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Monday, June 30, 2008

Here We GO $ 150 a Barrel for Oil

Oil Rises to Record on Concern Iran Supplies May Be Disrupted
By R. Tuttle
Crude oil rose to a record above $143 a barrel, completing the biggest quarterly increase in nine years, on concern Israel may attack Iran over its nuclear program and disrupt supply from OPEC's second-largest producer.
Pressure on Iran to end uranium enrichment and the falling value of the U.S. dollar may drive prices to $170 a barrel, OPEC President Chakib Khelil said June 28. Kuwait, the fourth-largest OPEC producer, is taking precautionary steps to export oil if Iran closes the Strait of Hormuz, Kuna news agency reported.
``We are going beyond rhetoric at this point,'' said William Adams, managing director of JKV Global in Chicago. ``Israel's intentions are pretty clear. That's going to keep prices pretty high.''
Crude oil for August delivery rose $1.96, or 1.4 percent, to $142.17 a barrel at 10:01 a.m. on the New York Mercantile Exchange after rising to a record $143.67. The price has doubled in the past year. Oil has risen 34.6 percent so far this quarter, the largest gain since the first quarter of 1999.
Foreign ministers from the Group of Eight nations last week suggested more talks to coax Iran into opening its nuclear program to inspectors, after speculation the Islamic Republic faces an imminent Israeli strike.
Goldman Sachs Group Inc., Wall Street's most profitable bank, said in a report that supply and demand, rather than speculators, are responsible for oil's rally.
`Excessive Speculation'
The U.S. House of Representatives last week approved a bill calling on the Commodity Futures Trading Commission to use its emergency powers to ``curb immediately the role of excessive speculation'' in any market it oversees where energy futures or swaps are traded.
Brent crude oil for August settlement rose $2.21, or 1.6 percent, to $142.52 a barrel on London's ICE Futures Europe exchange, after reaching a record $143.91.
Nigeria's rank among producers in the Organization of Petroleum Exporting Countries has slipped behind that of Angola amid violence by militants. Chevron Corp., Royal Dutch Shell Plc. and Eni SpA have all shuttered fields in Nigeria this month.
``Tensions ratchet up in Iran and troubles continue in Nigeria, drawing funds into the market,'' said Robert Montefusco, a broker at Sucden (U.K.) Ltd. in London. ``The weak dollar is also helping. The market does not want to break down just yet.''
The European Central Bank is expected to raise interest rates a quarter-percentage point to 4.25 percent, according to a survey of economists by Bloomberg News. The dollar has declined 8 percent this year against the euro.
Avoid the dollar ``at all costs,'' investor Jim Rogers said in Shanghai today. ``The best investments in 2008 are commodities and natural resources. Agricultural prices have much higher to go over the next decade. We have a shortage of everything including seeds.''
Rising Prices
Hedge fund managers and other large speculators almost doubled their bets on rising prices in the week ended June 24, according to U.S. Commodity Futures Trading commission data.
Net-long positions in New York oil contracts, the difference between contracts to buy and sell the commodity, rose to 24,217 contracts. Long positions climbed from a five-month low a week earlier while contracts to sell oil fell a second week to a two- month low.

Saturday, June 28, 2008

Bear Market 2008 !

Battered by Oil, Dow Touches Bear Territory
Published: June 28, 2008
After eight brutal months on Wall Street, the Dow Jones industrial average finally made it official: Blue-chip stocks have stumbled into bear territory.
After a brief rally in April, stocks indexes have resumed a downward trend. For the week the Dow industrials fell nearly 4.2 percent.

A trader at the New York Mercantile Exchange on Friday, where the price of crude oil settled at $140.21 a barrel, up 57 cents.
A brief 155-point slide on Friday afternoon brought the decline in the Dow to 20 percent from its October peak, an ignominious figure that is generally regarded as marking the start of a bear market. The index ended down 107 points, a mere 0.1 percent above the threshold. The broader Standard & Poor’s 500-stock index has not fallen quite as much.
The eight-month journey has roughly followed the twists of the subprime mortgage crisis, with a significant drop after the Bear Stearns collapse and a tantalizing rally when the economy appeared to recover slightly last month.
But in June, as the price of oil kept rising and the pain in the financial industry showed no signs of easing, the losses gained momentum. Many investors concluded that the economy was in worse shape than they had initially feared. This month, as the price of crude has gained about $13, the Dow has shed more than 1,000 points. The index closed at 11,346.51.
Few of the 30 companies in the Dow industrial index were spared Friday, reflecting growing concern among investors that the ongoing credit squeeze and record energy prices are taking a severe toll on industries throughout the economy. Procter & Gamble fell 2.2 percent. Boeing sank almost 1.9 percent. General Motors, which had plunged to its lowest level in decades on Thursday, eked out a small gain.
“The problem is, right now, things are too simple,” said Brian Gendreau, a strategist at ING Investment Management. “Whether it’s for airlines or automobiles or industry after industry, the market as a whole has become a play on energy, on oil.”
The broader stock market has fared better than the Dow, but only slightly. The Standard & Poor’s 500-stock index, a broader measure of American stocks, fell 0.37 percent on Friday to close at 1,278.38. It is 18.3 percent off its October high.
Entering a bear market is a bleak milestone, if primarily a symbolic one. But it would make official what investors have known for months: The economy is in trouble, with little relief in sight.
Since the Dow reached its record high last October, all but three of the 30 stocks in the index have lost value. The biggest losers are General Motors (down more than 70 percent), Citigroup (down 64 percent) and the American International Group (down 60 percent).
Wal-Mart has gained almost 25 percent. Chevron Corporation and I.B.M. have posted modest gains.
“Three months ago, I could have said, well, we’re in a dual economy,” Mr. Gendreau said. “Some sectors like housing or finance aren’t doing well. Other sectors are doing fine. Now, a lot of those assumptions have been called into question. It’s all been driven by developments in a single commodity market.”
A similar pattern has popped up all over the world, where several central banks have warned about encroaching inflation, primarily as a result of the run-up in energy prices.
Nearly halfway through the year, stock-market investors the world over are nursing losses. Blue-chip indexes in France, Germany and other European countries are down more than 20 percent. Emerging markets in China and Vietnam have lost about half their value.
And there appears to be little on the horizon to stanch the losses.
“We still have worries about high oil prices, worries about inflation, in my mind still questions about the economy,” Richard Sparks, an analyst at Schaeffer’s Investment Research, said. “Even though we’ve seen consumer spending bump up with the retail checks, my question is what happens at the end of next month when there are no stimulus checks coming out any more.”
The last bear market, as measured by the broad S.& P. 500 index, stretched from March 2000 to October 2002. During that time, the S.& P. 500 fell almost 48 percent.
During the 20th century, the stock market went through three great bear runs: 1901-21, 1929-48 and 1965-82. Those periods coincided with geopolitical or economic turbulence — wars, the Depression, stagflation. Of course, all of those periods eventually gave way to great bull markets.
While stock prices have fallen this year, shares still are not all that cheap by historical standards. On Friday, the 500 stocks in the S.& P. 500 traded at an average of 21.2 times those companies’ earnings per share. Since 1990, that price-earnings ratio has averaged 24.3.
The Nasdaq Composite Index, heavily weighted with technology stocks, closed down 0.25 percent, or 5.74 points, at 2,315.63. Treasury bond yields fell, and the dollar weakened against the euro.
The benchmark 10-year Treasury note rose 17/32, to 99 8/32. Its yield, which moves in the opposite direction, fell to 3.97 percent, from 4.03 percent.

Thursday, June 26, 2008

Peru Stock Rising higher ! BPZ Resources

BPZ Resources rallies on Shell pact in Peru
By Steve Gelsi

NEW YORK (MarketWatch) -- BPZ Resources Inc. (BZP: )

BZP 27.77, +3.34, +13.7%) on Thursday said it reached a memorandum of understanding with a unit of Royal Dutch Shell (RDSA:

Sponsored by:
RDSA 78.83, -0.52, -0.7%) to develop oil and gas ventures in Northwest Peru. Shell Exploration Company (West) B.V. (Shell) will commit to an exploration and appraisal program worth up to a proposed $300 million. Regional power generation, gas supply for local and regional industry and liquid natural gas production are all in the works. Shares of Houston-based BPZ jumped 14% to $27.88 in recent trades.

Wednesday, June 25, 2008

Wil Bernanke cut rates or Add Rates Higher ??

Bernanke May Halt Rate Cuts, Shift Focus to Inflation By Steve Matthews

June 25 (Bloomberg) -- The Federal Reserve may signal today that inflation is starting to replace a recession and the credit crunch as the biggest risk facing the economy.
Chairman Ben S. Bernanke and his colleagues are laying the groundwork for a policy shift after oil prices doubled in the past year and inflation exceeded 4 percent. At the same time, they may be reluctant to go too far because the economy has yet to shake off the credit crunch and bank losses are deepening.
The Federal Open Market Committee will leave the benchmark interest rate at 2 percent today, ending the fastest series of reductions in two decades, according to all 102 economists surveyed by Bloomberg News.
``They are going to lean a bit more to inflation risks than growth risks, and may provide a hint they could hike rates down the road,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. ``They will signal their concern in a subtle way, not explicitly. They don't want to have a statement that would tie their hands.''
Today's meeting resumed at about 9 a.m. in Washington and a statement is scheduled for about 2:15 p.m. Officials may say their past actions are helping sustain growth, while price increases might take time to moderate, Fed watchers said.
Fed governors and district-bank presidents are bringing new quarterly forecasts to the meeting, which began yesterday in Washington. As recently as April, ``many'' of them foresaw an economic contraction in the first half. That's now unlikely after more than $70 billion of tax rebates helped keep Americans spending and record exports eased the slump in manufacturing.
Bernanke's Assessment
Bernanke in a June 9 speech said that risks of a ``substantial downturn'' in the economy had diminished. He also flagged concerns about consumer prices, and warned that the Fed will ``strongly resist'' a leap in inflation expectations.
In the statement after their April 29-30 meeting, policy makers predicted inflation would ``moderate in coming quarters'' with a ``leveling out'' of commodity prices. Since then, gasoline prices have surged 13 percent to a record, and consumer expectations for average inflation over the next five years reached the highest since 1995.
Bernanke's warning this month spurred traders to bet on a rate rise. There are 33 percent odds of a boost in August and 88 percent in September, according to contracts quoted on the Chicago Board of Trade.
Emergency Measures
One impediment to an early increase may be the Fed's emergency programs providing funds for investment banks. Officials introduced them in March to alleviate the credit crisis that pushed Bear Stearns Cos. close to bankruptcy.
It may be difficult for the Fed to justify raising the cost of credit while at the same time lending to nonbanks, something it's only supposed to do under ``unusual and exigent circumstances'' when no other ``adequate'' credit is available.
The Primary Dealer Credit Facility allows securities firms to borrow from the Fed overnight at the same so-called discount rate available to commercial banks. The Fed said in March the program would be in place ``for at least six months.''
``The withdrawing of facilities creates some risk'' for the credit-market outlook, said Brian Sack, senior economist at Macroeconomic Advisers LLC in Washington and a former research manager at the Fed board. ``They may want to withdraw the facilities and see how credit conditions respond before'' lifting rates, he said.
Policy Priority
In its April 30 statement, the FOMC avoided specifying whether weaker growth or faster inflation was the greater concern. In their paragraph telegraphing policy priorities, officials may reiterate they will ``act as needed'' to promote both economic expansion and stable prices, Fed watchers said.
That would afford policy makers some flexibility. Higher borrowing costs now would hurt banks grappling with mounting losses. Commercial bank loans written off as unrecoverable climbed to 0.97 percent of the total in the first quarter, the highest since 2002, Fed data showed last month.
``It's a delicate balancing act -- don't look for a signal of a strong inclination for raising rates,'' said Michael Feroli, a former Fed researcher who is now an economist at JPMorgan Chase & Co. in New York.
One way of strengthening the message on inflation would be to echo the emphasis that Bernanke, Vice Chairman Donald Kohn and other officials have placed this month on keeping inflation expectations in check. In its last statement, the FOMC said it was important to monitor price developments ``carefully.''
Inflation Expectations
American consumers foresee average annual inflation of 3.4 percent over the next five years, the highest expectation since 1995, according to a Reuters/University of Michigan survey. The five-year outlook among investors has been more stable, at 2.41 percent, up from 2.31 percent in January, according to a measure derived from inflation-linked Treasuries.
Consumer prices rose 4.2 percent in the 12 months to May, government figures show.
``They might emphasize their concern with inflation expectations, saying that it will be necessary to continue to monitor inflation developments, and particularly inflation expectations, carefully,'' said former Fed governor Lyle Gramley, who is now senior economic adviser Washington for Stanford Group Co., a wealth-management firm.

Tuesday, June 24, 2008

Back again Talking ?? Yahoo & Microsoft ?

Yahoo/MSFT talks on, but not for acquisition
By Yi-Wyn Yen
A major Yahoo investor has been urging executives from both Microsoft and Yahoo in the past couple of weeks to revive their talks, and it looks like those efforts haven’t gone to waste.
A source at Microsoft told Fortune on Tuesday that while there was “no big deal” in the works-meaning a full acquisition-he implied that the company hasn’t ruled out the possibility of buying Yahoo’s search business. Shares of Yahoo had reached a five-month low Tuesday, but finished up nearly 3% after two tech blogs reported that Microsoft was revisiting its bid for the battered Internet portal.
The Yahoo investor said he has spoken with company board members about revisiting Microsoft’s (MSFT) offers to buy the whole company and, failing that, part of it. Yahoo directors, the investor said, have admitted that they made miscalculations in negotiations with Microsoft CEO Steve Ballmer. “They dragged this out for a couple months and were shocked when Steve went away,” the investor said.
Calls to Yahoo were not immediately returned.
The Yahoo investor said that selling Yahoo’s search business to Microsoft is a far better alternative than its Google ad pact. Shares of Yahoo (YHOO) dropped nearly 18% in value after the company announced it ended buyout talks with Microsoft on June 12 and said it would ramp up an online ad partnership with Google (GOOG) instead. “I would take anything that beats the current status quo,” the investor said.
Shares of Yahoo have been steadily falling for the past two weeks after the company announced it ended buyout talks. On Tuesday, Yahoo’s shares opened at $21.18, the low since Microsoft made an unsolicited offer to buy the company on February 1.
A Microsoft source shot down rumors that the software giant is again interested in acquiring all of Yahoo. Microsoft had previously offered $33-per-share for the company and walked away from that bid in early May. Asked if Microsoft was making a small deal, the source chuckled and said he had no comment.
One day after Yahoo said talks were off for good, Microsoft’s top advertising executive Kevin Johnson revealed in a letter to employees that the company had returned with a partial offer to buy Yahoo’s search business for $1 billion and invest another $8 billion in Yahoo.
TechCrunch on Tuesday cited sources who indicated that Microsoft and Yahoo were discussing a full buyout. CNET reported that a partial deal was being kicked around.
Wall Street analysts took in the latest rumors with mild amusement. Says Thomas Wiesel Partner’s Christa Quarles, “This is about the 8,000th time I’ve heard Microsoft is going to buy Yahoo. Everyone’s parsing out what their sources are saying or not saying. They’re reading tea leaves at this point.”

Monday, June 23, 2008

Oil still going higher !!

Oil Rises as Saudi Pledge Fails to Ease Nigeria Supply Concern
By Mark Shenk

June 23 (Bloomberg) -- Crude oil rose on signs that Saudi Arabia's output increase may not raise global supply enough to make up for production disruptions in Nigeria.
Attacks on a Royal Dutch Shell Plc platform and a Chevron Corp. pipeline last week halted 300,000 barrels a day of Nigerian output. Nigeria's white-collar oil union began a strike against Chevron today. Saudi Arabia will pump an extra 200,000 barrels a day next month, Oil Minister Ali al-Naimi said yesterday.
``The attack on the offshore platform and the Chevron pipeline point to an escalation,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``The Saudi news was widely expected, so it's had little effect. There were some hopes for a more substantial increase.''
Crude oil for August delivery rose $1.74, or 1.3 percent, to $137.10 a barrel at 11:31 a.m. on the New York Mercantile Exchange. Prices touched a record $139.89 on June 16.
An attack on Shell's Bonga platform, off the coast of Nigeria, on June 19 may halt deliveries for as long as six weeks, the company said last week. The field produces about 190,000 barrels a day. Chevron halted 120,000 barrels a day of onshore production after its pipeline was blown up last week.
After the latest round of attacks, the Movement for the Emancipation of the Niger Delta said it will declare a cease-fire starting tomorrow to ``give peace and dialogue another chance.'' Action against foreign oil companies in Nigeria will end at midnight local time tomorrow, the group said in a statement yesterday.
High Quality Oil
``If the truce comes true it will be very big news,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``It would be very bearish for the markets because a great deal of high quality, distillate rich, crude would be made available.''
Nigeria produces low-sulfur, or sweet, oils prized by refiners because of the high proportion of gasoline and distillate fuels it yields. Distillate fuel is a category that includes heating oil and diesel.
``The employees belonging to the Petroleum and Natural Gas Senior Staff Association of Nigeria have declared a work stoppage,'' Chevron spokeswoman Margaret Cooper said today in a statement.
Cooper said it's too early to comment on the impact of the strike on operations. Chevron in 2007 produced about 350,000 barrels of oil a day from its 32 fields in Nigeria, according to the company's Web site.
Jonathan Omare, secretary of the local Chevron union, said a full-scale strike had begun, though production was not yet affected. ``The strike is everywhere,'' Omare said by telephone. `Nobody's working apart from the guys in the field.''
Saudi Increase
Saudi Arabia first pledged to increase production by 200,000 barrels a day after a meeting between King Abdullah and United Nations Secretary-General Ban Ki-Moon that was reported on June 16. The kingdom will offer more oil if there is demand and also plans to increase its production capacity to 12.5 million barrels a day by the end of next year, al-Naimi said yesterday.
``People were expecting an increase of about this size, so it's a minor element in the market today,'' Lynch said. ``There would have had to be an increase of 1 million barrels to have a major impact.''
Saudi Arabia may need to sell its oil cheaply to complete deliveries after proposing its production increase, the London- based Centre for Global Energy Studies said in a monthly report today.
Brent crude oil for August settlement rose $1.54, or 1.1 percent, to $136.40 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.

Saturday, June 21, 2008

Need More Oil ??

U.S. Energy Secretary says more oil needed to tame price

JEDDAH, Saudi Arabia (Reuters) - Producers must pump more to ease the pain felt in the United States and elsewhere from record fuel prices, U.S. Energy Secretary Sam Bodman said on Saturday. He blamed tight supplies for fuelling a rally which lifted..."

JEDDAH, Saudi Arabia (Reuters) - Producers must pump more to ease the pain felt in the United States and elsewhere from record fuel prices, U.S. Energy Secretary Sam Bodman said on Saturday.
He blamed tight supplies for fuelling a rally which lifted oil close to $140 a barrel this week, sparking protests across Asia and Europe.
"Anything that will add supply to the market is important," he said.
"While increases in near term oil production are welcome and necessary, fundamentally the market needs to see investment in increasing the longer term production capability."
Bodman, representing the world's biggest oil consumer, was in Jeddah for a Saudi-hosted emergency meeting of energy powers on Sunday.
"The world faces an extraordinary time that, in my view, demands responsible action from both consuming and producing nations," he said.
Top oil exporter Saudi Arabia already has vowed to boost supply by 200,000 barrels per day (bpd) in July -- to the highest rate in decades.
And other major producers with the ability to pump more may join in, according to a senior Gulf OPEC official.
Bodman said prices would soar higher if more oil was not forthcoming.
"In the absence of any additional crude supply, for every one percent of crude demand, we will expect a 20 percent increase in price in order to balance the market."
"These are very high oil prices. They have a severe impact certainly on the families of the United States, but also on the families of other countries as well."

Friday, June 20, 2008

Another excuse for oil to rise again !!

Oil Rises $4 on Israeli Army Exercise
By TATYANA SHUMSKY and GREGORY MEYERJune 20, 2008 Crude-oil futures jumped Friday as traders mulled a report hinting at a showdown between Israel and Iran and expressed uncertainty over the impact of an international oil summit in Saudi Arabia this weekend.
Light, sweet crude for July delivery was recently up $3.11, or 2.4%, at $135.04 a barrel on the New York Mercantile Exchange after briefly jumping as high as $136.08. The July contract expires Friday. more actively traded August Nymex crude was up $3.22, or 2.4%, to $135.82 a barrel.
August Brent crude on the ICE futures exchange rose $3.08 to $135.08 a barrel.
The New York Times reported in Friday's editions that Israel this month carried out an airborne military exercise that American officials say looked like a "rehearsal" for a potential bombing attack on Iran's controversial nuclear facilities.
International tensions over Iran, the second-largest crude producer in the Organization of Petroleum Exporting Countries, have helped rattle the market amid oil's rise of more than 40% this year. Iran also lies on the Strait of Hormuz, a crucial conduit for the export of Gulf crude.
"At the very least it's noteworthy and potentially concerning," said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis. "However, at this point in time the imminence of an attack isn't there. Certainly geopolitical tension in the region can prove price-supportive."
The market partly recovered from a fall precipitated Thursday by China's decision to raise the domestic price of gasoline by 17% and diesel by 18%.
"It gave us a one-day selloff," said Walter Zimmermann, an analyst at brokerage ICAP/United Energy in Jersey City, N.J. "It remains to be seen whether that is going to translate into a decrease in demand."
On Sunday, Saudi Arabia has scheduled a summit of major oil producers and consumers. Traders continue to search for clarity over whether the meeting will result in a production boost.
OPEC President Chakib Khelil said Friday that a production increase doesn't make sense.
"To ask the oil producers to increase their output is illogical and irrational," Mr. Khelil told the Algerie Presse Service. Earlier reports have indicated Saudi Arabia, OPEC's de facto leader, will increase output by at least 200,000 barrels a day after the meeting.
Front-month July reformulated gasoline blendstock, or RBOB, rose 5.89 cents, or 1.8% to $3.4115 a gallon. July heating oil rose 9.38 cents, or 2.5%, to $3.8073 a gallon.

Monday, June 16, 2008

Will XM & SIRI Merger Happen ??

WASHINGTON (Reuters) - The head of the U.S. Federal Communications Commission will support Sirius Satellite Radio's (SIRI.O: Quote, Profile, Research) proposed purchase of rival XM Satellite Radio (XMSR.O: Quote, Profile, Research), The Washington Post reported in Monday editions.
FCC Chairman Kevin Martin's decision could remove the last regulatory hurdle in a lengthy and heavily criticized move to combine the companies, the Post said.
Aides to Martin said the FCC chief decided to give his support after the companies agreed last week to concessions intended to prevent the new company from raising prices or stifling competition among radio makers, the paper reported.
Martin is expected, as early this week, to issue an order that the FCC vote to approve the union of Washington-based XM and New York-based Sirius, his aides were cited as saying.
A spokesman for the FCC was not immediately available for comment.
The merger would bring entertainers such as Oprah Winfrey and shock jock Howard Stern under the same banner. It has been criticized as anti-competitive by the traditional radio industry and by some U.S. lawmakers.
Antitrust authorities at the Justice Department approved the deal in March after concluding it would not harm consumers. The department said satellite radio companies face stiff competition from traditional AM/FM radio, high-definition radio, MP3 players and audio delivered by mobile phones.
Under U.S. law, the FCC must determine whether a communications deal is in the overall public interest.
In the case of the XM-Sirius deal, the agency also has to decide whether to waive a rule that barred the two satellite radio companies from merging.
(Writing by JoAnne Allen;

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