ALSO IRAN WANTS TO FLOOD THE MARKET WITH
OIL SO THEY CAN GET MORE POWER IN THE MIDEAST.BUT THE SAUDI-ARABIANS DO
NOT WANT IRAN TAKING THEIR OIL REVENUE FROM THE WORLD MARKETS.AND
CUTTING INTO THEIR PROFITS.IRAN IS FIGHTING SAUDI-ARABIA IN THE MIDEAST
FOR OIL CONTROL.
FOR THE NEXT 2 DAYS CHINA IS CELEBRATING THE END OF WW2. SO CHINA WILL NOT BE HAVING A STOCK MARKET FOR THE NEXT 2 DAYS.
Iran determined to reclaim its share in global oil market: Zanganeh-HomeIranEnergy-Wed Sep 2, 2015 12:32PM-presstv
Iran's oil minister says the Islamic Republic is determined to reclaim its share in global oil markets once sanctions imposed on the country’s energy sector are lifted.“Immediately after lifting sanctions, it’s our right to return to the level of production we historically had,” Bijan Zangeneh said, adding, “We have no other choice.”The Iranian minister made the remarks in an interview with Bloomberg, which was published on Wednesday, at the Iranian Oil Ministry in Tehran.Iran lost part of its share in the global oil market after sanctions were imposed on the country by the United States and the European Union at the beginning of 2012, with Western countries claiming that there was diversion in Iran's nuclear program toward military purposes. Iran rejected Western countries’ claims categorically, insisting that its civilian nuclear program was only meant for peaceful purposes.Iran reached an agreement with the P5+1 group of countries – the US, the UK, France, Germany, China, and Russia – in Vienna on July 14, known as the Joint Comprehensive Plan of Action (JCPOA). According to JCPOA, sanctions against Iran's economic sectors, including oil and gas industry, will be lifted in return for certain restrictions on Tehran’s nuclear program.Elsewhere in his interview, Zangeneh said Iran plans to produce 3.8-3.9 million barrels per day (bpd) of oil by March 2016.Iran's Oil Minister Bijan Zangeneh during interview with Bloomberg at his office in Iranian Oil Ministry ©SHANA-He noted that the country will raise its output by 500,000 bpd soon after sanctions are lifted and by 1 million bpd within the following five months.He added that Iran's oil output currently stands at 2.8 million bpd, which is the highest level the country has achieved in three years, and is exporting more than 1 million bpd.Referring to the drastic oil price fall in global markets, the Iranian oil minister emphasized that the oil price slump will not slow Iran's return to the market.Oil has dropped by about half in the past year from more than USD 100 a barrel in September 2014 after the 12-member Organization of the Petroleum Exporting Countries (OPEC) decided during meetings in December 2014 and June 2015 not to reduce output despite a global crude glut.In another part of his interview, Zangeneh said most OPEC members would like to see crude prices at $70-$80 a barrel and the organization does not need to coordinate with other oil suppliers to determine output levels.An oil price at $70-$80 a barrel would be “fair,” he said, adding that OPEC is open to coordinating its action with non-members, although it won’t wait for others to determine or approve its action.
IRAN-SAUDI-ARABIA PROPHECY
http://israndjer.blogspot.ca/2015/09/jewish-rabbi-predicts-saudi-arabiairan.html
Iran and Saudi Arabia on a collision course over oil at Opec-Oil minister says Iran will start pumping an extra 1m barrels per day of crude after nuclear sanctions are lifted by the West-Andrew Critchlow in Vienna-1:51PM BST 05 Jun 2015-telegraph
After a week of meetings of the Organisation of the Petroleum Exporting Countries (Opec) in Vienna, one thing is clear: Iran and Saudi Arabia are on a collision course that could eventually break the world's largest oil producing group apart.Faced with Saudi Arabia's stubborn determination to keep Opec pumping at full choke, Iran's oil minister Bijan Zanganeh has upped the stakes in this game of double bluff between the Middle East's two dominant political forces. He has confidently stated that the Islamic Republic will pump an additional 1m barrels per day (bpd) of crude within months of nuclear sanctions being lifted by the West.The move - assuming that Iran agrees to all US demands to curb its nuclear ambitions by the deadline on June 30 - effectively fires the starting gun in a race among Opec's most powerful producers including Iran, Saudi Arabia and Iraq to gain a bigger share of the market. It is a race that will be run regardless of the havoc it will cause within the group's smaller producers who face complete economic meltdown.Tensions are running high between oil giants Iran and Saudi Arabia-Instead of emphasising consensus and a mutually beneficial production policy to work for all of Opec's 12 members, Mr Al-Naimi now talks in terms of countries being "free to do what they want". This begs the question: what is the point of Opec if it is just a platform for Iran and Saudi Arabia to wage economic war against each other to the detriment of all the group’s other members?In Riyadh, the country’s new ruler, King Salman bin Abdulaziz al-Saud, faces the risk of his family’s closest allies, the US, suddenly changing sides. It could see them shifting their support to an increasingly reformist Iran should a deal to lift sanctions be reached this summer. Such a move could see political power in the Middle East tilt irreversibly towards the Shia Muslim majority in the Gulf region. That could ultimately threaten the future of the House of Saud.Saudi Arabia’s political dilemma has been further complicated by Iranian support of Houthi rebels which it is fighting in Yemen. It also faces encroachment within its own borders of terrorists connected to the Islamic State of Iraq and the Levant (Isil). Throughout the region, the kingdom and its Sunni allies appear under siege, while in Iraq only Iranian forces appear capable of holding back the Sunni-Muslim Isil horde.It is becoming increasingly apparent that Saudi Arabia’s insistence last November, to force Opec to essentially allow oil prices to fall, was a move aimed not at crippling US shale oil producers; this has failed to happen, with America’s oil output now at a 44-year record high. Instead, it was to allow Saudi Arabia to increase its own production to levels well above 10m bpd, while impoverishing most of its partners in Opec and, most notably, its major rival in the Middle East, Iran.Sanctions against Iran had already exacted a heavy price in Tehran before the blow of the current oil price slump hit home. President Hassan Rouhani said last October that income from crude sales had fallen by 30pc. That was before the price of crude slumped to a multi-year low around $43 per barrel. Starved of the foreign currency earnings from oil, Iran has found it increasingly tough to support its allies in the Middle East, who also happen to be Saudi Arabia’s natural enemies among Shia Islam.However, it’s not just Iran which has felt the pain of Saudi Arabia’s willingness to tolerate weaker oil prices in return for freedom to pump more crude. Oil revenues for the whole of Opec are to fall by 46pc this year to around $446bn (£291bn), according to the Energy Information Administration. Even with a small recovery in prices this year, Opec producers such as Nigeria, Venezuela and Algeria are being pushed to breaking point by the civil war being waged by the group’s most powerful members.Nigeria’s new President, Muhammadu Buhari, warned just days before the start of the Opec meetings in Vienna that the African country’s economy was in “deep trouble” because of the slump in oil prices, caused largely by Saudi Arabia’s policies. However, because of the chaos now gripping Nigeria’s oil industry, the country was unable to send a minister to present its case in Austria. Its former petroleum minister, Diezani Alison-Madueke, faces corruption allegations.Saudi Arabia and its close knit Gulf allies within Opec – such as the United Arab Emirates and Kuwait – are in the unique position of having vast foreign currency holdings and sovereign wealth investments they can draw on to see them through the current spell of weaker prices. With over $800bn in foreign currency reserves, Riyadh can absorb the fiscal devastation that is being caused by lower prices.Iran has also tried to break Saudi Arabia’s domination of Opec behind the scenes. Officials from the Islamic Republic approached Abdullah bin Hamad al-Attiyah, Qatar’s respected former oil minister, to replace the current secretary general of Opec, Abdalla Salem el-Badri. After nine years at the head of the organisation, Mr el-Badri is thought to be too sympathetic to Saudi Arabia’s cause within the group.Faced with being swamped by a tidal wave of Saudi crude and its overbearing influence within Opec, Iran has decided to respond by signalling its intention to increase supplies should it be freed from the shackles of sanctions. This it appears willing to do regardless of Opec’s decision to leave its production ceiling unchanged at 30m bpd. A flood of Iranian crude flowing into an already oversupplied market would exert overwhelming downward pressure on oil prices, which continue to trade at around 40pc below last year's peak due to a global glut of supply.Of course, Opec has endured even tougher times and deeper divisions among its members before. The group survived the tensions caused by Iran-Iraq war and the turmoil of the Arab Spring. However, the tension between Iran and Saudi Arabia at Opec is now palpable and it is only a matter of time before these two oil giants come to blows.
Crude Oil Climbs as U.S. Equity Rebound Bolsters Demand Optimism-Mark Shenk-Updated on September 2, 2015 — 3:28 PM EDT-bloomberg
Oil climbed as a rebound in U.S. equities bolstered optimism that economic growth will strengthen in the world’s biggest crude-consuming nation.Futures climbed 1.9 percent in New York as the Standard & Poor’s 500 Index ended a two-day rout. Prices tumbled earlier after the Energy Information Administration said U.S. crude supplies rose 4.67 million barrels last week, the most since April. A 900,000-barrel gain was projected by analysts surveyed by Bloomberg. Refineries processing crude reduced operating rates as the summer driving season neared its end.Futures tumbled 7.7 percent Tuesday after the biggest three-day rally in 25 years amid speculation that a global glut that drove prices into a bear market will be prolonged as China’s economy slows. Crude will trade at $40 to $60 a barrel into 2016 as rising supplies overwhelm demand, according to Ian Taylor, chief executive officer of Vitol Group BV, the biggest independent oil trader."There’s a lot of price chasing going on," Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. "Some traders are probably taking a cue from the S&P, but that’s a risky strategy given the physical fundamentals and the likelihood of additional Iranian supply, which seems to be rising by the day."Market Movement-West Texas Intermediate for October delivery rose 84 cents to settle at $46.25 a barrel on the New York Mercantile Exchange. Futures traded in a $3.56 range.Brent for October settlement increased 94 cents, or 1.9 percent, to $50.50 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $4.25 premium to WTI.The Chicago Board Options Exchange Crude Oil Volatility Index climbed to the highest level since March 17 on Tuesday. The gauge tracks hedging costs on the U.S. Oil Fund, the biggest exchange-traded fund tracking WTI."There’s a lot of froth, a lot of short-term swings based on very little," Evans said. "This is a lot of churn."Crude inventories rose to 455.4 million barrels, leaving supplies almost 100 million barrels above the five-year seasonal average.Coiled Spring-"This market is like coiled spring waiting for a piece of data to move materially on," said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $16.9 billion. "A resolution to the issues in China isn’t expected anytime soon, inventories are high and not going away anytime soon and I don’t think OPEC will take any action."Refineries operated at 92.8 percent of their capacity, down 1.7 percentage points. U.S. refiners cut operating rates during September in nine of the past 10 years as gasoline demand decreases with the end of summer’s driving season on Labor Day, which falls on Sept. 7 this year.Iranian Plans-Iran will boost output by 1 million barrels a day as sanctions on its exports are removed, Oil Minister Bijan Namdar Zanganeh said. The fourth-biggest member of the Organization of Petroleum Exporting Countries plans to pump 3.8 million to 3.9 million barrels of oil a day by March, Zanganeh said in an interview in Tehran."We’re volatile because there are competing forces at work in the market," Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone. "The Iranian oil minister said they would raise production at any cost, which is weighing heavily on the market while U.S. production is falling and refinery maintenance season is pending."
When Will It End? History Shows U.S. Stocks Rebound Needs Months-Anna-Louise Jackson-September 2, 2015 — 2:55 PM EDT-bloomberg
Investors conditioned to expect quick recoveries from equity stumbles may need patience after U.S. stocks fell into the first correction in four years.Judging by prior 10 percent drops in this bull market, it could take until the end of 2015 as investors await a return to levels last seen in May. The gauge has fallen as much as 12 percent since reaching a high that month.The S&P 500’s rally that began in March 2009 has been marked by two previous corrections: a 16 percent selloff from April to July in 2010, and a 19 percent slump over seven months a year later. The benchmark group recovered within about four months of each, so if history is any guide, the market may not be back at its May peak until late December.Looking back at the 25 bull-market corrections since 1950, the one happening now “looks pretty run-of-the-mill,” said Brian Jacobsen, who helps oversee $250 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. The median recovery time in those cases has been about 90 days from the trough.If the current rout’s low of 1,867.61 on Aug. 25 holds, Jacobsen’s data suggest the market could be back to its May record “around the time we’re all gathered around tables for Thanksgiving and Christmas,” he said.Living through the rebound will require a strong stomach as swings in stocks double from earlier in the year, according to Jacobsen’s analysis.“The uniform message is the recovery can be very bumpy,” he said in a phone interview. “It moves in fits and starts. We could be looking at heightened volatility in the markets until about Christmas.”Others are even more optimistic. The S&P 500 will end the year at 2,200, according to the median estimate of 21 strategists at brokerages tracked by Bloomberg. That’s 3.2 percent above the May peak of 2,130.82, and 15 percent from yesterday’s close.“The historical trading pattern shows that the S&P 500 typically recovers fully within 3-4 months following the end of a correction,” David Kostin of Goldman Sachs Group Inc. wrote in an Aug. 28 report to clients. “Based on this template, S&P 500 would approach its all-time high in December 2015,” he said, while reiterating his year-end target of 2,100.Three of the strategists say the benchmark index won’t make it back to the record this year, while Jefferies Group LLC’s Sean Darby sees the market declining from its current level. Other skeptics question whether the S&P 500 has found its bottom yet, making it premature to start counting the days to a recovery.“My gut instinct is that we may not have seen the end of this,” David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., said in a phone interview. His firm oversees about $811 billion. “I’m not convinced the downside volatility is over.”Among the most optimistic strategists is Jonathan Golub of RBC Capital Markets LLC. “When the market turns, it’s going to happen much more aggressively than people think,” he said in an Aug. 26 interview on Bloomberg Television. Within the next three months, “we should’ve made up all of the loss that we’ve had.”
Welcome to Quantitative Tightening as $12 Trillion Reserves Fall-Simon Kennedy-Updated on September 2, 2015 — 12:27 PM EDT-bloomberg
The great global monetary tightening of 2015 is under way, but it’s not being led by the Federal Reserve. Even as U.S. policy makers ponder whether to raise interest rates this month, one recent source of central bank liquidity in financial markets is drying up and the loss of it partly explains August’s trading volatility. Behind the drawdown are the foreign exchange reserves run by the central banks. Bolstered following financial crises in the late 1990s as a buffer against capital outflows and falling currencies, such hoards fell to $11.43 trillion in the first quarter from a peak of $11.98 trillion in the middle of last year, according to the International Monetary Fund.Driving the decline is a combination of forces including the economic slowdown and recent devaluation in China, the Fed’s pending rate hike, the collapse of oil and decisions in Switzerland and Japan to cease intervening in currencies.Each means central banks are either paring their reserves to offset an exit of capital or manage currencies, have less money flowing into their economies to salt away or no longer need to sit on as much. Whichever it is, the shrinking of reserves means much less money flowing into the financial system given authorities tended to recycle their cash piles into local currency or liquid assets such as bonds.In the words of Deutsche Bank AG strategist George Saravelos and colleagues, welcome to the world of “quantitative tightening.”Reserve Peak-They predict 2015 will mark the peak of reserve accumulation after two decades of growth with China in the vanguard as its new currency regime means it has to pare reserves to avoid a freefall in the yuan. It has already reduced its holdings to $3.65 trillion from $3.99 trillion in 2014.For markets, Deutsche Bank says less reserve accumulation should mean higher bond yields and a rising dollar against rivals including the euro and yen. There are implications too for other central banks if the resulting rise in market borrowing costs hampers their ability to tighten monetary policy.“This force is likely to be a persistent headwind towards developed market central banks’ exit from unconventional policy in coming years, representing an additional source of uncertainty in the global economy,” Saravelos and colleagues in a report to clients on Tuesday. “The path to ‘normalization’ will likely remain slow and fraught with difficulty.”
FOR THE NEXT 2 DAYS CHINA IS CELEBRATING THE END OF WW2. SO CHINA WILL NOT BE HAVING A STOCK MARKET FOR THE NEXT 2 DAYS.
Iran determined to reclaim its share in global oil market: Zanganeh-HomeIranEnergy-Wed Sep 2, 2015 12:32PM-presstv
Iran's oil minister says the Islamic Republic is determined to reclaim its share in global oil markets once sanctions imposed on the country’s energy sector are lifted.“Immediately after lifting sanctions, it’s our right to return to the level of production we historically had,” Bijan Zangeneh said, adding, “We have no other choice.”The Iranian minister made the remarks in an interview with Bloomberg, which was published on Wednesday, at the Iranian Oil Ministry in Tehran.Iran lost part of its share in the global oil market after sanctions were imposed on the country by the United States and the European Union at the beginning of 2012, with Western countries claiming that there was diversion in Iran's nuclear program toward military purposes. Iran rejected Western countries’ claims categorically, insisting that its civilian nuclear program was only meant for peaceful purposes.Iran reached an agreement with the P5+1 group of countries – the US, the UK, France, Germany, China, and Russia – in Vienna on July 14, known as the Joint Comprehensive Plan of Action (JCPOA). According to JCPOA, sanctions against Iran's economic sectors, including oil and gas industry, will be lifted in return for certain restrictions on Tehran’s nuclear program.Elsewhere in his interview, Zangeneh said Iran plans to produce 3.8-3.9 million barrels per day (bpd) of oil by March 2016.Iran's Oil Minister Bijan Zangeneh during interview with Bloomberg at his office in Iranian Oil Ministry ©SHANA-He noted that the country will raise its output by 500,000 bpd soon after sanctions are lifted and by 1 million bpd within the following five months.He added that Iran's oil output currently stands at 2.8 million bpd, which is the highest level the country has achieved in three years, and is exporting more than 1 million bpd.Referring to the drastic oil price fall in global markets, the Iranian oil minister emphasized that the oil price slump will not slow Iran's return to the market.Oil has dropped by about half in the past year from more than USD 100 a barrel in September 2014 after the 12-member Organization of the Petroleum Exporting Countries (OPEC) decided during meetings in December 2014 and June 2015 not to reduce output despite a global crude glut.In another part of his interview, Zangeneh said most OPEC members would like to see crude prices at $70-$80 a barrel and the organization does not need to coordinate with other oil suppliers to determine output levels.An oil price at $70-$80 a barrel would be “fair,” he said, adding that OPEC is open to coordinating its action with non-members, although it won’t wait for others to determine or approve its action.
IRAN-SAUDI-ARABIA PROPHECY
http://israndjer.blogspot.ca/2015/09/jewish-rabbi-predicts-saudi-arabiairan.html
Iran and Saudi Arabia on a collision course over oil at Opec-Oil minister says Iran will start pumping an extra 1m barrels per day of crude after nuclear sanctions are lifted by the West-Andrew Critchlow in Vienna-1:51PM BST 05 Jun 2015-telegraph
After a week of meetings of the Organisation of the Petroleum Exporting Countries (Opec) in Vienna, one thing is clear: Iran and Saudi Arabia are on a collision course that could eventually break the world's largest oil producing group apart.Faced with Saudi Arabia's stubborn determination to keep Opec pumping at full choke, Iran's oil minister Bijan Zanganeh has upped the stakes in this game of double bluff between the Middle East's two dominant political forces. He has confidently stated that the Islamic Republic will pump an additional 1m barrels per day (bpd) of crude within months of nuclear sanctions being lifted by the West.The move - assuming that Iran agrees to all US demands to curb its nuclear ambitions by the deadline on June 30 - effectively fires the starting gun in a race among Opec's most powerful producers including Iran, Saudi Arabia and Iraq to gain a bigger share of the market. It is a race that will be run regardless of the havoc it will cause within the group's smaller producers who face complete economic meltdown.Tensions are running high between oil giants Iran and Saudi Arabia-Instead of emphasising consensus and a mutually beneficial production policy to work for all of Opec's 12 members, Mr Al-Naimi now talks in terms of countries being "free to do what they want". This begs the question: what is the point of Opec if it is just a platform for Iran and Saudi Arabia to wage economic war against each other to the detriment of all the group’s other members?In Riyadh, the country’s new ruler, King Salman bin Abdulaziz al-Saud, faces the risk of his family’s closest allies, the US, suddenly changing sides. It could see them shifting their support to an increasingly reformist Iran should a deal to lift sanctions be reached this summer. Such a move could see political power in the Middle East tilt irreversibly towards the Shia Muslim majority in the Gulf region. That could ultimately threaten the future of the House of Saud.Saudi Arabia’s political dilemma has been further complicated by Iranian support of Houthi rebels which it is fighting in Yemen. It also faces encroachment within its own borders of terrorists connected to the Islamic State of Iraq and the Levant (Isil). Throughout the region, the kingdom and its Sunni allies appear under siege, while in Iraq only Iranian forces appear capable of holding back the Sunni-Muslim Isil horde.It is becoming increasingly apparent that Saudi Arabia’s insistence last November, to force Opec to essentially allow oil prices to fall, was a move aimed not at crippling US shale oil producers; this has failed to happen, with America’s oil output now at a 44-year record high. Instead, it was to allow Saudi Arabia to increase its own production to levels well above 10m bpd, while impoverishing most of its partners in Opec and, most notably, its major rival in the Middle East, Iran.Sanctions against Iran had already exacted a heavy price in Tehran before the blow of the current oil price slump hit home. President Hassan Rouhani said last October that income from crude sales had fallen by 30pc. That was before the price of crude slumped to a multi-year low around $43 per barrel. Starved of the foreign currency earnings from oil, Iran has found it increasingly tough to support its allies in the Middle East, who also happen to be Saudi Arabia’s natural enemies among Shia Islam.However, it’s not just Iran which has felt the pain of Saudi Arabia’s willingness to tolerate weaker oil prices in return for freedom to pump more crude. Oil revenues for the whole of Opec are to fall by 46pc this year to around $446bn (£291bn), according to the Energy Information Administration. Even with a small recovery in prices this year, Opec producers such as Nigeria, Venezuela and Algeria are being pushed to breaking point by the civil war being waged by the group’s most powerful members.Nigeria’s new President, Muhammadu Buhari, warned just days before the start of the Opec meetings in Vienna that the African country’s economy was in “deep trouble” because of the slump in oil prices, caused largely by Saudi Arabia’s policies. However, because of the chaos now gripping Nigeria’s oil industry, the country was unable to send a minister to present its case in Austria. Its former petroleum minister, Diezani Alison-Madueke, faces corruption allegations.Saudi Arabia and its close knit Gulf allies within Opec – such as the United Arab Emirates and Kuwait – are in the unique position of having vast foreign currency holdings and sovereign wealth investments they can draw on to see them through the current spell of weaker prices. With over $800bn in foreign currency reserves, Riyadh can absorb the fiscal devastation that is being caused by lower prices.Iran has also tried to break Saudi Arabia’s domination of Opec behind the scenes. Officials from the Islamic Republic approached Abdullah bin Hamad al-Attiyah, Qatar’s respected former oil minister, to replace the current secretary general of Opec, Abdalla Salem el-Badri. After nine years at the head of the organisation, Mr el-Badri is thought to be too sympathetic to Saudi Arabia’s cause within the group.Faced with being swamped by a tidal wave of Saudi crude and its overbearing influence within Opec, Iran has decided to respond by signalling its intention to increase supplies should it be freed from the shackles of sanctions. This it appears willing to do regardless of Opec’s decision to leave its production ceiling unchanged at 30m bpd. A flood of Iranian crude flowing into an already oversupplied market would exert overwhelming downward pressure on oil prices, which continue to trade at around 40pc below last year's peak due to a global glut of supply.Of course, Opec has endured even tougher times and deeper divisions among its members before. The group survived the tensions caused by Iran-Iraq war and the turmoil of the Arab Spring. However, the tension between Iran and Saudi Arabia at Opec is now palpable and it is only a matter of time before these two oil giants come to blows.
Crude Oil Climbs as U.S. Equity Rebound Bolsters Demand Optimism-Mark Shenk-Updated on September 2, 2015 — 3:28 PM EDT-bloomberg
Oil climbed as a rebound in U.S. equities bolstered optimism that economic growth will strengthen in the world’s biggest crude-consuming nation.Futures climbed 1.9 percent in New York as the Standard & Poor’s 500 Index ended a two-day rout. Prices tumbled earlier after the Energy Information Administration said U.S. crude supplies rose 4.67 million barrels last week, the most since April. A 900,000-barrel gain was projected by analysts surveyed by Bloomberg. Refineries processing crude reduced operating rates as the summer driving season neared its end.Futures tumbled 7.7 percent Tuesday after the biggest three-day rally in 25 years amid speculation that a global glut that drove prices into a bear market will be prolonged as China’s economy slows. Crude will trade at $40 to $60 a barrel into 2016 as rising supplies overwhelm demand, according to Ian Taylor, chief executive officer of Vitol Group BV, the biggest independent oil trader."There’s a lot of price chasing going on," Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. "Some traders are probably taking a cue from the S&P, but that’s a risky strategy given the physical fundamentals and the likelihood of additional Iranian supply, which seems to be rising by the day."Market Movement-West Texas Intermediate for October delivery rose 84 cents to settle at $46.25 a barrel on the New York Mercantile Exchange. Futures traded in a $3.56 range.Brent for October settlement increased 94 cents, or 1.9 percent, to $50.50 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $4.25 premium to WTI.The Chicago Board Options Exchange Crude Oil Volatility Index climbed to the highest level since March 17 on Tuesday. The gauge tracks hedging costs on the U.S. Oil Fund, the biggest exchange-traded fund tracking WTI."There’s a lot of froth, a lot of short-term swings based on very little," Evans said. "This is a lot of churn."Crude inventories rose to 455.4 million barrels, leaving supplies almost 100 million barrels above the five-year seasonal average.Coiled Spring-"This market is like coiled spring waiting for a piece of data to move materially on," said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $16.9 billion. "A resolution to the issues in China isn’t expected anytime soon, inventories are high and not going away anytime soon and I don’t think OPEC will take any action."Refineries operated at 92.8 percent of their capacity, down 1.7 percentage points. U.S. refiners cut operating rates during September in nine of the past 10 years as gasoline demand decreases with the end of summer’s driving season on Labor Day, which falls on Sept. 7 this year.Iranian Plans-Iran will boost output by 1 million barrels a day as sanctions on its exports are removed, Oil Minister Bijan Namdar Zanganeh said. The fourth-biggest member of the Organization of Petroleum Exporting Countries plans to pump 3.8 million to 3.9 million barrels of oil a day by March, Zanganeh said in an interview in Tehran."We’re volatile because there are competing forces at work in the market," Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone. "The Iranian oil minister said they would raise production at any cost, which is weighing heavily on the market while U.S. production is falling and refinery maintenance season is pending."
When Will It End? History Shows U.S. Stocks Rebound Needs Months-Anna-Louise Jackson-September 2, 2015 — 2:55 PM EDT-bloomberg
Investors conditioned to expect quick recoveries from equity stumbles may need patience after U.S. stocks fell into the first correction in four years.Judging by prior 10 percent drops in this bull market, it could take until the end of 2015 as investors await a return to levels last seen in May. The gauge has fallen as much as 12 percent since reaching a high that month.The S&P 500’s rally that began in March 2009 has been marked by two previous corrections: a 16 percent selloff from April to July in 2010, and a 19 percent slump over seven months a year later. The benchmark group recovered within about four months of each, so if history is any guide, the market may not be back at its May peak until late December.Looking back at the 25 bull-market corrections since 1950, the one happening now “looks pretty run-of-the-mill,” said Brian Jacobsen, who helps oversee $250 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. The median recovery time in those cases has been about 90 days from the trough.If the current rout’s low of 1,867.61 on Aug. 25 holds, Jacobsen’s data suggest the market could be back to its May record “around the time we’re all gathered around tables for Thanksgiving and Christmas,” he said.Living through the rebound will require a strong stomach as swings in stocks double from earlier in the year, according to Jacobsen’s analysis.“The uniform message is the recovery can be very bumpy,” he said in a phone interview. “It moves in fits and starts. We could be looking at heightened volatility in the markets until about Christmas.”Others are even more optimistic. The S&P 500 will end the year at 2,200, according to the median estimate of 21 strategists at brokerages tracked by Bloomberg. That’s 3.2 percent above the May peak of 2,130.82, and 15 percent from yesterday’s close.“The historical trading pattern shows that the S&P 500 typically recovers fully within 3-4 months following the end of a correction,” David Kostin of Goldman Sachs Group Inc. wrote in an Aug. 28 report to clients. “Based on this template, S&P 500 would approach its all-time high in December 2015,” he said, while reiterating his year-end target of 2,100.Three of the strategists say the benchmark index won’t make it back to the record this year, while Jefferies Group LLC’s Sean Darby sees the market declining from its current level. Other skeptics question whether the S&P 500 has found its bottom yet, making it premature to start counting the days to a recovery.“My gut instinct is that we may not have seen the end of this,” David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., said in a phone interview. His firm oversees about $811 billion. “I’m not convinced the downside volatility is over.”Among the most optimistic strategists is Jonathan Golub of RBC Capital Markets LLC. “When the market turns, it’s going to happen much more aggressively than people think,” he said in an Aug. 26 interview on Bloomberg Television. Within the next three months, “we should’ve made up all of the loss that we’ve had.”
Welcome to Quantitative Tightening as $12 Trillion Reserves Fall-Simon Kennedy-Updated on September 2, 2015 — 12:27 PM EDT-bloomberg
The great global monetary tightening of 2015 is under way, but it’s not being led by the Federal Reserve. Even as U.S. policy makers ponder whether to raise interest rates this month, one recent source of central bank liquidity in financial markets is drying up and the loss of it partly explains August’s trading volatility. Behind the drawdown are the foreign exchange reserves run by the central banks. Bolstered following financial crises in the late 1990s as a buffer against capital outflows and falling currencies, such hoards fell to $11.43 trillion in the first quarter from a peak of $11.98 trillion in the middle of last year, according to the International Monetary Fund.Driving the decline is a combination of forces including the economic slowdown and recent devaluation in China, the Fed’s pending rate hike, the collapse of oil and decisions in Switzerland and Japan to cease intervening in currencies.Each means central banks are either paring their reserves to offset an exit of capital or manage currencies, have less money flowing into their economies to salt away or no longer need to sit on as much. Whichever it is, the shrinking of reserves means much less money flowing into the financial system given authorities tended to recycle their cash piles into local currency or liquid assets such as bonds.In the words of Deutsche Bank AG strategist George Saravelos and colleagues, welcome to the world of “quantitative tightening.”Reserve Peak-They predict 2015 will mark the peak of reserve accumulation after two decades of growth with China in the vanguard as its new currency regime means it has to pare reserves to avoid a freefall in the yuan. It has already reduced its holdings to $3.65 trillion from $3.99 trillion in 2014.For markets, Deutsche Bank says less reserve accumulation should mean higher bond yields and a rising dollar against rivals including the euro and yen. There are implications too for other central banks if the resulting rise in market borrowing costs hampers their ability to tighten monetary policy.“This force is likely to be a persistent headwind towards developed market central banks’ exit from unconventional policy in coming years, representing an additional source of uncertainty in the global economy,” Saravelos and colleagues in a report to clients on Tuesday. “The path to ‘normalization’ will likely remain slow and fraught with difficulty.”