Commodities

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.

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.

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.

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.

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.

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.

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.

Rogue trader exposes fickle oil market

3 Jul 2009

How can a small trader drive up the price of a barrel of crude by $2.50 in under an hour? By putting a big bet on oil futures in the early morning. The market proved easy to move. At least traders PMV didn't lose much in unwinding the trade.

Argentine anti-market policies’ good run may end

30 Jun 2009

President Fernández' moderate defeat in midterm elections may force policy compromise. So may reality with wheat planting down 30%, her government s strategy of heavily taxing farmers and exporters may finally hit the economic buffers. Still, Argentina has had a great run.

Oil surge is mixed blessing for Russian economy

18 Jun 2009

At $70 a barrel, oil prices are back where Russia says it can balance its accounts. But the Russian economy is still in a severe slump, worsened by longstanding flaws including corruption. The danger is that with oil on the rise, reforms might look less urgent.

Gold vending machines are sign of the times

17 Jun 2009

The idea of buying gold from machines at airports seems odd. After all, if the worst happened, why would anyone want to take it with them? But the buzz around the yellow metal makes sense. With both deflation and inflation causing concern, its perceived attributes seem alluring.

Iraqi oil could be China’s consolation prize

15 Jun 2009

Sinopec's mooted £5bn bid for oil producer Addax would give the Chinese petro giant access to Kurdistan and Nigeria, where Western majors tread with caution. It s China s payoff for political isolationism but no substitute for the bigger deals that got away.