Category Archives: Commodities

Merrill: Oil May Fall to $50

As the recession takes hold and increasingly looks to be a nasty affair, analysts are quickly revising forecasts to levels that would have seemed barmy a mere month ago. The latest is a new Merrill call that oil could drop to $50 a barrel, although the report waffles hugely by deeming a global recession “unlikely”. […]

Wealthy Investors Hoarding Bullion

Demand for gold continues to increase as the rich start to accumulate the metal itself. Nevertheless, the problem with gold as a store of value is twofold. First, for Americans, the US required citizens to turn in gold (presumably coins and bars) in 1933, and they were given paper money at a not-great exchange rate. […]

Baltic Dry Index Tanks

The Baltic Dry Index, which measures international shipping rates, is seen as a rough proxy for global growth. But like a negative yield curve, falls in the Baltic Dry Index have as often as not proven to be false positives. However, the BDI has taken a dramatic turn south, and in combination with weakening economic […]

Credit Crunch Hitting the Oil Patch

It appears no sector of the economy is immune from the credit crunch. The Wall Street Journal reported over the weekend that luxury goods and services are taking a hit (a slowdown in plastic surgery, quelle horreur!). Natural gas producers are also seeing the impact. From Platts (hat tip reader Michael): Chesapeake Energy CEO Aubrey […]

China’s Sinopec to Cut Oil Imports

So much for the thesis that China’s oil imports would rise relentlessly, which by implication said they would be immune to the advanced economy slowdown. Sinopec, the largest refiner in China, is reducing its oil imports. But oil has bounced up and is now trading at over $100 a barrel. So much for the theory […]

Oil Bull Goldman Slashes Forecast for Crude Prices

While Goldman, the firm that called for a “super spike” of oil prices this year to $150-$200 a barrel, has now reduced its forecast considerably, it still calls for oil prices significantly above their current level ($92 for Brent as of this writing) before year end. From Bloomberg: Goldman Sachs Group Inc. slashed its forecast […]

Ike Forces Shutdown of 20% of US Refineries; $4 Gas May Result

Here you were just getting used to some relief on gas prices and anticipating more was in the offing, when Mother Nature goes and wreaks havoc with your hopes. From Bloomberg: Almost 20 percent of the nation’s oil refining capacity was shut after Hurricane Ike slammed into the Gulf Coast today, limiting fuel deliveries and […]

More Evidence of Pre-Olympic Stockpiling Contributing to the Oil Price Spike

One of the factors we had mentioned that appeared to be contributing to the oil price runup of the first half of this year was China stockpiling gasoline, particularly diesel, in preparation for the Olympics. That notion was not well received. This article from Reuters says that China is unlikely to return to its pre-Olympics […]

Oil Bulls Unbowed

In a break from “all Fannie, Freddie, all the time,” a couple of readers (Dean and Michael) sent oil market sightings, both which cited proponents of $200 a barrel oil in the not-too-distant future, and are have not changed their price views much. The first, from Reuters, gives the latest forecast from Goldman’s Arjun Murti, […]

Trichet: "Reasonable Conjecture" That Investors Distorted Commodity Markets

Now it’s semi-official. A respected financial figure, no less a central bank chief with his reputation still intact, has said in bureaucrat-speak that speculation may indeed have had something to do with recent oil price moves. That view was nearly heretical until the rapid fall in oil prices began in July. From the Financial Times: […]

Bill Gross Says Nothing is Going Up, So Treasury Must Intervene

Bill Gross of Pimco’s monthly newsletter, “There’s a Bull Market Somewhere?” is out and making the rounds. The title refers to a Jim Cramer dictum. The bond chief uses it to argue that asset prices are declining on all fronts, which he then contends that the US government must reverse (boldface his): because in a […]

CFTC Investigating Whether Big Traders Lied About Oil Inventories

Wow, what happened? The CFTC went from being a lapdog to developing teeth. A little late, now that oil prices are on a forced march downward, but the commission could have backed off as oil became less of a front-burner issue. (Of course, your cynical blogger wonders if there was a risk that this story […]

OPEC to Keep Production at Current Levels to Combat Slowdown

Whether by accident or design, we’ve just been through a wee experiment on how higher fuel prices affect growth. Admittedly, it is difficult teasing out the impact of the credit crunch versus the oil and commodities spike, but in the US, habits started to change at $4 a gallon of gas, a lower level than […]

Faber: Oil, Commodities to Decline Further Near-Term

Macro investor Marc Faber, a commodities bull until the spring of this year, says that commodities have further to fall. From Bloomberg: Oil will likely drop further in the next three to six months, according to investor Marc Faber, who reiterated his forecast that the second half of 2008 won’t be “favorable” for commodities. The […]

Why No Questions About Special NYMEX Trading Session?

Reader Paul e-mailed about the special, early opening of the NYMEX to permit pre-Gustav trading. As he correctly noted: I have NEVER heard of a US market opening early due to macro events; the usual move is to CLOSE during exceptional circumstances. Neither have I. This looks pretty suspicious. Did some influential parties need to […]