Investment News

If you're hopeful oil prices will drop to $80 per barrel anytime soon, think again.

According to the International Energy Agency, spare oil production capacity may dissapear by 2013.  The IEA fears Increases in production and new found fields may only offset declining oil field production from maturing fields.

The IEA blames increasing demand from emerging economies for the spike in oil consumption.

August oil futures climbed toward $144 per barrel in trading today.

Watchdog cuts oil supply forecast [BBC News]

The highest inflation numbers seen in India in 13 years is being blamed for a 3 percent drop in India's stock market.

Like many emerging economies under pressure from high energy prices, India's government has been reducing subsidies on fuel and cooking oil.  Because energy makes up such a large part of India's inflation calculation, inflation has jumped from around 4% last year.

The surprising inflation numbers have caused wide spread fear India's central bank may start raising interest rates or increasting cash reserve ratios on bank lending which in turn could seriously slow India's future economic growth.

India's key stock index drops over 3 percent on inflation worries [International Herald Tribune]

Rising over US$10 per barrel in a single trading session, oil closed over US$139 per barrel for the first time in history.

Morgan Stanley helped drive the rally with a prediction of oil prices rising to US$150 in only a couple of months due to falling American stockpiles.

Gold also rallied strongly, closing up over US$27 an ounce.  Financials and technology were the losers for the day.

Oil tops $138, sets new record high [BNN]

Facing declining exports and soaring oil prices, Indonisia has become a net importer of oil.  Therefore Indonisia has decided not to renew its OPEC membership at the end of the year.

Most analysts agree it is Indonisia's lack of invesment in exploration and infrastructure that has lead to declining output over many years.  Indonisia has never been a large exporter of oil and its pullout from OPEC is not expected to have much effect world-wide.  However many analysts see this as a wakeup call and point to Mexico as another example of rapidly declining oil field output due to under investment in exploration and infrastructure.

Indonesia, the only OPEC member in South East Asia and OPEC's smallest production member,  has been a member of OPEC since 1961. 

Indonesia to withdraw from OPEC

Existing home sales have fallen 4 months in a row, but Scotiabank and the CMHC (Canada Mortgage and Housing Corp.) agree the risk of a real estate crash similar to the U.S. is low. 

Although large losses are not expected, further deterioration of the US economy and/or tighter credit conditions could cause more damage. 

The US slowdown and a high Canadian dollar has already seriously dampened the outlook for Ontario's economy, which historically has relied heavily on manufacturing and exporting to the US.  Worsening conditions south of the border could be very damaging particularly in Ontario.

The biggest recent slowdowns appear to be in Alberta - mainly in Calgary and Edmonton; cooling of the real estate market is expected to continue into 2009.

'Soft landing' seen for house sales [thestar.com]

Although no agreements were made over disputed gas and oil rights in the East China Sea or the ongoing problems in Tibet, Japan and China have agreed to begin working together to strengthen economic ties.

China wants Japanese technology and investment in the Chinese economy, Japan wants more access to the world's biggest market for Japanese products. China is already Japan's biggest trading partner.

The two countries have also agreed to work together to overcome the disputes of the past and to continue working together in future summits to be held yearly.

This was the first visit by a Chinese leader since 1998. 

Landmark China-Japan deal agreed [BBC News]

After a terrible first quarter, the SENSEX on Tuesday made a sharp turn-around and closed up 2.13%.  The ralley was based on good quarterly corporate results and new government policies announced to slow inflation.  

The Reserve Bank kept short-term lending rates unchaged and raised the cash reserve ratio25 basis points to 8.25% in an attempt to start mopping up excess liquidity in the economy.

Stock market cheers policy announcements; awaits Fed stance [The Hindu]

According to Chakib Khelil, chief of OPEC, the high oil prices we've been experiencing are primarily due to the devaluation of the American dollar.  According to Mr. Khelil, each time the dollar falls 1 percent, oil rises $4 per barrel and vice versa and did not rule out $200 per barrel oil some time in the future.

Khelil suggested supply concerns are overblown and confirmed OPEC would not be increasing production, citing 5 year high record surplus stocks of gasoline in the United States.

Investors will be eagerly awaiting the Fed's decision this week on another possible interest rate cut (widely expected to be 25 basis points).  A further cut in interest rates will likely push oil prices higher.

Oil closed today just over $US 118 per barrel.

Falling dollar to push oil to $200 [PressTV]

Husky's first quarter results released on Monday showed net earnings surge to $887 million, or $1.04 per share.  An increase of 36% from a  year ago.

Husky credits the 'high oil commodity price environment'.

Husky Energy Reports 2008 Quarter Results [Huskyenergy.ca]

A senior Russian oil executive claims Russia would need to invest $1 trillion dollars over the next 20 years into new oil reserve exploration and development if Russia is expected to keep up to growing demand from Europe and China.

Russia is currently the world's number 2 exporter of oil and number 1 exporter of natural gas.  There is now serious worry that high royalty taxes and lack of tax incentives is seriously slowing oil companies from investing the necessary dollars into infrastructure.

Even though Russian production is still rising, there is growing concern demand could out pace production in the near future.

Financial markets reacted to the news by pushing the price of oil to a new record price of US$113.93 a barrel.

'Threat' to future of Russia oil [BBC.com]