Tuesday, February 13, 2007
Oil..
Oil jumps back above $58 a barrelNEW YORK (AP) - Oil prices jumped back above $58 a barrel Tuesday, as the International Energy Agency forecast a strong increase in global demand this year and a snowstorm plowed through the Midwest.The IEA boosted its 2007 global oil demand forecast by 273,000 barrels per day to 86 million barrels per day on higher expectations for demand from China. The agency forecast 2006 global oil demand of 84.5 million barrels per day.Also pushing up demand prospects was a winter storm cruising through the U.S. Midwest and headed for the Northeast, which consumes 80 percent of the nation's heating oil."Primarily, people are just looking at the weather right now," said Daniel Flynn, an energy trader at Alaron Trading Corp. in Chicago, just before asking a co-worker how much snow was outside their office.Flynn said he'll be watching to see if oil prices can break through the $59 per barrel barrier.Light, sweet crude for March delivery rose 80 cents to $58.61 per barrel in midday trading on the New York Mercantile Exchange. Prices climbed as high as $58.85 per barrel earlier in the session.Brent crude at London's ICE Futures exchange rose 38 cents to $56.98 a barrel.The rebound follows a sharp drop of more than $2 a day earlier, spurred by moderating U.S. temperatures and expectations that there will be a crude surplus in the spring.Rebounds, though, have been difficult to sustain recently due to concerns on the part of so-called "longs," or investors hoping for higher prices, Cameron Hanover's Peter Beutel wrote in a research note."The longs cannot get out of their own way, and each attempt to move higher has been halted by heavy, long liquidation rather than by fresh selling," Beutel wrote. "If the jittery longs can be coaxed out by lower prices and, if that also brings in short-term short sellers, it could put the market in a better position to break above $60."Traders said they were also looking ahead to Wednesday's report on U.S. inventories.According to a Dow Jones Newswires survey, U.S. stocks of heating oil and other distillate fuels are expected to fall by about 4 million to 5 million barrels below the 136.3 million barrels reported last week.Gasoline and crude stocks are both expected to rise in the data released by the U.S. Department of Energy's Energy Information Administration.The U.S. winter chill of the past couple weeks, which drove prices briefly above $60 on Friday, is expected to ease up by late February, leading traders to believe that heating fuel demand will weaken.Natural gas prices rose 9.8 cents to $7.324 per 1,000 cubic feet on the Nymex and heating oil rose 2.5 cents to $1.67 a gallon. Gasoline prices rose 4.05 cents to $1.5932 per gallon.
LME REVIEW
DJ LME Review: LME Aluminum Jumps On Guinea Strike;Upside Seen
By Lisa Yuriko Thomas
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--London Metal Exchange aluminum prices surged Tuesday to levels last seen in late January, driven by escalating tensions in Guinea, with traders expecting further upside as political uncertainty there continues.
Three-month aluminum rose to a PM kerb of $2,820 a metric ton, up nearly 4% from Monday to prices last seen Jan. 25.
Martial law in Guinea and the bullish tone across the whole base metals complex helped boost aluminum prices, which are likely to rise further in the near term, said an LME trader.
Guinea is a leading producer of bauxite, which is an essential component used to produce aluminum.
Tuesday, Guinean President Lansana Conte instituted martial law until Feb. 23 after days of deadly protests. The protests were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
Many major companies have been affected by the violence, with Alcoa Inc. saying Tuesday that its production of bauxite at its CBG operations had been halted and Rusal saying production had been cut at its Friguia alumina refinery. Rio Tinto PLC said it has evacuated 16 of its staff from the country.
In addition, market speculation of a possible takeover of U.S. aluminum giant Alcoa by Rio Tinto or BHP Billiton was another supportive factor for prices, the LME trader said.
However, strength extended across the entire base metals complex. Copper prices climbed roughly 4% to a PM kerb of $5,749/ton triggered by a decrease in LME copper stocks by 2,800 tons to 213,250 tons.
Michael Widmer of Calyon also pointed to bullish macroeconomic data out of Germany as adding to base metal price support, particularly for copper.
The German Center for European Economic Research's business expectations index rose for the third straight month to +2.9 points in February from -3.6 points in January, signaling a pickup in economic activity in around 6 months time.
Three-month nickel prices jumped roughly 3% to a PM kerb of $36,000/ton "buoyed by gains reflected across the rest of the complex," Barclays Capital said.
Despite a modest rise in nickel stocks Tuesday by 18 tons to 3,768 tons, overall stocks remain at critically low levels. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Monday PM kerb
Copper 5749.0-5750.0 Up 279
Lead 1670.0-1675.0 Up 11
Zinc 3220.0-3222.0 Up 110
Aluminum 2820.0-2825.0 Up 113
Nickel 36000.0-36100.0 Up 1200
Tin 12595.0-12600.0 Up 95
Aluminum Alloy 2250.0-2270.0 Up 45
Aluminum Alloy 2260.0-2270.0 Up 115
By Lisa Yuriko Thomas
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--London Metal Exchange aluminum prices surged Tuesday to levels last seen in late January, driven by escalating tensions in Guinea, with traders expecting further upside as political uncertainty there continues.
Three-month aluminum rose to a PM kerb of $2,820 a metric ton, up nearly 4% from Monday to prices last seen Jan. 25.
Martial law in Guinea and the bullish tone across the whole base metals complex helped boost aluminum prices, which are likely to rise further in the near term, said an LME trader.
Guinea is a leading producer of bauxite, which is an essential component used to produce aluminum.
Tuesday, Guinean President Lansana Conte instituted martial law until Feb. 23 after days of deadly protests. The protests were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
Many major companies have been affected by the violence, with Alcoa Inc. saying Tuesday that its production of bauxite at its CBG operations had been halted and Rusal saying production had been cut at its Friguia alumina refinery. Rio Tinto PLC said it has evacuated 16 of its staff from the country.
In addition, market speculation of a possible takeover of U.S. aluminum giant Alcoa by Rio Tinto or BHP Billiton was another supportive factor for prices, the LME trader said.
However, strength extended across the entire base metals complex. Copper prices climbed roughly 4% to a PM kerb of $5,749/ton triggered by a decrease in LME copper stocks by 2,800 tons to 213,250 tons.
Michael Widmer of Calyon also pointed to bullish macroeconomic data out of Germany as adding to base metal price support, particularly for copper.
The German Center for European Economic Research's business expectations index rose for the third straight month to +2.9 points in February from -3.6 points in January, signaling a pickup in economic activity in around 6 months time.
Three-month nickel prices jumped roughly 3% to a PM kerb of $36,000/ton "buoyed by gains reflected across the rest of the complex," Barclays Capital said.
Despite a modest rise in nickel stocks Tuesday by 18 tons to 3,768 tons, overall stocks remain at critically low levels. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Monday PM kerb
Copper 5749.0-5750.0 Up 279
Lead 1670.0-1675.0 Up 11
Zinc 3220.0-3222.0 Up 110
Aluminum 2820.0-2825.0 Up 113
Nickel 36000.0-36100.0 Up 1200
Tin 12595.0-12600.0 Up 95
Aluminum Alloy 2250.0-2270.0 Up 45
Aluminum Alloy 2260.0-2270.0 Up 115
Copper
Metals - Copper rallies as traders focus on rising Chinese demandLONDON (AFX) - Copper prices rallied as traders focused on signs of improved demand from China and after the LME reported a sharp drop in stockpile levels.At 1.54 pm, LME copper for three-month delivery was up at 5,620 usd a tonne against 5,470 usd at the close Friday.Standard Chartered analyst Tariq Salaria said there is speculation in the market the Chinese will continue importing large amounts of copper this month."Shipment vessels are on their way and everyone knows they're destined for China - this is the trend going on for 4 months now," he said.Yesterday, data showed Chinese imports of unwrought copper and semi-finished copper products rose 44 pct in January over December."Indications are that Chinese destocking has come to an end and that restocking is on the way," said Salaria.Separately, copper is benefiting from a hefty decline in LME stocks.The LME said in a daily report earlier that copper stocks fell by 2,800 tonnes to total 213,250 tonnes.Although copper stocks held in LME warehouses have more than doubled since the start of last year, Salaria said overall global supply is still below historical averages.Aluminium prices also rallied as the metal continued to benefit from the general strike in Guinea, which has affected bauxite exports.Bauxite is a raw material used in the production of alumina, the raw material used to make aluminium.Nine people have been killed to date in the west African country since the strikes began, while President Lansana Conte has declared martial law.Aluminium was up at 2,770 usd a tonne against 2,707 usd at the close yesterday.Tin climbed higher but held below a new record high of 12,475 usd a tonne hit yesterday.Indonesian miner PT Koba Tin, which is being investigated on counts of illegal mining, has suspended shipments from the island of Bangka.Tin was up at 12,600 usd a tonne against 12,475 usd at the close yesterday.Lead extended yesterday's gains, still benefiting from Xstrata's declaration of force majeur on deliveries from its Mt Isa complex in Australia.Lead was up at 1,690 usd a tonne against 1,660 usd at the close yesterday.In other metals, zinc was up at 3,165 usd against 3,110 usd while nickel rose to 36,100 usd against 34,875 usd.
Oil
CRUDE OIL: Crude oil eases lower after Iran President Ahmadinejad reportedly said "Iran always ready to talk" on ABC TV. WTI Nymex crude oil is at $57.55, down 27 cents.
LME INVENTORY DATA
Change in London Metal Exchange inventory as of Tuesday, Feb 13:Copper down 2,800 tonnes at 213,250 tonnesLead down 850 tonnes at 35,875 tonnesNickel up 18 tonnes at 3,768 tonnes Aluminium down 2,175 tonnes at 756,125 tonnesTin up 35 tonnes at 10,380 tonnesZinc down 525 tonnes at 97,700 tonnes
Oil..
IEA ups 2006 global oil demand estimate, lifts 2007 oil demand forecastLONDON (AFX) - The International Energy Agency raised its 2006 oil demand estimate and upped its 2007 oil demand forecast, citing a large revision to estimates of China's apparent demand.The Paris-based energy watchdog said in its monthly report it now sees 2006 global oil product demand at 84.5 mln bpd, implying an upward revision of 111,000 bpd from the last monthly report.For 2007, the IEA sees global oil product demand totaling 86 mln bpd, an upward revision of 273,000 bpd from the last monthly report.It added, however, that given revisions to the 2005 baseline comparison, the annual demand growth rate for 2006 remains unchanged at 1 pct, while that of 2007 has risen to 1.8 pct.The agency also noted while demand last year in OECD countries recorded its first significant drop since 1985, the drop "does not imply a change in the longer-term trend"."While OECD oil demand growth has fallen, in non-OECD it has been robust," said the agency.It also warned that "barring a global slowdown, in just three years the rate of oil demand growth will once more outstrip the growth of new oil supplies"."Without stronger policies to stem demand growth ... or more rapid growth of oil capacity, the slim respite from the tight spare capacity may prove very brief," said the agency.
N KOREA
NKorea to close nuclear facilities in return for fuel aidBEIJING (XFN-ASIA) - North Korea has agreed to begin closing its Yongbyon nuclear reactor and some other atomic facilities in return for fuel aid, China's envoy to six-nation talks on Pyongyang's nuclear program said after revealing a deal had been reached.
Mining
In the Press
BHP Billiton and Rio Tinto have drawn up plans for a $40 billion (£20.5 billion) takeover of Alcoa, one of the world’s largest aluminium groups, The Times has learnt. BP's Russian joint venture has been given three months to increase production at one of the world's largest gas fields "by a technically impossible amount" or face losing the field altogether, reports the Independent.
BHP Billiton and Rio Tinto have drawn up plans for a $40 billion (£20.5 billion) takeover of Alcoa, one of the world’s largest aluminium groups, The Times has learnt. BP's Russian joint venture has been given three months to increase production at one of the world's largest gas fields "by a technically impossible amount" or face losing the field altogether, reports the Independent.
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