evening wrap, august 26
market vibes
If there's one thing in my life that's missing
It's the time that I spend alone
Sailing on the cool and bright clear water…Glenn Barrie Shorrock 1979
Oil prices held sway in New York on Monday and again today as the barrel gave everything back and more early in the session. It was another very quiet day, but filled with subtle developments.
I scoured Bloomberg and other sources like the FT and Yahoo, etc., which often lack timely updates, and found nothing to explain the plunge in oil prices. However, about 2 PM EDT, I found this on Reuters:
MOSCOW, Aug 26 (Reuters) - “Russia has revised up its crude oil export plan from western ports by 200,000 barrels per day (bpd) in August from the initial schedule after Ukrainian drone attacks disrupted refinery operations and freed up more crude for shipment,” three people familiar with the matter said. This implies two things:
Targeting Russia’s oil infrastructure has the unintended transitory effect of increasing global supplies.
Russia is impervious to U.S. sanctions. Exporting an extra 200,000 bpd means Russian oil still has ready buyers and destinations: “Loadings from Primorsk, Novorossiysk, and Ust-Luga are expected to reach about 2 million barrels per day (bpd), up from an initial plan of 1.8 million bpd,” sources familiar said.
Concurrently, in peace news, the U.S. said they would contribute intelligence, reconnaissance, and surveillance assets to enable and protect European ground deployment.
President Trump and European leaders have been unequivocal that there would be no soldiers deployed to the front lines of contact. However, NATO is forming a plan to buy $1 billion in arms per month from America (source Reuters, NPR). America’s military contribution is to make arms available for sale.
The PURL Program equals roughly a tenth of estimated allied annual expenditures in 2024. According to Grok: “Combining U.S. ($30–40 billion), EU ($47–58 billion), and other allies (~$15–20 billion, based on proportional shares from UK, Japan, Canada, etc.), total allied expenditures for 2024 likely range from $92–118 billion. If refugee support is included, the EU’s contribution could push the total closer to $120–150 billion, though this is less directly tied to war efforts.”
The propsed twelve billion dollars a year could be used to cover the NATO military contribution for security guarantees, not another year of war. For instance, the US spends about 5 billion a year to keep 35,000 soldiers in Germany. The German government contributes another one billion. I have read minimun estimates of 40,000 NATO peace keepers in country to secure a peace agreement so this 12 billion would be, financially, in the right zip code to guarantee the peace.
After reading and parsing these reports from Reuters, Bloomberg, and the FT, plus the abrupt reversal in oil prices today, validating the reports, maybe a credible effort to end the war is beginning to come together. You decide.
In other markets
Short sellers may finally be brought to heel, gold is showing signs of life, bitcoin may have bottomed… and a cool change in the vibe.
