KTFA:
BACKDOC: ITS MAKES ME GO HEE HEE WHEN I HEAR PROFESSIONAL TRADERS SAY THEY DO'NT KNOW WHAT TO DO NEXT! (See article below)
THERE IS SERIOUS CONFUSION IN TRADING THESE MARKETS! IF IT WEREN'T SO SERIOUS I WOULD LAUGH!
WE HAVE A SERIOUS ADVANTAGE KNOWING WE ARE IN A TRANSITION TO THE NEW REALITY!
TO THINK WE KNOW HOW THIS ALL PLAYS OUT WOULD BE FOOLISH FOR SURE. WHAT WE KNOW IS THAT EVERYTHING IS IN ITS TRANSITION TO DIGITAL!
I'M SO THANKFUL FOR MY KTFA FAMILY TO SHARE THE PROCESS WITH! TRULY WHAT WE ARE PART OF IS A BIGGER GLOBAL PICTURE!
WITHOUT THE DINAR FOR FINANCIAL HOPE I WOULD BE VERY DISMAYED! INSTEAD I FEEL A PEACE I CAN'T EXPLAIN! I HOPE WE CAN ALL JUST LAY OUR STRESS DOWN AND FOLLOW THE PROCESS TO THE END!
....
BACKDOC: ITS MAKES ME GO HEE HEE WHEN I HEAR PROFESSIONAL TRADERS SAY THEY DO'NT KNOW WHAT TO DO NEXT! (See article below)
THERE IS SERIOUS CONFUSION IN TRADING THESE MARKETS! IF IT WEREN'T SO SERIOUS I WOULD LAUGH!
WE HAVE A SERIOUS ADVANTAGE KNOWING WE ARE IN A TRANSITION TO THE NEW REALITY!
TO THINK WE KNOW HOW THIS ALL PLAYS OUT WOULD BE FOOLISH FOR SURE. WHAT WE KNOW IS THAT EVERYTHING IS IN ITS TRANSITION TO DIGITAL!
I'M SO THANKFUL FOR MY KTFA FAMILY TO SHARE THE PROCESS WITH! TRULY WHAT WE ARE PART OF IS A BIGGER GLOBAL PICTURE!
WITHOUT THE DINAR FOR FINANCIAL HOPE I WOULD BE VERY DISMAYED! INSTEAD I FEEL A PEACE I CAN'T EXPLAIN! I HOPE WE CAN ALL JUST LAY OUR STRESS DOWN AND FOLLOW THE PROCESS TO THE END!
....
THANKS FRANK ,DELTA, WALKINGSTICK,AND ITEAM FOR CREATING THE OPPORTUNITY FOR US TO GROW UP TOGETHER IN THIS GLOBAL ADVENTURE!
SPEAKING OF FIAT BONDS FOR A MOMENT, I THINK LATER IT WILL BE VIEWED AS A HUGE MONEY TRAP!
THE WORLD IS QUICKLY SLIPPING INTO A NEGATIVE INTEREST RATE DEMISE! I THINK INVESTORS MAY GET CAUGHT IN A MOUSE TRAP OF FALLING OR NEGATIVE YIELDS AND NOT BE ABLE TO SELL OUT!
MONEY COULD BE TRAPPED AND DEVALUED! OUCH!
NOW THE NEW DIGITAL BONDS, WE WILL BE ALL IN! DOC IMO
Thunderhawk: DOC REQUEST - REPOST
Here’s why speculation that China is mass-selling U.S. Treasurys could be true
Speculation that China has been mass-selling U.S. Treasurys to boost its foreign-exchange reserves grew again Wednesday, after a report showed that Belgium’s Treasury holdings — viewed as a proxy for China’s holdings — declined sharply.
Analysts had been hypothesizing that China might be liquidating large amounts of U.S. government debt, after Beijing announced last week that the country’s foreign-exchange reserves fell in January to their lowest level in more than three years, after tumbling in December by the largest amount on record.
The release of the Treasury International Capital data late Tuesday, which contain all the flows of money into and out of the U.S for purchases and sales of U.S. securities, offered new “evidence of big Chinese selling,” said Thomas Simons an economist at Jefferies, in emailed comments.
According to the holdings data, China retained the top spot in December as the largest holder of Treasurys, with $1.246 trillion, down $18.4 billion from November. Japan maintained its position as the second-biggest holder of Treasurys, with $1.123 trillion, down $22.4 billion from the previous month.
But Belgian holdings also fell sharply, down by $21.9 billion.
“Belgian holdings have been a point of focus due to extreme volatility...This is significant because it is widely speculated that China executes trades with Treasuries held in custody in Belgium,” Simons said.
Indeed, Belgium’s holdings have fluctuated widely over the past year.
The small European country had ranked as the third-largest holder of Treasurys as recently as February 2015, but holdings have fallen by $202 billion since then and Belgium is not even in the top 10 anymore.
Combined with the $18.4 billion decline in mainland Chinese Treasury holdings, the data suggests that total Chinese holdings fell approximately $40.3 billion in December, according to Jefferies.
Overall, foreign official institutions, including central banks and sovereign wealth funds, sold $49.5 billion in Treasurys in December. But as private investors stepped in and bought $13.6 billion in Treasurys, the net outflow was of $35.9 billion, as the following chart shows.
Earlier this month, Société Générale global strategist Albert Edwards said China is burning through its foreign-currency reserves at such a blistering pace that the country will run down its cushion in a few months.
But data from Janney Montgomery Scott taking the official Chinese holdings as a base for calculation showed that, at December’s rate of Treasury sales, China’s Treasury portfolio won’t be exhausted for nearly six years.
“While China does need to raise dollars, sell those dollars, and buy yuan to support its currency, the pace of any needed asset sales is far from breakneck and instead looks remarkably measured,” said Guy LeBas, chief fixed income strategist at Janney, in a note.
Official Chinese selling “only accounted for about a third of Asia’s net outflows at $18 billion; Japan’s $22 billion [outflow] was actually greater,” LeBas added.
http://ift.tt/1QmQVYP
Mountainman: Have You Ever"Tried" to CARRY a 5lb Bucket of "CONCRETE" across A "FROZEN LAKE" when the ICE is About to Come off the LAKE because it's Getting "CLOSE" to SPRING TIME ???... Me NEITHER....."NOT" A GOOD IDEA........
CHINA Knows that the US "FIAT" DOLLAR is Heading to A DEEP DARK PLACE.....=WHERE it Won't be Desired or Needed......."UNTIL" it gains it's "TRUE VALUE" backed by Assets......which is WHAT they/CHINA and Others AWAIT as Well !!!!
That is the Debt Many Countries are "SINKING" In Now!!!...........So too ......the REASON to "OFF LOAD" The CONCRETE/US DEBT they Carry on their "BOOKS".......=EVERYONE Seems to be LOOKING/WAITING for The NEW CHANGE......
Since CHINA holds A Lot of US TREASURIES/FIAT="DEBT"......In Order for their CURRENCY to Rise to It's TRUE POTENTIAL.....They are Selling Off the CONCRETE....so to speak......to Make Their Currency "MORE" Stable......
Basically the SAME Steps You Would take if Your "CREDIT SCORE" was in Bad Shape because of DEBTS Carried......Thus the "SOLUTION"=Get Rid Of it!!!!.....IMO Blessings,Mountainman
************
BACKDOC: LOOKS LIKE THE BOND VERSION OF STRESS TESTS! HEE HEE!
IS SOMEONE GETTING NERVOUS? WITH CHINA DUMPING TO BACK THEIR CURRENCY THE BOND MARKET IS IN TROUBLE!
THE TEN YEAR IS AROUND 1.7% WOW! TERRIBLE!
MANY OF THE BOND YIELDS ARE ALREADY IN NEGATIVE TERRITORY! DOC IMO
RDinar: New York Fed to Conduct Small-Value Treasury Purchase Operation
The Federal Reserve Bank of New York said it would conduct test trades Tuesday in U.S. Treasurys through its FedTrade proprietary trading terminal, following up on an authorization it received to continue such operations as part of its efforts to control of short-term interest rates.
In a statement posted Thursday on its website, the New York Fed said on Feb. 23, from 10:15 a.m. and ending at 11 a.m. EST, it would conduct a "small scale Treasury purchase operation" not to exceed $250 million in Treasury bonds maturing 10 to 20 years from now.
The operation "does not represent a change in the stance of monetary policy," according to the statement.
The maneuver is part of the New York Fed's commitment to conduct routine small-value trading operations to help it manage interest rates. On Wednesday, the New York Fed said it was authorized to conduct such trades and certain foreign currency transactions as part of its readiness for changing patterns in markets and "as a matter of prudent advance planning."
Tuesday's operation will be separate from reverse repurchase agreements the Fed has been conducting with money-market funds and banks since September 2013 as one of its key tools for raising interest rates. It won't affect the New York Fed's reinvestments of proceeds from maturing Treasury bonds.
Fed officials at their January policy meeting reauthorized the New York Fed to conduct such operations this year. The Fed's next rate-setting meeting is March 15-16.
http://ift.tt/1QO3P2q small-value-treasury-purchase-operation-20160218-01238
************
BACKDOC: FAMILY, IT SEEMS THAT EVERYDAY WE KEEP SEEING MORE ABOUT "THE DEAL"!
PARTNERS THAT ARE ABOUT TO HIT THE DANCE FLOOR! NOW WE MAY HAVE A HINT OF CURRENCY COMPATIBILITY ON STEROIDS!
DOC IMO
Thunderhawk: Iraq ready for Iran's industrial investment: Minister
Iraqi Minister of Industry and Minerals Mohammed Sahib al-Daraji said legal foundations for joint investment with Iran are available as his Iranian counterpart Mohammad Reza Nematzadeh expressed Tehran's readiness to contribute to Baghdad's industrial development plans.
'We welcome Iranian companies' participation in the Iraqi market,' al-Daraji replied to IRNA during a joint press conference with Nematzadeh in Baghad on Thursday.
The Iraqi minister was upbeat over outcome of the negotiations with Nematzadeh and said Iran's assistance to reconstruction of Iraq's industrial units was discussed during the talks.
The Iranian minister echoed al-Daraji's statement and said it was agreed that two countries will exchange delegations to follow up implementation of the agreements.
'We are ready to provide Iraq with our industrial experiences. During the meetings, the needs were reviewed. We encourage the private sectors in Iran and Iraq to joint investment projects,' Nematzadeh added.
Prior to the press conference, he met Iraqi Prime Minister Haider al-Abadi in which deepening of bilateral cooperation in industrial, commercial, and joint investment projects was stressed.
The Iranian minister, who arrived in Baghdad on Wednesday to promote bilateral relations, met Chairman of Iraq's Supreme Islamic Council of Iraq Seyed Ammar Hakim earlier on Thursday.
He also met governor of Iraq's National Bank, and his Iraqi counterpart on Thursday and visited industrial projects including a factory assembling Iranian automobiles.
http://ift.tt/1SEtGzR
************
BACKDOC: MR. LONELY WILL HAVE PARTNERS ALL AROUND! ITS MINERAL WEALTH WILL BE BEYOND COMPARE AND YET THEY GET A PIECE OF THEIR BROTHERS FRANCHISES TOO! YIPPIE! DOC IMO
Thunderhawk: Iran, Iraq confer on gas pipeline deal
Speaking to reporters after the meeting, Velayati said that the Iraqi oil minister is in Iran to discuss oil price and OPEC developments with Iranian officials.
He said that the Iraqi oil minister was satisfied with the results of his talks with Iranian senior officials.
It has been decided that deputy for economic affairs of Strategic Research Center of the Expediency Council, hold consultations about the gas pipeline deal with Iraq, he said.
Under the deal, the executive phase of the contract is to export 25 mcm of gas to Iraq, and the project has the capacity to increase the amount up to 40 mcm, Velayati added.
He added that the project will be completed within 2 years, saying “in order to meet the needs of the people and government of Iraq, a branch of the pipeline will reach Basra and another will deliver gas to Baghdad.'
Iran and Iraq finalized a plan for developing a pipeline to carry 40 mcm of gas to Iraq in September 2015. The project has been long in the offing but had been delayed over security concerns resulting from the war of insurgency that the ISIL terrorists have waged in Iraq.
http://ift.tt/1QO3MDN
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BACKDOC: WITH ALL THE THIS NEW INFORMATION HOW CAN IRAQ JUST "MINE" ITS OWN BUSINESS! HEE HEE
IT SEEMS IRAQ HAS SO MANY DANCE PARTNERS SOMEONE WILL BE ALWAYS CUTTING IN! DOC IMO
Thunderhawk: Tehran, Baghdad set to expand joint investment projects
Iranian Minister of Industry, Mine and Trade Mohammad Reza Nematzadeh and Iraqi Prime Minister Haider al-Abadi met here on Thursday stressing deepening bilateral cooperation in industrial, commercial, and joint investment projects.
During the meeting which focused on ways of increasing bilateral trade, the Iraqi premier thanked Iran over its support to develop his country's industrial infrastructure.
Nematzadeh expressed Iran's readiness to transfer its experience on industrial development and help the government of Iraq through joint investment projects.
The Iranian minister, who arrived in Baghdad on Wednesday to promote bilateral relations, met Chairman of Iraq's Supreme Islamic Council of Iraq Seyed Ammar Hakim earlier on Thursday.
He also met governor of Iraq's National Bank, and his Iraqi counterpart on Thursday and visited industrial projects including a factory assembling Iranian automobiles.
http://ift.tt/1SEtGzT
GO IRAN GO RV HAWK
SPEAKING OF FIAT BONDS FOR A MOMENT, I THINK LATER IT WILL BE VIEWED AS A HUGE MONEY TRAP!
THE WORLD IS QUICKLY SLIPPING INTO A NEGATIVE INTEREST RATE DEMISE! I THINK INVESTORS MAY GET CAUGHT IN A MOUSE TRAP OF FALLING OR NEGATIVE YIELDS AND NOT BE ABLE TO SELL OUT!
MONEY COULD BE TRAPPED AND DEVALUED! OUCH!
NOW THE NEW DIGITAL BONDS, WE WILL BE ALL IN! DOC IMO
Thunderhawk: DOC REQUEST - REPOST
Here’s why speculation that China is mass-selling U.S. Treasurys could be true
Speculation that China has been mass-selling U.S. Treasurys to boost its foreign-exchange reserves grew again Wednesday, after a report showed that Belgium’s Treasury holdings — viewed as a proxy for China’s holdings — declined sharply.
Analysts had been hypothesizing that China might be liquidating large amounts of U.S. government debt, after Beijing announced last week that the country’s foreign-exchange reserves fell in January to their lowest level in more than three years, after tumbling in December by the largest amount on record.
The release of the Treasury International Capital data late Tuesday, which contain all the flows of money into and out of the U.S for purchases and sales of U.S. securities, offered new “evidence of big Chinese selling,” said Thomas Simons an economist at Jefferies, in emailed comments.
According to the holdings data, China retained the top spot in December as the largest holder of Treasurys, with $1.246 trillion, down $18.4 billion from November. Japan maintained its position as the second-biggest holder of Treasurys, with $1.123 trillion, down $22.4 billion from the previous month.
But Belgian holdings also fell sharply, down by $21.9 billion.
“Belgian holdings have been a point of focus due to extreme volatility...This is significant because it is widely speculated that China executes trades with Treasuries held in custody in Belgium,” Simons said.
Indeed, Belgium’s holdings have fluctuated widely over the past year.
The small European country had ranked as the third-largest holder of Treasurys as recently as February 2015, but holdings have fallen by $202 billion since then and Belgium is not even in the top 10 anymore.
Combined with the $18.4 billion decline in mainland Chinese Treasury holdings, the data suggests that total Chinese holdings fell approximately $40.3 billion in December, according to Jefferies.
Overall, foreign official institutions, including central banks and sovereign wealth funds, sold $49.5 billion in Treasurys in December. But as private investors stepped in and bought $13.6 billion in Treasurys, the net outflow was of $35.9 billion, as the following chart shows.
Earlier this month, Société Générale global strategist Albert Edwards said China is burning through its foreign-currency reserves at such a blistering pace that the country will run down its cushion in a few months.
But data from Janney Montgomery Scott taking the official Chinese holdings as a base for calculation showed that, at December’s rate of Treasury sales, China’s Treasury portfolio won’t be exhausted for nearly six years.
“While China does need to raise dollars, sell those dollars, and buy yuan to support its currency, the pace of any needed asset sales is far from breakneck and instead looks remarkably measured,” said Guy LeBas, chief fixed income strategist at Janney, in a note.
Official Chinese selling “only accounted for about a third of Asia’s net outflows at $18 billion; Japan’s $22 billion [outflow] was actually greater,” LeBas added.
http://ift.tt/1QmQVYP
Mountainman: Have You Ever"Tried" to CARRY a 5lb Bucket of "CONCRETE" across A "FROZEN LAKE" when the ICE is About to Come off the LAKE because it's Getting "CLOSE" to SPRING TIME ???... Me NEITHER....."NOT" A GOOD IDEA........
CHINA Knows that the US "FIAT" DOLLAR is Heading to A DEEP DARK PLACE.....=WHERE it Won't be Desired or Needed......."UNTIL" it gains it's "TRUE VALUE" backed by Assets......which is WHAT they/CHINA and Others AWAIT as Well !!!!
That is the Debt Many Countries are "SINKING" In Now!!!...........So too ......the REASON to "OFF LOAD" The CONCRETE/US DEBT they Carry on their "BOOKS".......=EVERYONE Seems to be LOOKING/WAITING for The NEW CHANGE......
Since CHINA holds A Lot of US TREASURIES/FIAT="DEBT"......In Order for their CURRENCY to Rise to It's TRUE POTENTIAL.....They are Selling Off the CONCRETE....so to speak......to Make Their Currency "MORE" Stable......
Basically the SAME Steps You Would take if Your "CREDIT SCORE" was in Bad Shape because of DEBTS Carried......Thus the "SOLUTION"=Get Rid Of it!!!!.....IMO Blessings,Mountainman
************
BACKDOC: LOOKS LIKE THE BOND VERSION OF STRESS TESTS! HEE HEE!
IS SOMEONE GETTING NERVOUS? WITH CHINA DUMPING TO BACK THEIR CURRENCY THE BOND MARKET IS IN TROUBLE!
THE TEN YEAR IS AROUND 1.7% WOW! TERRIBLE!
MANY OF THE BOND YIELDS ARE ALREADY IN NEGATIVE TERRITORY! DOC IMO
RDinar: New York Fed to Conduct Small-Value Treasury Purchase Operation
The Federal Reserve Bank of New York said it would conduct test trades Tuesday in U.S. Treasurys through its FedTrade proprietary trading terminal, following up on an authorization it received to continue such operations as part of its efforts to control of short-term interest rates.
In a statement posted Thursday on its website, the New York Fed said on Feb. 23, from 10:15 a.m. and ending at 11 a.m. EST, it would conduct a "small scale Treasury purchase operation" not to exceed $250 million in Treasury bonds maturing 10 to 20 years from now.
The operation "does not represent a change in the stance of monetary policy," according to the statement.
The maneuver is part of the New York Fed's commitment to conduct routine small-value trading operations to help it manage interest rates. On Wednesday, the New York Fed said it was authorized to conduct such trades and certain foreign currency transactions as part of its readiness for changing patterns in markets and "as a matter of prudent advance planning."
Tuesday's operation will be separate from reverse repurchase agreements the Fed has been conducting with money-market funds and banks since September 2013 as one of its key tools for raising interest rates. It won't affect the New York Fed's reinvestments of proceeds from maturing Treasury bonds.
Fed officials at their January policy meeting reauthorized the New York Fed to conduct such operations this year. The Fed's next rate-setting meeting is March 15-16.
http://ift.tt/1QO3P2q small-value-treasury-purchase-operation-20160218-01238
************
BACKDOC: FAMILY, IT SEEMS THAT EVERYDAY WE KEEP SEEING MORE ABOUT "THE DEAL"!
PARTNERS THAT ARE ABOUT TO HIT THE DANCE FLOOR! NOW WE MAY HAVE A HINT OF CURRENCY COMPATIBILITY ON STEROIDS!
DOC IMO
Thunderhawk: Iraq ready for Iran's industrial investment: Minister
Iraqi Minister of Industry and Minerals Mohammed Sahib al-Daraji said legal foundations for joint investment with Iran are available as his Iranian counterpart Mohammad Reza Nematzadeh expressed Tehran's readiness to contribute to Baghdad's industrial development plans.
'We welcome Iranian companies' participation in the Iraqi market,' al-Daraji replied to IRNA during a joint press conference with Nematzadeh in Baghad on Thursday.
The Iraqi minister was upbeat over outcome of the negotiations with Nematzadeh and said Iran's assistance to reconstruction of Iraq's industrial units was discussed during the talks.
The Iranian minister echoed al-Daraji's statement and said it was agreed that two countries will exchange delegations to follow up implementation of the agreements.
'We are ready to provide Iraq with our industrial experiences. During the meetings, the needs were reviewed. We encourage the private sectors in Iran and Iraq to joint investment projects,' Nematzadeh added.
Prior to the press conference, he met Iraqi Prime Minister Haider al-Abadi in which deepening of bilateral cooperation in industrial, commercial, and joint investment projects was stressed.
The Iranian minister, who arrived in Baghdad on Wednesday to promote bilateral relations, met Chairman of Iraq's Supreme Islamic Council of Iraq Seyed Ammar Hakim earlier on Thursday.
He also met governor of Iraq's National Bank, and his Iraqi counterpart on Thursday and visited industrial projects including a factory assembling Iranian automobiles.
http://ift.tt/1SEtGzR
************
BACKDOC: MR. LONELY WILL HAVE PARTNERS ALL AROUND! ITS MINERAL WEALTH WILL BE BEYOND COMPARE AND YET THEY GET A PIECE OF THEIR BROTHERS FRANCHISES TOO! YIPPIE! DOC IMO
Thunderhawk: Iran, Iraq confer on gas pipeline deal
Speaking to reporters after the meeting, Velayati said that the Iraqi oil minister is in Iran to discuss oil price and OPEC developments with Iranian officials.
He said that the Iraqi oil minister was satisfied with the results of his talks with Iranian senior officials.
It has been decided that deputy for economic affairs of Strategic Research Center of the Expediency Council, hold consultations about the gas pipeline deal with Iraq, he said.
Under the deal, the executive phase of the contract is to export 25 mcm of gas to Iraq, and the project has the capacity to increase the amount up to 40 mcm, Velayati added.
He added that the project will be completed within 2 years, saying “in order to meet the needs of the people and government of Iraq, a branch of the pipeline will reach Basra and another will deliver gas to Baghdad.'
Iran and Iraq finalized a plan for developing a pipeline to carry 40 mcm of gas to Iraq in September 2015. The project has been long in the offing but had been delayed over security concerns resulting from the war of insurgency that the ISIL terrorists have waged in Iraq.
http://ift.tt/1QO3MDN
************
BACKDOC: WITH ALL THE THIS NEW INFORMATION HOW CAN IRAQ JUST "MINE" ITS OWN BUSINESS! HEE HEE
IT SEEMS IRAQ HAS SO MANY DANCE PARTNERS SOMEONE WILL BE ALWAYS CUTTING IN! DOC IMO
Thunderhawk: Tehran, Baghdad set to expand joint investment projects
Iranian Minister of Industry, Mine and Trade Mohammad Reza Nematzadeh and Iraqi Prime Minister Haider al-Abadi met here on Thursday stressing deepening bilateral cooperation in industrial, commercial, and joint investment projects.
During the meeting which focused on ways of increasing bilateral trade, the Iraqi premier thanked Iran over its support to develop his country's industrial infrastructure.
Nematzadeh expressed Iran's readiness to transfer its experience on industrial development and help the government of Iraq through joint investment projects.
The Iranian minister, who arrived in Baghdad on Wednesday to promote bilateral relations, met Chairman of Iraq's Supreme Islamic Council of Iraq Seyed Ammar Hakim earlier on Thursday.
He also met governor of Iraq's National Bank, and his Iraqi counterpart on Thursday and visited industrial projects including a factory assembling Iranian automobiles.
http://ift.tt/1SEtGzT
GO IRAN GO RV HAWK
BACKDOC: AS WE WATCH TO SEE IF TALK TURNS INTO ACTION, OIL PRODUCERS BETTER GET READY FOR A BUMPY RIDE LIKE FRANK SAID!
IF THE PRODUCERS DON'T LEARN ABOUT A NEW CONCEPT CALLED A SPIRIT OF COOPERATION THE CRUDE REALITY WILL BE MORE THAN RUDE! HEE HEE DOC IMO
Thunderhawk: Backdoc Alert
As 2017 oil rebounds to $45, U.S. drillers begin to hedge anew
U.S. oil producers reeling from an 18-month price rout have cautiously begun hedging future production this week, fearing this may be their best chance yet to lock in a $45 a barrel lifeline for 2017 and beyond.
As oil markets rebounded from 12-year lows this week, U.S. shale companies - for the first time in months - started inquiring and placing new hedges for the next few years, according to three market sources familiar with money flows.
Oil prices have crashed more than 70 percent in the past 20 months, driven by near-record production by the Organization of the Petroleum Exporting Countries and other producers, adding to one of the worst supply gluts in history.
On Thursday, even as immediate-delivery oil futures ended slightly higher, U.S. crude for December 2017 delivery fell more than 2 percent to $43.47 a barrel, weighed down in part by producer hedging, the sources said. The 2017 WTI price strip rose as high as $43.55 a barrel in early trade; a month ago, it hit a record low of $37.38 a barrel.
Trading volume in over-the-counter oil swaps was more than five times higher than the past three days combined, according to swaps data from the Depository Trust & Clearing Corp, available via Thomson Reuters Eikon.
The re-emergence of hedging interest, which traders said was still limited in scope for now and mainly in the form of inquiries rather than execution, came as a surprise to some, surfacing below the $50 psychological threshold that some traders had thought would be needed to coax back producers.
The activity likely reflects both the growing investor and lender pressure to safeguard heavy debt requirements down the road, as well as the fact that drilling costs continue to decline, allowing companies to break even at lower prices.
"The $45 is break-even for a lot of producers. It's not just about making a profit, it's about staying alive," one trader said.
The sources declined to say which companies were active this week, but some producers have been looking for an excuse to pounce. They may have found it this week, as prices surged on news that OPEC and non-OPEC oil producing countries would come together to freeze production at January levels and key producer Iran voiced its support for the output cap.
Denbury Resources Inc, for instance, said on Thursday that it had "recently" increased its fourth-quarter hedges to cover 30,000 barrels a day at around $38 a barrel.
"These are not great prices, but they protect our liquidity and will minimize our borrowings in the event that prices are lower for longer, because these hedges are above our total current cash costs," Chief Financial Officer Mark Allen told analysts.
On an investor call last week, Scott Sheffield, chief executive officer of Pioneer Natural Resources, one of the most heavily hedged drillers in the business, said he saw a good chance of more rumors stoking prices. He cited a Feb. 11 Reuters story that first reported that some OPEC countries are trying to achieve a consensus among the group and key non-members to freeze output.
With talk of declining U.S. shale output or supply curbs, "you've got to use events like that to put hedges in the marketplace."
Pioneer did not immediately respond to requests for comment. Just a month earlier, Pioneer's chief operating officer, Tim Dove, had told Reuters that the company would be looking for a minimum price of around $50 a barrel to lock in more hedging, but oil's relentless rout may have softened that view.
Matador Resources said this week it had added to its hedges over the past two weeks, but did not say by how much. It now has 43 percent of its estimated 2016 oil output hedged at weighted average floor and ceiling prices of $44 and $66.
CAPPING THE MARKET?
Hedging for future production is common among U.S. oil and gas producers, who use it as a lifeline to protect future profits and continue pumping. The need to hedge appears to be greater than ever, with some estimating that only 14 percent of 2016 oil output is protected.
The price slump since mid-2014 has effectively forced even the most resilient U.S. shale producers to slash additional spending and idle rigs in an effort to rein in costs and help balance a market battling with oversupply.
Some dealers have warned that companies' increased appetite for hedging may stymie a sharper recovery in prices, allowing them to increase drilling more quickly than they otherwise might.
"If I were a producer, I'd be saying that we will be lower for a lot longer. So I'd be locking in prices now," said Tariq Zahir, an analyst at Tyche Capital Advisors in New York. "But any spikes we see will just turn shale back (on)."
On Wednesday, data showed that output from North Dakota, the birthplace of the U.S. shale boom, fell nearly 3 percent in December and state regulators said it was a sign producers were not expecting prices to rise any time soon.
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