ARE WE SURPRISED? AHHHH NOOOOO — IT HAS BEGUN!
dnari131 wrote: Brent crude falls to lowest since 2008
Posted on December 11, 2015 | By Bloomberg
Ty Wright / Bloomberg Samson Resources Corp.
Aggregate debt: $4.3 billion
Oil declined to the lowest level since 2008 in London amid estimates that OPEC’s decision to effectively scrap production targets will keep the market oversupplied.
Brent futures declined as much as 2.1 percent for a sixth consecutive loss. The global surplus will persist at least until late 2016 as demand growth slows and the Organization of Petroleum Exporting Countries shows “renewed determination” to maximize production, the International Energy Agency said Friday. The group chose not to curb output at its Dec. 4 meeting.
Oil prices have slumped to levels last seen during the global financial crisis as a result of OPEC’s strategy to defend market share against higher-cost producers. The group’s production rose to a three-year high in November, it said in a report Thursday, as surging Iraqi volumes more than offset a pullback by Saudi Arabia.
Brent for January settlement declined as much as 83 cents to $38.90 a barrel on the London-based ICE Futures Europe exchange, the lowest since Dec. 31, 2008, and traded for $39.13 a barrel at 11:42 a.m. local time. It has decreased 9.2 percent this week. The European benchmark crude was at a premium of $2.82 to WTI.
West Texas Intermediate for January delivery was at $36.32 a barrel on the New York Mercantile Exchange, down 44 cents. The contract dropped 40 cents to $36.76 on Thursday, the lowest close since February 2009. The volume of all futures traded was about 29 percent above the 100-day average.
OPEC is displaying hardened resolve to maintain sales volumes even as prices fall in an oversupplied market, the IEA said Friday in its monthly report. While its policy is hitting rivals, triggering the steepest drop in non-OPEC supply since 1992, world oil inventories will likely swell further once Iran restores exports on the completion of a deal to lift sanctions, it said.
ConocoPhillips will reduce capital spending by 25 percent next year to protect the highest dividend yield among major U.S. producers, the Houston-based company said Thursday.
Its plan to cut spending to $7.7 billion comes a day after Chevron Corp. disclosed a 2016 budget 24 percent smaller than this year’s. Together, the reductions by the two companies totaled $10.9 billion, enough to rent 10 deepwater drilling rigs every day for more than half a decade.
Russia is preparing for the possibility that low crude prices are here to stay as competition between oil and other fuels such as natural gas intensifies. The nation sees no reason for crude to rise above $50 a barrel anytime soon and predicts it will remain in a $40 to $60 range over the next seven years, Deputy Finance Minister Maxim Oreshkin said at a Moscow conference organized by Vedomosti.
Seventeen of 30 analysts and traders, or 57 percent, were bearish on WTI in a Bloomberg survey Thursday. Five respondents were bullish while eight were neutral.
Post by backdoc » December 11th, 2015, 2:13 pm:
LOOKS LIKE THE SAUDIS MAY HAVE STOLEN SOME OF IRANS OIL MARKET CONTRACTS! MMMMM
AS I’VE BEEN TRACKING FOR A LONG TIME NOW THE BOND MARKET IS GETTING WEAK AT THE KNEES! THE JUNK BOND MARKET IS IN TROUBLE.
ALREADY ONE FIRM IS ALREADY HALTING REDEMPTIONS PER CNBC! I LOOK FOR THIS TO SPREAD QUICKLY INTO NEXT WEEK AT THE FED MTG.
THE TWO BUDGETS, IRAQ AND THE U.S. ARE INSEPARABLY LINKED NOW AS WE HEAD INTO THE ASSET BACKED YEAR 2016!
AS I’VE SAID FOR SOME TIME NOW LOOK FOR OIL TO MAKE ITS FINAL PLUNGE AS MARKETS CRASH IN THE COMING DAYS!
HE CRACKS IN THE ICE ARE GETTING WIDER WITH CHINA DE-PEGGING FROM THE DOLLAR!
IN JUNE OF 1981 THE SAUDI RIAL PEGGED TO THE DOLLAR. WE HAVE SEEN THIS UNIVERSAL CURRENCY, “BLACK GOLD”, CONTROL EVERY CURRENCY IN THE WORLD THROUGH THE PETRO DOLLAR! HAS ITS SERVED ITS PURPOSE? MMMM
WILL EARLY COMMENTS SEEN BY GOLDMAN SACHS BE RIGHT? WILL THE DOLLAR DEPEG FROM OIL?
WILL TPP NOW TAKE ITS PLACE CONTROLLING ALL CURRENCIES AS WELL AS MANAGING SUPPLY, DEMAND, AND PRICING WORLD-WIDE? MMMM
TODAY WE SEE THE MOST POPULAR U.S. CANDIDATE ACCORDING TO SOME POLLS IN A SEEMINGLY VERBAL WAR ON IMMIGRATION COMMENTS MADE.
WILL THIS ADD FUEL TO THE FIRE AS THE SAUDI PRINCE ALAWEED GOES ON THE ATTACK BY SAYING HE SHOULD DROP OUT OF THE RACE? MMMM
WHAT A COMPLICATED BEGINNING TO THE END OF DAYS! DOC IMO
China’s Central Bank Signals Intention to Loosen Yuan’s Peg to Dollar
PBOC says it makes more sense to measure yuan’s exchange rate against basket of currencies
Updated Dec. 11, 2015 12:53 p.m. ET
BEIJING—China’s central bank signaled its intention to change the way it manages the yuan’s value by potentially easing its loose peg to the U.S. dollar and instead letting it track the currencies of its broader trading partners.
In an editorial posted on its website Friday night, the People’s Bank of China said the yuan’s exchange rate would be better measured against a basket of currencies rather than the dollar alone.
The foreign-exchange trading system run by the central bank started calculating a yuan exchange-rate index Friday to provide a regular reference against a basket of currencies, the article said.
It isn’t clear whether or when China would make such a move, which it has discussed in the past. But any shift away from the dollar could have broad repercussions for currency markets—such as reducing China’s demand for dollars—as well as for investors and global trade.
It would also demonstrate China’s determination to make the yuan a global currency, with a value determined more in line with other major currencies, and to step out of the dollar’s shadow as the world’s de facto currency.
Referencing the yuan against a basket of currencies now would help keep it “stable at a reasonable equilibrium,” the editorial posted by the central bank said.
The central bank didn’t offer additional details on the makeup of the basket or a timetable for when it actually would change the way it manages the yuan.
As far back as 2005 it discussed pegging the yuan to a basket of currencies, and five years ago made similar comments. Still, the yuan continued to closely track the value of the U.S. dollar, even as other emerging-market and Asian currencies endured more volatile swings during events like the global financial crisis.
China has reasons why it would consider changing its currency management this time. The yuan faces growing pressure to depreciate versus the dollar due to potential higher U.S. interest rates and China’s slowing economic growth has encouraged investors to find places other than China to park their money.
On Friday, the yuan recorded its biggest weekly drop against the dollar—about 0.83%—since a surprise devaluation on Aug. 11. A dollar bought 6.4553 yuan based on Friday’s closing price published by the China Foreign Exchange Trade System.
In recent days, the dollar has been strengthening against the world’s major currencies as investors expect the Federal Reserve to raise interest rates next week.
Longer-term, a basket could indicate China is sticking with its pledge to make its exchange rate move in accordance to the markets. That would help it increase global use of the yuan, another of its goals.
Last month the International Monetary Fund decided to add the yuan to its basket of reserve currencies, which will put more pressure on China’s central bank to bow to market forces.
“Managing the yuan’s value against a basket of currencies rather than just the U.S. dollar is an economically astute move that will facilitate a smoother transition to a flexible, market-determined exchange rate,” said Eswar Prasad, a Cornell University professor and former China head for the IMF.
The move would help Chinese exporters who have seen their goods become less competitive in markets like Europe as the yuan has followed the dollar’s rise against other currencies.
It also would make China less sensitive to the decisions of the U.S. Federal Reserve, which can hurt the value of China’s holdings of dollar-denominated assets when it moves to weaken the dollar.
Potential decoupling isn’t without risks to China. Most investors still look at the dollar-yuan exchange rate when making their China-focused investment decisions, said Zhu Chaoping, China economist at UOB Kay Hian, a Singapore-based brokerage.
“Loosening the yuan’s peg to the dollar now could add to investors’ worry over the yuan’s stability,” he said. “The timing is not necessarily good.”
For now, China is letting the yuan gradually weaken against the dollar. The PBOC is testing how far it can let the yuan depreciate without setting off a sharp selloff like the one that followed the yuan’s surprise devaluation on Aug. 11, people close to the central bank have said.
Still, the PBOC is fighting a difficult battle. On one hand, China’s slowing economy is pressuring the central bank to weaken the yuan to help revive growth. On the other hand, China’s leadership has repeatedly pledged to keep the currency stable in a bid to enhance the yuan’s global appeal—a stated national goal.
The central bank already had spent hundreds of billions of dollars defending the yuan before the IMF added it to the fund’s reserve-currency basket. It would become increasingly costly for China if it continues to do so, many analysts say.
“Now with the IMF decision behind it, the central bank feels less pressured to continue bolstering the yuan,” a senior executive at one of China’s top four state-owned banks said.
Many investors and analysts now think the yuan is overvalued relative to its purchasing power, forcing Chinese companies to cut prices and lower wages to stay competitive, trends that could cause the economy to slide into deflation.
The Chinese currency remains a relatively strong currency by many measures. Since Aug. 11, when the central bank unexpectedly devalued the yuan by about 2%, the currency has fallen 3% against the dollar but has strengthened against the euro and weakened only slightly against a basket of currencies.
Zhou Hao, a senior economist at Commerzbank AG, said given the yuan’s significant appreciation versus the dollar in the past decade, “China is likely to accept more softness in [the] yuan going forward to gain more export competitiveness.”