It was another Thanksgiving Day Turkey shoot, and markets moved on light volume and also inspired movement. While oil sold off, it was bitcoin that seemed to take the biggest hit. Bitcoin had an 11% correction after its near historic run, making the oil correction look relatively modest. Oil traders know that Thanksgiving can cause crazy moves, and while this year, bitcoin that took the hit in years past was oil. My Favorite cryptocurrency that I am invested in, Cloud Coin, has also begun to have an excellent move as traders are starting to pick up on the fact that its Raida technology may someday replace blockchain.
Yet I digress. Oil looks to bounce back after the Turkey Day correction. While some worry about a Thanksgiving holiday, Covid surges more strong data from China, suggesting that the global oil demand recovery will continue and robust global trade data. Reuters reported Most emerging Asian stock markets ticked higher on Friday in thin trade as upbeat economic data from China boosted hopes of a swift rebound in the region in the months ahead, while Indian equities were flat ahead of GDP data. Most stock indexes were set for robust gains for the month, with Thailand eyeing its best result in nearly 20 years, while Singapore was on track for its best since May 2009, reflecting growing hopes for an economic recovery next year. The Chinese data suggested factory activity in the region’s biggest economy expanded at a slightly faster pace in November, while profit growth at industrial firms in October was the fastest since early 2017.
The Wall Street Journal reported that Global trade flows bounced back strongly in the summer, marking the largest rise in two decades as air and sea transport channels reopened while demand for consumer goods surged. China has led the rebound, which has increased its share of total exports and left trade volumes in September less than 2% below their levels at the end of 2019. The flows of goods across borders were 12.5% higher in the three months through September than in the second quarter. When flows fell by 12.2%, the CPB Netherlands Bureau of Economic Policy Analysis said Wednesday. That was the largest rise since records began in 2000, following the largest fall.
On top of that, folks that dared Covid and went over the river and through the woods suggest that gasoline demand will bounce. Jet fuel demand will also rise as Air Travel reportedly bounced back to a post-Covid high. Even in China, it appears that travelers are going to move on the upcoming Lunar New Year Holiday.
Bloomberg News reports that “Lunar New Year may be more than two months away, but one Chinese fuel supplier is already gearing up for an expected surge in air travel. According to data compiled by Bloomberg, China Aviation Oil is seeking to import jet fuel for January delivery in its first buy tender since May. The move by CAO, one of the largest buyers of jet fuel in Asia, comes as Chinese domestic air travel continues to recover after the pandemic-driven destruction.”
The focus will turn to the OPEC Plus meeting, where it is widely expected that OPEC and their co-conspirator Russia will extend production cuts by three months. Bloomberg reported that” Saudi Arabia and Russia have convened informal OPEC+ talks for Saturday, according to a letter. That will precede the formal ministerial meetings scheduled for Monday and Tuesday, where producers will decide whether to postpone a planned output hike.”
Some in the cartel may worry that an extension of cuts may breathe new life into the beleaguered U.S. Shale patch. Still, both Saudi Arabia and Russia know that the U.S. shale oil producers will have a challenging time coming back after the President-elect Joe Biden starts issuing his executive orders. His “Climate Czar” John Kerry will begin clamping down on the U.S. oil and gas producers. We know that Biden and Kerry’s team is bullish for oil prices but bad for most oil companies. Unless you are in a developing nation where you can pollute to your heart’s content, U.S. Energy producers will be held accountable by the incoming administration while foreign producers will not.
With our new incoming Climate Czar John Kerry, we might want to look at California to get an idea of what may be coming in our energy future. Bloomberg reports that “With strong winds raising the risk of wildfires, Edison International began cutting power to some homes and businesses in Southern California, blacking out Thanksgiving celebrations already overshadowed by the state’s worsening coronavirus surge.
The power cuts started Thursday morning and may ultimately impact more than 100,000 customers, or about 300,000 people, across six counties. At 2:30 p.m. local time, about 5,000 customers were affected. The shutoffs come as a Santa Ana windstorm rakes the region with gusts forecast to reach 50 miles (80 kilometers) per hour. California utilities have taken to cutting electricity service during high winds after their power lines sparked a series of deadly wildfires. The outages could spread as the windstorm moves south across the state. Sempra Energy’s San Diego-area utility warned it was considering shutting off power to 2,700 homes and businesses, or about 8,000 people, starting early Friday.
Venezuela is already feeling emboldened by a Biden administration. Reuters has reported that Venezuela has resumed direct shipments of oil to China after U.S. sanctions sent the trade underground for more than a year, according to Refinitiv Eikon vessel-tracking data and internal documents from state company Petroleos de Venezuela (PDVSA). It seems that Venezuela feels that Biden will lack the will to do anything to stop them. A funded Maduro regime will gain more power and further steal the Venezuelan people’s future from them. Maduro will become more prosperous, and they will become poorer.
Natural gas tries to bottom, but uncertainty about the stability of weather is making it more difficult. Warm temperatures and uncertainty on whether it will stay warm or get cold is keeping the market on edge. Still use the uncertainty to buy some calls just in case.
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Phil Flynn