Posts Tagged: oil prices

 

Equally misguided, according to the consultancy firm’s research arm, is the argument that recent declines in prices for a range of commodities – from copper to iron ore and oil – mark the beginning of a downward trend.

In the first edition of its 44-page report entitled Resource Revolution: Tracking global commodities markets, McKinsey makes the case that resources supply has already hit the limits of being able to react to short-term shifts in demand, especially in the case of oil. So often in the past, this has resulted in sharp short-term spikes in prices, which affect most people at the petrol pump. Other than natural gas and renewables, the company warns that new sources of energy and commodity supplies remain hard to tap.

Central to McKinsey’s argument is the close link between oil and the rising cost of producing most other raw materials and agricultural commodities. Energy accounts for up to 40pc of the cost of steel and up to 30pc of crop production. >> Read More

 

The International Monetary Fund slashed its growth forecast for Russia for 2013 and 2014 for the third time this year, urging the government to pursue structural reforms and improve the investment climate in order to boost growth.

The IMF said in a statement Tuesday that it saw the economy growing at 1.5% this year and 3% in 2014, held back by weak investment and low demand for its exports. In June, the Fund cut its outlook for 2013 to 2.5%, after an earlier cut in April to 3.4% from 3.7%. In April, the Fund saw Russia’s economy growth in 2014 at 3.8%.

The IMF outlook for this year is even more pessimistic than that of the Russian government, which sees 2013 growth at 1.8%, down from 3.6% forecast at the start of the year.

The IMF’s representative in Russia, Bikas Joshi, said the Fund revised its forecasts after receiving new data, including figures that showed the economy grew only 1.2% in the second quarter, much less than expected.

“The new forecast is somewhat lower than the official Economy Ministry forecast, which implies that the Fund probably sees less scope for a recovery in key items such as fixed investment growth,” said Yaroslav Lissovolik, Deutsche Bank’s chief economist in Moscow.

While praising the current tight fiscal and monetary policy, the IMF calls on Russia to rely “on more efficient use of resources and higher investment rather than increasing oil prices and spare capacity.” In order to boost growth, the IMF said, Russia needed “decisive implementation of structural reforms, particularly supply-side reforms.” >> Read More

 

India may have to draw about $ $ 9 billion from its foreign exchange reserves to finance current account deficit this year,PMEAC Chairman C Rangarajan said today, while pitching for promoting foreign investment and exports to deal with problem in the long run. 

The Prime Ministry’s Economic Advisory Council (PMEAC) Chairman also said fiscal deficit is a concern too and suggested raising domestic oil prices to restrict it to the budget target of 4.8 per cent of the GDP in this fiscal. 

“Controlling CAD remains the main concern at present… On the assumption that total CAD will be $ 70 billion and the net capital inflows that we have estimated (about $ 61 billion), there will be a drawdown on the reserves of about $ 9 billion,” Rangarajan said. 

He also expressed the hope that CAD will even fall below $ 70 billion if the capital inflows picks up.  >> Read More

 

IMPORT-Grappling with the stressed economy, Finance Minister P Chidambaram today said “hard decisions” would be taken in the next few days and weeks to trim wasteful expenditure and curb import of “inessential” items.

“We are going through a period of stress… we have to take some hard decisions. Many of these measures are being taken, and many measures will be announced in next few days and weeks. Some measures to curb import inessential items will also be announced.

“All these measures taken together will have beneficial impact”, he said, winding up a debate on Appropriation Bill in the Rajya Sabha. >> Read More

 

bad-newsOil prices touching a new high, the CBI has lodged a case against GAIL (India) Ltd and four private companies for causing a Rs 300-crore loss to the exchequer. The CBI recently registered a preliminary enquiry on a complaint from the Ministry of Petroleum and Natural Gas, said officials.

A preliminary enquiry is normally registered by CBI after verification and can result in filing of a regular case or closure of the case without informing courts. Top CBI officials said during the initial probe it was found that the four companies based in Andhra Pradesh and Karnataka benefited from GAIL, which provided them fuel, meant for the public sector, cheap.

CBI said GAIL was required to sell a tanker of CNG to private players at Rs 4,000 per standard cubic metre. GAIL continued to charge them Rs 3,000. Top officials of GAIL are under the scanner for allegedly extending the favour, said CBI. >> Read More

 

The Indian rupee is likely to again touch the 68 mark per US dollar by this month end, after which it could strengthen due to improvement in the current account deficit that could help pause the American currency’s rally, according to a Standard Chartered report.

The factors that are likely to keep USD-INR under pressure include challenging global economic scenario due to concerns over US Fed’s tapering its bond buying and upside risks to oil prices arising from Middle East turmoil, it said.

The rupee had touched an all time low of 68.80 to a dollar on August 28. However, it has strengthened from its all time low levels and is hovering at 66/USD.

StanChart expects the rupee to be around 68 per US dollar by the end of July-September quarter, significantly higher from its earlier projection of 59. >> Read More

 

Shutup -ASRPrime Minister Manmohan Singh finally broke his silence on the deep economic crisis being witnessed by the nation when on Thursday he said that the “country is faced with difficult economic situation” and several domestic and international factors are to be held responsible for it.

“The country is faced with the difficult economic situation and there are several causes,” Manmohan Singh said during question hour in the Rajya Sabha in response to repeated demands from the opposition for a statement on the issue of grave economic situation, the nation is faced with.

“I do not deny if there are some domestic factors but there are also international factors arising out of the changes in the US monetary stand,” he further said. >> Read More

Cheat Sheet On Syria

29 August 2013 - 11:42 am
 

The U.S. is about to attack Syria. Here’s what you need to know:

  • Russia has repeatedly stated that it would consider an attack on Syria as an attack on its national security. China has also strongly cautioned the U.S. against attacking Syria. China and Russia hold a lot of U.S. debt, and could make life difficult for us economically if we unnecessarily anger them
 

Until a few days ago, it looked like a sure bet that the U.S. Federal Reserve would announce the beginning of the end of its massive bond buying program in September. Now, investors are less certain.

The prospect of Western military action against Syria has sent stock markets worldwide reeling. Emerging markets have sold off and oil prices soared to six-month highs. And another potential showdown over the federal debt ceiling limit is looming this fall.

Taken together, the developments have eroded the conviction of most Fed watchers that the U.S. central bank would start backing off its $85-billion-a-month bond buying program, known as quantitative easing, or QE, at its September 17-18 meeting.

“It’s a really big decision to start tapering because it’s really like an exit strategy from QE and that’s very hard for the Fed to do as long as there is a lot of uncertainty in the market like we’re seeing right now,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.

“I certainly think the market is moving toward a delay into December.” >> Read More

$200 Oil Prices: Fact or Fiction?

26 August 2013 - 0:42 am
 

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Technically Yours,
Team ASR,
Baroda, India.