If it isn't Libya
If it isn't Libya, then it's Nigeria. A disturbing bombing in Nigeria is another reason the Brent crude will have a hard time coming back against West Texas Intermediate and another reason why Europe may continue to have tight supplies of light sweet crude. Nigeria, whose production can be seen as a replacement for Libyan crude, could become even more spotty than it has been before. The AP reported that, "A car loaded with explosives crashed into the main United Nations' building in Nigeria's capital and exploded Friday, killing at least 18 people in one of the deadliest assaults on the international body in a decade. A radical Muslim sect blamed for a series of attacks in the country claimed responsibility for the bombing, a major escalation of its sectarian fight against Nigeria's weak central government."
The concern is the fighting in Nigeria has gone to a whole new level and the Wall Street Journal says that although the militant group, Boko Haram, has carried out a series of increasingly deadly attacks over the past year, it isn't known to have gone after a foreign target before. In the search to explain the shift, foreign and local security officials are coming to share the view that the group has split into factions. The radical splinter group is believed to have more than a dozen members trained to carry out suicide bombings, said an undercover Nigerian security official based in northern Nigeria. At least four other attacks are planned throughout Nigeria, he said, and may include additional foreign targets. The official couldn't provide more detail but said security officials were working to prevent the attacks.
The AP reports that insured damages from the storm Irene will likely range between $2 billion and $3 billion, and total losses will likely be about $7 billion, according to preliminary estimates from Kinetic Analysis Corp. Both figures are lower than had been expected, suggesting that the storm poses little threat to the nation's $14 trillion economy. Some economists said that, as with past hurricanes and earthquakes, the recovery could end up boosting growth in the coming months. Demand for building repairs might help the depressed construction industry, for example."
Hurricane Irene seems to have done more damage to demand than supply. The losses due to refinery outages and import and power delays looks like it will be more than offset by demand destruction. Factories that were shut and drivers that were kept inside also hurt demand.
The Peoples Bank of China moved to set the yuan at an all-time high to try to slow inflation and perhaps demand for energy as well. The realization that the weak yuan is becoming a big problem not only for the global economy bit the Chinese economy as well. Dow Jones reports, "The People's Bank of China will require banks to include so-called ‘margin deposits,’ or collateral deposited by customers for letters of credit and other guarantees, in calculating the proportion of deposits that must be put aside to meet reserve ratio requirements, according to a memo circulated within a major domestic bank. The move could drain some CNY800 billion-CNY900 billion out of the system by the time it's fully implemented in February, economists say, making it more difficult for companies to borrow from banks. That could create demand for alternative sources of credit..."
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.