Iraqi financial deficit to increase in 2017 budget

Iraqi financial deficit to increase in 2017 budget
8:52 PM ADMIN

Baghdad/ Iraq TradeLink: Iraqi economic experts confirmed that the financial deficit in the national budget for 2017 will be increased by 4 billion dollars.

The experts added that the Iraqi government is trying to rectify the price of oil barrel in the additional budget for this year.

The Iraqi government sent its project for the additional budget for this year to the Iraqi parliament last week.

It is expected that the additional budget will mean an increase in the general budget by 7 trillion Iraqi dinars that will increase governmental spending.

Experts believe that the additional budget is not a drastic solution, but the main solution lies in better administration of the public funds.


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Hmm I wonder, since the 30% tariffs will be in full swing and it was reported that such would carry all of Iraq's debt load, thus oil will then be a reconstruction bonus...but the IMF likes them to run a deficit because they call the shots and Iraq needs such discipline.

wciappetta wrote:Hmm I wonder, since the 30% tariffs will be in full swing and it was reported that such would carry all of Iraq's debt load, thus oil will then be a reconstruction bonus...but the IMF likes them to run a deficit because they call the shots and Iraq needs such discipline.

not to mention that reports are that Oil will be at $60 a barrel by years end

Is This Year’s Driving Season Over Before It Began?


Oilprice.comJuly 10, 2017

Exactly six months ago, when oil bulls still held on to some fleeting hope that OPEC may somehow stabilize the crash in oil prices despite the shift in marginal oil production from low-cost OPEC producers to U.S. shale (a hope which is now gone as the just disclosed letter from Andy Hall demonstrates), Goldman noticed something troubling: an unprecedented collapse in gasoline demand. As the firm's energy analyst Damien Courvalin said on February 8, when discussing the 6 percent fall in U.S. gasoline demand, such a plunge "would require a U.S. recession" and add that "implied demand data points to U.S. gasoline demand in January declining 460 kb/d or 5.2 percent year-on-year. In the absence of a base effect, such a decline has only occurred in four periods since 1960 during which time PCE contracted."

Now, 6 months later, the situation is very much different: with the U.S. now inside peak summer driving season, the cyclical drivers behind gasoline supply and demand are vastly different, and yet something has remained the same: gasoline demand in the U.S. simply refuses to rebound, surprising analysts by how weak it is. So weak, in fact, that Bank of America has released a note which, like Goldman half a year ago, reveals confusion about why - if the economy is indeed strong - demand hasn't kept up and has prompted BofA's energy analyst Francisco Blanch to ask "where is the driving season?" and, more specifically, "is this year's driving season over before it began?"

Here's why some of the biggest banks continue to be amazed at the relentless failure of gasoline demand to validate an economic recovery, courtesy of BofA:

Gasoline demand is extremely price-elastic

In a U-turn from the last two years, when demand growth for gasoline was running at phenomenal speed, gasoline consumption in the Atlantic Basin has fallen by 1 percent on last year. In the US, lower demand growth seems largely a function of higher retail gasoline prices, underscoring how extremely price elastic oil demand is (Chart 1). Annual growth in miles driven has slowed to 1.5 percent from 3.4 percent in the same period last year. Higher prices are turning people back on to smaller and more fuel-efficient cars, reviving the well-established trend prior to 2015. Sales growth for SUVs, which averaged 7 percent YoY in 2016, has now slowed to 2 percent, allowing fuel efficiency gains in the U.S. fleet to come through more forcefully (Chart 2). More recently, slowing employment growth, as well as a slowdown in construction activity, may have also played a marginal role.





Is this year's summer driving season over before it began?



But the latest weekly data is somewhat disconcerting. Despite a sequential pick-up, gasoline demand is 180 thousand b/d, or 1.8 percent, down on the same four-week period last year. Gasoline demand in the US tends to reach a peak around the July 4th weekend, when Americans drive for pleasure, and then declines sharply between mid-August and late September, which is what creates the seasonality in the gasoline futures curve. But, increasingly, one has to wonder whether the summer driving season is already over before it has even begun (Chart 3)? Indeed, RBOB gasoline relative to U.S. diesel prices has collapsed in recent weeks and is now trading near parity (Chart 4).





In other words, while the reasons may be different, the structural gasoline demand malaise that was first observed in the start of the year has persisted half a year later. Who knows: maybe, just maybe the failure of oil prices to stage any rebound just might have something to do with this lack of end demand.

Big picture considerations aside, Bank of America sees little - if anything - to be excited about in gasoline's near-term and no to near-term future, mostly as a result of gasoline demand weakening not only in the U.S., but also globally, with distillates close behind:

While the gasoline market may find some temporary support on a demand improvement, elevated exports and inventory declines, we still see little structural tightness ahead. This year has seen a number of gasoline-geared refinery expansions in Asia, which is supporting gasoline supply. At the same time, the price-driven boost to demand is disappearing, with gasoline demand weakening globally, while distillate demand growth may play catch up. In our estimates, global gasoline refinery utilization rates are set to fall quite sharply this year and in 2018, likely taking the wind out of the sails behind gasoline cracks (Chart 26). In our view, winter gasoline cracks are likely to see further downside. True, crack time spreads currently stand at the bottom of the range, but should weaken post summer (Chart 27). Gasoline cracks are likely to see further downside and we expect diesel to reclaim a more typical pronounced premium to gasoline this winter.


The bad news is not over, however, as "any mid-to-late-summer rally in gasoline, if it materializes, is unlikely to be sustainable. Simply because there is a lot of work left in draining gasoline inventories before the end of the driving season. Contrary to common wisdom, gasoline stocks are anything but tight in the Atlantic Basin, even relative to both demand and exports. Flagging refinery utilization rates in places like LatAm or Africa have increased demand on other regions to run harder, in part explaining why U.S. crude runs recently pushed to a record level, while European runs are also elevated. After the summer, gasoline cracks are likely to see further downside and we expect diesel to reclaim a more typical pronounced premium to gasoline this winter."



And while the future for RBOB is certainly not bright - especially now that even the biggest crude bulls have thrown in the towel - with a new deflationary wave likely imminent and set to spoil the central banks' reflationary party yet again, a bigger question, as both Goldman and now BofA pose, is what is going on with gasoline demand: is it more efficient cars, is it a reduction in miles driven, or is it simply that the U.S. consumer continues to contract, between declining real wages and deteriorating labor market conditions, with gasoline demand just one of the very few undoctored indicators giving a glimpse into the true state of U.S. consumption?

Whatever the answer, the same stagnant demand that stunned Goldman in February is now "shocking" Bank of America. At what point will these, and other banks, finally connect the dots that this is not some "one-time, non-recurring" event.

By Zero Hedge

Oil could hit $60 before year-end: Barron's, citing Citi analyst

Reuters ReutersJuly 9, 2017
A pump jack is seen at sunrise near Bakersfield
A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/File Photo
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(Reuters) - Accelerating world oil demand and reduced supply from the Organization of the Petroleum Exporting Countries (OPEC) could push crude prices up to $60 a barrel before the end of the year, according to a report from Barron's.

The report cites research from Citigroup senior energy analyst Eric Lee, who previously called for a bear market in oil when the price was above $100. The decline in recent weeks to a low of just over $44 for Brent crude <LCOc1>, the international benchmark, has made Lee a short-term bull, Barron's notes.

Lee projects demand of 97.3 million barrels a day in 2017, a record high, up from 96 million in 2016, driven largely by emerging market countries such as China and India. Simultaneously, reduction in supply from OPEC of about 0.7 million barrels a day versus the 2016 average should drive the price up before the end of the fourth quarter.

A decline in global oil inventories began after the first quarter, and Lee projects that it will continue at an accelerated rate through the end of this year.

Oil prices settled nearly 3 percent lower on Friday as rising U.S. production and an increase in OPEC exports to a 2017 high cast doubt on efforts by producers to curb a persistent glut. [O/R] On Friday Reuters data showed that OPEC production is now at the highest level of the year.

Matt Smith, director of commodity research at Clipperdata, said OPEC exports were 2 million barrels per day (bpd) higher last month than in June 2016, despite the extension of OPEC's 1.8 million bpd production cut.

Lee notes that oil speculators ignored details of OPEC's agreement, which ordered cuts to begin at the end of 2016 rather than when the accord was announced. That allowed participants to ramp up production during negotiations, which meant the cuts were struck from a higher base.

As for supply from the United States, Lee says continued pumping by producers will keep prices from skyrocketing back towards $100 a barrel, but their presence is unlikely to prevent an upward move in oil for the remainder of the year.

Following the jump to $60 Lee expects prices to remain flat heading into 2018, as the supply side catches up with demand. Barring major political disruptions from petroleum-producing nations, he expects the price of crude probably will not rise much above $60.