WTI/RBOB Jump After Major Inventory Draws Across Entire Energy Complex

WTI posted a 5.2% gain in October, the first back-to-back monthly advance this year, and held up near the highs of the day into the API print. WTI/RBOB kneejerked higher as the data hit showing large inventory draws across everything…



  • Crude -5.087mm (-1.3mm exp)
  • Cushing -263k
  • Gasoline -7.697mm (-1.55mm exp)
  • Distillates -3.106mm

Big product draws in the previous week – and a modest crude build – bucked the recent trend but tonight's API data shows huge draws across everything…

Expectations that OPEC’s cuts are “tightening the market supply-demand fundamentals continues to drive prices higher,” Gene McGillian, a market research manager at Tradition Energy, told Bloomberg.

There is “a little bit of profit-taking and that’s why the rally seems to have kind of stalled. But, I don’t think we have any indications that the rebalance has completely been priced into the market”

The reaction was an immediate algo-buying panic then modest fade…

Jay Hatfield, portfolio manager at the InfraCap MLP exchange-traded fund, told Bloomberg, "inventories are in good shape. Demand is quite positive globally. We’ve been appropriately bullish."

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Is Hillary Clinton’s Halloween Costume Culturally Insensitive?

The lucky students at Texas A&M University got a costume-sensitivity-flowchart for Halloween this year from the GLBT Resource Center.

We thought it might help you when you choose your out for for tonight.

Wondering about your Halloween costume? Here are some things to keep in mind…

But, we wonder if Hillary Clinton has checked the chart because her choice of costume – to some – may be highly offensive…

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Trump Promises Tax Cuts for Christmas, White House Defends John Kelly’s Civil War Comments, and Ex-Catalan President Flees to Brussels: P.M. Links

  • John KellyNetflix halts ‘House of Cards’ Season 6 production in wake of Kevin Spacey accusation.
  • Trump promises tax reform for Christmas.
  • White House defends Chief of Staff John Kelly’s Civil War comments, calls criticism ‘disgraceful’.
  • Former Catalan President Carles Puigdemont flees to Brussels.
  • The Portland Mercury has a pretty cool collection of spooky, and cringe-inducing, stories of dental-related horror for Halloween.

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If Industry-Funded Scientists Can Be Conflicted, Surely Government-Funded Scientists Can Be Too

EPALogoEnvironmental Protection Agency administrator Scott Pruitt has declared that researchers who receive funding from his agency cannot serve on its scientific advisory committees. “It is very, very important to ensure independence, to ensure that we’re getting advice and counsel independent of the EPA,” Pruitt told reporters Tuesday, according to The Washington Post.

Nearly 10 years ago, I researched the issue of research conflicts of interest for the American Council on Science and Health. My report concluded that

there is very little evidence that alleged conflicts of interests are significantly distorting scientific research, harming consumers and patients or misleading public policy. Most conflicts of interest activists clearly have prior strong ideological commitments against markets and corporations. They view the conflicts of interest campaign as another tool to attack an enterprise which they already despise on other grounds.

Interestingly, in my review of the voluminous conflicts-of-interest literature 10 years ago, I could find no published studies that even attempted to see whether government funding might skew research results in the direction favored by the agency that supported such research.

If there are any such studies out there, please direct my attention toward them now. The topic is certainly worth addressing. As the economists William N. Butos and Thomas J. McQuade argued in 2005,

Scientists’ success in securing funding testifies to their submission of proposals that receive a favorable hearing by the funding agencies. Thus, scientists have an incentive to develop and nurture professional relationships with agency members, advisors, and consultants. Finally, government funding of science, including that associated with military R&D, unavoidably establishes linkages between the funding agencies’ preferences (or legislative charge) and the scientific activity that university and industry researchers perform. These linkages relate to the purposes for which funds are made available, thereby affecting the direction and regulation of scientific research as well as specific protocols for military R&D.

In a column published just when the anti-fracking hysteria was peaking, I asked, “Is Regulatory Science an Oxymoron?” At the conclusion I posed a couple of questions:

Why is it that environmentalists and environmental agency bureaucrats can always gin up studies that show that any activity they oppose and/or want to regulate is dangerous to the environment? On the other hand, why is it that energy producers and energy agency bureaucrats can gin up studies that suggest that the benefits of any activity they favor outweigh the costs?

My tentative answer: Regulatory science is an oxymoron.

In any case, the foregoing is not meant endorse any of the candidates nominated by Pruitt to serve on the EPA’s scientific advisory board. Each will need a case-by-case evaluation; avoiding both government shills and industry shills is a good idea. But Pruitt’s ruling that researchers dependent on agency funding should not serve on EPA advisory committees is not self-evidently wrong.

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Stocks Advance For 7th Straight Month As Yield Curve Crashes To 10 Year Lows

Well that was easy…

When does this mouth snap shut?


Japan wins October… with only two down days all month (the first -0.4% and the 2nd last night -0.003%!)…NKY's best month since Oct 2015

S&P, Dow, and Nasdaq's best month since February, Trannies were the only major index red with Small Caps bouncing back green today…


This is the 7th straight monthly advance for the S&P 500 (and Dow) (Last 7 mth, May 2013. Last 8 mth, Jan 2007. Last 9, Mar 1983).. and 11th of the last 12 months up…

h/t @JohnKicklighter

Tech, Utes, and Financials outperformed in October… Retailers lagged…


FANG Stocks surged almost 8% in October – 2nd best month ever…

TSLA ended the month -3%… AMZN up 15%


Another ugly day for Under Armour… to the lowest since April 2013…


It was a big month for other assets too…

  • Dollar Index rose 1.7% in October – best month since Nov 2016
  • Bitcoin surged 52% in October to a new record high
  • 2Y Treasury yield rose 11bps in Oct, 2nd monthly rise in a row to highest monthly close since Sept 2008
  • TSY 5s30s curve flattened for 3rd month in a row to flattest monthly close since Oct 2007
  • WTI Crude's highest monthly close since June 2015 (up 2 months in a row)
  • Gold's first consecutive monthly drop since Dec 2016

Stocks bounced back from yesterday's dip with Small Caps outperforming today and Nasdaq since Friday


VIX hit a 9 handle early on… bounced… then was pushed back down a 9 handle in the last hour…before rising once again…


Treasury yields were mixed today (long-end outperforming), echoing the month of October (2Y +11bps, 30Y +1bps)


With the yield curve starting to re-accelerate flatter…


The Dollar Index surge in October but has fallen the last 3 days…


Driven by slump in CAD (offset by strength in CNY)…


Bitcoin hit a new record high today after news of a Bitcoin Futures contract broke…


Copper and Crude ended October up 5.3% – oddly the same – with silver and gold stuck at the flatline…


Just one last thing… While US equity markets had a big October run… all the major US equity indices implied vols rose on the month… led by Small Caps…


And remember – October was all about China…

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There Are No Cheap Stocks Anymore… Literally

The S&P is substantially overvalued on 18 of 20 valuation metrics, with the only exceptions being free cash flow (helped again by depressed capex), and relative to small caps/bonds – the Fed's favorite indicator –  where yields remain depressed thanks to the Fed's failure to stimulate wage inflation for nearly 9 years.


But as the relative collapse of the equal-weight S&P relative to the market-cap-weighted S&P, all the gains have gone to the biggest names…


And longer-term, share prices have drifted – some might say 'inflated' – to the point that there are no cheap stocks anymore… literally.


Perhaps this chart will highlight the 'inflation' better

It now takes the average American worker almost 95 hours to earn enoough to buy one S&P 500 index 'unit'…30% higher than at the peak in 2007 and almost triple its cost at the lows in 2009…

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2 Dead After Truck Plows Into Crowd In Lower Manhattan; Suspect In Custody

In an attack that bears some of the hallmarks of terror attacks that have unfolded in the UK, Spain and France, a box truck veered into the West Side Highway bike lane Tuesday afternoon and mowed down cyclists and pedestrians, leaving two dead and at least eight injured. The scene is near Hudson Street and Chambers Street. The as-yet-unidentified suspect has reportedly been taken into custody, according to the New York Post.

It was unclear if this was an act of terrorism. NBC is reporting that shots were fired at the scene, but it's unclear if those shots were fired by police responding to the incident, the attack, or, as one twitter user reported, a cab driver.

Grisly video taken at the scene shows the aftermath of the attack:


Police shut down the FDR to rush victims to Bellevue Hospital. The West Side Highway has been closed from 20th street down.

"I saw a truck – a white pick-up truck – going down the bicycle lane and running people over," one witness told CBS.

NYPD has confirmed that the suspect is in custody.

Video from NBC shows the blocked-off West Side Highway. Mayor Bill DeBlasio is on his way to the scene.



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The Endless, Soul-Sucking Emptiness of Partisan Warfare

What is it that compels the leadership of a party that holds all the levers of power in Washington to repeatedly attack political opponents who are out of office, to call for investigations into the actions of administration officials who are totally out of the picture, and plan political campaigns around opposition to politicians who are never going to run again? I’m speaking, of course, of Democrats during the start of the Obama administration.

In 2009, Democrats held both the White House and a commanding majority in Congress, including the 60 Senate seats necessary to overcome a filibuster. Yet on multiple occasions throughout the year, party leaders singled out former President George W. Bush and his administration for attacks.

President Obama, who would let the federal budget deficit soar to record heights during his first term, complained publicly that he had inherited trillions in debt from Bush. Speaker of the House Nancy Pelosi supported an investigation into potential Bush administration lawbreaking on national security issues. And at the end of the year, Rep. Chris Van Hollen, then the chair of the Democratic Congressional Campaign Committee, declared that for the 2010 midterm election, the party’s strategy would be to remind voters of how much they disliked President Bush. At the height of the Democratic party’s occupation of elected office in Washington, in other words, a president who had been out of office for nearly a year and would never again hold political power was enemy number one.

You can see a similar instinct at work right now, as Republicans and their partisan allies attempt to jujitsu Trump administration scandals into indictments of Hillary Clinton, who is, you may have noticed, not currently our country’s president, or for that matter, our official anything else.

After the announcement yesterday that Trump’s former campaign manager, Paul Manafort, had been charged with conspiracy and money laundering as part of special counsel Robert Mueller’s investigation into Russia’s efforts to influence the 2016 election, White House Press Secretary Sarah Huckabee Sanders responded that “today’s announcement has nothing to do with the President, has nothing to do with the President’s campaign or campaign activity.” Instead, she said, “The real collusion scandal, as we have said several times before, has everything to do with the Clinton campaign, Fusion GPS, and Russia. There is clear evidence of the Clinton campaign colluding with Russian intelligence to spread disinformation.”

This morning, Trump responded to news that campaign foreign policy adviser George pleaded guilty to lying to the FBI as part of the same investigation. While working on the campaign, Papadopoulos attempted to set up meetings between the Trump campaign and Russian contacts, and he noted that individuals he believed to be connected to the Russian government said they had dirt on Clinton, including thousands of emails. This occurred months before thousands of Clinton emails were made public as the result of a hack. The president used this as an opportunity to says that his political opponents deserve more scrutiny. Papadopoulos, Trump said, was a “young, low level volunteer, who has already proven to be a liar. Check the DEMS!”

This message was echoed by Trump’s GOP allies in Congress: “Don’t forget we still have all the Hillary activity,” said Sen. James Inhofe when asked about the Manafort charges. Just last week, congressional Republicans launched several new investigations into Clinton’s actions as secretary state. And Trump’s most ardent defenders in the media have similarly spent the last week or so downplaying the importance of the Mueller probe while insisting that the Russia investigation that the entire operation is just a meaningless and shoddy Democratic hit job, and also that it reveals important and damning truths about Hillary Clinton and her allies. As always, the real enemy is someone who is out of power, and who will almost certainly never again wield it.

The need for a political enemy, for someone of the opposing party persuasion to despise and blame regardless of their current proximity to actual power, is a consistent feature of the partisan mind. It is a mindset that conceives of politics almost exclusively as a sport, played between two teams, with points to be scored and games to be won.

It’s a zero sum approach to governance, and what it means, in the end, is that anyone who is concerned with improving the performance of government ends up losing, as empty partisan victories inevitably end up prioritized over policy advances. It is politics as a combination of entertainment and petty cultural warfare, and it is a habit that is, at predictable intervals, indulged on both sides of the aisle. It is exhausting, endless, inevitable, and utterly soul-sucking.

The bipartisan nature of this mindset does not mean that what Republicans are doing now is perfectly equivalent to what Democrats did eight years ago. When Democrats blamed Bush for exploding the national debt or for engaging in legally and morally dubious acts in pursuit of the war on terror, they were certainly engaged in a self-serving partisan blame game. But in an important sense, they also had a point: Bush had been president for eight years, and had made a multitude of errors and blunders that profoundly shaped the course of the nation.

Hillary Clinton, on the other hand, not only isn’t president today—she never was. Yes, she served as President Obama’s secretary of state for four years, and she exerted real influence in that role, but not at remotely the same level as President Bush. And it is all but certain that she will never run for office again. And yes, the Clinton machine, the faction of advisers and advocates and money managers inside the Democratic party, was amongst the most powerful and influential players involved in American politics for decades. It is not entirely unreasonable or out of bounds to note or consider Clinton’s many roles in our recent national dramas. But given who controls the actual levers of power in our current government, it is also far from the most pressing concern at the moment. Yet Trump and his defenders would have us believe that shady Clinton dealings are the most important issue being raised by the current investigation. Perhaps even more bizarrely, the GOP faithful have attempted to turn Mueller, a lifelong Republican with a solid reputation, into a front for Clinton sleaze.

It is not an accident that the GOP’s attacks on Clinton have grown louder and more agitated as the investigation into Trump has made progress. It is a strategy designed to muddle the issue by playing on knee-jerk partisan resentments. Those resentments, meanwhile, have yet to produce much in the way of legislative achievements. Shallow partisan deflection is being forced to serve as a substitute for a popular and successful policy agenda. This is partisan politics at its worst, power-seeking and power-weilding for no reason except empty self-perpetuation, which is to say that it is partisan politics as it usually is.

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3 Potential OPEC Deal Killers

Authored by Zainab Calcuttawala via OilPrice.com,

The Middle East isn’t yet ready to agree on the future of OPEC’s output reduction deal as the bloc’s November 30 summit approaches, during which the cartel is set to decide on the depth and length of the cuts one year from their initial approval.

Here are the three key geopolitical issues wreaking havoc on the region’s ability to collectively raise the price of oil.

1. The Trump Administration’s Ongoing Iran Nuclear Deal Drama

From the day that Donald Trump declared he would run for president, he made it clear that he is firmly against the current deal with Tehran to reintegrate Iran’s economy into the international community in exchange for a smaller and monitored nuclear energy program. He believes the plan gives up too much leverage on the American side for the furthering of U.S. foreign policy objectives in the Middle East.

Earlier this month, Trump officially decertified the nuclear deal, which doesn’t do much in the way of dismantling the agreement, but does give Congress leeway to authorize further sanctions against Iran.

Tehran’s oil and gas industry needs global economic integration in order to fund social services and ensure a prosperous future for the Iranian people. Though Secretary of State John Kerry made his rounds reassuring European nations that their firms would not be hit by American sanctions by investing in Iran’s fossil fuel industry, Kerry’s replacement in the Trump administration has made no such promises.

What Secretary of State Rex Tillerson did do is issue a statement supporting Iran’s technical compliance to the deal, despite the president’s explicit decertification of it.

The uncertainty surrounding the U.S. sanctions on Iran leads to uncertainty regarding OPEC’s third largest oil producer’s ability to contribute to or maintain oil output. Tehran’s participation in the oil game has been contingent upon the success of the nuclear deal since January 2016. New sanctions from a Republican congress could undo much of the progress made by engaging the economic pariah.

2. Iraq’s Intense Struggle with Kurdistan

The Kurdistan independence referendum last month caused Baghdad to take over key oil fields formerly controlled by the Kurdistan Regional Government (KRG). A fraction of former output (half, or less than half, by most measures) is currently flowing through a pipeline in the area due to a deal between the Iraqi government and the Kurdish KAR group.

Last weekend, Iraqi authorities said they increased oil exports from the southern Basra region by 200,000 barrels per day to make up for a shortfall from the northern Kirkuk fields. But this doesn’t promise future output rebuttals if the KRG or its Peshmerga decide to strike back to regain its oil might. A significant loss in output from OPEC’s No. 2 producer could cause an unexpected spike in oil prices, which is what Saudi Arabia, the bloc’s leader, craves.

3. A Gulf Blockade Entering its Sixth Month

Despite its standing as top exporter of liquefied natural gas, Qatar is not a significant oil producer. The geopolitical impact of the Gulf’s economic blockade against Doha, however, could have significant geopolitical consequences as it enters into its sixth month with no end in sight. Instead of limiting its ties to Iran, Qatar has spent its political capital strengthening ties with the Shi’ite nation, which rivals Saudi Arabia politically and economically. Escalating tensions between the Gulf and Qatar will further increase the angst between Iran and Saudi Arabia, impacting the future of Iran as a political player and as a major oil producer.

*  *  *

This trio of major regional disputes plaguing the Middle East heavily involve the top three oil producers in the bloc. Iran has been in economic recovery mode since sanctions were lifted back in January, while Iraq’s stability over the course of 2016 and most of 2017 had allowed production to rise steadily.

With the trajectory of future output for the neighboring nations unclear, it remains to be seen whether the bloc will find it necessary to tighten quotas. After all, if the production cannot be summoned due to tangential political issues, there may be no need to limit it directly.

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Trump Administration Will Defend Cuba Embargo In Symbolic UN Vote

A series of mysterious sonic attacks on US diplomatic personnel (and more than a few spies) working at Washington’s Havana embassy have provided ample justification for the White House to reverse the US-Cuba detente negotiated by the Obama administration. And in a gesture that – though it has no implications for policy – is considered symbolically important, the State Department said Thursday the US will defend America’s decades-old economic embargo on Cuba by voting against a UN resolution condemning it, the Associated Press reported.

The news comes after at least 24 embassy personnel were targeted by mysterious sonic attacks in Cuba, inspiring the administration last month to withdraw most of its employees from the island nation. While the US hasn’t determined the source of the attacks, the administration kicked out most of the diplomats at Cuba’s embassy in Washington and has accused the Cuban government of not doing enough to keep US citizens safe – though Cuban leader Raul Castro has vehemently condemned the attacks.

Every year, the UN votes on a resolution condemning the embargo, and for years the US has predictably voted "no." But last year, the US abstained for the first time, as Obama and Cuban President Raul Castro moved forward with the historic warming of relations between the former Cold War foes.

A "no" vote from U.S. Ambassador to the UN Nikki Haley on Wednesday will mark a return to formal support for the embargo, which Obama had unsuccessfully urged Congress to end. Although the Obama administration eased travel and commerce restrictions on Cuba and reauthorized direct commercial flights between the countries, the formal embargo remains in place.

Back in June, Trump said he was going to “cancel” Obama’s detente with Cuba, but – aside from kicking out the diplomats and suspending visa processing – his anti-Cuba rhetoric has mostly been posturing.

"The Trump administration policy gives greater emphasis to advancing human rights and democracy in Cuba, while maintaining engagement that advances U.S. interests," said State Department spokeswoman Heather Nauert.

General Assembly resolutions are nonbinding and unenforceable. But the annual exercise has given Cuba a global stage to push back against the hated embargo.

To be sure, the half-century-old US commercial, economic and financial embargo on Cuba is extremely unpopular with other governments, the AP said. Typically, the annual vote to condemn it has received overwhelming support. Voting "no" means the US  will once again be pitted against almost every other nation.

In 2015, the last year that the US voted "no," close ally Israel was the only country to join in opposition, leading to a 191-2 vote to condemn the embargo – the highest number of votes ever for the measure.

The United States lost its only other ally in the vote, Palau, in 2013, when the Pacific island nation abstained rather than joining the US in voting "no."

In late 2014, Obama and Castro announced plans to restore relations, and the following year embassies were re-opened in Washington and Havana. Ties had been cut in 1961 after the communists, led by Fidel Castro, seized power.

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