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Aramco Said to Face Weeks Without Majority of Abqaiq Output

Published: 04:13 17 Sep 2019 EDT

Fuller Treacy: Comments of the Day

Video commentary for September 16th 2019

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area

Some of the topics discussed include: fallout from the Saudi Oil refinery attack, Crude oil jumps, oil services and producers rally, defense sector rallies, cyclicals remain on a recovery trajectory, Treasuries stable, Wall Street quiet, Dollar firm, Japan steady, China steady

 

 

Aramco Said to Face Weeks Without Majority of Abqaiq Output

This article by Anthony DiPaola, Will Kennedy and Javier Blas for Bloomberg may be of interest to subscribers. Here it is in full:

Saudi Aramco faces weeks or months before the majority of supply from the giant Abqaiq plant is restored after this weekend’s devastating aerial attack, according to people familiar with matter.

Aramco is still assessing the state of the plant and the scope of repairs, but the state oil company currently believes less than half of the the plant’s capacity can be restored quickly, the people said, asking not to be identified before an official announcement. It’s a more pessimistic outlook than Aramco had immediately after the incident, they said.

All eyes are on how fast the kingdom can recover from the weekend’s devastating strike, which knocked out roughly 5% of global supply and triggered a record surge in oil prices. The loss of Abqaiq, which handles 5.7 million barrels of oil a day, or about half of Saudi production, is the single worst sudden disruption to the oil market.

Aramco, the world’s largest exporter, is currently supplying customers from its stockpiles, but is asking some buyers to accept different grades. President Trump has said he’s ready to release oil from the U.S. Strategic Petroleum Reserve to ensure ample supply.

Saudi Arabia is also starting idle offshore fields to replace some of the lost production.

 

Eoin Treacy's view

Let’s lay out the questions. The first is just how much geopolitical risk is present and has that been under appreciated by markets? The second is the Khurais field is about equidistant from the border with Iraq and Yemen so how did these drones penetrate air space without being intercepted. The third is what is likely to do well as a result of these events?

 

 

China's Economy Slows Again, Adding Pressure for Policy Action

This article from Bloomberg news may be of interest to subscribers. Here is a section:

Industrial output rose 4.4% from a year earlier in August, the lowest for a single month since 2002, while retail sales came in below expectations. Fixed-asset investment slowed to 5.5% in the first eight months, with the private sector lagging state investment for the 6th month.

The data add support to the argument that policy makers’ efforts to brake the slowing economy aren’t sufficient as the nation grapples with structural downward pressure at home, the risk of yet-higher tariffs on exports to the U.S. and now surging oil prices. Nomura International Ltd. said this all raises the likelihood that the People’s Bank of China will cut its medium-term lending rate on Tuesday.

 

Eoin Treacy's view

China’s monetary and fiscal policy arms are walking a tight wire between overstimulating the property market, which already has bubbly characteristics, versus trying to support flagging growth in the industrial sector which is hurting from the global slowdown and the trade war. The devaluation of the Renminbi is a partial solution but there is a clear need for more conclusive action to support the economy not least because a weaker currency stokes inflation for such a large commodity importer.

 

 

Fast Strike Against GM Breaks Years of UAW Negotiating Tradition

This article by Andrew Wallender for Bloomberg may be of interest to subscribers. Here is a section:

“I think that they were just very impatient in this round of negotiations,” said Marick Masters, a management professor and the director of Wayne State University’s labor studies program.

But there’s a flurry of complicating factors in ongoing negotiations. Union leadership is under increased scrutiny as federal prosecutors continue to unravel a sprawling culture of corruption among former UAW leaders and negotiators.

There also was a strong sense inside and outside the union that a strike was likely, Masters said. Such an outlook could have contributed to the speed with which the strike was called, according to the professor.

“It’s hard to say how far apart they are,” Masters said of the UAW and GM. “But I get the feeling that they are pretty far apart. So you hope that they come to their senses pretty soon. But it certainly has the makings to go on for a very long time with the caveat that when reality sets in, they’re probably going to want to sit down and see what they can do to bring things back together.”

 

Eoin Treacy's view

Workers are increasingly agitating for a bigger piece of the pie as stocks close in on all-time new highs and the cost of living increases. That is contributing to the potential for inflationary pressures to reappear despite the widespread fear of deflation that has pervaded sovereign bond markets this year.

 

 

Eoin's personal portfolio precious metal trading position profit taken September 5th 2019

 

Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided. 

 

 

2019: The 50th year of The Chart Seminar

 

Eoin Treacy's view

The London Philharmonic Orchestra is holding a concert in David’s memory on October 5th October at the Royal Festival Hall. There is a reception between 5.30 and 6.45 in the Foyle Pavilion, Level 3, Green Side and subscribers are well to join David’s family there for light refreshments. Following the reception, we will move to the Beecham Bar, Blue Side, Level 5 for a short talk by Tim Walker, Chairman of the LPO. 

If you wish to attend the concert as well, which includes a performance of Elgar’s Cello Concerto by the Young Musician of the Year, it begins at 7.30 and you may book tickets (£67) by telephone on 020 7840 4242 quoting the code Fuller Concert.

Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

Video commentary for September 16th 2019

 

lace can also avail of the £850 rate for the second and subsequent delegates.

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