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Financial players increase their bets on crude

Financial investors are already quite disruptive in crude oil markets. And their influence is set to grow this year. That’s the message from surveys by Barclays Global Investors and JP Morgan. $120bn is now invested in commodities as a class, with oil a major target. Even your own pension fund may be about to invest, […]

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China freezes energy costs, bans plastic bags

Reaction to $100 oil has been swift. Yesterday, the Chinese State Council decided to freeze the prices of oil products, natural gas and electricity, as well as public transportation. A measure of the government’s concern is that the meeting to approve the freeze was attended by premier Wen Jiabao. Chinese inflation is now at 6.9% […]

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$100 crude – US manufacturing close to recession

Oil prices touched $100/bbl today, a new record in nominal and inflation-adjusted terms. At the same time, the US Institute of Supply Management (ISM) index signalled that the manufacturing sector ‘failed to grow in December’, with ‘industries close to the housing market struggling more than others’. All the ISM’s main indicators were negative, with inventories […]

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Dow integrates upstream via Kuwait deal

Dow has been unique amongst the world’s largest petchem companies in not being integrated upstream into oil and refining. This position will change dramatically at the end of 2008, when its newly-announced JV with the PIC subsidiary of Kuwait Petroleum opens for business. Not only will Dow then integrate its ethylene/PE business, but it will […]

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Oil supply worries increase

In recent days, 3 respected commentators on oil markets have raised concerns about the near and medium-term prospects for oil supplies: • Goldman Sachs has raised their 2008 WTI price forecast to $95/bbl from $85/bbl. This is driven by their expectation that cost inflation, plus continuing technological and political uncertainty, will ‘increase the price required […]

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CFO pessimism increases

CFOs are paid to worry, but their worries seem to be increasing quite rapidly, according to the results of the quarterly CFO survey by Duke University/The Economist. This showed: • Record pessimism about the US economy, with US CFOs worrying about ‘weak consumer demand, high fuel costs, rising labor costs and credit markets’. • European […]

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Asia ‘Recouples’

The major investment banks have changed their minds about the potential for Asia to ‘decouple’ from any credit-crunch induced downturn in the West. Originally, they had believed that domestic demand in China and elsewhere would enable the Asian economy to sail ahead, no matter what happened elsewhere. I was a bit sceptical of this hypothesis, […]

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OPEC targets stocks, not prices

There is some interesting material on the OPEC website, following this week’s Summit, which clarifies their current strategy. The key points are: • OPEC is currently targeting inventories, not prices. Their policy is to keep OECD crude stocks within the 5 year average. OPEC says its previous production cutbacks ‘minimised the excessive overhangs that existed […]

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A dip or a downturn?

Are we seeing just a dip in economic growth? Or are we at the start of a downturn that may run for months, or even years? The answer to this question lies in the US, which still accounts for 25% of global GDP, and where US consumer spending is 70% of US GDP. Optimists maintain […]

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US chemical imports face ‘green’ border tax

The US Congress is currently close to finalising a Bill that would aim to tackle climate change. This follows the EU model by establishing a carbon price via a cap-and-trade system, and is very welcome news. However, there is a sting in the tail, as currently drafted. For it also calls for a border tax […]

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