Oil: Price Impact? China's Shanghai Oil Exchange and RMB Denominated Contracts

Summary

  • Examination of China's cornering the Dubai oil market and their record setting August oil shopping spree's impact on oil prices.
  • Examination of the SHPGX - Shanghai Petroleum and Natural Gas Exchange and it's potential effect on oil prices.
  • Examination of China's dollar denominated purchases and their impact on oil prices.
  • Examination of China's RMB denominated purchases and their impact on oil prices.
In today's missive we point out why due to potential oil price impacts, anyone in the oil business or speculation thereof, will need to stay in the loop with regard to currency exchange, arbitrage, foreign UST sales, the dollar, RMB, the eurodollar and China. Today's missive is appropriately accompanied by the lyrics from the 1966 version of These Boots Were Made For Walkin.
You keep saying, you got something for me...
China has been liquidating UST's (US Treasury Bonds) and other global assets in their portfolio to prop their markets and economy.
You've been a messin' where you shouldn't have been a messin'...
When you sell a UST, you get paid in dollars, not RMB. The Chinese have apparently been using those dollars for purposes other than propping up their stock market and stablizing their currency, the RMB or Yuan. More later...
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