Oil

With some high profile names giving the pow-wow a miss this year, there is a sense that the annual Davos brouhaha is losing its marque status amongst the much written about jet setting global ‘elites’. Flying in on private jet to chitter-chatter and schmooze over pink champagne and butter-glazed vol-au-vents is very Duke of Sussex, and risks a whole load of trolling on social media. That a ticket behind the velvet rope reportedly costs $250k also jars somewhat in the context of the rest of the world feeling the brutal inflationary shake out of the extravagant, post-GFC, fiscal and monetary largesse. All told, the coverage appears a bit more subdued this year. What caught the gaze this week then, was the Bank of Japan Governor, Haruhiko Kuroda, who, against hyped up expectations, gave it a big ‘nothing-to-see-here’ as he announced that he was making absolutely no changes to the current strategy of yield curve control. That changes are needed explains all the hype, but any stepping back from all the bond buying will be on the watch of his successor. Providing there are any applicants. Those who thought a move was coming, got burnt. Also slipping out on the wires – to less fanfare – was news that the International Energy Agency revised up its oil demand forecasts. Up it goes. This despite all the recessionary warnings of many a high profile commentator. With flight data out of China speaking to huge pent up demand to don the Ray Bans, coupled with falling Russian output, subdued capex, and brokers ripping up box-fresh European recession calls, a hot bid returned to the oil patch, pushing prices up through the 50-day moving average. Speculative money, watches and waits. If China continues to ‘normalise’, the IEA may not be done with revising those forecasts. The bid will persist. And don’t bank on US shale coming through as the vaunted swing producer. Pioneer CEO, Scott Sheffield, recently whispered that “the aggressive growth era of US shale is over“. No one is interested in adding rigs. No one. And all this set against the shifting sands of geopolitics with Bloomberg reporting that Saudi Arabia is now very keen on selling oil in other, non-USD currencies; and the unlikely foursomes pairing of Russia and Iran, apparently exploring the development of some sort of stablecoin backed by gold. The talk may be in Davos but the action is, increasingly, elsewhere.