The Devil is in the detail.
Well, I’ll go to the foot of our stairs. OPEC says it has agreed a production cut of oil of around three per cent from January 2017. The first cut since 2008. Not surprisingly, the market knee jerk reaction was to push the price of oil up around nine per cent to just over the US$50 mark. And, at the time of writing this column, it is starting to go south again towards $49.
OPEC’s agreement is through, “self compliance.” Russia too has agreed to cut production. However, we won’t know any proof of the pudding until next year and even then, the figures may not be credible. The devil will be in the detail. What is my opinion of this cut redressing the oil supply and demand market? Well, to use a favourite phrase from TV sitcom character Victor Meldrew, “I don’t believe it.”
What OPEC’s move might do is prevent/ delay a further rout in oil prices that has long been expected. OPEC has blinked first and if the price can be sustained around the $50 mark then North American shale will be taking up some slack and maybe more, which will pressurise the price again. The oil war is not over.
At last, we have some decisive moments in Canadian pipelines. Two (Line 3 & Trans Mountain) are go, one (Northern Gateway) is no. Leaving two biggies to be decided, Keystone XL and Energy East. Keystone XL may well get Trump’s backing, Energy East still has some way to go for a build order. At least Alberta will be able to end its landlocked status and get significant product to markets, if the markets still want it that is.
Another devil in the detail is what will happen when Donald Trump takes over as U.S. President next year. My gut feeling is that it might be very bad or it might be very good. Or, it might be both depending if you’re going to gain or you’re going to lose. I think it would be a mistake to underestimate Trump. I think bringing cold, hard business to running a country is going to be a shock to some. The President Elect is surrounding himself with people he trusts. A very businesslike trait. I’m not impressed with the tendency nowadays to demonstrate when a side loses an election. Alberta, Brexit and now the U.S. Presidential election. If you lose, that’s it. Get over it. There will be another chance. Peaceful demonstration and lobbying against or for a policy is something else.
Fidel Castro has passed away. Whatever one may think of the man, his politics and his actions one cannot deny he was a giant figure for his country and also on the global stage too. I accept that Cuban exiles may have been pleased at Castro’s passing and maybe I’m old fashioned but I think its disrespectful to party on the street to celebrate someone’s death.
Sunday, December 4 could mark a European and possibly global game changer. Italian Prime Minister, Matteo Renzi has staked his career on winning the referendum on the Italian constitution. If polls and analyst opinion is to be believed Renzi is going to lose. I think so too. Renzi has said he will resign if he loses. But he may backtrack, after all he is a politician. A defeat could mean an election with the possibility that factions that are less than keen on the Eurozone and the EU too if truth be told could force a referendum on Italy’s membership of the Euro. Which, if the vote was no could sound the death knell for the currency.
The Brexit affair rumbles on and still the UK economy confounds the planet fear mongers. The next step is an appeal to the UK Supreme Court as to whether the UK Parliament should have a vote before the famed Article 50 is triggered. My opinion is that a vote will be required and the UK Government will put a non-amendable resolution to Parliament to stay on the Brexit schedule of triggering Article 50 by the end of March 2017.
Finally, and by no means least the world sits by while parts of Aleppo in Syria is bombed and stormed back to the stone age. The Russian backed regime I reckon is doing everything it can to defeat the rebels before the new U.S. President is sworn in. I think it will happen. The UN is pretty much powerless and other nations fear to cross Russia. It is wrong. It should stop. But it won’t. The talking shop will go on while people die in the streets. It’s disgusting.