Why big oil is striking black gold 17 Sep 2009 Oil and gas majors have made four big discoveries in three weeks. It s no surprise that finds are coming thick and fast. Better technology makes them possible, stable regulatory regimes foster confidence to invest, and expected high oil prices make costly projects seem viable.
Gas price drop casts doubt on oil-based contracts 16 Sep 2009 On the nascent spot market, natural gas prices are down 40% this year, while oil is up. Winter should see some narrowing of the gap, but the disconnect reflects a durable technological change. The likely result is more volatile prices for Russia and Algeria.
Should gold miners hedge? 11 Sep 2009 With a newish CEO, Barrick has decided the expensive answer is no , partly because the yellow metal s buoyant price has gold bugs clamouring for exposure. Yet investors seem to reward protection when prices weaken. When that next happens, it may test the company s conviction.
Mexico can’t fix oil operations with fancy finance 8 Sep 2009 Mexico s $8bn oil hedging gain distracts attention from its operational failings. Pemex s resistance to outsiders caused oil output to fall in a region where others find recordbreaking fields. Economically suicidal statist policies can t be offset by even the savviest hedging.
Oil producers will struggle to anchor price at $70 8 Sep 2009 For four months, oil has been floating at between $60 and $75. There s no absolutely right value, although $70 feels like a reasonable resting point. Market stability would help almost everyone. But Opec will find it hard to steady the oil price in an overly financial world.
Excess money helps gold float 3 Sep 2009 Stimulative policies in a still weak economy give investors more funds than clear opportunities. Poor earnings crimp stocks, housing is in oversupply, and bond yields are low. But gold and silver are good hedges against either inflation or a new recession. The rally could go on.
Glencore could use new friends in wealthy places 1 Sep 2009 For the first time, the secretive Swiss commodities trader may offer equity to outsiders, including Temasek and the CIC. That would strengthen a balance sheet strained by helping 35%owned Xstrata raise capital. New investors might even support a takeover of Xstrata itself.
Baker Hughes pumps up $5.5bn for BJ Services 31 Aug 2009 The US oilservices group is going back in time to acquire its onetime subsidiary. The deal highlights the extent to which technologies used to extract energy from unconventional or largely depleted fields have returned to the fore in a world of dwindling access to oil and gas.
Plummeting natural gas trips producers, investors 19 Aug 2009 A price spike in one product should increase demand for alternatives. But despite oil s rise, natural gas is at a sevenyear low. They may come from the same fields, but they re not interchangeable. And a growing supply glut is causing the gas market a lot of indigestion.
China’s unemployment fears inflate oil prices 10 Aug 2009 That sounds a stretch. But the Middle Kingdom is buying more crude and producing more petrol than it needs. Part of the motivation is to minimise refinery unemployment. To avoid the social and political problems that come with lost jobs, China is stoking commodity markets.
Commodity witch-hunt searches for wrong demons 4 Aug 2009 It s enough to excite any conspiracy theorist: commodity prices are up while the economy is still down. The UK s FSA is the latest to investigate. But new rules on transparency won t alleviate market volatility. The only durable cure is to stop relying so much on spot prices.
Xstrata puts little extra pressure on Anglo 4 Aug 2009 The Swiss miner is using its decent H1 results to reassert its credentials as a merger partner for Anglo American. Cost discipline and safety improvements suggest that anything Anglo can do, Xstrata can do better. But Xstrata will still need to pay a premium if it wants a deal.
BHP’s new chairman may need new style 4 Aug 2009 Jac Nasser would be an obvious choice to supervise a company in trouble. Ford s former boss likes to shake things up. But at BHP, he may need to be emollient. Happy investors don t need drama, while governments concerned about commodity prices will test his diplomatic skills.
Commodity price surge could endanger world economy 3 Aug 2009 Commodity price spikes generally occur at the peak of economic cycles. This time, a sharp rebound coincides with an economic trough. Whether caused by monetary factors or Asian demand growth, a further commodity price advance could spark inflation and stall global recovery.
Exxon Q2 stumble highlights long-term challenges 30 Jul 2009 The West s top company missed expectations. The halving of oil doesn t fully account for a 66% decline in profit. Decreasing production and sustained capital spending do. They also point to Exxon s conundrum: oil is getting harder to find and costlier to extract.
Shell keeps dividend, cuts investment 30 Jul 2009 The energy major s new boss faces an old problem the sums don t work for many key projects with oil around $60, and falling natural gas prices make it harder. Voser s response is to axe jobs, cut capex and increase debt, but maintain the dividend. That may not be sustainable.
Savings drive record emerging market bond volume 28 Jul 2009 Firsthalf issuance was the most ever, belying forecasts earlier this year of widespread capital shortages. Chinese and corporate issuers dominated. Companies in countries with big savings pools did the most business showing the advantages of thrift.
Chinese settlement won’t end iron ore spat 8 Jul 2009 The resourcehungry nation might be ready to agree the same 33% cut in contract prices agreed elsewhere in Asia. But miners shouldn t expect China to stop fighting for lower prices. Price volatility is as old as the benchmark pricing system. China s determination is new.
US efforts to vilify energy traders might backfire 7 Jul 2009 The new head of America s commodity markets regulator plans to hold hearings on whether the agency should limit the activities of traders to curb excessive speculation . But any rules born of such a simplistic view are likely to be harmful.
China pushes envelope for oil 3 Jul 2009 First Iraq, now Argentina. Chinese energy groups are hunting for oil in risky places. That s good for countries with resources to sell. But it s unwelcome competition for the oil majors. At least in Argentina, a deal for Repsol s assets could make sense for all sides.