Oil Archive

Saudi/Fed teamwork

Looks like markets are still trading with the assumption that as the Saudis/Russians hike prices the Fed will accommodate with rate cut. That’s a pretty good incentive for more Saudi/Russian oil price hikes, as if they needed any! Likewise, the US is a large exporter of grains and foods. Those prices are ...Read More

Crude oil demand revised up

This means Saudis/Russians will continue to be price setters for at least the next few quarters. IEA Lifts 2008 World Oil Demand Growth Forecast By Reuters | 14 Dec 2007 | 05:32 AM ET World oil demand will grow more quickly than expected next year fueled by the Middle East and proving ...Read More

UST ASW update

(an interoffice email) > > > 16bp day for 2yr spreads today: > > > > The market went into the fed announcement expecting perfection > > 25-50bp cut and 50bps on the discount window. > > > > Spreads were 6 lower on the day in the 2yr sprds and 3 ...Read More

Fed expected to lower rates despite raging inflation – MarketWatch

And the risk is headlines could get much worse after they cut. For example: ‘Oil prices rise as Fed rate cuts drive down the dollar’ ‘Fed cuts rates, driving up gas prices, to bail out banks’ MarketWatch article – Fed expected to lower rates despite raging inflation ...Read More

Saudi oil production rose last month

Saudi production rose last month, meaning demand for their output increased even at the higher prices. They are acting as ‘swing producer’ and let output vary to meet actual demand. By definition, therefore, markets are ‘well supplied’ at their price. To avoid controversy, they deny this policy, but in fact they have ...Read More

Bank capital NOT a constraint on lending

Here’s the response to Jan’s (Goldman) concern about lost capital constraining lending. Bank capital grows endogenously- it’s not a constraint on lending apart perhaps from the very near term. Banks ‘know’ the cost of capital, and the roe’s they need to make to pay for new capital. For example, if Citi paid ...Read More

Saudis are Necessarily in Position of Price-Setter

Published November 16, 2007 in the Financial Times From Mr Warren Mosler. Sir, Adrian Binks’ letter “Oil price conspiracy theories get in the way of facts”(November 14) is precisely the response indicated in my letter (November 12); in this case from an energy information service. While Mr Binks’ statements are indeed factual, ...Read More