The Haiku of Finance for 01/21/16

Demand oil meeting
OPEC members are crying
Tiring of low price

The Limerick of Finance for 05/31/15

Saudi oil pumping not slowing down
OPEC's leader hangs on to its crown
Meet domestic demand
Keep jihadists in hand
Shale producers prepare to leave town

Financial Sarcasm Roundup for 01/26/15

The final week of January requires a final blast of sarcasm.

Wall Street is launching its business continuity plans as winter storm Juno hits the Northeast.  The world won't miss a few hundred useless Wall Street relationship managers if they froze in place for a couple of days.  I'm pretty sure a few hamsters running in miniature plastic wheels could keep the financial sector humming.  Automation is making most of these humans redundant anyway.  The storm is the perfect test case for AIs.

Some OPEC big cheese is now warning about much higher oil prices.  Well, dude, blame Saudi Arabia and the other Gulf sheikhdoms for flooding the market with oil to protect their market share.  Driving more expensive shale producers out of business is a surefire way to frighten capital away from exploration and production.  Analysts underestimate the long lead times needed for new infrastructure.  Capped wells can be turned on quickly but many gas pipelines to shale fields and tar sands are still in the planning stages.  The smaller servicing companies that are about to go bankrupt won't be able to keep their fleets of trucks and portable rigs in storage, so those will be sold for scrap or converted to something else.

China's brokerage firms are going nuts with margin accounts and ignoring regulators.  This blatant juicing of Chinese equities is going to end very badly for the retail investors who get suckered in at the very end.  I hope the traders involved have lots of dried noodles stored up for the lean times awaiting them after the inevitable crash.

In other news, I am now the proud owner of a bag of potatoes.  They don't last as long as canned food but they are quite tasty with salt.

Greece, Oil, And Stuff In The Headlines for 06/20/11

This week is off to a really great start.  European ministers can't agree on how to structure the next iteration of wasted money for a bankrupt Greece.  At least they provided enough breathing room for a very important no-confidence vote to take place in the Greek parliament.  That will give Germany the pretext to say "told ya so" and refuse to back a bailout.  The Group of Seven wants to get in on the action if only to go on record with bold assertions that yes, we all really must do something about this whole dreadful Greek crisis thing.  The growing danger to the world economy of daisy-chained bank implosions from a Greek default hasn't gone unnoticed by the IMF.  Nothing gets by those wily IMF wizards, except of course a massive cyberattack on its databases from an adversary with deep resources. 

The IMF isn't the only acronymic organ of nascent global governance that's suddenly gone impotent.  The IEA is asking the world's oil producers to pretty-please raise their oil output so prices can come down and the developed world can start spending its way to prosperity again.  Nice try.  Better luck next millennium.  Russia isn't about to fall in line just to save the West from insolvency.  It's too busy consolidating its stock exchanges and preventing capital flight prior to elections to take requests right now. 

The IEA can start to relax with oil futures headed down anyway thanks to decelerating GDP growth in the developed world.  The free market takes care of these things without jawboning. 

The world is in for a new golden age provided it avoids financial implosion in Europe, stagflation in the U.S., and North vs. South resource wars.  Fun times ahead!  Life just keeps getting better for everyone. 

OPEC In Transition To Somewhere

OPEC is going through some kind of maturation process, or perhaps a winter of discontent, or some other metaphor for a phase of life that will probably take it to a new level of (dis)organization.  OPEC can't agree on whether to change production quotas.  History has shown that such disagreements tempt one member country to go it alone and raise production while prices remain high, in a mad dash for a revenue spike.  That won't sit well with countries whose supergiant fields are maturing (Saudi Arabia, Mexico) and not amenable to production boosts without years of new investment. 

Meanwhile, there's life left in supposedly mature North American petroleum production.  ExxonMobil has found plenty of oil in the Gulf of Mexico.  Heads up, BOEMRE, you'll have to speed up those GOM permits if the Administration is to make good on its promise to keep the U.S. out of recession.  Maybe the U.S. could join OPEC as the new swing producer if it keeps up the pace of offshore discoveries. 

The death of OPEC has been predicted for decades.  Those wily producers always manage to surprise the world with their longevity.  The only thing that can hurt the bloc is a permanent decline in oil production.  That isn't on the scene just yet. 

Oil, Oil, Everywhere, Nor any Drop to Pump

Samuel Taylor Coleridge's "Rhyme of the Ancient Mariner" is famous for its signature line: "Water, water, everywhere, nor any drop to drink." The Mariner's sailors lamented their thirst in the midst of plentiful water. In a cute segue (thank me later), China thirsts for oil in a world still awash in recoverable black gold. Brazil discovered lots of oil very far underwater, and China wants to help pump it out:

China wants to loan Brazil's state oil company $10 billion to help develop massive new oil fields in deep water off the coast of Rio de Janeiro, Brazil's top energy official said in comments published Monday.

Investment implies partial control. China needs above all else to maintain some healthy level of economic growth to forestall internal unrest. Securing access to non-OPEC oil is one way to do that. OPEC is going to make its oil harder to come by anyway, if they can pull off this near-term cut in production:

Oil prices rebounded from four-year lows and shot above $43 a barrel Monday as OPEC floated the possibility of a "severe" production cut and several countries announced new measures to boost their economies.

Why make a threat if you can't make it stick? OPEC members that used to cheat by abandoning production cuts after OPEC announces them now have less leeway to do so as their own producing fields reach geological plateaus. Most producers would go along with a cut either out of inertia or as a way to boost their currency reserves with income from higher oil prices.

Can I make money from this possible oil action? China's move won't have an impact on supply for years, so the OPEC announcement is something I'll wait to hear. Short puts on USO are looking much safer now if production cuts drive up the price of oil. Furthermore, higher oil prices are usually also bullish for gold in the short term. The proposed cut will be announced on Dec. 17, and short duration options expire Dec. 19, so if I sell a put option on USO it will have to be one dated Jan 09. Watch this space.