Houston Chronicle: BP chief says another oil spike is possible

Oil executives and political leaders told a major petroleum conference Monday that the era of cheap energy is over and warned of another price spike if investment in oil production is curtailed.

“Prices are falling, but they’re falling for the wrong reasons: because of reduced demand and a consequence of reduced economic activity, not because we have increased supply or increased energy efficiency,” BP Chief Executive Tony Hayward said at the Abu Dhabi International Petroleum Exhibition and Conference.

( Click the subject line for the story )

Tractors for Stockbrokers, Maseratis for Farmers

Says Jim Rogers...

Peter Schiff Interview On Glenn Beck Radio

Part I



Part II

Answers From Schlumberger's Top Brass (SLB)

During the conference call held to discuss the quarter, Chairman and CEO Andrew Gould initial statements included:

• The deterioration in the credit markets will have an effect on its customers, but this will largely impact North America only.
• Management does not know the extent to which current events will hurt 2009 drilling activity.
• Management is still looking for a slowing in the rate of growth in customer spending - not a decline.
• Even if activity is curtailed, due to the "age of the production profile and the decrease in reserve replacement ratios", any significant slowdown in exploration and production investment will cause a sharp drop in production, which will lead to a recovery.

Gould and the other executives were then questioned, some may say "interrogated", by analysts as to the extent and duration of any downturn.

( Click subject line for the entire article )

Poll: Whither Price Of Oil?

Collateral Damage

Chesapeak CEO Sold All Stock to Meet Margin Calls

Chesapeake Energy Corp. said its chief executive officer, Aubrey McClendon, involuntarily sold ``substantially all'' of his common shares of the company's stock over the past three days to meet margin loan calls.

``These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis,'' McClendon said in today's statement. ``In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential.''

McClendon, 49, owned 33.5 million shares, or 5.8 percent of the company's common stock, according to a Sept. 30 filing with the U.S. Securities and Exchange Commission. He was the company's third-largest shareholder.

Chesapeake, this year's worst-performing petroleum producer in the Standard & Poor's 500, fell 6.7 percent in New York trading today amid concern hedging contracts won't protect the company against a plunge in natural-gas prices. McClendon's divestiture was announced after the close of regular trading on U.S. stock markets.

``You have to imagine Aubrey's lost a large portion of his fortune,'' Benjamin Dell, an analyst at Sanford C. Bernstein & Co., said today in a telephone interview. He rates the stock at ``market perform'' and owns none.

The Oil Drum has a good thread on this

Admission of Guilt! A Reply to Mish

Mish over at the Global Economic Analysis asks the following in the comments section:

“Can I ask a question?

With oil at $84 ....
Where is Oil Shock?

Mish
Like this comment?
link to the post

Oil Shock was indeed wrong. Yes, I called the bottom at $90 for oil. It was indeed the bottom until Oil declined one more time. Yes, so far it about 7% below that price. I still have called a perfect bottom in gold. Dollar index is about 2% higher than my prediction top.

Australian Dollar cliff dived yesterday, partly due to the unwinding of the carry trade. Just two months ago, the Ozzie was at near parity with the USD, but today you could buy 1 Ozzie for 64 cents U.S. Do you think Australian economy is fundamentally a lot weaker than the U.S economy? Do you think what happened to Iceland and Australia are impossible to happen here?

Much of the strength in dollar index is due to the weakness of Euro, it is not an indication of Dollar strength. Euro is a doomed currency. I heard somebody put it as the Deutsche Mark + some parasites, and that is very true.

Was my bottom and top calls based on any specific formula? No. It was just rhetoric meant to say that inflation is still in play. Did I strongly believe in my prediction? Yes I did. Did I know that for 100% sure that Oil will bottom at $90.00, and Gold at $750? No I did not.

As for all those deflationary derivatives worth 500 trillion floating around, it is all hogwash. Derivatives can go to zero and 80-90% of them do, even in a bull market. Have you read stats on options? Most of them go to zero? If one were to really believe that those derivatives are part of the money supply, what do you think the price of a refrigerator full of groceries would be?

Is there an unwillingness to lend right now? Yes. But all the debt will be monetized away, and some more will be accumulated by the local, state, and federal governments and monetized.

Stop kidding yourself. Oil at $84 is a lot higher than were it was, when Mish started denying that inflation was non-existent, go back, he has a lot of charts and graphs starting from 2005 to prove his point.

Mish has been consistently wrong for many years with his predictions, and yet he needs a great deal of credit for predicting the crisis very accurately as it unfolded. There were a lot of guys predicting shallow recessions, muddle throughs etc. But Mish could see a lot further than those others; he predicted a deeper recession. He was just a little early. Mish is still wrong about deflation.

Real wealth is ability to produce real goods, and that is one area that American economy lacks clearly. Yes, America has a lot of productive capacity, but no where close the purported size of the economy. So, what really is backing our dollar? yes,a lot of productive capacity, and a lot more of hot air.

War on Your Wallet

Comrades,

When government declares war on something or somebody, whether it is war on drugs, war on poverty, war on terror, that means they are about to pick your wallet. Today, the government declared war, almost literally, against the turmoil in the financial markets. The Government, like mafia or a protection racket, is always looking for dragons to slay. It is on the prowl, looking for the next enemy.

The Government will use Tax Payers wallets as a sink for illiquid, financial carcasses. Every attempt will be made to keep a semblance of stability until after the presidential election. For instance, short selling - a strategy used by speculators to make profit from falling price of a financial instrument, will be banned until Friday Jan 16, 2009. Coincidence? You decide.

Recently Steve Jobs blamed short sellers for the falling price of Apple stock ( which is often a red flag - Execs sometimes use short sellers as a cover for their own incompetence. Not suggesting that as a certainty in this case ). A healthy number of short sellers a.k.a bears a.k.a skeptics is what keeps markets in balance. The skeptics usually pick apart the reports, they read the fine print, they read between the lines and they usually are the ones who blow the whistle at corporate corruption.

Policing Short Sales :

Companies are now lining up at SEC to add their ticker to the list that will be "protected" from short selling. Pakistani state apparatus recently tried to police short selling during their own version of market tumult. Immediate reaction of the punters was to drive up the markets, soon followed by a 25% crash. Later on, angry mob vandalized the Karachi stock market.

Don't be Fuld again:

"They called him the Gorilla - the brawler known as the scariest man on Wall Street," writes the Times of London about Richard Fuld, CEO of Lehman, and the story tells of his rise and fall. Here is a striking annotated painting posted outside Lehman offices for staff to post their comments on. Click here to view. (Thanks to mises.org)

Boone Pickens on Price oil, alternatives and Speculation

Here is the video link

Jim Rogers on Federal Reserve

Part - I:


Part - II

Warren Buffet on Peak Oil and resource depletion

Credit Bubble Update - 07/13/07

Banks losing up to $52 bln over subprime
Credit Suisse analysts estimated banks could lose up to $52 billion over time due to their exposure to collateralized debt obligations that invested in U.S. subprime mortgages.

Most of the losses would stem from loans to hedge funds, compared with an expected $5 billion to $10 billion from banks' direct investment in subprime CDOs, the Credit Suisse analysts said in a report dated July 6.


1,300 arrested in Zimbabwe prices crackdown
More than 1,300 shop owners and business managers have been arrested in Zimbabwe as part of a crackdown on firms accused of flouting government-imposed price controls, police said Monday.

Most of the 1,328 bosses had been fined but the number also includes around two dozen company executives arrested since Friday who are due to appear before magistrates, said police spokesman Chief Superintendent Oliver Mandipaka.


Sarkozy's blitz puts paid to pact on policy

French President Nicolas Sarkozy threw down the gauntlet in Brussels last night, vowing to press ahead with his plans for a "fiscal shock" regardless of EU rules on budget policy.

Softening his tone slightly after a blizzard of criticism, he told eurozone finance ministers that his government would "aim" for a balanced budget by 2010, but refused to give real ground.


Bernanke: Anchored expectations mute price swings

Swings in volatile energy and food prices will have minimal impact on inflation as long as expectations of future price gains are held steady, Federal Reserve Chairman Ben Bernanke said on Tuesday.

"If inflation expectations are well anchored, changes in energy (and food) prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy," Bernanke told the National Bureau of Economic Research.


Japan Should Diversify Reserves, Abe Adviser Ito Says

Japan, the largest overseas holder of U.S. Treasuries, should invest $700 billion of its currency reserves in higher-yielding assets such as stocks and corporate bonds, said Takatoshi Ito, an adviser to the prime minister.

The reserves should be managed by a special fund that will gradually diversify into euros, Australian dollars and emerging- market currencies, Ito said in an interview in Tokyo.


Russians Selling Off US Currency

The Central Bank of Russia says the amount of U.S. dollars held by individual citizens of this country is rapidly declining. The bank says Russians are also moving increasing sums abroad. Moscow correspondent Peter Fedynsky follows the money trail and reports that Russians are gaining confidence in their own economy.

New figures released by the Russian Central Bank indicate the amount of U.S. dollars held by private Russian citizens has dropped since 2002 from $35 billion to less than $12 billion as of July 1.

Australian hedge fund warns about withdrawals

An Australian hedge fund manager with $1bn in structured credits and junk-rated loans warned investors yesterday it could restrict withdrawals to ensure its survival as it reported losses of 14 per cent in one fund in June.

Basis Capital, based in Sydney, said in a letter to investors it had been hit by “indiscriminate” repricing of “otherwise fundamentally sound collateral” amid the crisis in US home loans to less creditworthy investors. It said it had deliberately avoided the worst-hit 2006 subprime loans.


Kuwait revalues as dollar weighs on Gulf currencies

Kuwait allowed its dinar to appreciate against the dollar for a second time this year after the US currency’s slide raised pressure on pegged exchange rates throughout the world’s biggest oil exporting region.

The dinar would trade at 0.28690 per dollar from Thursday, an appreciation of 0.4 percent, the central bank said, confirming expectations it would respond to the dollar’s tumble to record lows against the euro this week.


LBO Credit Quality Falls to Lowest in Nine Months

Loans used to finance leveraged buyouts are the riskiest in at least nine months on speculation that losses on subprime mortgage securities will spread to other markets, according to traders of credit-default swaps.

The iTraxx LevX Index of credit-default swaps on loans to 35 European companies fell as much as 1 percent to the lowest since the index started last October, according to Deutsche Bank AG prices. The LCDX index of loans to 100 U.S. companies dropped as much as 0.57 percent to 96, Phoenix Partners Group in New York said.


Dollar Slumps to Record Low Versus Euro as Retail Sales Drop

The dollar dropped to a record low against the euro and slumped versus the yen after a government report showed retail sales fell last month by more than analysts expected.

The data may add to concern that the U.S. economy will slow, lifting speculation the Federal Reserve will cut borrowing costs this year.


Retail sales drop worst in 2 years

Retail sales posted the biggest drop in nearly two years in June, the government reported Friday, fanning worries that consumers were starting to feel the pinch of higher gas prices and the slumping housing market.

"This report is a much weaker report than most analysts expected, and presumably it will come as a shock to people who bought retail stocks yesterday on the basis of [some] 'better' chain store numbers," Ian Shepherdson, chief U.S. economist with High Frequency Economics, wrote in a note Friday.


Foreclosure activity rises dramatically

Foreclosures continued to rise throughout the country, the state and the Bay Area in June, according to a report to be released today. Nationally, 164,644 foreclosure notices were filed in June, up 87 percent from June of last year, said RealtyTrac.com, an online marketplace for foreclosure properties. In the Bay Area, the number of foreclosure notices was 5,018, almost triple the 1,780 in June 2006.


The greatest economic boom ever

Just how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.

That may come as news to many Americans, whose boom-time memories are stuck in the 1990s, when Silicon Valley was the epicenter of our growth fantasies. But the fellow now occupying Paulson's old office at 85 Broad Street in downtown Manhattan shares that upbeat view. Just returned from a ribbon-cutting ceremony in the Middle East, Goldman Sachs (Charts, Fortune 500) CEO Lloyd Blankfein waves out toward the East River as he explains how the rise of the "BRICs" has altered his strategy and his travel schedule. (BRIC is an acronym Goldman coined in 2001 reflecting the rising economic power of Brazil, Russia, India, and China.)


U.S. trade deficit widens

The U.S. trade deficit widened to $60 billion in May as oil prices jumped and the volume of foreign oil coming into the country rose, the government said Thursday. But the overall trend still appears to be improving, economists said.

The Census Bureau said that the trade imbalance - the gap between what is imported and exported - grew 2.3 percent from April in seasonally adjusted terms. For the first five months of the year, however, the deficit grew at a slower pace than it did last year. From January through May, the deficit was $295.5 billion, compared with $317.8 billion in the first five months of 2006.


Moody's May Cut $5 Billion of Subprime-Backed CDOs

Moody's Investors Service may cut $5 billion of collateralized debt obligations after lowering the ratings of subprime mortgage bonds that make up the securities.

A downgrade would affect 184 pieces of 91 CDOs, representing about 3.6 percent of rated CDOs containing asset-backed securities, Moody's said in a statement today. Moody's yesterday sliced ratings on $5.2 billion of subprime bonds that back CDOs, which are also sliced into pieces to allow investors to choose how much risk they bear for the returns they receive.


D.R. Horton home sales plunge; expects loss

Home builder D.R. Horton said Tuesday declining home values would lead to its first quarterly loss since it listed on the New York Stock Exchange in 1995, sending its shares to a three-year low.

Hurt by the deteriorating U.S. housing market, the No. 1 U.S. home builder said net sales orders in its fiscal third quarter, ended June 30, fell 40 percent to 8,559 homes. The dollar value of the orders dropped 47 percent to $2.0 billion.


Zimbabwe: Inflation - the Endless Battle of the Zeros

WHEN Princess Nyathi retired to her rural home after a 20-year flirtation with a furniture shop, she was confident monthly payments in pension would be enough to buy the basic commodities.

But five years down the line, Nyathi is bitter after watching her monthly pension eroded heavily by inflation. "Six hundred dollars five years ago would buy you groceries, now with the $12 900 payment, you can only buy half a loaf of bread," she said.


Jeff Saut Presents: Subprime Sublime?

"Liquidity is a coward, when you need her most she runs away and hides.” That old market axiom has clearly stood the test of time. Most recently, the “liquidity cowardess” ran and hid from the subprime complex, causing the ABX-HE.BBB-Subprime Index to lose nearly 50% of its value. Concurrent with that price decline has been a sentiment slide, as reflected in The New York Times, whose reference to the subprime woes has seen a downward verbiage skein that has the glide path of a stone. To wit, “Largely contained,” “mostly contained,” “reasonably well-contained,” “severe but contained.” “Contained?” ... Well, maybe on a macro basis, but try telling that to investors in certain subprime-focused investment funds that have seen their principal erode and in some cases evaporate. Indeed, just a few weeks ago the Bear Stearns (BSC) “bombshell” brought the issue home to roost with the implosion of a couple of highly-leveraged subprime hedge funds. "

Credit Bubble Update - 07/08/07

A Mortgage-Securities Hedge Fund Suspends Payouts

In another sign that troubles in the mortgage market are spreading, a prominent hedge fund that specializes in bonds backed by home loans has suspended redemption requests by investors.

The Horizon ABS Fund managed by John Devaney, a well-known trader of asset-backed securities who is based in Florida, said yesterday that it made the decision to block withdrawals after one investor who accounted for about a quarter of its $650 million in assets sought to leave the fund.


Italease blow-up stokes derivatives fears

A derivative blow-up at the Italian bank Italease has sent tremors through Milan's banking fraternity and exposed the hidden dangers of exotic credit instruments.

The bank has paid off 610 million euros (£419m) in recent days to counter-parties in what amounts to a massive margin call after interest rate rises in Europe caused hedging and derivative losses by clients to mushroom out of control.


Newmont Eliminates Gold Hedges, Creating the World's Largest Unhedged Gold Company, and Announces Strategic Initiatives

Newmont Mining Corporation today announced the elimination of its entire 1.85 million ounce gold hedge position, establishing the Company as the world's largest unhedged gold producer. Newmont also announced plans to monetize components of its royalty and equity portfolio in the next twelve months, resulting in the discontinuation of the Company's Merchant Banking Segment as a separate business unit.


Berlin defends its 'crown jewels'

Germany is drawing up detailed plans to stop strategic assets falling into the hands of "giant locust funds" controlled by Russia, China and Middle East governments.

Finance minister Peer Steinbrück said "telecoms, banks, post, logistics and energy" were among the sectors that would be shielded from sovereign wealth funds, the new state trusts that are fast swamping global asset markets.


Canadian dollar hits high vs. greenback

The Canadian dollar climbed to a 30-year high against the U.S. currency Friday, bolstered by higher oil prices, a strong economy and a looming interest rate hike.

Canada's currency advanced as high as 95.53 U.S. cents Friday, pushing past the 95 U.S. cents mark for the first time since May 1977. It has risen 10.8 percent so far this year.


As 'China effect' reverses, inflation threatens

When the Prime Minister appears on television vowing to "get to grips with inflation", you know that a serious problem is taking shape.

Gordon Brown had the good fortune to be Chancellor over a golden decade as the industrial revolutions of China, India and emerging Asia supplied us ever cheaper manufactures.

In this miracle world, we have had 5pc global growth for five years - the best since the Second World War - without overheating.


Money falls from sky

A German motorist surprised by euro notes swirling in the air around her car hit the brakes and collected a "substantial amount of money" before turning it over to police, authorities in Worms said on Thursday.

A police spokesman in the small western town said the 24-year-old woman saw the money flying through the air in her rear view mirror late on Wednesday. She pulled over and tried to collect all the notes, unsuccessfully.


Subprime risks come home to roost for hedge funds

Bad bets revealed by some hedge funds in recent weeks may mean other funds will be forced to accept the market's deteriorating views on subprime mortgages and report their own losses soon.

Some managers have resisted accepting market views on their assets, claiming declines represent short-term market volatility and not underlying financial value in their subprime bonds, analysts said. Since the bonds trade infrequently, managers' have turned to pricing models that may ignore market sentiment, buoying prices.


Spain selling gold to cover up worsening trade deficit

In an interesting commentary entitled “The Gold of Spain’s Central Bank,” Gerardo del Caz debates the reasoning behind Spain’s massive gold sales, selling off 30% of its reserves (80 tonnes) in just two months. In March of 2004, Spain held eleventh place in the world’s ranking with 523 tonnes, but today has little more than 300 tonnes.


Subprime poor practice risks turning to malpractice

Regulators tread a fine line between the Keystone Cops – galumphing hopelessly after escaping criminals – and Captain Renault in Casablanca. The Financial Services Authority has put paid to the first criticism by warning intermediaries and subprime mortgage lenders before poor practice turns to malpractice. But given the subprime scandal unfolding in the US, the regulator can’t really be “shocked, shocked” to have uncovered market weaknesses.


LBO Loans May Follow Subprime Collapse, Moulton Says

Loans to fund leveraged buyouts may dry up just like subprime mortgages in the U.S., according to Jon Moulton, the British venture capitalist who tried and failed to buy the carmaker MG Rover.

``It's near the top. There are some difficulties beginning to emerge in the debt markets,'' Moulton, who runs the private equity firm Alchemy Partners, told a meeting of the U.K. Parliament's Treasury committee today. ``At some stage no one will be willing to underwrite fresh debt.''

Debt, Deficits, Derivatives & Delusions - 06/17/07

China's trade surplus surges 73 percent

Just last month, China announced plans to buy $4.3 billion of U.S. technology as a way to show how serious it is about reducing the ballooning trade gap with the U.S.

So it must have come as a mixed blessing in Beijing to see that China's antigravity trade surplus soared again in May to the third-highest monthly level on record, according to government figures released Monday.

China's Chinalco to buy Peru Copper

Peru Copper Inc. said Monday it's agreed to a $792 million acquisition by government-owned mining giant Aluminum Corp. of China in a deal that takes out one of the few remaining independent copper-mining companies.

Vancouver-based Peru Copper, which has an agreement to develop copper deposits in the South American country's Toromocho project, said it has received a friendly takeover bid valuing the company at $6.22 a share (C$6.60) in cash.

BIS cautions over surge in takeover debt

The Bank for International Settlements has warned that the current takeover boom across the world is being funded by ever greater levels of debt, storing up trouble should rising inflation lead to a sharp rise in interest rates.

The bank's quarterly report, released today, said merger and acquisition activity had reached an unprecedented $1,100bn (£560bn) in the US over the first five months of this year, and $1,000bn in Europe.

Greenspan not worried Chinese will dump Treasuries

There is little reason to fear a wholesale pullout by China out of U.S. government bonds, former Federal Reserve Chairman Alan Greenspan said on Tuesday.

While expressing concerns about China's runaway growth rate and what he described as overvalued stocks, Greenspan played down the prospect that Chinese authorities would sell Treasuries in earnest, forcing a sharp spike in U.S. interest rates.

Conspiracy or coincidence?

A bad day for stocks - and for gold, which closed Tuesday in New York at $647.10, down over $7 on the day and sharply down from its April lunge at the $700 level.

First a proprietary word: The Hulbert Gold Newsletter Sentiment Index, which represents the average gold market exposure among a subset of short-term gold-timing newsletters, stood at a reading of 21.4% on Tuesday night. That's not dramatically low - gold exposure can go well into negative territory. But it's a change from the over-enthusiasm (50%) that Mark Hulbert thought gold-timers were displaying earlier this month, when gold reached $671 See June 5 column

Bulls brave inflation and Zimbabwe's political turmoil

Notwithstanding the world's highest inflation rate - by far - and the world's fastest-contracting economy, the Zimbabwe Stock Exchange is booming, with share prices trebling in real terms in just 22 weeks.

Earnings and growth fundamentals cannot begin to explain the 4,500 per cent surge in the ZSE Industrials index since December 2006. Instead, analysts cite three main influences - the market is drowning in liquidity as the central bank prints money at a breakneck pace; the Zimbabwe dollar has collapsed in the parallel (unofficial) market from Z$2,900 to the US dollar at the start of the year to between Z$75,000 and Z$100,000 today, and the ZSE is more casino than market as investors throw increasingly worthless Zimbabwe dollars into penny stocks.

Swiss sales dash hopes of gold recovery

Switzerland's central bank is to sell a further 250 tonnes of gold, dashing hopes for a revival in depressed bullion prices after months of heavy selling by Spain and Belgium.

"This is quite significant, if you think that Britain's entire sales were 400 tonnes", said Ross Norman, director of the TheBullionDesk.com.

Markets could cope with doubling of US deficit

Global capital markets would be able to finance a near-doubling of the US current account deficit to $1,600bn a year by 2012, a McKinsey study published on Friday argues.

The study, by McKinsey Global Institute, breaks new ground in analysing the sources of funding for the deficit, and what a large dollar depreciation would mean for different industries and US trading partners.

Yields May Not Be A Threat Yet

With the rising yield of the 10-year Treasury note spooking the markets, it may be worth a historical look vs. the S&P 500. The chart (1962-2007) does show several periods where spikes in the 10-year yield coincided with corrections in the S&P 500 (see the thin black vertical lines). However, the vast majority of the 1982–2000 bull market in U.S. stocks took place during a period where the yield on the 10-year was higher than present level of 5.22% (see green box).

Oil hits seven-month high, palladium shines

The price of crude oil reached the highest level since September in London trading this week as the market worried about tight US stockpiles of motor fuel heading into the peak demand season.

Palladium was an unlikely star performer among precious metals, with its price approaching a one-year high. Lead and nickel notched up further historic records amid dwindling stockpiles. Friday’s prices are compared with those recorded late on Thursday of the previous week. Markets had shut on Friday, April 6 owing to the Easter festivities.

Commodities guru Rogers sees oil hitting $100/bbl

Commodities investment guru Jim Rogers said on Tuesday he expects oil prices to hit $100 a barrel as part of a larger commodities bull run that could last another 15 years.

With new oil discoveries struggling to keep up with rising demand from emerging economies in China and India, Rogers said crude prices will surge past historical highs.

Commodity Markets Analysis, Meat, Gold, Corn and Peak Oil

Where's the Beef?? It Better be in Your Freezer - Several different things I want to address first before getting to analysis of the HUI. The first one has to do with meat. The governments do not include the price of food or energy in the core rate of inflation (soon they will be including those that lie in graveyards into their index to further “average” the price down I am sure of it) so everything that you or I have to buy in the grocery store no matter how much costs rise is not “their definition of inflation”. This is the government's way of hiding the volumes of money being created out of thin air.

Copper futures up on increased demand, especially in Asia

Speculators on Tuesday pushed copper futures to hit their highest level since early November as demand grew, especially in Asia.

The most-active May copper contract rose 13.55 cents to settle at $3.3145 per pound on the New York Mercantile Exchange. It peaked at $3.3240 a pound in after-hours electronic trading, its strongest level since Nov. 8.

Commodities Trounce Stocks, Bonds on Oil, Soy Revival

Commodities are beating stocks and bonds for the first time in nine months, and the quarterly rebound is likely to continue on China's increasing imports of raw materials.

Oil, gold, soybeans and sugar for delivery at the end of the year on the New York Mercantile Exchange and the Boards of Trade in Chicago and New York show at least a 3.7 percent appreciation, beyond the 5.7 percent gain in the UBS Bloomberg CMCI index of 28 commodities through March.

Copper Prices Head for Biggest Monthly Increase Since April

Copper prices are headed for a fourth consecutive weekly gain and the biggest monthly increase since April on signs of robust demand for the metal.

Inventories monitored by the London Metal Exchange have fallen for a seventh straight week, the longest decline since July 2005. Producers including Codelco and Freeport McMorRan Copper & Gold Inc., the two biggest, said this week that Asian demand will remain strong. Copper prices have more than tripled in four years on demand from China, the largest consumer.

The stock is dead, long live commodities, says Rogers

Investment guru Jim Rogers says the rise of China and the change in the status of the US dollar as a reserve currency is having a profound impact on global demand.

Investment guru Jim Rogers believes that the bull market for stock and bond markets is over and says investors should get into commodities. There is a long-term bull market in commodities which will extend to 2014-2022, he told the Credit Suisse Asian Investment Conference in a keynote speech yesterday.

Uranium Market Still Has a Long Way to Run

As the name suggests the Geiger Counter fund [LSE:GCL] focuses on the uranium and nuclear energy markets. It was launched last July at 50 pence per share (as covered in a previous Resource Investor article), and has since enjoyed almost uninterrupted growth, with the price more than doubling to close today at 104 pence.

The independent investment advisor to Geiger Counter is NCIM (New City Investment Managers), a company established in 2004 with a flying pig as a logo, on the basis that the directors regularly hear presentations from potential investee companies who hope that their business proposition is going to flourish, yet often there is a greater chance that pigs may fly!

Economics 101: Look at the Facts; Don't Listen to Hysterics

Commodities investor Jim Rogers, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s, has looked at a small percentage of mortgage defaults and sees a real estate disaster right around the corner: “Real estate prices will go down 40-50 percent in bubble areas,” he warned on Friday. “There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history.”

Top investor sees U.S. property crash

Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

Top investor warns of Russia stock bubble

Prominent emerging markets investor Jim Rogers said Russian equity markets were overvalued and could burst "sooner rather than later," revealing the skeletons in the cupboard of its "outlaw capitalism."

"I wouldn't put a nickel of my own money in Russia, and I wouldn't put a nickel of your money there either," Rogers, a long-time commodities bull, told Reuters by telephone from New York on Wednesday.

Forget Russia, Jim Rogers advises

Commodities bull Jim Rogers would be more likely to advise someone looking to make their fortunes in energy or raw materials to go to Myanmar, Angola or East Timor, despite their political and social woes, than to Russia.

"Russia does have massive amounts of commodities, but Russia is falling apart," Mr. Rogers told an investor conference in Toronto this week. "Russia is a disaster that is falling into a catastrophe."

ENERGY TAXES, OIL PRICES AND ECONOMIC ILLITERACY

I have had numerous emails challenging my arguments against wasting scarce resources on grossly inefficient alternative energy projects. One of these people wrote that I must be wrong because Alan Wood, economics writer for The Australian's, also believes that the state should use taxation to discourage the consumption of oil. Just to make sure I got the message she sent me Wood's article (Excise feud fuelled by hypocrisy). It made for very depressing reading.

Commodity bull takes bearish view of U.S. economy

Move over Alan Greenspan.

Globe-trotting commodities bull and China booster Jim Rogers is a lot more confident about the U.S. economy being headed down for the count than the former U.S. Federal Reserve Board chairman, who said earlier this week that there is a "one-third probability" it could fall into recession by the end of 2007.

"I think the U.S. is probably in recession now or will be later in the year," Mr. Rogers, creator of the Rogers international commodities index, said yesterday.

Gold, Silver Rise to 9-Month High on Demand for Inflation Hedge

Gold and silver climbed to nine- month highs as a rally in commodity prices spurred demand for precious metals as a hedge against inflation.

Investment in exchange-traded funds for gold rose 5.4 percent this year amid gains in commodities including natural gas, nickel, corn and soybeans. The Reuters-Jefferies CRB Commodity Price Index is the highest since Dec. 8 as oil rose to the highest price this year and copper climbed for a third day.

Five Easy Oil Market Lessons

Much of what you read and hear about world oil pricing is wrong. Here are a few things to keep in mind whenever you hear pundits talk about oil prices:

Lesson One: Prices in a competitive market are determined by supply and demand. If the world oil market is competitive, the price of oil on any given day is the result of the intersection between supply and oil demand. Through that process, we end up with “equilibrium” and the price is called “the equilibrium price.” There are no “shortages” in such a market. A shortage indicates that what people are willing and able to buy is more than what sellers are willing and able to sell. In the case of a shortage, prices will increase until we reach equilibrium: a balance between supply and demand. Economics 101 tells us that if the price for West Texas Intermediate is $75 per barrel, then the oil market is at equilibrium at that price and supply and demand are balanced.

Resource Consumption: U.S. vs. China

The American dream is great for the rest of the world when it comes to exporting our traditions of freedom and democratic practices, and the rule of law.

But for many people, the American dream is more about our lifestyle, loaded up with material objects and comforts. This cherished "dream" of comfort and materialism is fast becoming the Chinese and Indian dream too.

More from Jim Rogers on the Aussie Commodity Boom

Two more points on Jim Roger’s speech the other day at Zinc, down Yarra-way in Melbourne. “Water is one of the things that could derail China,” Jim said. It’s true. We hadn’t thought of it that way before. But aside from what you have in your toilet and shower, the vast majority of water use is industrial and agricultural. Conserving at home makes you feel better. But when you begin to drill down into the story, you realize how much of the food you eat and the products you use on a daily basis (including petrol) include water as an input. Without it, a lot of economic activity dries up.

Base Metals are Melting Off the Speculative Froth

We spent a few hours mid-day yesterday listening to best - selling author and world-renowned commodities bull Jim Rogers speak at a lunch sponsored by UBS. The steak was excellent and Rogers on his game as well. “Stocks can go to zero. Lead is not going to go to zero. Neither is gold. Neither is oil. There will be corrections, but when you look at supply and demand, it’s not hard to do the math… this bull-market, according to my research, will last another seven to fifteen years.” Dignified gasps from some audience members ensued.

BHP Billiton numbers are simply staggering, with plenty more still to come

HAD Chip Goodyear heard Jim Rogers talking yesterday, at about the same time Goodyear was announcing his decision to retire as BHP Billiton chief executive by the end of this year, he might have had second thoughts.

Then again, perhaps it would simply have confirmed the view that 2007 was the perfect moment to pass on the leadership of the world's largest resource company.

Goldman Sachs selling popular commodity index

Goldman Sachs Group Inc. said Tuesday it's selling its widely tracked commodity index and two stock-benchmark families to Standard & Poor's as the financial-services powerhouse unloads more indexes that form the basis of exchange-traded funds.

S&P is acquiring the Goldman Sachs Commodity Index (GSCI), the Goldman Sachs Sector Indexes, and the Goldman Sachs Technology Index and six technology sub-indexes, according to a statement.

Copper future murky as B.C. looks on

The copper bulls are duking it out with the copper bears. Each side says look at China. Both have B.C. mining companies watching with interest.

The debate is on because copper has been slipsliding. Lately, it has been holding on at around $2.60 US for .45 kg (one pound), down some 35 per cent from a May 2006 stratospheric high of just under $4 for .45 kg.

There are a slew of reasons. Pundits talk about hot hedge fund money pouring out of copper as quickly as it rushed in.

But wipe away some of the froth and China remains a major issue.

Monday view: The West must handle with care China's growing interest in Africa

The new Cold War between China and the United States is taking shape, in Africa. Last week the US Defence Department quietly launched its first military command dedicated to black Africa and the Sahara - until now a forgotten annex of the Pentagon's European and Mid East operations.

Known as "AFRICOM" it is ostensibly designed to fight al-Qa'eda and cope with natural disasters. It is equally aimed at Beijing, a warning that the Communist regime will meet resistance if it tries to bottle up a large chunk of the world's oil, gas, and mineral reserves - not to mention its arable land, the strategic prize a decade hence as food runs short.

Private equity cycle to end badly, commodities expert warns

The debt-laden private equity market is headed for a shakeout and will exacerbate the pain from the next sharp downturn in world financial markets, commodities expert Jim Rogers said Monday.

With resources companies increasingly coming under the radar of cashed-up buyout firms, Rogers told journalists in Australia even the country's biggest companies, like global miner BHP Billiton PLC, could become targets.

"There is going to be a gigantic shakeout when that whole mess starts coming apart," said Rogers, who is author of the books 'Hot Commodities' and 'Adventure Capitalist.' He also co-founded the Quantum Fund with George Soros.

Schroders, DWS Target Agricultural Stocks After Shares Surge

Schroders Plc and DWS Investments are snapping up shares of U.S. seed processors, Chinese dairy farms and Brazilian sugar mills, confident the five-year rally in commodities isn't over.

The money managers are buying shares of companies that grow and process crops, including corn and wheat, and their suppliers even after agricultural prices retreated from their highest levels in a decade or more. DWS, a unit of Deutsche Bank AG, is Europe's third-largest asset manager, overseeing $323 billion, and Schroders is the sixth-largest in the U.K., handling $230 billion.

China aims to spend $200bn of reserves

The Chinese government is taking action to implement a new policy of diversifying the disposal of the country's over US$1 trillion foreign exchange reserves which was initiated by the Central Conference on Financial Affairs three weeks ago.

The Ministry of Finance (MOF) is planning to issue yuan-denominated bonds to raise funds that will be used to "buy out" as much as $200 billion from the country's foreign reserve pool.

Chinese president takes his African tour to copper-rich Zambia

Chinese President Hu Jintao arrived in copper-rich Zambia on Saturday, with a massive investment and debt-forgiveness package to boost ties with a long-standing ally and help meet the Asian giant's insatiable appetite for raw materials.

Facing mounting accusations of Chinese exploitation of African labor and resources — a hot political issue during last year's Zambian presidential elections — Hu stressed that Beijing was motivated by partnership rather than purely profit.

Oil Surges Above $59 on Increased Fuel Demand, OPEC Output Cuts

Crude oil surged above $59 a barrel in New York, the highest close this year, because of increasing fuel demand in the U.S. and OPEC's production cuts.

Heating consumption in the Northeast will be 36 percent above normal in the next week, Weather Derivatives, a forecaster in Belton, Missouri, said. Government reports this week showed that the U.S. is growing at a moderate rate, which may boost fuel use. The Organization of Petroleum Exporting Countries agreed to trim output by 500,000 barrels a day starting yesterday.

Ethanol Juggernaut Diverts Corn from Food to Fuel

Shoppers, brace yourselves. Higher across-the-board supermarket prices may be around the corner, says agricultural economist Lester Brown. A rapidly escalating demand for the corn that underlies a broad range of products—from breakfast cereals to milk and meats—has been driving up the price of this grain, he notes. Those commodity-price hikes could soon inflate the cost of plenty of other products.

POINTS AND PLUGS: Ethanol demand could lead to higher food prices

Demand for ethanol fuel has driven up grain prices and could lead to higher prices for foods, including beef and poultry.

The St. Paul Pioneer Press newspaper reported that corn hit a 10-year high in January, so in a single day the markets added one-third of a billion dollars to the value of grain stored in Minnesota's bins and elevators.

China Braces For A Bubble

Although he is 63 years old, Beijing retiree Du Shuzhan is not afraid to try something new. He has just discovered the stock market. A few weeks ago, he deposited $1,500 in his first share-trading account, and on a January afternoon he visited a local broker to buy shares of seven Chinese companies. "All my friends started to invest in the stock market last year," Du says. "My wife and I decided to join the trend." He admits that when it comes to deciding which stocks to buy, he lacks expertise. "I don't know much about it. I just picked the ones with low prices." But he figures he will do fine. "With all the money in the market, I don't see how it could go down."

Oil to pass $US100 - some time

Commodities guru Jim Rogers, who predicted the start of the big rally in 1999, said the recent slide in crude oil is a "correction" before prices resume their march towards $US100 ($127) a barrel.

"I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over $US100," Mr Rogers said in a Tokyo interview.

Oil Dips Below $58 a Barrel in Asia

Oil prices dipped in Asian trading Thursday as market participants took profits after crude gained more than $1 a barrel in the previous session.

Light, sweet crude for March delivery fell 27 cents to $57.87 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore.

Oil prices rises on OPEC cuts, natural gas up 10 percent on cold weather

Oil prices rose more than $2 to above $56 a barrel Tuesday on OPEC production cut concerns, while natural gas soared more than 10 percent on expectations of more Arctic weather in the Midwest.
The Wall Street Journal reported Tuesday that Saudi Arabia has told its customers it will cut supply by a further 158,000 barrels a day, effective Feb. 1. “After these cuts, our oil production will have declined by about 1 million barrels a day since last summer,” a senior official said, according to the newspaper.

Oil jumps 5 pct on fund buying, OPEC, U.S. cold

Oil jumped over 5 percent on Tuesday as big money funds poured fresh cash into the market amid OPEC cuts and cold U.S. weather that could tighten supplies.

U.S. light crude settled up $2.96 at $56.96, reversing a $1.41 drop on Monday. London Brent crude gained $2.71 to settle at $56.39.

The surge was fueled by a rush of buying by funds ahead of a fresh OPEC output cut.

How about a real energy policy?

If there is one thing you can say about one-way, extreme markets, it is this: they often reverse. John Maynard Keynes noted "trees don't grow to the sky," and that's pretty much true, depending on where you figure the sky starts.

In any case, oil topped out around the middle of last year, and at this point crude prices are stabilizing after a tumble. It would be easy to cite all of the markets that would never reverse that did, but why waste the time? We know that every market tops out eventually, though investor psychology never wants to admit such a possibility when in the grip of hysteria.

China’s Raging Bull

Are speculators out to subvert the Chinese state? Absolutely.

The current bull market in China shares looks like a lot like any other bull market: frenzied trading volumes, fresh record highs on a regular basis, cheerleading banks upgrading their "price targets".

But there is also a very special rationale involved in the run on China assets. This is not just a bull market this is a fight that could be called “China versus the Speculators.”

Bubble alarm sparks sell-off

China's benchmark stock indexes fell 4 percent Thursday after comments from "Commodities King" Jim Rogers that a bubble was forming in the domestic market.

Rogers appeared for 30 minutes during prime time on China Central Television, a mouthpiece of the central government, in what market observers saw as a sign Beijing was seeking to cool the overheating market by airing a shrewd investor's professional opinions.

Crude Oil, Natural Gas Fall on Signs U.S. Supplies Are Adequate

Crude oil and natural gas slid on signs U.S. heating-fuel stockpiles are adequate, blunting the impact of the colder weather that is forecast for the next two weeks.

Natural gas prices plunged today after a government report showed that U.S. supplies last week were 21 percent higher than the five-year average for the period. Some users switch between natural gas and fuels refined from oil based on cost. Below- normal temperatures will cover the eastern half of the U.S. from Jan. 31 to Feb. 8, the National Weather Service said today.

Petrodollars Will Test Asia's Dollar Fixation: Andy Mukherjee

A glance at stock values suggests that lower energy prices are an unalloyed blessing for Asia. That may not be true.

Morgan Stanley Capital International's emerging-market equity index for Asia has risen 22 percent since oil began its descent in early August last year.

China Plans to Shift Use of Foreign Exchange Reserves

China, the world's biggest consumer of coal and metals, will use its foreign exchange reserves to buy ``strategic'' resources, Vice Premier Zeng Peiyan said.

The government will increase the nation's purchases of resources for strategic stockpiling when there are ``plentiful'' reserves, Zeng said in a speech carried on the Ministry of Land and Resources Web site today.

Jim Rogers and Eric Sprott: Commodity Bull Run Not Over

Almost all commodities began 2007 on a downdraft, with the price of oil perhaps taking the hardest hit so far. Nickel and natural gas may be the most notable exceptions, while uranium has also remained strong. But the broader correction has been “so quick and violent,” says Sprott Asset Management, “that it has led many to believe that the commodity bull market that began in 2001 is now coming to an end.”

However, Eric Sprott considers this downtrend a short-term blip in what will continue to be a long-term bull market with several years to go.

Investing: 'Over $100' oil forecast following a correction

Oil will resume its march toward $100 a barrel and beyond after a "correction," according to Jim Rogers, who predicted the start of the commodities rally in 1999.

"I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over $100," he said Wednesday. "It will go over $150. Whether that is in 2009 or 2013, I don't have a clue, but I know it's going to happen."

Crude Price Punctures $50 Support on High U.S. Inventories

Crude ticked below $50 a barrel yesterday, a 20-month low, on a DOE report that U.S. inventories rose beyond expectations. It recovered to $50.48 by the end of the session, a 3.4% drop. Crude inventories increased by 6.8 million barrels last week, dramatically beyond consensus estimates of 325,000 and the largest weekly gain since October 2002. Saudi Arabia just nixed a proposed third production cut to stem the 17% drop in the oil price since the beginning of the year. In a striking juxtaposition, the Saudis -- who dismissed the oil price freefall as a "short-term aberration" -- announced plans to increase production capacity nearly 40% by 2009 and double refining size over the next five years concurrently with the International Energy Agency's report lowering its world oil demand growth forecast for 2007. Global demand did rise 0.9% in 2006 on growth in the Chinese and Middle Eastern markets, but that was down from 3.9% in 2004 and 1.5% in 2005. The IEA's report also noted that oil consumption in the 30 OECD countries fell 0.6% last year, the first such drop in over 20 years. The drop suggests that businesses and consumers in the developed world finally began to curb consumption in response to precipitous oil prices; the tipping point appears to have been last July, when crude hit $78. Commodities guru Jim Rogers sees crude recovering and eventually reaching $100 on surging Asian demand and the lack of any significant oil finds in the past 30 years.

Oil Service Stocks vs. Big Oil Stocks

T. Boone Pickens knows oil better than most people out there, definitely better than me. However, his calling into CNBC seemed like a desperate attempt to influence oil prices.

I’m not a big fan of large oil companies as most of them have little or no organic production growth and they are completely at the mercy of oil prices, but I am getting interested in oil service stocks for several reasons:

Oil service stocks are not as sensitive to oil prices as long as prices stay about $30+, oil companies will be making holes in the ground at a nice pace.

Soybeans trading higher in mid-January

While the corn market was definitely the newsmaker, the soybean market also shared the limelight.

Soybeans closed on the Chicago Board of Trade on Jan. 12 with March at $7.16 1/2; May at $7.31 1/2; July at $7.43; September at $7.50, November at $7.63 1/2, and November 2008 at $7.57/bushel.

Compared with the contracts in late December 2006, prices were up 17-23 cents/bushel.

According to the Chicago Board of Trade website, higher prices in corn supported moderate gains in soybeans following the release of the final 2006 crop production report.

PICKENS PLAYS CHICKEN WITH BULLISH OIL BET

If legendary oil trader T. Boone Pickens is so convinced oil will shoot up again, he may have to hog-tie Vladimir Putin to corral the Russian leader's petro-cash machine.

Pickens raised eyebrows yesterday when he said that collapsing crude prices would jump abruptly higher to $70 a barrel, which could earn him perhaps $1 billion overnight.

Iran says military attack impossible but ready for threat

A top Iranian nuclear official said yesterday that he believed the Western military attack on Iran's nuclear facilities was "highly improbable", but his country was ready to face the threat, the local ISNA news agency reported.
"We believe bombing our nuclear facilities is highly improbable, however, we have already adopted necessary precautious measures for this (threat)," Mohammad Saeedi, deputy chief of Iran's Atomic Energy Organization, was quoted as saying.

The Peak Oil Crisis: Congressional Hearings - Round #2

The first congressional hearings on peak oil were held in December 2005 when a subcommittee of the House Energy and Commerce Committee had a half-day session devoted to the topic. At the hearing several luminaries of the peak oil community testified that indeed the world was about to start running short of cheap, easy to find oil and that indeed there would be serious consequences for the industrialized world. This view was countered by the man from Cambridge Energy Research who testified that to the contrary, world oil production could continue to grow for decades, never really would “peak,” and this was a problem for future generations. Happy motoring everyone!

South Africa: End of Oil's Run?

THE price of crude hit a 19-month low last week, continuing a downward slide that has already slashed the price of a barrel of oil more than 12% in the first two weeks of the new year.

The immediate cause of the price slump was the resumption of Russia's oil supplies to central Europe -- the closure of this key pipeline three days earlier had cut supplies to the region 10%, so it was to be expected that, all else being equal, global prices would ease when the taps were reopened. This has also been an unusually warm winter in the US, which allowed inventories in the world's biggest oil-consuming economy to rise and released pressure on the supply side on the other side of the Atlantic.

IEA Cuts 2007 Oil Demand Forecast on Mild Weather

The International Energy Agency, an adviser to 26 nations, cut its forecast for global oil demand this year as a mild winter in the U.S. and Europe sent prices lower.

World demand is forecast to rise 1.6 percent this year to 85.77 million barrels a day, the IEA said in a monthly report today, 160,000 barrels a day less than it predicted one month ago. The agency also lowered its forecast for 2007 oil production outside the Organization of Petroleum Exporting Countries.

Jim Rogers: Oil to $150 a barrel

Back in the 1970s, Jim Rogers made a fortune on commodities investing. At the time, he was a part of the pioneering hedge fund, Quantum.

Well, once again, he's very bullish on commodities -- including oil.

Crude oil, techs clip stocks again

Crude hits $49.90 before rebounding. Techs dive on disappointments from Apple and Lam Research. After hours, IBM beats estimates, but shares dive. Fed boss Bernanke warns about rising Social Security and Medicare costs. Merrill Lynch's profit rises.

Rogers Says Oil Will Rise to $100 After `Correction'

Oil will resume its march toward $100 a barrel after a ``correction,'' said Jim Rogers, who predicted the start of the commodities rally in 1999.

``I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over $100,'' Rogers said in a Tokyo interview. ``It will go over $150. Whether that is in 2009 or 2013, I don't have a clue, but I know it's going to happen.''

Investment U: Art Laffer Says Oil Will Fall Below $35 Per Barrel

As energy traders scramble amid speculation that OPEC will try to stabilize prices around $60 a barrel, one of the chief architects of supply-side economics says the days of high-priced oil are over. For now, at least.

In an exclusive interview with Investment U, renowned economist and money manager Art B. Laffer, known best for his "Laffer curve," predicts oil will plummet below $35 a barrel.

End of Oil's Run?

The price of crude hit a 19-month low last week, continuing a downward slide that has already slashed the price of a barrel of oil more than 12% in the first two weeks of the new year.

The immediate cause of the price slump was the resumption of Russia’s oil supplies to central Europe - the closure of this key pipeline three days earlier had cut supplies to the region 10%, so it was to be expected that, all else being equal, global prices would ease when the taps were reopened. This has also been an unusually warm winter in the U.S., which allowed inventories in the world’s biggest oil-consuming economy to rise and released pressure on the supply side on the other side of the Atlantic.

Should Oil Be $40 or $70?

Declining Commodity Prices Signify Weakening Economy
Some Thoughts on the Volatility in Commodities
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Should Oil be $40 or $80 a Barrel?
The Predictive Power of Oil Prices
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South Africa, the Marines, and New Computers

Warm weather, fund selling, other factors contributing to crude price breakdown

We think numerous factors played a role in last week's crude price breakdown. First, the weather has been mild, especially on the east coast. The U.S. Northeast demands roughly 80 percent of all heating oil used in the United States. Because temperatures there have been warm, demand for the product has slumped, and heating oil has not supported the crude market. On that note, this is also the weakest season for gasoline demand, further limiting support.

Corn Rises to 10-Year High as Ethanol Demand Erodes U.S. Supply

Corn prices surged to a 10-year high, sparking rallies for soybeans and wheat, after the U.S. forecast the smallest global supplies in 29 years as record demand for ethanol uses up more of the crop.

A 2006 harvest that was the third-largest ever in the U.S., the world's biggest corn producer and exporter, still won't prevent global supplies from dropping to the lowest since 1978, the U.S. Department of Agriculture said today in Washington. Corn prices have surged 86 percent in the past year.