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He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Experts (Matt Simmomns) say Saudi oil may have peaked
http://english.aljazeera.net/NR/exer...E5850FB067.htm
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He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Investors watch rising energy costs
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The Paris-based International Energy Agency's recent pessimistic update about the world's oil supply/demand inversion set off global alarm bells. This was a major turnaround from a previous projection issued by the respected international agency before the end of last year.
With the IEA trumpeting increased global demand, combined with a cutback in non-OPEC production, the New York Mercantile Exchange oil traders returned per diem oil prices back to the high 40's per barrel. Only two months ago, oil prices had retreated back to the $40 per barrel range. The early winter weather in the Northeast was exceptionally mild, and it looked as if oil prices in the 30's were only a matter of time.
The timing of the IEA announcement was particularly ominous as the first quarter has historically proven to be the weakest in demand, coming between peak heating demand and the multi-month driving season.
This turn of events also did not go unnoticed by the equity markets' natural resource partnership, whose stock prices were driven to all-time highs, in an attempt to lock up future oil and natural gas availability, with prices projected to climb even higher.
OPEC, which is responsible for 35 percent of global oil exports, has shown no predisposition to loosen its quotas once again. Although cracking down on quota cheating after Jan. 1, the predominantly Middle East oil monopoly has signaled the possibility of further tightening at its mid-March meeting, scheduled for Teheran, Iran.
In effect, OPEC has taken off the mask of keeping prices down to accommodate global economic growth. Its spokesmen have lately "legitimized" price per barrel in the $50 range, due ostensibly to higher costs of production and the weakness of the dollar - the currency of all OPEC transactions.
The outlook for new arenas of oil production continues to deteriorate. In fact, depletion of existing sources are outstripping additional finds at an accelerating pace.
This phenomenon is best manifested by the behavior of the world's 10 biggest oil companies, which grew out of the mega-merger mania of the 1990s. Despite earnings of more than $100 billion last year on sales exceeding $1 trillion, not much of this unprecedented largesse is going into new exploration.
Despite a growing possibility that oil prices will remain high throughout 2005, the bulk of this all-time largest cash hoard is expected to go into mundane business commitments, such as stock buy-backs, dividend increases, and infrastructure strengthening, rather than expanding drilling activities. Even capital expenditures are being drastically cut back.
This has less to do with price risk aversion than too much money chasing too few exploration opportunities. This dilemma is complicated by many of the global oil-producing nations prohibiting partnering with the global multinationals.
Saudi Arabia, the world's No. 1 oil producer, is a good example. With rapidly aging oil fields and a deteriorating energy infrastructure, the Arab kingdom has demanded unacceptable terms from its former ARAMCO partners and is continuing to rapidly deplete existing reserves. Promises of Saudi reserves exceeding 500 billion barrels are increasingly labeled as pipe dreams by knowledgeable geologists. The same is true of repeated promises to pump 12 million to 15 million barrels a day.
Mexico, which had most recently discovered large offshore fields deep in the Gulf of Mexico, doesn't have enough money to even secure the sonar equipment necessary to confirm these finds. With 90 percent of its oil revenues confiscated by the government, Mexico is hamstrung by a law that does not permit non-Mexican partnerships.
This was part of a law passed in the late 1930s to make PEMEX, the national oil conglomerate, independent of extra-national influence.
The ongoing acquisitions and global energy partnership-building by China and lately India, also pose a dangerous restriction to U.S. av
He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Commodities and gold -Steve Saville
"In our opinion, what is presently underway is a final blow-off to the upside in the prices of some commodities and many commodity-related equities. It's impossible for us to confidently predict how much further these moves will go before the inevitable downturn gets underway, although our guess is that major peaks will be in place before the end of March. What we can say with confidence is that the decline that follows the speculative blow-off will take back all gains achieved during the blow-off stage plus a lot more. For an indication of what is likely to happen in some other sectors following the current blow-off take a look at what happened to silver and silver shares during March-May of 2004."
full article at:
http://www.gold-eagle.com/editorials...use030305.html
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He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Mick, read the article below on the way home tonight.
Seems a pretty credible call that steel prices at least may be heading for a fall.
http://news.ft.com/cms/s/0040aea2-8e...00e2511c8.html
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Bloomberg News
E-Mail This Story Printer-Friendly Format
Copper Rises to 16-Year High in New York and a Record in London Listen
March 8 (Bloomberg) -
Copper prices rose to a 16-year high in New York and touched a record in London on expectations that production of refined metal from the world's smelters will lag demand through June.
Smelters aren't boosting output because some are shut for maintenance, Merrill Lynch & Co. said today in a report. Inventory monitored by the London Metal Exchange has plunged 80 percent in the past year. World supply is equal to three weeks of demand, down from more than six weeks in early 2003, said Jon Bergtheil, an analyst at J.P. Morgan Securities Ltd. in London.
``Anything below four weeks is still a danger zone,'' Bergtheil said. ``There is no doubt that copper is extremely tight in the first half of the year.''
Copper futures for May delivery rose 1.85 cents, or 1.2 percent, to $1.515 a pound at 10:12 a.m. on the Comex division of the New York Mercantile Exchange, after reaching $1.521, the highest since March 6, 1989. Prices are up 17 percent in the past year.
On the London Metal Exchange, copper for delivery in three months rose $43, or 1.3 percent, to $3,287 a metric ton. Prices reached $3,296, the highest since the contract began trading in its current form in 1986.
The copper rally is part of a surge in commodity prices, which are at their highest in 24 years. The Reuters-CRB Index of 17 commodities jumped 7.1 percent last month, the biggest monthly gain since August 1983. The index is up 14 percent in the past year to 310.93 today, the highest since Jan. 1981.
``Everybody wants to be long of commodities,'' said Stephen Briggs, an analyst at Societe Generale in London. Hedge fund managers ``think that the potential returns in commodities are still very high.''
Phelps Dodge, BHP Billiton
Shares of Phoenix-based Phelps Dodge Corp., the world's second-largest copper producer, rose $1.06, or 1 percent, to $107.61 in New York Stock Exchange composite trading. The stock is up 30 percent in the past year.
Melbourne-based BHP Billiton, which owns the world's biggest copper mine, Escondida in Chile, today offered to buy WMC Resources Ltd. for A$9.2 billion ($7.3 billion) in part to help supply more copper and nickel to China.
China surpassed the U.S. in 2002 as the world's largest copper consumer.
``We feel quite optimistic about China,'' BHP Chief Executive Officer Chip Goodyear said in a conference call. BHP would displace Phelps Dodge as the world's second-biggest copper producer. Santiago-based Codelco, owned by Chile's government, is the world's largest producer.
Global copper consumption will rise 3.5 percent to 17.3 million metric tons this year, exceeding supply by 190,000 tons, said Jon Bergtheil, an analyst at JPMorgan Securities in London.
Weaker Dollar
Hedge funds and other speculators that hold at least 100 copper contracts have increased their holdings in the futures for the past three weeks amid speculation that declines in the dollar would boost global demand for the metal. The dollar fell against the euro today.
``The weaker dollar helped spur renewed speculative buying which propelled prices higher,'' said Marc Morgan, a trader at Triland USA Inc. in New York.
Copper prices have almost doubled in the past two years as demand surged in China, the U.S. and Japan, the top three users of the metal.
Price gains now are ``consistent with seasonal tendencies for copper, which often posts significant highs in late March or early April,'' said Tim Evans, an analyst at IFR Markets in New York. ``With low inventory levels this time around, that seasonal peak should run somewhat later than normal rather than earlier.''
U.S. refined metal stockpiles at refineries, wire-rod and brass mills and exchanges fell in November to 137,000 tons, down from 656,000 tons at the end of 2003, the Interior Department's Geological Survey said in a report today.
A futures contract is an obligation to buy or
He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Member
An argument for your continued shortage, Mick....
DJ INTERVIEW: Labor Shortages Shackle Australian Miners
This interview first ran around 0745 GMT
By Ray Brindal
Of DOW JONES NEWSWIRES
CANBERRA (Dow Jones)--At a time when Asia's appetite for raw materials remains
voracious, Australia's mining sector is facing unwanted challenges from higher costs
and chronic labor shortages.
These problems are now "a constant theme" in the industry, said Mitchell
Hooke, chief executive of the Minerals Council of Australia lobby group.
Capacity constraints reach beyond difficulties finding skilled and professional staff
such as electricians, toolmakers, and metallurgists.
"You can't get trucks, you can't get tires," Hooke told Dow Jones
Newswires, with other industry analysts adding explosives are in short supply.
Echoing a point made by the conservative government in recent days, Hooke cautioned
that supply issues need to be kept in perspective. Miners and companies in related
industries would rather be confronted by cost and labor pressures during a period of
booming sales rather than when the cycle is at a low point and balance sheets are
stretched, he said.
The investment boom, fueled by record prices for many mineral and energy products and
pushed by strong demand from China, isn't about to implode, say analysts.
More likely, some marginal projects will be shelved and development schedules for
others will be delayed, while many developers are also reworking project parameters.
Australia is a major global supplier of many mineral and energy products such as coal,
iron ore, base metals and liquefied natural gas. Slowing investment growth in the mining
sector could be something of a light dab on the brakes for the local economy, which at
this stage is being pushed along by strong capital expenditure.
Hooke said project economics are being recast and many people are reworking numbers for
previously approved projects.
"I know of circumstances where that's happening," he said.
"I certainly see the skills shortages as limiting the extent of the investment
activity. It isn't doom and gloom, it's limits," he said.
Undisputed 2006 World Cup Premierleague Champion
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He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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