It is apt that it is national sandwich day, given yesterday’s first-day-of-the-month onslaught of global manufacturing numbers, and ahead of tomorrow’s return to form in economic data. Hence today we are sandwiched in the middle, pausing for breath. We get a few tidbits of data out in the U.S. – factory orders, vehicle sales – but nothing too crazy. All the while, the drumbeat builds towards Nonfarm Friday and official U.S. unemployment data, with oil inventories and global services data providing something for us to get our teeth into in the meantime.
There is once again the ongoing theme of rising oil production, falling revenues floating around today, typified by the chart below relating to Norway. Net income from offshore oil and gas fields is 13 percent below the same 9 months of last year – which is not surprising given the drop in oil prices – but nonetheless production has increased by 10 percent so far this year. Production will likely continue to rise as a cash grab persists; all the while, the government plans withdraw cash next year for the first time from its $860 billion wealth fund to cover budget needs. Related: Oil Megaprojects Won’t Stay On The Shelf For Long
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From one struggling region to another, Saudi Arabia’s PMI index for non-oil private industries has dropped to its lowest level in six years in October – once again underscoring the economic fragility caused by lower oil prices. United Arab Emirates saw a similar trend in its data, falling to the lowest level since April 2013. Related: Elon Musk’s Hyperloop Takes a Step Forward
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In a couple of other bits about Saudi Arabia, the Ministry of Water and Electricity is hiking water rates for non-residential customers (read: industrial, government or large corporate users) as of next month, as it pursues spending cuts. In a similar vein, Saudi is said to be creating a Special Office whose main focus will be on cutting government spending.
Finally, an internal draft report of OPEC’s long-term strategy is said to carry suggestions from Iran, Algeria and Iraq, who are pushing for measures to support prices through a price target, a price floor, or a return to the cartel’s quota system. All the while, as our #ClipperData illustrates, exports from the three remain stout at over 4 million barrels per day last month, with Iraqi exports close to their record level, just shy of 3 mn bpd. Everyone wants solutions, while no-one wants to change. Related: How The Fed Has Backed Itself Into A Corner
Exports from Algeria, Iran & Iraq (source: ClipperData)
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By Matt Smith
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