With WTI oil up almost USD1 and now at USD 74.98 prices are likely to firm more in the second half of 2021 as demand increases with economies returning to pre-pandemic conditions and travel restarting. The other determinant is the OPEC Meeting yesterday which having deliberated on the supply volumes for H2, decided to restrict supply thereby supporting the price. Needless to say the natural OPEC tensions between Saudi Arabia at one end of the caution spectrum and Russia at the other with Russia keen to boost supply all goes into the mix. Last but not least USA oil inventory stockpiles continue to fall as they have for the past 2 months and in Cushing, Oklahoma, the delivery point for WTI, stocks are at their lowest since March 2020.
Europe and rising interest rates
The two most indebted Eurozone countries being Italy and Greece already had debt in excess of 1 year’s economic output prior to the pandemic, but since then they along with all European countries have spent massively in support of covid relief programmes. The ESRB or European Systemic Risk Board have warned that with a further rise in bond yields in the USA, borrowing costs not only in the USA but also in Europe would be the likely knock-on effect. That would be a real headache for all of Europe but especially by the most indebted countries that would struggle to service their debt at higher rates of interest. That is why the ECB is determined to keep Eurozone rates low with aggressive bond buying and ECB President Christine Lagarde is doubtless lobbying her colleagues in the USA to do the same. 10year US Treasury yields stand at 1.47% and Germany 10 year at -0.18%.
With the Delta variant increasing fast in the Republic, the SA Government is considering buying more Astra Zeneca vaccines from the Serum Institute of India Ltd. Consideration is also being given to licensing the Russian Sputnik V and the China Sinovac vaccines. These measures come only 4 months after RSA selling 1 million doses of vaccines to the Addis Ababa based 55 nation African Union. The Rand a little weaker with USD/ZAR at 14.30.
The sausage market is not one that we habitually comment on, but with the news that a further 3 month extension to the UK exporting sausages and processed meat from 30-06-21 has been agreed, we have been asked what it means beyond the obvious. The answer is not very much: the UK produces £850 million of sausages annually versus £450 million of (the culinarily inferior) burgers. In total the UK exports £17 million of sausages to the EU of which £7.5 million go to or through Northern Ireland.
Not exactly a top priority in the worry stakes.
With the release of his album I Just Can’t Stop Loving You in 1988, Michael Jackson had the distinction of making an album with 5 Number 1 singles on it. Here is the first of those 5 hits: Dirty Diana, a song which while short of artistic merit lyrically, has a good beat-and for the avoidance of doubt is about his friend(?) Diana Ross rather than his friend, Diana, Princess of Wales:
Oh, no
Oh, no
Oh, no
You’ll never make me stay
So take your weight off of me
I know your every move
So won’t you just let me be
I’ve been here times before
But I was too blind to see
That you seduce every man
This time you won’t seduce me
She’s saying, “That’s okay
Hey, baby, do what you please
I have the stuff that you want
I am the thing that you need
She looked me deep in the eyes
She touchin’ me so to start
She says there’s no turnin’ back”
She trapped me in her heart
Dirty Diana, nah
Dirty Diana, nah
Dirty Diana, no
Dirty Diana
Let me be
Have a Great Weekend!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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