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Cheap Oil Trumps Yuan Drop in China’s Thirst for Hoarding Crude

Oil’s slump makes crude so attractive to China that even the biggest drop in its currency since 1994 probably won’t deter its ambition to hoard supplies. China devalued the yuan for a second time after Tuesday’s record reduction in the daily reference rate, setting up the currency for its biggest two-day loss in 21 years and making imports of dollar-denominated commodities costlier. That won’t significantly slow crude purchases to fill strategic reserves, which have helped the nation overtake the U.S. as the world’s biggest oil importer, according to Energy Aspects Ltd., KBC Advanced Technologies and Nomura Holdings Inc. “While devaluing the yuan will make dollar purchases more expensive, it’s important to place that move in the broader context of the drop in crude,” said Virendra Chauhan, a London-based analyst at Energy Aspects. “If you think about where we were trading last year, you’re talking about a 50 percent reduction […]

Posted On : Published By : Tom Whipple
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China economic growth falters in July, yuan’s slide adds to worries

Employees work along a production line of a textile factory in Suzhou, Jiangsu province, China, June 13, 2015. Growth in China’s factory output, investment and retail sales were all weaker than expected in July, adding pressure on Beijing to roll out more measures to prevent a deeper slowdown, days after it shocked markets by devaluing its currency. While the central bank insisted on Wednesday it would not let the yuan slide too far, the devaluation came days after data showed a hefty drop in exports and producer prices, which clearly weighed on Chinese manufacturers last month. Nearly all data released for July was weaker than economists had forecast, pointing to further deterioration in the world’s second-largest economy. Data for June had fuelled some hopes that activity was stabilising after policymakers unleashed the biggest burst of stimulus since the global financial crisis. "This kind of data will only accentuate the […]

Posted On : Published By : Tom Whipple
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China lets yuan fall further, fuels fears of currency war

China’s yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it in a move that sparked fears of a global currency war and accusations that Beijing was unfairly supporting its struggling exporters. Spot yuan in China fell to 6.45 per dollar, its weakest since August 2011, after the central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday’s devaluation. The currency fared worse in international trade, touching 6.59. The central bank, which had described the devaluation as a one-off step to make the yuan CNY=CFXS more responsive to market forces, sought to reassure financial markets on Wednesday that it was not embarking on a steady depreciation. "Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the People’s Bank of China (PBOC) said. Foreign exchange traders later said state-owned […]

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Combined-cycle, gas-fired unit costs coming in below expectations: Duke

Natural gas-fired combined-cycle units, which have emerged as perhaps the most important elements of utility and independent power generation fleets, have been costing less than was initially expected to build, and per-kW costs of less than $1,000/kW of installed capacity have become common. Duke Energy Progress said Tuesday that the final cost of its 625-MW Sutton combined-cycle project near Wilmington, North Carolina, was $551 million, or about $882/kW of installed capacity, about 18% less than the company’s original $671 million estimate, or a per-kW cost of about $1,073. Duke Energy spokeswoman Lisa Parrish said DEP and its sister utilities have built six gas-fired units over the last five years. "All have come in under budget," she said. "As we begin to build two new natural [gas-fired] facilities in the Carolinas, we will take advantage of efficiencies and best practices we’ve learned." Parrish said the project costs include associated transmission […]

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China strengthens hold over oil market as price maker

Employees spray water to cool down oil tanks at a storage facility, which belongs to one of China’s biggest state-owned firms PetroChina oil, in Suijing, Sichuan Province, in this August 13, 2010 file photo. China’s growing ability to buy and sell millions of barrels of crude oil on the Asian physical market in a matter of minutes through its main trading firms has given China so much clout that other traders are often forced to follow its agreed prices. Leading Chinese oil traders have cornered the market on several occasions since October last year. Early this month, Chinaoil, the trading arm of PetroChina ( 0857.HK ), bought 5 million barrels of crude in just 30 minutes through Asia’s main price-finding mechanism organized by Platts, part of McGraw Hill Financial Inc ( MHFI.N ). Market power is shifting towards big consumers, with oil output at record highs and global demand […]

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Shock China devaluation unhinges commodities

A U.S. $100 banknote is placed on top of 100 yuan banknotes in this picture illustration taken in Beijing May 7, 2013. Oil, copper and other commodities tumbled on Tuesday after China devalued the yuan, raising concerns that a persistently weaker currency will choke off demand in the world’s top commodities consumer. China’s central bank made what it called a "one-off depreciation" of nearly 2 percent in the yuan after a run of poor economic data, which sent the currency to a three-year low. The dollar gave up immediate gains made after the devaluation, which ordinarily would boost dollar-denominated assets, but such is the importance of China to commodities demand that investors overlooked any weakness in the U.S currency. "When you have the biggest customer for oil and commodities devaluing, then obviously you find your product coming under pressure and that is really how the day has panned out," […]

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Australia Sets Emissions Goal, but Climate Experts Say It Falls Short

Photo The Great Barrier Reef in Australia. Critics of the country’s new goal for greenhouse gas reduction say that it does not go far enough, and that the reef could be threatened. Credit Australian Institute of Marine Science, via Agence France-Presse — Getty Images SYDNEY, Australia — Prime Minister Tony Abbott on Tuesday announced a greenhouse gas reduction goal for Australia that he said struck “the right balance” between economic concerns and the need to address climate change , but scientists and environmental groups said the plan fell short of what was needed. The goal — reducing carbon emissions at least 26 percent, and possibly 28 percent, from 2005 levels by 2030 — also earned Mr. Abbott a stinging rebuke from the Marshall Islands, the tiny archipelago northeast of Australia that is threatened by rising sea levels. “If the rest of the world followed Australia’s lead, the Great Barrier […]

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Canadian oil sands crude halves in price

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Oil-Patch Slump Spurs Wave of Trucking Deals

The energy bust has touched off a wave of consolidation among the trucking companies that haul equipment around the oil patch, where business is shrinking along with the tumbling price of crude. This week, Daseke Inc. said it would buy Hornady Transportation LLC, its second acquisition in just over a month. After the deal is completed, Daseke’s fleet will total over 3,000 tractors and 6,000 trailers, an increase in the tractor count of about 40% since last fall and a 50% addition in trailers. Addison, Texas-based Daseke says in terms of equipment that it operates, the company is the largest flatbed trucking company in the U.S., although Landstar System Inc. LSTR -1.51 % is larger by revenue under a system that focuses on using independent owner-operator drivers. Flatbed truckers have fallen on hard times after several years of rapid expansion driven by the shale oil boom. With oil prices […]

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EPA Chief Apologizes for Toxic Spill Affecting Rivers in Colorado, New Mexico

WASHINGTON—U. S. Environmental Protection Agency Administrator Gina McCarthy apologized Tuesday for a mine spill in Colorado caused by her agency, but she indicated she didn’t know much about what happened and would seek to fix any flaw in the agency’s procedures. “I am absolutely deeply sorry this ever happened,” Ms. McCarthy said at a news conference in Washington. “But I want to make sure we react positively and in a way that’s credible and we move this forward.” An EPA cleanup crew on Aug. 5 accidentally triggered a breach in an abandoned gold mine in the Southwestern part of Colorado, releasing an estimated three million gallons of toxic, mustard-hued sludge through a river system spanning three states. The sludge, which flowed down the Animas River and emptied into the San Juan River in New Mexico, contains such contaminants as lead and arsenic from the Gold King Mine, north of […]

Posted On : Published By : Tom Whipple