I am so old that I remember when the US was an oil producing nation.
However, in the Biden era, that memory is becoming dimmer, and gas is likely to be much more expensive as Organization of the Petroleum Exporting Countries (OPE)C members have announced substantial production cuts.
Traders bid up crude prices after the news of cuts totaling more than 1.1 million barrels a day, or 1 percent of global production, beginning next month. Brent crude, the international benchmark, rose more than 6 percent, to nearly $84.93 a barrel. West Texas Intermediate crude, the U.S. standard, was up by a similar amount, trading over $80 a barrel.Sunday’s surprise announcement signaled a potential new threat to global efforts to curb inflation and a challenge to the Biden administration, which has pushed for lower gasoline prices.“We don’t think that the production cuts are advisable at this moment, given the market uncertainty. And we made that clear,” said John F. Kirby, a spokesman for the National Security Council. “But we also don’t have a seat at that table.”While Mr. Kirby said the White House was given advance word of the cutback, the move could further aggravate strained relations between the United States and Saudi Arabia.
As a reminder, the Saudis are clearly immune to the Biden “magic.” The nation led the charge to cut oil production before last year’s November election.
Subsequently, the dollar wobbled as inflation concerns were renewed and manufacturing slumped.
The signs appear to be pointing to recession.
The Institute for Supply Management (ISM) survey showed on Monday that manufacturing activity fell to the lowest level in nearly three years in March as new orders continued to contract, with all subcomponents of its manufacturing PMI below the 50 threshold for the first time since 2009.That sent the greenback broadly lower, tracking a slide in U.S. Treasury yields, as investors pared expectations on how much longer interest rates would need to remain in restrictive territory.Against the sliding dollar, the British pound and the Australian and New Zealand dollars rose to multi-week highs in early Asia trade on Tuesday.Sterling peaked at its highest since late January at $1.2425, extending the previous session’s 0.7% gain.The kiwi rose 0.2% to $0.6310, its highest since mid-February, while the U.S. dollar index was marginally lower at 102.02, having fallen more than 0.5% on Monday.”The ISM manufacturing report for March was a dud,” said economists at Wells Fargo. “The closest thing we get to good news in (the) report is that the slowing in the factory sector is pushing prices lower and supply chains are continuing to heal, benefiting from the slack.”Beyond that, the rest of the themes were those that often precede an economic recession.”
However, Biden assures us it’s not as bad as we think.
Meanwhile, there appear to still be significant inflation challenges for small businesses.
The U.S. Chamber of Commerce’s Q1 Small Business Index found a record 54% of owners cited inflation as their top concern for the first three months of the year, marking the fifth consecutive quarter respondents pointed to cost increases as the number one stressor.Respondents’ confidence in the national economy also declined in the first quarter, with only one in five (20%) small business owners saying the economy was in good health. That’s down from 27% in the previous quarter.The survey results indicate a greater reluctance among owners to expand in the short term. Only 38% said they plan to boost investment in their business over the next year, a drop from 47% in the fourth quarter of 2022.
The trajectory certainly looks like it is setting up to be the Carter Era on steroids AND opioids.
CLICK HERE FOR FULL VERSION OF THIS STORY