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from Expert Zone:

India Markets Weekahead: Time to prune positions in an extended honeymoon

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The Nifty closed at a new closing high of 7,954 amid volatility in an eventful week that started with the Supreme Court ruling that the allocation of more than 200 coal blocks over the past two decades was illegal.

With nearly 3 trillion rupees at stake, this had a direct effect on the metals and power sector. It also affected banking, which has exposure to the two sectors.

The court’s verdict on the fate of the coal blocks and future course of action is expected on Sept. 1. It is not expected that licences for working coal mines would be cancelled as that would result in widespread disruption as well as financial losses and litigation. It’s possible that non-working coal mines could be de-allocated and others may be let off with penalties.

The much-awaited GDP data was published on Friday, which was a holiday to celebrate Ganesh Chaturthi, to honour the elephant-headed god of wisdom and prosperity. A growth of 5.7 percent for the April-June quarter was the best in nine quarters, albeit on a low base. This should cheer investors, although it also raises the bar going ahead.

from Global Markets Forum Dashboard:

U.S. shale revolution continues to upend geopolitics

Dominick Chirichella, president, Energy Management Institute

Dominick Chirichella, president, Energy Management Institute

Oil traders who bet on rising prices were hit with a double whammy on Tuesday in the way of announcements from the top two energy data agencies. The still-nascent U.S. shale energy revolution is upending eons-old geopolitical events and it still seems to be in the early days.

Global energy watchdog the International Energy Agency revised lower its outlook for oil demand this year back to 2012 levels as the U.S. Energy Information Administration (EIA) said July U.S. oil production rose to its highest in more than a quarter century.

from MacroScope:

Moment of truth for EU sanctions

The logo of Russia's top crude producer Rosneft is seen in Moscow

President Barack Obama and the leaders of Germany, Britain, France and Italy agreed on a conference call last night to impose wider sanctions on Russia’s financial, defence and energy sectors.

EU ambassadors are meeting today and are expected to target state-owned Russian banks and their ability to finance Moscow's faltering economy.

from Counterparties:

Drill, baby, drill

North Dakota is in the middle of something the rest of the country can only dream of: an economic boom. The state has become a massive success story over the last five years, with unemployment at 2.6 percent and its population growing rapidly to fill demand for oil jobs. “The state's modern history has been rewritten by the energy industry in just four short years,” writes Bloomberg’s Nicholas Kusnetz. But is it sustainable? Thanks to the shale boom, the state is currently producing as much oil in a month as it did in all of 2004, and production is growing at an exponential rate. That kind of growth can’t go on forever, says Fivethirtyeight’s Ben Casselman. Eventually it’s going to have to flatten out, and that has major implications for the economic stability of a state that has been very suddenly made rich (and just as suddenly dependent on this oil production).

Predictably, Katie Brown, at Energy In Depth (which is funded by the Independent Petroleum Association of America) says Casselman is wrong. It’s not just about recoverable oil, but about changing technology, she says. The U.S. Geological Surveyrecently doubled its estimate of the amount of recoverable oil in North Dakota, an estimate which is up 25-fold since 1995, according to Brown. Better technology is going to mean more oil, essentially. “It’s important not to get trapped by assumptions of static technology, especially in an industry like oil and gas, where innovators have proved over and over ... that the recoverability of resources increases over time,” Brown writes.

from Counterparties:

MORNING BID – Crypto-sale of the Century

Details on the sale of about 30,000 bitcoin have been spare, but what can be inferred by reading through the lines is that the sale of about $18 million went a lot better than many expected - particularly those who expected to get the coins on the cheap somehow. The prevailing market rate at the end of Monday was about $639, according to Coindesk, currently the leader in the pricing world, and the chatter trickling out was that the unsuccessful bidders - including hedge fund Pantera and SecondMarket's Barry Silber, who put together a consortium of more than 40 bidders - aimed too low in one of those "Price is Right" moves but without the warmth of Bob Barker to confront you when you lose on these things.

With that in mind the speculation on just where the auction ended up can run wild - did it go for $650? $700 for the lot? Perhaps; those commenting on twitter and to Reuters in a story from Gertrude Chavez and Nate Raymond on Monday were suggesting that there were plenty of newer bidders in the process, firms that have been just getting going in the bitcoin world and probably wouldn't mind to get their hands on a large stake even at a somewhat elevated price.

from The Great Debate:

Why the shift to alternate energies continues, despite shale boom

Thousands of solar panels are pictured generating electricity used at Nellis Air Force Base in Las Vegas

Oil prices are rising as uncertainty grows over the fate of major producers like Russia and Iraq. Everything from transportation to manufacturing to a petroleum-intensive agricultural system is a puppet flailing on the strings of this volatile commodity.

Meanwhile, increased production of alternative power is finally making prices more competitive, particularly for solar energy, as former Vice President Al Gore recently pointed out in Rolling Stone. Costs have declined dramatically -- 20 percent a year since 2010. This is not yet reflected in energy prices, however, largely because of the major tax breaks still extended to the dirty technology of the past.

from Breakingviews:

Iraq troubles are unlikely to bring new oil crisis

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The continued violence in Iraq looks like a harbinger of a sharp cutback from the world’s seventh-largest oil producer. But the bulk of Iraq’s production is still secure. Even though the Middle East has clearly become less stable, it will still take a cascade of problems to create a big oil price shock.

from Counterparties:

Oil shock

The violence in Iraq continues as radical Islamist militants from the Islamic State of Iraq and the Levant (ISIL) try to seize more territory in the northern part of the country. Iraq is the second largest oil producer in OPEC (after Saudi Arabia) and the conflict is likely to affect production in the region. The price of brent crude oil climbed from just over $108 per barrel last Monday to more than $113 today, closing at $112.94. Mark Shenk reports for Bloomberg that analysts expect the price to average $116 by later this year, although prices won’t necessarily go too much higher if the fighting stays in the north of the country, where comparatively little oil is produced.

While ISIL was fighting in Mosul, the independence-minded Kurds seized the opportunity to take control of Kirkuk, an oil-rich city in northeast Iraq (great background on that in Al Jazeera). “This crisis is a lifeline for the Kurds”, political risk analyst Kirk Sowell says in Vox. Earlier this year, Baghdad cut off money to the semi-autonomous Kurdish region because of a political dispute over exporting oil to Turkey. By May, the region was nearly insolvent. However, now that they’ve taken control of Kikurk, the Kurds can pump oil directly to Turkey without intervention from Baghdad. In the short term, though, the Kurds still have problems. A major pipeline to Turkey was destroyed in the fighting last week, and “the violence will doom attempts to repair the pipeline anytime soon, delaying major Kurdish oil exports”, says Nick Cunningham.

from Counterparties:

MORNING BID – Oil and trouble

Riskiest markets saw their first hiccup in a while in the last couple of days, with a 100-point loss in the Dow Thursday that has raised a bit of concern for the first time in ages, it seems. Of course, 100-point drops in the Dow aren't really what they used to be, but that doesn't mean this nascent selloff should be ignored. Worldwide issues - the sudden rise in oil prices on the growing insurgency in Iraq - have investors backing away from equities and shifting a bit into safer assets like the Treasury market. The indirect bidders in Thursday's auction of 30-year notes took the highest amount of the auction since 2006, perhaps as a way to offset worries about weak growth worldwide and the uncertainty in the Middle East.

The declines translated directly to the transportation stocks, where a confluence of factors have conspired to knock down the likes of airlines (just when they stopped seeming so horrible as investments). Lufthansa's warning earlier in the week brought some fresh worries about discretionary spending, while the rise in oil prices translated directly to a falloff in the airlines.

from Breakingviews:

Russia puts gas-hungry China in a bear hug

By Ethan Bilby
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Russia has signed a long-awaited gas pipeline deal with China, and it leaves the People’s Republic in a bear hug. Russia gets a new market outside the increasingly frosty European Union. Oil major PetroChina gets to balance out some losses from low regulated prices at home. But the optics of the deal shred Beijing’s pretensions to political neutrality.

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