A showdown in Libya is spiking oil (NYMEX:CLF14) as rebels refuse to allow the government to ship oil from three different ports. The government last week said that oil would be shipped even if they had to use force, so the odds of a conflict are rising and the odds of U.S. exports are rising as well. The markets are getting worried and add to that strong Eurozone manufacturing data. The market was pricing in the return of Libyan oil, but it now may be on watch for a military crackdown instead.
In France, Dow Jones reports that Total SA's (TOT) refineries began a strike over the weekend to demand higher pay, the CGT union said. Refinery employees consider the pay rises offered by the French oil company of between 1.2% and 1.5% as too low given the company's "fabulous" profits, the union said in a statement. Workers at five refineries operated by Total in France, as well as three other petrochemical facilities, walked out over the weekend, CGT said. "The process of shutting down is under way and the refineries will stop production gradually," CGT representative Charles Foulard told The Wall Street Journal. Officials at Total weren't immediately available for comment. Company officials have repeatedly said Total's refining business in Europe is less profitable than its other operations.
The Ukraine may be making a deal with the devil by having talks over securing a $1 billion loan from Russia. Violence in Iran as more bombings continue.
Commodities as an asset class are the big story in 2014. And not only are commodities undervalued related to stocks, but Natural Gas (NYMEX:NGF14) is cheap. Last week Jim Rogers and Beeland Interests, Inc. announced today the following adjustments to the Rogers International Commodity Index. WTI Crude will be reduced by 5.0% Index Weight to 16.0%. Brent will be reduced by 1.0% Index Weight to 13%. Each of Natural Gas, Gold and Silver will be increased by 2.0% Index Weight to 5.0%, 5.0% and 4.0% respectively. Each of these changes will be implemented in two phases: 50% during the January 2014 roll period, occurring at the end of January 2014, and the remaining 50% during the February 2014 roll period, occurring at the end of February 2014. The RICI represents the value of a compendium (or "basket") of globally traded commodities (37 commodity futures contracts) employed in the global economy, ranging from agricultural and energy products to metals and minerals. The RICI and its various sub-indexes are used by many investment banks and investors throughout the world. As of the end of October 2013, the RICI had increased by more than 251% since inception.