By Marc Chandler As the year winds down, a Gordian knot tying Russia, oil prices and China together is receiving a great deal of attention. Let’s see if we can unravel some of the confusing twists and turns. We turn first to China’s offer of assistance to Russia. The idea that Russia could activate its CNY150 bln (~$24 bln) currency […]
The title here is a bit provocative I know. But it is really something I stole from an article about Stephen Roach’s view that I will use as a jumping off point for my Friday review.
The Chinese property bubble is bursting
Chinese wage pressure is rising
Chinese search for oil has increased geopolitical tensions
The Greek bond deal that in February I predicted would come to market was deemed a rousing success by the market. Initially Greece had planned a 2 billion euro offering for 5-year money. But there was heavy interest and Greece’s underwriters got bids for 20 billion euros, allowing Greece to increase the deal size to 3 billion. The deal came […]
By Marc Chandler There is a common perception that Russia move on Crimea shows its strength. A closer examination suggests it is more complicated that it may seem. Like the bully at the school yard, the aggressiveness conceals weaknesses. Simply put, Russia felt threatened and for good reason. The democratic coup in the Ukraine threatened a potentially strategic loss for […]
Today’s links carry a widely-diverging set of opinions about the moral issues surrounding the situation in Ukraine. But since this is a finance site, I want to discuss the economic issues. I continue to believe the Ukrainian situation will have only a modest impact on the global economy unless war breaks out. Moreover, Europe’s trade linkages to Russia make sanctions a trickier subject for Europe than the US. Expect to see diverging views within NATO and no meaningful economic penalty as a result.
Central banks of several nations who are experiencing sharp currency declines are taking action to stabilize the situation. But not the Russians. The nation’s central bank likes the weak ruble because the currency decline boosts the domestic proceeds from Russia’s energy exports. This is particularly important to them as energy prices remain subdued.
During the month of December large money managers have been once again beefing up their long bets on crude oil. What’s driving this push into crude? This drawdown in crude was the result of US refineries firing on all cylinders, particularly in the Gulf Coast states. In fact refinery inputs have hit a new record.
The spread between crude oil traded in the international markets and the US benchmark, the so-called Brent-WTI spread has blown out once again. It’s now approaching levels not seen since February.
We’ve had a number of questions on energy sources in the United States – particularly with respect to the generation of electricity. Here are a few interesting facts about recent trends that hopefully help clarify some of the confusion surrounding this topic.
WTI crude oil has undergone a substantial correction in the last few days. What’s going on?
For India, oil prices currently stand at recent record highs (except possibly the oil India buys from Iran at a discount). Given that domestic petroleum is generally subsidized by the government, this spike is sure to put significant pressure on India’s fiscal balance.