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Thank you for your Padlet submission.  You articles are interesting and anlaysis indepth.  You may want to mention that oil is a form of "Oligopoly", i.e. it is a cartel (OPEC) and has substantial control over price and output of world wide oil supply.  Well, hope to receive your final report.

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Thank you for your Padlet submission.  You articles are interesting and anlaysis indepth.  You may want to mention that oil is a form of "Oligopoly", i.e. it is a cartel (OPEC) and has substantial control over price and output of world wide oil supply.  Well, hope to receive your final report.

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But the seemingly ungovernable country has already undermined OPEC 's efforts to cut production, and now Libyan oil executives are projecting that their production will reach a million barrels a day by the end of July, a level not seen in four years.

"It's an incredible disconnect between the security situation and the oil story," said Helima Croft, head of commodity strategy at RBC Capital Markets. "I just find it amazing, but I don't know how long you can reconcile these divergent stories."

Libya has Africa's largest oil reserves, and its high-quality light crude is in demand around the world. During the 2011 revolution against Col. Muammar el-Qaddafi, and most of the years that followed, production was reduced to a trickle while exports were blocked by militias that controlled the ports.

But by the end of 2016, the blockades were lifted by one armed group, the Libyan National Army, and threats to the oil fields by local adherents of the Islamic State were alleviated by a successful push of opposing militias. Those were positive developments for Libya, but they came just as OPEC decided to take a new course of production cuts to lift crude prices.

Libya, along with Iran and Nigeria, was excluded from the OPEC agreement to slash production last year by more than a million barrels a day. Now all three have increased production, but Libya has been by far the biggest surprise.

"A lot of experts figured things were so unstable in Libya and politics were so opaque that they did not want to factor in more supply from there," said Michael Lynch, president of Strategic Energy and Economic Research. With the Libyan surprise, he added, "OPEC has been wounded. It gets back to the problem that OPEC has a lot of members in bad shape, making it difficult for them to call on everybody to make sacrifices equally. So they excluded those three and now it's come back to bite them."

Oil prices have plummeted by 16 percent since late May, when OPEC announced an extension of its cutback agreement to next year. Global inventories of oil and refined products have remained stubbornly high, even during the summer driving season. Still, Saudi and other OPEC officials have expressed confidence that inventories and demand will come into balance in the fourth quarter of the year despite the increased oil production in the United States, Libya and a few other countries.

Libya continues to complicate that outlook.

The German oil company Wintershall reached an interim agreement to settle a dispute with the National Oil Corporation of Libya last week to resume production in two fields that potentially could combine to increase output by 160,000 barrels a day. Already, the country's daily production has jumped by 50,000 barrels.

Last month the national oil company announced an aggressive three-phase development plan to lift Libyan output to 1.32 million barrels a day by the end of 2017, to 1.5 million barrels a day by the end of 2018, and to 2.2 million barrels a day by 2023. That kind of growth will require the expertise of Western oil companies that have mostly shied away from investing in Libya in recent years because of the instability and dangers to their workers. Few oil executives outside of Libya are optimistic that the goals will be reached.

Many oil experts say that the Libyan oil company and its partners have been lucky over the last year and that their luck may soon run out, in part because of the rising tensions between Qatar and its Persian Gulf neighbors along with Egypt. The Qataris are aligned with powerful members of the Tripoli-based government backed by Western nations and Turkey, while the competing government based in the eastern city of Tobruk is backed by the United Arab Emirates, Saudi Arabia, Egypt and Russia.

The two governments reached an uneasy deal in late 2015, and the national oil company tries to remain neutral, but the effort led by the United Arab Emirates and Saudi Arabia to isolate Qatar is already spilling over into Libya.

Potentially caught in the crossfire is Glencore, the Swiss-based commodities trading giant, which is the marketer of a large percentage of Libyan oil production and is partly owned by the Qatari Investment Authority. The head of the eastern branch of the Libyan national oil company has accused Qatar of using its 8.5 percent stake in Glencore to divert the trading company's sales of Libyan oil to finance terrorists, a charge denied by Mustafa Sanalla, the chairman of the national oil company based in Tripoli. Glencore called the allegation "totally false and baseless."

Mr. Sanalla has official authority over all exports, but the prime minister of the eastern government, Abdullah al-Thinni, has ordered Glencore to halt oil exports from the port of Hariga. About 200,000 barrels a day of exports could eventually be put at risk.

"I appreciate the deals that Sanalla has done to re-establish production," said Geoff D. Porter, president of North Africa Risk Consulting. "But those deals don't reflect any structural change in the oil sector or the geopolitical risks or labor unrest, safety issues and tribal unrest. These are huge issues that could slow up the sector at any point."

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organization of the petroleum exporting countries

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Libya's Increased Oil Production Thwarts OPEC's Reduction Plans

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But the seemingly ungovernable country has already undermined OPEC 's efforts to cut production, and now Libyan oil executives are projecting that their production will reach a million barrels a day by the end of July, a level not seen in four years.

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Libya, being oil-rich, has increased its supply of oil while "Motorists around the globe are not driving enough to shrink crude and gasoline inventories as quickly as expected" , saying that the demand curve of oil had shifted to  the left at a far lesser extent than the shift of the supply curve of oil to the left.

This then causes the equilibrium price to fall, creating a "downward pressure on prices", lowering the prices of oil around the world to the new equilibrium price.

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China, the world's biggest gold market, may boost imports through Hong Kong by about half this year as local investors seek to protect their wealth from currency risks, a slowing property market and volatile stocks, according to the Chinese Gold and Silver Exchange Society.

Mainland China is set to import about 1 million kg from the territory this year, said Mr Haywood Cheung, president of the century-old exchange in Hong Kong, which trades physical gold and silver.

That compares with net purchases of 647,000kg last year, and would be the biggest since 2013, data from the Hong Kong Census and Statistics Department compiled by Bloomberg shows.

Demand is rising on concerns over property, share and bond markets and the outlook for the yuan, amid a government drive to reduce leverage in the financial system.

Local consumption was up 15 per cent in the first quarter, with sales of bars for investment climbing more than 60 per cent and dwarfing a 1.4 per cent rise in jewellery buying, according to data from the China Gold Association. China also imports gold from Switzerland.

"People are looking at other means to invest, a safe haven to protect their yuan because of the depreciation, so everybody starts to look for safe-haven products," Mr Cheung said. In December, China imported 158,000kg from the country, taking the total for the year to 442,000kg , up from 288,000kg in 2015, the data shows.

Global investors have also increased holdings. Assets in the SPDR Gold Trust, the world's largest exchange-traded fund backed by bullion, have climbed by more than 6 per cent since the end of January to 851,000kg as of Monday. Bullion rose as much as 1.1 per cent to US$1,293.78 an ounce yesterday, the highest level in about seven weeks, and traded at US$1,292.10 by 1.50pm in London.

The Chinese Gold and Silver Exchange Society is planning to build a bonded warehouse in Qianhai with a storage capacity of 1.5 million kg of gold, and completion is expected in two years to three years, said Mr Cheung. A temporary warehouse, which holds about 50,000kg to 100,000kg of gold will be operational by the end of this year, he added.

He also said the Shenzhen region supports some 3,000 jewellery manufacturing firms, which supply 70 per cent of the Chinese retail market.

Mr Philip Klapwijk, managing director of Precious Metals Insights, said that while the case for investment demand in China is reasonably "solid", jewellery demand will probably decline again this year, in terms of volume, as the consumer spends money on other things such as property or travel.

BLOOMBERG

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China's gold imports may surge by 50% as investors seek haven

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China, the world's biggest gold market, may boost imports through Hong Kong by about half this year as local investors seek to protect their wealth from currency risks, a slowing property market and volatile stocks, according to the Chinese Gold and Silver Exchange Society.. Read more at straitstimes.com.

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There is an increase in demand due to expectations of consumers
Quoted by article "local investors seek to protect their wealth from currency risks, a slowing property market and volatile stocks, according to the Chinese Gold and Silver Exchange Society"

The supply of gold does not change as there are no reported factors that cause a change in the supply curve

This results in an increase in equilibrium price and increase in equilibrium qty

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SYDNEY (REUTERS) - Australia's trade surplus collapsed in April as damage wreaked by a massive cyclone in Queensland almost halved exports of coal, underlining the risk of another round of disappointing economic growth.

The blow comes just a day after data showed the economy grew at the slowest annual pace since 2009 in the March quarter, again due in large part to the vagaries of the weather.

"This is a poor start to the June quarter," said Andrew Hanlan, a senior economist at Westpac, though he did hold out hopes for a better September quarter as shipments resumed.

Figures from the Australian Bureau of Statistics on Thursday (June 8) showed the trade surplus shrank 82 per cent to just A$555 million ($417.69 million). That was the lowest in six months and far under forecasts of A$1.9 billion.

Exports of coal alone fell 45 per cent, or a sizable A$2.5 billion, as Cyclone Debbie tore up rail tracks and caused weeks of disruption in the country's biggest coal region.

Total exports slumped 8.3 per cent, the largest decline since a similar weather-affected dive in early 2012, while imports dipped just 1 per cent.

Prices for some major commodities, notably iron ore, have also fallen back sharply from last year's peaks amid concerns about demand for the world's number one buyer, China.

Yet not all is dark. While coal exports were disrupted in April the mineral was still being stockpiled and would therefore add to inventories, and GDP.

Miners also worked overtime to resume shipping once the rail lines were fixed, noted Paul Dales, chief economist at Capital Economics. After diving 60 per cent in March, shipments from Queensland's three main coal ports jumped 130 per cent in May.

"The hit to coal exports caused by Cyclone Debbie almost single-handedly wiped out the trade surplus in April," said Dales. "However, the railways all reopened in mid-April and it's been business as usual since."

Shipments of iron ore, the country's single biggest earner, have also picked up markedly in the last couple of months.

Exports to China from Port Hedland, the world's largest ore terminal, surged to a record 38 million tonnes in May, up 9 per cent on April and 21 per cent on March.

Shipments of liquefied natural gas are also ramping up significantly as new projects come on line.

Analysts at National Australia Bank predict the value of LNG exports will pass A$27 billion this year and near A$35 billion in 2018, overtaking coal as the second biggest earner.

The gas could add a whole percentage point to GDP growth over this year, a much-needed offset to softness in household consumption.

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Australia trade surplus in April walloped by bad weather

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SYDNEY (REUTERS) - Australia's trade surplus collapsed in April as damage wreaked by a massive cyclone in Queensland almost halved exports of coal, underlining the risk of another round of disappointing economic growth. The blow comes just a day after data showed the economy grew at the slowest annual pace since 2009 in the March quarter, again due in large part to the vagaries of the weather.

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There is a decrease in supply due to bad weather affecting coal exports. Australia's supply curve of coal will be shifted to the right while demand curve remains the same.
This will create a downward pressure on coal prices , lowering the prices to the new equilibrium price.