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Global Demand for Steel is Growing Slower Than Expected

Global use of the alloy will rise 4.5 percent this year, less than the 5.4 percent forecast in October by the World Steel Association, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg. Growth may be as low as 1.2 percent, according to Bloomberg Industries analysts.

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OPEC: Iran embargo leads to higher oil

“So please don’t do it…”

Read here:

Any decision by Iran to cut oil exports to the European Union will affect the price of oil and hurt the region’s economy, OPEC Secretary General Abdalla Salem El-Badri told CNBC on Monday.

Iran’s parliament is to debate a “double-urgency bill” which would halt all oil exports to the EU in response to sanctions by the bloc, which plans to ban imports of oil from the Middle Eastern country in July.

“Iran are exporting 400-500,000 barrels a day to the EU,” El-Badri said. “Of course this quantity is going to affect the EU…you don’t want to add more problems to the EU. And for the Iranians also, to cut 400-500,000 barrels a day from their exports, it will affect their living.”

El-Bardi did not want to speculate on whether Iran will go ahead with the move to ban exports to the EU, which would disturb a five-month transitional period to allow the countries to find alternative suppliers.

“Today…the market is stable, there is no shortage of oil anywhere in the world,” he said. “However, to take out 400-500,000 barrels a day in a matter of days, this will affect the price. Of course the price will go up. I don’t know how much.”

He reiterated his statement that $100 per barrel was a sustainable price for oil for this year.

“One hundred dollars is suitable for producers and consumers,” El-Badri said. “For us, we can invest, we can have enough income for our member countries and also the consumers can survive, can have their economy flourish with $100. I think anything above $110 is a problem.”

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Because we’re all eyeing Natty, when to buy?

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Natural gas has gotten a much needed boost over the last couple weeks, rising over 15% after a catastrophic drop in the last year. The rally came in reaction to Chesapeake Energy’s (CHK) announcement that it was cutting capital expenditures by more than 2/3’s from last year, suggesting lower supplies. In addition, President Obama suggested in his State of the Union address that he’d seek to use more natural gas as a bridge between crude and renewables, suggesting stronger demand.

As econ 101 taught us: less supply + more demand = higher prices. So what’s the trade now that the tape has digested these news items and rallied sharply?

Rich Ilczyszyn, founder of iiTrader.com likes natural gas here and suggests the U.S. Natural Gas fund (UNG) as a way for retail investors to play. “UNG is definitely something I’d take a look at here,” he says in the attached clip, and offers two bullish catalysts to support the idea:

1. The huge downtrend has been accompanied by massive shorts. When shorts are forced to cover it “scoots the market up,” as Ilczyszyn puts it, leading to gains building on gains, particularly when there’s a fundamental basis for the move.

2. It’s a relatively low-risk trade, in his view.

Those who’ve been long natural gas over the last few years may take issue here. To be clea, Ilczyszyn isn’t saying there isn’t danger that the perennial “next big thing” can’t continue it’s trend lower, just that natural gas isn’t going to go to zero, and sees your downside risk that $2.

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Westport Innovations May Profit Big from NAT GAS Act

Jim Cramer made positive mention of Westport, calling it a solid play on natural gas should Congress pass its pending Natural Gas Act. Westport converts diesel engines (i.e. – those found in semi trailers) into ones that run on natural gas.

Benefiting Westport is that it’s: A) basically first to the market, at least in terms of mass production, and B) high barriers of entry for competition because of the complex technology involved in the transformations.

Read the rest here.

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No shortage of oil, even with Iran embargo

LONDON (Reuters) – The world is likely to have more oil, not less, this summer even as Europe imposes sanctions on Iran over its nuclear program.

Although Europe’s refiners will have to pay up for other sources of oil, they should have little difficulty finding them.

Extra crude oil from Saudi Arabia, Iraq and Libya will more than make up for any lost from Iran after the ban is imposed on July 1, and this is likely to be reflected in oil prices.

As much as 1 million barrels per day (bpd) more crude oil could be coming from these three producers alone – perhaps double the volume of Iranian exports lost to the European Union.

“The oil market should be very well supplied this summer – even better than now,” said Samuel Ciszuk, Middle East and North African (MENA) analyst at consultancy KBC Energy Economics.

“Volumes from Iraq should be up significantly, Libya is doing very well and Saudi Arabia will increase production to compensate for some of the lost Iranian barrels.”

The International Monetary Fund said on Wednesday sanctions against Tehran would imply supply declines of about 1.5 million bpd from the world’s fifth largest oil producer, adding global oil prices could rise as much as 30 percent if Iran halted oil exports as a result of the West’s actions.

But senior oil executives, traders and strategists see little chance of significant supply disruption this summer.

Although oil prices have risen on fears that conflict between Iran and the West could disrupt exports from the Middle East, they argue such a clash is extremely unlikely.

And with the European economy in the doldrums and Asian growth slowing, overall oil demand growth is being constrained.

“NOTHING WILL CHANGE”

Iran will keep selling its oil, much of it into Asia, where consumers will be only too happy to buy at the right price.

“(Iranian) oil will go somewhere else,” Total SA Chief Executive Christophe de Margerie told Reuters in Davos on Wednesday. “Iran may give a discount to make it easier and quicker but nothing will change.”

The net result is almost certain to be an overall increase in oil supply, initially into Asia but eventually to all world markets, and downward pressure on prices.

Expectations of improving supply are already beginning to affect prices, dampening Brent crude oil futures for nearby contracts relative to forward months, tipping the front of the price curve into a so-called contango.

The front-month contract for Brent, now March, traded around $111 per barrel on Thursday, and this week it has traded at a small discount to April. Many traders expect the rest of the price curve to move into contango as supplies improve.

The world’s top oil exporter, Saudi Arabia, is pumping just under 10 million bpd and is most likely to make up any shortfall in Iranian supplies. It has promised to meet any extra requests from customers and Gulf industry sources expect a significant increase this summer, maybe of up to 500,000 bpd.

Iraq is aiming to expand its crude oil exports by up to 400,000 bpd by March, after starting up a new Gulf oil terminal this month. This would take its overall oil sales to about 2.5 million bpd, an Iraqi industry source says.

Libya, returning to full production after the overthrow of Muammar Gaddafi and civil war last year, has already pushed up oil exports to around 800,000 bpd this month, says the National Oil Corp. Libya expects to increase exports by up to 500,000 bpd by the third quarter.

“FAVOURABLE” PAYMENT TERMS

Meanwhile, many buyers of Iranian oil, especially in Asia, show no sign of supporting the Western campaign against Iran.

Chinese oil companies are negotiating hard with the state-run National Iranian Oil Company on term purchases and, while they want the lowest possible price, they have no intention of taking less Iranian crude, sources familiar with the Chinese term negotiations say.

India wants to take as much Iranian oil as it can because terms are “favorable,” Oil Minister S. Jaipal Reddy said on Monday, after talks between the two sides on payment terms.

Together, China and India, could take more Iranian crude, possibly much more, if it were heavily discounted.

“Totting it all up, the figures show supplies from the MENA region improving, not decreasing,” said a senior oil trader at a large U.S. bank. “We can’t see a shortage coming.”

David Wech, head of research at Vienna-based consultancy JBC Energy, said the price impact of the changing supply-demand picture had been obscured by worries over geopolitical risk:

“There is some logic that the situation might lead to … more barrels if Iran manages to supply more than expected.”

The big losers could be European refiners, already under huge pressure from poor margins and high debt.

“The Iranians might have to discount a bit, but the real victims will be European refiners who will have to pay up for alternative supplies,” said a senior trader at a large European refiner that has been a regular buyer of Iranian crude.

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Iran: No we ban you, Europe

TEHRAN, Iran (AP) — Iran’s parliament will begin debating a draft bill requiring the government to immediately halt oil exports to Europe, a prominent lawmaker said Wednesday, as Tehran weighs its options following the European Union’s decision to stop importing oil from the country.

The EU embargo, announced on Monday, was the latest attempt to try to pressure Iran over a nuclear program the United States and its allies argue is aimed at developing nuclear weapons but which Iran says is for purely peaceful purposes. It came just weeks after the U.S. approved, but has yet to enact, new sanctions targeting Iran’s Central Bank and, by extension, its ability to sell its oil.

Many Iranian lawmakers and officials have called for an immediate ban on oil exports to the European bloc before its ban fully goes into effect in July, arguing that the 27 EU nations account for only about 18 percent of Iran’s overall oil sales and would be hurt more by the decision than Iran. China, a key buyer of Iranian crude, has blasted the embargo.

“The bill requires the government to stop selling oil to Europe before the start of European Union oil embargo against Iran,” lawmaker Hasan Ghafourifard told the parliament’s website, icana.ir. Debate on the bill is to begin on Sunday, he said.

The U.S. sanctions had outraged Iranian officials, prompting repeated threats from various officials that the country could shutter the vital Strait of Hormuz if measures are enacted that affect its oil exports. Roughly a fifth of the world oil passes through the narrow waterway, and the U.S. and others have warned Iran they will not allow it to impede the free flow of traffic in the area.

Iran is OPEC’s fourth largest producer and most of its crude goes to Europe and Asia.

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Gingrich and Gold: He Wants to Get Back to ‘Hard Money’

Charles Kadlec, Contributor

The biggest under-reported story of the South Carolina primary is winner Newt Gingrich’s campaign promise to convene a gold commission to “look at the whole concept of how do we get back to hard money.”

The only job of the Fed should be to “maintain the stability of the dollar because we want a dollar to be worth 30 years from now what it is worth now,” said Gingrich, pointing out price stability encourages savings and investment because people know what the dollar will be worth when comes time to spend it.

Monetary reform can be the issue that propels Gingrich above the tawdry attacks on his personal life and questions about his reliability all the way to the Republican nomination, because it puts him ahead of Governor Romney and Senator Santorum on a policy that enjoys a clear plurality of support among Republicans, Democrats, blacks, whites, hispanics and individuals across all income categories.

When the Rasmussen polling firm last October asked 1000 likely voters if they were “favorable or unfavorable about returning to the gold standard,” 44% were favorable versus 28% unfavorable.  However, when the respondents were asked: Would you “favor or oppose returning to a Gold Standard if you knew it would reduce the power of bankers and political leaders to steer the economy?” those in favor increased to 57% versus only 19% opposed.

All the candidates agree on the need to repeal ObamaCare and Dodd-Frank, to reduce the regulatory burden on American business and to cut corporate and personal income tax rates through tax reform.  But, Governor Mitt Romney promises to follow in President Obama’s footsteps as a weak dollar President, especially relative to the Chinese. Senator Rick Santorum’s website is strangely silent on the issue of monetary policy, even though the gyrations in the value of the dollar have demonstrably hurt the middle-class and manufacturing more than any other single policy.

Gingrich has seized this opening to build his appeal as the conservative candidate who can defeat President Barack Obama by making monetary reform integral to his campaign to increase the prosperity, security and liberty of the American people.

Read the rest here.

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