Dow jumped 199 (closing at session highs), advancers ahead of decliners 5-4 NAZ went up 57. The MLP index fell 1+ to the 249s & the REIT index was steady at 354. Junk bond funds rose in price & Treasuries were purchased. Oil fell to nearly 50 (more below) & gold gave back 3, falling to 1226.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
When OPEC reached a deal with Russia & other producers in 2016 to end a 2-year oil price slump, it was a relatively straightforward affair. The alliance announced it was slashing output, each country agreed to a specific production quota & intl oil prices rallied about $7 a barrel. Heading into next week's OPEC meeting, few analysts anticipate such decisive action or so clear-cut an outcome even with the oil market near the bottom of the worst price plunge since the 2008 financial crisis. Top OPEC producer Saudi Arabia & its Gulf allies are widely expected to orchestrate another output cut when producers meet in Vienna on Thurs. The signals are clear: Forecasters think the oil market will be oversupplied next year, the cost of crude has tumbled more than 30% in just 8 weeks, & most OPEC members don't stand a chance of balancing their budgets at current price levels. But the group is dealing with a very different set of challenges than it faced in 2016, including a US pres who is fiercely opposed to price-boosting production cuts. Analysts expect the meeting to culminate with an official statement that leaves the market scratching its head over just how many barrels OPEC intends to take off the market. The OPEC alliance agreed 2 years ago to keep 1.8M barrels per day (bpd) off the market, but by this last Apr, the group's output had fallen by about 2.7M bpd. Instead of clearly stating they would correct by restoring about 1M bpd, producers vowed to return to 100% compliance. Markets responded to OPEC's ambiguity by pushing oil prices higher, the opposite of what the cartel intended. In the following months, US crude rallied to a nearly 4-year high at $76.90 a barrel, driven by fears of oil shortages ahead of US sanctions on Iran. The price has since tumbled 35% over the last 8 weeks, hitting a 13-month low at $49.41 yesterday.
OPEC meeting may end with confusion and lower oil prices
Oil prices fell further today as swelling inventories depressed sentiment despite widespread expectations that OPEC & Russia would agree some form of production cut next week. The 2 global oil benchmarks, North Sea Brent & US light crude, have had their weakest month for more than 10 years in Nov, losing more than 20% as global supply has outstripped demand. West Texas Intermediate was down 52¢ (1%) at $50.93, after earlier falling as low as $49.65. Brent was down 76¢ (1.3%) at $58.75 a barrel, having bounced from a session low of $58.25. Prices pared losses from session lows after it was reported OPEC's advisory committee suggested decreasing production by 1.3M bpd from last month's levels. Before the OPEC meeting, the world's top 3 producers — the US, Russia & Saudi Arabia — will be part of a meeting this weekend of the Group of 20 industrialized nations in Buenos Aires, Argentina. Russia's energy minister Alexander Novak will meet his Saudi counterpart at the G20 summit in Argentina & discuss an oil output reduction in 2019. He was also reported to have said that Russia's 2019 oil output is expected at the same level as this year but could be adjusted, depending on a deal between OPEC & non-OPEC members. Surging oil production in the US, Russia & by members of the Middle East-dominated OPEC has helped fill global inventories & create a glut in some markets. US crude oil production rose 129K bpd in Sep to a fresh record of 11.475M bpd, the Energy Information Administration said. A slowdown in oil demand growth is compounding the emerging oversupply. A monthly survey indicates that output in Nov from the 12 OPEC members with supply reduction targets under a previous production agreement fell 110K bpd from Oct, while total OPEC output decreased 160K bpd. US energy firms this week added oil rigs for a 3rd week in 4 & increased the rig count for the 5th month in a row.
US crude plunges 22% in November, settling at $50.93, for weakest month in over 10 years
Buyers bid up stock prices in the last 3 hours of trading, but much of their interest was in the Dow & NAZ stocks. Market breadth was weak making it hard to take this advance seriously. A lot is riding on the outcome of the G-20 meeting & nobody knows what it will bring. The Dow rose 400 in Nov & is up 600 YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
British Prime Minister Theresa May accused the
opposition Labour Party of betraying the British people by trying to
stop Brexit as she went on the offensive in her battle to win
approval of the widely criticized divorce agreement she negotiated with
the EU. With less than 2 weeks to
go before a vote in the House of Commons, May is trying to win support
from lawmakers of all parties who have balked at the deal. She declined
to entertain questions about what alternative she might offer if the
current agreement is rejected on Dec 11. "I've
got a plan, I've got a proposal, I've got the deal that I've
negotiated," she said ahead of the G-20 summit in Argentina. "We don't
see any alternative coming forward from the Labour Party. ... Instead,
what I see from Labour is an attempt to frustrate what the government is
doing to deliver Brexit for the British people. That is actually a
betrayal of the British people." The agreement
ratified by EU leaders last weekend came more than 2 years after a
UK referendum in which 52% of those who cast ballots voted to
leave the bloc. Some opponents are calling for a 2nd referendum now
that the costs of leaving the EU have become clear, but May says that
would violate the trust of the 17.4M who voted for Brexit
in 2016. The prime minister has been highlighting the risks
of leaving the EU without a deal in a bid to persuade skeptical
lawmakers, including many of her fellow Conservatives, to back the
agreement. Many members of Parliament oppose
the deal because it leaves details of the future relationship between
Britain & the EU to be negotiated during a transition period that will
last least 21 months. Of particular concern is a backstop that could
leave Britain tied to the EU for years if the 2 sides can't agree on
how to prevent a hard border in Northern Ireland. Leaving
the EU without a deal would end more than 40 years of free trade &
disrupt the flow of goods & services between Britain & its most
important trading partners. The Bank of England warned this week that a
no-deal Brexit would plunge Britain into a severe recession. May's
comments came after lawmakers proposed an amendment that could stop
Brexit if Parliament rejects her agreement. The amendment says
Parliament must be able to express its view on how the gov should
proceed if the prime minister's plan is defeated.
UK leader focused on passing Brexit deal despite uncertainty
When OPEC reached a deal with Russia & other producers in 2016 to end a 2-year oil price slump, it was a relatively straightforward affair. The alliance announced it was slashing output, each country agreed to a specific production quota & intl oil prices rallied about $7 a barrel. Heading into next week's OPEC meeting, few analysts anticipate such decisive action or so clear-cut an outcome even with the oil market near the bottom of the worst price plunge since the 2008 financial crisis. Top OPEC producer Saudi Arabia & its Gulf allies are widely expected to orchestrate another output cut when producers meet in Vienna on Thurs. The signals are clear: Forecasters think the oil market will be oversupplied next year, the cost of crude has tumbled more than 30% in just 8 weeks, & most OPEC members don't stand a chance of balancing their budgets at current price levels. But the group is dealing with a very different set of challenges than it faced in 2016, including a US pres who is fiercely opposed to price-boosting production cuts. Analysts expect the meeting to culminate with an official statement that leaves the market scratching its head over just how many barrels OPEC intends to take off the market. The OPEC alliance agreed 2 years ago to keep 1.8M barrels per day (bpd) off the market, but by this last Apr, the group's output had fallen by about 2.7M bpd. Instead of clearly stating they would correct by restoring about 1M bpd, producers vowed to return to 100% compliance. Markets responded to OPEC's ambiguity by pushing oil prices higher, the opposite of what the cartel intended. In the following months, US crude rallied to a nearly 4-year high at $76.90 a barrel, driven by fears of oil shortages ahead of US sanctions on Iran. The price has since tumbled 35% over the last 8 weeks, hitting a 13-month low at $49.41 yesterday.
OPEC meeting may end with confusion and lower oil prices
Oil prices fell further today as swelling inventories depressed sentiment despite widespread expectations that OPEC & Russia would agree some form of production cut next week. The 2 global oil benchmarks, North Sea Brent & US light crude, have had their weakest month for more than 10 years in Nov, losing more than 20% as global supply has outstripped demand. West Texas Intermediate was down 52¢ (1%) at $50.93, after earlier falling as low as $49.65. Brent was down 76¢ (1.3%) at $58.75 a barrel, having bounced from a session low of $58.25. Prices pared losses from session lows after it was reported OPEC's advisory committee suggested decreasing production by 1.3M bpd from last month's levels. Before the OPEC meeting, the world's top 3 producers — the US, Russia & Saudi Arabia — will be part of a meeting this weekend of the Group of 20 industrialized nations in Buenos Aires, Argentina. Russia's energy minister Alexander Novak will meet his Saudi counterpart at the G20 summit in Argentina & discuss an oil output reduction in 2019. He was also reported to have said that Russia's 2019 oil output is expected at the same level as this year but could be adjusted, depending on a deal between OPEC & non-OPEC members. Surging oil production in the US, Russia & by members of the Middle East-dominated OPEC has helped fill global inventories & create a glut in some markets. US crude oil production rose 129K bpd in Sep to a fresh record of 11.475M bpd, the Energy Information Administration said. A slowdown in oil demand growth is compounding the emerging oversupply. A monthly survey indicates that output in Nov from the 12 OPEC members with supply reduction targets under a previous production agreement fell 110K bpd from Oct, while total OPEC output decreased 160K bpd. US energy firms this week added oil rigs for a 3rd week in 4 & increased the rig count for the 5th month in a row.
US crude plunges 22% in November, settling at $50.93, for weakest month in over 10 years
Buyers bid up stock prices in the last 3 hours of trading, but much of their interest was in the Dow & NAZ stocks. Market breadth was weak making it hard to take this advance seriously. A lot is riding on the outcome of the G-20 meeting & nobody knows what it will bring. The Dow rose 400 in Nov & is up 600 YTD.
Dow Jones Industrials
