Tag Archives: Oil

Dollar Close To Recent Lows As Yellen Testimony Awaited

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: US Fed Chair Yellen Testifies @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Dollar Close To Recent Lows As Yellen Testimony Awaited

Janet Yellen’s appearance today in front of the Joint Economic Committee will be followed for any shifts in the Fed’s economic and policy outlook following the recent employment figures. Traders across the financial markets will be watching to see if she has a message that could alter the course for interest rates. The U.S. dollar languished close to six-month lows against a basket of major currencies today as investors braced for the possibility that dovish comments from Janet Yellen could further undermine the greenback. The dollar index sank nearly a half percent Tuesday and is now down nearly a full percent in the last week. The dollar was weaker across the board, falling against the euro, yen, sterling, Swiss franc and major emerging market currencies such as the Indian rupee and Turkish lira. The dollar index was at its lowest level since October 2012, and its lowest level against the pound since August 2009.

Frustration has been growing among some players at the dollar’s inability to move higher even after the payrolls report, as the Federal Reserve continues to scale back its bond-buying support. Market consensus seems to be forming on the view that the Fed is still a long way from raising interest rates even after it ends its quantitative easing program, which is expected later this year. Analysts expect the dollar to recover when there’s sign of inflation or a further dip in the unemployment rate.

Brent Edges Up On Fall In U.S. Crude Stocks & Ukraine Risks

Brent Crude edged higher above $107 per barrel today after an industry report showed U.S. crude stocks declined last week, while increasing geopolitical risks in Ukraine helped put a floor under prices. Crude inventories in the United States fell by 1.8 million barrels last week, going against analysts’ expectations for a 1.4-million-barrel gain. Investors now await confirmation of the API numbers from the U.S. Department of Energy’s Energy Information Administration, which releases its more closely watched data later on Wednesday. Brent crude rose 26 cents to $107.32 a barrel by 0352 GMT, after ending the previous session 66 cents lower. U.S. crude gained 60 cents to $100.10 after the contract had settled 2 cents higher. Heightening tensions in Ukraine and the possibility of the country slipping into civil war also helped lift oil markets, as traders weighed the risk of supply disruptions from Russia, the world’s biggest oil producer.

Twitter Drops Nearly 18% As Lock-Up Period Expires

Twitter dropped sharply on Tuesday as nearly 500 million shares from company insiders became eligible to be sold. The stock fell nearly 18 percent on record volume of more than 124 million shares to a fresh all-time low since their trading debut on Nov. 7. The lock-up agreement that expired this week applied to about 470 million shares, or 82 percent of Twitter’s equity. With the stock’s recent selloff, Twitter’s current market cap is at $19 billion. Tuesday’s reaction to Twitter’s lock-up expiry was in sharp contrast to that of Facebook in late 2012. Facebook shares jumped 13 percent on Nov. 14 that year, when its lock-up expiry of roughly 800 million shares did not trigger an immediate wave of insider selling. Last week, Twitter’s net loss grew by more than $100 million in the first quarter, though the company’s operating earnings and sales topped Street expectations. Monthly active users hit 255 million, with mobile MAUs making up 78 percent of the total.

That sums up today’s highlights! We hope you have a profitable day on the markets

Gold On Track For Second Weekly Gain

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: G20 Meetings

WHAT WE’RE WATCHING TODAY

Gold On Track For Second Weekly Gain

Gold was trading near its highest in over 2 weeks on Friday, on track for its best week in a month. This followed minutes from the U.S. Federal Reserve’s last meeting at which monthly bond buying was cut for a third time, as tension in Ukraine persisted. The Fed has reduced monthly bond-buying by $10 billion at each of the past three meetings, while keeping its target for overnight lending between banks in a range of zero to 0.25 percent since 2008. Gold rallied 9.8 percent this year, rebounding from the worst annual drop in more than three decades, as the unrest in Ukraine, a rout in emerging markets and concern the U.S. recovery may be losing momentum spurred demand for a haven. Gold traded at $1,319.65 an ounce from $1,318.95 yesterday, when prices rose to $1,324.61, the highest since March 24.

WTI Heads for Weekly Gain Amid Speculation Of Increased U.S. Fuel Demand

West Texas Intermediate headed for a weekly gain amid speculation that U.S. fuel demand will increase as employment recovers. The discount to Brent decreased to the lowest since September after Libya signaled that it ready to boost crude exports. There are reasonable grounds for an ongoing improvement in the U.S. labor market in the next month or two which is good for demand and oil, with predictions that investors may sell West Texas contracts if prices rise to $105.20 a barrel. The other driving factor for oil is Libya and the negotiations about whether they’re going to restore some of their capacity. WTI for May delivery was at $103.06 a barrel in electronic trading on the New York Mercantile Exchange, down 34 cents. The volume of all futures traded was about 40 percent below the 100-day average. Prices have advanced 4.7 percent this year.

Google Glass Available To Buy Next Week

Google has announced that its Glass product will be available for purchase in the U.S. next week with interested consumers being able to buy online from April 15. Any adult in the US can become an Explorer by visiting the Google site and purchasing Glass for $1,500. Google Glass is available in various shades and frames. The tech giant said the number of spots in its newly extended Glass Explorer Program are limited. The product is currently not available outside of the U.S. but it will be interesting to observe initial user feedback and the reaction from the markets.

That sums up today’s highlights! Don’t forget to keep in touch with all the latest news and events for the day via our social media channels. We hope you have a profitable day on the markets.

Just A Minute!

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets.

Main Trading Events Of The Day: Several today including USD Non-Farm Employment Change @ 13.30, USD Trade Balance @ 13.30 & USD Employment Rate @ 13.30 GMT

WHAT WE’RE WATCHING TODAY

U.S. Non-Farm Payrolls: Gains In Job Growth Expected

Stock markets are ready for a soft jobs report due later today. Data is expected to show that employers in the U.S. hired more workers in February than a month earlier, indicating that companies were confident that demand will bounce back from a weather-induced slowdown. Payrolls increased 149,000 last month after a 113,000 gain in January, according to a Bloomberg survey ahead of figures from the Labor Department. The jobless rate held at 6.6 percent, the lowest since 2008, the survey also showed.

Even with last month’s pickup, job gains remain smaller than those seen for most of last year as the harsh weather conditions across the eastern U.S. slow consumer spending, housing and manufacturing. The Federal Reserve is trying to determine how much of the recent cooling has been due to weather, which means the outlook for monetary policy may not become clearer until March data becomes available but analysts believe that the weather is not the only factor behind the lull in activity - businesses are working through a large amount of unsold goods accumulated in the second half of 2013, which means they have no incentive to place new orders with manufacturers.

The U.S. dollar, meanwhile, is set for its biggest weekly gain in three months versus the yen before the release of U.S. payrolls data, with Federal Reserve officials reiterating the threshold for changing its stimulus tapering is high. The U.S. currency yesterday was at its strongest versus the yen since January as reports showed fewer Americans filed claims for jobless benefits. The dollar was little changed at 102.97 yen, from 103.07 yen yesterday, and has climbed 1.2 percent this week, the biggest advance since the period ended Nov. 29.

Meanwhile, Gold traded near the highest level in more than four months and headed for a fifth weekly advance before U.S. payrolls data. Gold rose 1.8 percent this week and closed at $1,350.02 an ounce yesterday, when prices rose 1 percent on expectations that U.S. borrowing costs will hold at a record low and European inflation will gradually accelerate. The metal reached $1,354.87 on March 3, the highest since Oct. 30, as tension between Ukraine and Russia escalated.

U.S. Non-Farm Employment Change @ 13.30 GMT.

What Is The Impact Of The Ukraine Crisis For Investors?

The recent Russia/Ukraine situation has caused some pronounced unrest in the currency markets, as well as a sharp selloff in the Russian equity market. Should investors be worried and is the safety trade the best trade? Much of this depends on whether Western influence can stop Russia invading. It is unlikely that the United States can stop Putin, but it can make it very uncomfortable for him to proceed. It is worth remembering that Russia has major pipelines running through Ukraine that deliver natural gas to the rest of Europe. Mistreating Ukraine to the point that it shuts down those pipelines would be economically devastating to Russia. It is unlikely that Ukraine will mount any meaningful military resistance to Russia simply because Ukraine is effectively broke. The Ukrainians cannot finance a war as they teeter on the edge of bankruptcy. What will punish Russia significantly will likely be the damage to asset prices that will be the consequence of investment funds leaving the country. Russia was forced to raise its overnight lending rate by 1.5 percent to defend the value of the ruble.

What does this mean for investors? Should investors be pulling up stakes in Russia and repatriating their funds home? Probably not, when you take into consideration what matters to Russia. First, oil is of great importance. Russia is one of the top producers of oil, and rising prices for crude means better revenues for Russia. Gold also matters to Russia. Russia is sensitive to the price of gold and other metals. Rising gold prices benefit Russia’s miners. The reality is that Russia likely will benefit from any spikes in commodity prices that these events cause. Russia’s markets are down significantly here and many believe they should be bought. With regard to equity prices, these are mainly dependent on earnings growth. Analysts believe that none of the events in Ukraine or Russia are likely have any impact on the earnings of companies here or in Russia. Earnings are expected to continue rising, and sooner or later the uncertainty in Russia will dissipate. Those investors who buy during the days of bad news will likely be winners once the political unrest blows over.

That sums up today’s highlights! We hope you have a profitable day on the markets.

The 10 Greatest Trades On Wall Street – #8 Andrew Hall

After Jim Rogers made a fortune on commodities, another trader followed his lead and hones in on one specific commodity that made him a rich man and earned him a place in the Wall Street hall of fame. We’ve all heard the expression that oil is black gold before, but for our next remarkable trader the phrase became a reality. When oil was still cheap and just assuming its central position in the developed world as the central fuel of life, Andrew Hall realised how important this liquid would come to be and put a bet that caused him ridicule at first, but ultimately gave him the last laugh.

8. Andrew Hall went really, really long on oil and made enough to warrant a very hefty bonus

Andrew Hall began to suspect early in 2003 that quickly-growing global oil demand, especially from emerging economies such as India and China, would outstrip supply and foresaw a great opportunity for buying oil that would bring returns years down the road. Hall had already developed a style of buying and holding a position, rather than making quick trades on the market, so when he put an enormous buy on oil and sat back on it, nobody saw anything extraordinary. Hall’s wager that oil would exceed $100 a barrel in 5 years elicited ridicule by other investors and news of his mega-trade that would leave him penniless should his prediction prove wrong inspired shock—he couldn’t possibly win such a position. When in 2008 oil prices skyrocketed passed the $100 mark Hall ripped the rewards of his gutsy bet. His Citigroup employers filled their pockets with back-gold profit while Hall himself reportedly earned a $100-million bonus for his work.

Ethan-oil?

Things are getting heated in the dispute over the federal mandate to mix corn-based ethanol into the nation’s fuel supply. There are always two sides to every story, and in this case, there are two big names pitting themselves against each other: Big Oil versus Big Agriculture. Both sides are powerful and self-interested, but the former may have an edge on this matter.

The ethanol mandate forces the public to use and subsidise a product that is both uneconomical and environmentally destructive, if you consider the land, fuel and fertilizer needed to grow, harvest and transport all that corn. Which is why some consider it a misguided policy that should be cut.

It was success for the Environmental Protection Agency (EPA) which last week for the first time proposed to trim this ethanol mandate. However is Congress doing enough on this matter? How about taking it one step further and revising the law that requires increasing amounts of ethanol in gasoline – a law which was conceived during the period straight after 9/11, when there was anxiety over the nation’s then-growing reliance on Middle Eastern crude oil, and before the consequences of mass ethanol production were clearly understood. By now it should be known that ethanol (which was pitched to the public as a renewable and environmentally friendly energy source) hasn’t lived up to expectations. In fact, some calculate that producing ethanol actually consumes too much energy and generates greenhouse gases.

The EPA’s proposition is modest: using the reasoning that U.S. gasoline use is falling - mainly because cars are becoming more fuel-efficient - they propose that U.S. fuel companies would be allowed to use about 6 percent less ethanol in 2014 than this year. Without such a change, fuel companies might have to break through the so-called blend wall, producing gasoline with more than 10 percent ethanol - even though many U.S. cars and trucks aren’t designed to run on mixes with higher amounts of ethanol. There is an alternative: to buy credits granting exemptions from adding ethanol, but a bidding war for these credits earlier this year helped drive the price of gas to almost $4 a gallon!

The other side of the story is that ethanol has also pushed demand for corn to the breaking point. Did you know that much as 40 percent of the nation’s corn crop goes to ethanol production? That means ploughing up millions of additional acres, much of it environmentally sensitive grasslands or wetlands.

The mandate not only raises the price of farmland but also forces Americans to pay as much as $40 billion a year more for food - from soft drinks to beef - according to estimates by Texas A&M University researchers. There are even signs that this has played a part in the rise in global food prices.

The oil industry has asked the EPA for a partial or total waiver of the mandate for next year, but Obama’s administration supports the mandate, and he has powerful allies from Iowa, the country’s biggest corn producer. To be fair, there is a place for ethanol in the nation’s fuel mix, since in small quantities it helps gasoline burn more efficiently in car and truck engines, but why not let the market, rather than the mandate, settle this?

The Shale Gas Boom…Is It Just Hot Air?

The shale gas boom is about to explode, literally! As you may be aware, new technology now enables us to access shale gas by hydraulic fracturing, or fracking as it is more commonly known. Fracking involves blasting a high-pressure mixture of water, sand and chemicals at dense shale rocks to split them apart and release the tiny bubbles of methane trapped within. Although fracking has been persistently in the news, not least because it has been associated with alleged instances of water contamination in the US, it does not appear to have hampered the shale gas boom…

This week, the International Energy Agency, the world’s most respected energy body, predicted that the shale gas boom will boost US manufacturing and jobs until at least 2035, reinforcing America’s economic edge over Asia and Europe for the next two decades. It added that shale would continue to fuel the American economy even after the US starts ramping up exports, despite fears that selling the cheap gas to overseas customers would erode the country’s competitive advantage. These are unfounded fears, it seems…

Big winners will be energy-intensive industrial firms who are able to access cheap gas, most of which are, and will continue to be, in America. PricewaterhouseCoopers estimates that US chemicals firms have already grown capacity by a third and US petrochemical companies are blowing away their European competition. One such company, Dow Chemical has seen its net income rise by a third and earnings per share grow by 13.1% since last year. Companies that transport shale oil and gas around the US, like Kinder Morgan who owns 180 terminals and 37,000 miles of pipelines, are also perfectly placed to profit from the energy boom. Recent results show that quarterly profits were up by 80% on a year ago.

The shale gas industry is undoubtedly booming, with enough evidence to suggest that this is a new energy revolution and by no means hot air!

Iran’s Double-Speak On Nuclear And Oil

On the surface, it seems that Iran’s recently elected President is more moderate and open to negotiation than his predecessor. Rouhani has repeatedly emphasised Iran’s desire to normalise relations with the West and even admitted in a CNN interview the existence of Holocaust, long been denied by Iran’s religious extremists. Whether he is politically influential enough and whether his policies will impact the financial markets remains to be seen. Skeptics would argue that logic and theocracies do not always go together and words do not always translate into definitive actions. Rouhani’s current promises and the short term drop of oil prices do not paint a full picture in this highly complex political and economic reality. Since the history of the financial markets teaches us that tensions and uncertainly in the Middle East without fail impact on the price of oil worldwide, should Rouhani’s words be taken with caution? Read more…

WTI Falls Along With U.S. demand

West Texas Intermedeiate (WTI) recorded another drop, prolonging its second monthly loss with increased crude stockpiles in the U.S. indicating slower demand in the world’s biggest oil consumer.

Futures took a hit of 0.8 percent in New York when the industry-funded American Petroleum Institute announced that inventories increased by 5.9 million barrels last weeks. Supplies reached 382.2 million barrels, recording a jump of 2.4 million barrels, the highest in four months before data from the Energy Administration today.

December deliver of WTI fell as much as 80 cents to &97.40 a barrel on the New York Mercantile Exchange, which the volume of all futures traded declined 17 percent more than the 100-day average. October has seen a drop of 4.5 percent following a 4.9 percent drop last month.

WTI Wavers While U.S. Supplies Reach a Three-Month High

West Texas Intermediated wavered up and down before the release of date indicating that crude stockpiles rose to a three-months high in the U.S.
In New York Futures fluctuated after last week’s drop to 1.2 percent. In the week ended on 11th October, U.S. crude inventories probably climbed by 3 million barrels to 373.5 million, according to a Bloomberg News survey preceding a government report today. That would be the highest level since July.

Keystone – The Pipeline to Prosperity

After the U.S State Department recently released a positive evaluation of the planned Keystone pipeline, several special interest groups and politicians begun their lobbying efforts in a bid to persuade president Obama to ratify the agreement with Canada.

The 1,179-mile, 36-inch-diameter crude oil pipeline system would transport roughly 830,000 barrels of synthetic crude oil per day and diluted bitumen from Alberta, Canada to numerous destinations in the United States.

The primary reason for the delay of the pipeline is the influential environmental movement. The movement’s main worry is that any pipeline spill would contaminate air and critical water supplies and cause damage to the region’s wildlife.

However, the pipeline would significantly reduce American dependency on foreign oil, especially from hostile countries such as Venezuela and some Arab countries – according to some estimates – by a whopping 40 per cent. Moreover, the introduction of the pipeline would provide several thousands of highly paid jobs for the U.S. economy which is in desperate need of more jobs.

The American economy needs the pipeline and the jury is still out on what the possible environmental effects of the pipe would have. The fact remains, the Keystone pipeline would vastly reduce American dependency on hostile countries.

Indeed, it seems that the well-being of Americans is secondary to the environmentalist movement which views nature as holy. All decent people should be concerned about the state of the environment, but a movement that ignores human realities should not influence policies that are harmful to the individual.

There are many great individuals who are worried about the environment and indeed the fight over the pipeline is battled mainly on ethical grounds; one side defends the necessity of the highly productive pipe, spewing out the most important substance needed to run a modern industrial economy, while the vociferous opposition argues that running such an economy would take place at the expense of wildlife.

Pantheism is the modern-day religion which seems to impact policy positions that often override common sense positions. Indeed, the pipeline issue comes down to one question: does one prefer the well-being of animals over the well-being and prosperity of human beings?

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