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China's Biggest Move In Oil Markets To Date – OilPrice.com

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China is making an aggressive entrance into the world of energy exchanges, but will it help the markets like some analysts suggest, or will it spell doom for oil prices?

Persistent oversupply in the global oil and gas market has created a difficult situation for smaller oil and gas companies who must find ways to compete in a debt-laden, low-priced environment against state-run oil titans like Saudi Aramco and deep-pocketed oil giants such as Exxon.

But the small oil and gas players—those private companies that are facing an uncertain future despite sitting atop a literal wealth of oil and gas in prolific US shale plays—may have just been handed their ticket out of trouble by the largest oil importer in the world, China. 

Or have they?

China, in its quest to shore up its energy security, is launching a new energy exchange that will make it much easier for buyers and sellers of all things energy—including gas, oil, LNG, carbon credits, and even chemical products—to find each other and do business together in the robust Chinese market that might otherwise seem daunting to enter.

For smaller US energy businesses—which account for nearly 60-70% of all energy companies in the United States–the Greater Bay Area International Energy Transaction Center, as the exchange is called, could be just what the doctor ordered: easier access to a tricky but colossal market.  

For China, the exchange is designed to protect its energy security at a time when its voracious appetite for crude oil exceeds its domestic production. 

On the surface, it seems like a marriage made in oil heaven.

But concerns with the new energy exchange are widespread, and global–from the United States to the Middle East.

Small Independents

Today, there are approximately 9,000 independent oil and gas companies operating in the United States—this includes only those businesses that produced fewer than 75,000 bpd and have less than $5 million in oil and gas sales per year. This class of producers accounts for 83% of all oil produced in the U.S., and 90% of all natural gas.

It’s a booming business—and no doubt some of these smaller players will jump at the chance to engage with Chinese companies to sell their oil and gas products. There are concerns, however, that easier access to the huge Chinese energy market will erode prices further—a price situation that China is looking forward to. 

As for those independents, some of which are struggling in the already lower oil price environment, additional price erosion could mean death.

Middle East

And then there are the Middle East producers. There was a time when the United States imported almost 150 million barrels of oil monthly from OPEC member countries, according to the Energy Information Administration. But then just a few years ago, the United States lifted the export ban on crude oil, and everything changed. In January 2017, the United States imported 117.6 million barrels of oil from OPEC. In September 2019—the last month for which there is data—the United States imported just 48 million barrels. 

That’s less than half.

OPEC nations—mostly Saudi Arabia, Venezuela, and Iraq—had enjoyed hawking their wares on the US market. But as the U.S. slowed its oil imports, Middle East producers set their sites on another large market: Asia, including China.

Those same OPEC nations that were hurt by U.S. oil production will also be hurt by China’s courting of U.S. oil companies through this exchange.  For OPEC, who has come up against the United States oil industry time and time again as it tries to lift prices through production cuts, American oil producers keep turning up like a bad penny.

A Geopolitical Foothold

China is hoping that the new international exchange platform will rival the LSE and NYSE when it comes to online trading of crude oil and other energy-related products, including settling trade and delivering it. In addition to crude oil, chemical products, and LNG mentioned above, it will also deal with LPG, methane, ethane, and energy derivatives. And there’s more: it will also make available market information.

But the exchange will also increase—to the worry of many—China’s geopolitical foothold in new markets.

China is fast sinking money into developing oil and gas resources in foreign countries, despite lower oil prices. Its state-run oil companies, including CNOOC, have been throwing money at oil projects in Brazil, Mexico, Guyana, Nigeria, and Canada–and the US Gulf of Mexico, to name just a few. And while some see this as just a method of filling the oil void left by its own domestic production, others see this as China’s way of controlling oil resources across the globe for geopolitical gain. 

China has already sunk money into Iran and Venezuela in the form of loans in exchange for cheap crude–two countries that have found themselves on the receiving end of US sanctions that have crippled their respective oil industries. This move has upset the geopolitical apple cart as the U.S. struggles to bring oil exports for both to zero–without China’s backing, the U.S. might have been successful in doing so.

The growth of a massive new energy exchange not only improves China’s global positioning to influence oil prices, but also increases its geopolitical clout as its money gives it influence in state-run oil companies that carry political sway within their governments–particularly with Venezuela’s PDVSA and Angola’s Sonangol.  

There is no doubt that the exchange will increase the energy trade between smaller players. Whether this will have a positive result for small U.S. energy companies or whether this will crush prices and increase China’s political might remains to be seen. 

Byt Julianne Geiger for Oilprice.com

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GameStop, BlackBerry, AMC stocks see trading halts as social media hype drives volatility – Global News

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Stocks of GameStop, BlackBerry and AMC Entertainment Holdings all saw trading halts on Wednesday morning amid continued volatility widely attributed to social media chatter.

The New York Stock Exchange briefly paused trading on GameStop and AMC stocks shortly before 10:15 a.m. ET, while the Investment Industry Regulatory Organization of Canada (IIROC) announced at 9:54 a.m. ET a temporary suspension of BlackBerry shares.

READ MORE: Does Bitcoin have a place in every investment portfolio?

The moves come as all three stocks have been soaring for a fourth day running, sparking calls for scrutiny of a social media-driven trading frenzy.


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The rally has also forced some hedge funds to retreat with heavy losses. Short-seller Citron, a target for some of the individual traders who have helped drive huge gains for a number of niche Wall Street stocks in the past week, said in a video post it had abandoned its bet on GameStop shares falling.

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With commentators and lawyers calling for scrutiny of the moves, Nasdaq chief Adena Friedman said exchanges and regulators needed to pay attention to the potential for “pump and dump” schemes driven by chatter on social media.

The Securities and Exchange Commission (SEC) declined to comment.

READ MORE: Will the 2nd coronavirus wave wipe away Canada’s movie theatres?

Mainstream commentators have questioned the justification of moves in a number of heavily-hyped stocks in recent days, at a time when some on Wall Street are wondering if months of stellar overall gains have driven shares into bubble territory.

GameStop’s stock has surged nearly 700 per cent in the past two weeks, upping the struggling video retailer’s market value from $1.24 billion to more than $10 billion. BlackBerry is up 185 per cent and on course for its best month ever.

Along with AMC and Nokia Oyj, the two were again among the most heavily traded in pre-market deals, with Reddit discussion threads again humming with chatter about the stocks.

“These are not normal times and while the (Reddit) … thing is fascinating to watch, I can’t help but think that this is unlikely to end well for someone,” Deutsche Bank strategist Jim Reid said.


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The advent of easily access apps like Robinhood that allow ordinary Americans to make stock market trades at almost no initial cost has spurred a boom in direct investment over the past year as trillions of dollars in official stimulus drove markets higher.

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On GameStop, the retail army have pitched themselves against some of the institutional short-sellers — a traditional area for hedge funds — who promote and bet on falls in companies they judge as weak.

Overall, short-sellers in GameStop were down $5 billion on a mark-to-market, net-of-financing basis in 2021, which included $876 million of losses early Tuesday, according to analytics firm S3 Partners.

Barron’s reported late on Tuesday that the top securities regulator in Massachusetts believes trading in GameStop stock suggests there is something “systemically wrong” with the options trading around the stock.

Others say that the trades are at the end of the day up to the investors who make them.

“The SEC has investigated Robinhood before, but when you have a structure in place that allows the zero-cost trading platforms to operate – how do you stop that flow?” said Neil Campling, head of tech media and telecom research at Mirabaud Securities.

Trading in GameStop stock was halted for volatility nine times on Monday and five times on Tuesday.

— With files from Global News money reporter Erica Alini

© 2021 Reuters

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2 short sellers admit defeat, bail out at huge loss as GameStop share surge hits 1000% – CBC.ca

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In the David and Goliath saga surrounding the struggling retail chain GameStop, Goliath has fallen.

Two Goliaths, actually.

A pair of professional investment firms that placed big bets that money-losing video game retailer GameStop’s stock will crash have largely abandoned their positions. The victors: an army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.

One of the two major investors that surrendered, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet that GameStop stock would fall. Andrew Left, who runs Citron, said it took “a loss, 100 per cent” to do so, but that does not change his view that GameStop is a loser.

“We move on. Nothing has changed with GameStop except the stock price,” Left said. He did acknowledge that Citron is taking a fresh look at how it bets against companies, in light of the GameStop campaign.

Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumours that the hedge fund will fail.

The size of the losses taken by Citron and Melvin are unknown.

GameStop’s stock surged as high as $380 Wednesday morning, after sitting below $18 just a few weeks ago.

GameStop’s stock has long been the target of investors betting that its stock will fall as it struggles in an industry increasingly going online. The retailer lost $1.6 billion over the last 12 quarters, and its stock fell for six straight years before rebounding in 2020.

That pushed investors to sell GameStop’s stock short.

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Essentially, these short sellers borrowed shares of GameStop and sold them in hopes of buying them back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

But its stock began rising sharply earlier this month after a co-founder of Chewy, the online retailer of pet supplies, joined the company’s board. The thought was that he could help in the company’s digital transformation.

Smaller investors pushing stock higher

At the same time, smaller investors gathering on social media have been exhorting each other to keep pushing the stock higher.

There is no overriding reason why GameStop has attracted those smaller investors, but there is a distinct component of revenge against Wall Street in communications online.

Over the past three months, shares of GameStop Corp., which has been buffeted by a shift in gaming technology, have spiked well over 1,000 per cent. Shares were up another 100 per cent at the opening bell Wednesday.

That has created titanic losses for major Wall Street players who have “shorted” the stock, which means they borrowed shares and sold them, hoping to buy them back at a cheaper price and pocket the difference.

As of Tuesday, the losses had already topped $5 billion in 2021, according to S3 Partners.

The phenomenon does not appear to be fading.

AMC Entertainment Holdings Inc., the theatre chain that has been ravaged by the pandemic, posted a quarterly loss this month exceeding $900 million.

It appears, however, that AMC has become the next battleground in the fight between smaller, retail investors and Wall Street.

Shares of AMC spiked 260 per cent when trading began Wednesday and #SaveAMC is trending on Twitter.

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In GameStop saga unfolding on Wall Street, 2 Goliaths fall – CTV News

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A David and Goliath saga is unfolding in financial markets over the stock price of struggling retail chain GameStop. On Wednesday, Goliath walked away from the battle.

Two Goliaths, actually.

A pair of professional investment firms that placed big bets that money-losing video game retailer GameStop’s stock will crash have essentially admitted defeat. The victor, for now at least, is a volunteer army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.

GameStop’s stock surged as high as US$380 Wednesday morning, after sitting below $18 just a few weeks ago.

One of the two major investors that surrendered, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet that GameStop stock would fall. Andrew Left, who runs Citron, said it took “a loss, 100%” to do so, but that does not change his view that GameStop’s stock will eventually fall sharply.

“We move on. Nothing has changed with GameStop except the stock price,” Left said. He also said he “has respect for the market,” which can temporarily run stock prices up higher than critics think they should go.

Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumours that the hedge fund will fail.

The size of the losses taken by Citron and Melvin are unknown.

GameStop’s stock has long been the target of investors betting that its stock will fall as it struggles in an industry increasingly going online. The retailer lost $1.6 billion over the last 12 quarters, and its stock fell for six straight years before rebounding in 2020.

That pushed investors to sell GameStop’s stock short. Essentially, these short sellers borrowed shares of GameStop and sold them in hopes of buying them back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

But its stock began rising sharply earlier this month after a co-founder of Chewy, the online retailer of pet supplies, joined the company’s board. The thought is that he could help in the company’s digital transformation.

At the same time, smaller investors gathering on social media have been exhorting each other to keep pushing the stock higher. There is no overriding reason why GameStop has attracted those smaller investors, but there is a distinct component of revenge against Wall Street in communications online.

“The hedge fund owners are crying as a result of us,” one user wrote on a Reddit discussion about GameStop stock. “We have the power in this situation, not anyone else as long as we stay strong!”

Almost immediately after, another user shouted in all capital letters, “BUY AND HOLD WE WILL BE VICTORIOUS.”

The battle has created big losses for major Wall Street players who shorted the stock. As GameStop’s stock soared and some of the critics got out of their bets, they had to buy GameStop shares to do so. That can accelerate gains even more, creating a feedback loop. As of Tuesday, the losses had already topped $5 billion in 2021, according to S3 Partners.

Much of professional Wall Street remains pessimistic that GameStop’s stock can hold onto its moonshot gains.

Analysts at BofA Global Research raised their price target for GameStop on Wednesday from $1.60, all the way up to $10. It was at $362 in midday trading.

Nevertheless, the phenomenon does not appear to be fading.

AMC Entertainment Holdings Inc., the theatre chain that has been ravaged by the pandemic, posted a quarterly loss this month exceeding $900 million.

It appears, however, that AMC has become the next battleground in the fight between smaller, retail investors, and Wall Street.

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