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Thursday, December 18, 2014

Oil Sands Output Rises as Canadian Crude Falls Below $40
By Robert Tuttle

Canadian heavy crude traded below $40 a barrel for the first time in five years just as surge of new projects are scheduled to start operation.

A total of 14 new oil sands projects are scheduled to start next year with a combined capacity of 266,240 barrels a day, according to data published by Oilsands Review. That’s 36 percent more than was started in 2014.

Oil futures have dropped more than 40 percent since June as production surged in the U.S. and Canada, adding to OPEC output that exceeded the group’s target for six consecutive months. OPEC decided to maintain its production level at a Nov. 27 meeting, resisting calls from members including Venezuela to reduce supply.

Kuwait crude oil price down to USD 53.91 pb

KUWAIT, Dec 18 (KUNA) -- Price of Kuwait crude oil per barrel dropped by USD 0.18 to stand at USD 53.91 pb in Wednesday's trading compared to USD 54.09 pb on Tuesday, Kuwait Petroleum Corporation (KPC) said on Thursday.

In the international oil markets, Brent crude went up on Wednesday in London Stock Exchange, as well as the US crude in the New York Mercantile Exchange (NYMEX), scoring slight returns.

Brent crude for February's delivery ended session with a hike of USD 1.17 to stand at USD 61.18 pb, while US crude futures rose by USD 0.54 to reach 56.47 pb. (end)

Kurdistan eyes oil export jump in the shadow of global price war

New deal between the Kurdistan Regional Government and Baghdad will see almost 1m barrels per day of crude flowing to Turkey within two years
By Andrew Critchlow

Falling oil prices and the threat of Islamic State militants have done little to dampen the interest of international oil companies in the autonomous northern Iraqi enclave of Kurdistan.

On a day that saw bounce more than 4pc in London authorities from the Kurdistan Regional Government - one of the world’s last great frontiers for hydrocarbons production - unveiled plans to dramatically increase exports next year.

Heavyweights from the industry, including ExxonMobil, Chevron, Total and Genel Energy were out in force in London yesterday to listen to Ashti Hawrami, Minister for Natural Resources in Kurdistan, explain how a new deal between Erbil and Baghdad over revenue sharing could see up to 800,000 barrels per day (bpd) of crude flow through a pipeline to Turkey in early 2015.

Mr Hawrami said that the additional volumes of oil will help the Kurdistan Regional Government (KRG) to pay money owed to international oil companies and operators after a long-running dispute with the central government of Iraq over revenues had disrupted these payments.

“We are committed to honouring these payments to international oil companies,” said Mr Hawrami, who worked in the UK’s North Sea with the state-owned British National Oil Company as an engineer in the 1970s, just when the region was starting to be developed.

Rouble slideshow: World economy to feel the heat

NEW DELHI: The slide of the Russian rouble sent shock waves across financial markets on Tuesday. The global markets could remain choppy as long as the crisis continues.

Russia's economic woes are a result of the plunge in global crude oil prices and sanctions against the country over Ukraine.

The drying up of oil revenues dented the Russian economy and forced the Central Bank to raise interest rate to 17%. But even this seems to have had limited impact.

Any default by Russia in debt obligations could impact developed world lenders, which could add to woes of the sluggish global economy . Slowing growth in China, the oil price slide and the European situation are risks for the global economy.

Russia poses risk to global economy

WASHINGTON ― Russia’s suddenly escalating financial crisis risks spilling beyond its borders and endangering parts of the global economy.

With economies in Europe, Japan, China and Latin America already ailing, fresh threats have emerged from Russia’s shriveled currency, its move to dramatically boost interest rates, the damage from plummeting oil prices and Western sanctions over Russia’s action in Ukraine.

Oil Plunge Can Trigger
‘Subprime’ Debt Crash
By Paul Gallagher

Dec. 10—What began as a British-Saudi financial warfare weapon against Russia and Iran—the so-called “oil sanction”—is turning into an unpredictably bouncing hand grenade which may blow out a large debt bubble over the bankrupt U.S. economy.

Warnings are now starting to proliferate, as the price of West Texas Intermediate crude oil has fallen to the low $60s/barrel, that a wave of defaults of “high-yield,” or junk, energy debt, could trigger a broader mass default in the high-yield debt markets as a whole, which represent a couple of trillion dollars in very leveraged debt. High-yield energy debt is variously reported to constitute 20-30% of that bubble.

One of Two Results Possible

During the last decade’s “shale oil boom” which has propelled the United States toward the world lead in oil production, oil companies here and in Europe have taken on record levels of debt. This is true both of the independent shale oil producers and of the long-established oil majors, although for different purposes. The repayment of that debt requires prices for a barrel of (Brent crude) oil which range from $80-85 to $120.

Bankers See $1 Trillion of Investments Stranded in the Oil Fields
By Tom Randall

There are zombies in the oil fields.

After crude prices dropped 49 percent in six months, oil projects planned for next year are the undead -- still standing upright, but with little hope of a productive future. These zombie projects proliferate in expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela.

In a stunning analysis this week, Goldman Sachs found almost $1 trillion in investments in future oil projects at risk. They looked at 400 of the world’s largest new oil and gas fields -- excluding U.S. shale -- and found projects representing $930 billion of future investment that are no longer profitable with Brent crude at $70. In the U.S., the shale-oil party isn’t over yet, but zombies are beginning to crash it.

The chart below shows the break-even points for the top 400 new fields and how much future oil production they represent. Less than a third of projects are still profitable with oil at $70. If the unprofitable projects were scuttled, it would mean a loss of 7.5 million barrels per day of production in 2025, equivalent to 8 percent of current global demand.

FALLING Crude OIL Prices!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

JUNK Bonds.................................""OH SHIT""!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

Russia RECESSION...............................DEAD Ahead!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Wednesday, December 17, 2014

Fed calls time on $5.7 trillion of emerging market dollar debt
A share trader takes a phone call as he is seen behind a false one dollar bill at the German stock exchange in Frankfurt

World finance is rotating on its axis. The stronger the US boom, the worse it will be for those countries on the wrong side of the dollar
By Ambrose Evans-Pritchard

The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.

They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.

Much of the debt was taken out at real interest rates of 1pc on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are "short dollars", in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots.

The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a "considerable time" has gone, and so has the market's security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.

Officials from the Bank for International Settlements say privately that developing countries may be just as vulnerable to a dollar shock as they were in the Fed tightening cycle of the late 1990s, which culminated in Russia's default and the East Asia Crisis.

Risk aversion affects emerging market currencies
By Srinivas Mazumdaru 

Many emerging market currencies have plummeted in recent days, especially the ruble, amid expectations of an interest rate hike in the US. DW examines the reasons behind the plunge and the countries affected.

The tumbling value of the ruble has captured global attention in recent days. The Russian currency has lost more than 50 percent of its value against the dollar since the start of the year. The stark depreciation has led to comparisons with the crisis in 1998, when the Russian government devalued the currency and defaulted on its domestic debt.

The sharp fall has been linked to a collapse in oil prices, as well as the sanctions imposed by the West against Russia for its perceived role in the Ukraine conflict.

Crude prices have declined nearly 50 percent since June this year to around $55 a barrel, creating a problem for Moscow. Energy exports account for about two thirds of Russian exports, amounting to some $530 billion. Revenues generated by selling oil and gas support most of the government's spending.

Russia therefore is highly vulnerable to oil price fluctuations, and the country's central bank estimates the economy could contract by as much as 4.7 percent next year if the price of oil stays around $60.

It is, however, not just the ruble which has seen huge losses, but rather a host of emerging market currencies - ranging from the Indonesian Rupiah to Turkish Lira. For instance, the Rupiah touched 12,698 per dollar on December 15, its lowest level since 1998, before erasing some of its decline. Turkey's Lira dropped to a record low of 2.41 per dollar. 

Veteran EM Fund Manager Warns "The Youngsters Are About To Be Schooled"

With Emerging Market debt, equity, and FX rates coming under significant pressure once again, 48-year-old veteran EM fund manager Stephen Jen has a message for the new breed of EM fund managers, brace for more pain. As Bloomberg reports, with echoes of 1997-98's crisis at hand, Jen explains, "many [current managers] became EM specialists after the term ‘BRIC’ was coined in 2001 and don’t know any serious crisis," adding "they are about to be schooled." 

Hedge Fund Manager Who Remembers 1998 Rout Says Prepare for Pain
By Simon Kennedy

Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia.

He was soon working around the clock when investors began targeting the region’s currency pegs, first felling Thailand’s in July. The rout spread through Asia before rocking Brazil and Russia. It led to the collapse of Long-Term Capital Management, an event that introduced the Federal Reserve-brokered bailout.

If the 48-year-old native of Taiwan, with a PhD from Massachusetts Institute of Technology, sounds a little jaded now, it’s not without some reason. He says he worries that many emerging-market analysts are too young to remember the late 1990s. Instead they learned the ropes in an era dominated by the rise of Brazil, Russia, India and China -- a supposed one-way bet to prosperity.

“Many became EM specialists after the term ‘BRIC’ was coined in 2001 and don’t know any serious crisis,’’ says Jen, who now runs the London-based hedge fund SLJ Macro Partners LLP.

The youngsters are about to be schooled. Jen says echoes of 1997-1998 may be at hand.

Investors woke up today to Russia’s 1 a.m. interest-rate increase to defend the ruble. There’s the mounting likelihood of a Venezuelan default. Stocks from Thailand to Brazil are reeling. The Fed hasn’t even begun raising interest rates. 

The Economies of China and Japan are going to CRUSH Asia!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Main sea freight index at Baltic Exchange falls to 838 points

UNITED KINGDOM December 17 2014 4:35 PMTweet

LONDON (Scrap Register): The main sea freight index at Baltic Exchange for bigger vessels fell on Monday due to weaker rates for bigger shipping vessels.

The overall index, which factors in average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, down by 7 points to 838 points on Monday.

YELLEN Will be the Cause of the next ""GREAT Recession""!!!!!!!!!!!!!!!!!!!!! 

Emerging Markets...................................""OH SHIT""!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

Russia RECESSION......................................DEAD Ahead!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

CURRENCY Crisis.............................It's Coming!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

FALLING Crude OIL Prices!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The Economies of China and Japan are going to CRUSH Asia!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Main sea freight index at Baltic Exchange falls to 838 points

UNITED KINGDOM December 17 2014 4:35 PMTweet

LONDON (Scrap Register): The main sea freight index at Baltic Exchange for bigger vessels fell on Monday due to weaker rates for bigger shipping vessels.

The overall index, which factors in average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, down by 7 points to 838 points on Monday.

The main sea freight index at Baltic Exchange is the rate which tracks for ships carrying dry bulk commodities.

Japan suffers $8.5 billion trade deficit

TOKYO: Japan logged a trade deficit in November, the 29th straight month of shortfalls, despite a slight decrease in imports thanks to the recent plunge in crude oil prices and Japan's return to recession.

The 891.9 billion yen ($8.5 billion) deficit in November compared with a 737 billion yen gap the month before, customs data showed Wednesday. However it was 32 percent lower than a year earlier.

Japan's costs for oil imports sank 22 percent in November from a year earlier, reducing total imports by 1.7 percent from a year earlier to 7.1 trillion yen ($60.7 billion). Exports rose 4.9 percent to 6.19 trillion yen ($52.9 billion).

Japan's trade surplus with the US grew 20 percent over a year earlier to 582.1 billion yen ($5 billion) as an increase in shipments.

Of machinery offset a 12 percent drop in the value of car exports. Its deficit with China, its biggest trading partner, rose 10 percent.

Japan Exports Rise in Value, Fall in Volume

Japan’s exports grew 4.9% in value in November but fell 1.7% by volume, the latest indication that a weaker yen has failed to stoke exports and real economic activity.

The figures underscore the challenge facing Prime Minister Shinzo Abe, who won a decisive victory in Sunday’s election despite two consecutive quarters of economic contraction–a common definition of recession. A weak yen is a key element of Mr. Abe’s pro-growth policies, which he touts as a way to increase exports and investment at home.

But after two years in office he faces rising doubts about the benefits of a weak currency, and growing complaints about some of its side-effects, which frequently put him on the defensive during this month’s election campaign. Small businesses and consumers, whose wages haven’t kept pace with a sales tax increase and inflation, have been hit by resulting higher import costs, and economists say this may actually be weighing on growth.

The yen touched a seven-year low earlier this month, and is down around 30% versus the U.S. dollar over the past two years. Mr. Abe has asked exporters to take advantage of this by cutting overseas prices and expanding market share, which would increase production and boost the economy. But many exporters haven’t done so, choosing instead to book higher profits in yen terms when they convert overseas earnings.

Export prices last month fell just 1.9% from a year earlier, Bank of Japan data showed. Meanwhile, export volumes have been largely flat over the past two years, while their value has increased by around 10%, according to data from the Ministry of Finance.

“Unless prices are reduced more aggressively, Japanese companies, such as electronics [makers], are unlikely to take market share from competitors in other Asian countries,” said Yuichi Kodama, economist at Meiji Yasuda Life Insurance Co.

Japan export growth slows, may add to concerns over recession-hit economy

TOKYO: Japan’s exports grew for a third straight month in November from a year earlier, but much more slowly than expected and despite a sharp fall in the yen as slowing demand in Asia and Europe dampened trade.

The 4.9 percent rise in exports was much weaker than a 7.0 percent gain seen by economists in a Reuters poll, slowing from a 9.6 percent gain in October, Ministry of Finance data showed.

Weakness in exports could compound April’s sales tax rise which pushed the economy into a recessionary second quarter of contraction through September.

“Exports to Asia and Europe were weak. Europe’s slump caused by Russia warrants attention, but the slowdown in Asia-bound exports was probably a temporary reaction to October’s big jump boosted by one-off factors such as exports of ships to Singapore,” said Hiroshi Watanabe, senior economist at SMBC Nikko Securities.

“I still expect shipments to remain firm as the US economy continues to help spur output in Asia and Japan. That will be welcome to Japanese policymakers.”

Malaysia market dives as foreigners trim holdings
By Pauline Ng
The Business Times

AS oil prices continued to slip, foreigners concerned over Malaysia's fiscal position trimmed equity holdings to push the stock market 2 per cent lower and just below the psychological 1,700 level.

Analysts warned of further headwinds. The freefall in oil prices has hit the petroleum-producing nation the hardest in the region despite the government's assurances that the economy is diversified enough to withstand external shocks.

Oil-related earnings now contribute 30 per cent to government revenue from nearly 40 per cent in 2009.

There are concerns that fiscal deficit targets might not be met given that the 2015 budget was based on oil prices of US$100 (S$131.26) per barrel, compared to about US$62 at present.

The local currency has also taken a beating against a resurgent greenback, losing about a tenth since the start of the year and could conceivably shed more if the outflow continues.

Malaysia is particularly vulnerable to portfolio outflows because foreign investors have large positions in financial assets, especially in Malaysian Government Securities (MGS). In October, they held 46 per cent of MGS - albeit off the peak of 49.5 per cent in May 2013 - and 24 per cent of local equities.

In a strategy report dated Dec 15, AllianceDBS head of research Bernard Ching said year to date net portfolio outflow amounted to RM17.5 billion (S$6.6 billion), with RM11 billion of it in the third quarter.

China HARD Landing.................................HAS Begun!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Kyle Bass Japan..................................Abenomics HAS Failed!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

NOTHING Can STOP the 2015 ""GLOBAL RECESSION""........................NOTHING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Asia isn’t ready for a China crash

As China’s first full year of rebalancing draws to close, how has President Xi Jinping done? Reasonably well, it seems. Growth appears to be moderating gently, stocks continue to soar and most economists still foresee a soft landing rather than market-shaking meltdown for the world’s second-largest economy.

Next year, however, Xi’s team will have to get to the hard stuff: taming an opaque, unwieldy financial system. My question isn’t so much whether China will or won’t crash. It’s whether the rest of Asia is ready for the possibility of 5 percent or even 4 percent Chinese growth, as predicted by pundits like Larry Summers and Marc Faber. It’s almost certainly not.

Historically, hedge funds betting against China haven’t done very well. This week, in fact, the government is expected to revise 2013 GDP figures upward by as much as $275 billion, which on paper should help meet its target of 7.5 percent growth for the year.

For anyone who thinks China is operating even close to that number, though, I have two words: iron ore. Even more than the precipitous drop in oil, the halving of prices for these pivotal rocks and minerals ― as well as a 44 percent plunge in oil and tumble in coal and other commodities ― suggests that China may be braking rapidly.

It’s important to remember that however large, China’s economy is no more developed than South Korea’s was when it imploded in 1997. The Chinese financial system is less evolved than that of the Philippines and less open than Indonesia’s. Beijing’s $3.9 trillion of currency reserves are useful when market turmoil hits, as has happened in emerging markets this week. But that stash is dwarfed by the $19 trillion in credit extended by the banking system since the 2008 Lehman crisis, according to Charlene Chu of Autonomous Research Asia. And remember: China’s vast and opaque shadow-banking system obscures Beijing’s true liabilities. 

Asia needs to start bracing itself for China’s slowdown
By William Pesek

AS CHINA’S first full year of rebalancing draws to close, how has President Xi Jinping done? Reasonably well, it seems. Growth appears to be moderating gently, stocks continue to soar, and most economists still foresee a soft landing rather than market-shaking meltdown for the world’s second-largest economy.

Next year, however, Xi’s team will have to get to the hard stuff: taming an opaque, unwieldy financial system. My question isn’t so much whether China will or won’t crash. It’s whether the rest of Asia is ready for the possibility of 5% or even 4% Chinese growth, as predicted by pundits like Larry Summers and Marc Faber. It’s almost certainly not.

Historically, hedge funds betting against China haven’t done very well. This week, in fact, the government is expected to revise 2013 GDP figures upward by as much as $275 billion, which on paper should help meet its target of 7.5% growth for the year.

For anyone who thinks China is operating even close to that number, though, I have two words: iron ore. Even more than the precipitous drop in oil, the halving of prices for these pivotal rocks and minerals -- as well as a 44% plunge in oil and tumble in coal and other commodities -- suggests that China may be braking rapidly.

It’s important to remember that however large, China’s economy is no more developed than South Korea’s was when it imploded in 1997. The Chinese financial system is less evolved than that of the Philippines and less open than Indonesia’s. Beijing’s $3.9 trillion of currency reserves are useful when market turmoil hits, as has happened in emerging markets this week. But that stash is dwarfed by the $19 trillion in credit extended by the banking system since the 2008 Lehman crisis, according to Charlene Chu of Autonomous Research Asia. And remember: China’s vast and opaque shadow-banking system obscures Beijing’s true liabilities.

China Fault Lines: Where a Hard Landing Could Be Exposed in 2015
By Bloomberg News

China’s leaders are seeking to deleverage the economy without a hard landing. Six fault lines will be closely watched next year to gauge their success.

Risks to a soft-landing scenario include a credit crunch sparked by a shadow bank default or capital outflows, an external shock that undermines business confidence, a further slump in home sales, or rising U.S. interest rates, said economists and analysts interviewed by Bloomberg. While they don’t expect such outcomes, these are the areas identified that could trigger a plunge in growth or systemic risk in the financial industry.

To ensure China achieves growth of about 7 percent next year as forecast by economists, rather than a dive to 5 percent or less, policy makers must navigate the following:

China November home prices fall 3.7 pct yr/yr

Dec 18 (Reuters) - Average new home prices in China's 70 major cities fell 3.7 percent in November from a year earlier, the third consecutive month showing an annual fall, according to Reuters calculations from official data published on Thursday.

Compared with the previous month, home prices were down 0.5 percent in November, a seventh straight monthly drop following October's fall of 0.8 percent, the calculations showed.

Economists believe the cooling housing market poses the biggest risk to the world's second-largest economy, even as Beijing tries to stimulate overall growth.

Hong Kong Seen Hit by China Slowdown, Fed Move on Rates in 2015
By Lisa Pham

With an economy increasingly linked to mainland China yet a monetary policy still tied to the U.S., Hong Kong is set to be squeezed by diverging dynamics in the two nations, compounding challenges posed by political unrest.

The U.S. Federal Reserve yesterday reinforced forecasts for higher interest rates next year that would typically prompt Hong Kong to raise its borrowing costs. When the Fed was last tightening in 2004-06, Hong Kong’s economy was bolstered by surging growth in China. This time, China is contending with its weakest expansion in almost a quarter century, putting Hong Kong “between a rock and a hard place,” Nomura Holdings Inc. says.

“Slowing mainland Chinese growth will have a negative impact,” said Young Sun Kwon, a Nomura economist in Hong Kong. “Higher interest rates in the U.S. will result in higher interest rates in Hong Kong. That could be negative for Hong Kong property.” 

China’s Oil Demand Growth Has Fallen to Just 1.1%: ICIS China Study

Growth in demand for refined oil products in China has collapsed in 2014, with the world’s largest economy showing only a 1.1% increase over the past 12 months, a new study by the country’s largest energy analysis business shows.

The authoritative ICIS China Annual Petroleum Report, due for release in January 2015, calculates Chinese oil demand to have hit 503 million tonnes over the course of this year. The figure represents the slowest growth rate since 2000, ICIS China says in its 160-page study – an exhaustive and unrivalled annual review of China’s entire oil industry. Net imports of refined products have meanwhile fallen by 43% year on year as China’s refining industry has ramped up production, and overall dependence on imported products is now at just 2%.

The slowdown in demand growth comes despite a collapse in international oil prices since July, which has seen benchmark Brent crude fall from a peak of $114/barrel in June to just below $60/barrel today.

Overall energy consumption in China is expected to grow at a faster rate than oil: up by 3.4% year on year to 3.88 billion tonnes of coal equivalent in 2014. That figure will fall to just 3.2% growth next year, ICIS China predicts, with energy consumption at 4 billion tonnes.

In part, the slowdown in oil products demand growth is due to slower economic growth in China, ICIS China says, with 2014 coming in at 7.5% for the overall economy. However, it is also the inexorable effect of the country’s ongoing shift from heavy industry to lighter industry, service industries, and its focus on urbanisation. This is provoking a slump in demand for gasoil, while that for transportation gasoline remains relatively buoyant.

China Demand Drop Pushes Iron Ore Shipping Rates to 5-Year Low
By Naomi Christie

Iron ore and shipping costs plunged to the lowest in five years amid signs China’s slowing economic growth and a glut of the commodity are sapping seaborne trade.

China imported 67.4 million tons of iron ore in November, down 15 percent from October, according to customs data. This was the first November decline in China’s iron ore imports since 1998. The only other time November imports fell since records began was in 1996.

China’s economic growth will slow to 7 percent next year from 7.4 percent in 2014, according to economist forecasts in a Bloomberg survey. The rate to ship the commodity on a Capesize vessel to Qingdao, China from Tubarao, Brazil fell 4.4 percent to $12.47 a ton yesterday, the lowest since Jan. 9, 2009, data from the Baltic Exchange in London show. The Latin American country’s shipments fell 18 percent in November to 26 million tons, the lowest for the time of year since 2010, government data show.

“December might be even more disappointing than November,” Alex Gray, chief executive officer of Clarkson Securities Ltd., a unit of the world’s biggest shipbroker, said by phone on Dec. 15, citing his firm’s initial discussions with port agents in Brazil. “The absence of Brazilian volume in the scale we’d anticipated has been the key cause of the Capesize drop.”

Brazil is the second-largest exporter of iron ore in the world after Australia. Such cargoes have a greater impact on freight rates, as the country is three times farther from China than Australia. It takes 35 days to ship ore from Brazil to China, according to

Los Angeles, Long Beach port imports flat, exports fall
By Karen Robes Meeks

The slowing of the Chinese economy and ongoing bottlenecks at the ports of Los Angeles and Long Beach are contributing to slight dips in imports and double-digit dives in exports at the nation’s two busiest seaports last month, according to numbers released this week.

Imports dropped 2.7 percent to 333,153 units, while exports fell 16 percent to 150,568 units from November 2013 to last month at the Port of Los Angeles.

Los Angeles saw 663,346 cargo units move through its port in November, a 3 percent decrease when compared to last year. Empties, or empty containers to be replenished with goods, were up 10.6 percent to 141,923 units.

Meanwhile, the Port of Long Beach moved 581,514 cargo units last month, a 2.1 percent growth from the same time last month. Although the increase marked the busiest November in seven years for the port, imports were flat and exports fell last month.

Imports dipped 0.9 percent to 293,984 units, while exports dropped 14.5 percent to 129,960 units.

Empty containers, however, rose 30.2 percent to 157,570 units in Long Beach.

Port officials are attributing the soft numbers in part to the ongoing congestion at the ports due to the arrival of bigger ships, the lack of equipment and alleged slowdowns related to contract talks between dockworkers.

China HARD Landing.........................HAS Begun!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

China Real Estate..................................................""OH SHIT""!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

China Hong Kong

FALLING Crude OIL Prices!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Chinese EXPORTERS..........................Be Very Afraid of the HEALTH of The American MIDDLE Class!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

NOTHING Can STOP the 2015 ""GLOBAL RECESSION"".........................NOTHING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
A Pessimist's Guide to the World in 2015

December 17, 2014

Skirmishes in the South China Sea lead to full-scale naval confrontation. Israel bombs Iran, setting off an escalation of violence across the Middle East. Nigeria crumbles as oil prices fall and radicals gain strength. Bloomberg News asked foreign policy analysts, military experts, economists and investors to identify the possible worst-case scenarios, based on current global conflicts, that concern them most heading into 2015.

Potential Flashpoint:

Iran, failing to reach agreement with world powers on limiting its nuclear program, pushes through with development of a nuclear weapon. Israel moves to stop Iran’s efforts, setting off a regional war.

Potential Flashpoint:

Vladimir Putin undermines NATO members by stirring up trouble with Russian minorities in Estonia and Latvia, and with Russia’s Kaliningrad exclave between Poland and Lithuania. Recent airspace encounters show Russia’s willingness to test NATO’s capabilities.

Potential Flashpoint:

Putin-backed rebels, supported by Russian forces, drive further west in Ukraine to create a land corridor to join up with Crimea. That triggers deeper economic sanctions from the U.S. and the European Union and forces them to accelerate military support to the government.

Potential Flashpoint:

Confrontations break out between Chinese navy vessels and fishermen in South China Sea; Chinese and Japanese fighter jets engage in a dogfight over the disputed Senkaku/Daioyu Islands. The escalation brings in allies, inflaming nationalistic tensions.

Potential Flashpoint:

A North Korean submarine sinks a South Korean ship claiming it was spying. Citing the sinking of South Korean ship Cheonan in 2010, South Korea retaliates by sinking a North Korean vessel.

Greece Fails to Gather Support to Elect New President
By Antonis Galanopoulos and Marcus Bensasson

Greece moved a step closer to early elections after Prime Minister Antonis Samaras failed to gather enough support for his nominee in a parliamentary vote for a new head of state.

In voting in Athens yesterday, 160 lawmakers in Greece’s 300-seat chamber backed Samaras’s candidate for the presidency, Stavros Dimas, short of the 200 votes required in the first of three attempts this month. Samaras has 155 lawmakers in his governing coalition and failure to rally enough support for Dimas will lead to the dissolution of parliament.

“This is clearly at the lower end of the government’s expectations,” Michael Michaelides, a rates strategist at Royal Bank of Scotland Group Plc in London, said in an e-mail. “It will need a big political development between now and Dec. 29 for him to get the votes.”

Attention now turns to the second vote on Dec. 23, when Samaras again needs a two-thirds majority to win. If he fails in the third attempt, set for Dec. 29, parliament is dissolved and early elections will be called.

Samaras needs to do something to persuade more parliamentarians to support Dimas, Athanasios Vamvakidis, head of G-10 foreign exchange strategy at Bank of America Merrill Lynch, said in an e-mail after the vote. “Promising early elections may help,” he said. 

Potential Flashpoint:

Greece’s government falls, bringing to power anti-euro opposition leader Alexis Tsipras and weakening Greece’s status among euro countries, some of which face extremist movements of their own. Hamstrung European policy makers fail to respond. 

Israel Iran...........................It's going to HAPPEN!!!!!!!!!!!!!!!!!!!!!!!!

NATO Russia

UKRAINE...............................It's going to get MUCH Worse!!!!!!!!!!!!!!!!!!!!!!!!!

China Japan Military

North Korea

GREECE...........................Absolutely NO HOPE!!!!!!!!!!!!!!!!!!!!!!!!!!!

Like I have been WARNING about.............................2015 "IS" going to be a REAL BITCH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

""GLOBAL WAR"" in this DECADE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 
Putin’s Secret Gamble on Reserves Backfires Into Currency Crisis
By Evgenia Pismennaya, Ilya Arkhipov and Brad Cook 

Kremlin insiders gathered in secret last February to answer a crucial question for Vladimir Putin: Could Russia afford the economic blowback from taking over Crimea?

Moscow said yes.

Markets aren’t so sure.

As President Putin exulted at the Winter Olympics in Sochi 10 months ago, aides assured him Russia was rich enough to withstand the financial repercussions from a possible incursion into Ukraine, according to two officials involved in the talks.

That conclusion now looks like a grave miscalculation. Russia has driven interest rates to punishing levels and spent at least $87 billion, or 17 percent, of its foreign-exchange reserves trying to prevent a collapse in the ruble from spiraling into a panic. So far, nothing has worked.

Despite the assurances in Sochi, Putin now confronts the nation’s most serious economic crisis since 1998, when Russia’s devaluation and default reverberated around the world. U.S. and European sanctions and, more significantly, plummeting oil prices are eroding the reserves that emboldened Putin to annex Crimea despite an international outcry.

The story of Russia’s foreign-exchange reserves traces, in hard numbers, the arc of Putin’s power, from the collapse of the late 1990s to the oil-soaked riches of the 2000s to the new dread that prevails today.

Bears Return to Russia ETF as Ruble Spurs Short Bets
By Halia Pavliva

It took a market panic before investors were willing to start betting on future declines in the biggest exchange-traded fund tracking Russian stocks.

Short interest as a percentage of shares outstanding in the Market Vectors Russia ETF (RSX) surged to 11 percent on Tuesday, the highest level since March, when Russian President Vladimir Putin annexed Crimea from Ukraine. Bearish bets on the $1.2 billion fund touched 1.6 percent, the lowest this year, just a week earlier.

Short sellers, who aim to profit from price drops, moved into the ETF Tuesday as the ruble continued to slide even after policy makers raised benchmark borrowing costs 6.5 percentage points to 17 percent to stem the world’s worst currency decline. The ruble’s plunge set off a market rout that pushed Russian stocks to five-year lows as bond yields surged to a record. Short interest had been falling as investors were reluctant to wager that the cheapest equities in emerging markets would decline further.

The market sell-off “strengthened the overall negative sentiment,” Ilya Kravets, the New York-based director of investment research at Daniloff Capital, said by phone. “Russia is cheap, but everything depends on oil, and things are getting worse as the market is pricing in a deeper economic recession after the central bank increased rates, making loans unaffordable for businesses.”

EU Says Ukraine Needs $15 Billion as Curbs on Crimea to Tighten
By Jonathan Stearns, James G. Neuger and Mark Raczkiewycz

Ukraine needs $15 billion in financial aid, European Commission President Jean-Claude Juncker said, as the 28-member bloc plans to outlaw the sale of some energy equipment to the Crimea peninsula annexed by Russia.

The government in Kiev faces “enormous” challenges that include overcoming a recession, bringing peace to its eastern regions and ensuring adequate energy supplies, Juncker told the European Parliament in Strasbourg, France. The curbs on Crimea will be finalized today before the bloc’s leaders meet in Brussels, an EU official said, asking not to be named because the matter is private.

The former Soviet republic is relying on a $17 billion loan from the International Monetary Fund to stay afloat and stave off a default as its economy shrinks under the strain of the conflict and spending cuts. Foreign reserves are languishing at the lowest in more than a decade amid the deepest recession since 2009, with the bailout proving insufficient.

“Ukraine will need more help,” Juncker said yesterday. “The assessment of Ukraine’s financing gap has been completed by the IMF. Ukraine will need $15 billion in addition to what is already planned.”

The hryvnia has lost 48 percent against the dollar this year, the biggest decline among all currencies tracked by Bloomberg.

The Collapse of Putin's Economic System
By Henry Meyer and Ilya Arkhipov

The foundations on which Vladimir Putin built his 15 years in charge of Russia are giving way.

The meltdown of the ruble, which weakened to a record low this week, is endangering the mantra of stability around which Putin has based his rule. While his approval rating is near an all-time high on the back of his stance over Ukraine, the currency crisis risks eroding it and undermining his authority, Moscow-based analysts said.

The president took over from an ailing Boris Yeltsin in 1999 with pledges to banish the chaos that characterized his nation’s post-communist transition, including the government’s 1998 devaluation and default. While he oversaw economic growth and wage increases in all but one of his years as leader, the collapse in oil prices coupled with U.S. and European sanctions present him with the biggest challenge of his presidency.

Russia RECESSION....................................DEAD Ahead!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

CURRENCY Crisis..........................It's COMING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 
Ambrose Evans-Pritchard: Japan's recovery bid a threat to the world

HSBC has warned that Japan's barely disguised attempt to drive down the yen is becoming dangerous and may spin out of control, leading to an exchange rate crisis next year and a worldwide currency storm.

"It is entirely possible that the yen decline becomes disorderly and swift," said the bank, in one of the starkest criticisms so far of Japan's radical stimulus policies.

David Bloom and Paul Mackel, HSBC's currency strategists, voiced growing concern that Premier Shinzo Abe is backing away from fiscal retrenchment and may pressure the Bank of Japan (BoJ) to fund policies aimed at boosting household spending.

"The temptation to drift towards increasingly generous fiscal programmes could grow. We do not expect a 'helicopter drop' of income into every household, but the yen would react very badly to any sign that the Government is heading down a route of overt monetisation," they wrote in a report entitled "The Year of Living Dangerously". 

Japan export growth slows despite falling yen

Japanese exports rose less than expected in November despite a sharp fall in the value of the yen which should spur overseas sales.

Exports increased by 4.9 percent, compared with the same month last year. In October they had been up by 9.6 percent.

However analysts pointed out October was an exceptional month due to one-off factors such as the delivery of ships to Singapore.

EU-bound exports fell for the first time in 18 months. They were down 1.3 percent.

Japan government/ panel sees fiscal goal 'hard to meet' without radical steps

A finance ministry's key fiscal panel has called for drastic steps to cut government spending and secure revenue to meet Tokyo's aim of halving the primary budget deficit next year, a draft proposal showed, describing the goal as "quite difficult". The draft recommendation, seen by Reuters ahead of its submission to Finance Minister Taro Aso later this month, underlines a tough balancing act between reining in snowballing public debt and pulling the world's third-largest economy out of recession.

It provides a basis for the government's process for compiling next fiscal year's draft budget in January. The draft proposal highlights the need for Prime Minister Shinzo Abe to continue efforts to restore Japan's finances, even after his decision to postpone next year's planned sales tax hike by 18 months. The tax hike delay will leave a revenue shortfall of 1.5 trillion yen ($12.80 billion) in the state budget for the fiscal year from April 2015, making it hard to halve the primary budget deficit, excluding new bond sales and debt servicing, it said. 

Do Americans still think gas prices are too high?
By Sarah Dutton, Jennifer De Pinto, Anthony Salvanto and Fred Backus

Despite a recent drop in the price of gas, 45 percent of Americans still think the price is too high - but that is far below the 92 percent who thought so in 2012. Forty-nine percent now think the price is about right, according to a new CBS News poll.

Sixty-three percent of Americans say lower gas prices have not had any effect on their financial situation, but for a third, the price drop has been beneficial. Majorities say they will use any savings from lower gas prices to pay bills or save; fewer will pay off credit cards, do home repairs, spend more on holiday gifts, or travel more.

Fifty-three percent of Americans don't think a president has much to do with the price of gas, and 58 percent think the Obama administration's policies contributed not much or not at all to the recent price drop.
The Price of Gasoline

With the price of gasoline now below $3 a gallon, far fewer Americans think the price of gas is too high than thought so two years ago. Now 45 percent of Americans think the price of gas is too high, while 49 percent of Americans think it is about right. In April 2012, when the average price of gas was just under $4 a gallon, 92 percent of Americans thought the price of gasoline was too high. 

This Wasn't Supposed To Happen: 7 In 10 Americans To Save, Spend Gas "Tax Cut" On Bills Not Gifts


The lower-gas-price-tax-cut is "unequivocally good" meme is becoming more and more full of holes by the day. All that extra disposable income means moar iPhones, moar dining-out, and moar GDP... right? Wrong! As CBS reports, a new poll finds 73% of Americans will not use any extra cash from lower gas prices to buy additional gifts. What is even worse for America's credit-growth-dependent economy - 69% of Americans will use this extra disposable income to pay down outstanding bills and expenses. The final nail in the coffin of exuberance, two-thirds of Americans say they see no benefits from lower gas prices. But apart from that... keep the narrative going... 

Deflation Is Winning

And central banks are running scared
By Brian Pretti

Remember in the early part of the last decade, long before he was appointed the Chairman of the Federal Reserve, Ben Bernanke penned an article that caught widespread public attention entitled, “Deflation: It Can’t Happen Here” ?

Bernanke was referring to the deflationary pressures Japan had been dealing with for more than a decade. In the article, Bernanke laid out a game plan for how the Fed would respond if the US ever faced deflationary pressures. His miracle antidote for battling deflation? Printing money. Lots of it.

Little did anyone know at the time that this game plan would become the Fed’s exact response to the credit market crisis and deflationary impulse that erupted in 2008 and 2009.

Moreover, this game plan of printing money was ultimately adopted by every major world central bank in the wake of the meaningful downturn of that period.  We continue to live through this grand and unprecedented global experiment. 

US heading down the path of deflation?
By Chris Becker

Last night saw the release of the US consumer price index prints for November just before the FOMC meeting and painting a picture of a potential push into deflation for the worlds biggest (2nd?) economy.

The headline inflation rate came in at 1.3% annualised, and 1.7% excluding food and energy, with dropping oil prices obviously helping:

American Consumer Deleveraging 

Kyle Bass Japan........................Abenomics HAS Failed!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

China's #1 Export in 2015..............DEFLATION


DEFLATION...................................Your WORSE Nightmare!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Obamacare + 2015 = American Recession!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

ObamaCare fines loom for uninsured
By Elise Viebeck

People without insurance are running out of time to avoid the hefty ObamaCare penalties that the IRS will be handing down in 2016.

Consumers face a Feb. 15, 2015, deadline to buy insurance, after which those without coverage could be hit with fines of $325 per adult or 2 percent of family income, whichever is higher.

Uninsured people looking to escape the penalties are turning to the exchanges before they close, while insurance companies and tax preparers are seizing on the looming tax hit as a business opportunity.

One recent mass mailer from CareFirst BlueCross BlueShield obtained by The Hill warned potential customers in the Washington, D.C., region that going without health insurance coverage would come with a steep cost.

“When you don’t have health insurance ... you put your financial security at risk,” the mailer states. “That’s because under the new Affordable Care Act legislation, millions of Americans will have to pay an increased penalty tax of at least 2 percent of their income in 2015 if they go uninsured.”

Small businesses struggle with Obamacare premium hikes
By St. Louis Post-Dispatch

When President Barack Obama's administration delayed part of his controversial health care law, many small business owners were relieved.

Last year, the administration decided to give businesses more time to stay on their current "grandfathered" coverage before moving to plans that comply with the Affordable Care Act.

But the relief of being able to keep the same plan was short-lived for some small business owners.

Kurt Barks, the CEO of Complete Auto Body, found that the premiums for his company plan that covers about 40 workers would rise about 38 percent, even though it's the same coverage he has had for the last few years.

"My poor employees," he says. "It is killing them; it is killing me."

When Barks first learned of the double-digit rate increase, he scrambled to find alternatives. He looked at reducing benefits, switching health plans and even dropping coverage altogether.

Several senior employees -- key to his business -- said they would have to leave if he dropped coverage or cut benefits. That left him with looking at maybe switching policies.

But as many other small business owners found out, the option of leaving their grandfathered coverage and moving to an Affordable Care Act-compliant plan wasn't much of a choice at all. They found that getting comparable coverage would often be more than double the cost of staying with their existing coverage. 

Senate Leaders Demand Treasury, HHS Inform Consumers About Risks Of Coverage
By Michael F. Cannon

The Obama administration is boasting that 2.5 million Americans have selected health insurance plans for 2015 through the Exchanges it operates in 36 states under the Patient Protection and Affordable Care Act, and that they are well on their way to enrolling 9.1 million Americans in Exchange coverage next year. But there’s a problem. The administration is not warning ObamaCare enrollees about significant risks associated with their coverage. By mid-2015, 5 million enrollees could see their tax liabilities increase by thousands of dollars. Their premiums could increase by 300 percent or more. Their health plans could be cancelled without any replacement plans available. Today, the U.S. Senate leadership — incoming Majority Leader Mitch McConnell (R-KY), Majority Whip John Cornyn (R-TX), Conference Chairman John Thune (R-SD), Policy Committee Chairman John Barrasso (R-WY), and Conference Vice Chairman Roy Blunt (R-MO) — wrote Treasury Secretary Jacob J. Lew and Health and Human Services Secretary Sylvia M. Burwell to demand the administration inform consumers about those risks.

First, some background.

Obamacare....................................America, YOU Can't AFFORD this ""LIBERAL"" Screw JOB!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The Macro Economics of Falling Crude Oil Prices have Not YET begun to Tear a NEW ASSHOLE in the Economies of Global Crude Oil Producing Countries but EARLY into 2015 IT WILL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Mortgage Applications Tumble As Citi Warns Oil-Drop Risks Housing/Jobs Slump


Mortgage applications for home purchases fell almost 7% last week, fading recent gains and hovering once again back at 20 year-lows (entirely unable to reflect the housing 'recovery' for the average joe). The plunge in applications comes as mortgage rates crash back to 4% - the lowest in 19 months. The reason - apart from unaffordability - is explained by Citi's Will Randow who notes the spillover effects of the "unequivocally good for everyone" drop in oil prices has a dramatic effect on both jobs (prolonged price drop means a loss of ~200k jobs) and housing (starts expected to drop 100k if oil prices remain low). Maybe talking-heads should reconsider that "unequivocally good" narrative. 

   There "IS" some Serious PAIN Coming!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Output increase continues despite plunging prices

SOICHI INAI, Nikkei staff writer

NEW YORK -- Market players around the world are watching shale oil companies in the U.S. for hints about when the pace of production will slow. But while some of these companies are planning to reduce capital investment, there is no clear indication that the rapid expansion of shale oil output, which is widely regarded as the main culprit for the tumble in crude oil prices, will stop anytime soon. 

A visit to a major crude oil hub in the U.S. and interviews with experts reveal why shale players will likely keep ramping up production.

Optimistic outlook

Cushing, Oklahoma, where numerous crude oil pipelines converge, is the delivery point for West Texas Intermediate crude oil contracts. Visiting the city in late November, I asked the driver of a tanker truck parked near a cluster of huge crude oil storage tanks about the impact of falling crude prices. He said he was as busy as ever.

Oklahoma is among the U.S. states with high-quality shale sites.  I met Michael Teague, the state's secretary of energy and environment, at a coffee shop. Asked about his outlook for next year's crude production in the state, he was bullish, saying production increases in Oklahoma will continue for the time being 

Despite lower crude oil prices, U.S. crude oil production expected to grow in 2015

graph of drilling and production activities in North Dakota, as explained in the article text

The recent decline in crude oil prices has created the potential for weaker crude oil production. EIA's Drilling Productivity Report (DPR) includes indicators that provide details on the effect low prices may have on tight oil production, which accounts for 56% of total U.S. oil production. Analyzing these indicators and the changes in oil production following the drop in crude oil prices during the 2008-09 recession may offer some insight into possible near-term oil production trends. 

The price of West Texas Intermediate (WTI) crude oil delivered to Cushing, Oklahoma declined more than 31% from June to November 26 and another 13% after the late November announcement of the Organization of the Petroleum Exporting Countries (OPEC) decision to maintain the current production level. At $60 per barrel, the current price of oil is likely approaching or already below the expected per-barrel costs of some of the most expensive U.S. tight oil projects. 

Some of the most active production fields in the country are in North Dakota. Indicators tracked by the DPR and North Dakota's Department of Mineral Resources (DMR) cover much of the exploration and production process, from planning to production. These indicators include:

  • Permits. Before drilling begins, producers must sign lease contracts and apply for permits to drill exploration and development wells.
  • Rig movement. Drilling rigs must be secured and moved to permitted locations.
  • Spuds. Spudding is the term for the ground-breaking process of a new drilling project. In North Dakota, the spud count is a count of new wells drilled.
Based on the most recent data released by North Dakota's DMR, drilling and production activities in the state have not slowed, despite the significant decline in domestic crude oil prices since July 2014. Oil production in September 2014—the latest data available—rose 5% from the prior month. 

The number of permits issued in October 2014 was 28% above the September level, but it dropped 30% in November. However, when normalized based on the number of business days during those months, October is only 17% above September's level, and November is only 10% lower than October. 

Low Oil Prices to Slow, but Not Derail US Shale Boom
By Karen Boman

Recent declines in North Sea Brent and West Texas Intermediate (WTI) crude oil prices – and the recent decision by the Organization of Petroleum Exporting Countries (OPEC) to maintain oil output – has caused speculation about whether the boom in U.S. shale exploration and production could continue.

The U.S. shale revolution has created in a boom in U.S. oil production over the past five years, growing from 5.4 million barrels of oil per day (MMbopd) in 2009 to 8.6 MMbopd today. Shale gas production has also soared from 59.3 billion cubic feet per day (Bcf/d) in 2009 to more than 75 Bcf/d today, according to a report by the Deloitte Center for Oil and Gas Solutions. By year’s end, U.S. oil production level should be very close to 9 MMbopd, U.S. Energy Information Administration Administrator Adam Sieminski said Nov. 18 at the Deloitte Oil and Gas Conference in Houston.

However, the recent slide in crude oil prices has prompted several shale companies to reduce their 2015 capital expenditures as their profit margins thin out, Reuters reported Dec. 1. Last month, the International Energy Agency reported that falling oil prices could cut investment in U.S. shale oil by 10 percent in 2015. Reuters reported Dec. 8 that ConocoPhillips would cut its 2015 capital budget by 20 percent, or about $3 billion, compared with 2014. The company said it would focus on Eagle Ford and Bakken shale, but defer significant investment on less developed shale projects in Canada, the Niobrara and the Permian Basin. 

Lifting the U.S. ban on oil exports would send OPEC a message
By Chris Faulkner

Crude oil prices are down 40% in recent months. There's a surplus of 2 million barrels being pumped each day. Estimates are that demand for oil will fall in 2015.

And yet in the face of all this, the Organization of the Petroleum Exporting Countries, or OPEC, is holding its oil production steady. So far, the 12 OPEC countries appear willing to absorb huge losses in the hope that plummeting prices will make U.S. shale oil extraction unprofitable. If it can squeeze out some U.S. producers, OPEC hopes to regain its dominance and force the United States back into foreign oil dependence.

The United States has an effective potential countermove: Congress should lift the 40-year ban on exporting crude oil and keep U.S. producers in the game.

OPEC has good reason to feel threatened. The U.S oil business is experiencing an unprecedented production boom thanks to hydraulic fracturing, or fracking. According to the Energy Information Administration, U.S. oil production has risen to 9.08 million barrels a day — its highest level in more than 30 years. 

OPEC Signals “Wait And See” Approach Could Last A Year

Oil has lost almost half its value since this year's peak of $115 per barrel in June on slower global demand and the U.S. shale oil boom.
By Reuters

Core Gulf OPEC oil producers signalled this week they are prepared to wait as long as six months to a year to see the market stabilise, quashing hopes for any quick intervention to stop the price rout that took crude to under $60 per barrel.

Some OPEC watchers had identified $60 as a potential red line at which the group, which produces a third of global oil, was expected to send a signal to the market that the decline had been too fast and too steep.

But with Brent oil futures trading below that – down a fifth since the OPEC meeting just three weeks ago — some ministers are saying they see no reason for action at any price level.

Some OPEC ministers say the industry should look for other signals that prices had bottomed.

OPEC itself is struggling to predict what those signals could be — a total saturation of global stocks, a bankruptcy of a large oil company or a call from Moscow saying Russia is ready to join output cuts.

“The market takes time, it’s like a big gigantic ship,” Suhail Bin Mohammed al-Mazroui, oil minister of the United Arab Emirates, a close ally of OPEC kingpin Saudi Arabia, said on Monday.

“If the market takes three months, six months, a year to balance and then that would help all of us because we will all have a more mature stabilised market. Then (so) be it.”

Fellow Gulf OPEC member Qatar echoed that view on Tuesday. “We need to watch the market closely, but it will settle eventually,” Qatar’s oil minister, Mohammed al-Sada, said. 

OPEC will not step in to support oil prices: Kuwait

OPEC has no plans to intervene in the oil market to shore up sagging crude prices, the Kuwaiti oil minister said, as Brent crude breached the $60 mark.

“At OPEC’s meeting in November, we took two decisions,” Ali al-Omair said at a lecture in Kuwait City.

“The first was to keep the production ceiling unchanged and the second to hold the next meeting in June. So far, nothing has changed and there are no calls for holding an emergency meeting,” Omair said.

He declined to answer a question on what price would force the Organisation of Petroleum Exporting Countries to step in to bolster the market.

“As of now, there are no plans. We will talk about it when it comes,” the minister said in response to a question on whether OPEC would meet if prices drop to $40 a barrel.

The Kuwaiti minister said the current slide in oil prices had “surpassed all forecasts”, which initially predicted a slight drop in crude prices.

He said excess supplies in global markets had increased from 1.2 million barrels per day when OPEC met last month to 1.8 million bpd now.

Oil prices were also under pressure because “many world markets are saturated” with oil.

Earlier on Tuesday, Omair said OPEC should stick by its decision to maintain production levels despite sliding prices.

OPEC To Lose $375 Billion In Oil Revenues
By Michael Bastasch

Low oil prices are really starting to cut into OPEC’s finances. Energy Department data show that OPEC countries could lose $375 billion in export revenues through 2015 if oil prices average under $70 a barrel.

The U.S. Energy Information Administration reports that OPEC countries, except Iran, are set to earn about $700 billion for oil exports in 2014 — a 14 percent decrease from oil 2013 oil export revenues. But that slight decrease will be compounded in 2015 when oil export revenues slide 46 percent below 2013 levels to only $446 billion.

The primary drivers behind lost export revenue are decreases in OPEC exports and plummeting crude oil prices.

All in all, OPEC could be looking at $375 billion less in revenues in 2015 compared to 2013 — a huge blow to member state finances. Several OPEC members, like Venezuela, Iraq and Ecuador are running huge budget deficits, according to the International Monetary Fund. 

EIA: OPEC net oil export revenues expected to fall in 2014 and 2015
By PennEnergy Editorial Staff

Based on crude oil market assessments in the Short-Term Energy Outlook, EIA estimates that members of the Organization of the Petroleum Exporting Countries (OPEC), excluding Iran, will earn about $700 billion in revenue from net oil exports in 2014, a 14% decrease from 2013 earnings and the lowest earnings for the group since 2010. OPEC earnings declined in 2014 largely for two reasons: decreases in the amount of OPEC oil exports and lower oil prices, with the 2014 average for Brent crude oil projected to be 8% below the average 2013 price.

For similar reasons, revenues for OPEC (excluding Iran) in 2015 are expected to fall further, to $446 billion, 46% below the 2013 level. Brent crude oil is projected to average $68 per barrel in 2015, down from $100 per barrel in 2014 and $109 per barrel in 2013.

Iran is excluded in this calculation because current sanctions make it difficult to estimate their crude oil export revenues. Iran may be taking discounts on the crude oil it exports and may not be receiving all the revenue from those sales because of restrictions on accessing international payment systems.

Prolonged periods of lower oil prices have the largest effect on OPEC countries that are more sensitive to losses in revenue, most notably Venezuela, Iraq, and Ecuador. Governments in these countries were already running fiscal deficits in 2013, and their sovereign wealth funds are smaller compared to other OPEC members. This implies that these countries may not be able to fill budget gaps for as long as other OPEC members.

Further revisions to future budget plans may be required in many OPEC member countries, particularly the countries cited above, because of lower oil prices and large uncertainty over future global economic growth and crude oil production levels. Geopolitical risk may also be elevated because of lower government spending. 

Oil Producers Must Accept Darwinian Logic
By Gaurav Sharma

Futures and options contracts of major oil benchmarks for the first month 2015 are now open with the trading community confronting the reality of a supply glut head on. Both Brent, considered the global proxy benchmark, and WTI are trading below $60 per barrel; a level deemed as the floor below which investment in the sector is likely to suffer.

Since the current oil price decline is not a replication of 2008-09 with causative factors of both slumps being quite different, industry alarm bells aren’t ringing just yet. But they would if a highly likely $40 price-floor gets breached, however briefly that slippage might be.

Physical traders grasped it first, growing numbers of short-sellers opportunistically followed suit and then most hedge funds acknowledged the supply glut albeit after bad calls to the contrary over the summer. However, oil producers of myriad colors and stripes still remain in denial conjuring up conspiracy theories for public consumption.

For instance, overwhelmingly bearish oil market sentiment has Russia in a spot of bother. The ruble is in trouble despite several interventions by the country’s central bank and treasury as Western sanctions following the Ukrainian stand-off continue to bite. In response, vast majority of Russian media outlets would have you believe the Americans and Saudis are “colluding to punish” their country.

Domestic oil producers lose Rs 1.4-lakh-cr value in 6 months

Goldman says sector could lose $1 trillion globally if $60 becomes the new normal for Brent crude oil
By Dev Chatterjee

Even as global financial powerhouse Goldman Sachs has forecast a loss of $1 trillion for the global oil industry if the benchmark Brent crude oil price remains below $60 a barrel, Indian oil producers led by Oil and Natural Gas Corporation (ONGC), Reliance Industries, Oil India and Cairn India have already lost combined market value worth Rs 1,40,000 crore in six months. There has been a 46 per cent fall in global crude oil prices in the said period.

A Goldman Sachs report has said global oil producers will lose $1 trillion as they will be forced to shut unviable projects, with oil around $60 a barrel. The research looked at 400 wells across the world awaiting investment decisions.

Deep sea oil fields that require billions of dollars of investment will be at high risk, the report says.

The total investment at risk is $930 billion and oil companies will need to cut their expenses by 30 per cent to make their projects viable provided oil remains around $70 a barrel.

Domestic analysts say though share prices of Indian oil producers will remain soft, with crude oil inching towards $70 a barrel over 12 months the recovery will be fast. 

Petrobras Plummets 16%, Defers Q3 Earnings Date Again - Analyst Blog

Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras ( PBR ) declared that it has deferred its third-quarter 2014 earnings yet again. Petrobras was slated to release its third-quarter earnings last Friday but is now expected to provide the unaudited report within Jan 31, 2015, without violating debt covenants. 

The delay is owing to Petrobras' decision to incorporate the results of the investigation of new developments − post-Nov 13, 2014 − on existing money laundering and bribery cases. Following the announcement, Petrobras ADR plummeted almost 16% to touch a new 52-week low of $6.01 per ADR.

However, the company provided some limited financial information, which will not likely be impacted by the outcome of the ongoing investigations.

Pain looms for some US energy firms as banks reassess credit

HOUSTON, Dec 12 – Banks are responding to tumbling crude prices by trimming the value of oil reserves tied to credit lines, possibly causing a cash crunch for some highly-leveraged U.S. exploration and production firms.

With U.S. crude production still rising and the oil cartel OPEC showing no willingness to cut output to curb global oversupply, there is little to suggest that prices will rebound soon from a 40 percent slide since June.

Lower reserve valuations would reduce the amount of credit available. When banks next reassess loans, which they typically do twice a year in October and April, smaller publicly traded oil companies with heavy debt and largely used up credit lines could see some financing dry up.

“They may be able to refinance debt. But I don’t think anybody is going to be able to add on significantly more debt,” said Christian Ledoux, a senior portfolio manager at San Antonio-based South Texas Money Management.

Tapping other sources of financing such as new equity issues and asset sales has become harder for smaller companies given their shares’ underperformance against bigger peers.

For example, Goodrich Petroleum shares are down 75 percent, compared with an 13 percent slide in shares of larger Devon Energy Corp.

That could leave smaller firms at the mercy of costlier financing from hedge funds and private equity investors.

Banks typically value reserves at around 80 percent of the quote for benchmark West Texas Intermediate crude on the NYMEX futures market, and most credit lines now appear out of whack. 

Oil-Producing States Feel Pinch of Falling Prices

The skydiving price of gasoline is good news for drivers across the country, but it’s causing headaches for budget directors in oil-producing states that are now revising their numbers downward and hoping the that prices stabilize quickly.

"I haven’t seen anything this rapid in my time," Oklahoma Finance Secretary Preston Doerflinger told "I don’t think we’ve seen anything in recent history this dramatic."

The budgets in oil-rich states count on the revenue that’s generated from the oil and gas industry. In addition to the money generated from sales taxes that have accompanied the boom times that have come as a result of technological advances from horizontal drilling and hydraulic fracturing, the industry also kicks in millions of dollars each year in severance taxes.

For example, a recent study showed that 31.5 percent of the general fund in New Mexico is attributed to taxes, royalties and fees generated each year by the oil and gas industry.
But with the price of a barrel of oil plummeting from $107 a barrel to under $60 in the space of five months, states that had been counting on a nice chunk of change from energy companies are now expecting less money coming their way.

"Maybe as equally important as oil price and the ramifications of depressed prices on our economy is the possible ripple effect if the energy industry were to shrink in our state," Doerflinger said. "When I say that, I’m talking about income taxes and other types of revenue sources that can be affected by not having as many energy jobs in the state." 

500+ rigs may shut down as oil slides, analysts say
By Collin Eaton

As many as 550 drilling rigs may have to sit on the sidelines of U.S. shale oil patches over the next few months, analysts say, as oil prices have folded nearly in half since this summer.

The projections come a few days after Texas drilling rigs led the nation in a 1.4 percent weekly decline in the U.S. active rig count, according to oil-field services firm Baker Hughes. Oil companies cut 20 rigs in the Permian Basin, a sharp turnaround from the flurry of rigs and hydraulic fracturing equipment that had rushed to West Texas earlier this year.

“We think there’s a significant amount of pain coming” to the oil industry and its service companies next year, said Praveen Narra, an analyst with Raymond James. Any recovery in U.S. drilling activity likely will take longer than usual in oil-price downturns because the decline was set off by a glut in crude supplies, rather than less demand, he said.

Battening down the hatches: more oilpatch firms slashing 2015 budgets
By Lauren Krugel
The Canadian Press

CALGARY - Three Canadian oil and gas firms say they'll be reining in spending next year in the face of free-falling oil prices.

Shares in Penn West Petroleum Ltd. (TSX:PWT), Husky Energy Inc. (TSX:HSE) and MEG Energy Corp. (TSX:MEG) were all significantly higher on the Toronto Stock Exchange on Wednesday after they announced tighter capital budgets for 2015. The sector as a whole was up about seven per cent.

Penn West aims to spend $625 million next year, down by about a quarter from what it predicted a month ago and from what it estimates to have spent in 2014.

The company has cut its outlook for the price it gets for light, sweet crude in Alberta by the same amount to an average of $65 a barrel next year.

Beginning in the first quarter of next year, Penn West is slashing its quarterly dividend to three cents per share from 14 cents. It's also suspending its dividend reinvestment program "until further notice."

Profitability is more important than increasing production, with oil prices falling by about half over the past six months, said CEO Dave Roberts.

Unions voice fear for North Sea oil production after Wood Group cuts contractors' pay

The concern has been raised with Energy Secretary Fergus Ewing as more than 1300 North Sea contractors were told by energy services firm Wood Group PSN that they face a further cut in pay amid a plunge in the world oil price.

The Aberdeen-based company announced that rates paid to UK offshore and onshore contract staff will be reduced by up to ten percent from the end of January. Salaries will also be frozen for the majority of Wood Group onshore employees.

It follows an earlier ten percent reduction for onshore contract workers on June 1.

Wood Group, which employs 12,000 people in the UK, recently secured a £477m contract from BP. It plans to create 150 new jobs as a result of the deal.

But unions believe this is just the tip of the iceberg, having already dealt with a host of pay cuts in the past year.

Jake Molloy, regional organiser of the RMT union's offshore energy branch, believes oil firms need better incentives like tax cuts to prevent the "curtain falling" on oil production.

"If you have an oil price which is below $50 a barrel with the level of taxation we have got then it is just not economic anymore. We need government intervention," he said.

The latest cut comes after energy giant BP announced plans to cut contractor pay following a similar move by Shell which cut rates by 15per cent on November 1.

Romania discovers biggest oil gas deposit in 30 years

Romania discovered a new deposit of crude oil and natural gas, which may be the biggest discovery of its kind in the past 30 years in the south, a Romanian oil company announced Wednesday.

According to OMV Petrom, a subsidiary of the Austrian group OMV, the deposit was discovered at a depth of 2,500 meters in the south of Buzau County.

The estimates obtained from the production tests indicate a potential production per well of 1,200-2,100 boe per day.

The discovery has been made under the onshore exploration partnership signed in 2010 by OMV Petrom and Hunt Oil Company of Romania, the company said, adding that the exploration investment led to this discovery amounts to 5 million euros (6.25 million US dollars).

OMV Petrom is the largest producer of oil and gas in southeastern Europe, with an annual production of crude oil and natural gas of 66 million boe.

Country Analysis Note

  • Romania’s energy strategy is to secure supply through both fuel imports and domestic supplies and maintain a balanced energy resource portfolio by promoting clean coal technologies, nuclear energy, renewable energy expansion, and shale gas development.
  • Romania has nine crude oil refineries with a total capacity of 467,642 barrels per day (bbl/d) according to the Oil & Gas Journal (OGJ), which is among the largest refining capacities in Eastern Europe. Although Romania's refineries operate below capacity, refinery output exceeds domestic consumption allowing the country to export the surplus petroleum products. Romania consumed 215,000 bbl/d of petroleum in 2013.
  • Oil production in Romania has steadily declined over time. Total crude oil and other liquids production in Romania was 104,000 bbl/d in 2013, down from around 134,000 bbl/d in 2003. Romania has the fourth-largest crude oil reserves in Europe with 600 million barrels of proved reserves as of January 1, 2014, according to OGJ estimates.
  • Dry natural gas production has declined steadily over the past three decades, from its peak of 1.4 trillion cubic feet (Tcf) in 1983 to 375 billion cubic feet (Bcf) in 2012. Romania has the fifth-largest natural gas reserves in Europe with 3.7 Tcf of proved reserves as of January 1, 2014.
  • Romania is looking to develop a shale gas industry and reduce its reliance on Russian natural gas supplies. According to Eurogas, imports of natural gas from Russia accounted for 24% of the natural gas Romania consumed and for 100% of the natural gas Romania imported in 2012.
  • According to the recent EIA study, Technically Recoverable Shale Oil and Shale Gas Resources, Romania holds 51 Tcf of technically recoverable shale gas resources. The government decided to end a moratorium on shale gas exploration in March 2013, and Chevron began exploratory drilling in 2014. However, public opposition against shale gas exploration remains high and numerous protests have been staged around Romania. The government remains concerned about environmental issues related to shale gas development.
  • Romania had a total electricity generating capacity of 58.8 billion kilowatthours in 2011. Romania’s two nuclear power plants generate about 20% of Romania’s electricity. Romania intends to build two additional nuclear plants to increase the share of electricity produced by nuclear to 40%.
  • Renewable energy, mostly from hydroelectric generation, accounted for 23% of Romania’s gross final energy consumption in 2012, according to Eurostat data. The country is one of few in the European Union on track to meet its 2020 renewable energy target, which involves renewable energy accounting for 24% of Romania’s gross final energy consumption.

FALLING Crude OIL Prices!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Russia RECESSION...........................DEAD Ahead!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

OPEC "IS" Totally SCREWED in this GAME of Chicken this TIME!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

DEFLATION..............................YOUR Worse NIGHTMARE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

Nothing Can STOP the 2015 ""GLOBAL RECESSION"".................NOTHING!!!!!!!!!!!!!!!!!!!

READ Folks......................Connect the DOTs...............The Collapse of Crude Oil Prices "IS" going to be SEEN in 2015 as the Evil TWIN of the U.S. Housing Collapse of 2007-2008. The Coming CORRECTION "IS" going to be FRICKING BRUTAL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 

The Fracturing Energy Bubble Is the New Housing Crash
By David Stockman

Let’s see. Between July 2007 and January 2009, the median US residential housing price plunged from $230k to $165k or by 30%. That must have been some kind of super “tax cut”.

In fact, that brutal housing price plunge amounted to a $400 billion per year “savings” at the $1.5 trillion per year run-rate of residential housing turnover. So with all that extra money in their pockets consumers were positioned to spend-up a storm on shoes, shirts and dinners at the Red Lobster.

Except they didn’t.  And, no, it wasn’t because housing is a purported  “capital good” or that transactions are largely “financed” at upwards of 85% leverage ratios. None of those truisms changed consumer incomes or spending power per se.

Instead, what happened was the mortgage credit boom came to a thundering halt as the subprime default rates became visible. This abrupt halt to mortgage credit expansion, in turn, caused the whole chain of artificial economic activity that it had funded to rapidly evaporate.

And it was some kind of debt boom. The graph below is for all types of mortgage credit including commercial mortgages, and appropriately so. After all, the out-of-control strip mall construction during that period, for example, was owing to the unsustainable boom in home construction—especially the opening of “new communities” in the sand states by the publicly traded homebuilders trying to prove to Wall Street they were “growth machines”.

Soon Scottsdale AZ and Ft Myers FL were sprouting cookie cutter strip malls to host “new openings” for all the publicly traded specialty retail chains and restaurant concepts—–along with those lined-up in a bulging IPO pipeline. These step-children of the mortgage bubble were also held to be mighty engines of “growth”.  Jim Cramer himself said so—-he just forgot to mention what happens when the music stops.