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Oil prices fall on profit taking, rate hike uncertainty

An attendant cleans the window of a car near a sign displaying the petrol station’s current fuel prices in yen in Tokyo August 24, 2015. Oil prices fell in Asia on Monday as traders took profits, snapping gains last week that saw the biggest two-day rally in six years. Brent crude futures for October delivery slipped nearly $1, or 2 percent, putting the benchmark on track for its fourth straight monthly decline, having risen in only two of the past 14 months. "There is definitely a lot of profit taking going on," said Daniel Ang, an analyst at Singapore’s Phillip Futures. "There is some readjustment in the positions taken by traders," he said. The fall came after Brent climbed 10 percent last week, while U.S. crude finished the week up 12 percent. Brent fell 98 cents to $49.07 per barrel as 0329 GMT after rising $2.49, or 5 percent, […]

Posted On : Published By : Tom Whipple
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Oil Set for Third Monthly Drop as U.S. Rig Count Gains Amid Glut

Oil headed for a third monthly decline as U.S. drillers showed no signs of letting up even as a supply glut persists. Futures fell as much as 2 percent in New York after the biggest two-day rally since 2009. The number of active rigs seeking oil in the U.S. increased for a sixth week to 675, the most since the start of May, according to Baker Hughes Inc. A measure of oil-price fluctuations rose Friday to a five-month high. Oil is holding losses after a slide this month below $40 a barrel, the lowest since February 2009, on concern slowing demand in the U.S. and China will leave the global market oversupplied. While crude has swung higher amid a rebound in commodities and equities, prices are still down more than 25 percent from this year’s peak in June. “The retracement is the market coming back to the reality that […]

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Eni Discovers Massive Gas Field in the Mediterranean

Eni SpA discovered a “super giant” natural gas field offshore Egypt in what the Italian oil company said is the largest find in the Mediterranean Sea. The deep-water deposit in the Zohr Prospect in the Shorouk block may hold 30 trillion cubic feet of gas, equivalent to 5.5 billion barrels of oil, Eni said in an e-mailed statement Sunday. Eni, which wholly owns the license for Shorouk, said the discovery validates its strategy of exploring mature areas. Egypt’s petroleum ministry confirmed the discovery in a separate statement. “Egypt has still great potential,” Claudio Descalzi, the company’s chief executive officer, said in the statement. “This historic discovery” will transform the energy industry in Egypt, he said. International oil and gas companies are seeking new deposits as existing fields become depleted. Egypt’s energy demand is rising as the Arab world’s largest population grows, making the country more reliant on imports provided […]

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Indian Oil Said to Plan $3 Billion Petrochemicals Unit in Iran

Indian Oil Corp. is seeking to build a $3 billion petrochemicals plant in Iran, according to people with direct knowledge of the matter. The plan hinges on assurances from Iran that the 1 million-ton-a-year project will have access to cheap natural gas as feedstock, said the people, who asked not to be identified because the information isn’t public. A company spokesman didn’t respond to requests for comment by phone, text message and e-mail. Indian Prime Minister Narendra Modi’s government is eyeing energy and infrastructure investments totaling billions of dollars in Iran, including upstream gas production and port developments. India has sought to secure ties with Iran and ensure access to its abundant hydrocarbons as years of sanctions on the Persian Gulf nation may be nearing an end. Economic and financial restrictions on Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries, left it in need of […]

Posted On : Published By : Tom Whipple
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Warning Signs in U.S. Presaged China’s Stock-Market Plunge

Long before investors lost faith in the Chinese stock market, something seemed amiss at the ports of Long Beach and Los Angeles, where the stevedores and longshoremen process about 40% of U.S. trade with China. Jock O’Connell, a trade adviser in California with 28 years’ experience studying the docks, wasn’t seeing the patterns he would expect from a rapidly growing Chinese consumer class. The number of containers coming from China was continuing to grow, but beginning in 2013, fewer were being sent in the other direction. Global stock markets had a rude awakening last week when investors suddenly woke up to a faltering Chinese stock market and unmistakable signs that the world’s second-largest economy was slowing. Close observers of U.S.-China trade patterns, however, had for several years seen the telltale signs many in the markets missed. “A couple of years ago, everybody was still agog about the growing, burgeoning […]

Posted On : Published By : Tom Whipple
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China’s Next Problem: Paying for Its Stock-Market Bailout

China’s epic stock-market drops over the past week give the impression that Beijing may have given up on trying to prop up the market or is at least retreating to defend a lower level. The question is, what will the government do with all that stock that it already has bought? Unlike the U.S. bailouts of 2008 and 2009, China is in the unenviable position of having bought near the market’s top, not at the bottom. Getting a TARP-like profit from its investments seems unlikely with the market so far below where much of the buying took place. If the gang of bailout entities known as the “national team” —banks, brokers, pension funds and government agencies—is stepping aside, it seems likely their holdings will drop even further in value. The Shanghai Composite Index traded in a 2000-to-2400 range during the three years before the bubble formed. Falling to that […]

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China Places Cap on Local Government Debt

BEIJING—Chinese lawmakers have placed a 16-trillion-yuan ($2.5 trillion) cap on local government debt as Beijing looks for ways to address one of the major impediments to the world’s second-largest economy. The Standing Committee of China’s National People’s Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan on debt owed by local governments as of the end of 2014, Xinhua said. The moves are the result of a new law requiring the government to limit local debt, it said. The caps don’t include indirect liabilities, which officials said totaled 8.6 trillion yuan, according to Xinhua. The latest government estimate put China’s local debt load at 17.9 trillion yuan as of the middle of 2013, up from negligible levels just six years before, […]

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Crises Put First Dents in Xi Jinping’s Power

BEIJING—Shortly before President Xi Jinping boarded a plane last month to attend a summit in Russia, his office issued an executive order: China’s stock markets must go back up. The massive state-backed share-buying that ensued propped up the markets briefly in mid-July, allowing Mr. Xi to showcase China’s economic might at the summit with emerging-market leaders. In recent weeks, though, share prices have plunged again, taking global markets with them and triggering an international crisis of confidence in Mr. Xi’s stewardship of the world’s second-largest economy. Mr. Xi will project an image of strength when he presides over a World War II Victory Day parade on Thursday featuring fighter jets, ballistic missiles and 12,000 troops—an event China hasn’t marked in such a high-profile way before. Three weeks later, he heads to Washington for a state visit meant to convey China’s parity with the U.S. Yet just as he stages […]

Posted On : Published By : Tom Whipple