Oil's eventual recovery, part one

Right now we are experiencing something which has only happened twice in nearly 30 years, a greater than 50% year over year drop in the price of oil.  The previous event happened during the great financial panic of 2008 - 2009.  Today the US, China, or Western Europe aren't experiencing a severe recession, so what triggered this dramatic fall?  At it's simplest, supply exceeded demand.  The how and why is fascinating.  Some quick charts describing the extent of the decline Year over year percentage change in the price of oil. Absolute price - Beside the dip to 40 during the great financial crisis, the last time US oil prices flirted with 40 dollars was in 2004. So what caused the fall?  Note the graph below, showing oil production levels of the largest five producers up to 2014.   US oil production grew 15.9% from 2014 to 2013 (Source: BP statistical review) and not only was this the largest percentage increase in the world, it was also from one of the largest suppliers in the world.  In fact in 2014 the United States pumped more oil than any other country in the entire world. From a nadir in 2005, US production rose nearly 70% by 2014 -- a increase of more than 4.7 million barrels a day.  Additionally total world oil production increased by ~2.3% in 2014.   Demand did not keep pace with supply however.  Source: yardeni.com Note the graph above hasn't shown a decline in world crude oil demand since the great recession; instead supply outstripped demand and prices fell.  Saudi Arabia exacerbated the situation by pumping even more oil. (I'll speculate as to WHY later) Saudi Oil Production source: moslereconomics.com Remember all that talk about Peak Oil so many years ago?  American oil companies evidently didn't read the articles calling for the death of oil production.       Source: Google Trends The internet keeps track of almost everything now, so make your predictions carefully. Even the New York Times piled onto this theme; stating Malthus was eventually right and we'd better get used to it (Peak Oil) http://www.nytimes.com/2006/11/29/opinion/29homerdixon.html?pagewanted=all While I may appear to be picking on these predictions, and I am (a little) I would rather highlight how hard it is to make predictions, especially long term forecasts.  I will make a few in later missives.  Be careful with those.  So how did the US reverse the inevitable decline in oil production?  A technique called fracking (aka shale oil or tight oil) altered the cost structure and timing of extracting oil and natural gas from locations previously thought to be uneconomic.   Below is a quick video and some additional links describing the technique: http://www.eia.gov/todayinenergy/detail.cfm?id=15571 https://en.wikipedia.org/wiki/Tight_oil https://www.youtube.com/watch?v=VY34PQUiwOQ Fracking can resonate for some of my readers as an especially dangerous form of petroleum extraction.  The linked video is from an oil company, so they will show the process in a positive light without discussing any of the possible downsides. (Such as waste fluids intruding into water aquifers)  Google any of the terms and you'll find a strident debate regarding the safety of this new technique.    Regardless of the safety of the process or whether it should be employed at all, fracking and tight oil extraction techniques are currently legal in America and from my reading of the current regulatory climate will remain so.  Even a recent EPA report on fracking provides fodder for both sides:  https://rbnenergy.com/cmon-gimme-good-water-epa-draft-report-on-hydraulic-fracturing

Fracking allows for the extraction of oil and natural gas from areas previously thought uneconomic.  New wells are  drilled very quickly and productivity in drilling speed and initial flow rates continue to rise.  Specific examples are always illustrative.  (source: http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf ) Notice on the upper left image how initial oil flows increased from less than 100 barrels a day to ~800 barrels in the Eagle Ford region (Texas), a greater than x8 increase in productivity!  This has catapulted Eagle Ford production to more than 1.2 million barrels a DAY. On its own the Eagle Ford today would be considered one of the top 20 countries in the world for oil production from nearly nothing in 2010.  Scroll through the linked report above and you'll see comparable increases in both natural gas and oil for other regions of the country. One can also see the quick drop off in production for both oil and natural gas since the collapse in energy prices.  The rapid decline rate (more on that later) from these new techniques is both a blessing and a curse The game has changed, and OPEC knows it. This new technology (fracking) has disrupted the oil production regime, creating a new potential avenue of supply not only in America, but the rest of the world.    How this new technology changes energy pricing as well as geopolitics is too much for just one post.  I'll try to dissect the situation later.

More energy posts

Another dump of energy articles, questions, etc.

Will big oil charge ahead while smaller E&P's face liquidity issues?
http://on.wsj.com/1KsPoya via @liamdenning
The huge energy companies may be able to power through this downfall assuming prices start rising and they can swoop in and gobble up some low priced assets in the wake of the collapse.

Productivity improvements in oil and nat gas production have been very impressive over the last few years so looking at rig counts over a long time period have lost their efficacy.

https://rbnenergy.com/getting-better-all-the-time-productivity-improvements-crude-production-and-moores-law 

Great post on the recent improvements

World versus US oil prices
http://research.stlouisfed.org/fred2/graph/?g=10uD

For a while US (WTI) prices separated quite dramatically from world prices (BRENT) Will this recur in the future?  The spread helped US refiners earn outsized profits.

Will the Keystone pipeline ever get built?
http://seattletimes.com/html/nationworld/2025244144_pipelineeconomicsxml.html

We may see instead a pipeline going east / west in Canada.  The oil must flow!
http://bigstory.ap.org/article/canada-oks-oil-pipeline-pacific-coast

Crude oil shipped via rail has exploded over the last few years.  Will this trend continue?
https://www.aar.org/data-center/rail-traffic-data

Did oil shipments crowd out coal shipments? And will the coal finally get to the power plants?

http://www.npr.org/2014/09/23/350946899/stockpiling-coal-for-winter-proves-problematic-for-power-plants?ft=3&f=1003,1004,1007,1013,1014,1017,1019,1128

Another article on floating storage

http://ftalphaville.ft.com/2015/01/09/2083862/the-return-of-floating-storage-a-k-a-the-sharks-are-back/

Some Questions regarding oil, nat gas, and energy in general

Some questions have been floating about in my head after the great fall in oil prices and their rippling through all the other various forms of energy.  The predictions are few, if any, just a lot of thinking out loud and links. I've been collecting all this in too many separate nooks and crannies and it is time to collate and collect my thoughts and links.

It's not pretty but it gets the data posted an in one spot.  Questions are just questions, don't look for subtext. Hopefully there will be more than one post.

Will re fracking now become more of a thing?  With lower rigs costs and already built in infrastructure will the older fracked fields get a makeover?

http://climateerinvest.blogspot.com/2015/01/oil-its-cheaper-to-refrack-slb-hal-wft.html

Consumers will gain from lower oil prices yet industries related to oil production, distribution, transportation will suffer.  Which will adjust faster? Concentrated pain versus diffused benefit and over what timeframe?

Jim Chanos has some interesting commentary regarding the tension between big oil's economics versus the frackers.

http://www.cnbc.com/id/102343976


Major trading houses are taking advantage of the contango in oil to store it now in supertankers and sell it forward, or perhaps just speculate?  Either way inventories are going up

http://www.wsj.com/articles/worlds-largest-traders-use-offshore-supertankers-to-store-oil-1421689744

According to shipbrokers and analysts, major traders including Vitol SA, Gunvor SA, Trafigura Beheer BV and Koch Supply & Trading Co. Ltd have chartered supertankers capable of storing a combined total of more than 30 million barrels of oil—many of them in the past few weeks.

RBN Energy runs some numbers on the contango trade (02/02/15)
https://rbnenergy.com/skipping-the-crude-contango-the-floating-crude-storage-trade

eia.gov provides some production decline graphs to see what would happen if new production just stopped in the lower 48. My eyes say a falloff from 7 million / year to ~ 5 million by 2016
http://www.eia.gov/todayinenergy/detail.cfm?id=19711

Also discusses backlogs in production.  Would hate to have paid up for a well that's going to be cash flow negative right now ! :(

Global LNG prices converge, upper band crushed by drop in oil prices
http://www.reuters.com/article/2015/01/27/lng-prices-global-idUSL6N0V603620150127

Weather and Energy - Hurricane free for another year

The continental US made it another year without a hurricane making landfall. (Winter snow storms are another matter!)

How many more years will the US extend this streak before we get slammed by another one? I have no idea, but it will eventually happen.

A lack of past volatility can lull people into a false sense of security and that's when one can lose quite a bit of money (and lives as well as property in this case)

Some are even opining (Washington Post, 2014 October 7) the recent lack of hurricanes creates a dangerous future situation, and there's some credence to that.

The catastrophic bond market is something I've examined over the years as an alternative asset class but haven't invested any capital in this area yet. We've been in a relatively benign environment and pricing for risk has dropped in this area (sound familiar?)  I'd rather wait for a some 'volatility' to re-enter the system before dipping my toe into this area.

http://www.preferredconcepts.com/when-worlds-collide/ examines this a little more

We've been recently lucky with hurricanes. This will eventually end.

Peak Hurricane?

Atlantic hurricane frequency - source: NOAA

So far this year we have been blessed by a lack of hurricanes on the East Coast.  As the accompanying graphic shows, we are past peak hurricane season this year without any major storms.  Of course statistics only work with a large sample size. Hurricane Sandy from last year is an unfortunate contrary example.  She struck in the last few days of October and as you can see from the accompanying graph this is supposed to be rather uncommon.   This doesn't matter to someone whose home that was demolished by Sandy.


As of right now the coast does look rather clear except for one storm named Humberto near Africa.  The current forecast is for it to rise to hurricane force winds and then fall back to a tropical storm.  One can keep an eye on any storms forming at http://www.nhc.noaa.gov/  During hurricane season I open this window every day to see if anything is forming on the horizon.

Beyond the horrible damage, death and destruction a hurricane inflicts upon society they also play havoc with a portfolio.  Reinsurance firms, oil service companies, oil and natural gas exploration firms, and even utility companies are but a few of the sectors which can be adversely affected by one slamming into America.    Keep an eye out for upcoming storms and also consider stress testing your portfolio. If a major hurricane hit the East Coast how would it affect your portfolio?  Do all your energy stocks have Gulf of Mexico fields? What's the risk with your insurance firms, reinsurance firms?  

Disclosure: Own stock in pipeline companies, reinsurance, oil service, and major oil & nat gas companies

Edit: Reuters also notices the lack of meteorological violence this year 

http://www.reuters.com/article/2013/09/07/us-weather-hurricanes-idUSBRE9860AY20130907

The rising oil choke collar

Oil prices are on the upper end of the post 2008 financial crisis range. So far each time prices rose to the 110+ region they have backed down again.

Gasoline and Oil prices - source: Federal Reserve

While Syria has been getting all the news, Libya's declining oil production may be another reason for firm oil prices. A recent WSJ article (September 10, 2013) highlights the situation.   Considering the vast majority of Libya's GDP is derived from the energy sector (CIA Factbook) this does not bode well for the new post Gaddafi Libya.

I suggest keeping an eye on the price of oil. If it gets much higher it may temper the recent positive economic news.

Additional reading:
http://en.wikipedia.org/wiki/Economy_of_Libya
http://en.wikipedia.org/wiki/Libyan_civil_war

Disclosure: Own oil service, energy, and pipeline stocks

My natural gas & LNG presentation at 2012 Vail ValueX Conference

Embedded below is my presentation at Vail ValueX on some aspects of the North American natural gas market and how LNG (liquefied natural gas) exports may close the worldwide pricing differential.

Dislaimer: I do discuss some economic winners and losers in this presentation. I own a few of them but I'm not going to tell you which ones.  As an investor you should make your own decisions about what to own and I don't know your risk profile or need for current income, etc.


The topics of natural gas and LNG exports are very large and compressing it down to 15 minutes was a challenge.  I could only present the major factors I see driving price differentials.

The full list of presentations can be found at the Vail ValueX hosts' Scribd site: http://www.scribd.com/VitaliyKatsenelson


ValueXVail 2012 - Greg Merrill

Pipelines and oil - Canadian crude will get out

I previously posted an article about the intersection of oil and politics and wanted to update you on one of my statements

Obama may feel the need to stop this project for political purposes but all he will succeed in doing is building more pipelines in Canada going east and west and sending that oil to Asia.  

Kinder Morgan, a large pipeline / energy company in North America is seeking firm commitments from oil shippers to expand their Trans Mountain Pipeline to the Canadian West Coast.  From Alberta Oil Magazine

Kinder Morgan Canada said yesterday it would extend an open season as it seeks firm commitments from shippers for an expansion to its Trans Mountain pipeline to Canada’s West Coast. The Canadian arm of Dallas-based Kinder Morgan aims to double capacity on the Pacific-bound line, from 300,000 to 600,000 barrels per day. Among other products, the $3.8-billion expansion would carry additional volumes of oil sands to a port at Burnaby, British Columbia, for export to Asia-Pacific markets and the West Coast of the United States.

The expanded oil production in Canada and the Midwest is creating a localized glut of oil and various companies are capitalizing on this price differential.

Western Canada Price Differential
Source: Bloomberg

While there are quality differences between these two benchmarks one can see how the spread has widened recently.

Regardless of the decision on the Keystone pipeline, Canadian oil will (eventually) get out to the worldwide marketplace.

Additional reading:
http://www.albertaoilmagazine.com/2012/04/u-s-pipeline-constraints-weigh-on-canadian-crude-prices/

Diesel usage diverging from overall economy

While the economy has been recovering nicely from the Great Recession there are some interesting divergences which are popping up with this recovery.  One of them which has been discussed elsewhere in the blogosphere (sorry no links) is the apparent divergence between fuel usage and economic activity.

Diesel fuel usage

The Ceridian Index reports monthly on diesel fuel used by the trucking industry.   Unlike retail sales which continues upwards the Ceridian fuel index is now declining on a year over year basis. From their most recent report you can see the decline.

One can see in the next chart the apparent divergence between retail sales and diesel usage.

The researchers at Ceridian note the divergence as well and have a possible solution  Unlike the rest of the economy which is improving on a year over year basis, the housing market remains stuck in the duldroms and is still sputtering along the bottom. (See page 6 in the above linked report)

While productivity improvements are also possible I find it unlikely the rate of improvement would be enough to create the entire divergence.  Perhaps the lack of a growing home market and improved fuel usage (or the continued virtualization of our economy) are enough to close the gap between retail sales growth and flat fuel usage.  Only time and further research will tell.  Regardless this indicator bears watching.

Fuel usage and retail sales

Obama shuts down Keystone pipeline. The oil must flow!

It appears the Obama administration will block approval of the Keystone pipeline.

Your political leanings aside, this will not stop 'dirty oil sands' oil from getting out. I was going to work up a nice post about how Canada can ship the oil east or west but NPR beat me to it:

Philip Verleger, an economist who specializes in oil markets, says even if environmentalists convince Obama to block the Keystone XL pipeline, it won't stop the growth of production in the Canadian oil sands.
"With prices around a hundred dollars a barrel globally, that oil is going to make it to the market somehow," Verleger says. "The development may be slowed for a year or two. But one can move the oil west on the existing Kinder Morgan pipeline. They could expand pipelines east. Those pipelines already exist, and they can be expanded."
In fact, Enbridge, a Canadian energy company, recently asked Canadian regulators for permission to reverse the direction of one of its pipelines in Ontario, which many see as the first step to move more Canadian oil to the American East Coast — and relieve some of the Canadian oil glut in the upper Midwest.

Not only is the oil going to flow east but the article mentions Kinder Morgan planning to increase the flow westward to British Columbia and then down to the Pacific Northwest and out to Asia as well.

The NPR article continues...

But demand is the key, say most economists. If you can get American drivers to buy less gas — by raising fuel efficiency standards, as the Obama administration recently did — then, they say, you stand a much better chance of slowing production in the oil sands.

Sorry but these are economists? American drivers are just one user of energy, don't forget all of Asia, India, South America, etc.  

All is not lost
For those of you worried the end is nigh and we will run out of oil soon and that will be the end of us all I would like to point you to this graph and article from the Economist

Energy used per unit of GDP has been declining in America since the 1920's. For nearly a century America has become more efficient at extracting more value out of each barrel/btu/pound of energy and the trend is to greater and greater efficiency.

Furthermore oil is not the only form of energy we have available in America.  Through new techniques the amount of natural gas in America is at all time highs and current prices are extremely low and production continues to rise. From Sober Look

But I digress from the Keystone pipeline.  Obama may feel the need to stop this project for political purposes but all he will succeed in doing is building more pipelines in Canada going east and west and sending that oil to Asia.   Would it not be better to have the cheaper oil captive in America and depressing our prices relative to the rest of the world? Believe it or not but oil has been cheaper in America than the rest of the world for nearly a year, and some of that is due to the increased production up north in Canada. 

 For those of you concerned about the risk of the Keystone pipeline, there are already skads of them all over America

The Keystone pipeline would not have reduced our energy 'dependence' from external sources but would you rather buy our oil from next door Canada or Saudi Arabia and Venezuela?

Additional Reading

http://soberlook.com/2011/12/us-net-oil-imports-lowest-since-1996.html

http://soberlook.com/2011/12/sober-look-at-us-natural-gas.html

http://soberlook.com/2012/01/whats-driving-brent-wti-spread-wider.html

http://soberlook.com/2011/12/six-common-myths-about-us-and-global.html

Linkage roundup

Some reading material for you from my twitter stream:


RT @edwardnh: Why the latest eurozone bail-out is destined to fail within weeks - Telegraph http://t.co/sgj8HQcn
RT @credittrader: GReader: The Global Moral Hazard Dawns: Merkel Says "It Must Be Prevented That Others Come Seeking A Haircut" As... http://t.co/Tjd22kbQ
RT @theanalyst_hk: $$ Jim Chanos: Not Impressed By The Europeans, And Still Shorting #China http://t.co/OvdXeWIr #economy #europe
RT @JackHBarnes: Chart of the Day: North Dakota Annual Oil Production: http://t.co/lUWOqWst -- need to do more research myself on shale oil
Transfer payments over time in US http://t.co/sxiw6sF8
RT @zerohedge: And Now, For Some Semblance Of Sanity, Here Is One Hour Of Hugh Hendry http://t.co/5A5Jwgxu -- separate post on this soon(tm)
CITI: Failure To Trigger Greek CDS Could Cause The Whole Euro Bailout To Fall Apart http://t.co/TLDjUF7L -- be careful what you wish for
Meanwhile in China a swan finally takes flight... http://t.co/Z8w40PKd -- Condo prices are falling hard.
RT @AlephBlog: Fannie Squeezing Banks Makes 4% Mortgage a Mirage, Hinders Housing Rebound http://t.co/BKikceRX Higher lending standards fight lower rates
RT @AlephBlog: Money managers and commodities, the case against http://t.co/ynsn1qT3 Graph shows $$ managers drove commodity prices http://t.co/eNKE3nFA
RT @andrewyorks: *EU LEADERS CALL FOR BANKS TO HAVE 9% CORE CAPITAL LEVEL ok move that dial on the upper left to 9 http://t.co/WHLMk6Dm -- should be interesting when taking haircuts on Greek debt.
Skyscraper taller than any in London or Tokyo opens in Chinese village of 2000. http://t.co/IvHoRw4j #thiswillnotendwell
Underground bank lending in China - NPR - http://t.co/677IPKYK
RT @historysquared: $$ The cash commodity trading firms that account for 1 trillion in annual revenue 50% of all transactions http://t.co/TqTvhHM1
RT @ftasia: Iron ore plummets to 15-month low: As Chinese steel mills cut production, the price of iron ore dropped 7.2 per ... http://t.co/RVfC48zy
Blackberry outage made roads safer. http://t.co/agSNxNGX

Verleger on high oil prices and demand destruction

I don't quite agree with the prediction towards a hydrogen economy but it is interesting to hear about the demand destruction of gasoline usage.  Mind you this conversation is about US demand. Add in emerging demand and you may see a different picture in total

Video of Verleger on gasoline consumption, heavy versus sweet crude, diesel versus gas costs --
(I would embed the video but it autoplays)
September 7 on Bloomberg

Linkage roundup

Some stuff I've been reading:

Saudi's ready to pump more oil after OPEC disagreements.  Could get interesting if Saudi Arabia decides to burn the other OPEC nations and pump all out.  They have done this before to let everyone know who's boss.
If you are looking for a good historical book regarding oil and politics I'd suggest
The Prize: The Epic Quest for Oil, Money & Power

Central banks are culpable for cycle of boom / bust --  I have been meaning to write a longish entry regarding how specifically emerging market central banks have contributed to the cycle of boom and bust but this will have to do until then

US structural problems remain -- We are not out of the woods. It is going to take a while.

One reason for high yield falloff ? -- The Fed is selling into an illiquid market it appears, driving down prices.

I know, cheery stuff! Here's some good news:
Industrial jobs coming back to America? -- China's inflation and a declining dollar may help induce an improvement in domestic production. This macro idea has been something I've been considering for a while.

The politics of oil

Yesterday President Obama announced new measures to increase drilling.  From Reuters

 U.S. President Barack Obama, under pressure from Republicans and the public to bring down gasoline prices, announced new measures on Saturday to expand domestic oil production in Alaska and the Gulf of Mexico.

Elections are hard to win with high gas prices:

High fuel prices have dented Obama's ratings in opinion polls and threaten to dampen the economic recovery that is critical to his re-election in 2012.

Considering the lead time required to get oil to market from a new find this will ironically help whomever is in office after the elections of 2012.

I seriously doubt the President would have increased leases available to oil companies if gasoline prices were $2.00 a gallon versus the current $4.00.

There's a reason alternative energies are called alternative and its because they are much more expensive per unit of energy than gasoline.  Until new forms of portable energy become cheaper than gasoline a President's politics will bend to the reality of high gas prices.

edit: if you are wondering why we are attacking Libya and not Syria, this is one reason.

Some news on Libya

Here's a video on the Libyan situation.    France also officially recognized the Libyan rebels which could set up a situation where the frozen Libyan assets are released to the rebels.  This would allows the rebels to arm themselves and get on with winning the civil war.

From UPI

France recognized the Libyan opposition movement Thursday as the representative of the Libyan people, a former Libyan envoy said from Paris.Ali al-Issawi, the former Libyan envoy to India, announced in Paris that France recognized "the (Interim Transitional) National Council as the legitimate representative of the Libyan people," reports French news agency France 24.

All oil is not created equal

NPR recently spoke about how oil is not created equal. There are differing types of oil, with some having higher sulpher content as well as other parameters making it easier or harder to refine into the higher quality fuels.

http://www.npr.org/2011/02/25/134056647/ripple-in-libyan-oil-markets-make-waves-worldwide

"It happens that Libyan crude has almost no sulfur and produces a great deal of diesel fuel per barrel of crude, which means it is very valued," he says. "One can think of it as fat-free milk."
Libyan oil is light and sweet — it's the kind that refineries want for making low-sulfur diesel, which is widely desired in Europe, and jet fuel, of which the U.S. makes a lot. Both markets require low-sulfur fuel because it pollutes less.

It's a short (<4 minute) introduction to some of the intricacies of the energy markets and I suggest you listen to it.

Rising Risks Roundup

This weekend has been an eventful one for the world geopolitically and this week will see further events which shape the stage.  The riots in Libya and continued unrest throughout the Middle East had a dramatic affect on futures markets today as the regular markets were closed.

Libya News - NYTimes

Middle East news - Al Jazeera

The events in Libya are obviously in flux and getting hard news out of the country is difficult so the rumors and actual news will be mixed together and hard to clarify.

The affect on the markets today (Monday) was dramatic:

Crude oil up 6+% to 91

Silver up 7+% to 33.86

SP 500 down -0.64% to 1329.25 (Futures price)

While the rioting is getting the headlines the trouble in the Eurozone continues its slow burn. Ireland is holding elections this week and the party currently in power is predicted to be handily spanked in the polls.  The mood in Ireland is not good and there is some talk of repudiating the guarantee of the government honoring all senior bank. 

Meanwhile Portugal debt continues to drop in price. The 10 year is at 7.45% tonight  

This cannot go on forever.  The recent German elections sent a clear message that Germans are tired of paying for other people's problems.  

Tomorrows markets will be very interesting to watch. Oil prices are getting to a point where they are seriously hitting the consumer's pocketbook and another spike in oil (like the one in 2008) could seriously stress the already weak US consumer.  I'm not evening mentioning China and their continued raising of interest rates / reserve ratios.  That's for another time.

Further reading:

High oil prices hit US consumer:

http://bonddad.blogspot.com/2011/02/gas-prices-are-beginning-to-choke-off.html

Oil inventories creeping upwards

While oil prices have not done much recently total oil product inventories have been creeping upwards in America and throughout the rest of the OECD.

Looking at total US oil and petroleum products inventory levels you will see they are at 20 year peaks!  The OECD is also above its 5 year average inventory levels.

So if the industrialized world is filling up with oil where is it all going and why have prices not dropped?  Some possible reasons are:
* Emerging market demand and specifically China is a great unknown. 
* The Iran / Israel situation is keeping people jumpy. 
* The financialization of commodities also provides a firm bid on oil prices. 
* Hurricane season is just warming up in the US.  We'll see how much carnage they produce.

Here's some previous entries on the topic of hurricane season:
http://merrillovermatter.blogspot.com/2009/08/weather-and-oil.html
http://merrillovermatter.blogspot.com/2009/09/so-far-no-hurricanes-this-year.html

Late Night Linkage

Some links of stuff I've been reading recently:

http://alephblog.com/2010/07/05/watch-the-state-of-the-states/

Canadian home sales falling.  Prices next?
http://globaleconomicanalysis.blogspot.com/2010/07/vancouver-home-sales-drop-30-percent.html

A different look at Dr. Copper
http://humblestudentofthemarkets.blogspot.com/2010/07/dr-copper-teeters-over-abyss.html

China home prices
http://www.telegraph.co.uk/finance/china-business/7875713/Chinas-property-market-braced-for-30pc-drop.html

Payroll number may take a header next month due to birth death model
http://jessescrossroadscafe.blogspot.com/2010/07/note-to-mish-bls-added-145897-imaginary.html

Greece -- Default now or later? Good reads.
http://www.nakedcapitalism.com/2010/07/greece-is-restructuring-debt-now.html
http://mpettis.com/2010/06/what-might-history-tell-us-about-the-greek-crisis/


Iran discovers large gas fields
http://www.hellenicshippingnews.com/index.php?option=com_content&task=view&id=109332&Itemid=79

More oil found in North Sea
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7873355/North-Sea-oil-hopes-rise-of-the-biggest-discovery-in-a-decade.html

Libya eyes purchasing stake in BP.  Cue irony.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7873702/Libya-eyes-stake-in-bargain-BP.html

China building more nukes
http://www.chinadaily.com.cn/business/2010-07/06/content_10069093.htm

BP considering selling assets to pay fines
http://www.bloomberg.com/news/2010-07-05/bp-said-to-consider-selling-colombia-venezuela-fields-to-pay-spill-costs.html
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7866766/China-seeks-9bn-of-BP-assets-in-Argentina.html


Ozzie mine tax revised
http://seekingalpha.com/article/212933-miners-win-as-australian-government-revises-mining-tax

ECRI predicts more frequent recessions in future
http://www.businesscycle.com/news/press/1887/

Steven Keen gets some more press on his Minsky model predicting what will happen next.
http://www.nakedcapitalism.com/2010/07/steve-keens-scary-minsky-model.html

http://www.creditwritedowns.com/2010/07/mandelbrot-fractals-and-the-art-of-roughness.html

Recent jobs report was not good
http://www.thereformedbroker.com/2010/07/03/the-truth-about-those-job-numbers

Video from Russian Forum -- Various hedge fund managers discuss the world

A video from the recent Russian Forum.  It's an hour+ but I suggest you watch it all.

http://2010.therussiaforum.com/news/session-video3/

Numerous topics are covered including, coal, energy, Russia, China, US Treasuries, Emerging versus Developed economies.  Includes Hugh Hendry, one of my favorite money managers.

ht Zerohedge