Monthly Archives: December 2014

Venezuela confirms recession, highest inflation in Americas

(Reuters) – Venezuela confirmed on Tuesday it had entered a recession while inflation remained the highest in the Americas, and President Nicolas Maduro’s socialist government blamed political foes for the dismal data.

The Central Bank said GDP contracted in each of the first three quarters: 4.8 percent, 4.9 percent and 2.3 percent. Twelve-month inflation reached 63.6 percent in November.

Economists, banks and regional bodies have long forecast that the OPEC member would be the worst-performing major economy in the region this year. The central bank statement confirmed those views just before Maduro began a news conference in which he was expected to announce economic changes.

Maduro, 52, won election last year to replace his mentor Hugo Chavez. He has blamed political opponents, who protested in the streets for four months this year, for damaging the oil-dependent economy.

Those protests resulted in violence that killed 43 people, including protesters, security officials and Maduro backers.

“These actions against public order blocked the correct distribution of basic goods to the population, as well as the normal development of production of goods and services,” the central bank statement said.

“This resulted in an inflationary spike and a fall in economic activity.”

Venezuela, whose last recession was from 2009-2010, may struggle to turn around its economy given the plunge in oil prices. Venezuelan crude has dropped to $48 per barrel, compared with $96 mid-year.

Opponents say Venezuela’s economic crisis is a consequence of 15 years of socialist policies, begun by Chavez, who ruled from 1999 to 2013 before dying of cancer.

“With one day of the year left, they publish the September, October and November figures. The highest in the world. Economic efficiency Nicolas! Wonderful,” scoffed opposition leader Henrique Capriles via Twitter.

CHANGES COMING?

Venezuela had not published inflation data since August.

Inflation in September was up 4.8 percent, October 5.0 percent and November 4.7 percent, compared with the same months of 2013, the bank said in its statement, which can be viewed at ( here )

The bank said Venezuela’s balance of payments posted a surplus of $6.8 billion by the end of the third quarter, with a current account surplus of $899 million, and the capital account showing a deficit of $568 million.

Venezuelan exports, of which oil accounts for more than 90 percent, fell 14.2 percent to $19 billion in the third quarter, while imports were down slightly, by 1.4 percent, to $12.2 billion in the same period, the bank said.

Chavez-era welfare policies have long been popular among Venezuela’s poor, and the bank said social indicators were all improving despite the poor GDP data.

It said extreme poverty was down to 5.4 percent of households in 2014, half the level before Chavez came to power, while unemployment fell to 5.9 percent.

“Despite the protests and economic war during 2014, Venezuela’s economic indicators have improved,” Maduro said at the start of his news conference.

“This economic war, this fall in the oil prices, is a great opportunity for economic change. 2015 is the year of opportunity, for great change in the economic model.”

Many analysts are recommending reforms such as a unification of Venezuela’s three-tier currency controls and a rise in gasoline prices that are the cheapest in the world. But Maduro has balked at such measures so far, perhaps wary of a social backlash prior to a crucial vote for a new parliament next year.

(Additional reporting by Eyanir Chinea and Corina Pons; Editing by Peter Murphy and David Gregorio)


Source: Newsjyoti Economics

U.S. opens door to oil exports after year of pressure

An offshore oil platform is seen in Huntington Beach, California September 28, 2014. REUTERS/Lucy Nicholson

An offshore oil platform is seen in Huntington Beach, California September 28, 2014.

Credit: Reuters/Lucy Nicholson


(Reuters) – The Obama administration on Tuesday bowed to months of growing pressure over a 40-year-old ban on exports of most domestic crude, taking two steps expected to unleash a wave of ultra-light shale oil onto global markets.

The Bureau of Industry and Security, or BIS, which regulates export controls, said it had granted permission to “some” companies to sell lightly treated condensate abroad. Condensate is a form of ultra-light crude.

Some two dozen energy companies had asked the agency for clarification on permissible exports earlier this year, but until Tuesday those requests had been put on indefinite hold.

The BIS also released guidance in the form of frequently asked questions, or FAQs, to explain what kind of oil was generally allowed under the ban, the first effort by the administration to clarify an issue that has caused confusion and consternation in energy markets for more than a year.

The two measures are clearest signs yet that the administration is ready to allow more of the booming U.S. shale oil production to be sold overseas, where drillers have said it can fetch a premium of $10 a barrel or more.

They follow a year of murky messages and widespread uncertainty over what is or is not allowed under a trade restriction that critics say is a relic of a bygone age, when oil was seen as scarce after the 1970s Arab oil embargo.

A domestic drilling boom of the past six years has transformed the United States into an energy powerhouse, boosting U.S. production by more than 50 percent and reversing decades of decline.

Output of very light oil has been especially strong, leading to a glut that threatens to overwhelm domestic demand. The constraints helped fuel bumper profits for refiners such as Valero Energy Corp (VLO.N) and PBF Energy Inc (PBF.N), but angered drillers such as Hess Corp (HES.N) that say they were selling at a discount.

Jamie Webster, the senior director of oil markets at research firm IHS, said the FAQ “takes the leash off of (the U.S. Department of) Commerce” and signals it may take additional action on crude exports after several months of inaction.

While likely to draw broad support from many quarters, the measures also open the Obama administration to attack by environmentalists and Democrats who may see it encouraging more hydraulic fracking and as a sop to big oil companies.

STEPS TO CLARIFY

How the measures will affect flows of condensate is uncertain, particularly given the dramatic slump in global oil markets, where prices have nearly halved since the summer.

An administration official said that the oil market – not a “fairly arcane clarification” in guidelines – would ultimately determine how much oil is exported. That echoed the Obama administration’s policy on exports of liquefied natural gas, or LNG, which are also now generally allowed.

The steps on Tuesday were “certainly not designed to add or detract from what can be exported. We are trying to make the boundary line clearer,” said the official.

In its FAQ, which the agency has been working on for most of this year, the BIS confirmed or clarified a number of nuanced issues related to the rules, including:

* Confirmation that lease condensate processed through a distillation tower is considered a petroleum product, and therefore can be exported without constraint.

* Clarification of what constitutes “distillation” for export, including the fact that pressure reduction alone, and flash drums with so-called heater-treaters or separators, would not be sufficient to qualify oil for overseas sales.

* A reminder that most petroleum products may be “exported to most of the world without a license,” a message seen by many analysts as blessing the process of self-certification.

* And clarification that “a minimum amount of mixing” between exportable foreign crude and restricted domestic crude may be allowed, a note likely making it easier to ship Canadian crude through U.S. pipelines and ports.

(For the FAQ, see: here)

FRUSTRATION BUILDING

Uncertainty about what kind of petroleum can be shipped abroad has frustrated oil market players since the BIS, an office of the Commerce Department, quietly gave permission in 2013 to a small company, Peaker Energy, to export minimally treated light oil called condensate.

Last spring BIS gave permission to export treated condensate in private letters to two other companies, Pioneer Natural Resources Co (PXD.N) and Enterprise Products Partners LP (EPD.N).

The private nature of the communications between the government and the three energy companies left a wide range of other drillers in the dark about investing in expensive infrastructure to process condensate.

One company, Australia’s BHP (BHP.AX), said last month it would press ahead with exports without having received a formal approval from the BIS, but other energy companies have been reluctant to follow suit without further guidance.

Domestic pressure has also grown. Several lawmakers in the House of Representatives and Senate have said that unless energy companies can export oil to Asia and Europe, the drilling boom will eventually choke on its own output.

(Additional reporting by Jessica Resnick-Ault and Jonathan Leff in New York; Editing by Jessica Resnick-Ault, Bill Trott and Jeffrey Benkoe)


Source: Newsjyoti Economics

Shares slip in low-volume trading; safe-havens rise

A man looks at electronic boards showing the graph of the recent fluctuations of the Japan's Nikkei average (L) and the Japanese yen's exchange rate against the U.S. dollar (2nd L) and various stock prices outside a brokerage in Tokyo December 24, 2014. REUTERS/Yuya Shino

A man looks at electronic boards showing the graph of the recent fluctuations of the Japan’s Nikkei average (L) and the Japanese yen’s exchange rate against the U.S. dollar (2nd L) and various stock prices outside a brokerage in Tokyo December 24, 2014.

Credit: Reuters/Yuya Shino


(Reuters) – Investors backed away from global equity markets on Tuesday, with light volume magnifying moves, as worries about Greece’s future in the euro zone pushed shares lower and lifted safe havens such as gold and U.S. government debt.

Oil prices fell to 5-1/2 year lows CLc1LCOc1, while copper rose for the first session in five, a day after dropping to a 4-1/2 year low.

The Greek government collapsed Monday, setting the stage for elections in four weeks that are likely to be a referendum on painful austerity policies.

Wall Street ended lower, after the S&P 500’s latest record high on Monday. The benchmark index is on track to close a third straight year of double-digit positive returns.

The Dow Jones industrial average .DJI fell 55.16 points, or 0.31 percent, to 17,983.07, the S&P 500 .SPX lost 10.22 points, or 0.49 percent, to 2,080.35 and the Nasdaq Composite .IXIC dropped 29.47 points, or 0.61 percent, to 4,777.44.

An MSCI gauge of stocks in major markets .MIWD00000PUS fell 0.6 percent, weighed by a 1.6 percent drop in Tokyo’s Nikkei .N225. European shares .FTEU3 closed down 1 percent.

The thinly traded market, particularly in Europe, triggered a “magnified reaction to headlines from Greece,” according to Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Banking in New York.

The yield on Greece’s 10-year bond GR10YT=TWEB ticked lower after a sharp move higher on Monday. The left-wing Syriza party, which could win a snap election next month, has said it wants to abandon many drastic spending cuts that are part of a European Union and International Monetary Fund bailout program.

Weaker stocks and concerns about Greece helped push U.S. Treasuries prices higher. The benchmark 10-year U.S. Treasury note US10YT=RR was up 4/32, and its yield down to 2.191 percent.

The euro EUR= held just above a 2-1/2 year low at $1.2158 as more lackluster bank lending data and fresh evidence of deflation taking hold in Spain and Italy bolstered the case for further monetary easing by the European Central Bank.

The yen gained 0.9 percent against both the dollar JPY= and euro EURJPY=R as investors sought the traditional safety of the Japanese currency.

Oil dropped in volatile trading, after rebounding somewhat from lows last seen in May 2009. Brent LCOc1 was down 0.7 percent at $57.45 after falling to $56.74 earlier. U.S. crude CLc1 edged up 0.1 percent to $53.67 a barrel.

The two main crude market movers today were oversupply from the world’s oil producers and a weaker U.S. dollar, said Brian LaRose, a technical analyst with United-ICAP.

A “significant catalyst” is needed to prompt buying, and LaRose said that has been absent. “Until we see some sort of technical evidence developing, then one has to be skeptical of picking a bottom,” he said.

Spot gold XAU= rose 1.3 percent while silver XAG= added 3.3 percent. Copper CMCU3 bounced from a 4-1/2 year low to gain 0.6 percent at $6,325 a ton.

(Additional reporting by Chuck Mikolajczak, Samantha Sunne, Karen Brettell and Sam Forgione; Editing by Dan Grebler, Christian Plumb, Meredith Mazzilli and Steve Orlofsky)


Source: Newsjyoti Economics

Wall St. pulls back from record; utilities slump

Traders work on the floor of the New York Stock Exchange in New York December 30, 2014.   REUTERS/Carlo Allegri

Traders work on the floor of the New York Stock Exchange in New York December 30, 2014.

Credit: Reuters/Carlo Allegri


(Reuters) – U.S. stocks fell on Tuesday as investors engaged in profit-taking to pull major indexes from record levels, while the trend of modest moves and low volume continued heading into the final trading day of the year.

The day’s losses were broad, with each of the ten primary S&P 500 sectors in negative territory. Utilities .SPLRCU – 2014’s best sector performer – led the decline with a drop of 2.1 percent.

Equities have enjoyed a solid rally of late, buoyed by strong economic data and the U.S. Federal Reserve’s commitment to be “patient” about raising interest rates. The S&P 500 gained nearly 6 percent over the prior eight sessions and managed to score its 53rd record close of the year on Monday.

The speed and scale of the rally provided incentive to take profits, and amplified volatility is possible this week with many market participants out for the holiday, which dampens volume. The stock market will be closed on Thursday for the New Year’s holiday.

“It wasn’t going to take much to prompt the decline, it’s probably more resting than anything else. We’ve had a pretty significant move higher,” said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco.

“We’ve marched straight up from 1,970 or so to about 2,100 so it’s only natural that we are going to get a little bit of a pullback here.”

The Dow Jones industrial average .DJI fell 55.16 points, or 0.31 percent, to 17,983.07, the S&P 500 .SPX lost 10.22 points, or 0.49 percent, to 2,080.35 and the Nasdaq Composite .IXIC dropped 29.47 points, or 0.61 percent, to 4,777.44.

In the latest economic data, consumer confidence rose slightly less than expected in December, while U.S. single-family home price appreciation slowed less than forecast in October.

NeuroDerm Ltd (NDRM.O) soared more than 193 percent to $18.14 on heavy volume after it said data from a mid-stage study suggested that a higher dose of its Parkinson’s drug could provide an alternative to treatments that require surgery.

Civeo Corp (CVEO.N), which provides temporary housing for oilfield workers and miners, late Monday slashed its workforce and forecast revenue could fall by one-third as slumping crude prices force oil producers to cut costs. The stock plunged 52.6 percent to $3.92 on volume of about 56.2 million shares, the most active day in its history.

Volume was light, with about 4.42 billion shares traded on U.S. exchanges, well below the 7.06 billion average so far this month, according to data from BATS Global Markets.

Declining issues outnumbered advancing ones on the NYSE by 1,806 to 1,262, for a 1.43-to-1 ratio; on the Nasdaq, 1,671 issues fell and 1,031 advanced for a 1.62-to-1 ratio favoring decliners.

The benchmark S&P 500 posted 25 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 107 new highs and 39 new lows.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)


Source: Newsjyoti Economics

Brent and WTI see small gains as end of year approaches

A woman pumps gas at a station in Falls Church, Virginia December 16, 2014. REUTERS/Kevin Lamarque

A woman pumps gas at a station in Falls Church, Virginia December 16, 2014.

Credit: Reuters/Kevin Lamarque


(Reuters) – Crude futures closed up slightly Tuesday, getting some relief from a weak dollar but not making significant strides as traders prepared for the end of the year.

The dollar is generally inversely related to the price of oil, and so a small the decline in the dollar index .DXY may have lent some strength to crude oil, according Thomas Saal, an analyst with INTL Hencorp Futures. Saal said prices may have also been boosted as traders balanced their positions before the end of the year.

The global benchmark Brent LCOc1 settled up 2 cents at $57.90. U.S. crude CLc1 settled up 51 cents at $54.12 a barrel.

Both measures hit 5-1/2-year lows yesterday before rebounding slightly.

U.S. crude was supported slightly by news that the Obama administration took two long-awaited steps that could increase the amount of processed light crude that can be shipped under the 40-year-old ban on exports of most domestic crude.

The reaction was muted because the measures were introduced during the holidays, said John Kilduff, partner at New York energy hedge fund Again Capital.

Investors were also waiting for U.S. inventory data. The American Petroleum Institute is scheduled to release data on Tuesday while the U.S. Department of Energy’s Energy Information Administration will issue data on Wednesday.

A Reuters poll forecast U.S. crude inventories would show a drop of 900,000 barrels, after a rise to their highest recorded level for December in the week ended on Dec. 19. [EIA/S]

There were expectations on Monday that the destruction of over a million barrels of oil by a fire at Libya’s main oil port could push Brent over $60, but by the end of the day prices had fallen past previous lows.

Oil prices this year are on track for the biggest decline since 2008 and the second-biggest annual fall since futures started trading in the 1980s.

(Additional reporting by Keith Wallis in Singapore and Christopher Johnson in London,; editing by Jason Neely, Louise Heavens, Jessica Resnick-Ault, Andrew Hay and Cynthia Osterman)


Source: Newsjyoti Economics

Global stocks shrug off Greek jitters

By Jamie McGeever

LONDON
Wed Dec 10, 2014 6:30pm IST

LONDON (Reuters) – Oil prices were anchored near five-year lows and Germany’s benchmark government bond yield fell to a record low on Wednesday as concerns over Greece’s political and financial prospects spurred demand for safety.
Greek stocks and bonds fell, with short-term yields rising above long-term yields, ahead of next week’s presidential vote, pushing the borrowing costs of all peripheral euro zone governments higher.European stocks were largely shielded from the Greek fallout, recovering from the previous day’s selloff after a similar rebound in Chinese shares prompted by hopes that weak inflation will bring more monetary policy easing in China.U.S. stock futures, however, pointed to a slightly lower open on Wall Street.”European equities have stabilised following yesterday’s weakness, although Greek equities continue to sell off and peripheral (bond yield) spreads widened further as Greek snap elections renewed concerns,” Barclays said.At 1220 GMT Britain’s FTSE 100 was up 0.2 percent at 6,542 points, Germany’s DAX was up 0.9 percent at 9,876 points and France’s CAC 40 was 0.5 percent higher at 4,286 points.The broader FTSEuroFirst 300 index of leading European shares was 0.5 percent higher at 1,369 points.In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent, but was off lows as Chinese shares closed up 2.9 percent. On Tuesday, the Shanghai index rose to a 3-1/2-year high before tumbling more than five percent. Data on Wednesday showed China’s annual consumer inflation fell to a five-year low of 1.4 percent in November, signalling persistent weakness in the world’s second largest economy.Japan’s Nikkei stock average tumbled 2.3 percent as a stronger yen prompted investors to sell exporters’ shares.The dollar was down a third of one percent at 119.27 yen, more than two yen off Friday’s seven-year high of 121.83 yen, and the euro was steady at $1.2372.RISK AVERSIONThe focus for investors in Europe was firmly on Greece, where short-term yields shot above long-term yields. This yield curve inversion often indicates a country is about to default or fall into recession.Greek Prime Minister Antonis Samaras has brought forward to this month a vote on a new president, a gamble that could backfire by triggering an early parliamentary election and catapulting the leftist anti-bailout Syriza party to power.Three-year Greek bond yields shot up 130 basis points to 9.52 percent, the highest level since the bonds were issued back in July and also above 10-year yields, which rose 53 basis points to 8.59 percent.”This inversion tells you that there are concerns about further potential debt writedowns and that is a function of minds being focused on Syriza, which would no doubt push hard for such a policy,” said Rabobank strategist Lyn Graham-Taylor.Investors flocked to the safety and liquidity of German government bonds, pushing the 10-year yield to a new low of 0.679 percent. Yields on Portuguese, Spanish and Italian bonds all rose. Greek stocks fell as much as 4 percent earlier but by midday had recovered to trade down 1.5 percent. On Tuesday, they fell 12.7 percent, their biggest one-day fall since 1987.Front month Brent crude oil futures were down 1.6 percent at $65.78 a barrel, barely 50 cents above Tuesday’s five-year low of $65.29.Adding to pressure on crude prices, the Organization of the Petroleum Exporting Countries (OPEC) cut its 2015 forecast of global demand for the group’s oil by 280,000 barrels a day to 28.92 million barrels per day, down from its previous forecast.Low oil prices, weak global inflation and the political developments in Greece supported demand for safe-haven U.S. Treasuries. The yield on benchmark 10-year notes stood at 2.218 percent in Asian trade, down slightly from its U.S. close of 2.220 percent on Tuesday.Spot gold rose to a seven-week high earlier in the day of $1,238.20 an ounce before slipping back to $1,226. (Editing by Gareth Jones; To read Reuters Global Investing Blog click here; for the MacroScope Blog click on blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on blogs.reuters.com/hedgehub)
Source: Newsjyoti Bollywood