanwhile, a senior United States administration official said on Friday the U.S. will destroy any Iranian drones that fly too close to its ships, a day after the U.S. said one of its navy ships had “destroyed” an Iranian drone in the Strait of Hormuz. Iran said it had no information about losing a drone.

INSIGHTS ›

Crude oil supply outages and curbs also helped lift prices higher. “Oil prices got a small boost this morning after Libya’s (NOC) declared force majeure on Sharara crude loaded at Zawiya port,” said Stephen Innes, managing partner at Vanguard Markets.

The Sharara oilfield resumed production at half capacity on Monday after being shut down since Friday, which caused an output loss of about 290,000 barrels per day (bpd).

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Meanwhile, data late last week showed shipments of crude oil from Saudi Arabia, the world’s top oil exporter, fell to a 1-1/2 year low in May.

Speculative money is flowing back into the oil markets in response to the escalating dispute between Iran and the United States and other western nations playing out in the Gulf waters along with the signs of falling supply.

Hedge funds and other money managers raised their combined futures and option’s positions on U.S. crude for a second week and increased their positions in Brent crude as well, according to data from the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.

Goldman Sachs (NYSE:GS) on Sunday lowered its year-on-year oil demand forecast for 2019 to 1.275 million bpd, citing disappointing global economic activity.


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The forecast was still above the consensus of about 1.05 million bpd for 2019, it said, adding that “we see increasing scope for oil demand to finally start exceeding beaten-down expectations.”

The World’s Biggest Diamond Mine⁠ Is Being Shuttered By Rio Tinto Group After Almost Four Decades


< Stock Market News Today > … Rio’s Argyle mine in remote Western Australia has transformed the sector since 1983 when the operation began supplying gems for both ends of the market. RBC Capital Markets and Panmure Gordon are among brokers, banks and competitors forecasting the closure could kick-start prices that have waned since 2011, according to PolishedPrices.com, an industry data provider.

Production at Argyle, about 2,600 kilometers (1,600 miles) northeast of the state capital Perth, is scheduled to end before the end of next year after finally exhausting its supply of economically viable stones, said Arnaud Soirat, Rio’s head of copper and diamonds.

“There is going to be a fair bit of supply which is going to come out of the market,” Soirat said in an interview Friday at the mine site. “In late 2020 we’ll be stopping operations and will start the rehabilitation of the site.”


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Argyle is best known as the source of about 90% of the world’s prized pink diamonds—rose-to-magenta hued stones that command among the sector’s highest prices. Sotheby’s auctioned the 59.6 carat “Pink Star”, mined by Rio’s rival De Beers, for $71 million in April 2017, a record auction price for any gem. While they attract most attention, the pink stones account for less than 0.01% of Argyle’s total output.

More than three-quarters of Argyle’s output is comprised of lower value brown diamonds, and the mine’s overall output sells for an average of between $15-$25 a carat, Canaccord Genuity Group Inc. estimated in 2017. That’s far less than the $171 a carat average price realized last year by De Beers.

The mine also is the biggest diamond producer by volume and that’s what has put the operation at the center of global oversupply. More than three-quarters of Argyle’s output is comprised of lower-value brown diamonds, and the mine’s overall output sells for an average of between $15-$25 a carat, Canaccord Genuity Group Inc. estimated in 2017. That’s far less than the $171 a carat average price realized last year by De Beers.


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A glut of cheap and small diamonds has eroded profits for nearly every miner and made it increasingly hard for the industry’s cutters, polishers and traders to make a profit. In December, some of Rio’s customers refused to buy cheaper stones, while De Beers has been forced to cut some prices and offer concessions to buyers.

Yet, with consumer appetite for diamonds stable, and major mines including Argyle scheduled to shutter, “the rational offset between supply and demand should lead to price growth,” Stornoway Diamond Corp. Chief Executive Officer Pat Godin said in March. Declining output, led by Argyle’s closure, will help revive prices, Toronto-based producer Mountain Province Diamonds Inc. said in May.

About 21 million carats a year of global diamond production—including about 14 million a year from Argyle—are scheduled to exit the market by 2023, a volume that’ll only partially be offset by the addition of new mines, according to Russia’s Alrosa PJSC, the world’s diamond biggest producer. The shortfall between annual demand and supply could be between 11 million and 35 million carats by 2023, the company said in a presentation last month.

“In terms of the pink diamonds, the impact is going to be even more dramatic” from Argyle’s closure, Rio’s Soirat said in the interview. “You can imagine the laws of supply and demand will apply, and you can imagine the impact that will have on those very rare pink, red, blue and purple diamonds.”

The producer estimates Argyle has only about 150 colored diamonds of sufficient quality left to extract and make available for its annual tender, a sale to invited buyers that showcases 50-to-60 of the year’s most valuable gems, he said.

Prices of pink diamonds have already as much as quadrupled over the past 10 years, and buyers are “now just waking up to the potential impact that Argyle’s closure will have” in lifting values further, said Frauke Bolten-Boshammer, proprietor of Kimberley Fine Diamonds, a retailer based in the town of Kununurra, about 200 kilometers north of the mine. She has traded the gems since the 1990s.

Overall, the diamond sector probably also needs a boost to downstream demand, according to Richard Hatch, a London-based analyst at Berenberg. Mine closures that tighten supply “will help, but is it the shot in the arm that the industry really needs? Probably not,” Hatch said.


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Buyers have been hit by a shortage of finance and stagnant end markets, while a weaker rupee has made gems more expensive for Indian manufacturers, who cut or polish about 90% of the world’s stones.

The closure of Argyle will remove about 75% of Rio’s diamonds output, yet the impact on the producer’s earnings will be negligible. Diamonds bring in only about 2% of earnings, while iron ore—the company’s top commodity⁠—accounts for almost 60%.

Rio in 2016 shuttered the Bunder development project in India and in 2015 exited the Murowa mine in Zimbabwe. The producer’s only other producing diamond asset, Diavik in Canada, is scheduled to close in 2025, though exploration work is continuing to potentially extend that site’s life, Soirat told reporters Friday at Argyle.

Still, the company aims to retain a presence in the sector. While it could consider acquisitions to add new output, Rio’s main focus is on exploration⁠—an option that’ll take longer to deliver new output growth. Work is advancing on the Fort a la Corne project in Saskatchewan, a joint venture project that potentially could enter production within five to 10 years, Soirat said.


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Diamonds is “not a big business in Rio, however it is a very profitable business,” he told reporters, adding that the company has advantages in the sector that it can look to continue to exploit, including technical expertise and branding. “It’s not a commodity, it is luxury goods, and so the market dynamics are completely different.”

The U.S. Is Overflowing With Natural Gas But The Infrastructure Needed To Move Gas Around The Country Hasn’t Kept Up


America is awash in natural gas…. Earlier this year, two utilities that service the New York City area stopped accepting new natural-gas customers in two boroughs and several suburbs. Citing jammed supply lines running into the city on the coldest winter days, they said they couldn’t guarantee they’d be able to deliver gas to additional furnaces. Never mind that the country’s most prolific gas field, the Marcellus Shale, is only a three-hour drive away.


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Meanwhile, in West Texas, drillers have so much excess natural gas they are simply burning it off, roughly enough each day to fuel every home in the state.

U.S. gas production rose to a record of more than 37 trillion cubic feet last year, up 44% from a decade earlier. Yet the infrastructure needed to move gas around the country hasn’t kept up. Pipelines aren’t in the right places, and when they are, they’re usually decades old and often too small.



The result, despite natural-gas prices that look low on commodities exchanges, is energy feast and famine.

This spring, the price of natural gas at a trading hub near Midland, Texas, dropped as low as negative $9 per million British thermal units—meaning that producers were paying people to take it off their hands. (A million British thermal units is enough to dry about 50 loads of laundry.)

Elsewhere, prices soared due to bouts of cold weather coupled with supply disruptions, including an explosion along a British Columbian pipeline and a leaky underground storage facility near Los Angeles. At a trading hub in Sumas, Wash., natural gas rose to $200 per million British thermal units in March, the highest ever recorded in the U.S. In Southern California, prices went as high as $23; the average over the winter was a record $7.23.

The national benchmark, which is set at a knot of pipelines in Louisiana, recently hit a three-year low of $2.19 and has hovered below $3 for much of the year.

“I don’t recall a situation when we’ve had the highs and lows happen in such extremes and in such relatively close proximity,” says Rusty Braziel, a former gas trader who now advises energy producers, industrial gas buyers and pipeline investors.


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With U.S. homes, power plants and factories using more natural gas than ever, the uneven distribution of the shale boom’s bounty means that consumers can end up paying more or even become starved for fuel, while companies that can’t get it to market lose out on profits. Around New York City, the dearth of gas has cast uncertainty over new developments and raised fears of stifling economic growth.

One reason for the problem is that pipelines have become political. Proponents of reducing the use of fossil fuels have had little luck limiting drilling in energy-rich regions. Instead, they’ve turned to fighting pipeline projects on environmental grounds in regions like New York and the Pacific Northwest, where they have a more sympathetic ear.

Even in Texas, the heart of the oil-and-gas industry, new pipelines have started to meet more local resistance. In April, landowners, Hays County and Kyle, a booming city on the outskirts of Austin, sued to block construction of a 430-mile pipeline that would move gas from the West Texas drilling fields, where it is being burned up, to buyers near Houston. The case was dismissed by a Texas judge in June.

Before pipelines… Natural gas, which is often found alongside oil and coal, was once a nuisance to drillers and miners alike. It would send crude shooting up out of wells like flammable geysers and was at risk of exploding in mineshafts. Before the advent of arc-welded pipelines that could be laid over long distances, gas had little value unless it happened to be very close to early industrial cities, like Pittsburgh or Cleveland.

After World War II, energy producers repurposed oil pipelines to ship gas to fuel the hungry furnaces and factories of the Northeast. By the beginning of the 21st century, many thought the U.S. was running out of gas. The national price averaged about $6 over most of that decade and at times rose to more than $12. Pipelines were built to move imported gas from the country’s borders, particularly along the Gulf Coast, into the interior.

Then the fracking revolution arrived, flooding domestic gas markets and rendering a lot of supply routes irrelevant. Within a generation, the U.S. has gone from importing gas to becoming a leading exporter.

These days, it’s a hassle getting gas from drilling fields like the Marcellus and Utica shales in Appalachia, and the Permian Basin in West Texas, to customers in northern cities. Many pipelines now run the other way: to move gas toward the Gulf Coast, where exporters can usually buy it for less than $3 per million British thermal units, and ship it overseas as liquefied natural gas, or LNG, for higher prices.


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A 99-year-old law prevents foreign tankers from shipping gas within the U.S. There are no domestic LNG tankers, mostly because the hundred-million-dollar-plus ships are much less expensive to build in Asia. So consumers in New England relied on importing liquefied natural gas from Trinidad and Tobago and even Russia to keep prices in check this past winter.

n New York, commercial real-estate broker John Barrett said he was completing the sale of a development that would become a 66-unit apartment building, when Consolidated Edison Inc. announced it would no longer take on new gas customers after March 15 in the southern part of Westchester County. The developer canceled the deal signing and backed out of the purchase two weeks later.

The future of a nine-figure development in New Rochelle, which would include a new city hall, fire station and affordable housing units, is suddenly in doubt. In Yonkers, Mayor Mike Spano worries that the gas moratorium will foul up plans for a mixed-use development on a big downtown parking lot.

Homes that don’t come with natural gas lines are now a tougher sell, said Mark Nadler, director of Westchester sales at Berkshire Hathaway Homeservices, unless buyers don’t mind cooking on an electric range or refilling tanks of heating oil each autumn.

Con Edison is trying to adapt to a world without additional pipelines. Scott Butler, from the company’s “utility of the future” department, said the team has explored trucking in emergency fuel supplies and even making its own fuel. The utility has proposed building three new facilities in the New York City area to turn compost and food scraps into gas. It is also planning to haul in natural gas on trucks, as many as 180 of them on the coldest days.


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Natural gas has long been considered a transition fuel—a placeholder that’s cleaner-burning than coal or oil but more dependable than renewables like wind or solar. But natural gas still releases carbon dioxide into the atmosphere, and fracking has its own environmental consequences, including the production of toxic wastewater. That has raised resistance to building new pipelines as well as enlarging old

OPEC And Allies Set To Extend Oil Supply Cuts


OPEC and its allies led by Russia are set to extend oil output cuts until March 2020 on Tuesday to try to prop up the price of crude as the global economy weakens and U.S. production soars.

The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world’s top producer.

Benchmark Brent crude (LCOc1) has climbed more than 25% so far this year after Washington tightened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop.


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But fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries.



Brent was trading flat on Tuesday at around $65 per barrel after OPEC approved the supply-cut extension the previous day.

Monday’s OPEC meeting will be followed by talks with its allies on Tuesday. The gathering is due to start after 08:00 GMT.


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Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend the existing OPEC+ pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand.

Oil prices could stall as a slowing global economy squeezes demand and U.S. oil floods the market, a Reuters poll of analysts found.

Saudi Energy Minister Khalid al-Falih said on Monday he was growing more positive about the global economy after a G20 meeting of world leaders over the weekend.

“The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between (the United States and China) and the truce they have reached in their trade and the resumption of serious trade negotiations,” Falih said.


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The meeting on Tuesday will also discuss a charter for long-term cooperation between OPEC and non-OPEC producers.

Gold Rally: The Price Of The Precious Metal Is Heading Toward A Fresh Six-Year High


… “When the real value of money is being debased, then gold is viewed as the asset to own” …


The price of gold is rising at the quickest pace in years, illustrating the extent to which global investors are anticipating lower interest rates around the world and seeking alternatives to bonds and currencies.

The most-active gold futures contract climbed as much as 1.5% Tuesday before closing slightly higher at $1,418.70 a troy ounce—its highest level since August 2013. Tuesday’s rise brought gains in the past four sessions to 5.2%. As the rally continues, speculators are boosting wagers that prices will continue to climb and billions of dollars are flowing into gold-focused exchange-traded funds. Shares of gold miners are also hitting multiyear highs.


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Driving the gains are concerns that global central banks will work to spur growth by lowering interest rates, driving their currencies lower. Those expectations have already led to a global collapse in bond yields—the yield on the benchmark 10-year U.S. Treasury note closed below 2% on Tuesday for the first time since 2016, while those across Europe and in Japan are already negative.

The drop in bond yields has boosted the allure of gold, which has traditionally been a popular destination for investors when yields fall and fears of currency devaluation arise. Similar claims have also been made by proponents of bitcoin, which topped $11,000 on Tuesday, its highest level since early in 2018.

The recent spike in gold prices comes after years of listless trading in bullion, which had generally stayed between $1,100 and $1,350 since June 2013. The momentum in the sector has coincided with a surge in the broader stock market, with major indexes supported by bets that lower interest rates will lower borrowing costs and support corporate profits. Big-name investors such as Paul Tudor Jones and Jeffrey Gundlach have also publicly touted gold’s appeal in recent weeks.

“When the real value of money is being debased, then gold is viewed as the asset to own,” said Hugo Rogers, who oversees $5 billion as chief investment strategist at Deltec International Group. “The environment really plays into the hands of some kind of store of wealth that you cannot debase by printing more.”

Mr. Rogers bought gold for his fund earlier this year, and believes prices are likely to keep climbing.

With Tuesday’s rise, gold logged its best four-day stretch since February 2016. It is now heading for its best month and quarter since that period, when fears about a Chinese economic slump and an oil-price slide roiled markets.

Both the S&P 500 and gold are on track to rise at least 6% in the same month for the first time since October 2011, according to Dow Jones Market Data. “Spikes like this are very rare,” said Chris Mancini, an analyst at Gabelli Gold Fund. “A move like this tells you something has changed.”


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At its meeting last week, the Federal Reserve hinted that it would lower interest rates in the coming months if the outlook for the economy doesn’t improve. Gold fell alongside stocks during Tuesday’s session after Fed Chairman Jerome Powell said the central bank shouldn’t overreact to individual data points or sentiment shifts, surprising some analysts who expect multiple interest-rate cuts this year.

Many still expect lower rates to support gold. Hedge funds and other speculative investors pushed net bets on higher gold prices to their highest level since February 2018 during the week ended June 18, Commodity Futures Trading Commission data show. During the most recent week, bullish wagers outnumbered bearish bets by a ratio of 8-to-1, compared with a ratio of 3-to-1 just two weeks prior.


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Figures for the week ended Tuesday will be released on Friday. More than $1.5 billion flowed into the SPDR Gold Trust exchange-traded fund last week, FactSet data show, the largest inflow since August 2011.

The investor interest has been a boon for beaten-down shares of gold miners, pushing up the VanEck Vectors Gold Miners ETF up 25% in the past month. Shares of Barrick Gold Corp. and other mining companies are up 30% or more in that period, compared with a 3.2% gain for the S&P 500.


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Bill Garrett, a 58-year old who works for a home-healthcare business in Wilmette, Ill., said he has been buying gold coins recently, citing steady physical buying from countries such as China and a belief that currencies around the world will become less valuable. “I think gold is really, really going to take off,” Mr. Garrett said.

Still, many analysts remain wary that a U.S.-China trade deal could lift the outlook for the world economy, spurring growth and sending gold prices sharply lower once again.

And although the Fed has hinted that it could reduce interest rates, many analysts say it is unlikely the central bank will cut them as quickly as the market currently expects.

That gap in projections is one of the largest threats to both stocks and gold, analysts say. “If the Fed doesn’t ease, then I think there’s a good chance they both do come back down,” Mr. Mancini said.

Trade Tensions Are Pushing Makers Of U.S. Farm-Equipment Into A Deeper Ditch


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Deere & Co., CNH Industrial NV and other makers of the tractors and combines used to plant and harvest American crops are already facing weak demand from farmers as a result of a five-year slump in the agricultural economy.

That downturn is worsening this year as China buys less soybeans and other crops from the U.S., and manufacturers pay more for the steel and other materials they import to build their machines.

“People just aren’t buying. They’re afraid,” said David Savoie, vice president for Sunshine Quality Solutions, a Deere dealer in Louisiana where sales of big machinery have dropped significantly since last year.

During the first three months of 2019, U.S. agricultural exports to China were 40% below the same period last year, according to Agriculture Department data. And that comes on top of a steep decline in 2018, when the U.S. sold $9.2 billion worth of farm goods to China, versus $19.5 billion in 2017, the department estimates.

Deere said May 17 that it will cut production in the second half of its fiscal year by 20% compared with the same time last year. The Moline, Ill.-based company expects to record up to $75 million in higher costs this year for steel and metal components driven up by U.S. tariffs.

CNH, the U.K.-based manufacturer of Case IH and New Holland equipment, expects to pay tariff-related costs of between $50 million and $100 million this year. CNH manufactures farm equipment in the U.S. and is the second-largest seller of machinery in the domestic market behind Deere.

CNH and Duluth, Ga.-based AGCO Corp., whose machinery brands include Massey Ferguson and Challenger, reported lower farm-equipment sales in the first quarter from a year earlier.

U.S. farmers are holding machinery longer while their incomes are depressed. Sales of large, high-horsepower tractors in the U.S. and Canada are down 50% from 2013, even though sales grew last year, according to trade group data.

Farmers interested in buying new machinery are finding it tougher to trade in their older models because dealers are already stuck with inventories of used equipment that can’t sell. “That used market is fairly saturated now,” said Barry Alexander, manager of 13,000-acre Cundiff Farms in western Kentucky.

A long-running trend toward consolidation in the Farm Belt also leaves fewer customers for equipment dealers. And the larger tractors bought in recent years have given farmers more horsepower and greater efficiency, allowing them to buy fewer machines and replace them less often.

Deere’s production cut is rippling through its supply chain, where profits are already shrinking from weather-related delays in planting this year’s crop and lower grain exports. “Farmers are the collateral damage of that ongoing China-U.S. trade dispute,” George Reitz, the chief executive of Quincy, Ill.-based off-road tire maker Titan International Inc., told analysts earlier this month.

Titan on May 6 reported a 35% reduction in first-quarter profit from its farm business. At the same time, U.S. tariffs on metal and components from China are hurting other farm-focused manufacturers.

Pella, Iowa-based Vermeer Corp., which makes hay balers, said it expects to pay $4 million in direct tariff costs this year. Its steel costs rose 50% last year, but prices have been declining in recent months as steel inventories rise. Lindsay Corp. , based in Omaha, Neb., said profit from its irrigation business fell by 31%, as sales dropped 16% in the three months through February.

The Trump administration has said it would spend $16 billion to offset the impact on American agriculture from the trade dispute between the U.S. and China. Yet even if the dispute is resolved, some manufacturing executives say U.S. farmers might still be worse off than before if China continues to buy some grain from farmers in South America, which has increased output to accommodate the demand from China.

“Once those supply chains move, it’s not guaranteed they’ll come back,” CNH Chief Executive Hubertus Mühlhäuser said. “Brazil will keep its customers. They’ll put more acres under the plow.”

Saudi Arabia’s Energy Minister Says Sees No Oil Shortage, But OPEC To Act If Needed



Saudi Arabia’s Energy Minister Khalid al-Falih said on Saturday that he saw no oil supply shortage as global oil inventories are still rising, particularly from the United States, but OPEC will be responsive to the oil market‘s needs.

Speaking in Jeddah ahead of a ministerial panel gathering on Sunday of top OPEC and non-OPEC producers, including Saudi Arabia and Russia, Falih told Reuters OPEC will not decide on output until late June when the group is due to meet next.

“I am not sure there is a supply shortage, but we will look at the (market) analysis. We will definitely be responsive and the market will be supplied,” Falih said, when asked whether an increase in output was on the table due to oil shortage concerns.

“But all indications are that inventories are still rising. We saw the data from the U.S. week after week, and they are massive increases, so there is obviously supply abundance.”



The Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers, known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.

“We will be flexible. We are going to do the right thing as we always do,” Falih said of any decision at the meeting in June on continuing the reductions.

Falih said OPEC was guided by two main principles: “One to keep the market in its direction towards balancing, and inventories (are) back to normal level. And two to be responsive to market needs. We will strike the right balance I am sure.”

Saudi Arabia does not see a need to quickly boost production now with oil prices around the $70 a barrel level, as it fears a crash in prices and a build-up in inventories, OPEC sources said. But Russia wants to increase supply after June when the current OPEC+ pact is due to expire, the sources said.

The United States on the other hand, which is not a member of the OPEC+ but is a close ally of Saudi Arabia, wants the group to boost output to bring oil prices down.

Falih has to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh’s budget needs, while pleasing Moscow to ensure Russia remains in the OPEC+ pact, and being responsive to the concerns of the United States and the rest of the OPEC+, the sources said.

OPEC’s agreed share of the cuts is 800,000 bpd, but its actual reduction is far larger due to the production losses in Iran and Venezuela. Both are under U.S. sanctions and exempt from the voluntary reductions under the OPEC-led deal.

U.S. President Donald Trump has called on OPEC and the group’s de facto leader Saudi Arabia to lower oil prices.


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Sunday’s ministerial panel meeting, known as the JMMC, comes amid concerns of a tight market as Iran’s oil exports are likely to drop further in May, and shipments from Venezuela could fall more in coming weeks due to the sanctions by Washington.

Oil contamination also forced Russia to halt flows along the Druzhba pipeline – a key conduit for crude into Eastern Europe and Germany – in April. The suspension, as yet of unclear duration, left refiners scrambling to find supplies.

But U.S. crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]

Tensions between Saudi Arabia and fellow OPEC member Iran are also running high, after last week’s attacks on two Saudi oil tankers off the coast of the United Arab Emirates and another on Saudi oil facilities inside the kingdom.

Saudi Arabia accused Iran of ordering the attack on state oil giant Saudi Aramco’s oil pumping stations that Yemen’s Iran-aligned Houthi militia has claimed responsibility for.

An OPEC and non-OPEC technical committee found that oil producers’ compliance with the supply-reduction agreement reached 168 percent in April, three sources told Reuters on Saturday.

That shows that OPEC+ producers are cutting output by more than their share. Saudi Arabia has been pumping below its production target since January to keep oil inventories and prices in check.

Trump Asked China To Remove All Tariffs On US Agricultural Products

President Donald Trump on Friday said that he has asked China to “immediately remove all tariffs” on U.S. agricultural products, in return for his decision to postpone a March 1 deadline to raise U.S. tariffs on Chinese imports.

Trump made the request “based on the fact that we are moving along nicely with trade discussions,” he said.

On Sunday, Trump announced that he would delay the additional tariffs that were scheduled to go into effect at the beginning of March.

By Marco Vinci | marcovinci2030@gmail.com

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President Donald Trump on Friday said that he has asked China to “immediately remove all tariffs” on American agricultural products, in return for his decision to postpone a March 1 deadline that would have dramatically raised U.S. tariffs on Chinese imports.

Trump made the request “based on the fact that we are moving along nicely with trade discussions,” he said. The president called in particular for Beijing to lift its levies on products such as beef and pork.

On Sunday, Trump announced that he would delay the additional tariffs that were scheduled to go into effect at the beginning of March and would have more than doubled levies from 10 percent to 25 percent on $200 billion in Chinese goods. The president has not announced a new deadline for that round of tariffs.



Trump also said Sunday that if more progress is made toward a resolution of the long-running trade negotiations between the two countries, Chinese President Xi Jinping would be invited to a summit at Trump’s Florida golf course, Mar-a-Lago, to “conclude an agreement.”

Trump’s top economic advisor, Larry Kudlow, painted a rosy picture of the ongoing trade negotiations in an interview with CNBC on Thursday. “The progress has been terrific,” Kudlow said, while adding that “we have to hear from the Chinese side. We have to hear from President Xi Jinping, of course. I think we’re headed for a remarkable, historic deal.”

A day before Kudlow’s interview, U.S. Trade Representative Robert Lighthizer gave a more cautious outlook in testimony before Congress. “Much still needs to be done both before an agreement is reached,” Lighthizer testified, “and, more importantly, after it is reached, if one is reached.”

Trump’s request could also suggest he recognizes the impact of the U.S.-China trade war has taken on American farmers. Growing tariffs have led to China scaling back purchases of U.S. grain, and have affected the storage, shipping and freight operations that American farmers need to move their crops to market.


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Last July, Beijing imposed an additional 25 percent retaliatory tariff on U.S. beef imports. The U.S. Department of Agriculture said last year in a report that China’s middle class continues to grow in size and so does their appetite for Western-style diets, including beef. Still, most of China’s beef imports currently come from Australia and South American countries.

The National Cattlemen’s Beef Association, the trade group for the U.S. beef industry, responded to Trump’s tweet Friday by suggesting China’s president “shouldn’t have to fly all the way to Mar-a-Lago to enjoy a USDA Prime Ribeye. It’s time for China to lift the trade barriers on U.S. beef so our 1.4 billion Chinese consumers can enjoy beef again.”

At the same time, American pork now faces hefty import taxes from China that exceed 70 percent, which includes two rounds of tariffs that took effect last year.

China is the world’s largest pork producer but outbreaks of the deadly African swine fever virus have led to tighter pork supplies domestically and the possibility of increased demand for American pork products in 2019. The volume of American pork exports to China fell by 20 percent in the first 11 months of 2018, according to the U.S. Meat and Export Federation.

“The United States produces the safest, highest-quality and most affordable pork in the world,” said Jim Monroe, a spokesman for the National Pork Producers Council, the industry’s largest trade association. “China represents an enormous opportunity for U.S. pork producers and we are eager to gain more favorable access to this market.”


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China-U.S. Trade – Oil Prices Pressed Higher, Marking Fresh Three-Month Highs On Friday


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Oil prices pressed higher, marking fresh three-month highs on Friday, as investors celebrated a meeting between U.S. President Donald Trump and China’s top trade representative, Vice Premier Liu He.

New York-traded West Texas Intermediate crude futures rose 50 cents, or 0.88%, at $57.46 a barrel by 9:39 AM ET (14:39 GMT), after touching $57.81 earlier, its best level since November of last year. Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 32 cents, or 0.48%, to $67.39, backing off of $67.72, which was also its best level in three months.



Markets interpreted the fact that Trump agreed to meet with Liu at 2:30 PM ET (19:30 GMT) on Friday as a sign that trade discussions were progressing and the implementation of an increase in U.S. tariffs on Chinese products on March 1 would likely be delayed.

Investors have feared that the standoff between the U.S. and China could negatively impact economic growth, diminishing the demand for oil from the world’s two largest consumers. Apparent progress in negotiations this year along with OPEC-led efforts to slash production has supported the rally in oil prices, with gains of more than 20% in 2019.


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Some analysts remained cautious, however, amid a wide range of pending issues, including sanctions on Venezuela and Iran, a bottleneck in the Canadian production pipeline and maintenance difficulties in Saudi Arabia.

“Slower global growth, a resurgent dollar and record U.S. production are all weighing on prices and causing any rallies to stall relatively quickly,” OANDA market analyst Craig Erlam said. “It has recovered from its selloff late last year, but not as much as you may have expected and there does seem to be a reluctance to hop on board,” Erlam added.

Investors are also wary of escalating production in the U.S., which the Energy Information Administration reported Thursday had hit a record high of 12 million barrels per day last week. In that light, investors will pay close attention as Baker Hughes releases its weekly rig count data, an early indicator of future output, at 1 PM ET (18:00 GMT).

In other energy trading, gasoline futures slipped 0.03% to $1.6139 a gallon by 9:41 AM ET (14:41 GMT), while heating oil advanced 0.16% to $2.0396 a gallon. Lastly, natural gas futures lost 0.22% to $2.691 per million British thermal units.


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Glencore PLC Plans To Curb Production At One Of Its Biggest Copper And Cobalt Mining Operations


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Glencore ( GLNCY ) plans to curb production at one of its biggest copper and cobalt mining operations, Mutanda Mining Sarl in Congo, according to people familiar with the matter, potentially taking a sizable portion of two important industrial metals out of circulation.

The company intends to cut about 2,000 workers at Mutanda, mostly contractors, the people said. The cutback in production is likely to be temporary as Glencore explores new copper-mining methods for the mine.



No full-time employees will be laid off from the mine, which at full capacity employed about 7,500 workers at the end of 2018, including contractors, a person familiar with the matter said. About half of the workforce cut will come from contractors whose terms with Mutanda are expiring, the rest will come from contracts that are being terminated, the person said.

Glencore’s copper operations in Africa produced 410,000 metric tons of copper in 2018, up 72% from 2017, and 38,000 tons of cobalt, a 61% increase. Mutanda, its most productive Congo mine, produced 199,000 tons of copper and 27,000 tons of cobalt last year.


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That is about one-fifth of global cobalt production, making it the world’s most prolific producer of cobalt. The metal is a key ingredient in the lithium-ion batteries that power electric vehicles and smartphones.

Glencore in 2016 temporarily suspended mining operations at its other Congo copper mine, Katanga Mining Ltd., amid a sharp downturn in copper prices. That move caused copper prices to shoot higher. Glencore halted exports of cobalt from Katanga last year after it discovered some of the metal was radioactive. The company is installing new technology to decontaminate the metal.

Glencore could announce further details about its plans for Mutanda when it releases its annual results for 2018 on Wednesday.


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Gazprombank Freezes Accounts Of Venezuela’s PDVSA To Reduce The Risk Of The Bank Falling Under U.S. Sanctions


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Gazprombank has decided to freeze the accounts of Venezuelan state oil company PDVSA and halted transactions with the firm to reduce the risk of the bank falling under U.S. sanctions, a Gazprombank source told Reuters on Sunday.

While many foreign firms have been cutting their exposure to PDVSA since the sanctions were imposed, the fact that a lender closely aligned with the Russian state is following suit is significant because the Kremlin has been among Venezuelan President Nicolas Maduro’s staunchest supporters.

“PDVSA’s accounts are currently frozen. As you’ll understand, operations cannot be carried out,” the source said. Gazprombank did not reply to a Reuters request for a comment.


Reuters reported this month that PDVSA was telling customers of its joint ventures to deposit oil sales proceeds in its Gazprombank accounts, according to sources and an internal document, in a move to try to sideline fresh U.S. sanctions on PDVSA.

Washington says the sanctions, imposed on Jan. 28, are aimed at blocking Maduro’s access to the country’s oil revenue after opposition leader Juan Guaido proclaimed himself interim president and received widespread Western support.

Gazprombank is Russia’s third biggest lender by assets and includes among its shareholders Russian state gas company Gazprom. The bank has held PDVSA accounts for several years. In 2013, PDVSA said it signed a deal with Gazprombank for $1 billion in financing for the Petrozamora company. The source said that Petrozamora accounts were frozen, too.


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Russian officials have said they stand by Maduro and have condemned opposition actions as a U.S.-inspired ploy to usurp power in Caracas.

But Russian firms find themselves in a quandary, caught between a desire to endorse the Kremlin line and back Maduro, and the fear that by doing so they could expose themselves to secondary U.S. sanctions which would harm their businesses.


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China Has Been Holding Talks With Venezuela’s Political Opposition To Safeguard Its Investments


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By Anne Losuck | leckben@smn.today | StockMarketNews.Today

China has been holding talks with Venezuela’s political opposition to safeguard its investments in the troubled Latin American nation, hedging its bets as pressure builds on Nicolás Maduro, the embattled leader for whom Beijing has been a vital ally.

Chinese diplomats, worried over the future of its oil projects in Venezuela and nearly $20 billion that Caracas owes Beijing, have held debt negotiations in Washington in recent weeks with representatives of Juan Guaidó, the opposition leader heading the U.S.-backed efforts to oust Mr. Maduro, according to people familiar with the talks.

Today’s Stock Market News – China Has Been Holding Talks With Venezuela’s Political Opposition
Today’s Stock Market News – China Has Been Holding Talks With Venezuela’s Political Opposition

“China recognizes the increasing risk of a regime change and does not want to be on the bad side of a new regime,” said R. Evan Ellis, an expert on Chinese relations in Latin America at the U.S. Army War College. “While they prefer stability, they realize they have to put eggs in the other basket.”

The talks are a sign of the apprehensions building with creditors of Venezuela’s leftist government. Over nearly two decades, loans-for-oil deals with China and Russia have provided vital support for Venezuela. Relations flourished under Mr. Maduro’s predecessor, the late socialist strongman Hugo Chávez, who fortified ties with those countries, Cuba, Iran and even India in an effort to combat U.S. power.


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But commercial and financial ties with these countries have been strained since Mr. Maduro, Mr. Chávez’s handpicked successor, took power in 2013 and the economy began to shrink, with oil production plummeting by more than half after years of rampant graft and mismanagement.

Sanctions leveled by Washington last month on Venezuela’s oil industry have exacerbated Mr. Maduro’s difficulties, cutting off Venezuela’s only meaningful source of income and portending further declines in oil output.

China’s Foreign Ministry didn’t respond to a request for comment about Beijing’s contacts with the Venezuelan opposition. In recent weeks, the ministry has suggested that discussions are taking place and Beijing wants to see its interests respected. Asked about rumored talks at a media briefing on Feb. 1, Foreign Ministry spokesman Geng Shuang said Beijing “has been in close communication with all parties in various ways on the situation in Venezuela.”

“No matter how the situation evolves,” Mr. Geng said, “China-Venezuela cooperation should not be undermined.” Mr. Guaidó has publicly extended olive branches to China and Russia. The young National Assembly chief, whom lawmakers chose to lead an interim presidency in a direct challenge to Mr. Maduro, has argued that political change would be a precursor to economic reforms to restore stability.

Venezuela, which sits atop the world’s largest oil reserves, should maintain ties with China, the world’s biggest oil importer, he said. The fall of the Maduro government could work to China’s advantage, said Mr. Ellis. “Guaidó could help lift [U.S.] sanctions and get oil flowing again. At the end China has everything to gain from Guaidó,” he said.

People familiar with the debt-repayment talks said there are significant hurdles. Venezuela has borrowed from China more than $50 billion in a series of loans-for-oil agreements since 2007, and according to estimates by China’s Commerce Ministry it still owes Beijing around $20 billion.


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China is unwilling to take a significant loss on its loans, as some of the opposition’s economic advisers have suggested for lenders, including holders of the country’s defaulted bonds, according to two of the people familiar with the talks. Both sides have been discussing grace periods on repayment plans to give any potential Venezuelan transitional government breathing space, they said.

Opposition lawmakers have also long clamored to make the terms of China’s loan deals with Venezuela more transparent, which Beijing opposes, according to two of the people familiar with the negotiations.

Like China, Russia has publicly supported Mr. Maduro but has shown little willingness to prop up the government with fresh funds. Neither ally has granted large loans to Venezuela in recent years. Their joint oil ventures in Venezuela have been subject to the corruption and operational difficulties felt across the country’s oil industry, energy consultants said.

One director of a company that provides oil-field valves and tubes to Chinese and Russian state firms operating in Venezuela said the company had only made one sale in all of 2018. “The Chinese, the Russians, I just don’t see them putting any money in,” the director said. Moscow is open to dialogue with Mr. Guaidó, Kremlin spokesman Dmitry Peskov suggested this month, saying Russia expected to maintain cooperation with Caracas “regardless of political developments in the country.”

The Trump administration’s sanctions aim to redirect oil assets and revenue away from Mr. Maduro and into the hands of Mr. Guaidó, closing off access to Venezuela’s biggest cash customers. Venezuelan officials have been seeking new buyers for their heavy oil, which until January could be refined at specially fitted American installations.

On Sunday, the state-run Saudi tanker company, Bahri, said one of its vessels had traveled to Venezuela to load crude for one of Caracas’s regular customers in India. Bahri said the shipment would be completed before the end of a grace period set by U.S. sanctions.


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On Monday, Venezuela Oil Minister Manuel Quevedo was in New Delhi, seeking to increase sales to India, his ministry said. But Indian officials have said privately that they have grown impatient with Venezuela, which for several years has delayed repayment of nearly $500 million owed to state oil company ONGC Videsh Ltd.

Venezuela’s government has also fallen into arrears with Indian pharmaceutical companies that once thrived here, forcing many of them to shift operations out of the country as social and economic conditions deteriorated. “Private entities in India have little reason to go out of their way to ramp up imports in such a chaotic situation,” said Smita Purushottam, a former Indian ambassador to Venezuela who recently retired from the Foreign Ministry.

“My view is that the people of Venezuela are fighting for survival,” she said. “They have suffered for too long and perhaps the only way forward is to start anew, under international supervision, to minimize their suffering and rekindle hope.”


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Venezuela Seeks OPEC Support Against U.S. Sanctions Imposed On His Country’s Oil Industry


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By Liz Kirbayeva | kir75bayeva@smn.today

Venezuela’s Nicolas Maduro has sought OPEC support against U.S. sanctions imposed on his country’s oil industry, citing their impact on oil prices and potential risks for other members of the producer group.

But a source familiar with the matter said the Organization of the Petroleum Exporting Countries, of which Venezuela is a founding member, had declined to make any formal statement. OPEC says it is concerned with oil policy, not politics.

Today’s Stock Market News – Venezuela Seeks OPEC Support Against U.S. Sanctions
Today’s Stock Market News – Venezuela Seeks OPEC Support Against U.S. Sanctions

More than 40 nations including the United States, European powers and most of Latin America have recognized Maduro’s rival, Juan Guaido, as the country’s rightful head of state, following disputed elections last year.

The request was made in a letter sent to OPEC Secretary-General Mohammad Barkindo dated Jan. 29 and seen by Reuters, a day after the United States imposed sanctions on Venezuelan state oil firm PDVSA.

“Our country hopes to receive the solidarity and full support of the member countries of OPEC and its ministerial Conference, in the fight we are currently having against the illegal and arbitrary intrusion of the United States in the internal affairs of Venezuela,” Maduro wrote.

I seek “your firm support and collaboration to jointly denounce and face this shameless dispossession of … important assets of one of the members of OPEC, the letter said. He wrote that OPEC should help to determine potential solutions based on “the impact that this action has on the global energy market, and the risk it represents for the other countries … of this organization”.

The sanctions on Venezuela have boosted global oil prices, which were trading at around $62 a barrel on Monday. The move has disrupted shipments as more than 20 tankers loaded with Venezuelan oil have been anchored off the U.S. Gulf Coast.

Still, analysts say there is ample spare capacity in other oil producers such as Saudi Arabia plus strategic reserves in consuming nations to compensate for a loss of Venezuela’s exports.

OPEC tends to avoid political disputes involving individual members. Last year, it declined a request from Iran for a discussion of U.S. sanctions against Tehran at a policy-setting meeting.


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Venezuela was once a top-three OPEC oil producer but production has been in decline for years following the collapse of the country’s economy.

Energy research and consulting firm Rystad sees Venezuelan production plummeting to 680,000 barrels per day (bpd) next year, from 1.34 million bpd at the end of 2018. Venezuela pumped 3 million bpd at the turn of the century.

Together with Libya and Iran, Venezuela is exempt from the latest OPEC-led supply cut due to the involuntary decline in production.


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Major Global Powers Ordered To Stop Trading Oil And Gold Assets With The Venezuela


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Venezuela crisis – Major global powers ordered to stop trading oil and gold assets with Maduro


By Andry Roskyeva | StockMarketNews.Today | roskyeva7andry@gmail.com

A coalition group of Latin American countries and Canada has urged the Venezuelan military to sever ties with President Nicolas Maduro.

In a statement published Monday, 11 of the 14 members of the Lima Group called for a “peaceful transition through political and diplomatic means without the use of force.”

The group also underscored the need for an urgent delivery of humanitarian aid and insisted international governments “take measures to prevent the Maduro regime … from doing business in oil, gold and other assets.”

venezuela gold e oil news
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Major global powers, including the U.S., have publicly recognized opposition leader Juan Guaido as Venezuela’s legitimate interim president.

Guaido’s declaration as the rightful leader of the South American country takes Venezuela into uncharted territory. That’s because there is now an internationally recognized opposition — without control over state functions — running a parallel government to Maduro.

At the start of January, Maduro was sworn in for a second term. It followed an election marred by an opposition boycott and claims of vote-rigging. The result prompted a fresh wave of anti-government demonstrations in the capital city of Caracas, with thousands of protestors seen marching in support of Guaido over the weekend.

The Lima Group was set up in 2017 with the aim of finding a peaceful solution to Venezuela’s deepening economic and humanitarian crisis. On Monday, it published a 17-point declaration following a meeting in Ottawa, Canada.


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The document says the governments of Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay and Peru “reiterate their recognition and support for Juan Guaido.”

In addition to condemning the “persistent and serious violations of human rights in the country,” they also “called upon the National Armed Forces of Venezuela to demonstrate their loyalty to the interim president in his constitutional functions as their Commander in Chief.”

Canadian Prime Minister Justin Trudeau also announced $53 million in new funding to support people in Venezuela. The aid package is designed to help the three million refugees who have fled the crisis in recent years. Mexico, Guyana and Saint Lucia were the only Lima Group members not to be included on the statement.

Speaking to Spanish television on Sunday, Maduro — who maintains the backing of China and Russia, amongst others — claimed interference in domestic affairs from overseas could lead to civil war. “Everything depends on the level of madness and aggressiveness of the northern empire (the U.S.) and its Western allies.”


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“We ask that nobody intervenes in our internal affairs … And we prepare ourselves to defend our country,” he said, in an interview broadcast on the channel La Sexta. Growing unrest in Venezuela follows years of economic mismanagement, repression and corruption.

Millions of people have been driven out of the country amid hyperinflation, power cuts and severe shortages of basic items — such as food and medicine.



 

U.S. homes and businesses used record amounts of natural gas for heating during the brutal freeze blanketing the eastern half of the country on Wednesday


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U.S. Homes and Businesses Used Record Amounts of Natural Gas for Heating


By Scott DiSavino | Reuters

Several utilities urged customers to cut back on power and gas use on Thursday during the brutal freeze blanketing the eastern half of the country after U.S. homes and businesses used record amounts of natural gas for heating on Wednesday.

Harsh winds brought record-low temperatures across much of the Midwest, causing at least a dozen deaths and forcing residents who pride themselves on their winter hardiness to huddle indoors.

A natural gas flare on an oil well pad burns as the sun sets outside Watford City, North Dakota
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As consumers cranked up heaters to escape the bitter cold, gas demand in the Lower 48 U.S. states jumped to a preliminary record high of 145.1 billion cubic feet per day on Wednesday, according to financial data provider Refinitiv.

That topped the current all-time high of 144.6 bcfd set on Jan. 1, 2018. One billion cubic feet is enough gas to supply about five million U.S. homes for a day. In Michigan, auto makers agreed to interrupt production schedules through Friday after local utility Consumers Energy made an emergency appeal to curtail gas use so it could manage supplies following a fire at a gas compressor station on Wednesday.

Fiat Chrysler Automobiles NV said on Thursday it canceled two additional shifts at its Warren Truck and Sterling Heights Assembly plants and General Motors Co said it was suspending operations at a total of 13 Michigan plants and its Warren Tech Center. Ford Motor Co said it had also taken steps to reduce energy use at its four Michigan plants supplied by CMS.


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Consumers, a unit of Michigan energy company CMS Energy Corp, said that the Ray compressor station in Macomb County was partially back in service but urged all of its 1.8 million Michigan customers to continue their conservation efforts through Friday. Elsewhere in Michigan, DTE Energy Inc asked its 2.2 million power customers to reduce electric use voluntarily to help safeguard the reliability of the regional grid.

PJM, the electric grid operator for all or parts of 13 states from New Jersey to Illinois, said there were no reliability issues and noted that power demand had already peaked on Thursday below 140,000 megawatts. That is well below the PJM region’s all-time winter peak of 143,338 MW set on Feb. 20, 2015. One megawatt can power about 1,000 homes.

While the brutal cold boosts gas use for heating, it can also reduce production by freezing pipes in gathering systems in producing regions, called freeze-offs.


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Gas production in the Lower 48 states was projected to fall to a four-month low of 84.9 bcfd on Thursday due primarily to freeze-offs in the Marcellus and Utica, the nation’s biggest shale gas-producing region in Pennsylvania, Ohio and West Virginia, according to Refinitiv.

Venezuela Has 20 Tons of Gold Ready to Ship. On Monday, a plane belonging to Nordwind Airlines, a company based in Moscow, landed at the international airport near Caracas


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The Russian Boeing 777 that had landed in Caracas the day before was there to spirit away 20 tons of gold from the vaults of the country’s central bank


Venezuela Has 20 Tons of Gold Ready to Ship. Venezuelan lawmaker Jose Guerra dropped a bombshell on Twitter Tuesday: The Russian Boeing 777 that had landed in Caracas the day before was there to spirit away 20 tons of gold from the vaults of the country’s central bank.

The claim set off a welter of social media speculation and outrage. When asked how he knew this, Guerra provided no evidence. Just another outlandish comment from a lawmaker trying to draw attention to the plight of crisis-torn Venezuela? Perhaps not.

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For one thing, Guerra is a former central bank economist who remains in touch with old colleagues there. For another, a person with direct knowledge of the matter told Bloomberg News Tuesday that 20 tons of gold have been set aside in the central bank for loading. Worth some $840 million, the gold represents about 20 percent of its holdings of the metal in Venezuela, the person said. He provided no further information on plans for those bars.

With strongman President Nicolas Maduro losing control of the country’s already-scant finances and reserves thanks to U.S. sanctions, who can put his hands on the nation’s estimated 200 tons of gold at home and abroad has become a key question. The nation owes billions to its patrons Russia and China as well as bondholders, and also needs hard currency to buy food for its starving people.


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Venezuela has been trying for years to increase its gold reserves by encouraging mining, putting the military in charge of vast territories that yield the precious metal. State gold processor Minerven melts the ore into bars, which military aircraft take to airbases around Caracas. Soldiers regularly unload it into armored vehicles bound for the central bank and beyond.

The U.S. has been working to put National Assembly head Juan Guaido, who says he is the nation’s rightful president, in charge of Venezuelan finances and starve the regime. Last week, the Bank of England denied Maduro officials’ request to withdraw $1.2 billion of gold stored there after top U.S. officials, including Secretary of State Michael Pompeo and National Security Adviser John Bolton, lobbied their U.K. counterparts to cut off the regime from its overseas assets.

On Monday, a plane belonging to Nordwind Airlines, a company based in Moscow, landed at the international airport near Caracas, according to flight tracking website FlightRadar24. Finance Minister Simon Zerpa declined to comment on the nation’s gold and also said there was no Russian plane at Simon Bolivar International Airport.

“I’m going to start bringing Russian and Turkish airplanes every week so everybody gets scared,” he said. The Kremlin has lavished support on the Latin American country in recent years, making it one of the biggest recipients of Russian loans and investment and an outpost of Moscow’s influence in a region dominated by the U.S. But Russia has been reticent about committing more capital, especially because opposition officials have said they might not honor all the Maduro government’s obligations.


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Russia vowed to “do everything” to protect Maduro against U.S. efforts to oust him as the Trump administration issued new sanctions against Venezuela on Monday, without elaborating what steps it would take.

A top Russian finance ministry official, meanwhile, warned that Venezuela could have trouble meeting payments under a $3.15 billion debt-rescheduling deal reached in 2017. The next installment of $100 million is due in March. The ministry said later that Russia expects Venezuela to meet its obligations, according to an emailed statement.


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To contact the reporters on this story: Patricia Laya in Caracas at playa2@bloomberg.net; Andrew Rosati in Caracas at arosati3@bloomberg.net. To contact the editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net, Stephen Merelman, Anne Reifenberg

Impacts of climate change in Antarctica. What’s Happening Beneath Antarctica’s Ice?… Businesses and investors are keenly interested


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{ By Daniela Hernandez } . They call it the Dreamcatcher. Its job is to help answer one of the most important and perplexing questions facing climate scientists today. Dangling from a helicopter over Antarctica’s frozen landscape, the giant hexagonal instrument sends out electromagnetic waves that penetrate the sheets of ice below, giving scientists something like an X-ray of an ancient body.

The scientists gathered here in Antarctica’s Dry Valleys—a rocky ecosystem dotted with frozen lakes and glaciers, some flowing into the sea—want to know what lies beneath the ice. Is it rock? Or is it salty water?

The answer will have implications for communities, infrastructure and investments all over the world. Glaciers sitting atop briny water can be more prone to sliding off the land and into the ocean, potentially contributing to rising sea levels. Yet chief among the blind spots in climate models is the stability of the ice at the bottom of the world.

Scientists are confident that as the planet warms, Antarctic ice sheets will shrink, shedding the water they store. But how much of this continent’s ice could end up in the ocean, and how quickly that might happen, are unknown. That in turn matters for the financial-services firms, asset managers and consultants that have been turning to climate models to assess risk and guide investment.

“The biggest question when it comes to sea-level rise is: How will the Antarctic ice sheets react to ongoing climate change?” says Ricarda Winkelmann, an ice-sheet modeler in Germany’s Potsdam Institute for Climate Impact Research. When Dr. Winkelmann talks to policy makers and business people, they want to know what is the worst-case scenario, and how fast will climate-related changes occur, she says.


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The answers will come from the work of scientists like Jill Mikucki, Slawek Tulaczyk and Peter Doran, who spent weeks using the Dreamcatcher to map the underbelly of Antarctica’s Dry Valleys. They are part of an ecosystem of polar researchers whose data provide the foundation for global climate models. Such data, which takes years to incorporate into models, is necessary for making the kind of predictions that governments and investors need.

Antarctic scientists are gathering “some of the most high-priority data that needs to be taken,” says Richard Rood, a professor of climate at the University of Michigan in Ann Arbor.

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Climate models use measurements of the Earth’s oceans, atmosphere, land and ice, sometimes going back more than 100 years, both to understand the climate’s history and to predict its future. Scientists use mathematical equations that rely on these data to simulate physical phenomena such as rainfall and ocean currents.

They test how good these simulations are at mimicking reality by doing “hind-casting.” If the outputs match historical records, the model is considered accurate, and scientists can use it to study how the planet might react to future conditions.

If models’ calculations don’t match past observations or they fail to predict a future event, as they did with the sudden disintegration of Antarctica’s Larsen B ice shelf in 2002, it is possible scientists are misunderstanding some crucial physical process or just don’t have enough data. That is what makes more and better measurements, such as the information being gathered in Antarctica, so valuable.

Financial firms, including banks and insurance companies, are hiring climatologists and modelers and contracting with data-analysis firms specializing in climate science to help them apply climate data to business decisions.


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Better ice dynamics data will help with “understanding the overall picture on climate change and the pace of change that’s taking place,” says Francis Condon, who focuses on sustainable investing for the global investment-management arm of Swiss bank UBS Group AG . “If there is an indication that the [sea] level is rising faster than previously indicated, that is an issue that needs to be considered from an investment perspective.”

At the Asian Development Bank, which lends to governments and companies in Asia’s developing markets, Jay Roop is part of a team that oversees the construction of wharves, ports and roads around the Pacific region. To predict how projects might fare in future climate conditions, he and his team use 24 different climate models. The data they incorporate include melting rates of glaciers, historical ocean temperatures and rainfall, and information on local geography and water dynamics, which can affect storm surges. Most models don’t have data on the stability of Antarctic ice.

Mr. Roop consulted climate models to assess a wharf the Papua New Guinea government wanted to build. Many models suggested that, without climate-proofing, the wharf would be underwater within a few decades. The design was reconfigured so the wharf could be easily raised. That increased the cost by roughly 17%. Construction will begin in late 2019.

A better sense of how the ice in polar regions is changing would narrow the “range of possible climate futures… which would give us more confidence in how we manage the risks that are being presented to us,” says Mr. Roop, a senior climate specialist in ADB’s Pacific department.

Those who make investment decisions rely on proprietary climate data and publicly funded ice-sheet and global climate models. Some of the data incorporated into models is from large surveys that show what is happening across continents or the world’s oceans.

Model builders using large-scale data can do no more than generalize about smaller-scale processes such as the effect of water on glaciers’ stability. Smaller surveys like the one in the Dry Valleys are “absolutely necessary” to understanding what is happening on the smaller scale and to improve the accuracy of models decision makers use, says Mathieu Morlighem, an ice-sheet modeler at the University of California, Irvine.

Drs. Mikucki, Tulaczyk and Doran are using the Dreamcatcher and on-the-ground measurements of the chemical properties of subglacial water to gain knowledge about ice-sheet behavior and Antarctic habitats never before gleaned from the continent’s ice.

Dr. Mikucki, a microbiologist from the University of Tennessee in Knoxville, and her students collected samples from the outflows of saltwater at the Taylor Glacier. The water’s high iron content washes the ice in red. They call it Blood Falls.


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Dr. Mikucki wants to know what organisms live in the ferrous flows, which will help her understand the ecology of hidden briny water. When such water flows into the ocean, it can change water density, which in turn affects global weather patterns.

At Marble Point, a camp in the Dry Valleys, the three researchers took turns overseeing work with the Dreamcatcher. For weeks, they planned experiments and analyzed data from tents surrounded by glaciers, seals and scavenging birds called skuas. Helicopters came and went.

To use the Dreamcatcher—its formal name is SkyTEM—a helicopter must fly it over the glaciers the researchers want to study. Each mission can survey 150 miles.

The tool discriminates between different materials based on something called resistivity—a measure of how easily electrical current can flow. Substances such as ice have high resistivity, meaning electricity doesn’t flow through them easily. Water conducts electricity better. The saltier the water, the lower its resistivity.

Those differences allow the scientists to map subglacial topography. “It’s transformative,” says Dr. Mikucki. The work done in November, says team member and glaciologist Dr. Tulaczyk, provided “positive evidence” there is a lot of water beneath Antarctica’s ice and land surface, including along the coast. Typically, such pockets of water act as a lubricant, making the ice more prone to sliding into the sea.

One surprise: Because of the way some glaciers evolved, especially in valleys below sea level, their undersides might be coated by ancient seawater whose chemistry has changed through interactions with rock and sediment over millennia. How much lubrication that provides has yet to be determined, Dr. Tulaczyk says.

He wants to study, he says, whether the “transformed seawater” has “the same capacity to impact the dynamics, the motion of the glaciers, as water that’s generated by melting those glaciers themselves.” Combined with ice-flow data and climate archives contained in ice cores drilled from other areas of the continent, the information could yield new insights into the stability of Antarctic ice deposits, according to glaciologists and climate scientists.

After the Dry Valleys team wrapped up their experiments in late November, another group of scientists headed to Hercules Dome, roughly 250 miles from the South Pole, to look for 125,000-year-old ice. Their goal is to use that frozen record, which will take five to six years to unearth, to understand how the fragile West Antarctic Ice Sheet has reacted to past changes in climate, and at what rate. Roughly 125,000 years ago, it was much smaller than it is today, and sea levels were much higher.


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The ice core this team is after should provide glaciologists and modelers critical clues about how sensitive this area is to changes in climate, according to Eric Steig, a University of Washington glaciologist who is part of the Hercules Dome expedition. “The largest uncertainty in future sea-level rise is this problem,” he says. “I can’t imagine that won’t affect insurance companies…if we narrow that one way or another.”