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Worst Drought in 91 Years Turns Brazil Into Hot Spot for LNG

  •  State-run oil company is seeking liquefied natural gas cargoes
  •  Water crisis curbs hydropower supplies across South America

As hydropower output declines, South America’s most populous nation is turning to the super-chilled fuel to keep lights on for its 212 million people. Brazil has already imported a record number of LNG cargoes just from the U.S. this year while state-run oil company Petrobras SA is tapping the spot market for another four.

The drought comes as the nation — which boosted its ability to import LNG in 2014 to avoid blackouts during soccer’s World Cup — is facing declining gas production from major supplier Bolivia. The conditions are also affecting other countries in South America, with Chile seeking to buy LNG and traders speculating Argentina could be next.

Brazil's Thermal Power Rises as Hydro Slides

“South America is running out of hydropower because of dry weather, and I wouldn’t be surprised if buyers all across the region were buying more LNG,” said Henning Gloystein, global director of energy and natural resources at consultants Eurasia Group. “Besides Southeast Asia and India, South America is a growth area for gas demand.”

Hydropower currently accounts for about 70% of Brazil’s electricity mix, and the lack of rainfall has forced the country to import 34 U.S. LNG cargoes over the past six months to bridge the power-supply gap, shipping data compiled by Bloomberg show. That eclipses the 17 sent to Chile and four to Mexico, which has long been the top buyer of U.S. LNG in the Western Hemisphere. Brazilian imports are approaching levels typically seen only from buyers in Asia and Europe.

…click on the above link to read the rest of the article…

Save Earth Get Rich


Henri Matisse Flowers 1907
I sometimes can’t believe I think I must revisit this theme time and again, but here we are. Joe Biden is chairing a virtual climate plan/summit/whatever, and absolutely nothing has changed since the last time I tried to explain why it is nonsense, or all the other times before that. But this is the biggest boondoggle/cheat/trick ever played on mankind, so what choice do I have?

It’s still a bunch of politicians all over the world who are beholden to a bunch of extremely rich people for their cushy positions and claim they intend to save the world hand in hand with these rich people. In other words, our resident sociopaths and psychopaths are the only ones who can save us. But you’re going to have to pay up, or they won’t do it.

It’s all an intensely moronic piece of theater (no, I won’t insult Kabuki!), but since all the media is in on it, who would know that? It’s the biggest show on earth! Your carrots are jobs, profit, and a saved planet for your children. What’s not to like?

Biden’s billionaire political sponsors promise to save you, but of course they do need to make a profit off it. One that is preferably larger than the profits they have been making over the past decades off of the very things they now pretend to condemn, and are still invested in, fossil fuels.

Of course they know that will never happen, but they also know that you do not. So here goes. This intro from the Guardian, written before Ol’ Joe opened Day Two, tries some critical notes, but that’s just to lift the party mode even higher.

Joe Biden To Stress Green Jobs As Key To Tackling Crisis At Climate Summit

…click on the above link to read the rest of the article…

What To Expect From Today’s OPEC+ Meeting: Another Saudi Surprise?

What To Expect From Today’s OPEC+ Meeting: Another Saudi Surprise?

After Wednesday’s JMMC meeting ended without reaching a recommendation (as is customary and expected), the key decision-making OPEC+ meeting – where ministers will hammer out May’s output quotas – begins at 1pm London Time. As Newsquawk notes, market expectations are skewed towards an extension of current cuts, but a clear stance from Saudi – who have a tendency to surprise in recent months – remains to be seen, namely on the decision regarding the extra 1MM barrels the Kingdom has kept offline since the start of the year.

Commenting on today’s key event, Bloomberg’s Jake Lloyd-Smith reminds us that Saudi Arabia has sprung some big surprises in the oil market already this year, and may do so again today as OPEC+ grapples with a thorny decision on supply. That could make for a volatile session before the long weekend, and already has with oil whipsawing from gains to losses in jittery trading, amid market rumors that OPEC+ is i) considering a return to phased monthly oil-output hikes and ii) is also considering maintaining current cuts, according to a delegate… which pretty much covers every base so is completely useless.

As such, while the consensus view is the grouping will stick with deep output curbs to safeguard crude’s recovery, there’s an outside chance of alternative outcomes. These span the twin extremes, from releasing barrels to tightening further.

At issue is the varied recovery across key regions. For every rosy demand metric from the U.S. or China, there’s a poor one from Europe as lockdowns make a comeback. In addition, Riyadh faces a headache from rival Iran, which has been pushing clandestine barrels into China despite U.S. sanctions…

…click on the above link to read the rest of the article…

opec+, oil and gas industry, zerohedge, saudi arabia, russia, iran, china, united states, economic sanctions, oil, oil price, bloomberg

Shale Giants Proving OPEC Right

Shale Giants Proving OPEC Right
Saudi Arabia’s bet that the golden age of U.S. shale is over appears to be a safe one – for now, at least.

(Bloomberg) — Saudi Arabia’s bet that the golden age of U.S. shale is over appears to be a safe one — for now, at least.

A round-up of data on shale drillers shows they’re sticking to their pledge to cut costs, return money to shareholders and reduce debt. If they stay the course, it would validate the OPEC+ alliance’s high-stakes wager that it can curb output and drive crude prices higher without unleashing an onslaught of supply from U.S. rivals.

That’s still a big “if,” one that’s keeping the oil market on edge as crude’s rally makes it more tempting for shale producers to go back on their word. But the U.S. shale patch is showing little sign of a true comeback so far, and even a dramatic boost in activity would leave oil output below pre-pandemic levels until late next year. Drillers that have shown signs of straying from the script and boosting production have been punished by investors.

Publicly traded explorers that are remaining disciplined on output are helping to keep crude prices aloft, said Michael Tran, managing director for global energy strategy research at RBC Capital Markets. The motives of closely held producers, on the other hand, remain “an open-ended question,” he said. The number of oil rigs has already jumped 80% after bottoming out in August, Baker Hughes data show.

The more restrained shale drillers are this year, “the more they can potentially grow production at higher prices next year and beyond,” Tran said.

…click on the above link to read the rest of the article…

Bloomberg, M.Tobin, D.Wethe, K.Crowley, oil price, oil, crude oil, saudi arabia, shale oil, opec+, rigzone.com

Aramco’s Carbon Emissions Could Be “Nearly Double” What The Company Discloses

Aramco’s Carbon Emissions Could Be “Nearly Double” What The Company Discloses

It was no secret that leading up to Saudi Arabian Oil Co.’s IPO in 2019 that the company touted its low emissions compared to other producers.

Chief Executive Officer Amin Nasser said while the company was doing its roadshows: “Not because our crude is cleaner than other crudes globally. It’s because of our standards. Even though our numbers are great, climate change is critical for the world.”

But now, it appears the company may have “failed to provide a complete picture”, according to a new Bloomberg report. The report says that Aramco fails to account for emissions generated from many of its refineries and petrochemical plants.

Inclusive of the omissions, Bloomberg estimates that the company’s carbon footprint would “nearly double”, and that Aramco would add as much as 55 million metric tons of CO2 to its annual tally. 

Now that investors “need to be able to put a price on the climate risks that they are running in their portfolios,” as one commodity researcher put it, the carbon footprint numbers can easily turn into a “red flag”.

When Bloomberg reached Aramco for questioning, the company replied: “We have a clear and deliberate path to increase the scope and details of [emissions] disclosure.” It said its current number “reflects emissions from those assets where Aramco has the accountability and ability to manage and control emissions.”

The company gets away with its current disclosures by pointing to the process of extracting the oil in Saudi Arabia. It will often cite studies that show that extraction of Saudi oil generates the second lowest amount of emissions in the world.

…click on the above link to read the rest of the article…

Bloomberg Analysts: “Gold the Asset to Beat in 2021”

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold to spearhead precious metals’ outperformance in 2021, why 2020 was a very good year for national mints, and birdwatcher unearths biggest-ever hoard of Celtic gold in Britain.

Bloomberg analysts: A $2,000 price tag will make gold the asset to beat in 2021

Among traditional assets, it would be difficult to beat gold for the title of top performer in 2020. Having hit a new all-time high of $2,070 in August, the metal has traded around its previous all-time high of $1,911 ever since. And though gold has appeared somewhat rangebound over the previous months, Bloomberg Intelligence senior commodity strategist Mike McGlone sees this as a stepping stone on the way towards an even better year.

According to McGlone, the $2,000 level that gold appears to have had difficulty recapturing is poised to become the metal’s next support, making it the asset to beat once again. “In an investment landscape increasingly dominated by how low — or negative — central banks will set base rates, along with rising debt-to-GDP and QE, we see the foundation solidifying under the price of gold. Resistance at about $2,000 an ounce in 2020 is set to transition to support in 2021,” he explained.

McGlone added rising volatility to the list of reasons why he can’t imagine gold’s price rise stopping, especially as the metal has held steadfast to its upwards-pointing 12-month moving average. In what has by now become a common scenario, McGlone expects gold to continue outperforming the record-setting S&P 500 along with sovereign bonds.

…click on the above link to read the rest of the article…

 

Peak Oil is Suddenly Upon Us

title

Planes stopped flying. Office workers stayed home. “Zooming with the grandkids” replaced driving to see family. A year of global hunkering yielded the sharpest drop in oil consumption since Henry Ford cobbled together the first Model T. At its worst, global demand dropped by a staggering 29 million barrels a day.

As a once-in-a-century pandemic played out, British oil giant BP Plc in September made an extraordinary call: Humanity’s thirst for oil may never again return to prior levels. That would make 2019 the high-water mark in oil history.

BP wasn’t the only one sounding an alarm. While none of the prominent forecasters were quite as bearish, predictions for peak oil started popping up everywhere. Even OPEC, the unflappably bullish cartel of major oil exporters, suddenly acknowledged an end in sight—albeit still two decades away. Taken together these forecasts mark an emerging view that this year’s drop in oil demand isn’t just another crash-and-grow event as seen throughout history. Covid-19 has accelerated long-term trends that are transforming where our energy comes from. Some of those changes will be permanent.

It’s often difficult to recognize civilization-sized shifts in behavior until after they’ve occurred. Until the pandemic none of the major oil forecasters had seen an imminent demand peak. The debate won’t end now, especially with signs that the pandemic will ease in 2021. But if we look back from here and see the oil peak clearly in the past, what follows will be the evidence of how the energy future snuck up on us.

…click on the above link to read the rest of the article…

World’s Negative-Yield Debt Pile Has Just Hit a New Record

  •  $17 trillion of investment-grade debt now has sub-zero rates
  •  U.K. and Australian central banks expand bond-buying programs

The market value of the Bloomberg Barclays Global Negative Yielding Debt Index rose to $17.05 trillion on Thursday, the highest level ever recorded and narrowly eclipsing the $17.04 trillion it reached in August 2019.

Almost $600 billion of bonds have seen their yields turn negative this week, meaning 26% of the world’s investment-grade debt is now sub-zero. Thanks to the slew of global issuance in 2020 as governments and companies wrestle with the impact of the coronavirus, that remains below 30% peak reached last year.

Global supply of bonds with negative yields hits record $17 trillion

The borrowing binge has been mostly met with trillions of dollars of quantitative easing that suppress yields. Just this week, the Bank of England and Reserve Bank of Australia announced plans to expand their bond-buying programs, while the Federal Reserve discussed a shift.

For investors watching yields vanish, it’s become a dilemma: make riskier bets in order to boost income or accept lower returns.

“There are still return hurdles that investors will try to reach but that is not something you can get in a large share of fixed income products at this point,” said Richard Kelly, head of global strategy at Toronto-Dominion Bank. “This will drive a further push out the risk curve for investors, be that equities, credit, or long-end bonds.”

While much of the sub-zero debt pile is denominated in euros and yen, dashed expectations for a massive fiscal spending package under a unified Democratic government are also whittling down Treasury yields.

…click on the above link to read the rest of the article…

“The Largest Ever Physical Transfer Of Gold”

“The Largest Ever Physical Transfer Of Gold”

Two months ago, when the market was in a state of near-total chaos as a result of a sudden collapse in global supply chains due to the hasty coronavirus lockdowns, one market that saw unprecedented turmoil was that of physical gold.

As we pointed out in late March, due to a sudden breakdown in physical gold supply as the world’s top gold refiners, those located in the southern Swiss town of Ticino, namely Valcambi, Pamp and Argor-Heraeus, suddenly stopped producing gold, the  result was a record divergence in the price of spot gold vs gold futures contracts…

… with gold futures decoupling and trading far above spot prices.

The resulting record divergence in gold futures vs spot (in some way analogous to what happened to the price of the prompt WTI contract in April, when the May WTI contract traded as low as ($40) as traders were willing to pay buyers to store oil in a world where there was suddenly no space for the physical commodity), unleashed a flood of physical gold into the US as a record scramble by traders rushing to take advantage of this arbitrage opportunity by shipping bullion to New York sparked what Bloomberg said “may be one of the largest ever physical transfers of the metal.

“The flows into New York are unprecedented,” Allan Finn, the global commodities director at logistics and security provider Malca-Amit told Bloomberg as his company’s teams in New York have been working 24 hours a day to cope with unprecedented demand for physical gold while navigating lockdowns, flight disruptions and social distancing.

…click on the above link to read the rest of the article…

“Crisis In Processing” – Pandemic Exposes Fragility Of Food Supply Chain

“Crisis In Processing” – Pandemic Exposes Fragility Of Food Supply Chain  

Today’s food supply chain crisis began in the meat industry has been developing for decades, and Tyson Foods has helped to create the disaster that is currently unfolding

The problem is consolidation, and with Tyson, JBS SA and Cargill Inc, three mega-corporations that control 66% of America’s beef, as much of it is processed in just a few dozen meatpacking facilities across the US. Only a few companies also dominate pork and Chicken. 

There have been at least 12 closures of meatpacking plants in April because of virus-related issues among employees. This has resulted in at least 25% of pork and 10% of beef processing capacity coming offline in the last several weeks, reported Bloomberg

“This is 100% a symptom of consolidation,” said Christopher Leonard, author of “The Meat Racket,” which examines the protein industry. “We don’t have a crisis of supply right now. We have a crisis in processing. And the virus is exposing the profound fragility that comes with this kind of consolidation.”

On Sunday, Tyson Foods warned in a full-page ad in the New York Times that the “food supply chain is breaking.”

“As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain,” wrote Tyson Chairman John Tyson, patriarch of the company’s founding family, in a Tyson Foods website post that also ran as a full-page ad in several newspapers. “The food supply chain is breaking.”

Then on Tuesday, President Trump signed an order for meatpacking facilities to remain open during the pandemic. With plants being forced to stay open as the fast-spreading virus infects workers, that doesn’t necessarily mean workers will show up to work. We discussed that over the weekend in a piece titled “American Farms Cull Millions Of Chickens Amid Virus-Related Staff Shortages At Processing Plants.” 

…click on the above link to read the rest of the article…

Chinese Warns US To Halt Military Operations In South China Sea

Chinese Warns US To Halt Military Operations In South China Sea 

The Chinese military is closely monitoring a US Navy guided-missile destroyer transiting the South China Sea on Tuesday (April 28). 


Global Times✔@globaltimesnews

When US destroyer Barry trespassed into China’s territorial waters off the Xisha Islands on Tue, the PLA Southern Theater Command coordinated with naval and air forces to follow its course; they identified the ship, warned and expelled it:PLA Southern Theater Command spokesperson

View image on Twitter

The People’s Daily, quoting senior colonel Li Huamin, spokesperson for the Chinese Army (PLA) Southern Theater Command, said a US warship entered the “territorial waters off Xisha Islands in the South China Sea without China’s permission. The Southern Theater Command of PLA deployed air and navy forces to monitor and verify the ship, and warned it to leave.”


 People’s Daily, China✔@PDChina

A US warship on Tue entered the territorial waters off Xisha Islands in the South China Sea without China’s permission. The Southern Theater Command of PLA deployed air and navy forces to monitor and verify the ship, and warned it to leave, according to Senior Colonel Li Huamin.

View image on Twitter

Bloomberg reports that the “Chinese navy followed and expelled it [US Navy warship],” citing a PLA Daily report. 

Huamin went on to say, the US Navy violated “relevant international law and was a serious infringement of China’s sovereignty.” 

CGTN News said China urged the US to focus on the COVID-19 pandemic unfolding across the country rather than conduct freedom of navigation missions in the South China Sea. 

The PLA has spent the last 3 to 4 weeks ramping up military operations in the highly contested waters as the pandemic sweeps across the world. 

The US blasted China last week for its “bullying behavior” in the region. The US State Department recently said China is taking advantage of the region’s focus on the COVID-19 pandemic to “coerce its neighbors.” 

…click on the above link to read the rest of the article…

American Farms Cull Millions Of Chickens Amid Virus-Related Staff Shortages At Processing Plants

American Farms Cull Millions Of Chickens Amid Virus-Related Staff Shortages At Processing Plants

A significant concern that readers should have during an economic collapse and pandemic is food security. We’ve noted over April that troubling news is developing deep inside America’s food supply chain network, suggesting shortages and rapid food inflation could be ahead.

The reason behind the disruptions begins with meatpacking plants across the country are shuttering operations because of virus-related issues. At the moment, we’ve reported at least 10-12 large operations have gone offline in the last several weeks, which could result in pork shortages in the first or second week in May.

“Almost a third of U.S. pork capacity is down, the first big poultry plants closed on Friday and experts are warning that domestic shortages are just weeks away,” reported Bloomberg

We also highlighted additional risks to beef and poultry capacity at processing plants that were starting to develop.

Now, more specifically, diving into the world of poultry, new developments from Maryland, Delaware, and Virginia, a region known to be a top producer of chickens not just in the country but the world, is experiencing logistical issues due to coronavirus.

The Baltimore Sun is reporting that 2 million chickens are set to be culled across farms in Maryland and Delaware amid coronavirus-related staffing shortages at meatpacking plants.

We’ve heard the same story with pork, turkey, and beef processing plants across the country. Reducing operations or shutting down due to virus-related illnesses among staff. 

“With reduced staffing, many plants are not able to harvest chickens at the pace they planned for when placing those chicks in chicken houses several weeks ago,” before strict social distancing rules went into effect, trade group for the Delmarva poultry industry said in a statement.

…click on the above link to read the rest of the article…

Weekly Commentary: Fault Lines

Weekly Commentary: Fault Lines

Now on a weekly basis, we’re witnessing things that couldn’t happen – actually happen.

April 20 – Bloomberg (Catherine Ngai, Olivia Raimonde, and Alex Longley): “Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than Monday’s collapse in a key segment of U.S. oil trading. The price on the futures contract for West Texas crude that is due to expire Tuesday fell into negative territory — minus $37.63 a barrel.”

For posterity, the latest numbers on U.S. monetary inflation: Federal Reserve Assets expanded $205 billion last week to a record $6.573 TN. Fed Assets surged $2.307 TN, or 56%, in just seven weeks. Asset were up $2.645 TN over the past 33 weeks. M2 “money” supply surged $125bn last week to a record $16.870 TN, with an unprecedented seven-week expansion of $1.362 TN. M2 inflated $2.329 TN, or 16.0%, over the past year. Institutional Money Fund Assets (not included in M2) jumped $123 billion last week. Over seven weeks, Institutional Money Funds were up $845 billion. Combined, M2 and Institutional Money Funds jumped a staggering $2.207 TN over seven weeks ($100bn less than the growth of Fed Assets).

It’s increasingly clear this pandemic is striking powerful blows at the most fragile Fault Lines – within communities, regions, societies, nations as well as for the world order. To see this disease clobber the most vulnerable ethnic groups and the downtrodden only compounds feelings of inequality, injustice and hopelessness. It is as well stunning to watch COVID-19 hasten the partisan brawl. A nation terribly divided is split only more deeply on the process of restarting the economy. To witness rival global superpowers plunge further into accusation and enmity. And to see the coronavirus viciously attack Europe’s fragile periphery, further splitting a hopelessly divided Europe and pressuring a critical global Fault Line.

…click on the above link to read the rest of the article…

“Scan Your Code!”: Dystopian Post-Lockdown ‘Normal’ In Wuhan Enforced By ‘Anti-Virus Patrols’

“Scan Your Code!”: Dystopian Post-Lockdown ‘Normal’ In Wuhan Enforced By ‘Anti-Virus Patrols’

The industrial hub of over eleven million people and ground zero for the global outbreak, Wuhan, has come roaring back to life but more in the way of a dystopian version of itself after the virus peaked there in February and now with almost no new infections occurring according to official numbers.

Under strict lockdown since late January as the virus ripped through the original ‘hot zone’ epicenter of Hubei province, the capital city provides a glimpse of what hard-hit urban centers in the West may look like in a new post-lockdown world.

“So far, Wuhan’s answer has been to create a version of normal that would appear utterly alien to people in London, Milan, or New York — at least for the moment,” Bloomberg writes. It’s a situation that appears ‘normal’ but with a totalitarian twist: “Bolstered by China’s powerful surveillance stateeven the simplest interactions are mediated by a vast infrastructure of public and private monitoring intended to ensure that no infection goes undetected for more than a few hours.”Police in some locations have begun to use AI-powered smart helmets to track citizens’ temperatures. Source: China News/Weibo via Daily Mail.

Just to get a major Lenovo tablet and phone factory on the outskirts of the city up and running again – previously closed for over two months – workers are first greeted by a series of four temperature checks. If flagged for even slightly higher than normal temperature (above 99.1F) they get referred to an in-house “anti-virus task force” to make determinations.

…click on the above link to read the rest of the article…

Eight Meatpacking Plants Close In Weeks Across America Stoking Food Shortage Fears

Eight Meatpacking Plants Close In Weeks Across America Stoking Food Shortage Fears

Update (April 23):  Food shortages across the country are coming a lot quicker than anyone has anticipated. A total of eight meatpacking plants have already gone offline in weeks. On Thursday morning, we noted how pork shortages could hit households by the first week of May.

Now we’re starting to learn the dominos are falling, with meatpacking plants shuttering operations across the country because of the coronavirus outbreak.

Tyson Foods Inc. has announced the third plant closure in about a week and the second closure within 24 hours. The latest announcement crossed the wires on Thursday afternoon, specifies how a major beef facility in Pasco, Washington, is shutting down operations because of the virus outbreak, reported Bloomberg.

“We’re working with local health officials to bring the plant back to full operation as soon as we believe it to be safe,” Steve Stouffer, head of Tyson Fresh Meats, said in the company’s statement. 

“Unfortunately, the closure will mean reduced food supplies and presents problems to farmers who have no place to take their livestock. It’s a complicated situation across the supply chain.”

In total, eight major meatpacking plants have closed in the last several weeks. We noted on Thursday morning that a “rash of coronavirus outbreaks at dozens of meatpacking plants across the nation is far more extensive than previously thought.” 

As for the plant in Washington, well, it produces enough beef to feed four million people per day. Just imagine what happens when people who have just lost their jobs experience food shortages, or maybe rapid food inflation. It could be a trigger for social unrest.

* * * 

Update (19:50):  It appears meatpacking facilities in America’s heartland could be the next epicenter of the coronavirus outbreak.

On Wednesday, Tyson Foods announced two closures of meatpacking facilities because of coronavirus related issues.

Here’s the timeline of closures:

…click on the above link to read the rest of the article…

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