Commodities speculators: most of Congress hates them, George Soros criticises them, even Opec isn’t very keen. After numerous congressional hearings over the past few years, the CFTC is about to formally consider whether it should set limits on speculative positions, particularly in energy commodities:
Our first hearing will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities, such as crude oil, heating oil, natural gas, gasoline and other energy products. This will include a careful review of the appropriateness of exemptions from these limits for various types of market participants.
Aggregate Position Limits and Review of Hedge Exemptions for Energy Futures Markets
The price of oil has, as usual, been keeping everyone on their toes. But with oil prices up from recent lows, that is not an issue for the oil majors.
What might well be an issue when their second quarter results come out later this month is the refining end of the business. ConocoPhillips, the US’ third biggest oil company, said in releasing its interim results today that its refining and marketing results for the second quarter will be impacted by factors such as low worldwide distillate margins. Read more
By Tracy Alloway
We like this chart from Goldman Sachs.
It shows their forecast that oil will rise to $85 a barrel by mid-January — and not a moment before!
In all seriousness, there’s been a step change in the commodities markets over the past week, with the US benchmark Nymex August West Texas Intermediate falling to $64.05 a barrel — the lowest in five weeks — after investors apparently (suddenly) came around to the fundamental economic realities of the market. Read more
Political analysis blog FiveThirtyEight has extrapolated from the House voting patterns on Waxman-Markey to see the bill’s chances of getting a filibuster-proof 60 votes in the Senate. The Democrats now have a majority of 60 in the Senate, but FiveThirtyEight estimates nine of those – mostly from states with high per-capita carbon emissions – are likely to be ‘problematic’. In total, they put 50 votes in the ‘likely’ to ‘nearly certain’ ranges.
Nearly certainly yes – 24
Extremely likely yes – 14
Highly likely yes – 6
Likely yes – 6 Read more
Oil prices stabilised on Tuesday after falling for the previous four sessions while base metals made modest gains and gold traded in a narrow range above $920 an ounce as concerns about the global economy’s recovery prospects weighed on sentiment among commodity investors.
Disappointing US employment data for June, released last week, has been cited as the primary cause for subsequent selling across commodity markets.
However, analysts at Goldman Sachs said the sell-off was “simply a correction in a commodity rally that had run ahead of itself.”
Goldman noted that recent economic data had, in general, been mixed, as solid industrial news contrasted with disappointment on employment. Read more
Alexis Madrigal has posted two interesting graphs of US R&D spending:
First, within energy: Read more
Discussion of a tax on miles driven is continuing in the US, often as an alternative to a politically unviable higher petrol/gasoline tax. But a miles-driven tax, as is frequently pointed out, might not effectively reduce fuel consumption, because it would not reward fuel efficient cars.
What is a a fuel tax, or a miles-driven tax, for? If demand reduction is the only goal, law professors Michael Levine of New York University and Mark Roe of Harvard say it could be done by giving the money back to drivers in the form of rebates. That way, average drivers would have an incentive to reduce their use. They write in the FT today: Read more