Pump And Dump

Oil did a pump and dump after it was announced that Saudi Arabia raised oil production to an all-time high in November, pumping 11.1 million to 11.3 million barrels per day (bpd). Yet, oil rebounded because it is just not about production but also oil exports that the Saudis are signaling will be falling sharply. The talk is that Saudi Arabia is already reducing oil exports and engineering a 1.5-million-barrel oil a day production cut, along with Russia and other OPEC nation conspirators. The Saudis usually raise output before a production cut just to remind its partners of its production capabilities. On top of that, oil in Saudi storage reportedly was at a 10-year low, so some of that extra oil may go to refilling their own coffers.

Today, oil is trying for a second day higher, still reeling from the “black and blue Friday” that was the biggest one day sell-off in 3 years. It will have to overcome fears of more sanctions on China and of course the ongoing risk of a Presidential tweet. Geopolitical risk factors are heating up. Ukraine’s parliament has agreed to impose martial law in 10 of its provinces to combat “growing aggression from Russia,” after a weekend confrontation in waters off the disputed Crimean Peninsula led Russia to seize three Ukrainian navy vessels according to the AP. The Russian Foreign Ministry issued a statement on Monday with a “warning” to Ukraine that naval conflict in the Sea of Azov and the Black Sea “is fraught with serious consequences.” Sunday’s incident occurred as the Ukrainian navy ships, including a tugboat, tried to pass through the Kerch Strait, a strategic waterway that separates the Black Sea and the Sea of Azov. A newly built Russian bridge opened by Putin himself now spans the strait, which Moscow hopes will solidify its claim to adjoining Crimea, the Ukrainian peninsula it forcibly annexed in 2014, according to NPR.

Trump is talking tough with China, either get a deal before the G20, Nov. 30 and Dec. 1, or face more sanctions. The Wall Street Journal reported that President Trump, days before a summit with China’s leader, said he expects to move ahead with boosting tariff levels on $200 billion of Chinese goods to 25%, calling it “highly unlikely” that he would accept Beijing’s request to hold off on the increase. In an interview with The Wall Street Journal, Mr. Trump suggested that if negotiations don’t produce a favorable outcome for the U.S., he would also put tariffs on the rest of Chinese imports that are currently not subject to duties. “If we don’t make a deal, then I’m going to put the $267 billion additional on at a tariff rate of either 10% or 25%,” Mr. Trump said. He first threatened those duties, and the higher tariffs on the initial $200 billion in goods, in late summer.


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