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Exchange-traded fund - Wikipedia
Since then ETFs have proliferated, tailored to an increasingly specific array of regions, sectors, commodities, bonds, futures, and other asset classes. As of January 2014, there were over 1,500 ETFs traded in the U.S., with over $1.7 trillion in assets. In December 2014, U.S. ETF assets went above $2 trillion.
https://en.wikipedia.org/wiki/Exchange-traded_fund
Two Popular Leveraged Oil ETFs Are Shutting Down Next Month
Traders looking to place high-stakes bets on oil prices will have two less tools are their disposal next month, when two popular VelocityShares ETNs are delisted.
The VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:UWTI), which provides triple leveraged bullish exposure to oil futures, and the VelocityShares 3X Inverse Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:DWTI), which offers triple leveraged bearish (inverse) exposure, will both cease operations in December. From Credit Suisse:
As part of its continuing effort to monitor and manage its suite of exchange traded notes, Credit Suisse AG has decided to delist the foregoing ETNs with a view to better aligning its product suite with its broader strategic growth plans.
The ETNs will survive in some form after they’re delisted, but they’ll no longer be available on any exchange:
Accordingly, Credit Suisse AG anticipates that the ETNs will continue to trade on NYSE Arca up to and including December 8, 2016 and that effective December 9, 2016, the ETNs will no longer be listed for trading on any national securities exchange. In addition, Credit Suisse AG will suspend further issuances of these ETNs effective December 9, 2016. Following their delisting, the ETNs will remain outstanding, though they will no longer trade on any national securities exchange.
Both UWTI and DWTI have proven popular with traders over the years, gathering over $1 billion and $350 million in assets, respectively. They’re also heavily traded, with about 18 million and 3 million shares changing hands each day, respectively.
Their popularity has come despite rapid share price declines. Contango in the futures markets often leads to steep losses for leveraged products, with the ETPs forced to engage in repeated reverse splits to keep their prices afloat.
Leveraged ETFs had come under fire from regulators earlier this year because of these concerns, so perhaps today’s move represents Credit Suisse getting ahead of some potential government intervention down the line.
http://etfdailynews.com/2016/11/16/two-popular-leveraged-oil-etfs-are-shutting-down-next-month/
Credit Suisse AG Announces Its Intent To Delist And Suspend Further Issuances Of Its DWTI And UWTI ETNs
NEW YORK, Nov. 16, 2016 /PRNewswire/ -- Credit Suisse AG announced today its intention to delist and suspend further issuances of the following Exchange Traded Notes (the "ETNs"):
ETN
Ticker
CUSIP
VelocityShares™ 3x Inverse Crude Oil ETNs linked to the S&P GSCI® Crude Oil Index ER due February 9, 2032
DWTI
22542D548
VelocityShares™ 3x Long Crude Oil ETNs linked to the S&P GSCI® Crude Oil Index ER due February 9, 2032
UWTI
22539T316
As part of its continuing effort to monitor and manage its suite of exchange traded notes, Credit Suisse AG has decided to delist the foregoing ETNs with a view to better aligning its product suite with its broader strategic growth plans.
Accordingly, Credit Suisse AG anticipates that the ETNs will continue to trade on NYSE Arca up to and including December 8, 2016 and that effective December 9, 2016, the ETNs will no longer be listed for trading on any national securities exchange. In addition, Credit Suisse AG will suspend further issuances of these ETNs effective December 9, 2016.
Following their delisting, the ETNs will remain outstanding, though they will no longer trade on any national securities exchange.
The ETNs may trade, if at all, on an over-the-counter basis. Although it is not currently accelerating the ETNs at its option, Credit Suisse AG continues to have the right to do so, as described in the pricing supplement for the ETNs (the "Pricing Supplement"), and may choose to accelerate the ETNs at its option in the future, either together on the same date or each on a separate date, including shortly after the delisting. Subject to the minimum redemption amount and other conditions, investors can continue to exercise their early redemption right with respect to the ETNs prior to, and following, the ETNs' delisting, pursuant to the terms of the ETNs as described in the Pricing Supplement. If investors wish to exercise their early redemption right, they and their broker must follow the procedures set forth in the Pricing Supplement, which can be accessed on the Securities and Exchange Commission website at www.sec.gov as follows:
https://www.sec.gov/Archives/edgar/data/1053092/000095010316017628/dp70004_424b2-a32.htm
Only the VelocitySharesTM 3x Inverse Crude Oil ETNs linked to the S&P GSCI® Crude Oil Index ER due February 9, 2032 (NYSE Arca: DWTI) and the VelocitySharesTM 3x Long Crude Oil ETNs linked to the S&P GSCI® Crude Oil Index ER due February 9, 2032 (NYSE Arca: UWTI) are affected by this announcement.
As disclosed in the Risk Factors section of the Pricing Supplement, the market value of the ETNs may be influenced by, among other things, the levels of actual and expected supply and demand for the ETNs in the secondary market. It is possible that this announcement and the delisting and suspension of further issuances of the ETNs, as described above, may influence the market value of the ETNs. For example, delisting the ETNs will remove the primary source of liquidity for the ETNs and investors may not be able to sell their ETNs in the secondary market at all. In addition, suspending further issuances of the ETNs may further adversely affect liquidity for any secondary market that may develop following a delisting. Credit Suisse AG cannot predict with certainty what impact, if any, these events will have on the public trading price of the ETNs. Investors are cautioned that paying a premium purchase price over the indicative value of the ETNs could lead to significant losses. An investor that pays a premium for the ETNs, for example, may suffer significant losses if the investor is unable to sell the ETNs in the secondary market, if the investor sells at a time when the premium has declined or is no longer present or if Credit Suisse AG accelerates the ETNs at its option. Even if investors do not pay a premium over the indicative value of the ETNs, investors could still suffer substantial losses because of the illiquidity associated in the secondary market. For instance, investors may not be able to sell the ETNs readily and may suffer substantial losses and/or sell the ETNs at prices substantially less than their intraday indicative value or closing indicative value, including being unable to sell them at all or only sell them for a price of zero in the secondary market.
In addition, as described above, Credit Suisse AG continues to have the right to accelerate the ETNs at its option in the future, either together on the same date or each on a separate date, including shortly after the delisting. If Credit Suisse AG accelerates the ETNs at its option, investors will receive the applicable accelerated redemption amount, which will be an amount equal to the arithmetic average of the closing indicative values (which will not include any premium) of the applicable ETN during the accelerated valuation period. Any investors who paid more for their ETNs (including any premium to closing indicative value) than the amount they receive upon an acceleration will suffer a loss on their investment, which could be significant. In addition, investors will not receive any other compensation or amount for the loss of the investment opportunity of holding the ETNs and investors may be unable to invest in other securities with a similar level of risk and/or that provide a similar investment opportunity as the ETNs.
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 47,690 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
This document was produced by, and the opinions expressed are those of, Credit Suisse as of the date of writing and are subject to change.
Copyright © 2016, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.
Logo - http://photos.prnewswire.com/prnh/20091204/CSLOGO
SOURCE Credit Suisse AG
Related Links
http://www.credit-suisse.com
http://www.prnewswire.com/news-releases/credit-suisse-ag-announces-its-intent-to-delist-and-suspend-further-issuances-of-its-dwti-and-uwti-etns-300364595.html
It is a very strange market right now.
WTI 46.07 +0.26 +0.57%
WTI 45.41 -0.40 -0.87%
This Is What It Will Take To Seal The OPEC Deal
By Julianne Geiger - Nov 15, 2016, 9:50 AM CST
An anonymous OPEC delegate has just laid out the four fundamental must-haves for sealing the OPEC deal—revealing that the path that lies ahead for the OPEC deal is even harder than many had thought.
This weekend’s OPEC meetings did not resolve long-standing disputes between its members over who was cutting, and who was cutting how much—as a result the technical committee, which is in the unfortunate position of working out the details of the much anticipated and ever-elusive deal, has moved up its meeting to November 21 from November 25, according to Reuters sources.
But another source, speaking only on the condition of anonymity, disclosed some terms that Saudi Arabia—the weightiest OPEC member—said are absolutely necessary if a deal is to be had.
First, according to the source, all OPEC members must agree to collective action. Second, each member must share the burden of the cuts equitably. Third, the cuts must be transparent and be credible as seen by the markets. In other words, members would have to use production figures reported by OPEC, not their own self-reported figures.
This maneuvering by Saudi Arabia—this digging in of its heels—although understandable on its part, since Saudi Arabia is oft the OPEC member stuck with all the heavy lifting. But this who’s going to blink first mentality could very well be the deal breaker that the markets have been fearing ever since the Algiers almost-deal-but-not-quite deal was struck in September.
While the source specified that this laundry list of demands would still allow for Libya and Nigeria to be exempt from any cuts or freezes, Saudi Arabia would expect Iraq to cut production—and to use OPEC production figures to determine how much—and for Iran to freeze production, again, using OPEC figures.
Related: Iran Surprises OPEC With A Further 250,000 Bpd Increase
This is a pretty big ask, considering both countries have balked at the idea of using OPEC production figures versus their own.
For Iran, using OPEC-supplied production figures means that Saudi Arabia expects Iran to “freeze” production at 3.7 million barrels per day, versus Iran’s self-reported 4 million barrels per day. And even if Iran agreed to use the 3.7 million barrel per day figure, it is still adamant that its desire is to freeze only after it reaches 4 million per day, which is its pre-sanction production level.
For Iraq, Saudi Arabia is asking for a cut down from 4.6 million barrels per day, instead of Iraq’s figure of 4.8 million barrels per day. Meanwhile, Iraq is still insistent that it should be exempt from the deal because it is still fighting Islamic State.
Saudi Arabia, Iran, and Iraq are OPEC’s largest producers—and are often at odds even beyond oil matters—and without an agreement between them, there will be no deal.
By Julianne Geiger for Oilprice.com
http://oilprice.com/Energy/Energy-General/This-Is-What-It-Will-Take-To-Seal-The-OPEC-Deal.html
That's what is happening.
Oil prices soar on renewed hopes of OPEC output deal
Oil prices jumped as much as 5 percent on Tuesday, bouncing back from multi-month lows on renewed expectations that OPEC will agree later this month to cut production to reduce a supply glut that has weighed on prices for more than two years.
Saudi Energy Minister Khalid al-Falih is expected to travel to the Qatari capital, Doha, this week for meetings with oil-producing countries on the sidelines of an energy forum, sources familiar with the matter told Reuters.
The Organization of the Petroleum Exporting Countries is due to meet on Nov. 30 to hammer out the terms of a deal to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say.
Traders and analysts also pointed to a report from Monday about a last ditch effort by OPEC to bring the world's top producers together to rein in production, saying it triggered a wave of short covering. (bloom.bg/2eTLwNI)
"Clearly the market is now seeing increased chances of an OPEC production cut," Commerzbank analysts said in a note.
"There is doubtless considerable pressure to take action, as the oversupply will not reduce itself."
By 11:46 a.m. EST, Brent LCOc1 futures rose $1.88, or 4.2 percent, to $46.31 a barrel, after reaching a session high of $46.41.
U.S. crude CLc1 rose $1.99 to $45.31 per barrel, a 4.6 percent gain, after hitting $45.42. Prices were on track for their biggest daily percentage gain since Sept. 28.
Brent hit a three-month low of $43.57 on Monday while U.S. crude also dropped to a three-month low of $42.20 in the previous session.
News of an attack on a major oil pipeline in Nigeria, the Nembe Creek Trunk Line in the southern Niger Delta, gave an additional push to prices.
Technical analysts said oil markets were due an upward correction after a month of declines.
"The current active contract (for U.S. crude) is expiring. The last trading day is next Monday, so some oil traders are already starting to close out their positions to roll over," Philips Futures investment analyst Jonathan Chan in Singapore said.
But rising Libyan oil production could cap gains.
A tanker carrying the first freshly produced cargo of Libyan crude to be exported since the Ras Lanuf terminal reopened in September left the port on Monday.
Libya's oil production has almost doubled to around 600,000 barrels per day in recent weeks.
(Additional reporting by Christopher Johnson in London and Mark Tay in Singapore; Editing by Marguerita Choy and Adrian Croft)
http://www.reuters.com/article/us-global-oil-idUSKBN13A068
Oil prices jump 3 percent on hopes of OPEC output cut
Oil prices jumped more than 3 percent on Tuesday, bouncing back from multi-month lows on expectations that OPEC will agree later this month to cut production to reduce a supply glut.
North Sea Brent crude oil LCOc1 was up $1.30 a barrel at $45.73 by 1350 GMT (8:50 a.m. ET) after hitting a three-month low of $43.57 on Monday. U.S. light crude CLc1 was also up $1.30, at $44.62. It reached a three-month low of $42.20 on Monday.
Oil producers in the Organization of the Petroleum Exporting Countries are due to meet later this month to agree to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say.
OPEC is a diverse grouping, politically and economically, and several members wish to increase production.
Saudi Arabia's energy minister has said it is imperative OPEC reach a consensus on a deal to curb production, Algeria's state news agency APS said on Sunday.
"Reports of a diplomatic push by OPEC to strike a deal are supporting the markets," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. "The rally could last a little while but the underlying fundamental picture is still bearish."
IG Group market strategist Jingyi Pan said market sentiment has been buoyed by reports that key producers including Iran and Iraq were thinking about restraining production.
News of an attack on a major oil pipeline in Nigeria, the Nembe Creek Trunk Line in the southern Niger Delta, gave an additional push to prices.
Technical analysts said oil markets were due an upward correction after a month of falls.
Philips Futures investment analyst Jonathan Chan in Singapore said crude prices were supported by short-covering.
"The current active contract (for U.S. crude) is expiring. The last trading day is next Monday, so some oil traders are already starting to close out their positions to roll over," Chan said.
But rising Libyan oil production could cap gains.
A tanker carrying the first freshly produced cargo of Libyan crude to be exported since the Ras Lanuf terminal reopened in September left the port on Monday.
Libya's oil production has almost doubled to around 600,000 barrels per day in recent weeks.
(Additional reporting by Mark Tay in Singapore; Editing by Jason Neely and Adrian Croft)
http://www.reuters.com/article/us-global-oil-idUSKBN13A068
There are now reports OPEC is working hard to get an oil-production-cut agreement put in place, despite growing doubts about the cartel’s ability to do so.
WTI 44.62 +1.30 +3.00%
WTI 44.14 +0.82 +1.89%
WTI 42.29 -1.12 -2.58%
D is at 94.80 right now.
Sounds good.
WTI 42.82 -0.59 -1.36%
Crude Oil Futures - Dec 16 (CLZ6)
OPEC’s Bearish Report Provides Little Hope For Oil Markets
By Irina Slav - Nov 11, 2016, 5:49 PM CST
Just one day after the IEA warned the world could drown in oil if production does not fall beneath demand sometime soon, OPEC released a new market whammy, offering up the cartel’s production figures, which largely jive with figures reported by the IEA yesterday: OPEC has increased its oil production.
OPEC’s Monthly Oil Market Report revealed daily oil production for the cartel of 33.64 million barrels for October—up by 240,000 bpd on September—largely confirming the IEA’s report, although the international authority’s figure was a bit higher at 33.83 million bpd.
OPEC’s calculations had the increase over September, on the other hand, a bit higher than the figures published by the IEA.
The OPEC report uses daily output amounts as reported by secondary sources rather than by the members themselves, since the latter are often higher than the former. This output calculation methodology was a bone of contention for Iraq in September when negotiations about an output cap began. Regardless of which production figures are used, secondary or direct, it’s now clear that the global supply glut will not ease during this time of increased production.
On a somewhat brighter note, according to the group, non-OPEC supply this year would be some 780,000 barrels lower than it was in 2015. However, this is expected to rise in 2017 by 230,000 bpd—a figure a bit below the October over September production increase by OPEC members.
In contrast, the IEA predicted a 500,000-barrel increase in oil production outside the cartel for 2017. OPEC’s estimates put non-OPEC production next year at an average daily of 56.43 million barrels. This, added to OPEC’s October rate of production, would give the world almost 91 million barrels of oil per day.
But the interesting breakdown presented by OPEC in this latest report is that demand for OPEC crude in 2017 would stand at 32.7 million barrels per day. With their current production at 33.64 million barrels per day, that’s a net inventory gain of 940,000 barrels of crude per day, based on OPEC supply vs. OPEC demand (or 1.1 million barrels per day if you use IEA figures released yesterday. Even if a freeze does take shape sometime in 2017 using the minimum amount discussed at the Algiers meeting, which was 32.5 million bpd, we’re talking about a 200,000 barrel per day decrease in inventory in the world of OPEC. Between Algiers and now—and likely between now and next year, OPEC is adding to the supply side of that equation daily, which would push out further and further any takeaways from inventory.
Hypothetically—it’s possible that these production figures could result in some easing of inventories in 2017 on a global level, since OPEC expects global oil demand next year to hit 95.55 million barrels of crude per day. If its estimate is correct, the global glut could possibly begin to ease at some point during the year. That said, it remains unclear just how much crude is currently being kept in storage, and how long it will take to get rid of however much that is.
The easing of the global glut—thought by some to be even a shortage at some point in 2017— is more than likely to remain just a hypothetical, given some non-OPEC producers’ intentions, stated directly or in a veiled manner, to continue expanding production, and OPEC’s very own Saudi Arabia’s threat that it would raise production to 11-12 million barrels if all its co-members do not agree to take part in the freeze—notably Iran.
“The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting,” according to an OPEC source, as quoted by Reuters. The comment was denied by OPEC senior officials.
If Iran digs in and refuses to cut, and Saudi Arabia digs in and refuses to take on most of the cutting itself, thereby giving up market share, OPEC will continue to add to the glut, further straining heavily oil-dependent economies.
By Irina Slav for Oilprice.com
http://oilprice.com/Energy/Oil-Prices/OPECs-Bearish-Report-Provides-Little-Hope-Oil-Markets.html
OPEC Has To Dump Its Oil Strategy Just As It Begins To Work
By Tsvetana Paraskova - Nov 10, 2016, 1:51 PM CST
Desperate times call for desperate measures. And when things no longer work, you throw them out. OPEC may be just that desperate, and perhaps it is now willing to throw out its tried and trusted strategies of yesteryear when the oil industry was merrily rolling along.
With its member economies reeling from the lower-for-longer oil prices, OPEC has been publicly trying to get its members all on the same page on just how to lift crude prices, and even lobbying for support from non-OPEC producers to join the efforts to stabilize the oil markets. But with some OPEC members reluctant to participate, is the old OPEC go-to solution to have Saudi Arabia do all the cutting still on the table for consideration?
Just three weeks before the November 30 meeting, where members are expected to discuss the details of a production freeze or cut, OPEC published its 2016 World Oil Outlook in which it sees the total OPEC supply of crude oil and natural gas liquids at 40.6 million bpd in 2020.
This figure is projected to account for 41 percent of global liquids supplies, compared to the 37 percent market share for 2020 that OPEC had expected in its 2014 World Oil Outlook, according to figures crunched by Bloomberg. Last year, OPEC’s share of the world liquids supplies was 40 percent, higher than the 38-percent projection from 2014.
Back in 2014, OPEC, at the likely behest of its de facto leader Saudi Arabia, embarked on the mission to raise its market share, adopting a pump-at-will policy to that end. So far, that strategy’s most evident result has been the oil price crash stemming from the oil supply glut it helped to create.
Now it seems that—as far as vying for higher market share is concerned— the ‘no-limits’ pumping policy has finally worked.
So, Ali Al-Naimi, former long-standing Saudi oil minister and the architect of that strategy, is seeing his efforts to preserve and raise market shares pay off. In a book Al-Naimi is launching this month, he stands by his policy.
But Al-Naimi’s successor, Khalid al-Falih, who rose to power in May of this year, has been working on a different strategy for Saudi Arabia and OPEC, after seeing how the ‘no-limits’ production backfired spectacularly on OPEC economies, including Saudi Arabia’s, while U.S. shale proved to be more resilient in the lower price environment than initially thought.
Oil prices crashing from US$100 a barrel in 2014 to below US$30 in February of this year, and now around US$45, drained the budgets of oil-dependent economies, caused governments to slash costs and costly projects, raised budget deficits, reduced government spending and consumers’ purchasing powers, and slowed down economic growth.
Saudi Arabia alone is canceling US$266.7 billion in projects and is cutting pay and perks for public servants.
Nigeria and Venezuela are also seeing their highly oil-dependent economies battered by the low oil prices, additionally aggravated by the Niger Delta militant violence, and the agenda of Socialist President Nicolas Maduro to seize all powers on his road to dictatorship, respectively.
So, OPEC’s market-share-seizure strategy came at a cost, and what a cost it has been. According to Bloomberg calculations based on OPEC data, the cartel’s crude oil sales would be worth around US$365 billion less in 2020 with the lower oil prices.
The low oil revenue is the other side of the market-share coin. This time around, it seems that the Saudis—and their new oilman—may be willing to manipulate production to prop up prices and save OPEC economies from even further slowdown.
Last week, Al-Naimi shed some light on the November 2014 talks about OPEC possibly cutting production. The former Saudi oil minister had then asked each OPEC oil minister individually if they would cut production.
“All the answers were no. The expectation was: ‘Traditionally you—Saudi Arabia—cut.’ [I said] we won’t do that anymore, that’s it,” Al-Naimi said last week in London, as quoted by the Wall Street Journal.
Traditions are not what they used to be, and the Saudis may be unwilling to cut if others do not follow suit. The Saudis are reluctant to back down on this issue because a unilateral cut (impossible as it seems) could undermine their position of leading the cartel, and give a free pass to Iran to reach its desired pre-sanctions market share, and the Saudis won’t have it.
The cartel, however, has seen in less than two months bitter infighting over which data to use to set limits; who would, should or could be exempt from cuts; and the background has always been who is most or least desperate to have oil prices higher.
Still, even if OPEC were to somehow cut a deal on output cuts, most analysts and industry officials believe that OPEC alone would do little to lift oil prices. So will non-OPEC Russia or other non-cartel producers carry the torch and do more than just vaguely ‘commit’ to joining efforts to stabilize the market?
If so, would a possible deal even hold, given OPEC’s poor track record of sticking to pledges? And finally, would an OPEC agreement even matter given that president-elect Donald Trump has promised an energy program to make U.S. fossil fuels great again?
By Tsvetana Paraskova
http://oilprice.com/Energy/Energy-General/OPEC-Has-To-Dump-Its-Oil-Strategy-Just-As-It-Begins-To-Work.html
IEA: If OPEC Doesn’t Cut, We’ll Drown In Oil
By Irina Slav - Nov 10, 2016, 5:13 PM CST
Various OPEC members have been busy looking for ways to get all members of the cartel to agree to a production cut, but outside the spotlight, as it turns out, they have been pumping ever-growing amounts of crude.
According to the IEA’s latest Oil Market Report released today, OPEC produced 230,000 bpd more in October, hitting yet another record with a total daily production of 33.83 million barrels. This, according to the authority, will make the task of cutting production more challenging than previously thought.
The proposed band for production that was hoped would help the market return to balance is 32.5-33 million bpd.
The challenge becomes nearly insurmountable in light of the OPEC members that caused the rise. These were Libya, Nigeria, and Iraq, where production hit an all-time high. The first two of these countries have been exempted from the production cut because of loss of market share unrelated to oil prices trends. Iraq is adamant that it should be exempted, too.
The situation is heating up, with Saudi Arabia last week flexing its muscles after playing the good and reasonable guy for a couple of months. According to OPEC sources cited by ZeroHedge, the desert kingdom threatened to turn up the taps and add to the glut. It seems Saudi Arabia is losing patience with its co-members, which are refusing to follow its lead at their own expense.
“The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting,” the source told Reuters. That’s certainly food for thought and cause for pessimism, especially if we factor in Saudi Arabia’s ongoing fight against the Iran-backed Houthis in smaller neighbor Yemen.
In this context, it is difficult to continue believing a cut will be agreed to. What’s even worse, at least from the energy industry’s perspective, is that even if an agreement is forged through clenched teeth, it is unlikely to have any major effect on prices.
In the same report, the EIA said supply from non-OPEC producers, which so far this year have reduced output by an average 900,000 barrels a day, will rise in 2017. The rise won’t be tiny, either: EIA puts it at 500,000 bpd. This, Bloomberg reminds us, is a lot more than last month’s forecast non-OPEC supply increase of 110,000 bpd for next year. Apparently, a lot can change in a month, prompting the agency to revise its forecast so substantially.
On the demand side, things are still looking kind of bleak. The IEA kept its projection for a growth rate of 1.2 million bpd this year and the next, because of a slowdown in the Americas and China. It doesn’t seem like anything could turn things around, not even the renewed militant attacks against oil pipelines in Nigeria.
And still, says IEA, OPEC had better cut production, possibly on the basis that every little helps. Indeed, if Russia opts out of an agreement with the cartel, and with other big non-OPEC producers such as Brazil and Kazakhstan pumping consistently more crude, the glut that had barely started to ease this year will once again plunge prices into murky depths and traders into depression.
By Irina Slav for Oilprice.com
http://oilprice.com/Energy/Energy-General/IEA-If-OPEC-Doesnt-Cut-Well-Drown-In-Oil.html
D just hit 87.71.
WTI 43.84 -0.82 -1.84%
DWTI HOD so far was 82.54.
WTI 44.53 -0.74 -1.63%
Will Trump’s Entry into the White House Affect Oil Fundamentals?
Analyzing Crude Oil's Movement after the US Presidential Election PART 2 OF 2
Will Trump’s Entry into the White House Affect Oil Fundamentals?
By Robert Scott
| Nov 9, 2016 4:37 pm EST
Effect of the US presidential election
The US presidential election may not have any short-term effect on crude oil prices. However, in the long term, Donald Trump’s policies could impact oil fundamentals.
Trump’s policies focus on enhancing the production of crude oil (USL)(DWTI), natural gas (UNG), and coal. His policy also supports using government land for the exploration and production of fossil fuels such as crude oil, natural gas, and coal. According to him, this is the key to generating more jobs in the US economy.
Trump and the oil market
According to the IEA (International Energy Agency), the world’s total oil demand was 95.6 million barrels per day in 2Q16. The total supply of oil was 95.9 million barrels per day, and the market was oversupplied by 0.31 million barrels per day in the quarter. The IEA’s forecast also indicates that world oil demand could reach 97.0 million barrels per day in 4Q16, a rise of 1.4 million barrels per day compared to 2Q16.
New policies and OPEC’s (Organization of the Oil Producing Countries) record production could lead to a higher crude oil supply, which would likely be bearish for oil prices. Any further rise in oil production could impact ETFs such as the Direxion Daily Energy Bear 3X ETF (ERY), the First Trust Energy AlphaDEX ETF (FXN), the United States Brent Oil ETF (BNO), the Energy Select Sector SPDR ETF (XLE), and the United States Oil ETF (USO).
Energy and Power Performance
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http://marketrealist.com/2016/11/trump-entry-white-house-will-impact-oil-fundamentals/?utm_source=yahoo&utm_medium=feed
http://marketrealist.com/2016/11/u-turn-oil-prices-election-investors-need-understand/
Analyzing Crude Oil's Movement after the US Presidential Election PART 1 OF 2
U-Turn in Oil Prices Post-Election: What Investors Should Know
By Robert Scott
| Nov 9, 2016 4:37 pm EST
US crude oil
At 1:09 PM EST on November 9, 2016, US crude oil (USO) (OIIL) (UWTI) (DWTI) active futures were trading at $45.69 per barrel, 1.6% above the previous day’s closing price.
On the same day, US crude oil prices fell to an intraday low of $43.07 per barrel, ~4.2% lower than the previous day’s closing price.
Understanding the rise and the fall
Falls in crude oil prices, equities, and currencies came in early during Asian trading when Donald Trump’s lead over Hillary Clinton was widening. At the same time, gold was rising.
Gold active futures have made an intraday high of $1,338.30 per ounce, on November 9, ~5% higher than the previous day’s closing price. The rise in gold prices corresponds with investors’ fears. As a growth-driven asset, crude oil tends to underperform safe haven assets such as gold during market uncertainties.
The recovery in oil prices comes with the rise in the equity market. The S&P 500 Index (SPY) (QQQ) (IVV) (VFINX) had risen 0.89% as of 2:02 PM EST. US crude oil inventories rose by 2.4 million barrels in the week ended November 4, 2016.
On November 8, the American Petroleum Institute (or API) reported a rise of 4.4 MMbbls (million barrels) in crude oil inventories for the week ended November 4. The smaller-than-expected rise in crude oil inventories also helped oil prices to recover.
Impact on energy ETFs
The above analysis could be important for ETFs such as the United States Brent Oil ETF (BNO), the PowerShares DWA Energy Momentum ETF (PXI), the Energy Select Sector SPDR ETF (XLE), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
Energy and Power Performance
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WTI was at 45.95 earlier today.
45.30 right now up 32 cents.
The DOW futures are down 224 right now. Early this morning they were down over 800.
Trump is going to drain the swamp and end much of the corruption. The party is over for the criminals and they don't know how to react to this news yet. The markets are already improving just in the last few hours. Take advantage of the temporary swings.
$30 Oil Or Worse If OPEC Fails
By Nick Cunningham - Nov 07, 2016, 4:41 PM CST Oil Rig
After the worst week for oil since January, crude prices firmed up on Monday ahead of Tuesday’s historic election.
Oil dropped 10 percent last week, in large part due to lowering expectations that OPEC could succeed in working out a production cut at the end of the month and also because the EIA reported a record high build up in oil inventories. Oil dropped below $45 per barrel, hitting nearly two-month lows.
Of course, the elephant in the room is the U.S. presidential election. While not directly related to oil prices, the financial markets have been reacting in dramatic fashion to recent movements in the polls. And as Bloomberg reports, they have a clear preference for who they want to win: Hillary Clinton. The former Secretary of State is seen as a known quantity, while Donald Trump as a wildcard. When Trump moved up in the polls global stock markets dipped, and the markets gained as Clinton’s fortunes improved.
The dynamic played out again on Monday when the FBI cleared Clinton of wrongdoing in the latest cache of emails. Global stock markets and commodity prices soared on the news, as the odds of a Clinton victory seemed to improve. “European shares rebounded from a four-month low and Asian equities rose with S&P 500 Index futures after the boost for Clinton, who is seen by investors as the more predictable presidential candidate,” Bloomberg news wrote. Oil prices also rose, as the risk to the global economy appeared to wane.
But with the presidential campaign mercifully at an end, the oil markets will refocus on OPEC, the next major catalyst for crude prices.
And there is mixed news on that front. New supply from OPEC casts doubt on the prospects of a deal. Iran, Iraq, Libya and Nigeria added about 450,000 barrels per day of additional output in October compared to September levels, which is more than half of the amount of oil that OPEC promised to cut. At the meeting in Algiers at the end of September, member countries promised a cut of somewhere between 200,000 and 700,000 barrels per day.
But if the deal is to count for something, the cuts will have to be much deeper to offset the additional supply from the four countries demanding to be exempted from the pact. The onus will almost entirely be on Saudi Arabia, but a cut of more than 1 million barrels per day of production might be too much to ask for. John Kilduff, a partner at Again Capital, says that no deal will be struck in Vienna at the end of the month, and the failure will push oil back down into the mid-$30s. The disaster of yet another OPEC failure will even put “the February low of $26.05 back in-play, into year-end,” he wrote in a CNBC commentary.
However, that outcome is not inescapable. OPEC officials are trying to strike a positive tone, and made some small but significant progress on technical details recently. The group apparently settled on using the “secondary sources” data for how it will calculate the production cuts. The data comes from the EIA, the IEA, Argus Media and other organizations. The compiled data is the basis for OPEC’s production figures, but Iraq has charged that the data is undercounting Iraqi barrels. The Wall Street Journal reported last week that OPEC has agreed to stick with the secondary sources. If Iraq signs on, that increases the odds of a deal in a few weeks’ time. Recognizing the small bit of good news, oil prices jumped 1 percent on Monday.
And while the OPEC negotiations have not appeared to be going all that well, some of the stubbornness and inflexibility could be bargaining tactics. There is little incentive for individual countries to offer concessions ahead of time, as John Kemp of Reuters noted.
In an effort to push a deal forward, Saudi Arabia reportedly issued an ultimatum to Iran. Saudi officials threatened to intentionally crash the oil price again if Iran did not come on board with production cuts. "The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting," an OPEC source told Reuters.
Ramping up to 11-12 mb/d and essentially pursuing a scorched-earth policy and price war would indeed sink oil prices to new lows. If the Saudis are serious about that threat, there are two possible outcomes from the late-November meeting in Vienna. OPEC agrees to cut production, likely pushing oil back up into the $50s per barrel, or they fail to do so, leading to a price war that crashes prices well below $40 per barrel.
By Nick Cunningham of Oilprice.com
http://oilprice.com/Energy/Energy-General/30-Oil-Or-Worse-If-OPEC-Fails.html
WTI 44.65 -0.24 -0.53%
The DOW is up 312.75 right now!
WTI 44.20 +0.13 +0.29%
WTI 44.60 +0.53 +1.20%
FBI will not change decision regarding Hillary Clinton's emails | Daily Mail Online
http://www.dailymail.co.uk/news/article-3911032/FBI-announces-not-change-decision-regarding-Hillary-Clinton-s-emails.html
WTI 43.65 -1.01 -2.26%
D just hit $88.12.
WTI 44.30 -0.36 -0.81%
Your crystal ball is priceless!
WTI 44.62 -0.72 -1.59%
D just hit 82.65!