Dow finished up 153, decliners modestly ahead of advancers & NAZ fell 22. The MLP index went up 3+ to the 211s & the REIT index gained 5+ to 470. Junk bond funds drifted lower & Treasuries continued to be sold, raising Treasury yields sharply. Oil was up 1+ to the 113s after a Saudi terminal was attacked & gold dropped 10 to 1952 (more on both below).
AMJ (Alerian MLP index tracking fund)
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A huge plume of smoke could be seen above an oil facility in the Saudi city of Jeddah, according to multiple media reports, with Yemen's Houthi group claiming they had attacked a Saudi Aramco site with missiles. Videos of a raging fire at an oil depot, saying the location of the blaze was near the North Jeddah Bulk Plant — which is southeast of the city's intl airport. A source said a Saudi Aramco facility had been hit. A Formula One auto race is due to take place in Jeddah this weekend. The Iran-backed Houthis claimed they were behind the strike with a military spokesperson adding that they had also used drones to hit the Ras Tanura & Rabigh refineries. The additional strikes could not be confirmed. Brent crude rose $1.20 (0.7%) to $119.92 a barrel just after the news, while US West Texas Intermediate crude was up $1.04 (0.9%) to $113.34. Both had traded in negative territory earlier in the session. On Sun, Saudi authorities confirmed an attack on Aramco facilities last weekend, with Houthi rebels using missiles & drones to target at least 6 sites across the kingdom, including an Aramco fuel depot & a liquefied natural gas plant. “There were no injuries or fatalities, and no impact on the company’s supplies to customers,” Aramco CEO Amin Nasser said on Sun.
Yemen’s Houthis claim attack on Aramco facility after reports of a huge fire in Saudi city of Jeddah
While one US oil producer feels confident in its ability to pump more domestic oil, the CEO cautioned production won’t speed up anytime soon, despite Pres Biden's recent natural gas deal with Europe. "I think you're going to see U.S. production rise," Canary CEO Dan Eberhart said. "We can't turn on a dime to add this production given the recent price increase, it's going to take some time," he continued. "There's a lag." Biden announced yesterday the US reached a deal to export more liquefied natural gas (LNG) to the EU, curbing their reliance on Russian fossil fuels. Pressure & urgency to get more supply on the global market has mounted amid record-high prices. But Eberhart says it's more challenging than ever to do business. "I think the regulatory climate has been a big headwind," he said. "The Biden administration has made it more difficult to be in the oil business." The oil industry is also facing production hurdles many businesses may find familiar. "It's hard to find labor, stuff from China is taking six weeks, not three, our insurance costs are up, our fuel costs are up, which, pun intended, does affect us, too," Eberhart explained. His oilfield, located in the heart of the Marcellus Shale in the northeastern US, has the capacity to increase production from 11.6M barrels per day to 14-15M barrels, but Eberhart put onus on the Biden administration to set the "right structure." "[The Federal Energy Regulatory Commission] and the [Department of Energy] have been sitting on these permits for these export terminals for LNG," he said. "And I think the administration's going to have to pick up the pace on that so that we can help Europe and hurt Russia." "We're the Saudi Arabia of gas, and a lot of people don't know that."
US oil CEO warns industry can't pump more natural gas 'on a dime'
Treasury Secretary Janet Yellen said she does not believe the US should impose sanctions on China because of its ties to Russia. “I don’t think that that’s necessary or appropriate,” the Treasury secretary said. “Senior administration officials are talking privately and quietly with China to make sure that they understand our position.” “We would be very concerned if they were to supply weapons to Russia, or to try to evade the sanctions that we’ve put in place on the Russian financial system and the central bank,” she added. “We don’t see that happening at this point.” The Treasury secretary’s remarks come as NATO leaders step up their efforts to warn China against enabling Russia's assault on Ukraine. Yellen also touched on how both Russia’s invasion of Ukraine & the Covid-19 pandemic have emphasized the importance of securing US supply chains. “Maybe American businesses have focused on efficiency and organizing supply chains in ways that lower costs but impair resilience,” she said. “And resiliency in supply chains is a high priority of the administration.”
Treasury Secretary Yellen sees no need for China sanctions as U.S. tries to deter aid to Russia
Gold futures ended lower, but tallied a gain for the week, as traders eye developments in the Russia-Ukraine war & an increasingly hawkish Federal Reserve. Gold for Apr fell $8 to settle at $1954 an ounce, but prices based on the most-active contract still gained 1.3% for the week. The US yesterday made it clear that any transaction involving gold related to the Central Bank of the Russian Federation is covered by existing sanctions. Russia reportedly has an estimated $132B in gold stockpiles. In US economic datay the final reading of US consumer sentiment in Mar fell slightly to 59.4 & stayed at a nearly 11-year low because of high inflation & angst about the Russian invasion of Ukraine. Treasury yields have risen sharply & the $ has rallied as hot inflation fuels expectations the Fed will move aggressively to hike interest rates & otherwise tighten monetary policy. Higher bond yields can be a headwind for gold, raising the opportunity cost of holding nonyielding assets. A stronger $ can also be a negative, making commodities priced in the unit more expensive to users of other currencies. But the inflation story is likely to outweigh those factors as inflation sparks demand from investors looking for a hedge against rising prices & geopolitical tensions drive demand for assets viewed as havens.
Gold ends lower, but tallies a weekly gain
Oil futures finished higher, giving up earlier declines &
boosting global prices by nearly 12% for the week, after reports of an
attack on an oil facility in Saudi Arabia renewed concerns over global
crude supplies. Prices for oil had been trading lower as EU countries failed to agree on a ban on imports of Russian crude. Ongoing supply concerns, meanwhile, prompted prices to post their first
weekly gain in 3 weeks. West Texas Intermediate (WTI) crude for May rose $1.56 (1.4%) to settle at $113.90 a barrel, with the contract finishing up 10.5% for the
week. May Brent, the global benchmark, added $1.62 (1.4%) at $120.65 a barrel, with prices up almost 12% for the week. Yemen's Houthi rebels attacked an oil depot in the Saudi city of Jeddah ahead of a Formula One race, adding that the attack targeted the same fuel depot the Houthis attacked in recent days. Several EU countries have resisted pressure for an
embargo on Russian oil due to their heavy reliance on supplies from the
country. The EU can't sanction Russian oil completely, but the
attack on an oil facility reminds traders that Yemen's Houthi rebels
have the ability to shut down production in Saudi Arabia. Baker Hughes, however, reported a weekly rise in the number of active US oil-drilling rigs.
Oil rises after reported strike on Saudi oil facility, with global prices up nearly 12% for the week
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