Commodities

French government zigs and zags on EDF strategy

30 Oct 2009

Ten months after backing the French energy group s US strategy including a $4.5bn bid for Constellation nuclear assets the state is to support new CEO Henri Proglio s plans to exit America. France has been a terrible custodian. What better case for EDF s full privatisation?

Rivals try gaining on Exxon’s prowess with costs

29 Oct 2009

The Texan major has long been the model for efficiency in the industry and still enjoys a sizeable lead. But Shell, BP and others are hoping to narrow the gap with more credible restructuring plans and stronger discipline on expenses. They have a way to go yet.

Proglio’s plans for EDF shouldn’t include Veolia

28 Oct 2009

The incoming chairman and chief executive of EDF says he doesn't want to merge the French electricity group with Veolia, the environment services company he currently heads. But he still wants EDF to become Veolia's dominant shareholder. This is a bad idea.

BP shows worst may be over for Big Oil

27 Oct 2009

The 47% drop in the oil giant s Q3 earnings was less than feared, thanks to impressive cost control. BP is promising further efficiency gains by the yearend. Longterm strategic issues persist. But for now, BP is reaping the benefits of past investments and a stronger oil price.

China fails to disrupt Rio Tinto

14 Oct 2009

Record Chinese imports are driving record production at the miner. Despite pressure for a price cut, the Chinese are effectively paying Rio and its peers the benchmark price. Detaining Rio s chief negotiator hasn t had much effect. China may have to rethink its strategy.

Russia will struggle to keep all its gas promises

14 Oct 2009

Putin is eager to sign megadeals both with China and Europe. That sounds like good politics and sound economics. But Russian production is stagnating and new fields are beyond the reach of domestic technology. It s hard to see how he can deliver without major help from the West.

Pandit avoids fight over Phibro

9 Oct 2009

The Citi boss could have made a case for keeping the commodities trading unit not least its consistent profitability over the years. But the brouhaha of a bank propped up by the government paying $100m bonuses was too overwhelming. Hiving Phibro off was the right call.

Gold flies on multiple engines

6 Oct 2009

A new record price above $1,040 an ounce for the yellow metal reflects a multitude of factors: loose money, inflation fears, dollar weakness and conspiracy theories, to name a few. The gold bugs have been right so far, but there is still paranoia built into their case.

Chinese rivalry for oil assets has silver lining

29 Sep 2009

Iraq, Argentina, and now possibly Nigeria. Chinese energy groups are seeking mega oil assets in risky places. They may look like an increasing competitive threat to Western oil groups. But their interest is not all bad news for the majors. The Chinese could also be good partners.

Rusal may covet China for more than money

18 Sep 2009

Oleg Deripaska s aluminium group is looking to raise $23bn in a Hong Kong IPO to cut debt and let minority shareholders out. Eastern investors love commodities and have plenty of cash. And they re likely to be comfortable with the quirks that may feature in the float.

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.