April 29, 2010
April 10, 2010
World Financial Market Update
Coal Mine Safety
Recent accidents and death in mining projects will put pressure on government to increase scrutiny and improve security measures in mining operations. The most recently reported coal operation disaster killed 25 miners at a Massey Energy (MEE) mine in West Virginia this week. Another major disaster occurred in China just days before the Massey incident that cost 32 lives. There has been deathly disasters in Colombia, which has not made it to the world news. As a result of several coal mine problems, China shut down numerous mines last year, with the result at China becoming a net importer of coal for the first time ever.
The United States will be increasing scrutiny of their coal operations in the US, the public will be pressuring governmental agencies to seek higher safety standards on their operations. This will make a big push for natural gas, which burns cleaner than coal, is looking increasingly abundant, not to mention cheap, so the last thing the coal industry will want is a bout of bad publicity on safety.
Coal Price
The coking coal market is hot. Due to increased production of steel in China continues to push the coking coal prices to unheard levels. Dalhman Rose analysts this morning released a report on coal with coking coal with a price tag of $200 price tag per metric ton.
Oil
Oil prices have been slowly increasing, now the expectations in the market is that oil prices will increase to triple-digit. The concern will soon become the kiss of death to a global economic recovery. May futures for light sweet crude oil are up 29 cents, at $85.68 par barrel. October futures are up 90 cents at $88.99 per barrel. None of the contracts show a three-digit price, yet.
Natural Gas
The Appalachia Region of the United States, well known for its coal production is becoming one of the hottest global energy plays. It is drawing attention from big names and big money to a region of the country, but it's not coal they're after. It's natural gas. One of India's biggest conglomerates, Reliance Industries Ltd., plunked down $1.7 billion to take a claim in the Marcellus Shale play. Marcellus is a vast underground sheet of shale stretching from New York's Finger Lakes through western Pennsylvania as far south as parts of Kentucky and Tennessee.
What makes Marcellus hot is that drillers have figured out how to run horizontally drilled wells through the shale strata and fracture it under high pressure, literally shattering the rock, to release the natural gas trapped inside. This wasn't possible a generation ago.
Reliance is the first Indian energy company to gain a foothold in the Marcellus Shale, buying exploration rights to 120,000 acres. But it's not the first foreign company in the region by a long shot. Norway's state oil company Statoil and France's Total SA, to name a few.
Unlike crude oil, natural gas cannot be loaded onto tankers and shipped abroad. So when India's Reliance Industries makes a play for gas in North America, it's not looking to send much-needed energy to fuel further growth in India's booming economy. Rather, it's an Indian company injecting itself into an exploration boom in Pennsylvania in the hope of being a supplier of gas to utilities and industries along the East Coast. For American energy companies, this is a familiar role in overseas markets. But it's an unfamiliar site to see so many overseas operators on gas fields here at home.
The big push Reliance in the United States is expected to bring other speculators into the area. Even Reliance is taking a huge risk when consider that the Mumbai based company bought its Marcellus exploration acreage from Atlas Energy Inc. an independent operator based in Mon Township, Pa., with a market cap of less than $3 billion. It's hard to know whether all these big bets on the Marcellus Shale will pan out. There are lots of questions about how long gas will flow out of these special wells before they require expensive overhauls. There is also mounting concern among local governments over whether such unconventional drilling techniques pose environmental threats, especially to ground water. And, of course, there's the natural gas market itself, where prices have been depressed for years from oversupply. However, if the investment results positive for Reliance it would provide Reliance access to a highly populated area with established infrastructure, high income region, and supply to meet demand. Also, as mentioned before with the expected scrutiny in the coal industry and pressure from environmentalists on the United States to seek cleaner alternatives may create a higher demand on natural gas.
Gold
Gold futures settled at a fresh four-month high at $1,161.90 an ounce on the Comex division of the New York Mercantile Exchange, the highest for a most-active contract since December 7. Gold price drivers are the downgrade of Greece which heightened concerns about the euro-zone countries and the global economic recovery, giving prices a decisive upward push. The whole Greek story has been supporting gold for some time now. However, the major concern is not just Greece, but if it is not going to be easy for Greece, what's going to happen if someone else has trouble?.
There has been concern about China's economy and how long they can sustain their buying spree and their currency. Dollar weakness also played a role in gold's winning streak. In addition, the lack of other attractive alternatives due to continuously low interest-rate levels both in the U.S. and the euro zone, should keep interest in gold high and should support the gold price for a while.
Other Metals Are Up
> Silver for May delivery added 22 cents, or 1.2%, to settle at $18.3510 an ounce on Comex.
> Platinum for July delivery added $10.30, or 0.6%, to $1,727.40 an ounce.
> Palladium for June delivery increased $10.10, or 2%, to end at $513.60 an ounce.
> Copper for May delivery ended flat at $3.59 a pound.
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Recent accidents and death in mining projects will put pressure on government to increase scrutiny and improve security measures in mining operations. The most recently reported coal operation disaster killed 25 miners at a Massey Energy (MEE) mine in West Virginia this week. Another major disaster occurred in China just days before the Massey incident that cost 32 lives. There has been deathly disasters in Colombia, which has not made it to the world news. As a result of several coal mine problems, China shut down numerous mines last year, with the result at China becoming a net importer of coal for the first time ever.
The United States will be increasing scrutiny of their coal operations in the US, the public will be pressuring governmental agencies to seek higher safety standards on their operations. This will make a big push for natural gas, which burns cleaner than coal, is looking increasingly abundant, not to mention cheap, so the last thing the coal industry will want is a bout of bad publicity on safety.
Coal Price
The coking coal market is hot. Due to increased production of steel in China continues to push the coking coal prices to unheard levels. Dalhman Rose analysts this morning released a report on coal with coking coal with a price tag of $200 price tag per metric ton.
Oil
Oil prices have been slowly increasing, now the expectations in the market is that oil prices will increase to triple-digit. The concern will soon become the kiss of death to a global economic recovery. May futures for light sweet crude oil are up 29 cents, at $85.68 par barrel. October futures are up 90 cents at $88.99 per barrel. None of the contracts show a three-digit price, yet.
Natural Gas
The Appalachia Region of the United States, well known for its coal production is becoming one of the hottest global energy plays. It is drawing attention from big names and big money to a region of the country, but it's not coal they're after. It's natural gas. One of India's biggest conglomerates, Reliance Industries Ltd., plunked down $1.7 billion to take a claim in the Marcellus Shale play. Marcellus is a vast underground sheet of shale stretching from New York's Finger Lakes through western Pennsylvania as far south as parts of Kentucky and Tennessee.
What makes Marcellus hot is that drillers have figured out how to run horizontally drilled wells through the shale strata and fracture it under high pressure, literally shattering the rock, to release the natural gas trapped inside. This wasn't possible a generation ago.
Reliance is the first Indian energy company to gain a foothold in the Marcellus Shale, buying exploration rights to 120,000 acres. But it's not the first foreign company in the region by a long shot. Norway's state oil company Statoil and France's Total SA, to name a few.
Unlike crude oil, natural gas cannot be loaded onto tankers and shipped abroad. So when India's Reliance Industries makes a play for gas in North America, it's not looking to send much-needed energy to fuel further growth in India's booming economy. Rather, it's an Indian company injecting itself into an exploration boom in Pennsylvania in the hope of being a supplier of gas to utilities and industries along the East Coast. For American energy companies, this is a familiar role in overseas markets. But it's an unfamiliar site to see so many overseas operators on gas fields here at home.
The big push Reliance in the United States is expected to bring other speculators into the area. Even Reliance is taking a huge risk when consider that the Mumbai based company bought its Marcellus exploration acreage from Atlas Energy Inc. an independent operator based in Mon Township, Pa., with a market cap of less than $3 billion. It's hard to know whether all these big bets on the Marcellus Shale will pan out. There are lots of questions about how long gas will flow out of these special wells before they require expensive overhauls. There is also mounting concern among local governments over whether such unconventional drilling techniques pose environmental threats, especially to ground water. And, of course, there's the natural gas market itself, where prices have been depressed for years from oversupply. However, if the investment results positive for Reliance it would provide Reliance access to a highly populated area with established infrastructure, high income region, and supply to meet demand. Also, as mentioned before with the expected scrutiny in the coal industry and pressure from environmentalists on the United States to seek cleaner alternatives may create a higher demand on natural gas.
Gold
Gold futures settled at a fresh four-month high at $1,161.90 an ounce on the Comex division of the New York Mercantile Exchange, the highest for a most-active contract since December 7. Gold price drivers are the downgrade of Greece which heightened concerns about the euro-zone countries and the global economic recovery, giving prices a decisive upward push. The whole Greek story has been supporting gold for some time now. However, the major concern is not just Greece, but if it is not going to be easy for Greece, what's going to happen if someone else has trouble?.
There has been concern about China's economy and how long they can sustain their buying spree and their currency. Dollar weakness also played a role in gold's winning streak. In addition, the lack of other attractive alternatives due to continuously low interest-rate levels both in the U.S. and the euro zone, should keep interest in gold high and should support the gold price for a while.
Other Metals Are Up
> Silver for May delivery added 22 cents, or 1.2%, to settle at $18.3510 an ounce on Comex.
> Platinum for July delivery added $10.30, or 0.6%, to $1,727.40 an ounce.
> Palladium for June delivery increased $10.10, or 2%, to end at $513.60 an ounce.
> Copper for May delivery ended flat at $3.59 a pound.
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April 6, 2010
Financial Shape of America
The Wall Street Journal, USA Today, and Parenting magazine have released shocking statistics on the financial shape of most Americans: about 70% live paycheck to paycheck, about 50% couldn’t cover one month’s expenses if they were laid off, and 44% systematically prepare for retirement by investing. According to USA Today, only 3 out of 100 people age 65 are financially secure; 97 of them can’t write a check for $600 and 54 are still working. This is a rude awakening when we consider that the federal government now needs to pay back the Social Security System for the $2.3 trillion surplus it borrowed over the years.
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