1. Oil and the Global Economy
New York futures continued to slide last week closing Friday at $81.01 for the fifth weekly loss. London oil traded quietly around $86 a barrel to finish out the week at $86.13, also down for the fifth consecutive week. There has been no change in the markets’ perception that there is still too much oil chasing too little demand. The only foreseeable change in the situation will come at the November 27th OPEC meeting when we will know whether the Saudis and other Gulf Arab states will cut their production in an effort to raise prices. The other major exporters, particularly Russia, Iran, and Venezuela, are in near desperate need of all the oil revenue they can get and are unlikely to cut anything.
There was a rebound in the markets at mid-week when it was reported that Saudi sales in September were 328,000 b/d lower than in August, but the rally died when it was further reported that Saudi production had increased by 100,000 b/d last month with the rest of the oil going into storage. The weekly US stocks report showed the crude inventory increased by 7 million barrels the week before last. The stockpile at Cushing, Okla. was up a bit to 20.6 million barrels which about what is necessary for a smooth flow of futures market deliveries.
Of long-term interest was the EU leaders’ agreement last week for a mandatory 40 percent cut in emissions between 1990 and 2030 and a major emphasis on renewables. With several Asian nations cutting government subsidies for oil products, a marked economic slowdown in China, and a sluggish US economy, large increases in demand for oil products seem unlikely in the immediate future.
US natural gas futures continue dropping from a high of $4.15 per million at the beginning of the month to a close on Friday of just above $3.60. The weekly natural gas inventory report showed a build of 94 billion cubic feet which was well above the five-year average build for the week of 70 billion. Weather forecasts are pointing to milder than normal temperatures across the US in November.
2. The Middle East & North Africa
resilience
