On Food Riots, Peak Oil and Military Force

Here’s a fabulous look into the political economy of oil by Andy Lees. His view is that the era of cheap oil is over. But, more than that, natural resources as a whole are increasingly dear. And a world of dwindling natural resources has geopolitical implications when supply and demand are finely balanced. Andy writes

Oil: Where is the spare capacity?

This morning’s note from UBS’ Andy Lees addresses something about which I am sceptical regarding the escalating Libyan conflict: global spare oil capacity. I am in the same camp with Jeremy Grantham. Call it peak resources, peak oil, the end of cheap oil, whatever – the fact is there is a finite amount of natural

Oil Sands: Fueling the Future

By Marin Katusa, Casey Energy Opportunities For many years, trying to tap an oil sands deposit accomplished about as much as sipping molasses through a straw, but that is changing. So do oil sands companies make a good investment now? Humans and bacteria share a surprising number of features, not least in what they consider

Surely There Is Nothing “Funny” About What Is Going On In Japan?

By Edward Hugh As Japanese officials continue to toil away in what we all hope will be a successful bid to avert a worst case nuclear meltdown, even while thousands of Japanese remain missing and unaccounted for, financial market participants across the globe have been struggling to answer one and the same question: just how

The politics of nuclear now favour existing fossil fuel producers

Marc Chandler wrote a good piece on the politics of nuclear in Germany and elsewhere in Europe. I want to piggyback on his comments with some of my own thoughts and questions regarding what this could mean for the energy space. This is a quick shot, so I’ll bullet point this. The circumstances of the

U.S. is Exporting Inflation

Rising agricultural produce prices helped boost U.S. export prices, while oil boosted import prices. Exports were +8.6% and imports +6.9%

Economic Facts of Life about Global Energy

Oil spills, coal mining disasters, concerns over Middle East revolutions and now nuclear meltdowns. What do all these events have in common? As I have written earlier, they are energy-related. They all have to do with desperate efforts to find energy fuels to supply the world’s ever-growing demands. Where is the concern over the horrific civil war now commencing in the Ivory Coast? After all, its population is more than three times larger than Libya’s. Forget it, no oil

Oil Prices and Rate Hikes Favor Latam FX Over Asia and EMEA

By Win Thin Malaysia central bank surprised the markets by hiking the statutory reserve requirement 100 bp bp while leaving policy rates unchanged at 2.75%. The bank noted that “While the stance of monetary policy is expected to remain supportive of growth, the degree of monetary accommodation may be reviewed given the sustained growth in

High Oil Prices Unlikely To Go Away Anytime Soon

Oil prices are moving higher today, due largely to news about Libya and OPEC. Algerian Oil Minister said that there was no shortage in the global oil markets and that an emergency OPEC meeting is not needed now. It also appears that optimism over a quick resolution to fighting in Libya was overdone, and that

Canada and Oil: More Complicated than One Might Suspect

We have found that the correlation between oil and the Canadian dollar has collapsed. We conduct the correlation analysis on a 60-day rolling basis, using percent change. The correlation peaked at the end of last year near 0.76. It now stands at -0.1 (see graph from Bloomberg below This is the first time the correlation is inverse since the July-Oct 2007 period. In the 1992-2002 period, the correlation was often inverse, but in recent years this is an exception

Mexico Central Bank Turns A Bit Hawkish

Mexico central bank kept rates steady at 4.5% today, as expected. However, it tilted a little more to the hawkish side and supports our view that tightening is likely to start in Q4 11 and not Q1 12 as market is pricing in. Central bank noted that the balance of risks for inflation is deteriorating, and noted that higher commodity prices resulting from Mideast turmoil and bad weather may spur inflation this year. The change in tone comes despite CPI inflation easing to 3.6% y/y in mid-February from a peak of 4.4% in December, and back within the 2-4% target range. Core CPI has eased steadily to 3.3% y/y in mid-February from over 4% in early 2010. Instead, the bank appears to be focusing on the output gap, which it said is likely to close by mid-

Euro and Yen – Surprising Developments

It looks so easy. Risk on and risk off. When risk trades are being put on, equity market and commodities prices, like gold and oil, rise. The euro appreciates and the yen sells off. When risk trades come off, just the opposite takes place.

This common narrative is based on numerous assumptions, including that correlations between the currencies and equities and commodities are fairly stable. We examined this hypothesis and present our results here. Contrary to our expectations, we found that recently there has been a sharp decline in the correlations between the euro and yen on one hand, and equities and gold and oil on the other hand