Föhrenbergkreis Finanzwirtschaft

Nach den kristallklaren Aussagen des Föhrenbergkreises zur Finanzwirtschaft aus dem Jahr 1999 gibt es jetzt einen neuen Arbeitskreis zum Thema.

Mit ‘oil price’ getaggte Beiträge

Sovereign Debts in a Fossil-Fueled World

Geschrieben von hkarner - 10. April 2014

Date: 08-04-2014
Source: YaleGlobal

Transition away from fossil fuels toward new alternatives is not going smoothly. Proponents of alternatives confront a powerful industry with longstanding incentives and favorable tax policies, suggests analyst Will Hickey. Around the globe, economic struggles and immediate profits take priority over development of alternative energies. Emerging economies are in a race to catch up with the living standards of developed economies. Advanced economies – steeped in debt, with infrastructure and tax policies built around fossil fuels – resist innovation on new fuels or efforts to stem climate change and pollution. Hickey suggests that “Most world governments are so compromised with the fossil-fuel industry they cannot easily walk away without leaving their financial coffers worse off as the true costs of energy are hidden in a producer and consumer subsidy labyrinth that promotes the addiction. Eliminating subsidies for the fossil-fuel industry, highlighting the true costs, would speed up the development of alternative energies. – YaleGlobal

Governments refuse to tally true costs of fossil fuels and fail to escape industry dependence

Clean fuel retreat? German Chancellor Angela Merkel faces pushback on clean energy (top); India counts on coal power for growth

DAEJEON: The obvious switch to alternative energy – solar, wind, geothermal, hydro – in a carbon-intensive world is not as straightforward as one might think. The fossil-fuel industry is powerful, its oil and coal companies generating revenue of several trillion dollars a year. Downstream energy producers, including refineries and power generation plants, are also heavily levered to the fossil-fuel industry, adding to the difficulty of changing over to alternatives. Government incentives, infrastructure building and tax policies have largely been built on facilitating fossil fuels well into the future. Den Rest des Beitrags lesen »

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Is there room for more than one international currency?

Geschrieben von hkarner - 17. März 2014

One or multiple international currencies? Evidence from the history of the oil market

Livia Chiţu (ECB), Barry Eichengreen (Berkley), Arnaud Mehl (ECB), 17 March 2014

The dollar remains dominant in the global monetary system. The clearest sign for its prevailing status is the dollar’s role as an exclusive currency used in the global oil market. This column suggests that there is room for more than one international currency even in a market as homogenous as the oil one. This is consistent with the view that network increasing returns are not as strong as sometimes supposed, first-mover advantage is not everything, and incumbency is no guarantee for continued dominance.

Notwithstanding a near meltdown of the US financial system, the downgrade of US sovereign debt by one rating agency and the emergence of the renminbi as a potential rival, the global financial crisis underscored – in the view of many – how dominant the dollar remains in the global monetary system (see e.g. Frankel 2013, Prasad 2014).

One of the clearest signs of the dollar’s dominant international role is its status as the all but exclusive currency used in global oil markets. The prices of West Texas Intermediate, Brent, and Dubai crude are expressed in dollars. The dollar is used as the unit of account for virtually all benchmark prices. NYMEX, the world’s largest oil futures market, provides quotes exclusively in dollars. In the global oil market, whether for spot, term, or future contracts and irrespective of country, the dollar reigns supreme. Den Rest des Beitrags lesen »

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Why Putin Doesn’t Respect Us

Geschrieben von hkarner - 5. März 2014

Date: 05-03-2014

Source: Thomas L. Friedman

Just as we’ve turned the coverage of politics into sports, we’re doing the same with geopolitics. There is much nonsense being written about how Vladimir Putin showed how he is “tougher” than Barack Obama and how Obama now needs to demonstrate his manhood. This is how great powers get drawn into the politics of small tribes and end up in great wars that end badly for everyone. We vastly exaggerate Putin’s strength — so does he — and we vastly underestimate our own strength, and ability to weaken him through nonmilitary means.

Let’s start with Putin. Any man who actually believes, as Putin has said, that the breakup of the Soviet Union was “the greatest geopolitical catastrophe” of the 20th century is caught up in a dangerous fantasy that can’t end well for him or his people. The Soviet Union died because Communism could not provide rising standards of living, and its collapse actually unleashed boundless human energy all across Eastern Europe and Russia. A wise Putin would have redesigned Russia so its vast human talent could take advantage of all that energy. He would be fighting today to get Russia into the European Union, not to keep Ukraine out. But that is not who Putin is and never will be. He is guilty of the soft bigotry of low expectations toward his people and prefers to turn Russia into a mafia-run petro-state — all the better to steal from. Den Rest des Beitrags lesen »

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EU Widens Probe Into Energy Pricing .

Geschrieben von hkarner - 21. Mai 2013

Date: 20-05-2013

Source: The Wall Street Journal

European Union authorities have widened their probe into potential energy-price manipulation in recent days, sending requests for pricing information to commodity-trading firms including Glencore Xstrata PLC, Vitol Group, and Gunvor Group Ltd., say people familiar with the matter.

The companies received written questionnaires with general questions about how fuel pricing works, these people said. A spokesman for the EU declined to comment.

Last week, European antitrust regulators conducted unannounced inspections of oil giants BP PLC, Royal Dutch Shell PLC and Statoil ASA, in addition to price-index firm Platts, a division of McGraw-Hill Financial Inc. Platts publishes prices for a variety of fuel products that are widely used as standard measures. Den Rest des Beitrags lesen »

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Crude Oil’s Quick Fall Leaves Trail of Queries .

Geschrieben von hkarner - 18. September 2012

Date: 18-09-2012
Source: The Wall Street Journal

A plunge in crude-oil prices rippled through financial markets, leaving traders confused and regulators seeking answers.

Oil prices dropped more than $3 in less than a minute late in the trading day on Monday, just as trading volume spiked. The move also dragged down prices of gold, copper and even the euro.

“Traders were looking like deer in the headlights,said Peter Donovan, a floor trader at Vantage Trading on the New York Mercantile Exchange. “I called four different desks, and they all said, ‘we don’t know.’ “

The move came at about 1:54 p.m. EDT. West Texas Intermediate crude for October delivery plummeted to $94.83 a barrel on the Nymex, from more than $98. Some 12,500 contracts changed hands in a minute, compared with less than 500 a minute previously.

The move sparked talk of an erroneous trade—called a “fat-finger” error in industry parlance—or a computer algorithm gone awry. Traders and regulators have been on alert in recent months after a series of technology glitches roiled financial markets. Commodity Futures Trading Commission member Bart Chilton said the CFTC is seeking more information. “Superfast price moves, like we saw in oil, put us on high alert,” Mr. Chilton said in an email. Den Rest des Beitrags lesen »

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A Rare Speed Bump in Commodities’ Long Run

Geschrieben von hkarner - 14. Mai 2012

Date: 14-05-2012
Source: The Wall Street Journal

Lower Growth from China and the West Squeezes Prices; Some Investors See a New Phase for the Market

Commodities fell to nearly two-year lows last week, measured by a widely used benchmark, prompting investors to ponder whether the massive rally that began in 1999 may be faltering.

China is cooling down at the same time the U.S. is struggling to heat up, clouding the outlook for the world’s two biggest consumers. And producers of some raw materials have ramped up supplies enough to create at least temporary gluts, particularly if appetites falter.

After a strong start to the year, prices for crude oil and gold have slumped by double-digits in percentage terms from their 2012 highs, and copper—an often-cited barometer of economic activity—also has fallen 8% from a peak for the year in February.

The commodities market has become hyper-attuned to moves in the world economy. Broad worries about the global economy, especially Europe’s debt woes, also often override fundamental forces of supply and demand to drive prices.

That flummoxes even experienced traders, adding risk to a market that’s increasingly popular with ordinary investors, but volatile.

“Any whiff of a slowdown, and the market sells off,” said John Bailey, chief executive of Spruce Private Investors LLC, a Stamford, Conn., firm that has $3 billion under advisement and invests with nine commodity-focused hedge funds.

From the outset, the rally that began in 1999 was fueled by two diverging forces: Rapid growth in emerging markets sparked fresh demand, particularly from China, which joined the World Trade Organization in 2001. That move opened up hundreds of billions of dollars of trade with China. At the same time, supplies were limited as years of low prices had made producers reluctant to expand their operations. Den Rest des Beitrags lesen »

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The High Cost of Gambling on Oil

Geschrieben von hkarner - 12. April 2012

Date: 11-04-2012
Source: The New York Times By JOSEPH P. KENNEDY II

THE drastic rise in the price of oil and gasoline is in part the result of forces beyond our control: as high-growth countries like China and India increase the demand for petroleum, the price will go up.

But there are factors contributing to the high price of oil that we can do something about. Chief among them is the effect of “pure” speculators — investors who buy and sell oil futures but never take physical possession of actual barrels of oil. These middlemen add little value and lots of cost as they bid up the price of oil in pursuit of financial gain. They should be banned from the world’s commodity exchanges, which could drive down the price of oil by as much as 40 percent and the price of gasoline by as much as $1 a gallon.

Today, speculators dominate the trading of oil futures. According to Congressional testimony by the commodities specialist Michael W. Masters in 2009, the oil futures markets routinely trade more than one billion barrels of oil per day. Given that the entire world produces only around 85 million actual “wet” barrels a day, this means that more than 90 percent of trading involves speculators’ exchanging “paper” barrels with one another.

Because of speculation, today’s oil prices of about $100 a barrel have become disconnected from the costs of extraction, which average $11 a barrel worldwide. Den Rest des Beitrags lesen »

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Factors in the Recent Oil Price Increases

Geschrieben von hkarner - 7. März 2012

Author: James Hamilton · February 26th, 2012 · RGE EconoMonitor

Crude oil prices surged last spring following disruptions in oil production from Libya, and had been drifting down during the summer and fall. But since the beginning of October, the price of West Texas Intermediate and Brent crude oil have both risen by over 30%, putting them back up near where they had been last spring. What’s changed in the world since the beginning of October?

Price of West Texas Intermediate, dollars per barrel, weekly Jan 7, 2011 to Feb 24, 2012. Data source: Webstract.


Although conditions in Libya may have stabilized, the possibility of military conflict in Iran has been increasingly discussed, an event which would be hugely important for oil markets. Here for example is a measure of the volume of Google searches for “Iran War”. Den Rest des Beitrags lesen »

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Chris Cook: The Oil End Game

Geschrieben von hkarner - 5. März 2012


Author: Yves Smith · February 27th, 2012 · RGEconoMonitor

By Chris Cook, former compliance and market supervision director of the International Petroleum Exchange. Cross posted from Asia Times

The end game is about to begin. On the one hand you have the noise and rhetoric. Greedy speculators gouging gasoline prices; mad mullahs preparing to wipe Israel off the map; bunker buster bombs and fleets being positioned; huge demand for oil from the BRIC countries; China’s insatiable thirst for oil; the oil price will head for $200 a barrel and will never again fall below $130 …

On the other hand you have the reality.

Oil Markets

The oil markets are completely manipulated and orchestrated, and the conductors of the orchestra have the benefit of having already held a rehearsal in 2008.

History never repeats itself, but it does rhyme. This time around it is not demand from the United States that is collapsing, but European Union and United Kingdom demand, as oil prices in euros and pounds sterling have never been higher. In the meantime, the US is awash in oil as domestic production quietly increases, flushed out by the high prices. Den Rest des Beitrags lesen »

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Are Oil Prices Driven by Speculators?

Geschrieben von hkarner - 18. April 2011

Apr 14, 2011 1:03PM
0413chart.jpg  Fascinating chart above via David Wilson of Bloomberg.

It very much suggests that while Speculators may not have been the prime mover on the 2008 Oil peak, the specs seem to be a very large portion of the current push. Den Rest des Beitrags lesen »

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