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Oil Surges After OPEC+ Said To Agree On 100Kb/d Production Cut

Oil Surges After OPEC+ Said To Agree On 100Kb/d Production Cut

And there it is: the half life of the infamous fist bump proved to be less…

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Oil Surges After OPEC+ Said To Agree On 100Kb/d Production Cut

And there it is: the half life of the infamous fist bump proved to be less than two months, with a delegate telling Reuters that OPEC+ supports a 100kb/d reduction in oil output for October, meaning it's a done deal.

  • *OPEC+ JMMC SUPPORTS 100K B/D OIL-OUTPUT CUT FOR OCT: DELEGATE

... just as we predicted.

* * *

The much-anticipated OPEC+ meeting later on Monday has all options on the table for oil, Bloomberg's Nour Al Ali writes, adding that whatever the decision is on production in October, the alliance has the upper hand, which is bullish for the oil futures market. 

A delegate has told Bloomberg that OPEC+ will discuss a range of oil-policy options at Monday’s meeting including a 100k b/d output cut - reversing last month's just as symbolic output hike following Biden's begging for more oil. Other options include maintaining production at current levels as well as an output cut before the next month's meeting.  

That much appears to be priced into futures markets, which remained about 2.7% higher at around the $95-level in Brent crude futures.

As Al Ali reminds us, we know from Saudi Arabia, that perhaps oil at current levels isn’t a fair reflection of the physical market’s tightness. Historically, the leader of the alliance is known to view prices at around $100 as fair. 

Meanwhile, disruptions to global oil supply remain key. As the EU discusses a price cap on Russian oil, many members of the 23-nation alliance struggle to increase their output due to various reasons, and the outcome of a potential Iran nuclear deal remains uncertain. Technical experts at OPEC+ recently slashed forecasts for this year’s supply surplus in half, to 400,000 barrels a day, and expect a supply deficit in 2023. 

Finally, as volatility picks up, the futures market (which is now "completely broken" according to oil trader Pierre Andruand) poses a conundrum for the alliance. Even as bearish factors such as a looming global economic slowdown and reduced demand out of China push prices lower, the European energy crisis puts the alliance back in the driver’s seat as an oil-for-gas substitution might be needed to keep the continent warm this winter.

Here's what else to expect from today's OPEC+ meeting which takes place as the US is out on vacation.

Courtesy of Newsquawk, here is a full preview of today's JMMC and OPEC+ due at 12:00 BST

SCHEDULE: On September 5th, the Joint Ministerial Monitoring Committee (JMMC) will review the findings of the JTC and make a recommendation to the decision-making OPEC+ group. The JMMC is set to meet at 12:00BST/07:00EDT, with the OPEC+ ministerial meeting guided around 12:30BST/07:30EDT.

PRIOR MEETING: On August 3rd, OPEC+ agreed to hike total September quotas by 100k BPD. Split among most members, Saudi Arabia’s share was increased by 30k BPD, and the UAE’s by 7k BPD. The White House welcomed the decision, since it eases some pressure on Washington in the short term at least; the US Energy Department said at the time that it has seen a remarkable decline in oil prices, and wanted even lower prices.

LATEST SOURCES:

  • Sources briefed on Saudi's thinking says Saudi has not yet made a decision to tweak OPEC+ policy, but the energy minister is under pressure to keep prices near USD 100/bbl, FT reported: but the range of complicating factors could make the Kingdom opt for a pause.
  • Russia doesn't currently support an oil output cut and OPEC+ is likely to keep its output steady when it meets Monday, according to people familiar with the matter cited by WSJ. Russia is said to be concerned that production cut would signal crude supply is outgripping demand, thus reducing leverage will oil consuming nations.
  • Reuters sources said OPEC+ is to weigh a rollover or small cut at its meeting on Monday Two out of five sources said the group could weigh a small cut of 100k BPD to bring quotas back to August levels. Five sources said existing policy could be rolled over.

RECENT SOURCES:

  • OPEC+ is reportedly not currently discussing the possibility of reducing oil production, and one source says it is too early to talk about reduction, according to TASS; note: this quote has subsequently been withdrawn from the article, without an explanation yet provided.
  • Reuters sources said OPEC+ might lean towards an oil output reduction when and if Iranian production returns, whilst warnings cuts may not be imminent. (23rd Aug)
  • WSJ reported Saudi Arabia and its allies are open to oil-output cuts to keep prices high, and the comments from the Saudi Energy Minister have been backed by some OPEC members, such as Iraq, Kuwait, and Algeria for now. (23rd Aug)
  • Five OPEC+ sources told Argus that a formal proposal to reduce production was not on the table, but another said cuts were possible "if needed". (24th Aug)
  • Saudi Arabia and UAE could pump significantly more oil in the case of a winter crisis, but would only do so if supply worsened, according to Reuters; sources said OPEC members possess around 2.0-2.7mln BPD of spare capacity. (4th Aug)

NOTABLE COMMENTARY:

  • Saudi Energy Minister said OPEC+ may need to tighten output to stabilise the market and that the oil futures "disconnect" may force OPEC+ action. Furthermore, he stated OPEC+ will soon start work on a new accord for post-2022 and has the means to deal with market challenges including cutting production at any time and in different forms, while he also stated that the oil market is overlooking limited spare capacity and faces extreme volatility amid low liquidity, according to Bloomberg. (22nd Aug)
  • Russian Deputy PM Novak said Russian oil producers support an extension of the OPEC+ deal after 2022. Russia and partners will discuss an extension in October.
  • UAE is supportive of the latest statement from Saudi Arabia on crude markets, according to Reuters citing sources. (26th Aug)
  • Iraq supports the statement from the Saudi oil minister on extreme volatility within oil markets and believes the OPEC alliance will take all necessary measures to achieve market balance, Bloombergsaid. Iraq said thin liquidity and extreme fluctuations in oil futures markets lead to prices being far from fundamentals, and OPEC has several tools to combat market fluctuations, due to discrepancies between futures and spot markets. (24th Aug)
  • OPEC President (Congo) said he is open to an oil production cut, according to WSJ. (25th Aug).
  • Algeria said it's ready to balance oil market with OPEC+ partners; concerned about elevated oil price volatility which does not reflect a major change in fundamentals. (24th Aug)
  • US State Department says conversations will continue with OPEC+ and other partners. (22nd Aug)
  • Russia's Gazprom CEO called for the OPEC+ deal to be extended, and geopolitics are behind high oil prices and OPEC+ is not to blame for it. (30th Aug)
  • OPEC Secretary General said fears of a Chinese slowdown have been taken out of proportion, "relatively optimistic" on the 2023 oil outlook. OPEC Sec Gen says he sees a likelihood of an oil-supply squeeze this year, open to dialogue with the US. Still bullish on oil demand for 2022. Too soon to call the outcome of the September 5th gathering. (17th Aug)

JTC FINDINGS: The OPEC+ Joint Technical Committee (JTC), under a revised analysis due to underproduction by members, cut its 2022 surplus forecast by half to 400k BPD and flipped the forecast for 2023 to a deficit of 300k BPD. Assuming producers hit their quotas, the JTC sees the 2022 oil market surplus at 900k BPD, +100k BPD from the prior report; it also acknowledged the relevance of the Saudi Energy Minister's comments on volatility and thin liquidity of crude markets, according to Reuters.

FACTORS IN PLAY

IRANIAN NUCLEAR DEAL:

The Iranian Nuclear Deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), has been in a state of limbo following a string of unsuccessful negotiations between members, namely Tehran and Washington – who have resisted making concessions up until recently (a recent Newsquawk analysis can be found here). The Biden administration has attempted to revive the deal to bring energy prices down as the West shuns Russia's oil and gas. In March 2022, the Iranian oil minister was cited saying Iranian oil production capacity can reach its maximum less than two months after a nuclear deal is reached. Iran pumped an average of 2.4mln BPD in 2021 and plans to increase output to 3.8mln BPD if sanctions are lifted, with the National Iranian Oil Company (NIOC) chief also suggesting the possibility of over 4mln BPD by year-end. More recently, on August 31st, the EU's foreign policy chief said on he was hopeful the Iran nuclear deal could be revived "in the coming days" after receiving "reasonable" responses from Tehran and Washington to his proposed text.

SPARE CAPACITY:

OPEC+ is burdened with limited spare capacity, with Saudi Arabia and the UAE the members with the most output power left. As a reminder, the IEA estimates Saudi has a short-order capacity (reachable in less than 90 days) of around 1.2mln BPD, with the longer-term capacity predicted to be nearer to 2.1mln BPD. The argument OPEC watchers have been flagging is the state of confidence within the group (to stabilise the oil market) if they have no spare capacity, with oil traders warning of a potential upward spiral in oil prices if this “worst case” scenario was to occur.

GLOBAL GROWTH:

The COVID situation in China remains a headwind for global growth and overall demand. Several Chinese cities have tightened restrictions in recent days, with the latest major update being the Chinese metropolis of Chengdu, which will affect 21mln residents - this is China's largest city-wide lockdown since Shanghai in June. Furthermore, Moody's became the latest agency to downgrade its global economic growth forecast - "the risk of further energy shocks remains high. As for monetary policy, it will be tricky for central banks to navigate to an equilibrium where inflation falls but economic activity does not slip into a deep recession. China's low tolerance for COVID-19 outbreaks and weakness in its property sector pose risks to its growth outlook," Moody's said.

EU ENERGY MEETING:

The holder of the EU’s rotating presidency, the Czech Republic, has called for an emergency energy meeting on September 9th in Brussels to discuss a broader solution to the rise in energy markets. "The main task... is to separate the price of electricity from the price of gas, and thus prevent Putin from dictating to Europe prices of electricity with his shenanigans with gas supplies," the Czech Industry Minister said. Power prices have been on an exponential rise in recent weeks, with French and German contracts breaching both EUR 1,000/MWh (note: natural gas prices have seen some pull-back recently after EU officials pledged to take action). The Czech Industry Minister expects draft proposals next week. One-fifth of European electricity is generated by gas-fired power plants. A Commission official also said the EU is looking at energy price caps as well as options for lowering electricity demand, including looking at windfall taxes in the context of high energy prices.

OIL PRICES & MARKET SHARE:

Oil prices have been volatile since OPEC's last meeting, and somewhat unstable with Brent in a USD 15/bbl range. The Saudi Energy Minister said OPEC+ seeks to calm a "yo-yo" oil market that he views as a threat to energy security and the global economy. Some have also suggested the Saudi commentary indicates an "OPEC put", i.e., a price floor - however, his comments were seemingly more related to volatility. Meanwhile, IEA's Birol said a further strategic petroleum reserve release is not off the table, and Russian oil production has not fallen as much as previously expected.

Amid the shunning of Russian energy from the West, market share has been rejigged, with some Asian nations upping imports of Russian crude (see figure below via S&P Global). There have also been reports that Russia is mulling oil discounts of up to 30% with Asian nations in response to the price-cap push, according to Bloomberg.

Meanwhile, Iraq's SOMO said it can redirect more crude oil exports to Europe if needed, according to Reuters citing a SOMO source. SOMO began exports to Europe in June and said Iraq has adjusted export flows as a result of increased competition in Asian markets.

Tyler Durden Mon, 09/05/2022 - 07:43

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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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