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China's Oil Import Bill Surges 86% on Record Prices (Update3)
May 26 (Bloomberg) -- China spent 86 percent more in April to import oil than a year earlier, the Customs General Administration of China said, amid record prices. Higher costs may not damp the country's demand for fuels, refiners said.
The nation's bill for oil imports climbed to $4.66 billion last month, the customs administration said in Beijing today. During the first four months of this year, costs jumped 43 percent to $13.8 billion, it said.
China, the second-largest oil consumer, imported 22.5 percent more oil in April, with shipments reaching 12.3 million tons, to meet surging demand for fuels and chemicals. High prices for oil, which touched a record $58.28 a barrel in New York on April 4, may do little to crimp the nation's consumption, said Tian Chunrong, a senior engineer at China Petroleum & Oil Corp.
``High international oil prices have an impact on our import bills, but that has a minimal effect in deterring China's strong demand,'' said Tian, whose company, known as Sinopec, is Asia's largest refiner. ``Oil imports should continue to grow in the coming months,'' he said by telephone from Beijing today.
Oil for July delivery traded at $51.23 a barrel at 5:11 p.m. Beijing time.
Imports of oil in the first four months surged 4.4 percent to 41.9 million tons, customs data show. Fuel imports in April fell 42.6 percent to 2.5 million tons and declined 14.8 percent in the first four months to 10.8 million tons.
Economic Growth
China raised the volume of crude oil imports 35 percent last year as PetroChina Co., Sinopec and other domestic producers failed to meet demand as the economy grew at the fastest pace in eight years.
The rise in oil imports indicates that China's oil companies are processing more to meet domestic fuel demand and cutting purchases of refined products from outside the country, Tian said.
Crude oil exports in April rose almost seven fold to 1.2 million tons. For the first four months, exports climbed 34.7 percent to 2.5 million tons.
Coal imports in April rose 29 percent to 1.98 million tons and by 50 percent over the first four months to 7.4 million tons. Coal exports fell 18 percent in April to 6.4 million tons and declined 3 percent over the first four months to 26.5 million tons, the customs administration said.
Power Plants
China's coal demand has risen as power plants increase generation to meet the needs of an economy that expanded 9.4 percent in the first quarter.
The government kept this year's quota for coal exports unchanged at 80 million metric tons, after cutting last year's shipments from 93 million tons in 2003.
China reduced the tax rebate it pays coal exporters to 8 percent from 11 percent, starting May 1, to encourage domestic supply and stabilize prices, the nation's Ministry of Finance said on April 29.
China's April exports of coke, a fuel used in stoves and furnaces, rose 4 percent to 1.2 million tons. Coke exports increased 48 percent to 5.2 million tons during the four months.
To contact the reporter for this story:
Loretta Ng in Hong Kong at Lng13@bloomberg.net;
Xiao Yu in Beijing at yxiao@bloomberg.net.
Last Updated: May 26, 2005 05:24 EDT
SILVER STOCKS ON SALE
Sean Rakhimov
SilverStrategies.com
May 27, 2005
We learn from experience that men never learn anything from experience.
.................................................. .................................................. ..G.B.Shaw
Mining stocks are in the midst of a severe decline these days and it seems like there is no hope. The light at the end of the tunnel appears to be as dim as it’s as ever been and many think there is no light and there never was one. At least their actions assert that very outlook.
In most situations people know what they should do. They just don’t do it. We know that we need to sleep more, eat less, exercise regularly yet how many of us do it? On occasion we dab into “the right thing to do” area, but overall, we largely ignore this ageless wisdom and continue on doing what we do day in and day out. In retrospect we kick ourselves for being so hopelessly undisciplined. It happens time and again, over and over. And if that is how we behave in everyday life regarding things that are important to us, how can one expect people to be rational and do what they “should” in the stock market? After all is it not just a hobby, a kicker, something we do above and beyond our immediate needs, something that does not directly effect our present situation?
Ask anyone - what to do in the market - and chances are you will get a sound piece of advice: seek value, invest for the long term, don’t try to time the market, buy dips, don’t yield to hype on the way up or down, don’t follow the herd, buy low and sell high. Yet if you look in his/her brokerage account nine times out of ten you will see the opposite. How many of us actually do “the right thing”? How many of us follow those simple guidelines that we so easily and willingly impart to others? How many successful investors do you know? Are you one of them? This reminds me of a poker game when if in half an hour you don’t know who the dope is, you are it. Who is the dope in this resource market?
A friend phoned this morning to get my take on the markets. I actually went on to say that the only investor we commonly know is Warren Buffett (not personally, of course). Most everyone else is a trader, speculator or an outright gambler. Buffett purchased his silver in 1994 and has been sitting tight since. Do the math folks, that is 11 years! Storage fees only on 130 million ounces of silver over 11 years should amount to quite a sum. His formula is simple: find value, take a position and stay with it, not for a few weeks, months or years, but as long as necessary for the market to realize that value. That’s investing.
Incidentally, Buffett is known to say that “gold is a stupid investment because it earns no interest”, but we like gold and won’t hold it against him. After all, he is Warren Buffett, the king of value investing and we’re just die-hard silver bugs. Be as it may, actions speak loader than words. I was going to say that Buffett owns a ton of silver, but he actually owns many tons of it.
We spent two days at the NY Gold Show and report to you that our impression was that the whole show (exhibitors and attendees) was sliced in half as compared to last year or the year before. However when we talked to silver companies as we always do at these conferences, to our surprise several of them were quite happy with the public turnout and pointed out that while the quantity was on the lighter side, the quality was there. As it happens in all markets when times are good and stocks are flying high everyone wants be in the game and interest is abundant from all sorts of investors. When times are not so good – like now – interest from unsophisticated investors virtually disappears as they stage an exodus from these stocks. In contrast, sophisticated investors and others in the know, those who believe in the fundamentals of the silver story take out their check books and go shopping.
Even Bob Prechter was not able to scare off investors with his keynote presentation discussing the end of “bear market rally” in gold and
Shanghai Copper Futures Rise on Declining London Stockpiles
June 3 (Bloomberg) -- Shanghai copper futures rose for the third day after stockpiles in London fell to a 17-year low, adding to concern that global supply may lag demand from cable and wire makers in China and the U.S., the world's biggest users.
Stockpiles in warehouses monitored by the London Metal Exchange fell 67 percent in the past year to 43,225 metric tons, the lowest since May 1988. Inventories monitored by London, Shanghai and New York totaled 91,078 tons yesterday, less than two days of global consumption, based on Macquarie Bank Ltd.'s forecast of 17.37 million tons.
``The main reason for rising prices is the problem of stockpiles, which are just over 90,000 tons, while producers and traders are adding to inventories,'' Fang Xiangming, a metal analyst at Zhongcai Futures Co., said by telephone from Shanghai.
Copper for August delivery on the Shanghai Futures Exchange rose as much as 950 yuan, or 3.1 percent, to 31,350 yuan ($3,788) a ton. It traded 810 yuan higher at 31,210 yuan at 9:53 a.m. local time.
Copper for delivery in three months on the London Metal Exchange was bid at $3,173 and offered at $3,178 a ton at 9:53 a.m. Shanghai time from $3,179 yesterday.
On the New York Mercantile Exchange, copper for delivery in July on the Comex division fell 0.25 cent, or 0.2 percent, to $1.5140 in after-hours trade at 9:55 a.m. Shanghai time. The contract closed at $1.5165 a pound yesterday, the highest closing price for a most-active contract since April 11.
To contact the reporter for this story:
Chia-Peck Wong in Singapore at cpwong@bloomberg.net.
Bloomberg News
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IEA Raises 2nd-Half Demand Forecast, Straining OPEC (Update2)
June 10 (Bloomberg) -- The International Energy Agency, an adviser to 26 countries, raised its forecast for oil demand in the second half, signaling greater strains on OPEC's capacity to ensure supplies as consumption peaks in the fourth quarter.
Global demand will reach 86.4 million barrels a day in the fourth quarter, the IEA said in monthly report today, up 200,000 barrels a day from its prediction one month ago. That means the Organization of Petroleum Exporting Countries will need to pump 29.6 million barrels a day in the final quarter, 300,000 a day more than expected last month, the IEA said.
OPEC members ``are producing at close to capacity,'' Jeff Brown, the IEA's oil demand analyst, said in an interview from Paris. ``Hopefully by the end of the year the pressures that we see will ease.''
Oil futures remain above $50 a barrel as OPEC nations increase output to build inventories to ensure supplies are ample for use later this year. Traders are concerned about tighter supply during the Northern Hemisphere's winter months, when heating fuel consumption will peak, and constraints in oil- refining systems.
Brent crude oil futures for July settlement gained in London after the IEA report, and were up 26 cents at $54.08 a barrel at 10:05 a.m. New York oil was up 32 cents at $54.60.
The IEA left its full-year 2005 demand projection unchanged at 84.3 million barrels a day, as it raised both its third- and fourth-quarter estimates by 200,000 barrels a day and lowered the second quarter by 200,000 barrels a day. The IEA had raised its 2005 world demand estimate in four of its previous five monthly reports.
OPEC Capacity
The world's oil use will grow by 1.78 million barrels a day, or 2.2 percent, in 2005, which is slower than the 3.4 percent increase last year, which was the fastest in a quarter century. The agency will give its first forecast of 2006 demand next month.
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's oil, decreased crude oil production by 55,000 barrels a day last month to 29.3 million barrels a day, amid lower output from the United Arab Emirates and Venezuela, the IEA estimated. Venezuelan crude production fell 40,000 barrels a day to 2.12 million barrels.
OPEC capacity at the end of the year will be 32.2 million barrels a day, the IEA said. About 700,000 to 800,000 barrels of daily capacity is still to be added to the OPEC system in the rest of the year, the IEA said.
``OPEC is pretty much producing at capacity,'' said Veronica Smart, an analyst at the Energy Information Centre, a consulting company in Newmarket, England.
``The Saudis have some spare capacity but that's sour crude and nobody really wants much of that'' because it's more difficult to refine, she said. ``The focus in the oil market is already on winter, and prices seem reluctant to fall.''
Some Oil Coming
The IEA said non-OPEC nations will help to boost supply.
``Potentially the market could ease a little bit later in the year, as there is more non-OPEC production coming online,'' the IEA's Brown said.
The combined crude-production quota for all OPEC members except Iraq was raised to 27.5 million barrels a day at an OPEC meeting in March, and members are considering whether to raise quotas further when they meet next week in Vienna on June 15. Actual crude production from those 10 nations was 27.51 million barrels a day in May, according to the IEA.
``A tacit acceptance remains in place within OPEC of the need to build inventories ahead of rising second-half demand,'' the report said.
Industry oil stockpiles in Organization for Economic Cooperation and Development nations rose by 13.5 million barrels in April and were 99 million barrels higher than a year earlier. They were equal to 53 days worth of demand, unchanged from the pervious month's report, the agency said.
To contact the reporter on
Tight supply to extend copper's bull run
Fri June 10, 2005 6:06 PM GMT-04:00
By Robin Paxton
NEW YORK (Reuters) - High copper prices will extend into 2006, possibly hitting new records, but Chinese demand alone will not be enough to sustain the bull run in the industrial metal, a top industry analyst said on Friday.
Edward Meir, commodity analyst for Man Financial in New York, said the world would consume more copper than it produces in the third quarter of 2005 and the first two quarters of 2006, but there would be a surplus in this year's fourth quarter.
"Demand has been steady, but supply hasn't been keeping up," Meir told Reuters in an interview. He forecast an average copper price of $3,200 a ton this year for three-month delivery on the London Metal Exchange.
Next year, he said the average price would be $3,100. Consumption in China, which uses about a fifth of the world's copper for everything from electrical wires to air conditioning units, helped drive the price of the metal to a record high of $3,336 a ton in April.
China's demand is seen growing this year in excess of 9 percent, in line with forecast economic growth, but Meir said U.S. and European growth would also underpin copper prices.
"Most people are a little bit starry-eyed on China," he said. "When you're running a huge trade surplus like China is, you are dependent on other markets being strong enough to sustain your own growth."
Meir said the recent strength in prices was linked more to tight supply and London Metal Exchange warehouse stocks that have dwindled to their lowest levels in more than 30 years.
The end of a current round of interest rate hikes in the United States and a stronger U.S. economy from the second quarter of next year would also help copper prices, he said.
COPPER DEFICIT Meir forecast a global deficit of 11,000 tons of copper in the third quarter 2005, a surplus of 92,000 tons in the fourth quarter, and deficits of 7,000 tons and 37,000 tons, respectively, in the first two quarters of 2006.
"You're still getting supply shortages here and there, and demand is still strong enough to take in whatever extra production is coming in," he said.
There were few hidden stocks waiting to come into the market, he added.
"When you have a backwardation of $200 for three months, every pound of it is either used or pledged. I don't think anyone's sitting on hidden stocks," he said.
Backwardation occurs when the cash price exceeds the price for delivery at a future date.
But Meir said he had heard rumors that 10,000 tons of copper might arrive in LME warehouses within the next week, which would set back prices.
Of other metals traded on the LME, zinc had the most potential to rise further, Meir said.
"Zinc is a bit of a laggard. It's due to move higher," he said, predicting a deficit of the anti-corrosive metal for all of next year. Meir forecast an average three-month LME zinc price of $1,285 ton this year, rising to $1,350 a ton in 2006. The metal hit $1,450 on March 16, its highest since September 1997. On nickel, he forecast an average three-month price of $15,200 a ton this year and $14,700 in 2006.
Nickel is used to add strength and sheen to stainless steel. Demand for the metal is soaring in China, but Meir said it could be curtailed by any slowdown in Chinese stainless steel output.
In my opinion, Why oil is King - but soon to be displaced by Uranium, simple isn't it! Cheers[B)][}:)]
P.S And why BHP stole WMC for a song! Uranium!
Is global oil production reaching a peak?
A few years ago only a handful of geologists and academics were considering such a possibility.
But now it appears even governments are taking a serious look at the subject.
The question is occupying more and more minds around the world.
It could happen soon.
A French government report on the global oil industry forecasts a possible peak in world production as early as 2013.
Don't mention it
The report 'The Oil Industry 2004' takes a long look at future production and supply issues.
But perhaps what is most interesting about this Economics, Industry & Finance Ministry report, is that it actually mentions a possible production plateau at all.
Even one year ago it was unheard of to find the subject mentioned amongst government ministries or financial institutions.
Now banks such as Goldman Sachs, Caisse D'Epargne/Ixis, Simmons International and the Bank of Montreal have all broached the subject.
"They are being forced to by circumstances," says Professor Richard Heinberg, author of 'peak oil' books Power Down and The Party's Over.
"They have relied on optimistic data and rosy outlooks that are being proven to be incorrect."
Nevertheless, some analysts disagree with the notion of any peak in oil production, also known as 'Hubberts curve', after the geologist M King Hubbert who first argued the case.
Deborah White, senior energy analyst at Societe Generale in Paris, says that "we have heard these arguments about 'peak oil' since the idea of Hubert's curve came into being.
"We don't endorse the idea at all."
'Peak oil' mentioned
And yet, the French report, perhaps the most open government dossier yet, questions the viability of long term oil production.
The report's second chapter 'Global Exploration and Production' runs a series of differing scenarios based on current forecasts.
Commuting from cities to the suburbs raises the odds
The scenarios differ according to projected demand increases, from 0% to 3% per annum, and possible new field discoveries, between zero and fifty billion barrels a year.
At a rate of 3% increase in demand per year and annual finds of 10 billion barrels, the ministry report states 2013 as "the time of maximum production or 'peak oil'".
That would mean the world's oil consumption would reach its highest point at around 97 million barrels per day (mbpd).
Forced to react
It is also very unusual to find a government report using the wording 'peak oil'. This is a phrase often used to describe the theory of a global oil production plateau, after which production would begin to decline.
Chris Sanders spoke at the recent Association for the Study of Peak Oil conference and is director of international finance consultants Sanders Research.
He believes 'peak oil' is major threat to modern economies.
"There is only so long politicians can ignore a geological problem, and it is a geological one," he says.
"Governments have had a great chance to take the lead on this situation, but they have not taken it. Now they are being forced to react.
"Why? Because it is very probable that we are nearing 'peak oil'."
The French report uses the phrase, in English, and repeats it on no less than four occasions.
Outdated data
The best case scenario the report lays out is rather far fetched, with a 0% increase in world consumption, at only 79mbpd, with annual finds of 50 billion barrels of new deposits per year.
That makes 'peak oil' arrive in 2125.
Supplying the world with oil is getting trickier by the day
Unfortunately the report's figures are already outdated. The world consumed 84.7 mbpd in the first quarter of 2005.
International Energy Agency (IEA) forecasts - traditionally regarded as conservative by the markets - p
Copper reaches record high
Funds move back into metals as supply tightens. Powerful quake in Chile heightens supply fears.
June 16, 2005: 3:50 PM EDT
LONDON (Reuters) - Copper prices touched record highs above $3,340 a ton Thursday as fund managers shifted back into metals markets dominated by tight supply.
Analysts said supply worries and shortages of material on the London Metal Exchange (LME), the world's largest non-ferrous metals market, cemented gains.
"Having set up new highs a period of consolidation would not be surprising," Basemetals.com's William Adams said.
"There's a chance to go higher above $3,350 after a brief period of consolidation, profit-taking and producer selling.
"However, from mid-July onwards there will be seasonal shutdowns for maintenance and with production increases due later this year we should see prices then ease."
Numis Securities analyst John Meyer said in a report: "Cash copper prices are perilously close to a staggering $3,550 a ton as (economic) data out of China supports our view of continuing strong manufacturing growth in the region.
"The market is awaiting the release of Shanghai (metals) inventory data on Friday to measure the impact of recent strong industrial activity."
A trader said: "Copper is onwards and upwards -- the market has been running short and they (shorts) have been caught on the wrong foot."
LME three-months prices closed at $3,317 after touching $3,343 at midday, but were still well up from Thursday's close of $3,287.
"Stops were triggered above $3,330/40 in copper and after this some profit-taking has weighed in, partly prompted by a reversal higher in the dollar," one LME broker said.
The dollar bounced higher in volatile, technically driven trade, recovering from an earlier dip on slightly soft U.S. data as questions about political integration in Europe took a toll on the euro.
In New York, COMEX July copper futures rallied to a new 16-year high on renewed fund buying.
Supply premium
The premium commanded by prompt delivery copper over three months delivery was at an 8-1/2-year high of $240 in London, with LME warehouse stocks of the metal falling 1,000 tons to 38,300 tons -- a level last seen in July 1974.
Total world stocks, held by producers, consumers, merchants and all market warehouses, are some 670,000 tons, equivalent to less than three weeks of demand.
At the start of 2004 world copper inventories were 1.5 million tons.
The LME spot premium echoed that scarcity of nearby supply. Typically the cash price is at a discount to reflect the cost of storing and financing metal for forward delivery.
"The real bottleneck is in readily available smelting capacity, which has restricted the availability of LME grade copper," Meyer said.
"While there remains some under-utilized smelting capacity in the world, much of this spare capacity is in relatively inaccessible locations."
Tokyo traders said fund managers might be reshuffling their portfolios after recent rises in long-term U.S. bond yields and only modest gains by Wall Street stocks.
The LME, along with precious metals and energy markets, posted strong price gains on Wednesday on the view that funds were shifting back into raw materials, traders said.
Supply fears
A powerful earthquake this week in the northern mining region of Chile, the world's leading copper exporter, had intensified worries about market supply.
Traders were particularly concerned by the closure of BHP Billiton Ltd.'s 115,000 tons a year Cerro Colorado copper mine in Chile, which remained shut overnight.
They are also mindful of the threat of labor action hanging over copper miner Asarco in the United States.
But BHP's giant Escondida Chilean mine was operating normally.
BHP Billiton and a buoyant mining sector led a bounce by Britain's top shares on Thursday on the back of strong Chinese industrial data, high base metals prices and positive analyst comments.
Aluminum prices shrugged off news that Norway's Norsk Hydro
THE "REAL" BOOM!
Puru Saxena
26 June 2005
Let us assume that an investor is looking for one asset, which he could buy and hold for the coming 10 years. This individual is extremely busy with his work so he does not have the time to closely monitor his investments on a regular basis. He is simply looking for an undervalued asset-class, which he could buy and forget for a decade without any sleepless nights. His plan is to invest his money in only one asset-class and he intends to cash in on the profits in 2015. So, which asset-class should this guy invest in? Should he buy US stocks, Asian stocks, perhaps bonds or even leave his funds in cash? Below, I provide my analysis of what he ought to be doing with his money.
But first, I want to start with an underlying philosophy. As an avid student of economic history, I have realised that all assets go through multi-year economic cycles commonly known as bull-markets (boom) and bear-markets (busts). These cycles surely follow each other as night follows the day. During a bull-market, an asset goes from depths of undervaluation to overvaluation. A bull-market usually ends with intense public participation, optimism and euphoria. On the other hand, a bear-market takes an asset on its long journey from extreme overvaluation to acute undervaluation. A bear-market usually ends with "blood on the street" or deep, dark despair. As a money manager, it is my job to identify, which assets are in a bull-market and those that are in a bear phase.
Looking back at history, it is now easy to see that if the above investor had to buy one asset in 1970 for the next 10 years, he should have bought commodities. For those who are not familiar, commodities went through an enormous boom during this period. Supply conditions were extremely tight, demand was rising and we also had the "Oil Shocks", which led oil to its all time high in 1980. During that period, the US economy was in a recession, inflation fears were running high and interest-rates were rising fast. The whole world was convinced that inflation would continue to escalate and that savings would eventually become worthless. Thus, everyone turned to hard, tangible assets to protect their wealth. The boom, which started off as a gradual bull-market (as they all do) erupted into an enormous mania in the late 70's as investors kept piling their cash in commodities whilst completely ignoring the prices they were paying. During the 70's, several commodities went up through the roof. Sugar went from 1.4 cents/pound in 1966 to 66 cents/pound in 1974 - a staggering rise of 45 times! Oil went from $2/barrel in 1973 to over $30 in 1980 and gold went from $35/ounce in 1971 to over $850/ounce in January 1980! Looking at the statistics now, commodities were an obvious choice in the 1970's but hindsight is always 20/20.
If our investor friend was looking for one investment theme in 1980 for the next 10 years, he should have bought Japanese stocks and real-estate. During that period, Japanese assets soared exponentially as the world became amazed by the "Japanese miracle". Money kept pouring in from around the world and the Japanese stock-market index (NIKKEI) rose from 6,500 in 1980 to 38,915 in December 1989. The future looked obvious: Japan's hardworking and focused society seemed unstoppable. In the 1980's, the Japanese economy was a sensation - the most dynamic economy the world had ever seen. Meanwhile, Japanese real-estate also surged. At the peak of the bubble in 1990, Japanese real-estate was worth four times the value of all property in the US! The Imperial Palace in Tokyo and the nearby park were valued more than the whole of Canada! So, it is obvious now that the land of the rising sun would have been the best option for investment purposes in 1980.
Let us now turn to the next decade - the roaring 1990's. During that period, our investor should have put all his money in American assets. During that period, the world's super-power came alive as the world fell in love with the US. As many will remember, the last decade s
Is 'Puru' their real name? Sounds like the alias of some bird on the phone sex line. Not that I'm into that sort of thing (ahem), just knew a few girlies at uni who used to have the odd alias as they were putting themselves through education by having some 'extra-curricular' money making ventures.
Not that I ever heard they also had an alias as an economic commentator: gawd! At uni, being a phone sex worker has more cred than being an economist!
Sorry Skinny! And the other economists hereabouts.
I'm not sure if the name's for real packers but I do know that the artical itself is definately a rehash of one of Marc Fabers interveiws published in 2002.
Alias's and plaugarism - what else are they teaching at uni these days.
,
He he, Mick. Having seen some recent uni work, I have an insight into plagiarism and university.
Hand in hand.
Still, thanks for the article.
Cheers.
Rupert,
Peak oil theory is real and proven i.e. production within the USA peaked in 1972. Oil is a finite commodity, one day it will peak and then start to decline, I dont think any petroleum engineer would dispute that.
The problem is estimating when peak will arrive. The pessimists predict it will happen shortly, the USGS suggests it wont happen till around 2035.
Either way it is a real problem that most of us will have to deal with in our lifetime!
I suggest you read a few peak oil books and crunch some numbers yourself, the outcome I would hazard to guess is a retraction that peak oil is rubbish talk.
I'v been reading about this peak oil theory for 2-3 yrs now Rupert and I am a believer.
As deisel has pointed out the US oil production peaked in the early 70's which was almost exactly 40 yrs after discoveries peaked in the early 30's
World wide discoveries peaked in the mid 60's.
40 yrs has lasped since then and that is the main reason why so many are predicting that world peak production will occur during this decade.
Other reasons include:
-no giant feilds discovered in the last 35 yrs despite very high oil prices in the 70's - 80
-major oil co's are increasing their reserves by aquiring other co's (they are not finding new oil)
-increasing demand from developing countries (china, india)
-advances in technology are increasing rate of production from existing feilds but not increasing the total amount of oil that can be recovered over the life of the feild which will lead to speeding up the rate of depletion.
A world wide reccession, which would dampen demand, is the one thing that could delay peak oil for a number of yrs, IMO
Ironically, high oil prices would be the most likely cause of a world wide reccession.
,
By Niu Shuping
Wed Jun 29, 4:53 AM ET
BEIJING (Reuters) - China will produce far more steel in 2005 than previously forecast, generating an unexpected surplus almost as big as the national capacity of Germany, estimates from a top agency showed on Wednesday.
Slowing growth in domestic steel demand, mainly from the property sector, was responsible, said the State Council Development Research Center, the cabinet's think-tank, spelling bad news for global steel makers dreading a tide of Chinese exports.
But the surplus is not going abroad just yet. Exports and imports would be about balanced, the think-tank said.
China, the world's largest steel maker and consumer, would produce 348 million tonnes of steel products in 2005, 17.7 percent more than last year, it said in a report carried in the China Securities Journal.
Demand would grow 10.2 percent to 305 million tonnes. The surplus, 43 million tonnes, compares with Germany's 2003 crude steel output of 45 million tonnes.
The think-tank's output forecast was well above the February estimate from the official China Iron and Steel Association, just over 300 million tonnes.
Giving that estimate to Reuters in February, association chief Xie Qihua forecast no surplus: demand would be about the same or even a little more than output.
But the think-tank said: "Demand from major steel-consuming industries keeps on growing steadily, but the growth will slow."
The surplus had pressured domestic steel prices in the second quarter of the year and steel prices would continue to fall in the short-term.
The association said prices for some steel products had fallen so far that they were now below cost, and that could curb steel production in the future months.
"There are still lots of uncertainities in the coming months," said Li Shijun, a deputy secretary-general of the industry association. "Some mills will stop producing if steel prices keep on falling."
BREAKING EVEN
Li said mills producing long products, typically used in construction, were only breaking even.
Nine major steel mills, including Baoshan Iron and Steel Co. Ltd., the country's biggest, asked the government on Sunday to limit imports of low-end steel products.
They also urged the industry to support prices by increasing inventories and doing maintenance, interrupting production.
The association said last week that prices of some steel products in the second quarter had been as much as 20 percent lower than in the first. Production in the first five months of the year had basically matched demand, it added.
Government controls over fixed-asset investment and property had hurt steel demand, the think-tank said.
Ship-building, container making as well as the railway sector were major contributors to the growth, it said.
"Construction, home appliances and most machinery-building industries will continue to sustain steady development but the tendency for growth will slow down."
Imports of iron ore, the raw material to make steel, would rise 25 percent to 260 million tonnes in 2005. Domestic production of iron ore would hit 300 million tonnes, it said without giving comparative figures.
The report said imports of steel products were likely to fall 26.8 percent to 21.34 million tonnes while exports would increase by 45.7 percent from the year-earlier period to 21 million tonnes.
China was a net steel exporter in November and December last year, but it has yet to become a net exporter on an annual basis.
By KELLY OLSEN, AP Business Writer
Wed Jun 29, 4:27 AM ET
SEOUL, South Korea - Surging oil prices could curb Asia's economies, with some analysts predicting the fast-growing region — heavily dependent on oil imports — could slip into a recession if prices don't recede.
With oil prices about 50 percent higher than a year ago, the warnings are starting to mount.
South Korea's central bank said higher crude prices could shave 0.7 percentage points off economic growth this year and raise consumer prices. The Philippines has warned of a "heavy toll." Officials in Japan, the world's No. 1 oil importer, and Malaysia are voicing concerns.
"High oil prices are already weighing on growth in Asian economies," Andy Xie, economist at Morgan Stanley in Hong Kong, wrote in a report this week. "If oil prices do not recede, Asia could slide into recession in the short term."
After rising to a record close of $60.54 a barrel on Monday, crude oil prices fell back some, granting the region's importers a reprieve. In Asian trading Wednesday, light, sweet crude for August delivery was down a cent at $58.19 a barrel on the New York Mercantile Exchange, but traders said prices could easily test the $60 mark again.
Asia's heavy reliance on oil imports, mostly from the Middle East, means higher crude prices quickly translate into higher costs for a wide range of companies, from airlines and steelmakers to computer makers and fisheries. Consumers will also have to divert more of their spending to cover higher utility and gasoline bills. The overall effect could seriously restrain economic growth.
Also, Asian oil consumers have had to pay slightly higher prices because there is less competition among suppliers than in other parts of the world. This so-called "Asian premium" can run as high as $1.50 a barrel.
But the region's economic diversity — ranging from industrial behemoths like Japan, South Korea and China to smaller economies like Singapore and Hong Kong and advanced consumer societies like Australia __ means the oil price impact can vary substantially.
Officials in Malaysia, where dozens of electronics companies have factories, are worried that high fuel prices could slow gross domestic product growth to 5-6 percent this year from 7.1 percent last year.
Likewise, growth in South Korea, home to a booming tech sector, could decline from its previous projection of 4 percent this year, the Bank of Korea warned Tuesday.
Philippine President Gloria Macapagal Arroyo said the oil spike threatens "to take a heavy toll on the entire nation."
While those economic projections are far from suggesting a recession, economist Xie warns that the impact of higher Dubai crude, an Asian benchmark, can already be seen in Thailand and South Korea.
Thai Prime Minister Thaksin Shinawatra on Monday said that " GDP will definitely be affected by the oil price rise."
Export-dependent Singapore and Japan appear to be more concerned about the fallout from a global slowdown triggered by higher energy costs. Singaporean officials predict economic growth of between 3-5 percent this year, down sharply from nearly 8.5 percent in 2004.
"There may be a gradual indirect effect on the Japanese economy," Chief Cabinet Secretary Hiroyuki Hosoda, the top government spokesman, said recently about the oil price hikes. "We are worried there may be a major negative impact on the world economy."
Japan's suffering from past oil crises has forced the nation to become more fuel-efficient, with factories making fuel conservation a priority to lower production costs and consumer electronics manufacturers hyping the energy-saving merits of their air conditioners, refrigerators and washing machines.
And while surging oil prices certainly aren't welcome at a time when Japan is struggling to emerge from a decade-long slump, some automakers speculate that the turn of events could boost interest in their new fuel-efficient cars.
China, however, is cushioned by its state-owned oil companies from most swings in world oil
MUSICAL CHAIRS
by Mike Hoy
June 30, 2005
We have entered what I feel to be, a very interesting time period in the precious metals and natural resource markets. Never have I seen so many companies reporting such excellent results from their work programs and getting absolutely no respect in the market.
I attribute this to two basic reasons; (1) the market is limited in the supply of new capital available to invest in these stocks and (2) the potential buyers of these stocks have absolutely no motivation to bid them up.
The opportunities are real but the supplies of available funds are strictly limited to what the players already have committed in the market. There is a big reluctance on the part of investors to commit new money as they are not at all pleased with the returns of their current investments. This is like playing musical chairs where the players are there but nobody is stepping up to the plate until they feel they absolutely have too. They are all going around in circles doing very little because of the poor returns, performance and lack of liquidity in what they already own; in short they have no desire or motivation.
As a result of investors lack of funds or reluctance to commit new funds we are seeing the market eat itself up from within. We are seeing investors pruning their portfolios of, what they feel are the weak or undesirable stocks, in favor of the new stocks they want to own. The problem with this is the fact that the bids are lacking to give them the liquidity to sell without driving the price of the stocks down. This is giving the market, in whole, a downward spiral where the basic fundamentals for owning stocks are taking a back seat to the fact that many stocks are being sold strictly because they offer the owners liquidity in which to use to purchase these new ventures. In other words we are seeing investors part with their better quality stocks because those are the stocks that they are finding bids and liquidity in. The ironic part to this is the fact that this selling is keeping a lid on the stocks that should be going up.
Leadership is terribly lacking in this market as stocks in general are not advancing in relation to the positive news that the companies are releasing. When companies are releasing news on drilling programs where the results are exceptional and the stocks barely make a sustainable move forward; I have to wonder what the trigger will be to change the lackadaisical nibbling buying habits of timid investors to the bold venturesome risk takers that will inevitably emerge at the end of this malaise. In the not-to-distant future, stocks will again begin to react to the positive news releases and investors will be very surprised at what they have missed out on. Kind of like being the only one without a chair when the music stops.
Frustration and lack of faith are the predominant and guiding ingredients that are ruling the roost today. Some investors are tired, bored, frustrated or simply do not care. I feel sorry for these people because I feel they are missing one of the greatest opportunities to load up on stocks at prices they may never see again.
As for me, I have identified several stocks that I want to take positions in and I am putting bids in below the current market price and building positions as shares come along. It is very difficult to buy size as you have to take what you can get; patience is definitely a virtue on some of these new positions. My big reward will be a significant rise in these stocks when the market does turn around. Likewise, I must be patient with the lack of bids in the stocks that I am looking to prune out of my portfolios; many of the stocks that I am looking to sell are stocks that I really don’t want to sell but stocks that I feel will underperform the new stocks that I want to buy. If my thinking is correct I will be able to buy back my old positions, if I choose, with a lot more money thereby giving me a greater position in the end.
This is a very important point in time as many investors have completely overlook
Revamped CRB index
Adam Hamilton
http://www.gold-eagle.com/gold_diges...ton070805.html
,
Bloomberg News
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Oil, Copper Rise as Yuan Gain to Boost China Demand (Update5)
July 22 (Bloomberg) -- Crude oil and copper rose on expectations China will boost consumption of raw materials after the country revalued the yuan, making commodities priced in dollars cheaper to import.
``We expect Chinese demand for commodities and especially for oil to increase,'' said Tobias Merath, a strategist with Credit Suisse in Zurich. ``Since commodities are traded in U.S. dollars, a yuan appreciation makes them more affordable for Chinese consumers.''
China Petroleum & Chemical Corp., the largest oil refiner in Asia, and Jiangxi Copper Co., China's biggest producer of the metal, are among companies that will benefit from lower import costs. China is the largest oil consumer after the U.S. and the biggest nickel buyer after Japan.
Cheaper raw materials may accelerate demand already up from last year with the expansion of China's economy, which grew 9.5 percent in the second quarter and helped fuel a four-year surge in commodity prices. The Reuters/Jefferies CRB Index of 19 commodities rose to 24-year high in March. Oil reached a record $62.10 a barrel on July 7, and copper touched a 16-year high last month.
China will value the yuan against a basket of currencies, the central bank said on its Web site yesterday. The new yuan rate strengthens the currency by 2.1 percent to 8.11 per U.S. dollar immediately, the People's Bank of China said. Until now, the yuan had been pegged at about 8.3 per dollar.
Stimulate Demand
``Anything that makes commodities cheaper for China will stimulate demand,'' said Nick Moore, a metals analyst at ABN Amro Holding NV in London. ``The revaluation is a lot smaller than expected. We were hoping for 6 percent.''
Some executives don't expect the change in the exchange rate to spark a significant jump in demand.
``A 2 percent revaluation is tokenism,'' said Daniel DiMicco, chief executive officer of Nucor Corp., the second- largest U.S. steel producer. ``I'm encouraged by the fact that they did something, but I think it was done more to appease folks.''
China's decision also didn't boost commodity prices yesterday. The CRB index fell 0.9 percent, the biggest drop in three weeks, to 300.76, led by declines in grains, copper and energy prices.
Crude oil futures for September delivery rose 27 cents, or 0.5 percent, to $57.40 a barrel at 10:17 a.m. Singapore time in after-hours trading on the New York Mercantile Exchange.
No Big Deal
``China now has more buying power to satisfy its appetite for commodities,'' said Mike Armbruster, co-founder of Altavest Worldwide Trading Inc. in Laguna Hills, California. ``The China story is big news but I'm doubtful it will completely alter the landscape in the crude oil market.''
The oil-import bill for China rose 42 percent to $15.2 billion in the first half, the state news agency Xinhua reported on July 11.
``A yuan revaluation would bring oil prices to record highs,'' said A.F. Alhajji, an energy economist and associate professor of economics at Ohio Northern University. ``While no one knows for sure how much China's oil demand would increase as a result of a yuan revaluation, the current tight oil market indicates that oil producers cannot meet any incremental demand, which would force oil prices even higher.''
Every 1 percent appreciation may increase the 2005 net income of China Petroleum & Chemical, or Sinopec, by 3.5 percent, Fan Cheuk Wan, head of China research at ABN Amro Bank NV in Hong Kong said in a note to clients May 9.
Substantial Savings
A revaluation is ``good news for us because we buy oil in U.S. dollars,'' said Huang Wensheng, a spokesman for Beijing- based Sinopec. About ``21 percent of our oil is from domestic sources and 79 percent is imported. It will mean substantial savings for us.''
Copper futures for September delivery rose 1.45 cents, or 0.9 percent, to $1.5845 a pound in electronic trading on the Comex division of the New
From The AUSTRALIAN
Oil prices spike infrastructure
By Shane Wright
August 03, 2005
HIGH oil prices are underpinning another surge in infrastructure investment that could continue for years to come, a new report has found.
The Access Economics-Delta Electricity investment monitor found an 11.1 per cent increase since March in the value of projects on the drawing board or under construction.
Access put the total value of projects being considered at $375 billion, of which $95 billion worth was under construction.
The total value of possible projects rose 20.9 per cent to $124.8 billion, while the value of committed projects jumped 26.5 per cent to $31.4 billion.
The value of all projects is now 15.9 per cent up on where it was a year ago.
Access associate director David Rumbens said state governments had sunk money into major infrastructure projects in recent months.
But it was the energy sector, driven by soaring oil prices, that looks set to keep Australia's recent lift in infrastructure investment moving forward.
"Strong energy demand is firming plans for large LNG projects in Western Australia and the Northern Territory," he said.
"While high oil prices hurt consumers at the bowser, Australia as a net energy exporter gets some benefits through higher profits and investment.
"If prevailing conditions continue, it may well be energy developments that see a fourth wide drive growth into the investment cycle into the future."
Access found the value of proposed infrastructure projects in Western Australia grew 15.1 per cent in the June quarter to more than $103 billion.
There was also a surge in Victoria (up 15.6 per cent to $79 billion), Queensland (up 14 per cent to $68.5 billion) and Tasmania (up eight per cent to $7.5 billion).
Infrastructure investment in both NSW and Victoria is being led by transport projects, while mining-related activities are pushing work in Queensland and WA.
Access said growth in commercial building is easing as growth in the domestic economy slows, partly due to the cool housing market.
The baltic Dry Index - Troubled Waters Ahead
http://www.kitco.com/ind/Downs/aug042005.html
Extract:
The BDI provides an assessment of the price to move the world’s major raw materials by sea and insight into the global shipping market. It is an accurate barometer of the volume of global trade. A large demand for shipping means rising rates, and slack demand means lower rates. The BDI doesn’t deal with ships carrying finished goods. It only deals with precursors to production, so the index seems to be a better indicator for economic growth and production and is devoid of speculative content. No one books an ocean freighter on a hunch! When bulk shipments of cement, grain, iron ore, etc. are arranged with a shipping company, there is economic activity planned at the end of the line where the raw materials are delivered.
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Bullish news for those holding US and Canadian natural gas shares
Electricity demand reaches record levels
http://www.msnbc.msn.com/id/8825380/
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Aden sisters on commodities, gold and silver
http://www.gold-eagle.com/editorials_05/aden081805.html
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Time to get into tangibles
http://www.gold-eagle.com/editorials...ena090905.html
,
The great resourse bull markets - Doug Casey
http://www.kitcocasey.com/displayArticle.php?id=276
,
:)
Hi folks,
You look lonely in here, Mick ..... :)
Soybeans ... looking for some significant news/moves from
this market on 13 Sept 2005, at about 11:23 am (Chicago time).....
On 12-13 September 05, then we may see prices fall
further to bounce off new lows around 5.60
(exactly 2.00 from the June solstice highs ???).
Could be an interesting week for soybeans.
happy days
yogi
:)
May be of interest.............
http://www.freecharts.com/Commodities.aspx?page=mktcom
Handy link
Cheers Arco
,
Bloomberg News
E-Mail This Story Printer-Friendly Format
Shanghai Copper Rises as Oil Price Surge Spurs Commodity Buying
Sept. 20 (Bloomberg) -- Copper futures in Shanghai rose for the first day in five as surging oil prices prompted hedge funds to buy commodities and as copper users build inventories before the week-long National Day break.
The Reuters/Jefferies CRB Index of 19 commodities yesterday rose 3.8 percent, the biggest percentage gain since the index debuted in September 1956. Crude oil and other energy prices soared on concern Tropical Storm Rita may disrupt fuel output in the Gulf of Mexico.
``Copper rose as the storm triggered fund buying,'' said Cai Luoyi, head of research at China International Futures (Shanghai) Co.
Copper for December delivery, the most actively traded contract, rose as much as 920 yuan, or 2.7 percent, to 34,510 yuan ($4,265) a metric ton on the Shanghai Futures Exchange. The contract traded at 34,370 yuan at 11:30 a.m. break local time. Shanghai copper futures have fallen 2.2 percent from a closing high of 35,130 yuan on Sept. 5.
Copper for immediate delivery on the Changjiang Nonferrous Metals Spot Market rose 430 yuan, or 1.2 percent, to 36,030 yuan a ton today. The premium for copper from Chile, the world's biggest producer, fell to 380 yuan from yesterday's 600 yuan over the front-month futures contract.
Copper in New York yesterday rose the most in 11 months on speculation that some manufacturers will resume purchases of the metal. The rally accelerated as oil, gasoline and natural-gas prices surged, said Michael Purdy, a trader at ABN Amro Holding NV in New York.
Copper for delivery in December yesterday rose 3.9 percent to $1.6545 a pound on the Comex division of the New York Mercantile Exchange. The contract rose to $1.655 a pound at 12:30 p.m. Shanghai time in after-hours trading.
On the London Metal Exchange, copper for delivery in three months was bid at $3,642 a ton and offered at $3,647 at 12:28 p.m. Shanghai time. It closed 3.2 percent higher at $3,623 yesterday.
-- Editor: White.
To contact the reporter for this story:
Helen Yuan in Shanghai at hyuan@bloomberg.net
Last Updated: September 20, 2005 00:47 EDT
China May Invest A$10 Billion in Australian Mines (Update1)
Sept. 22 (Bloomberg) -- Chinese metals companies such as Beijing Shougang Co. are in talks to spend as much as A$10 billion ($8 billion) on Australian mines to make sure China's mills don't run out of raw materials.
The planned acquisitions could increase China's total investment in Australian projects six-fold within three to five years, said Henry Wang, senior investment commissioner for Greater China at government agency Invest Australia.
Commodity prices have risen to all-time highs because global mining companies such as BHP Billiton can't keep up with China's demand for materials to feed mills, building sites and car plants. As competition for minerals increases, steelmakers and traders including Beijing Shougang and Sinosteel Corp. are going to the source to ensure they have enough iron ore and coal.
Overseas investment ``is a necessary and natural step for Chinese metal producers because the country is short of natural resources,'' said Lin Hai, who helps manage the equivalent of $1.8 billion for Guotai Asset Management Co., including shares in Baoshan Iron & Steel Co. ``With these investments they can lower costs and take pre-emptive rights on the raw materials.''
Half of the proposed Chinese investments are in iron ore, 30 percent in coal and the rest in natural gas and other metals, said Wang, who runs four of the agency's 12 overseas offices. Australia, the world's biggest coal and iron ore supplier, had garnered A$1.6 billion of investment from China by the end of 2004, according to Wang.
Steady Supply
Beijing Shougang, the publicly traded unit of China's fourth-biggest steelmaker, will pay A$120 million for a 50 percent stake in Mt. Gibson Iron Ltd.'s A$722 million iron ore project in Western Australia, subject to a feasibility study, Mt. Gibson Finance Director Alan Rule said by phone from Perth.
``We definitely need to invest in overseas iron ore projects so we can secure a steady raw material supply for our plants,'' Liu Anshan, a spokeswoman at Shougang Group's mining resources unit, said in Beijing.
In 2001, Baosteel invested $30 million in the Eastern Ranges iron ore mine in Western Australia, partnering Rio Tinto.
China wants ``to control the supply chain,'' said Wang at a conference organized by London-based Metal Events Ltd. on Sept. 16. ``There's an urgency for them to get into long-term contracts or be involved in directly investing.''
Competition
Australian exports of minerals and energy rose to a record A$67.4 billion in the year ended June 30, boosting the local dollar by 9 percent in a year. Commodities account for 60 percent of the country's export earnings.
Chinese companies are competing for Australia's resources with rivals such as South Korean steelmaker Posco, Japan's Nippon Steel Corp. and Mitsubishi Corp., which already own stakes in Australian mines.
Indian companies are also hunting for assets. Coal India Ltd., which produces 87 percent of the nation's supply, is looking for stakes in Australian mines and plans this year to meet with officials from Queensland state.
Chinese companies are in talks to participate in all eight new iron ore projects being developed in Western Australia, Wang said. Fortescue Metals Group said this month it held talks with investors, including steel trader Sinosteel, which in June signed a joint development with Perth-based MidWest Corp.
``Of the total iron ore that China imports, China has some kind of involvement in the supplier in 25 percent of them,'' Wang said. ``The Chinese industry wants to increase that to 50 percent.''
Uranium Talks
Iron-ore contract prices charged by BHP Billiton, Rio Tinto and Cia. Vale do Rio Doce, which account for more than three quarters of global ore trade, jumped 71.5 percent from April 1.
Chinese companies are also ``very interested in getting involved in the mining of uranium,'' Wang said. These include ``state-owned enterprises involved in nuclear-power generation,'' he said, declining t
Houses and Commodities - steve Savill
http://www.gold-eagle.com/editorials...use092305.html
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A sweet deal - Sugar
Puru Saxena
http://www.gold-eagle.com/editorials...ena092305.html
,
China's Central Bank Raises GDP Forecast
Monday September 26, 5:21 am ET
China's Central Bank Raises GDP Forecast for 2005 to 9.2 Percent
SHANGHAI, China (AP) -- China's economy is expected to expand 9.2 percent this year, up from an initial estimate of 9 percent, the nation's central bank said Monday.
However, growth in China's gross domestic product is expected to slow slightly to 8.7 percent in the first half of 2006 from the same period in 2005, the research bureau of the People's Bank of China said in a report carried by its official newspaper, the Financial News.
The report did not elaborate on the reason for the revision in the GDP growth estimate. But economists have pointed to strong demand for exports and a rebound in spending on construction as key reasons for the continued strong growth.
Meanwhile, China's consumer price index -- the main barometer for inflation -- will come in at 2 percent this year, down from the previously reported 2.7 percent, the central bank said.
The index rose 3.9 percent in 2004 and rose 2.1 percent in the first eight months of this year over the same period of 2004.
"The yuan revaluation has put certain downward pressure on domestic prices," the report said, referring to the July 21 move by the central bank to raise the nation's currency by 2.1 percent against the U.S. dollar and allow it to trade in a restricted float against a basket of currencies.
China's economy grew a blistering 9.5 percent in 2003 and 2004.
The government has sought to slow growth down to more sustainable rates, saying that soaring demand for energy and other resources is straining the country's transport systems and supplies and that surging excess investment in property developments and other construction could lead to financial problems.
Natural gas woes bigger story than crude oil
Mella McEwen
Oil Editor
Midland Reporter Telegram
09/25/2005
Having seen his prediction that crude oil prices would reach $65 a barrel become reality, Dr. Michael Economides is making equally bold predictions about natural gas.
Natural gas prices, he said Wednesday while visiting Midland to address the Permian Basin section, Society of Petroleum Engineers, will reach $20 per thousand cubic feet (Mcf) around Christmas.
Having forecast $65 oil, he said, he's now predicting $100 oil "but I'm not impressed with that. Natural gas is the real story."
Economides, professor at the Cullen College of Engineering at the University of Houston and managing partner in a petroleum engineering and strategy consulting firm, lists several reasons for his expectations of high energy prices.
One is the "perfect storm" of Hurricanes Katrina and Rita. Rita's approach has, as of Wednesday afternoon, knocked out 73 percent of the Gulf of Mexico's oil production as personnel were evacuated from offshore rigs and production platforms. On Tuesday, the U.S. Minerals Management Service survey of Gulf of Mexico natural gas wells found that 3.3 percent of gas production has been shut-in as a result of Hurricane Katrina three weeks ago.
There is, he said, 3.5 million cubic feet of Gulf of Mexico natural gas production off-line that likely won't be back on the markets by Christmastime.
"What's going to happen is we're going to have a huge shortfall of natural gas and around Christmas there will be a bad present for the Midwest," he observed.
That comes at a time, Economides said, when the nation is transitioning from crude oil to natural gas use and domestic production is already struggling to meet rising demand.
"Over the next 20 years," he said, "we will have a 25 percent increase in natural gas demand for just electric power generation. Of that, 21 percent will be for new plants and 4 percent to replace coal and nuclear plants."
That means, continued Economides, who has recently appeared on national business news programs discussing energy prices, that over that 20-year period, natural gas demand will rise another 10 trillion cubic feet -- to about 33 Tcf -- and "this means liquefied natural gas will be the only solution."
Never before, he noted, has natural gas reached $12 per Mcf, as it has in the aftermath of Hurricane Katrina. But, he said, even if Katrina and, now Rita, had not stormed through the Gulf of Mexico, the energy markets had problems meeting demand.
He cites other issues impacting energy markets, both domestic and global. Domestically, tight refining capacity is a "disaster," he said, adding that "no doubt" additional refining capacity would have eased supply shortages that sent gasoline prices to $3 per gallon after Katrina damaged Gulf Coast refineries and pipelines that sent supplies to the Midwest and Northeast.
Globally the United States is going to have to increasingly compete with other nations for oil and natural gas supplies. China, Economides pointed out, increased oil demand 20 percent in 2004 and will increase demand 20 percent this year. The producing members of the Organization of Petroleum Exporting Countries, despite promising this week to increase production by 2 million barrels, has no excess production capacity, he said, and tensions between the United States and major producers Iran and Venezuela could jeopardize supplies from those two countries.
Another major producing country, Russia, has regressed to what Economides called the Brezhnev era with the state takeover of Yukos, once Russia's largest oil company, and the jailing of its founder, Mikhail Khodorkovsky. That, he said, puts over 50 percent of Russia's oil production capability in government hands and "that's a serious deficiency."
He chided the Bush administration for not forcefully opposing the Russian government's actions, saying the administration should be blasting Russian President Vladmir Putin.
"The Bus
"MOLY" THE NEXT SECTOR TO ROCK!
by Mike Hoy
September 26, 2005
For those of you who haven’t noticed; it appears that the price of Molybdenum (moly) is on the move and the funny thing is, it is moving in the opposite direction of what most of the analysts and newsletter writers have predicted. HOW CAN THAT BE? How can they be wrong about a base metal that has skyrocketed in price by more than 12 X in the last 3 years? Funny thing about this is the fact that it is not really their fault that they have been on the wrong side of the price movement with their predictions.
Moly is one of the most unknown and mis-understood base metals in the world today. This metal is unquestionably the metal of the 21st century. Not only is it the metal of the 21st century but very few individuals, investors, newsletter writers and even companies that produce moly have a clue to the importance that moly will play in shaping the rest of our lives and the lives of generations to come.
The best part about this is the fact that we, as consumers, are going to be the big winners. Not only will the consumer be a huge winner but countries such as the US and China can now look at each other as partners in the development of crucial technology and power plants that will easily solve the world’s energy problems and needs rather than fierce competitors for the worlds dwindling supplies of natural resources.
Think about it for a second! What better way to cool the world’s frayed nerves than to come up with a solution to the world’s energy crisis! Think of the possibility of buying gasoline at $1.50-$2.00/gallon again. Believe it or not there is a solution to the world’s energy crisis and the technology has been around for decades! In fact this technology is now in the process of becoming a reality.
China and South Africa are working together to develop and build power plants that will liquify coal in a process that makes their vast reserves of coal economical and the finished product is burned pollution free. Think of what this means! Both the US and China can tell the oil producing nations, of the world, to go take a “high flying leap off their tallest oil rig.” For the first time in years I have positive feelings about the future and I can see a way for the US to solve many of its pressing problems. Think of automobiles and power plants burning fuel that is virtually pollution free for a lot less than we pay for the same energy today! This technology will not only solve our energy crisis but it will also do wonders in solving the world’s air pollution crisis and the threat of global warming.
I hope you are getting as excited as I am because from my standpoint I have searched for a very long time to find anything to be positive about in the world today. Not only does this give me something to cheer about but the timing cannot be better.
Now you have got to be asking yourself “how does moly fit in to this?” The answer to that is very simple but yet it has been kept a “BIG SECRET!” Very few people know or understand the fact that MOLY is the catalyst to clean the impurities out of the vast quantities of coal and stranded natural gas that exists in the world today. With moly as the catalyst there is very little doubt about the fact that the demand for moly can do anything but increase significantly over the years to come.
Very few newsletter writers, analysts or even producing moly companies understand the fact that the world of the 21st century cannot exist, in the manner that it will, without a much larger supply of moly than is available in the market today..
Without this knowledge there is no way that many of these very intelligent people could come to the conclusion that the price of moly could do anything but fall in price. That would be a logical and practical opinion to form.
For months newsletter writers and analysts have said that moly prices would fall below $15/lb. after peaking above $39/lb. For months end users of moly have waited for the pullback in price. Most of these end users felt that moly had no-where t
OUTLOOK FOR STEEL DEMAND
http://www.iht.com/articles/2005/10/03/business/hot.php
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Silver / oil ratio
Adam Hamilton
http://www.gold-eagle.com/gold_diges...ton100705.html
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Hi Mick, interesting post on siver/oil ratio.
Mike Hoy sounds uber-exuberant about molybdenum but its probably worth having a look at it.Leave no stone unturned etc.
38-STEPS TO BECOMING A SUCCESSFUL TRADER
Steps to Successful Commodities Futures Trading
as published in Commodity Futures Trading Club News
and in Traders Organization's Real Success Daytrading Course
We accumulate trading information - buying books, going to seminars and researching.
We begin to trade with our 'new' knowledge.
We consistently 'donate' and then realize we may need more knowledge or information.
We accumulate more information.
We switch the commodities we are currently following.
We go back into the market and trade with our 'updated' knowledge.
We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in.
We start to listen to 'outside news' & other traders.
We go back into the market and continue to donate.
We switch commodities again.
We search for more trading information.
We go back into the market and continue to donate.
We get 'overconfident' & market humbles us.
We start to understand that trading success fully is going to take more time and more knowledge then we anticipated.
--------------------------------------------------------------------------------
Many Traders Will Give up at this Point as they Realize Work is Involved
We get serious and start concentrating on learning a 'real' methodology.
We trade our methodology with some success, but realize that something is missing.
We begin to understand the need for having rules to apply our methodology.
We take a sabbatical from trading to develop and research our trading rules.
We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute. We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute.
We add, subtract and modify rules as we see a need to be more proficient with our rules.
We go back into the market and continue to donate. We go back into the market and continue to donate.
We start to take responsibility for our trading results as we understand that our success is in us, not the trade methodology.
We continue to trade and become more proficient with our methodology and our rules.
As we trade we still have a tendency to violate our rules and our results are erratic.
We know we are close.
We go back and research our rules.
We build the confidence in our rules and go back into the market and trade.
Our trading results are getting better, but we are still hesitating in executing our rules.
We now see the importance of following our rules as we see the results of our trades when we don't follow them.
We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
We continue to trade and the market teaches us more and more about ourselves.
We master our methodology and trading rules.
We begin to consistently make money. We begin to consistently make money.
We get a little overconfident and the market humbles us.
We continue to learn our lessons.
We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
We are making more money then we ever dreamed to be possible.
We go on with our lives and accomplish many of the goals we had always dreamed of.
http://www.commodities-futures.com/
Coffee anyone?
Coffee has broken up thru the downtrend line on the weekly and looks positive at the moment for a possible run north.
http://www.khalsaspad.com/files/101105_701.gif
POWER SHIFTS!
by Puru Saxena
October 17, 2005
I will start the proceedings by making a bold claim - Asia powered by China, will provide economic leadership over the coming decades.
Let us face it; America’s days as the undisputed global leader are now numbered. Unfortunately for the US, history has never been kind to empires. They rise from the ashes, flourish and eventually decay. The past is dotted with glorious states, which ultimately faced the inevitable – the eventual decline! The 16th century belonged to the Spanish, the 19th century was dominated by the British and the 20th century saw the growth of America. So, who will take charge of the 21st century?
I am of the opinion that China will dominate our planet in the future. You may think I am crazy. But, if someone had told you in 1900 that the United States would replace Britain as the world leader in the 20th century, you would have pronounced him crazy too! So why am I so sure that the dragon will rule?
Remember, the People’s Republic of China is a massive market with 1.3 billion people. When the Chinese leaders unleashed capitalism 20 years ago, they changed our world forever. The Chinese economy has been gradually opening its doors and the effects are being felt today in several sectors. The most profound impact has been felt in the commodities arena. China is in the early stages of its industrialisation and per-capita consumption is still depressed. Yet, China has already replaced the US as the largest consumer nation in the world! China is now the largest consumer of copper, zinc, tin, rubber, raw wool, cotton, coal and major oil seeds. Furthermore, it is already the second largest consumer of oil (despite a ridiculously low per-capita consumption of 1.7 barrels when compared to 25 barrels in the US!), aluminum, nickel and lead.
The point I am making is that China’s hunger for raw materials is going to increase in the future. As more and more jobs are transferred to Asia, the standard of living will rise. Wealthier people consume more things – period. Multiply any small increases in consumption by the 1.3 billion Chinese and you get a gigantic figure! This thought must have businesses dreaming all around the world!
China is now the 7th largest economy in the world and worth US$1.4 trillion dollars. However, adjusted for differences in purchasing power, the Chinese economy is already the 2nd largest and over 60% of the size of the US economy.
Today, China has 46 colour televisions per 100 households, 21 telephone lines per 100 people, 22 mobile phone users per 100 people, 3 computers per 100 people and 0.1 internet hosts per 1,000 people! These figures are miniscule when compared to the “developed” nations of the world. For instance, America has 99.5 colour televisions per 100 households, 62.4 telephone lines per 100 people, 54.6 mobile phone users per 100 people, 66 computers per 100 people and 680 internet hosts per 1,000 people!
What will happen to domestic demand (and commodity prices) when the 371.6 million Chinese households start consuming more? You don’t have to be a rocket-scientist to figure out that the price of raw materials will go through the roof!
Modern China boasts two major cities – Shanghai and Beijing. Over the coming years, I suspect another 15-20 major cities will spring up all over China. Already, there is an exodus from rural areas towards urban centres and these ambitious people will need housing and employment. If America can boast of several major cities (New York, San Francisco, Los Angeles, Washington DC, Houston etc.) then why can’t China build at least the same number? In my view, it is inevitable that in a few years from now, Wuhan, Tianjin and Shenzhen will one day light up the night sky as major American cities do today. I want you to consider how much steel, copper, tin, lead and energy will be used to build these cities.
In addition to this, what about China’s neighbour, the second most populated nation in the world? India. It is home to 1.1 billion people and has 199.4 million households
hi mick,impressive stats,where and how did you get them.i cant disagree with your logic on the growth prospects of china and india but,,,,they need to sell their products to support their growth and if their overseas consumers are in the doldrums,ie the usa,they may not get the cars/television so soon.i did appreciate your stats,cheers pago.
The artical is authored by Puru SaxenaQuote:
quote:Originally posted by pago
hi mick,impressive stats,where and how did you get them.i cant disagree with your logic on the growth prospects of china and india but,,,,they need to sell their products to support their growth and if their overseas consumers are in the doldrums,ie the usa,they may not get the cars/television so soon.i did appreciate your stats,cheers pago.
The stats look genuine to me
India is one of the lowest per capita oil consumers in the world at about 0.7 barrels per yr
I see your point about the US being the number one consumer at present but don't forget, it's not just americans buying chinese made goods. As these asian countries become more wealthy thier own consumption will increase to the point where they are consuming much more than they do ATM. I think this is the point Saxena is trying to make.
,
More good news for commodities investors -
Bernanke to be next FED chairman (let the good times roll on)
http://www.gold-eagle.com/editorials...rie102605.html
,
THE ENERGY SECTOR REMAINS ATTRACTIVE
by Joseph Dancy, LSGI Advisors, Inc.
Portfolio Manager, LSGI Fund
Adjunct Professor, SMU School of Law
November 8, 2005
The hurricane season of 2005 has been the most prolific ever. Wilma's formation last month, followed by Alpha and Beta, gave us 23 named storms. The previous record - 21 storms - was set in 1933. According to hurricane expert Dr. Jeff Masters “We’re living history this year. . . . This is a once in a lifetime hurricane season.”
Dr. Masters describes the ferocity of the recent storms: “There has never been a hurricane like Wilma before. With an unbelievable round of intensification . . . Wilma smashed the all-time record for lowest pressure in an Atlantic hurricane. . . This is an incredibly compact, amazingly intense hurricane, the likes of which has never been seen. The Hurricane Season of 2005 keeps topping itself with new firsts, and now boasts three of the five most intense hurricanes of all time--Katrina, Rita, and Wilma.” (emphasis supplied)
Since around 20% of our natural gas supplies and 25% of U.S. crude oil production originate from fields in the Gulf of Mexico, the increased storm activity has had a major impact on the U.S. energy sector. The Minerals Management Service reports that 67% of crude oil production and 54% of the natural gas production in the Gulf of Mexico remains shut-in – over sixty days after the first hurricane made landfall! In addition, over 5% of U.S. refinery capacity remains off-line. Numerous natural gas processing plants and pipelines remain shut down or are operating at a reduced rate, as well as onshore oil and natural gas wells.
The Outlook for the Energy Sector
While we expect the energy markets to be volatile, we remain bullish on the energy sector for the following reasons:
The first week of November traditionally marks the start of the heating season for the natural gas markets. At the end of the summer injection season natural gas volumes in storage will exceed 3.14 trillion cubic feet (tcf) – around 100 billion cubic feet below last year’s storage levels. Note that it took natural gas prices of $13 per thousand cubic feet (Mcf) this summer for the companies to acquire the necessary gas to fill the storage facilities versus around $7.75 per Mcf in the year ago period.
In ‘normal’ years 3.14 tcf in storage would be considered satisfactory to meet expected winter heating demands. Around 80% of winter demand is met by production facilities and around 20% of demand is met from natural gas retrieved from storage facilities. With such a high proportion of the nation’s natural gas production remaining off line there is a high probability that larger than normal draws from storage will be required to meet winter demand. If we have a cold winter draws on storage will be much higher than we have seen in recent years. If this thesis proves correct expect natural gas prices to remain elevated, and possibly spike, this winter.
This week natural gas futures traded for $13 per Mcf. Last year at this time natural gas sold for $7.75 per Mcf. The U.S. Department of Energy predicted the average heating bill this winter in the U.S. will increase 47% over last year’s level. The market clearing prices needed to allocate natural gas production remain elevated. Higher prices will result in higher cash flow and earnings for any companies in the natural gas extraction and marketing sectors.
Long term forecasters at Accuweather predict a colder than normal winter in the Northeastern U.S. – which should provide healthy demand for both heating oil and natural gas. AccuWeather found a high historical correlation between active hurricane seasons and cold ensuing winters in the Northeast. Weather patterns existing in the "hyper-hurricane" seasons of 1933, 1969 and 1995 resulted in abnormally cold winters in the Northeast.
Accuweather’s forecast calls for Northeastern U.S. temperatures to be as much as 3.5 degrees colder than normal – significantly below normal in a high population area.
China’s economy grew by 9.
Copper prices touch lifetime high
Gold gains 2.5% on week; platinum at 26-year high
SAN FRANCISCO (MarketWatch) -- Copper prices touched a lifetime high Friday above $1.90 a pound on supply concerns, platinum hit a 26-year peak and gold futures marked a five-session climb to close 2.5% higher for the week.
Copper ended the week with a gain of 3.2% and platinum rose 4% from last Friday's close.
December copper climbed to a record $1.9065 a pound Friday on the New York Mercantile Exchange. It closed at $1.9055, up 3.4 cents for the session. A week ago, it closed at $1.846.
On Thursday, Chile's copper commission reduced its production estimate for 2005 from 5.5 million to 5.37 million tons, according to Todd Hultman, president of Dailyfutures.com. It also reduced its estimate of 2006 production from 5.52 to 5.51 million tons.
"There appears to be no stopping copper prices," Hultman said, "despite warnings from China that they may sell some of their state copper reserves."
The industrial metal is "in a monster uptrend that shows no sign of dying anytime soon," said Dale Doelling, chief market technician at Trends In Commodities.
"Deliveries of copper [to] the market [remain] tight as can be seen by the widening of the backwardation," said William Adams, analyst at BaseMetals.com. Backwardation is a condition in which a futures price is lower in the distant-delivery months than in the near-delivery months, according to InvestorWords.com.
"Given the break into new high ground, further short covering is likely to send prices even higher, although expect ongoing producer hedge selling to take advantage of the higher levels," Adams said.
"At some stage this hedging is expected to become the dominant factor, but there's little sign of this happening yet," he added.
Gold tallies five-session win
Gold futures closed higher, pulling the December contract up $1.70 to close at $469.40 an ounce. It closed $11.50 higher for the week after ending last Friday at $457.90.
Bombings in Jordan, a large U.S. trade deficit and negative news on the prices of imported goods are all "positive for gold," said Ned Schmidt, editor of the Value View Gold Report, in his latest newsletter.
Looking ahead, "gold should moderate further in the coming week, though U.S. trading activity will be low due to Thanksgiving," he wrote.
Indeed, "with a strong dollar providing a serious headwind, all signs point to lower [gold] prices in the near term," said Doelling.
For now, taking its cue from the current strength in gold, December silver gained ground, climbing 1.5 cents to $7.72 an ounce.
"Silver will likely feel the effects of any weakness in the gold market, but I doubt that we'll see any major decline," added Doelling.
He also said that "silver's stronger technical picture may cause the market to consolidate here, while gold moves down to test support around the $450 level."
Platinum ends at 26-year high
Rounding out the metals action, January platinum rose $6.40 to close at $971.90 an ounce -- tallying a weekly gain of 4%. December palladium finished at $250.05 an ounce, up $7.10 for the day and up 10.5% from the week-ago close.
Platinum prices traded at a 26-year high and palladium prices were at their highest level since May 2004, according to James Moore, analyst at TheBullionDesk.com in London.
"Investment demand looks set to continue in the coming sessions, with platinum potentially targeting the $1,000 level as the market lacks significant chart resistance levels," he said.
"Industrial and jewelry substitution as well as overflow interest in platinum look set to push palladium higher, with resistance now pegged at $250," he added.
As for U.S. inventories, copper supplies were unchanged at 3,690 short tons as of late Thursday, according to Nymex. Silver stocks were down 385,689 troy ounces at 116.4 million, while gold inventories stood at 6.44 million troy ounces, up 116,012 troy ounces from the previous session.
Indexes gain on day, week
Afte
Sugar prices up in storms' wake
Flood damage comes after 2004 hurricanes hit Florida crop
By RUKMINI CALLIMACHI
Associated Press
RESOURCES
Graphic: Louisiana Sugar Production
ERATH, LA. - When the wave of black water descended on this town, the fields of sugar cane were ripe, tall, green shoots bursting with sugar.
"This entire field was a lake," recalled Clay DuPlantis, standing in one of the decimated fields his family has farmed for seven generations.
Thousands of acres of cane ready to be harvested were soaked in salt water as hurricanes Katrina and Rita pounded the Gulf of Mexico 35 miles away. When the seawater receded, much of the cane was damaged and the fields were filled with torn-off porches, picnic tables, splintered furniture and stinking moss.
The loss of the Louisiana sugar cane and disruptions at two sugar refineries in New Orleans sent a shock through the sugar industry, which was already dealing with shortages because of hurricane-damaged crops in Florida last year.
Since the end of August, the price of sugar has gone from 28 cents a pound to over 40 cents, according to the U.S. Department of Agriculture, citing industry publications. That's compounded the pricing difficulties the sugar industry faces — the government keeps prices for sugar considerably higher in the U.S. than on the world market by limiting imports and restricting how much sugar can be sold domestically.
The goal is to protect farmers and processors and ensure a steady supply of sugar.
However, the price difference means that food manufacturers — and consumers — pay more than if there were no restrictions on imports. The world price for refined sugar averaged 14.18 cents a pound, according to the USDA.
The latest increase is being felt mostly by small confectioners, bakers and ice cream makers who don't buy their sugar on the futures market months ahead of time.
"A day without sugar at the candy factory is like a day without air for a human being," said Eric Atkinson, whose grandfather founded Atkinson Candy Co. in Lufkin in 1932. Three times in October, his sugar distributor failed to deliver its promised supply.
Atkinson, whose factory uses up to 40,000 pounds of sugar per day, has tried without luck to bring in two trucks of cheaper Mexican sugar into Texas. "It got bogged down in bureaucracy," he said.
If the shortages and high prices persist, he may have to move his operations offshore, he said. Either that, or raise prices for his sweet treats. In a normal year, the loss in Erath, a town at the heart of Cajun country, and others like it dotting the southern Louisiana coast would not have shaken the market, said USDA senior economist Larry Salathe. The 220,000 tons lost in southern Louisiana represents just 3 percent of the refined sugar grown in the U.S., according to the USDA.
But Salathe describes the destruction of Louisiana's crop as the proverbial nail in the coffin. It followed a bad crop last year in Florida, the nation's No. 1 sugar-cane-growing area. Florida was pummeled by hurricanes in 2004, causing the U.S. sugar cane crop to drop from 4 million tons in 2003 to 3.3 million in 2004.
Congress will be under pressure from food companies to overhaul import and market controls when lawmakers write a new farm bill in 2007. In 2002, the last time Congress rewrote sugar policy, the industry faced the opposite conditions — historically low prices and an oversupply in the U.S.
Meanwhile, in Louisiana, it's still unclear what long-term effects the salt water will have on the fields.
Usually, a field can yield as much as 50 tons of sugar per acre. This year, DuPlantis said he'd be happy to salvage 17 tons per acre from the fields he doesn't have to burn. Only a portion of the damage will be covered by hurricane insurance, he said.
Chuck Williams, manager of Southern Candymakers in New Orleans, said his distributor has increased the price of a 50-pound bag of sugar from $18 to $22 in the last two weeks. But his candied pralines still sell.
"The good thing is when times
Copper volatile as China rumours swirl
By Maria Silander
Published: November 16 2005 11:46 | Last updated: November 16 2005 20:57
The copper market remained nervous and volatile on Wednesday as rumours continued to circulate.
Three-month copper prices swung in a $100 range, ending near record highs as speculation on China’s State Reserve Bureau’s plans to buy copper continued.
Three-month contracts touched a high of $4,155 a tonne overnight but eased to $4,139 at the end of pit trading in London after some Asian traders said Chinese authorities were seeking permission to export 200,000 tonnes of metal.
The SRB is at the centre of market speculation that one of its traders has built a potentially costly short position of 150,000-200,000 tonnes of copper on the London Metal Exchange.
Analysts and traders thought the Chinese might be just trying to talk the copper price down to decrease their losses.
“There’s this poker game going on, people trying to bluff each other,” said one trader in London.
“Nobody knows if the Chinese are delivering the metal they said they would or if they have bought the metal to cover a short position.”
If China has bought the metal, that would make the copper market collapse, the trader said. According to some analysts, the interest in copper on the spot market has this week increased compared with three-month contracts. Spot copper declined $32.50 to $4,309.5 a tonne on Wednesday while three-month copper ended $3 up.
Aluminium prices were under pressure because of weaker copper and a 57,350-tonne stock rise in London Metal Exchange. Three-month aluminium prices declined $5 to $2,010 a tonne at the LME. Three-month zinc fell $8 to $1,607 a tonne.
Gold surged to its highest level in four weeks, as fund buying lifted it to $478.60 a troy ounce up $10.70 from its quote in New York on Tuesday and only $1.65 below last month’s near-18-year high of $480.25.
Silver hit an 11-month high in London, rising 27 cents to $8.01 a troy ounce on fund buying and support from the gold rise. Platinum hit another 25-year high, climbing $21 to $988 on a positive industry report.
Crude oil prices rose slightly in reaction to data showing a surprise decline in weekly US crude and gasoline inventories. West Texas Intermediate for December delivery was up 90 cents at $57.88 a barrel by the close of trade in New York. Brent crude for January delivery rose 82 cents to $56.00 a barrel in London.
The Energy Information Administration reported that US crude inventories fell 2.2m barrels last week to 321.4m barrels as imports slumped. Petrol stockpiles fell 900,000 barrels to 200.2m barrels even as demand eased.
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Freezing weather pushes oil and gas prices up
By Maria Silander
Published: November 22 2005 13:34 | Last updated: November 22 2005 20:29
The onset of cold weather turned up the heat on oil and gas prices in London on Tuesday. Oil prices edged towards $59 a barrel and British gas day-ahead delivery surged to its highest levels for at least two years as freezing weather boosted demand.
British gas for day-ahead delivery rallied to 150p a therm, up 30p from Monday’s close. Spot contracts were at 140p, a new eight-month high.
Spot prices have more than doubled in the last week as a decline in output from North Sea gas fields coincided with forecasts that this winter could be the coldest for a decade.
The high gas price has already forced UK power stations and factories to cut production this week to reduce their demand for gas, according to supplier Total. The French energy group said on Tuesday that gas demand was running at about 80 per cent of the level it would expect at these temperatures.
Brent crude oil for January delivery climbed $1.07 to $56.41 a barrel by the end of trade in London, while West Texas Intermediate for January delivery rose $1.14 to $58.84 a barrel by the close of the New York Mercantile Exchange session.
Gold soared in Asian trade to $495.35 a troy ounce on speculative buying, its highest price since December 1987, but eased later to end at $490.90/$491.60 a troy ounce, still up $2.40 from its Monday’s late quote in New York.
Investors are expecting bullion to hit the $500 a troy ounce price soon.
But analysts think that prices could soften this week on profit-taking ahead of a long weekend in the US. Gold has gained nearly 9 per cent since the start of the month in spite of the strong dollar and receding inflation fears.
Silver tracked gold’s gains and peaked at $8.20 a troy ounce, the highest price since April 2004.
Copper fell for the first trading session in nine in London on speculation that China had rescheduled deliveries of as much as 200,000 tonnes, putting off purchases of the metal that would cover its commitment.
There was a further rise in LME copper inventories. Barclays Capital said that the recent flow of copper into Asian warehouses was believed to be from China’s State Reserve Bureau.
Three-month copper contract was at $4,137.5 a tonne on the London Metal Exchange at the end of open outcry trading, down $77.50 from the previous close.
Three-month aluminium fell $31 from its 10-year peak hit on Monday to $2,038 a tonne in late London trade. Zinc peaked at a new eight-year high of $1,659.5 a tonne, up $10.50 from the previous close and only $16 away from setting a new 15-year record.
China's Copper Crisis Tells a Bigger Story: William Pesek Jr.
Nov. 25 (Bloomberg) -- If you want a reality check on China's economy, look no further than the copper market.
It's a story that reads more like a spy novel than financial news: A few weeks back, markets buzzed with rumors as Liu Qibing, a well-known metals trader for China's government, went missing. It happened amid talk someone had taken a huge short position -- selling copper futures in a bet prices would fall -- and was losing big as the market went the other way. The government at first denied Liu even worked for it.
All this had trading pits buzzing with questions. Was China facing massive losses? Might it default on trading commitments? Was Liu under house arrest in Beijing? Could China be forced for the first time to disclose its copper holdings? Would it dump copper to drive down prices and cut its losses? Whither metals prices?
Yet these questions, tantalizing as they are, miss the real story -- what the copper mess says about China's economy.
China's economy is the world's sexiest, as evidenced by the gold-rush mentality driving investors, executives and pundits the world over to get a piece of the action. Less chronicled is the growing tension between China's move toward market economics and the socialism it's struggling to leave behind.
Chinese Fashion
The government responded to Liu's wrong-way trade in true Chinese fashion, with opacity. First, it denied being caught in a short position. Then it turned around and tried to talk down the copper market, as if traders wouldn't see through such efforts.
What's at stake here is China's credibility as a financial trading partner, and that's a huge problem. Liu, after all, traded for the State Reserve Bureau, the agency that stockpiles commodities to feed China's industrialization. Regardless of how this affair turns out, China needs to continue amassing the gamut of commodities to fuel its economy. That will be harder without the trust of suppliers and markets.
Investors, too. One barometer of China's challenges is its stock market. While stock indexes don't always correlate with gross domestic product, how could the benchmark Shanghai Composite Index be down more than 12 percent this year amid 9 percent growth?
Economic Implications
Inadequate corporate transparency and governance get much of the blame. One also has to look at China's rickety financial system, which is weighed down by hundreds of billions of dollars of bad loans.
The bureau may become the second Chinese state-owned trader to fall into financial woes in a year. In November 2004, China Aviation Oil (Singapore) Corp. sought protection from creditors after it ran up $555 million of debt from trading oil derivatives. The company bet prices would fall; instead, they rose to a record.
The copper controversy is an even more jarring reminder that the standard of Chinese corporate and financial dealing needs to be upgraded, and fast. It's also a microcosm of how the role of the state stands in the way of China's economic maturity.
Big questions remain about the lines of accountability in Beijing and the relationships between different government agencies. Simply put, the role of the Chinese state remains undefined.
That's why Chinese officials shouldn't have been surprised that markets were skeptical of claims it has 1.3 million tons of stockpiled copper. Ren Yunhe, analyst at Shanghai Shenyin Wanguo Research and Consulting Co., summed it up well: ``The people who believe that are rather few. It's a rather large amount.''
A Matter of Trust
Even if China has a rogue trader akin to Nick Leeson -- the Singapore-based trader who caused the collapse of Barings Plc in 1995 -- on its hands, as it suggests, it still needs to honor its commitments.
Japanese trading house Sumitomo Corp. paid up when its copper trader Yasuo Hamanaka ran up a $2.6 billion loss in the copper market. Should China fail to make good on Liu's trades, it would in some ways be akin to defaulting on debt. Some
See that man from Newmont on Business Sunday today saying gold >US$1000 in the future
http://businesssunday.ninemsn.com.au....aspx?id=74203
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Zinc and aluminium lead metals higher
By Kevin Morrison
Published: December 1 2005 11:55 | Last updated: December 1 2005 20:39
Base metal prices extended their record breaking run on Thursdasy, while silver and raw sugar prices reached new long-term highs.
Investors continued to pour more funds into commodity markets even though prices have moved beyond the most optimistic of predictions made at the start of this year.
Copper was again the focus in base metals markets with the benchmark three month price rising by more than $130 to a new record of $4,370 a tonne on the London Metal Exchange. More speculators betted that China’s State Reserve Bureau was holding a large short position with an obligation to physically deliver metal this month.
Traders said there was fresh investment fund buying, and dealers who were short were covering their positions. This suggested that investors or consumers had already sold copper at lower prices and were buying the metal to cover their obligations.
The latest move up in copper prices came ahead of a critical few weeks when the market should learn whether the SRB really has a obligation to deliver significant amounts of copper into LME warehouses.
The three month LME aluminium price struck a fresh near 17 year high when it breached the $2,200 a tonne level for the first time since January 1989 on its way to an intra-day peak of $2,208, up $69 on the day.
Aluminium prices were boosted by reports that China may be reducing excess production of aluminium, which in turn may reduce Chinese exports of the metal and tighten the global supply and demand balance. In addition, Rio Tinto has started to cut output at its New Zealand aluminium smelter due to higher power prices.
China has applied similar curbs in the steel and copper sectors to try and limit speculative investment that Beijing believes puts pressure on the country’s environment, drives up the cost of natural resource imports and potentially leads to bad debt.
The three-month LME zinc price hit a new 15-year high when it touched an intra-day peak of $1,765 a tonne, up more than $200 from the previous close.
Lead prices also hit a record of $1,070 a tonne.
Gold moved back above $500 a troy ounce, hitting a high of $502.20, up $8 on the day. Silver hit a new 18 year high of $8.44 a troy ounce.
Oil prices, which had been relatively flat in late trading, picked up near the close with January Brent up $1.10 at $56.15 at the close of London trade. Nymex West Texas Intermediate for January delivery settled at $58.47, up $1.15, a barrel in New York trade.
Raw sugar futures touched a new nine year high of 12.96 cents a pound on the New York Board of Trade. Sugar last traded above 13 cents in July 1996.
http://news.ft.com/cms/s/90efae88-65...0779e2340.html
US crude price back over $60
By Kevin Morrison
Published: December 5 2005 12:05 | Last updated: December 5 2005 20:32
US crude futures moved back above $60 a barrel on Monday for the first time in four weeks on expectations of colder weather in the northeast of the US, which is the biggest consuming region of heating oil in the world.
With New Yorkers braced for snow in the coming days, oil traders there were in a mood to buy.
January Nymex West Texas Intermediate rose to an intra-day peak of $60.26 a barrel, before settling at $59.91, a rise of 59 cents, at the close of trade in New York.
IPE Brent for January delivery added 68 cents to $57.73 a barrel in late afternoon London trade.
US heating oil futures also rose to their highest level in a month with the January Nymex oil futures up 3 cents to $1.8025 a gallon. US gas futures were also higher in anticipation of the colder weather. January Nymex Henry Hub gas futures were up 40 cents to $14.30 per British thermal unit, and within sight of the record high of $14.75 reached two months ago.
Benchmark gas futures have risen $3.50, or almost a third, in the past week as colder weather swept across the US.
Ministers from the Organisation of the Petroleum Exporting Countries have indicated that they are likely to keep production quotas unchanged at their ministerial meeting in Kuwait next week.
Gold rose to a new 23-year high of $508.25 a troy ounce before easing to $506.70/507.50, up from its late quote of $503.00/503.80 in New York on Friday.
Gold hit $509.20 an ounce in February 1983. Anything above that level will bring the metal to its highest since January 1980, when it hit a record $850 an ounce. Gold prices in euro terms reached a record high of €434.51 a troy ounce.
Goldman Sachs, the investment bank, on Monday placed gold as one of its top 10 recommendations in the currency market for 2006.
“The longer-term trend of rising futures volume and open interest reflect this price surge.
“We would look for further acceleration above the $514 area for an initial target at a retracement level around 565, then longer-term towards the $640 level,” it said.
Other precious metals were higher. Silver reached a fresh 18-year high of $8.64 a troy ounce and platinum touched a new 26-year high of $1,006 a troy ounce.
Aluminium struck a new 16-year high of $2,225 a tonne on the London Metal Exchange.
The three-month zinc price hit a 16 year high of $1,805 a tonne as it moved through the $1,800 level for the first time since March 1989.
The three-month copper price was $13 higher at $4,397 a tonne.
Anumber of reasons to remain bullish on oil and natural gas - by Joe Dancy
http://www.financialsense.com/fsu/ed...2005/1205.html
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Thanks Mick100 and others for this thread.First time I have read it.
I have just returned from China and concur with all your comments.Jiangmen(popn 3m)was literally growing in front of your eyes.New motorways,6 star hotels etc etc.
If China can make it the price will go down.If they cant the price will go up.The stories posted about the bad debts and copper markets will obviously hit them at some stage but this juggernaut will keep on growing at plus 8 % all the same.Their pollution is horrific.On one par five we could scarcely see the green.
Last year there were some big noises that the Chinese would force the price of iron ore down through intense negotiations.This is not happening.Even coking coal is holding onto last years gains.
They are putting 10000 new cars on the road each day.In 1980 they had 20000 cars in total!!!...(but plenty of trucks )
This commodity boom is only just starting.
Thanks bermuda
Good to hear about your first hand experience and thoughts
,
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Steel costs could drop next year
By Kevin Morrison
Published: December 5 2005 19:57 | Last updated: December 5 2005 19:57
The cost of raw materials for steelmaking could fall next year with a likely rise in iron ore prices being offset by a fall in coking coal prices from their record highs.
Talks between miners and Japanese steelmakers begin in the next month to settle coking coal and iron ore prices for the 2006/07 year starting in April. However, the final outcome on prices will be determined by China, the world’s largest steel producer.
China, the world’s top importer of iron ore, is expected to import 264m tonnes of the raw material in 2005, the Ministry of Commerce said yesterday. It forecast imports would rise by about 35m tonnes in 2006, less than the estimated 56m tonne rise this year.
A slump in domestic steel prices might discourage steel mills from importing more iron ore because many mills are operating on negative margins.
Patrick Cleary, research manager steelmaking costs and raw materials at CRU, a consultancy in London, said that Chinese steel prices for a tonne of hot roiled coil were about $400, compared with $600 for an equivalent amount of steel in the US.
“There is an imbalance in the Chinese market, which cannot be sustained and there is a fear that more Chinese steel will exported and bring down international steel prices,” said Mr Cleary.
Chinese production is estimated at about 330m tonnes of steel this year, up nearly 60m tonnes on last year and about triple the volume of 1997. This rise has required ever increasing imports of iron ore and coking coal, although the Chinese are almost fully self-sufficient in coking coal.
Concern about Chinese excess steel production has made predicting final prices for iron ore and coking coal next year difficult.
Jim Lennon, metals analyst at Macquarie Bank, said benchmark coking coal prices were expected to fall from their current level of $125 a tonne.
“There is a general consensus that prices should stay above $100/t,” Mr Lennon said. He predicted all coking coal types would fall to between $110-115/t.
Iron ore prices in contrast are expected to rise in the forthcoming round of negotiations. At present, iron ore spot prices are $5 above the current contract price of $70 a tonne.
“With spot prices above contract prices, it is fair to assume that the iron ore contract price will rise, providing the fundamentals do not change too drastically over the next few months,” said Mr Cleary.
Bloomberg News
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Oil, Heating Oil, Natural Gas Rise as Cold Front Boosts Demand
Dec. 8 (Bloomberg) -- Crude oil, heating oil and natural gas rose as cold weather in the northern U.S. bolsters heating- fuel demand and refiners try to increase production.
Temperatures in New York and Boston will fall to 25 degrees Fahrenheit (minus 4 Celsius) on Dec. 10, forecaster Meteorlogix LLC said. U.S. refineries operated at 90.6 percent of capacity last week, down from 94 percent a year earlier, according to an Energy Department report. Almost 30 percent of the country's capacity was shut in September after hurricanes made landfall.
``The bone-chilling cold should reduce distillate stocks,'' said Jim Steel, director of commodity research at Man Financial Inc. in New York. Refinery output is ``still down from last year even though they have done quite a job getting them back up and running. These factors are raising concern.''
Crude oil for January delivery rose 54 cents, or 0.9 percent, to $59.75 a barrel at 12:13 p.m. on the New York Mercantile Exchange. Prices are down 16 percent since touching a record $70.85 a barrel on Aug. 30, the day after Hurricane Katrina struck Louisiana and Mississippi. Oil is up 42 percent from a year ago.
Heating oil for January delivery jumped 2.34 cents, or 1.4 percent, to $1.76 a gallon in New York. Heating oil reached a record $2.21 on Sept. 1. Futures have gained 40 percent in the past year.
`Snow's Coming Tomorrow'
``Snow's coming tomorrow and it now looks like the cold weather will stay around longer than we expected,'' said Michael Palmerino, a forecaster at Lexington, Massachusetts-based Meteorlogix LLC.
Temperatures in the Northeast should be 2 to 6 degrees below normal through next week, Palmerino said. The normal low in New York at this time of year is 32 degrees Fahrenheit (0 Celsius) and in Boston the low is usually 28 degrees (minus 2 Celsius), he said.
Home-heating demand in the Northeast, where 80 percent of the nation's heating oil is used, will be 17 percent above normal through Dec. 14, Weather Derivatives, a forecaster in Belton, Missouri, said today. Yesterday, heating demand was forecast to be 12 percent above normal in the region.
``More than 25 percent of production is still out in the Gulf and it looks like we are in for consistent cold,'' said Michael Fitzpatrick, vice president of energy risk management at Fimat USA in New York. ``By the end of the heating season we could be in for some problems.''
U.S. oil production in the Gulf of Mexico yesterday was down 476,035 barrels a day, or 32 percent of the region's total, because of Hurricanes Katrina and Rita, according to the Minerals Management Service. About 2.48 billion cubic feet of natural gas a day is shut, or 25 percent of the Gulf total.
Natural Gas
The rise in prices accelerated after the Energy Department reported that U.S. natural gas inventories declined. Natural-gas and oil prices often move in tandem because as many as 10 percent of U.S. factories and power plants can switch between burning oil and gas. Natural gas is used to heat 55 percent of U.S. homes.
Natural gas inventories fell 59 billion cubic feet to 3.166 trillion last week amid mild weather. Analysts had expected supplies to fall by 65 billion cubic feet, the median of 21 estimates in a Bloomberg survey.
Natural gas for January delivery surged 68 cents, or 5 percent, to $14.38 per million British thermal units in New York. Futures touched $14.55, the highest since Oct. 5, when they reached an all-time high of $14.75. Prices have more than doubled in the past year.
Crude-Oil Supplies
U.S. crude-oil supplies rose 2.7 million barrels to 320.3 million in the week ended Dec. 2, the department said in a report yesterday. The report also showed that heating oil and gasoline supplies increased.
The Louisiana Offshore Oil Port, the biggest U.S. oil import terminal, stopped unloading one sweet crude-oil grade because there is no available stor
The BTU Gap
by Elliott H. Gue
Editor, The Energy Letter
December 9, 2005
With natural gas prices hovering at record highs and oil back above $60 a barrel, the media isn't giving coal the time of day. But when it comes to electrical power, coal remains king. In fact, coal is set to become an even more important part of the US electricity grid over the next 20 years.
Prices for coal have been on the rise of late, particularly for low sulphur coal from the Powder River Basin (PRB) in the western United States. But coal-fired power remains far cheaper than gas-fired power. This would remain the case even if gas prices were to fall back under $5 per million BTUs, less than one-third the current quote. Even better, the US has some of the world's most abundant reserves of high-quality low-sulphur coal.
At least when it comes to coal, the US is energy independent.
Several of the big US coal companies gave presentations at a Friedman Billings Ramsey Conference last week; their comments are worthy of note. The CEO of Arch Coal, Steven Leer, spoke about demand for coal over the next few years. He mentioned that the utilization of coal plants has been rising rapidly over the past couple of years’. In other words, coal plants around the country are running more often and standing idle less than they used to.
This is certainly not news. But he went on to say that the traditional seasonal lull periods are disappearing rapidly. Traditionally, demand for coal-fired power has been highest in the summer and mid-winter for cooling and heating demand respectively. The autumn and spring represented lulls in demand. But, he is seeing these valleys in demand disappear—demand for electricity is more constant all year long.
As demand for electricity in the US rises even during lull periods, the utes relied first on the nuclear plants to pump out the additional capacity. But with nuclear running at near-full capacity, coal plants are filling the void.
Additionally, interest in building new coal plants is building. A few years ago, none of the utes wanted to build new coal plants; all the new construction plans were for plants running on natural gas. But with rising gas prices, coal is definitely back on the table—Arch estimates that new plants being planned for the next decade or so could represent upwards of 300 million short tons of additional annual coal demand. This is considerable when you consider that US consumption is currently running at about 1.1 billion short tons annually.
Even more interesting is that Leer echoed the concerns about current utility coal inventories that Peabody Coal made in its conference call back in late October. He stated that many of their customers (utilities) are currently running on inventories of just 10 to 20 days’ worth of coal. This suggests that despite the warm autumn in the Northeast, there are plenty of utes running on uncomfortably low inventories. Most of these utes have stated that they'd like to push their inventories back to the 35- to 40-day range. Short-term demand for restocking those inventories will be high.
Most of the demand will fall on low sulphur coal. There is a market for trading sulphur dioxide allowances--utilities can buy these credits to cover plants that would otherwise fail to meet new environmental regulations. But there's a problem right now: The cost of those sulphur credits is exploding to around $1,200 to $1,400 per credit.
Because it will be some years before the utilities can install cost-effective scrubbers to remove sulphur, many are choosing instead to burn low sulphur coal. By doing this, they're able to avoid paying up big time for those sulphur credits. Much of this low sulphur coal is coming from the Powder River Basin (PRB) in the Western US. The coal miners with low sulphur reserves are benefiting from these high sulphur credit prices--they're able to sell their coal at higher prices to reflect the cost of sulphur allowances.
Take, for example, a standard Western PRB coal containing 0.8 pounds of sulphur per million BTUs. Mo
Fascinating articles in this thread. You have to wonder what impact China's increasing energy use will have on the climate. Global warming fast tracked?
I agree that coal to liquid and gas to liquid processes will become economic, as are the Canadian tar sands now.
Hi Mick, interseting article about coal liquefaction etc. As a historical footnote : when Doctor Diesel first started developing the diesel engine in Germany, he started by using powdered coal as the fuel which was blast-injected with compressed air in to the cylinder.
The Uranium Story
Sol Palha
http://www.financialsense.com/fsu/ed...2005/1211.html
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Japan to End Release of Oil Reserves
Tuesday December 27, 6:16 am ET
Japan to End Release of Strategic Oil Reserves on Jan. 4, Report Says
TOKYO (AP) -- Japan will end its release of oil reserves to the United States next week, a news report quoted the economy minister as saying Tuesday.
Japan has been shipping oil from its reserves under a plan brokered by the International Energy Agency to temper rising prices after Hurricane Katrina struck U.S. oil refineries.
"The impact of hurricane damage on the global oil market has been mitigated," Japan's Kyodo News quoted the Economy, Trade and Industry Minister Toshihiro Nikai as telling reporters. "Therefore, we find it appropriate to terminate Japan's oil release on Jan. 4."
The Paris-based IEA announced in September that its 26 members, including Japan, would draw on 2 million barrels a day of oil to help offset the loss of output and refining capacity in the United States caused by Katrina and restore confidence in the market.
Under the release plan, Japan has kept an emergency stockpile equivalent to 67 days of imports over the coming 30-day period. Japan normally keeps a 70-day minimum. The three-day difference is equal to about 10 million barrels.
This is the third time Japan has tapped emergency reserves, after an oil crisis in 1979 and the Gulf War in 1991.
The price of crude is 19 percent below its all-time high of $70.85 after Hurricane Katrina made landfall on Aug. 30.
The price for light, sweet crude for February delivery slipped 82 cents to $57.60 a barrel on the New York Mercantile Exchange in Asian electronic trading midmorning Tuesday in Singapore.
Kuwait's biggest field starts to run out of oil
By Peter J. Cooper
KUWAIT: It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field. The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al-Zanki told Bloomberg. He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.
However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming.
Last week the International Energy Agency's report said output from the Greater Burgan area will be 1.64 million barrels a day in 2020 and 1.53 million barrels per day in 2030. Is this now a realistic scenario?
The news about the Burgan oil field also lends credence to the controversial opinions of investment banker and geologist Matthew Simmons. His book 'Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy' claims that ageing Saudi oil fields also face serious production falls.
The implications for the global economy are indeed serious. If the world oil supply begins to run dry then the upward pressure on oil prices will be inexorable. For the oil producers this will come as a compensation for declining output, and cushion them against an economic collapse.
However, the oil consumers then face a major energy crisis. Industrialized economies are still far too dependent on oil. And the pricing mechanism of declining oil reserves will press them into further diversification of energy supplies, particularly nuclear, wind and solar power.
All this was foreshadowed in the energy crisis of the late 1970s when a serious inflection in oil supply by the year 2000 was clearly forecast. How ironic that those earlier forecasts now look correct, while more modern and recent forecasts begin to look over optimistic and out-of-date with geological reality.
Nobody can change the geology, and forces of nature that laid down reserves of oil and gas over millions and millions of years. Could it be that we have been blinded by technological advances into thinking that there is some way to beat nature?
The natural world has an uncanny ability to hit back at the arrogance of man, and perhaps a reassessment of reality at this point is called for, rather than a reliance on oil statistics that may owe more to political manoeuvring than geological facts. - AME Info FZ LLC.
Outlook for Palladium
Puru Saxena
http://www.gold-eagle.com/editorials...ena121505.html
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THE POTENTIAL EMERGING ENERGY CRUNCH, PART 1
by Sol Palha
Tactical Investor
December 29, 2005
Before we work on artificial intelligence why don't we do something about natural stupidity?
Steve Polyak
According to Cambridge Energy Research Associates high energy prices are here to stay until 2008; we think if nothing is done to address the root cause of the problem that high-energy prices could plague Americans for at least another 9 years if not longer. Let’s look at some alternative energy sources:
Wind Power= still not economical and needs huge subsidies.
Coal= While cleaner technologies are being developed to process coal they are still not clean enough; it’s also very labour intensive.
Oil and Gas= these are non-renewable sources and no major discovery has been made for a long time.
Fuel Cells= while very promising it will still be years before anything truly promising has a chance to emerge from this field.
Hydroelectric power= the potential for more power from this source is limited as there are huge environmental concerns of creating new dams. In addition during times of drought power generation can drop to precipitous levels.
This leaves us unfortunately with only one option and that is nuclear energy; the problem is that everyone is now recognizing this at the same time. Nuclear reactors are powered only by uranium and there is only a finite amount of uranium available; to put it mildly at current production there is not going to be enough uranium to power all the new plants that are going to come online in the next few years. In fact we could hit a brick wall as early as 2007.
Russia understands this problem and has already cut back on the amount of Uranium it exports. Japan for their part has decided to stockpile up to five years worth of Uranium supplies and China's known uranium reserves stand at 77,000 tons. China has enough Uranium to power existing reactors for approximately 46 years however they are building so many new reactors that they will need substantially larger amount of uranium soon. It is interesting to note that they always seem to plan for the future and this can be seen by the amount of uranium they have put aside to power their current nuclear plants. If India, Russia and other nuclear nations decide to adapt the same strategy things could really get ugly as several dozen new plants are set to come online over the course of the next decade ;for all we know they might have already started to hoard supplies. What happens when every country in the world that has nuclear energy decides its time to hoard five years or more worth of uranium? In 2005 alone it is estimated that demand will outstrip supply by over 99 million pounds (the figures change from source to source, however the key thing to remember is that we are already experiencing a shortage without the additional 30-45 new plants that are set to be built all over the world in the next 10 years).
Shortages of uranium could get so bad that it could precipitate a war between rivaling nations and then prices could hit unheard of levels. We are entering a new paradigm and the only real solution to avoid unimaginable prices in uranium and possible wars is for someone to come up with a new clean and cheap energy source or for nations to spend billions of dollars in exploration and for the development of new mines. Even if they start today there is still going to be about a lag period of over two years; currently no nation has embarked on such a program yet.
Conclusion
Make sure you have some exposure to the Uranium sector and make sure you are holding the right stocks. It’s not just fundamentals that count; one has to make sure the psychological and technical outlooks are fine also. In fact the technical and psychological picture of a stock is in many cases far more important than the fundamental outlook. The reason is very simple; anyone can read and digest fundamental data and usually the conclusion is always the same. The same does not hold true when it comes to psychological and technical analysi
Commodity Profits 2006
http://www.financialsense.com/editor...2005/1227.html
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THE POTENTIAL EMERGING ENERGY CRUNCH PART II
by Sol Palha
Tactical Investor
January 3, 2006
The nuclear solution.
You can swim all day in the Sea of Knowledge and still come out completely dry.
Most people do. Norman Juster
Over 50% of the world’s supply of Uranium is located in just 3 countries, Australia 30%, Canada 14% and Kazakhstan 17%. Even though Australia has the world’s largest reserves Canada produces the worlds most uranium accounting for 18% of total output.
Over the next 15 years China plans on building 40 additional nuclear plants (these numbers keep changing the thing to keep in mind is that they are going to keep building). China's known uranium reserves stand at 77,000 tons; currently it consumes 1,650 tons a year. In 2020 this could increase to 8250 tons a year. Further more China has signed strategic deals with Kazakhstan and Canada. It is just a matter of time before it does so with Australia; currently Australia supplies China with significant quantities of uranium. Why are we spending time focusing on what China is doing? We have always stated that one must view the Chinese as advanced chess players; they plan for events decades in advance. Patience and discipline seem to be one of their key strengths and assets. Presently China has enough uranium to power their existing reactors for 46 years; think about that for a second. How many countries have managed to build up such huge reserves so fast; this action definitely indicates that these chaps like to plan for things way in advance. We are positive that they are going to make sure that they have enough uranium to feed the new plants they are building for at least 18 years without any interruption. Hence the bidding war will be left to the other nations. China must be building huge reserves of uranium for a reason; they probably foresee massive price swings in the future.
Consider the following facts:
Uranium prices have almost tripped since the start of 2004.
It is projected that world’s energy demand will increase by an additional 65% in approx 15 years. At this point in time the only solution that appears to have a chance of dealing with this increase is nuclear power plants; the only material able to power these plants is uranium.
One pound of Uranium produces roughly the same energy as 37 barrels of oil or 8.9 tons of coal; the choice is all but obvious.
Technically speaking there is more than enough uranium out there to power all the stations that are going to be built. (Look at the chart towards the end of this article). The problem is that this uranium is in the ground and needs to be mined and at the moment there are not enough mines to produce all the uranium we need. Furthermore not enough money and resources are being dedicated to exploration and the opening up of new mines; another thing to remember is that it can take up to 2 years before a closed mine or a new mine becomes fully operational. Hence demand cannot be rapidly quenched even with the opening of 100’s of new mines. It’s for this reason we think that the long term out look for uranium is rather bright.
Conclusion
The race to build new nuclear plants to supply developing nations future electric needs is about to create a very explosive situation. It’s no longer a matter of if but when this situation will go out of control; we do not have enough uranium above the ground to power current nuclear power plants. At present approx 50% of the demand is coming from reserve supplies (mostly the decommissioning of old nuclear war heads); imagine what will happen when all those new nuclear power plants come online. The tragedy here is that these plants can only operate on uranium and nothing else and so at some point in time these plants will have to do whatever it takes to get uranium or shut down. It’s for this reason we have been taking position in certain stocks that we feel will benefit tremendously from this potentially huge disaster. One such stock already doubled in less than 3 months.
On a separate note there is plenty of Uranium in the
Bloomberg News
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Copper Rises to Record in London as Chilean Miners Plan Strike
Jan. 4 (Bloomberg) -- Copper advanced to a record in London as workers planned to strike at Chile's Codelco, the world's largest copper producer, threatening to reduce supplies amid forecasts of a production shortfall for 2006.
A group of 28,000 contract workers are asking for a bonus of 50,000 pesos ($963) from the Santiago-based state company after copper prices rose 40 percent in 2005. President Ricardo Lagos said yesterday the government won't pay the bonus.
The strike ``is just another reason to buy more copper,'' said Andrew Silver, a trader in London at Natexis Metals, one of the 11 companies that trade on the floor of the London Metal Exchange, in a telephone interview. ``This is already a fantastic commodity market.''
Copper for delivery in three months on the London Metal Exchange traded as high as $4,550 a metric ton, beating by $32 the previous record set on Dec. 28. The metal gained $105, or 2.4 percent, to $4,545 a ton as of 10:01 a.m. London time.
The contract workers expect to walk off the job at all of Codelco's four divisions, union leader Miguel Santana said yesterday. The company, which owns about a fifth of the world's copper reserves, produced last year about 1.7 million tons, according to Codelco estimates made in October.
Analysts already forecast demand will exceed production this year. The deficit will be 200,000 tons, Credit Suisse First Boston said in a November report.
Strikes helped curb global production in 2005. Output lagged demand by 140,000 tons last year, Goldman Sachs Group Inc. said in a Dec. 15 report.
Speculative Investors
Copper users may fill the shortfall with inventory. Stockpiles tracked by the London Metal Exchange rose 4.3 percent to 96,175 tons, the exchange said today in a daily report. Inventory monitored by the LME and commodity exchanges in New York and Shanghai is 161,530 tons.
Pension funds and speculative investors such as hedge funds are buying more metals and other commodities after the asset class outperformed other types of investments in 2005. Copper, aluminum and other base metals climbed yesterday as investment funds put more money into metals, said Gordon Buchanan, a trader in London at Stratton Metal Resources.
``There are quite a few pension funds in the U.S. that have been given the green light,'' Buchanan said yesterday in a telephone interview.
Aluminum prices rose to a 17-year high on the LME. The lightweight metal, used to make beverage cans, gained $25, or 1.1 percent, to $2,308 a ton. Earlier it traded at $2,310.50, the highest since January 1989.
Zinc increased $12 to $1,935 a ton after trading at $1,948, the highest in 17 years. Lead rose $11 to $1,088, nickel gained $150 to $14,050 and tin climbed $75 to $6,725.
To contact the reporters on this story:
Simon Casey in London at scasey4@bloomberg.net
Last Updated: January 4, 2006 05:47 EST
Long term Energy forcast Updated
Jo Dancy
http://www.financialsense.com/fsu/ed...2006/0103.html
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China's Major Banks See Bad Loans Decline
Wednesday January 18, 2:06 am ET
By Elaine Kurtenbach, AP Business Writer
China's Major Banks See Bad Loans Decline, As Restructuring Efforts Accelerate
SHANGHAI, China (AP) -- Nonperforming loans at China's major commercial banks fell by 498.5 billion yuan ($61.8 billion) last year, reducing their share of total lending by 4 percentage points, the official Xinhua News Agency reported Wednesday.
The report, citing an unnamed official at the China Banking Regulatory Commission, comes as efforts step up to restructure state-owned lenders ahead of a full opening of China's financial services markets to foreign competition at the end of this year.
Major banks, as defined by the banking regulator, include both state-owned and joint stockholding banks, but exclude credit cooperatives -- known to have much higher portfolios of bad debts -- and foreign banks, the report said.
The report did not provide total dollar figures for the amount of nonperforming loans or total loans at major banks. According to data released earlier, by the end of 2004, the banks had total nonperforming loans worth 1.718 trillion yuan ($212.9 billion), accounting for 13.2 percent of total lending.
International analysts have put the actual amount of irrecoverable loans at a much higher level, although massive state-financed write-offs and bailouts have helped to trim them from their peak a few years ago of as much as half of all lending.
In a report issued Wednesday, the ratings company Standard and Poors described the outlook for the industry as positive.
"Government actions taken in the past two years signify that industry reform is taking a major step forward," said the report, calling the effort a "work in progress."
Yet it noted that the industry was still plagued by bad corporate governance, weak asset quality, low profitability and low capitalization.
Total assets in China's banking system reached 37 trillion yuan ($4.6 trillion) by the end of 2005, up 18.4 percent from a year earlier, the report said without providing comparative figures.
The report said 40 of the country's more than 100 banks had met the regulator's capital adequacy ratio requirement of 8 percent by the year's end, an increase of 10 from the end of 2004.
On Tuesday, the Agricultural Bank of China, the third-largest but weakest of the country's four big state-owned commercial banks, said it hopes to finish restructuring this year but has yet to receive a government decision on a bailout.
The government has spent a total of $60 billion to replenish capital at the other big state banks -- the Bank of China, Industrial and Commercial Bank of China and China Construction Bank.
"We have gotten in line, we're the last and still waiting for a decision," Han Zhongqi, vice president of the Agricultural Bank, told reporters. "The restructuring won't be as fast as the other banks and our problems are larger."
The Agricultural Bank was set up to lend to rural projects and businesses and thus has a wider exposure to bad debts, with its nonperforming loan ratio at 26 percent of total lending at the end of 2005, down just 0.51 percentage point from the beginning of the year.
The bank said it disposed of bad loans worth 46.2 billion yuan ($5.7 billion) in 2005 and plans to write off another 50 billion yuan ($6.2 billion) this year.
Unrest in Rural China
http://www.iht.com/articles/2006/01/.../china.php?rss
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IMPORTANT GUIDANCE FOR GOLD STOCK INVESTORS
Kenneth J. Gerbino
We are currently bullish on gold but the market is volatile and now dangerous. It is dangerous to be out and dangerous to be in. A strategy of survival and common sense is needed to do well in the coming years. 2006 could see some minor and some major corrections in both the metal and the stocks. These could be very painful emotionally and financially. The good news is that the trend for many years should be up.
All commodities have moved up globally in all currencies over the past year. The real world factors that determine commodity prices in the woof and warp of daily world economics, business, international commerce and manufacturing, are indicating that things are simply more expensive in the world. Almost everything is in more demand and the usual basic material supply channels are having a hard time keeping up with the hundreds of millions of new consumers newly created from the developing countries.
What is a Reasonable Price for Gold
It is possible to arrive at a true relative economic value of gold in the U.S. We analyzed, years ago, wholesale price increases since 1789 and based on those increases applied it to the gold price in 1789 and came up with the value of gold in 1980 should have been $280. Gold in 1789 was $20.22 an ounce. In 1933 gold was still $20.22 an ounce. The wholesale price index was also the same in 1933 as it was in 1789. It seems amazing that after 150 years prices were the same. This was because we had a monetary system based on hard money (gold and silver). From 1933 to 1980 wholesale prices went up 14 times. Therefore the logic would be gold should be up 14 times. ($20.22 x 14 = $283. I have rounded it off to $280 to make life easier. In 1980 it reached $850, a very overvalued level.
Using the consumer price index to factor what gold should be valued at in 2005 we arrive at the following formula. Since 1980 the consumer price index has averaged a 3.8% increase per year. This rate of increase applied to the "fair value" 1980 gold price of $280 over 25 years would suggest that in 2005, the relative economic value of gold should currently be $733 an ounce. This implies that gold today is undervalued as a basic consumer commodity. With gold's additional appeal as a monetary substitute and financial insurance asset, one can easily conceive of the price going considerably higher than $733 in the medium term. If this indeed takes place gold mining stocks will enjoy explosive gains.
The World Is Advancing
Despite world problems, economic progress is everywhere as most of the old socialist systems are being thrown out the window by large population countries such as the FSU, Brazil, India and China. The demand for goods and services is overwhelming the traditional supply/demand equations. Natural resources will be one of the most important investment sectors for many years to meet this demand. Remember even with the gross mismanagement and meddling of economies by governments the world is moving ahead.
There is no doubt that a new and powerful commodity bull market is underway with some experts I respect claiming this will be a generational bull market - one that could last 10-20 years. Gold and precious metals like all commodities will also be part of this mega trend. Owning mining stocks that produce or will produce precious metals, copper, zinc, lead, nickel and uranium in the coming years we believe will provide well above average returns. Ditto for oil companies. The problem will be withstanding the volatility.
Don't Be a Sucker
You should avoid the risky and over promoted exploration and junior mining sector dogs that number in the thousands and will mostly be losers except to insiders that sell when you buy. They own their stock for 1-2 cents. Selling to you for 30 cents is a homerun for them. Many could care less if they ever find any gold or silver. Many so called newsletter writers write these dogs up and you have all also received the 16 page promotional mining direct mail pieces which promo
AP
Iran Sanctions Could Drive Oil Past $100
Sunday January 22, 6:39 pm ET
By Brad Foss and George Jahn, Associated Press Writers
Oil Could Top $100 a Barrel if U.N. Imposes Sanctions on Iran Over Nuclear Program
A surge in oil prices last week to almost $70 a barrel on concerns about the restart of Iran's nuclear program only hints at what may lie ahead.
Prices could soar past $100 a barrel, experts say, if the U.N. Security Council authorizes trade sanctions against the Middle Eastern nation, which the West accuses of trying to make nuclear bombs, and Iran curbs oil exports in retaliation. A sharp global economic slowdown could follow.
That's the dilemma the United States and European nations face as they decide whether to act. But Iran would also pay a hefty price if the petro-dollars that now represent 80 percent of export revenues are reduced, potentially stirring civil unrest in a nation with a 14 percent unemployment rate.
"They would shoot themselves in the foot," said Mustafa Alani, director of national security and terrorism studies at the Dubai-based Gulf Research Center. "It's one thing to test the market psychology, it's another to take the actual step and stop oil exports."
Iran, the second-largest oil producer within the Organization of Petroleum Exporting Countries, exports roughly 2.5 million barrels per day -- 1 million barrels more than current excess production capacity worldwide. It also controls the strategic Strait of Hormuz, a critical shipping lane in the Middle East.
"Even if Iran pulled a small amount of its oil off the market, say it pulled a half million barrels a day, I could see oil prices literally jumping over the $100 per barrel mark," said James Bartis, a senior researcher at Rand Corp.
But other oil analysts say prices would likely not climb much higher than $75 a barrel before strategic reserves would be released and demand would begin to taper off as economic activity slowed around the world.
So who would be hurt more? The United States and other nations say it would be Tehran and argue against succumbing to economic blackmail in any case. "We cannot be intimidated by economic threats from their side," Sen. Trent Lott, R-Miss, told CNN.
The U.S. Department of Energy estimates that oil exports finance about half of the Iranian government's budget. And while high oil prices have boosted the annual growth rate to about 5 percent, Iran has never really recovered from its 1980-1988 war against Iraq and trade restrictions on sensitive technologies. The Iran Nonproliferation Act, which the U.S. Congress passed in 2000, deters international support for Iran to develop nuclear, chemical and biological weapons programs and missile-delivery systems.
For weeks, Iran's state television has sought to show a people united behind the leadership, showing passer-by on Tehran city streets expressing their support for the country's strivings for nuclear independence.
Still, Alani of the Gulf Research Center questioned "whether the ordinary citizens will be willing to risk sanctions and endure a lot of suffering like the Iraqis suffered for 13 years" under U.N. sanctions.
Oil consuming nations, meanwhile, have at least one ace up their sleeves -- crude reserves. The United States and other members of the International Energy Agency have a combined 1.48 billion barrels of oil in their emergency stocks. That's equivalent to about 600 days of Iran's net oil exports of 2.4 million barrels per day.
OPEC might be able to add 1.5 million barrels per day to world production, mostly from Saudi Arabia. And oil analyst Fadel Gheit at Oppenheimer & Co. in New York said Russia might be able to crank up exports by about 500,000 barrels once its domestic home-heating demand eases.
Gregory L. Schulte, chief U.S. delegate to the International Atomic Energy Agency, accused Iran last week of deceiving the world about its atomic program, declaring that moves to haul it before the U.N. Security Council were meant to deny "the most deadly of weapons to the most dangerou
What's going on
George Kleinman
http://www.financialsense.com/editor...2006/0123.html
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An article on oil peak
Some good info on bio fuel production
(rather a long read)
http://www.earthpolicy.org/Books/PB2/pb2ch2.pdf
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Palladium
Eric Englund
http://www.financialsense.com/editor...2006/0124.html
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Mining Giants to Thrive on Rising Iron-Ore Prices
By Charlotte Mathews
26 Jan 2006 at 10:24 AM EST
CAPE TOWN (Business Day) -- Final iron-ore contract price increases this year could be in the range of 15%-20%, following last year’s record 71.5% increase, commodities analysts said yesterday.
This would enhance the valuation of shares such as BHP Billiton [NYSE:BHP], Rio Tinto [NYSE:RTP; LSE:RIO] and other mining groups.
Numis Securities London analyst John Meyer said in a report he had raised his valuations and target price forecasts for BHP Billiton and Rio Tinto based on a conservative assumption of a 10% increase in iron-ore prices. Bloomberg reported that ING Groep Paris analyst Alain William said annual supply contracts, starting from April 1, would show a 20% price increase.
Last year BHP Billiton’s carbon steel materials division contributed almost a quarter of its turnover and a third of pretax profits, reflecting both higher prices and increased production.
In its December quarter production report released this week, BHP Billiton said iron-ore production had risen 4% compared with the September quarter.
Rio Tinto, whose iron-ore division contributed 18% of turnover and 20% of net earnings in 2004, reported record or near-record production levels at its iron-ore operations in the December quarter, boosted by mine and export expansions.
It said demand remained strong from all markets during the year.
A recent report from Interfax, which could not be confirmed, said several Chinese steel makers had signed short-term supply contracts with two of the world’s three biggest iron-ore producers at $44/ton, which was a 10% increase last year.
This could set the tone for benchmark price increases. The major iron-ore producers announced late last year that they were seeking a 20% increase.
Steel producers had been complaining about rising iron-ore prices as a massive increase in stainless steel production capacity had squeezed margins, Meyer said.
But supply of iron ore was tight, which put producers in a good position to negotiate price increases.
High iron-ore prices and producers’ strong profits were encouraging increases in iron-ore capacity, which could make current prices the peak of the cycle, Meyer said.
New capacity would increase competitive pressures and push down prices in future, particularly with the overcapacity in the steel sector.
“However, iron ore has historically been a profitable business and since production is dominated by Brazil’s CVRD, Rio Tinto and BHP Billiton, there may now be some discipline in the market,” Meyer said.
China accounted for about 31.5% of world steel output, Meyer said, which meant the Chinese were increasingly setting the tone for iron-ore negotiations.
China has predicted gross domestic product will grow 8.8% this year. This suggested that commodity prices could stay at historically high levels and it underpinned Meyer’s positive but slightly cautious outlook for iron-ore prices.
Ethanol Could Reduce Fossil Fuel Need, Study Shows
January 27, 2006 — By Maggie Fox, Reuters
WASHINGTON — Ethanol -- alcohol produced from corn or other plants -- is more energy-efficient than some experts had realized and it is time to start developing it as an alternative to fossil fuels, researchers said Thursday.
While some critics have said the push for ethanol is based on faulty science and mostly benefits the farm lobby, several reviews and commentaries published in Friday's issue of the journal Science argue otherwise.
"We find that ethanol can, if it is made correctly, contribute significantly to both energy and environmental goals. However, the current way of producing ethanol with corn probably only meets energy goals," said Alexander Farrell at the University of California Berkeley.
Farrell and collegases.
"(The environmental cost) comes entirely from making fertilizer, running the tractors over the farm and operating the biorefinery," Farrell said.
Better methods now being investigated would use the woody parts of plants, using what is known as cellulosic technology to break down the tough fibers.
"Ethanol can be, if it's made the right way with cellulosic technology, a really good fuel for the United States," said Farrell, an assistant professor of energy and resources.
"At the moment, cellulosic technology is just too expensive. If that changes -- and the technology is developing rapidly -- then we might see cellulosic technology enter the commercial market within five years."
Writing in the same journal, scientists from Imperial College London, Georgia Tech and Oak Ridge National Laboratory in Tennessee said they had teamed up to find ways to make a facility to do that.
Their facility would make a range of fuels, foods, chemicals, animal feeds, materials, heat and power using what is known as biomass -- a collection of renewable plant matter and biological material such as trees, grasses and agricultural crops.
"We're looking at a future for biomass where we use the entire plant and produce a range of different materials from it," Charlotte Williams of Imperial's Department of Chemistry said in a statement.
"Before we freeze in the dark, we must prepare to make the transition from nonrenewable carbon resources to renewable bioresources," her team wrote.
An oil industry expert said it was possible.
"Credible studies show that with plausible technology developments, biofuels could supply some 30 percent of global demand in an environmentally responsible manner without affecting food production," Steven Koonin, chief scientist for BP in London, wrote in a commentary.
"To realize that goal, so-called advanced biofuels must be developed from dedicated energy crops, separately and distinctly from food."
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Booming China helps commodity prices boom
By John Waggoner, USA TODAY
Commodities are the hottest — well, commodities — on the financial markets today.
By Joe Hermosa, Valley Morning Star/AP
The Standard & Poor's 500-stock index gained 7.8% the past 12 months, but the contents of your sugar bowl have soared more than 100%. Prices of copper, orange juice, oil and cotton have all posted double-digit gains. And the Commodities Research Bureau index, which measures a broad basket of commodities, has gained 23%.
Those big gains have spurred new interest in commodities. The price of a seat on the New York Board of Trade, for example, blasted past the $500,000 mark this year for the first time — and jumped to $650,000 on Tuesday. Volume on the board of trade soared 20% last year. At the Chicago Board of Trade, January volume jumped 22% from January 2005.
What's driving commodity prices? Two words: energy and China.
Consider sugar, up 104% the past 12 months. The U.S. Agriculture Department estimates that worldwide sugar output will rise 3.3 million tons to 144.2 million tons this year. Consumption is forecast at 142.8 million tons, leaving little room for any rise in consumption.
Much of that new demand is not for sweeteners, but for auto fuel. Brazil, the world's largest sugar producer, uses half its sugar output for producing ethanol, an increasingly popular gasoline substitute. Flexible-fuel vehicles in Brazil, which can run on regular gasoline or ethanol, accounted for 46% of Brazil's auto sales last year.
Brazil's ethanol use is being keenly watched by other countries, says C. Harry Falk, president of the New York Board of Trade.
"The world has realized that you can make ethanol out of sugar cane," Falk says. "Thailand, Argentina, India and China are all planning ethanol facilities."
Demand for sugar cane, combined with reduced crops in the USA because of hurricane damage, have sent prices soaring this year.
China's gross domestic product grew 10.1% last year, which is one reason the prices of oil, gas and sugar are soaring. China's growth is pushing up prices of many other commodities, as well.
The extent of building in China is staggering, says Richard Asplund, chief economist for the Commodity Research Bureau.
The Chinese building boom has raised demand for copper, used in wiring and plumbing. And rising concern for the environment has made it hard to open new mines.
"Mine production isn't keeping up with demand," Asplund says.
Copper isn't the only raw material being buoyed by China's prosperity. Nickel and steel prices have surged, too. And cotton prices have gained 27% over the past 12 months.
"As China and India have gotten wealthier, the demand for new clothes has increased," Asplund says.
Coffee prices are booming because of popular tastes. High-end, expensive coffee — the kind that sells for $3 a cup in the USA — is in big demand. As growers produce more expensive java, the supply of standard coffee falls. That drives prices up. Fears of bad weather in coffee-growing regions can send coffee prices soaring.
Big gains on the commodity exchanges have drawn in new investors. But other factors, too, are driving up the volume on commodity exchanges:
•Inflation fears. Rising prices of raw materials can herald widespread inflation, which can devastate stocks and bonds. Investing in commodities can offset some of inflation's damage.
•Speculators. Traditionally, raw materials producers and consumers account for 85% of the activity on the futures exchanges. They use futures to lock in prices and reduce the risk of big increases in raw materials costs. In recent years, though, exchanges have seen activity by hedge funds and other investment firms jump 20% or more, and investors now account for about 40% of the exchange activity, Falk says.
•The dollar. Foreign central banks hold vast amounts of U.S. dollars. Japan, for example, keeps about $736 billion in dollar-denominated assets, according to an estimate by Grant's Interest Rate Observer, a new
Bio fuels - are they a realistic substitute for oil;
http://www.financialsense.com/editor...2006/0203.html
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Commodities bull market
By Scott Wright
http://www.gold-eagle.com/gold_diges...ght020306.html
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THE ENERGY SECTOR REMAINS VOLATILE
by Joseph Dancy, LSGI Advisors, Inc.
Adjunct Professor, SMU School of Law
February 5, 2006
The energy market remains volatile, and we expect it will remain so for some time. Some of the recent developments that we think will have an impact on future market and portfolio performance include the following:
As of last week the Gulf of Mexico still had 373,000 barrels a day of crude oil shut in from last years’ hurricanes, or 25% of normal Gulf production. Shut in natural gas production was approximately 1.6 billion cubic feet, or 16% or normal production. Two refineries remain closed due to the hurricane damage.
The Mineral Management Service projects that 255,000 barrels a day and 400 million cubic feet of gas a day will probably not be restored to production prior to the start of the 2006 hurricane season. The economic cost of the disruption, and the cost of repairs, has been incredible – much higher than originally anticipated.
Iraqi oil production fell by 8 percent in 2005, with a sharp decline near year's end that left average daily production at half the 3 million barrels envisioned by U.S. officials at the outset of the war in 2003. Instead of steadily increasing production the annual output fell in 2005 to 1.83 million barrels a day, including a sharp decline over the final quarter - capped by a December dip to 1.57 million barrels daily.
OPEC producer Kuwait's oil reserves are only half those officially stated according to internal Kuwaiti records seen by industry experts last month. The consensus has been that Kuwait holds the world’s fourth largest reserves of crude oil.
U.K. North Sea production continues to decline at a rapid rate according to a recent study by the Royal Bank of Scotland. The Bank reported that the daily average output for oil and gas production in November was down 14 percent compared with a year ago. Oil production fell by 238,000 barrels per day to 1.5 million b/d. U.K. natural gas production is also in decline, and recorded a decline of 14 percent on the year.
Foreign oil companies accustomed to high tension in Nigeria's oil-rich Niger Delta are being forced to grapple with a new level of violence one industry official called "shocking." Nigeria's oil industry, including pipelines, company offices and a pumping station, has been the target of rebel attacks in the past two weeks. As much as 9 percent of the country's oil production has been interrupted. The country is Africa's leading oil exporter and the fifth-biggest source of US oil imports.
The extremely cold weather in Russia last month is likely to knock 2% to 4% off Russian oil companies' first quarter estimated crude oil production figures according to analysts at Aton Capital. Temperatures have averaged -40 C in some key production areas, causing power outages, well shutdowns, and postponing maintenance work.
China’s economy surged 9.9% in 2005, and growth is expected by some experts to accelerate this year. Growth in 2004 was 10.1%, and in 2003 was 10.0% according to official statistics. Some private analysts note that China’s economic growth may have been more in the 12-15% range, with the country downplaying the rapid rate of growth for political purposes.
Due to the dynamic nature of the Chinese economy it is less energy efficient per unit of GNP than that of the U.S. – and total energy use most likely expanded at a rate faster than the rate of economic growth. Longer term, this economic growth is very bullish for energy and commodity prices.
The Reserve Bank of India raised a key short-term interest rate amid higher than expected economic growth. The central bank raised its forecast for economic growth for the fiscal year ending March 31 to 7.5-8.0%. Like China’s vibrant economy, this rate of economic growth will add to global demand for energy and commodity supplies.
OPEC has increased production but has little spare production in reserve, leaving the global oil markets vulnerable to a supply shock. This reserve capacity stands at 1.5
The outlook for Energy Commodities
http://www.financialsense.com/editor...2006/0207.html
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Base metals find feet after fund sell-off
Wed Feb 8, 2006 12:25 PM ET
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By Martin Hayes
LONDON (Reuters) - Major base metals steadied on Wednesday afternoon, recouping earlier sharp losses when investment funds sold a broad range of commodities that hacked up to 13 percent off some prices.
Precious metals and agricultural soft commodities followed a similar path before recovering but mining stocks were badly hit.
Analysts and fund mangers were however not fazed by the latest moves.
"It is good to have corrections. These markets have done so incredibly well it doesn't hurt. I'd hate to say it's the end of a bull run," a fund source said.
Angus MacMillan, Bache Financial minerals strategist said: "It is too early to say whether this is the end of the beginning or the beginning of the end."
On the London Metal Exchange (LME), the world's largest non-ferrous metals market, all metals initially fell sharply as drops in gold and oil triggered heavy sales by investment funds.
Gold <XAU=> fell to $545.80 a troy ounce, but finished European trade near the day's high just above $551.
"I think this is another warning shot that these are going to be very volatile and dangerous times. The dust needs to settle again. There is still money to come in to these markets," the fund source said.
Another fund manager said his fund would continue to invest in base metals, concentrating on zinc, lead and tin.
The LME benchmark contract <MCU3> for copper, extensively used in plumbing and wiring, hit an early low of $4,860 a tonne, before rebounding to $5,005. It finished open-outcry trade at $4,975, unchanged from Tuesday's close.
The metal, which hit a new all-time high of $5,100 on Tuesday, is still up by some 13 percent since the end of 2005, having gained nearly 40 percent that year.
Other metals made an attempt to follow copper's lead, but had to work harder as earlier losses were much steeper.
Aluminum, used to make consumer white goods, registered a 5.8 percent fall from a new 17-1/2 year peak at one point, but finished at $2,605, down only 0.8 percent. Lead, whose main end-use is automobile batteries, had nearly 13 percent wiped off its value in a peak-to-trough move. It finished at $1,270 a tonne, down some three percent.
The earlier sell-off had a more lasting ripple effect on mining shares. Major miners BHP Billiton (BLT.L: Quote, Profile, Research) shed 3.7 percent and Rio Tinto (RIO.L: Quote, Profile, Research) 2.6 percent as the mining sector took about 12 points off the index.(.L: Quote, Profile, Research)
Investment bank JP Morgan said in a note strong demand from China would not be enough to safeguard high-flying metals from the prospect of a bear market, predicting precious metals would outperform base metals this year.
COMMODITIES RIPE FOR SELLOFF
Technical charts, which are used to predict future price moves on the basis of past performance, had signaled that rises were being over-extended, although some felt the latest clean out presented another good buying opportunity.
"Don't miss the boat, again. Supply and demand fundamentals remain constructive for the price up-trends to persist," Barclays Capital said in a daily report.
Base metals have scored successive, almost daily highs, in 2006 on an influx of fresh investment fund money. Many of the latest investors to join the commodity boom -- pension, endowment and mutual funds -- are new to the market.
But while many expect a sudden downturn, predicting the timing of a fall is difficult with the market ignoring fundamentals and the huge volume of cash flowing into the market.
"Fundamentals are just taking a back seat at the moment (to funds)," MacMillan said.
(Additional reporting by Lucy Hornby in Shanghai, Richard Dobson in Taipei, Daniel Magnowski and Clare Black in London)
Thorium, an alternative to Uranium
http://www.resourceinvestor.com/pebble.asp?relid=16813
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Bloomberg News
E-Mail This Story Printer-Friendly Format
Ethanol, Boon to Farms, Won't Cure Oil Addiction: John M. Berry
Feb. 9 (Bloomberg) -- Ethanol, touted in President George W. Bush's State of the Union speech as a partial cure for America's oil addiction, is the product of another pernicious habit: subsidizing farmers.
From the beginning, use of ethanol has been sold as a way to lessen the U.S. dependence on foreign oil, which as Bush said in the Jan. 31 speech, is ``often imported from unstable parts of the world.''
In reality, it is a way to boost corn farmers' income, along with that of the industries that supply farmers with machinery, fertilizer and other goods and services.
Even with today's high oil prices, ethanol is too costly to produce to compete with gasoline. To make it viable, the federal government provides a subsidy of 51 cents a gallon when it's mixed with gasoline and sold as motor fuel.
In addition, it takes a lot of energy to grow and transport the corn, the main ingredient of ethanol, and to turn it into a liquid fuel. The latest studies indicate the process consumes about 80 percent as much energy as it produces, though that figure depends on a variety of assumptions such as corn yields and the location of ethanol plants relative to the corn fields.
On the other hand, a lot of the energy consumed is in the form of electricity generated from coal, of which the U.S. has plenty. Another large chunk is from natural gas, which increasingly is in tight supply.
Tariff Help
One big problem with ethanol is that it is more corrosive than gasoline. Gasoline stations need special equipment and tanks, and only a handful of cars and trucks made in the U.S. today can burn fuel that is more than 10 percent ethanol.
To make sure foreign farmers and producers can't get in on the gravy train, there is a ``temporary'' tariff of 54 cents a gallon on imported ethanol on top of an overall tariff of 2.5 percent of its value. Brazil, with a large industry making ethanol from sugar cane, is the main target of the tariff.
If energy security was the overriding consideration in having ethanol available in the U.S., a quick step would be to reduce that temporary tariff. Brazil hardly rates as an unstable part of the world compared with the Middle East.
Unfortunately, that's not what ethanol is really all about, as the clout of the farm lobby demonstrated with the provisions of the American Jobs Creation Act of 2004 and again with the Energy Policy Act of 2005.
Ethanol Subsidy
Prior to passage of the Jobs bill, the ethanol subsidy was in the form of a small reduction in the motor fuel excise tax motorists pay at the pump. The tax on a 10 percent ethanol-90 percent gasoline blend, known as E10, was 14.666 cents a gallon rather than the 18.4 cents on gasoline.
That approach annoyed the highway lobby because it meant somewhat fewer dollars were flowing into the Highway Trust Fund, which helps finance highway construction and maintenance.
So the tax break at the pump was dropped and the larger direct 51-cent subsidy was put in place.
Then last year the Energy Policy Act, which was studded with tax breaks and subsidies for energy production, mandated use of ``renewable fuels'' such as ethanol on a set schedule. This year, 4 billion gallons are to be blended with gasoline and diesel fuel, rising gradually to 7.5 billion in 2012.
There are almost 100 ethanol production facilities today, about 30 more are under construction and dozens more are in various stages of planning, according the American Coalition for Ethanol's Web site. ``Approximately half of the nation's ethanol is made at facilities owned by farmers and other local investors,'' it says.
Sugar Costs
Given the huge subsidy involved, and a government-decreed market, that burst of construction is hardly a surprise.
Brazil itself has weaned itself from oil imports through a huge expansion in its ethanol industry and a government subsidized plan that converted the country's gasoline st
Mexican oil output could drop sharply
- Cantarell, Mexico's largest field in decline
http://www.forbes.com/home/feeds/afx...fx2512329.html
AFX News Limited
Mexican oil output could drop sharply - report
02.09.2006, 05:23 AM
LONDON (AFX) - Mexico's huge state-owned oil company, Petroleos Mexicanos, or Pemex, may be facing a steep decline in output that would further tighten global oil supply and add to global woes over high oil prices, the online edition of the Wall Street Journal reported.
The potential decline faced by Pemex, also could undermine US efforts to reduce dependence on Middle East oil, and complicate Mexican politics and financial stability.
An internal study reviewed by The Wall Street Journal shows water and gas are encroaching more quickly than expected in Cantarell, Mexico's biggest oil field, and might cause output to drop precipitously over the next few years.
Currently, Cantarell produces 2 mln barrels of oil a day, or six of every 10 barrels produced by Mexico, and is the world's second-biggest-producing field after Saudi Arabia's Ghawar.
Pemex says it is confident it can make up for any decline at Cantarell by squeezing more output from other fields, but some analysts outside the company are far less sanguine. The study was carried out last year by Pemex experts.
'I am confident in Pemex's portfolio of assets. Other fields will be able to substitute (Cantarell's output) and increase production,' Juan Jose Suarez Coppel, the company's chief financial officer, said in an interview.
Pemex predicts Mexico's output will actually grow this year to 3.42 mln barrels a day from 3.33 mln barrels last year.
But the study already prompted the company in December to predict a slightly sharper decline at Cantarell than its previous forecasts -- with output down 6 pct this year to an average rate of 1.9 mln barrels a day and off to 1.43 mln barrels as an average for 2008. That prediction now roughly matches the study's most optimistic scenario.
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Reuters
Base metals fall sharply, fund sales cause havoc
Friday February 10, 12:30 pm ET
By Martin Hayes
LONDON (Reuters) - Prices of industrial metals were battered by a fresh round of investment fund sales on Friday, increasing jitters in markets that were still reeling from aggressive selling earlier this week.
On the London Metal Exchange (LME), the world's largest non-ferrous metals market, copper fell as low as $4,770 a tonne from the $5,017 Thursday close, the lowest since January 27, before ending at $4,840, a $177 loss, or some 3.5 percent.
Aluminum (MAL3) hit $2,490 in the sell-off, before ending at $2,530, down $116, or around 4.5 percent, while other major metals zinc (MZN3) lost six percent, lead (MPB3) shed nearly seven percent, while nickel (MNI3) was nearly six percent lower.
"It is the end of the week and there is a lot of nervousness around. The general outlook is still good, but these markets needed a shake-out," an investment fund source said.
Analysts said confidence in a stunning two-year commodity bull market had been rocked by a broad mid-week sell-off that started in mid-week, and sentiment was still nervous.
A rash of selling of metals assets including precious metals and mining equities earlier in the week sparked fears that the boom of investment in commodities was coming to an end.
Renewed buying on Wednesday afternoon and Thursday had gone some way to allaying those fears, but Friday's action underlined how jittery the markets were.
FUNDS REMAIN
Technical charts, which are used to predict future price moves on the basis of past performance, signaled that rises had become unsustainable.
But analysts said new entrants -- pension, endowment and mutual funds -- would keep the run going, with those players happy to buy on dips.
"The (portfolio) money that is waiting in the wings can afford to wait this afternoon -- there might be better buying opportunities next week," the fund source added.
Earlier this week, copper, used in plumbing and wiring, hit all-time highs of $5,100 a tonne and aluminum was at 17-1/2 year peaks of $2,678. Zinc (MZN3), used to protest steel from corrosion, reached a record peak of $2,420, while lead (MPB3), whose main-end-use is vehicle batteries, touched a contract high of $1,435.
In nearly all cases, metals have run ahead of levels justified by fundamentals, due to the sheer weight of investment fund money.
"At some stage the fundamentals will become influential again, but while the funds are willing and able to buy commodities, you have to accept that their patronage is the most influential aspect in the market and will remain so until something knocks them from their current thinking," William Adams of BaseMetals.com said.
GOLD CRASHES, MINERS UNSETTLED
Other financial instruments were hit as well. Gold dropped 2.5 percent, while silver fell over three percent.
Shares in major mining companies have also buckled this week, and on Friday were still sickly (^L - News). Rio Tinto (London:RIO.L - News; Australia:RIO.AX - News) was 86 pence lower at 2,750p, while BHP Billiton (London:BLT.L - News; Australia:BHP.AX - News) fell 50p to 956p. (0#.FTMIN)
(Additional reporting by Richard Dobson in Taipei, Lucy Hornby in Shanghai and Daniel Magnowski in London)
Oil steadies as IEA trims demand forecasts
By Kevin Morrison
Published: February 10 2006 11:32 | Last updated: February 10 2006 11:32
Crude oil prices remained relatively flat on Friday following a late sell-off in the previous session, while gold prices were slightly weaker following a solid bounce on Thursday from the three-week low reached earlier in the week.
IPE Brent for March delivery slipped 10 cents to $60.65 a barrel in mid-morning London trade extending a 31 cent decline from the previous session. March Nymex West Texas Intermediate added 5 cents to $62.67 a barrel in electronic trade.
The International Energy Agency, the energy watchdog of developed countries, trimmed overall global demand growth to 1.78m barrels a day for the 2006 year from 1.8m b/d previously. The IEA left its 2006 estimate of 28.6m b/d unchanged for the crude oil supply from the Organisation of the Petroleum Exporting Countries.
The Paris-based agency said weather-related disruptions across the globe, together with supply disruptions in Nigeria and Iraq, cut total global oil supply by 450,000 b/d last month.
It said global oil supply fell to 84.6m b/d in January, only 135,000 b/d lower than in December. The IEA said Opec’s spare oil production capacity was running at a mere 1.4m b/d, though it expected the spare capacity to increased by 0.5m b/d by the middle of the year.
Opec crude oil fell by 65,000 b/d in January to 29.2m b/d.
Gold strengthen to $558.30/$559.00 a troy ounce in mid-morning London trade, from its late quote of $565.70/$566.60 a troy ounce in New York. Traders said today’s session could prove crucial for the near-term outlook ater the weakness earlier in the week. If the price could consolidate above the $550 level, this could set the stage for another move upwards. The US trade data due for release later today is expected to have an impcrt on trading.
============================================
this is the sentence that was the reason for oil prices falling on Friday - rediculous IMO
"The International Energy Agency, the energy watchdog of developed countries, trimmed overall global demand growth to 1.78m barrels a day for the 2006 year from 1.8m b/d previously."
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Resource Cycles
(some good charts)
http://www.gold-eagle.com/editorials_05/chan021306.html
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Wed Feb 15, 11:50 AM ET
VIENNA (AFP) - World demand for crude oil is expected to rise by 1.89 percent in 2006 to 84.64 million barrels per day, OPEC said in its monthly report.
The figure is 0.05 percent lower than the estimated demand of 84.83 million bpd published in the January report of the Vienna-based Organisation of Petroleum Exporting Countries, but higher than the average demand of 83.07 million bpd in 2005.
China's demand is forecast to increase by 6.0 percent to 6.94 million bpd.
US demand will grow by 1.38 percent to 25.81 million bpd, while that of western Europe by a slight 0.43 percent to 15.64 million bpd, OPEC said.
These figures seem to confirm the United States' dependence on the Middle East for oil supplies, at least in the short term, experts say.
In a study published on Tuesday, the British energy research group Wood Mackenzie had said that the United States was suffering a refining deficit and was thus "highly dependent on imports of oil products, particularly gasoline".
US President George W. Bush called on Americans recently to reduce their dependence on gas by 75.0 percent by 2025.
Total projected US demand, according to the OPEC report, is more than half that of all 30 countries in the Organisation for Economic Cooperation and Development, which is put at 50.12 million bpd, a rise of 0.46 percent.
The OECD does not include China and Russia.
The OPEC report said that demand for the oil produced by the cartel's 11 member states should stand at around 28.5 million bpd, a reduction of 0.2 million bpd on the January report.
Average output by OPEC in January stood at 29.6 million bpd, down 0.169 million bpd from December 2005, the report said, citing as usual "secondary sources."
Output from non-member states is forecast to rise by 1.38 percent this year, to 51.53 million bpd, compared to 50.15 million bpd in 2005.
"A key question for the market is whether this higher growth represents a short-lived rebound, or the start of a healthier trend that can be sustained in the coming years," the report said.
Deepwater production is expected to make up over half of the total estimated increase in supply by non-OPEC members and "has potential to reach 5.4 mbd by 2008... underpinned by projects in Angola, Australia, Brazil, Congo, Equatorial Guinea, Malaysia, Mauritania, and US GoM (Gulf of Mexico)," the cartel said.
Average supply from Russia for 2006 is expected to increase by 0.18 million bpd from 2005, to 9.6 million bpd.
"The government now controls some 3 mbd of production and their plan is to maintain modest production growth," the report said.
At opening Wednesday, oil prices were slightly up after falling sharply over the last two weeks.
In New York, light sweet crude for delivery in March, climbed 15 cents to 59.72 dollars per barrel in electronic trade.
In London, the price of Brent North Sea crude for April delivery added 18 cents to 59.70 dollars per barrel.
Tuesday, oil prices fell below 60.0 dollars per barrel for the first time since late December in New York.
US crude surges after Nigeria attacks slash output
Tuesday, February 21, 2006 5:35:25 PM
http://www.afxpress.com
LONDON (AFX) - US crude futures continued higher as output in Nigeria remained halted following attacks by militants fighting for more local control of the oil wealth in the world's eighth largest crude producer. At 5.01 pm, March-dated US light crude futures, which did not trade yesterday on account of the US Presidents' Day holiday, were up 77 cents at 60.65 usd. April-dated Brent contracts were down 59 cents at 60.95 usd per barrel, having surged 1.65 usd yesterday to close at 61.54 usd
Sucden analyst Sam Tilley said US crude was was "catching up from yesterday", when Brent surged on the back of attacks that slashed Nigeria's output by some 20 pct or 455,000 bpd
The attacks occurred on Saturday when the Movement for the Emancipation of the Niger Delta (MEND) set fire to Royal Dutch Shells' Forcados export terminal, sabotaged two pipelines and took nine foreign oil workers hostage
The rebels went on to stage further attacks yesterday, blowing up a floating army barracks block, sabotaging another of Shell's crude oil pipelines and forcing the oil major to evacuate all its oil plants in the immediate area
Barclays Capital analyst Kevin Norrish said the risk of foreign companies being forced to withdraw from Nigeria is becoming increasingly real, with the situation set to support prices at least until next year's elections
Including losses from previous attacks, Nigeria, which produces the light, sweet crude favoured by US refiners, has halted production of 601,000 bpd, equivalent to 25 pct of the country's output
Tilley said the unrest "has the potential of lifting oil prices back towards the high 60's as, despite the current glut of crude oil, the lack of spare production capacity has the market on edge"
The global oil market currently has spare capacity of roughly 1.5 mln bpd, which would be insufficient to compensate for total production losses from Nigeria, which exports around 2.5 mln bpd
This lack of spare capacity is supporting prices even though the oil market is technically over-supplied
Yesterday, Kuwaiti energy minister Sheikh Ahmad Fahd al-Sabah said OPEC may need to cut production in the second quarter in order to combat a supply overhang that could reach 2 mln bpd
He also said, however, that if prices continue "as they are now", the cartel will "support stable prices". OPEC meets on March 8 to discuss output levels
Oil prices gained 9 pct in January on rising geo-political tensions in key producers Iran and Nigeria. They more than retraced those gains in the first half of February, however, as attention turned to bulging US energy supplies
While the supply over-hang pushed aside concerns about the Iranian nuclear dispute for now, traders are still closely monitoring the tensions, with compromise talks today between Russia and Iran ending inconclusively
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Copper, Zinc, Coal Prices Forecasts Raised by Merrill (Update1)
March 1 (Bloomberg) -- Copper, zinc and thermal coal price forecasts were increased by Merrill Lynch & Co., the world's biggest securities firm by market value, because of increasing demand and investment funds driving prices higher.
Merrill raised its price forecasts for four base metals, including aluminum and nickel, and thermal coal by between 5 percent and 43 percent, analyst Vicky Binns said in a note today. It made its last price revision in December.
Copper, zinc and other metals rose to records this year, bolstered by economic growth in China that fueled demand for autos, homes and appliances. As much as $200 billion of fund money is invested in commodities, with $30 billion in base metals, Citigroup Inc. said in a Jan. 25 report.
``We, like everyone else in the market, have been caught out by the effect of money flowing into the commodity markets and therefore need to upgrade price forecasts,'' said Sydney- based Binns. Investment demand is being backed by rising consumption from developing countries like China, and developed economies in Europe and Japan, she said.
The price of copper, used in pipes and wires, may average $2 a pound in 2006, 21 percent higher than a previous forecast, Merrill said. The metal has averaged $4,856.60 a ton, or $2.20 a pound, this year on the London Metal Exchange.
``Demand has surprised on the upside in key Chinese and Indian markets,'' said Binns. ``This has combined with supply bottleneck at the smelters to switch our small surpluses in 2006 into small deficits.''
Zinc, Thermal Coal
Zinc, used to protect steel from corrosion, may average $1 a pound, 43 percent more than a previous forecast, Merrill said. That compares with the average price of $2154.2 a ton, or 97.7 cents a pound, this year.
The securities firm also raised its forecast for aluminum, used in cars and planes, by 5 percent to $1.05 a pound for 2006. Aluminum has averaged $2,417.50 a ton, or $1.1 a pound this year.
Merrill Lynch also raised its forecasts for annual thermal coal prices to $48 a ton, from $43 a ton, due to rising rates on the spot market. Thermal coal is used to generate electricity.
``We believe the risks are for higher prices, with coal seen as the preferred source of power in Asia and Europe and with cement production picking up in Japan,'' Binns said. ``Supply continues to experience delays, higher costs and unavailability of truck tyres.''
Zinifex Ltd. and Oxiana Ltd. are expected to be the biggest beneficiaries of higher prices, Merrill said.
The brokerage raised its earnings forecast for Zinifex, the world's second-largest zinc producer, for fiscal 2006 by 50 percent to A$743 million ($552 million).
Oxiana, an Australian copper producer, will likely post 2006 profit of A$298 million, 55 percent higher than earlier predicted, Merrill said.
Merrill Lynch also revised its profit estimates for BHP Billiton and Rio Tinto Group, the world's largest and third- largest mining companies. It raised its fiscal 2006 profit forecasts for BHP by 7 percent to $9.9 billion, and for Rio by 8 percent to $6.6 billion.
To contact the reporter on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net;
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