LONDON, May 25 (Reuters) – Widespread use of alternative
motor fuels has been hampered by lack of fuel distribution
infrastructure, despite strongly favourable economics for
alternatives to gasoline and diesel, and a range of financial
incentives offered by U.S. federal and state governments.

The U.S. federal government’s commitment to alternatives,
coupled with renewed interest among large commercial fleet
operators, encouraged by the big spread between cheap natural
gas prices and the high cost of petroleum-derived fuels, could
provide the critical mass of demand to support the roll out of a
nationwide alternative fuel system.

LONDON (Reuters) – Proponents of clean energy often portray the sector as a plucky little David locked in battle with the fossil fuel industry’s big bad Goliath for taxpayer support.

In the United States, President Barack Obama has tapped into this theme to push for an end to tax relief and other subsidies for oil and gas production, and an extension of federal support for renewable energy and energy efficiency initiatives.

LONDON, May 21 (Reuters) – Under intense pressure from the
banking industry, U.S. regulators have already proposed a very
generous interpretation of the Volcker Rule prohibition on
proprietary trading which contains broadly drafted and
ill-defined exemptions for hedging including portfolio hedging.

But even that was not enough for JPMorgan Chase and Co
. The extent of the bank’s hostility to restrictions on
its use of portfolio hedging and asset-liability management is
laid bare in a letter from Barry Zubrow, newly-installed
executive vice president for corporate and regulatory affairs,
to the Federal Reserve and other agencies on February 13.

LONDON, May 18 (Reuters) – Former Kansas City Fed President
Thomas Hoenig suggested banks that are too big to fail are also
too big to exist, and should be broken up (“Financial reform:
post-crisis?” Feb 23, 2011).

But are banks that are too big to fail also too big to trade
and too big to manage properly?

LONDON, May 17 (Reuters) – JP Morgan’s reported loss on a
“hedge” highlights the way the concept has been stretched in the
last two decades to cover a broader range of transactions than
before, many of which have little to do with the traditional
concept of offsetting underlying price risks with like-for-like
derivative positions.

It should stiffen the resolve of regulators to define
hedging more narrowly in future when deciding whether positions
should qualify for special relief under banking and derivatives
laws — and ignore special pleading from banks, lobbyists and
derivatives lawyers to continue stretching the term to give
privileged treatment to an ever-wider range of transactions.

LONDON, May 16 (Reuters) – Governor Mervyn King has finally
admitted that the Bank of England can no longer accurately
forecast inflation, as the tremendous amount of uncertainty
renders the quantitative forecasting techniques employed before
2007 obsolete.

“The difficulty of predicting the precise impact of these
influences means that the (Monetary Policy Committee) places
more weight on the broad shape of the inflation outlook than its
exact calibration,” a subdued governor confessed at a news
conference to present the latest revisions to the bank’s
inflation fan charts.

LONDON, May 16 (Reuters) – U.S. crude futures have
been offered aggressively lower over the last fortnight as the
market scents distress and hunts for the last remaining traders
trapped on the losing side of a Brent/WTI arbitrage that has
gone spectacularly wrong.

For months, prominent oil analysts have been sharply divided
about whether the reversal of the Seaway pipeline from Cushing
in the U.S. midcontinent to Houston on the Gulf Coast would be
enough to cure the glut of crude which has built up in the
central United States, pushing U.S. crude futures to a record
discount against the international marker Brent.

LONDON, May 14 (Reuters) – The collapse in oil prices since
the start of May is posing a severe test for oil market bulls
who must meet big margin calls to maintain their positions — or
close them out and accept their losses.

On February 22, the highly respected research team at
Goldman Sachs recommended a long position in September 2012 WTI
futures, then valued at $107.55 but now down more than
$12 per barrel to a low of just $94.70 in trading earlier on
Monday.

LONDON, May 14 (Reuters) – Bullish investors finally
abandoned hope for a recovery in oil prices, at least in the
short term, in the week ending May 8, slashing their long
positions in WTI-linked futures and options by the largest
amount in more than five years.

Hedge funds and other money managers reduced their long
position in U.S. crude by the equivalent of nearly 54 million
barrels of oil, the largest one-week decline since at least June
2006, according to data released by the U.S. Commodity Futures
Trading Commission (CFTC) on Friday (Chart 1).

LONDON, May 9 (Reuters) – Research and analysis into
commodity prices and derivatives almost always relies on the
commitments of traders (COT) report published by the U.S.
Commodity Futures Trading Commission (CFTC).

Except for some correlation studies published by the
European Central Bank and International Monetary Fund, every
major report on the formation of commodity prices,
supply/demand, the role of index funds, and the possible
“financialisation” of the asset class, published in the last
five years, has relied on data taken from the COT report.