Crude Corona Cocktail
“Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected” - George Soros
Over the weekend, Commodity Markets reacted sharply to Coronavius news.
OPEC+ is holding a meeting today, re/ the virus
Unipec (China) halts West African crude purchases
On the Gas front, the LNG market may to be facing pressure soon -
CNOOC, PetroChina & Sinopec are all considering a declaration of Force Majeure:
Total, in particular, could facing a sharp hit - among the IOCs, they’re the 2nd largest in LNG.
Something strange is happening in Belarus -
We don’t know what exactly…
…but we do know that it began in ‘96:
That year, Belarus + Russia signed an agreement, creating a Union State
Boris Yeltsin was president of Russia
Yeltsin was a weak leader…
Alexander Lukashenko was (and still is) Belarus’s de-facto dictator.
He saw an opportunity:
If the Union was to be fully consummated, there’d be an election
Lukashenko reasoned that he would beat Yeltsin
In the end, Putin came to power - put Russia back together - and the Union was never completed.
Today, Belarus & that Union State deal are back in the headlines.
Putin needs a way to get around term limits…
And leadership of a completed Union is one option.
So now, the tables have turned - Lukashenko is the vulnerable one.
Russia has cut Oil & Gas supplies, pushing the envelope...
Lucky for Lukashenko - the US sees these developments as an opportunity:
For the 1st time in >10yrs, the US is going to appoint an ambassador to Belarus
The US Secretary of State has also offered to supply Oil & Gas
Where this goes - we don’t know.
There’ll be 1x winner max - likely none.
Chaos would be a complete Union, *with an election*.
In a free election (albeit doubtful) - Lukashenko just might give Putin a run for his money -
On Sunday night (Monday in Asia), the Markets Vomited:
Chinese equities had their worst day in 5yrs
Brent crude traded down to $55/bbl
A couple notes:
Quality of data is still a concern
There are rumors of testing kit shortages
The date that a vaccine gets to market will be the most important, going forward.
Keep an eye out for that -
Trent Jacobs wrote a piece on Tight-Oil Well Terminal Decline Rates
A classic student / teacher exchange, at Oxford:
“I am not able to arrange any divestment [Oil & Gas Equities] at short notice. But I can arrange for the gas central heating in college to be switched off with immediate effect”
We like this guy, and we’ll leave it at that -
That’s it for today - we’ll be back Friday -