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(Bull) Market April 2021 (2 Viewers)

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Oil news:


- U.S. energy consumption declined by 93 quadrillion BTUs in 2020, a 7% decline from the year before. That is the largest annual decline since EIA data collection began back in 1949.

- By comparison, U.S. energy consumption declined by 5% from the global financial crisis in 2008-2009.

- Unsurprisingly, transportation took the biggest hit, with a 15% decline in energy use.

Market Movers

- Occidental Petroleum (NYSE: OXY) plans to build a pilot bio-ethylene plant, using sequestered CO2.

- Canada’s Inter Pipeline Ltd (TSE: IPL) received C$408 million from Alberta to build its Heartland Petrochemical Complex.

- BP (NYSE: BP) said it reached its $35 billion net debt target ahead of schedule and will provide an update on share buybacks later this month.

Tuesday Aril 6, 2021

Oil prices sank on Monday as coronavirus cases surged around the world, leading to renewed lockdowns. The city of Mumbai went into lockdown, suggesting a forthcoming hit to oil demand in India. Oil prices rebounded on Tuesday, although the trend is not exactly bullish, with WTI stuck at around $60.

OPEC+ bets on demand. The loosening of OPEC+ production cuts shows the group believes demand will continue to rise.

Oil bounces on stronger economic outlook. The IMF upgraded its 2021 GDP forecast for the second time in three months, noting the speed of the vaccine rollout. The U.S. is now becoming the focus and engine of global economic recovery with a fast vaccine rollout and substantial fiscal stimulus. “We’ve had these wild moves for the better part of the past ten days,” Bob Yawger, head of the futures division at Mizuho Securities, told Bloomberg. “There’s a recovering economic picture, with an improving vaccine situation in the U.S., on one side of the equation. It’s supply versus demand here for control of the market.”

Goldman Sachs cuts Chevron. Goldman Sachs downgraded Chevron (NYSE: CVX) to Neutral from Buy, noting that the oil major already trades a premium to some of its peers.

Exxon sues Energy Transfer over pipeline dispute. ExxonMobil (NYSE: XOM) subsidiary XTO Energy is suing Energy Transfer LP (NYSE: ET) for disputed payments on the Dakota Access pipeline. The suit alleges that Energy Transfer overcharged XTO when the oil producer shifted oil flows to another pipeline.

Soaring methane as drilling bounces back. U.S. oil production remains about 2 million bpd lower than its pre-pandemic levels. Still, methane emissions are already back to their levels from before the coronavirus.

U.S. and Iran discuss reviving nuclear deal. After a rocky start, the U.S. and Iran are making progress on a diplomatic thaw. Iranian oil exports have already been inching up this year, and a breakthrough in talks could see even more.

Iran oil won’t shock markets. “With OPEC+ appearing to manage its exit for now, supply concerns will likely shift to the potential return of Iran to the JCPOA (Joint Comprehensive Plan of Action) agreement,” analysts at Goldman Sachs said in a note on Monday.

India cuts oil purchases from Saudi Arabia after price hike. India will buy some 36 percent less crude oil from Saudi Arabia next month, unnamed sources told Reuters soon after the Kingdom said it would increase its official selling price for oil for its Asian buyers.

European battery majors emerging. Europe is scrambling to build out battery manufacturing capacity as EV sales pick up. Backed by billions in EU subsidies for both EVs and battery manufacturing, competition is heating up between Northvolt AB in Sweden, Britishvolt Ltd. and France’s Automotive Cells Co., and Tesla (NASDAQ: TSLA) and Volkswagen (OTCMKTS: VWAGY). BNEF forecasts Europe’s share of battery manufacturing rising from 7% in 2020 to 31% by 2030.

Lawsuits from Texas freeze proliferate. At least 30 lawsuits related to natural gas contracts have been filed in four states since the February freeze, according to the Wall Street Journal.

Pioneer’s takeover of DoublePoint shows shale’s signs of life. The $6.4 billion acquisition of DoublePoint Energy by Pioneer Natural Resources (NYSE: PXD) is the largest purchase of a private shale driller since 2011. The deal is a sign of further consolidation in the U.S. shale industry, but also one that shows “signs of life,” according to the Wall Street Journal.

JPMorgan cuts Pioneer. JPMorgan cut Pioneer Natural Resources (NYSE: PXD) to Neutral from Buy following the $6.4 billion takeover of DoublePoint Energy. The bank said that the acquisition “fits like a glove” and would improve cash flow, but also noted that the purchase price was high.

Shell invests in aviation fuel maker. Royal Dutch Shell (NYSE: RDS.A) has invested in a sustainable fuels company LanzaJet, which is building an “alcohol-to-jet” facility to produce sustainable jet fuel.

Renewables overtake nuclear worldwide. Renewable energy generated more electricity around the world in 2019 than nuclear, a milestone that is unlikely to be reversed. A separate report finds that renewables account for 82% of total capacity additions worldwide last year.

European companies saw energy transition coming. Enel (BIT: ENEL) and Iberdrola (BME: IBE) began their energy transitions years ago, making them now powerhouses in renewable energy. That puts them ahead of the game compared to the oil majors. Reuters looks at how this unfolded.


View attachment 122460


jog on
duc
1617742885522.png

An interesting first graph: in 2020, with covid, if you exclude US and Europe, world oil consumption did not even decrease so we should not be surprised to see even stronger demand in coming year regardless of US and EU green battle.
Time will tell but that would explain the OPEC confidence in raising production caps.
Note: @ducati916
Mr Ducati : is this posting of mine just noise in your thread or does it add some value? I can abstain if you consider these out of place👍
 
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View attachment 122461
An interesting first graph: in 2020, with covid, if you exclude US and Europe, world oil consumption did not even decrease so we should not be surprised to see even stronger demand in coming year regardless of US and EU green battle.
Time will tell but that would explain the OPEC confidence in raising production caps.
Note: @ducati916
Mr Ducati : is this posting of mine just noise in your thread or does it add some value? I can abstain if you consider these out of place👍


Absolutely post!

It gets very boring talking to oneself.

For tomorrow, look at the VIX: I wouldn't be surprised to see an uptick or two and stock sectors or the overall market, get a little jumpier.

Screen Shot 2021-04-07 at 12.49.29 PM.png


jog on
duc
 
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The EOD charts are cautionary:

The breadth just isn't there. This sort of divergence is never good. Add in the range issue in NYMO, stocks are losing some momentum. And the PUT/CALL ratio is at an extreme.

Screen Shot 2021-04-08 at 6.27.30 AM.png
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Today, its choppy again: Energy coming back, but nothing much moving.

Screen Shot 2021-04-08 at 6.08.43 AM.png


Mr flippe-floppe-flye:

Screen Shot 2021-04-08 at 6.18.06 AM.png


Cryptos are having a (rare) bad day:


Screen Shot 2021-04-08 at 6.34.42 AM.png



The market just has an eerie feeling to it.

Screen Shot 2021-04-08 at 6.36.39 AM.png


Nothing concrete from stocks.

Bond yields are off. Even at the short end, which pushes them into negative nominal territory. That is a run to safety. That is something that I pay attention to.

Screen Shot 2021-04-08 at 6.38.38 AM.png


VIX is down: but just too low.

Screen Shot 2021-04-08 at 6.41.51 AM.png


Caution is the better part of valour in the current circumstances.


jog on
duc
 
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Things are seriously overstretched. Warning signs everywhere. Timing is of course the crucial question.

The market sitting at or near all-time highs.

Screen Shot 2021-04-09 at 5.44.50 AM.png


Underneath those all-time highs, the internals continue to flash warning signs:

The VIX at its most complacent. But stretched.

Screen Shot 2021-04-09 at 5.46.54 AM.png


NYMO turning down while the market trades higher.

Screen Shot 2021-04-09 at 5.47.48 AM.png


Only 70% of stocks are above their 50 day EMA. The trend is concerning.

Screen Shot 2021-04-09 at 5.48.13 AM.png


Yesterday, lots of PUT buying. We have seen recently that the volumes of Options have gone through the roof. This market can and does have an effect on the underlying market.



Screen Shot 2021-04-09 at 5.48.44 AM.png


Gold is (and particularly the Miners, is looking a wee bit bullish.

Screen Shot 2021-04-09 at 6.02.42 AM.png


10 yr Bonds and the long end of the curve have been losing yield as my model predicted. Of far more concern is the short end of the curve:

Screen Shot 2021-04-09 at 5.53.45 AM.png


Screen Shot 2021-04-09 at 5.53.18 AM.png


This is a classic run to safety. DXY, all set to resume its loss of value has also paused. Why? Does it really matter? Pick your own causation. For the moment, the internals and associated markets are nervous. Will it amount to anything? Who knows.

Mr flippe-floppe-flye:

Screen Shot 2021-04-09 at 5.30.42 AM.png


Screen Shot 2021-04-09 at 5.29.31 AM.png


And a chart on social media use:

Screen Shot 2021-04-09 at 5.27.36 AM.png


I like and use YouTube, the rest, IMO, garbage.

jog on
duc
 
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An interesting first graph: in 2020, with covid, if you exclude US and Europe, world oil consumption did not even decrease so we should not be surprised to see even stronger demand in coming year regardless of US and EU green battle.
Time will tell but that would explain the OPEC confidence in raising production caps.
Adding to that, US oil production hasn't rebounded to pre-COVID levels and remains down significantly.

There's an abundance of information here:


No point me repeating it all but if you just want the short version well then scroll through that article and look at the charts. There's a lot of them but pretty much all show the same basic pattern of a steep dive early last year followed by a limited rebound which has now faltered.

Note that Tight Oil is what most call "shale".

1617908154506.png


Conventional oil - that's oil which isn't shale, isn't tar sands needing to be mined, etc. What most people think of as oil - drill a well in the ground to access it.

1617908173654.png

1617908320828.png


There's a lot of charts in the link but all the same basic pattern. Steep plunge, partial recovery which has run out of go.

I'll leave others to work out what that might mean for the price but on the physical supply side, there's no ongoing production boom in the USA.

And no, it's not all due to the Texas power failure:

1617908588562.png


The US isn't the whole world of course but it's extremely significant when it comes to oil since, pre-COVID, it was the largest producer marginally ahead of Russia and Saudi Arabia. Crucially, the US has also been the primary source of production growth at the global level in recent years. So it's not the world but it's significant. :2twocents
 
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So starting with oil news:

Friday, April 9th, 2021

Oil prices are set to post a loss this week, following several days of up-and-down trading. The story is the same – a jockeying between market tightness and concerns about demand amid spreading Covid cases and lockdown measures.

Biden admin to decide DAPL’s fate. The Army Corps of Engineers is scheduled to appear in a U.S. court on Friday to decide the fate of the Dakota Access Pipeline. Last year, a court vacated a critical permit issued by the Army Corps during the first days of the Trump administration. The pipeline was allowed to remain online despite lacking the permit, but the court ordered the Army Corps to conduct a more thorough environmental assessment and come up with a new justification for continued operations of the pipeline, or to shut it down. The Army Corps, now under President Biden, has been silent on the issue but will make a decision on Friday.

Permian output to rise. “The number of completed wells in the Permian basin during the first quarter of 2021 exceeded the required output maintenance level, so oil production is set to rise in the current quarter – but will likely slow again later in the year,” Rystad Energy said in a note.

Exxon explores the sale of its polymer business. ExxonMobil (NYSE: XOM) is exploring a sale of its Advanced Elastomer Systems division for as much as $800 million.

Repsol to furlough refinery staff on energy transition concerns. Repsol (BME: REP) plans to furlough 830 workers at two refineries citing lower demand and uncertainty regarding the energy transition.

Shell threatens to leave API and other industry groups. Royal Dutch Shell (NYSE: RDS.A) is threatening to leave the American Petroleum Institute, the Texas Oil & Gas Association and the U.S. Chamber of Commerce unless they take a stronger stance on climate change. API and the Chamber are the most powerful oil and business lobby groups in the country, respectively. Earlier this year, Total (NYSE: TOT) left API for similar reasons.

Shell to turn an upstream profit. Royal Dutch Shell (NYSE: RDS.A) said that its upstream unit would return to profitability in the first quarter for the first time since the start of the pandemic.

Aramco weighs pipeline sale for $10 billion. Saudi Aramco (TADAWUL: 2222) is in advanced talks to sell up to a 49% stake in its oil pipelines to a consortium of U.S., Chinese and local investors.

Oil majors’ rush for offshore wind crowds sector. Oil majors are rushing into offshore wind auctions in the North Sea, pushing up auction prices and crowding out big developers.

Jet fuel demand showing signs of life. Jet fuel demand is picking up, according to refiners.

EPA to propose new auto rules by July. The EPA said it would propose new fuel economy standards for cars and light-duty trucks by the end of July. The agency is rewriting Trump-era rules that weakened fuel efficiency.

EIA cuts oil production forecast. U.S. oil output may average 11.04 million barrels day this year, according to the EIA, down from last month’s forecast at 11.15 million after the Texas grid crisis. The agency lowered its 2022 forecast by 100,000 bpd.

Norway’s sovereign wealth fund invests in clean energy. Norway’s $1.3 trillion wealth fund made its first investment in clean energy infrastructure, buying 50% of a 752-MW offshore wind farm.

GM to make an electric pickup. GM (NYSE: GM) said it would make an electric version of its Chevy Silverado pickup truck.

White House considers 50% climate target. The Biden administration is considering announcing a goal of a 50% reduction in GHG emissions by 2030 (from a 2005 baseline), which would double the previous commitment made under the Obama administration. The U.S. is set to host an international summit later this month, so the announcement could occur in advance of those talks.

Mexico refinery explosion. A massive fire erupted on Wednesday evening at an oil refinery operated by Petroleos Mexicanos (Pemex) in the city of Minatitlan in the eastern Mexican state of Veracruz

Investors rush back to oil stocks. Despite the surge of ESG-related equities, investors are flocking back to oil and gas stocks, at least for now.

Phillips 66 cancels Bakken/Rockies pipeline. Phillips 66 Partners LP (NYSE: PSXP) canceled the Liberty Pipeline, a proposed oil pipeline that would have carried Bakken and Rockies oil to Cushing, OK. The company took a $180 to $210 million impairment.

Equinor and SSE plan the first hydrogen plant in the UK. Equinor (NYSE: EQNR) and SSE Plc are working to develop the world’s first hydrogen power plant in the UK.

White House considers Tellurian executive for Nord Stream negotiations. The Biden administration is considering appointing Amos Hochstein as a special envoy to negotiate the halting of the Nord Stream 2 pipeline. Hochstein was formerly in the State Department under the Obama administration before leaving to work for Tellurian (NASDAQ: TELL).

BlackRock raises $4.8 billion for renewables. BlackRock Inc. has raised $4.8 billion to invest in renewables, double its initial target. Meanwhile, Bank of America said it increased to $1 trillion its goal of financing low-carbon projects.

Biden to announce climate disclosure rule. U.S. climate envoy John Kerry said at an IMF event on Wednesday that the Biden administration “is poised to issue an executive order that will require disclosure” of climate change-related risks by publicly traded companies. “It’s going to change allocation of capital,” he said. Bloomberg reports some details on that executive order.

U.S. Intelligence: Climate change to drive instability. A new report from the U.S. National Intelligence Council says that climate-driven chaos will fuel global instability and migration in the future.

This week ends with Tech. on top and Energy on the bottom:

Screen Shot 2021-04-10 at 6.19.02 AM.png


Bonds & Commodities have been choppy all week:

Screen Shot 2021-04-10 at 6.19.28 AM.png
Screen Shot 2021-04-10 at 6.19.38 AM.png


Market valuations horribly stretched, but that could continue for quite some time.

Screen Shot 2021-04-09 at 4.05.08 PM.png


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News:

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And Mr flippe-floppe-flye:

Screen Shot 2021-04-10 at 6.31.24 AM.png



Nothing really much to add from yesterday. Mostly noise. No real signal, internals are weak. Various markets are positioning for what they believe might eventuate, but there seems to be low commitment to anything. The Tech. end of the market was the place to be this week, predicated largely on the 10yr coming off of the boil.

The 10yr coming off of the boil is essentially the market discounting the inflation fear. As can be seen, inflation currently is not a thing. With commodities (oil) having a bad week, the market can also lower rates, which it has.

This is potentially (enter your own causation here) in response to lowered growth expectations going forward. Looking @Smurf1976 charts yesterday, I'm taking it that the market believes that the Arabs can fulfil the demand lost from US supply as and when needed. I guess we'll find out when we find out.

Rising (fast) commodities would have been a headwind to stocks. With that fear allayed (for the moment) the bull market is safe to move forward on the macro-fundamentals: the internals are stretched, which means we are still prone to fast sell-offs. For the moment however, that becomes a BTD opportunity.



Screen Shot 2021-04-10 at 7.07.27 AM.png


The one remaining issue is DXY. If DXY (up today) continues weakness and sells off, this will again raise the inflation thing. I still have DXY as a short. If the sell-off picks up steam and particularly if it breaks the recent low, then I think markets will start to boil.

Often currency trends and flows can have significant lead times, with nothing much (seemingly) occurring during periods of weakness/strength. I don't think this is one of those times.

A hard sell-off in DXY will trigger commodities higher and rates will follow pretty quick. All are bad for stocks, particularly as we have seen Tech. and Tech. related.

Screen Shot 2021-04-10 at 7.19.48 AM.png


So because I am short DXY, I am long gold miners and hedged in stocks. We'll just have to wait and see whether that actually plays out.


jog on
duc
 
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Weekly wrap up:

Looking at the market first:

Commercials are selling less.

Screen Shot 2021-04-11 at 7.37.56 AM.png


Market at all time highs.

PE and Yields and 1 yr comparison:

Screen Shot 2021-04-11 at 7.12.14 AM.png


Screen Shot 2021-04-11 at 7.29.59 AM.png


VIX very low.

Screen Shot 2021-04-11 at 7.31.54 AM.png


Where VIX may go: as you can see, the probabilities don't argue lower.

Screen Shot 2021-04-11 at 7.25.41 AM.png
Screen Shot 2021-04-11 at 7.27.18 AM.png



Commercials also selling less.

Screen Shot 2021-04-11 at 7.32.55 AM.png


Commercials buying less.

Screen Shot 2021-04-11 at 7.36.39 AM.png


Commercials buying less, but the last couple of weeks saw a real turnaround.

Screen Shot 2021-04-11 at 7.37.03 AM.png



The overall impression is that commodities are set to move higher, DXY lower and gold higher. All of which are not great for stocks, which are currently pretty much priced for perfection.

Because these markets are such a mess, all can change tomorrow.






Some 'insider' transactions:
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Screen Shot 2021-04-11 at 7.53.40 AM.png


A biotech. hand grenade. Does it blow up higher? Certainly the insiders and Options market say yes.


jog on
duc
 

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