Yesterday was a day for increased geopolitical risk.
But don’t let that get in the way of booking a trip to see the newly-restored Notre Dame in Paris. It reopens to the public on Sunday and looks spectacular.
~Doug
What’s in this issue:
- Energy Market Recap
- OPEC Output Up
- Copper Rallies
- Geopolitical Risk Abounds
- Headlines
| Crude Oil (Jan) | $69.94 | +1.84 | +2.70% |
| Natural Gas (Jan) | $3.042 | -0.171 | -5.32% |
| Copper (March) | $4.2020 | +0.0715 | +1.73% |
| S&P 500 | 6.049.88 | +2.73 | +0.05% |
Energy Markets 🛢️Oil prices jumped 2.7% as the ceasefire between Israel and Hizbollah looks increasingly fragile and economic data from China is giving hopes of a recovery (see segment on copper below).SpreadsJan/Feb: +.40 OPEC Output Up Despite Headlines A Reuters survey of firms who work to estimate OPEC’s true output (not the headline number) shows that the groups cumulative production was up 180,000 bpd in November to 26.51 mm bpd. The second month of increases.Libya had the largest gain followed by Nigeria and Iran. Venezuela’s output has almost hit 1mm bpd, a level last seen in 2020.In Brazil, not an OPEC member but part of OPEC+, the new chief executive of Petrobras, Magda Chambriard, is reversing course on prior initiatives to shrink the energy giant. “When we look at what company we want to be in 2050, we say ‘as big as possible’ and growing at least at the same rate as Brazil. We will grow in oil and generate additional energy, including renewable sources.” It continues to beg the question, why hold back now? Here’s John Arnold’s take on what we noted from Javier Blas yesterday – the fact that Saudi’s best play is to crash oil prices in the near term.  John Arnold @JohnArnoldFndtnUS shale oil production crossed 1 mil b/d in 2011. Since then, Saudi’s market share has been on slow but steady decline, punctuated only briefly by steep price drops in 2015-6 and 2020. Saudi can manage either price or market share. Today, it’s losing control of both. Prices are… https://x.com/i/web/status/1864014448723394814 11:30 AM • Dec 3, 202472Retweets334LikesRead 48 replies 🔥Natural gas prices dropped over 5% as short term weather looks increasingly mild.Despite a short-term cold front blowing through the northeast later this week, NatGasWeather.com notes:“While national demand is quite strong this week due to frosty air into the northern and eastern U.S., the pattern late this weekend and again for Dec. 14-18 isn’t nearly as cold as needed,” |
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| Copper Rallies on Trade ThreatsSigns of life from China’s manufacturing sector is supporting commodities across the board, but yesterday’s run up in copper is an early glimpse into affects of the threats of tariffs, and an escalating tit-for-tat between the US and China. Scrap copper accounted for about 30% of production last year, and imports of scrap from the US were subject to tariffs in Trump’s first term. Just the threat of tariffs on imports that would arrive after Trump takes office have led Chinese purchasers to stop purchases. Global disruptions are already happening. +Trump tariffs could reshape global copper landscape – Mining.com +TSX edges toward record high as metal mining shares climb – Reuters |
| Geopolitical Risk AboundsLooking at the crude chart in the Energy Markets section above, you can see how the White House’s ceasefire announcement between Israel-Hizbollah was enough to unwind $4-5 out of oil prices.Today, the ceasefire looks increasingly fragile, as both sides are actively engaged in military strikes.And that’s not all. While perhaps not directly related to oil prices, there’s no doubt that headlines yesterday were full of unusual geopolitical headlines from our traditional allies. Hold it together people. South Korea – Martial Law, Not South Korean President Yoon Suk Yeol declared martial law in a supposed effort to control, “pro-North Korean” or “anti-state” forces within the country.However, Yoon is largely seen as eroding democratic freedoms since taking office, stating “The forces of communist totalitarianism have disguised themselves as democracy activists, human rights advocates and progressive activists,” Massive protests broke out across the country, and the South Korean parliament voted 190-0 to rolled back the declaration.  ian bremmer@ianbremmers korea parliament votes to end martial law 190-0 strong institutions matter 3:10 PM • Dec 3, 2024144Retweets822LikesRead 26 replies France Dissolves France’s President Macron and La Pen’s National Rally party are at a standoff. A miscalculated snap election in June brought NR into a powerful position, and they intend to use it to force a no-confidence motion on Wednesday. “If the government were to collapse on Wednesday, it would underscore the power acquired by Le Pen since Macron called the surprise election in June. It would also mark the shortest tenure for a premier since France’s Fifth Republic was founded in 1958.” +Michel Barnier ‘method’ at risk in raucous French parliament – FT |
| Headlines “US labour productivity has grown by 30 per cent since the 2008-09 financial crisis, more than three times the pace in the Eurozone and the UK. That productivity gap, visible for a decade, is reshaping the hierarchy of the global economy.” +Why America’s economy is soaring ahead of its rivals – FT “Consumption of renewable diesel on the East Coast from May to September was within the range of 5,000-7,000 barrels per day, the EIA said, above the previous record high.The East Coast now holds almost 10% of renewable diesel inventories in the United States and attracts almost 10% of U.S. imports, the EIA said.” +US East Coast becomes consistent destination of renewable diesel, EIA says – Reuters ”Ridership increased 15% over 2023 to a record 32.8 million customer trips, as passenger revenue hit $2.5 billion, up 9% over the prior year, while total operating revenue was $3.6 billion, up 7%. Amtrak reported an adjusted operating loss of $705 million for the 12 months ending Sept. 30, down 9% over 2023.” +US railroad Amtrak sets passenger record in 2024 – Reuters U.S projects have faced rising construction costs, with Venture Global’s Plaquemines export plant under construction in Louisiana over budget by $2.3 billion, and Golden Pass LNG, a joint venture between Exxon Mobil and QatarEnergy, more than $2 billion over its original budget. +Rising LNG terminal costs to make new US projects less competitive, says analyst – Reuters |
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