originally posted by Tony Daltorio at http://wallstreetmess.blogspot.com/
The oil market changed back in 2009, but most Americans did not notice.
That was the year, for the first time, China temporarily surpassed the United States as Saudi Arabia’s biggest and most important customer.
At the time, Saudi oil minister Ali Naimi said “Ten years ago, China imported relatively little crude oil from us. Now, it is one of our top three markets, and is the fastest growing market for us globally.” He added that this showed the increasing “depth of Saudi-Chinese relations”.
Today, when oil tankers leave Saudi ports with their load of crude oil, they increasingly travel eastward to the rapidly growing economies of Asia rather than to the established markets of western nations.
When looked at historically, this new trend is significant. Remember that the most of the oil industries in the Middle East were originally set up by western companies with the sole aim of providing oil for western economies.
The day when Saudi oil exports to China permanently overtake those to the U.S. has not arrived yet. But it will soon. Read More…
SmartStops wants to remind you that it is important to stay protected in the markets. There’s alot going on within the underlying infrastructure that you may not realize.
from inside flap of The Vega Factor: Oil Volatility and the Next Global Crisis by Kent Moors
“There is a sleeping dragon at the heart of the financial system. Soon the beast will awake and rear its terrible head, and we will look back on the days of the subprime disaster with nostalgia. In this riveting book by oil industry expert Kent Moors, you will meet the dragon he refers to as oil vega, and you’ll discover why it poses such a grave threat to world economic and political stability.”
“Those familiar with the options and currency markets will recognize vega as the term traders use to denote the rate of price volatility. Expanding upon that traditional usage, Moors coined the expression oil vega to describe the dramatic increase of price volatility seen in the oil markets over the past several years. In The Vega Factor, he describes how, contrary to popular belief, the current environment of runaway volatility in the markets is not the work of diminishing reserves, manipulation by oil producing nations, or increased competition among nations. Rather, it is a result of a structural flaw in the trading system itself.
as published at http://www.stockpickr.com/how-play-rising-gasoline-prices.html
NEW YORK (SmartStops) — President Obama made some commentsover the weekend that there is no “silver bullet” to help bring down gas prices. While this isn’t what most Americans want to hear, investors and traders can profit from rising gasoline prices to help hedge their daily expenses.
If you believe that Obama is right, here are a few ways to profit from rising gas prices, either by playing certain ETFs or specific equities.
In his weekly radio address, Obama said: “Now, whenever gas prices shoot up, like clockwork, you see politicians racing to the cameras, waving three-point plans for $2 gas. You see people trying to grab headlines or score a few points. The truth is, there’s no silver bullet that can bring down gas prices right away.”
As the US government has resorted to excessive spending measures to keep the economy from completely crumbling, many investors suggest that inflation is inevitable and could even prevail in the coming months.
Current economic data suggest that inflation is running lower than expected; however there are numerous reasons to think that inflation will eventually be inevitable. Some of these reasons include the Federal Reserve’s implementation of QE2, which launched in early November, the increases in money supply in the earlier stages of the Great Recession to ignite a spark in the US economy and rising commodity prices are likely to take their toll on the consumer price index (CPI). In fact, rising prices have already started to emerge, evident through the recent rise in energy prices (i.e. crude oil and gasoline), food prices (i.e. wheat, sugar, coffee and soybeans) and airline tickets. Read More…
As commodities like cotton, wheat and copper have witnessed price surges this year, the actions and decisions of the Federal Reserve combined with sustainable global demand could boost crude oil providing positive price support to the United States Oil Fund (USO), the United States 12 Month Oil Fund (USL), the PowerShares DB Oil Fund (DBO) and the iPath S&P GSCI Crude Oil TR Index ETN (OIL). Read More…
Global economic growth is expected to boost demand for crude oil in the near term future, paving the path to opportunity for the US Oil Fund (USO), the United States 12 Month Oil Fund (USL), the PowerShares DB Oil Fund (DBO), and the iPath S&P GSCI Crude Oil TR Index ETN (OIL).
According to the Energy Information Agency (EIA), global demand for black gold for the remainder of the year is expected to increase to 86.06 million barrels per day, a 2.1 percent increase from last year. Furthermore, the EIA expects global consumption to jump to 87.44 million barrels per day in 2011, an increase of nearly 300,000 barrels per day from previous forecasts due to resurgent demand in the US, Germany and Japan over the past three months. Read More…
Frontier market ETFs have been gaining investor attention as many seek to diversify portfolios and gain exposure to nations and regions that are up and coming and for good reason.
The actual definition of a frontier market is somewhat ambiguous, but they do offer investors the ability to access parts of the world that are likely to witness rapid economic growth in terms of GDP. Another reason to consider frontier markets is due to their low, to no, correlation with emerging and developed markets. This lack of correlation shelters these markets from the wrath that has been brought on by the sovereign debt crisis seen in developed markets throughout Europe as well as the socioeconomic climates of both the developed and developing markets. Read More…
Despite hitting a wall due to ambiguity over the stability of the global economic recovery and the negative publicity brought on by the massive Gulf oil spill, the forces of supply and demand may enable an opportunity in black gold to prevail.
On the supply side, the BP PLC (BP) Gulf oil spill could potentially reduce future domestic crude supply. The spill will likely result in more stringent drilling regulations making it more costly and difficult to explore and bring new oil production online. In fact, the Obama administration has already placed a 6-month moratorium on most deep water drilling in the Gulf, which, if kept in place, could cut nearly 25 million barrels of U.S. crude production next year. Read More…
The debt crisis looming in Europe and a slowdown in China’s growth has driven commodity prices to their biggest slump since the demise of Lehman Brothers, enabling some to believe that a rally in the alternative asset class may be in the near future. Whether or not a rally is in the near future for commodities, it is important to be aware of their inherent risks.
As the appeal of exchange traded funds (ETFs) has magnified, so has that of commodity based ETFs and exchange traded notes (ETNs). One inherent characteristic of many commodity based ETFs and ETNs is contango. Contango arises when the front-month futures contracts are cheaper than second-month futures contracts. To simplify it, it is when the price of a commodity for future delivery is higher than the spot price (the opposite phenomenon occurs as well, and this is known as backwardation). Read More…
According to projections from the International Monetary Fund, China, India and Brazil are expected to be the economic growth leaders of the year and it is possible to reap the benefits of this international growth domestically.
Over the last year, the MSCI Emerging Markets Index has witnessed stellar growth and prices in emerging stock markets, like China, have followed. In fact, China’s main stock market index trades at a price-to-earnings ratio of more than 30, nearly 50% higher than that of the S&P 500.
In addition to being cheaper, domestic stocks that are likely to benefit from international growth tend to be less volatile, have less risk and are more liquid than those of emerging markets. As these nations grow and develop, demand for energy, technology and industrials will likely surge. Read More…