(Bloomberg) -- Crude oil fell from a six-month high on speculation last week’s 10 percent advance won’t be sustained as global output increases.
Exports from Iraq’s Kurdistan region will begin June 1 after the state oil ministry agreed to “expedite” shipments, the provincial government said on its Web site yesterday. Venezuela, OPEC’s fifth-largest producer, seized the assets of 60 oil-field service companies on May 8 to restore operations shut over contract disputes.
“At some point you do have to be asking the question as to just how far this can go,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “The supply side really isn’t the focus of the market at the moment.”
Crude oil for June delivery fell as much as 68 cents, or 1.2 percent, to $57.95 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $57.99 at 11:58 a.m. in Singapore.
The contract rose 3.4 percent to $58.63 a barrel on May 8, the highest settlement since Nov. 11, as slowing job losses in the U.S. increased investor confidence and a drop in the dollar boosted the appeal of commodity investments.
Brent crude oil for June settlement declined as much as 54 cents, or 0.9 percent, to $57.60 a barrel on London’s ICE Futures Europe exchange.
U.S. Economy
Last week’s jobs report in the U.S., the world’s largest oil consumer, added to investor confidence that the worst of the recession there may be over, boosting demand expectations, Hassall said.
Ongoing weakness in the dollar will support commodities and oil may resume its rally if U.S. summer fuel demand is sufficient to start drawing down stockpiles there, he said.
Today, the euro has surged to a six-week high against the dollar as the gains in global equities has increased investors’ risk appetite.
Hedge-fund managers and other large speculators changed their bets on the direction of oil prices for a second time last week, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets prices will fall, outnumbered long positions by 11,285 contracts on the New York Mercantile Exchange on May 5, the commission said May 8. A week earlier, traders had bet on rising prices.
New York oil futures plunged to a four-year low of $32.40 on Dec. 19 as global recession slashed demand and producers cut production to slow rising stockpiles. Prices have gained 39 percent in the past two months as measures to restore global credit markets lifted global equity markets.
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Sunday, May 10, 2009
Santos Seeks to Raise A$3 Billion for LNG Project
(Bloomberg) -- Santos Ltd. is seeking to raise A$3 billion ($2.3 billion) from a share sale to fund its portion of Exxon Mobil Corp.’s liquefied natural gas venture in Papua New Guinea, the largest investment in the Pacific nation.
Santos is offering investors two shares for every five they own at A$12.50 apiece, 27 percent below the last traded price of A$17.09, the Adelaide-based company said in a statement to the Australian stock exchange today. It would be the country’s largest share sale since National Australia Bank Ltd. raised A$3 billion in November.
Australia’s third-biggest oil and gas producer will use A$1.05 billion of the sale proceeds to fund spending at the $12.5 billion Exxon-led project. Santos expects a “step- change” in production in 2014 once the Papua New Guinea venture and a proposed gas-export project in Queensland with Petroliam Nasional Bhd. come online, it said May 6.
“Exxon putting their horsepower behind it makes this a very good project to be involved in,” said Peter Arden, a Melbourne-based analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. “It will be a stepping stone for Santos; it will help get them a lot of credibility.”
Of the stock on offer, A$1.65 billion for sale to institutional investors is fully underwritten. The A$1.35 billion retail portion of the sale isn’t underwritten, Santos said. Caliburn is advising Santos, while JPMorgan, Citigroup and Deutsche Bank are managing the sale, the Australian Financial Review reported earlier.
Queensland Project
Additional capital raised would fund other growth projects, which include a proposed LNG venture at Gladstone in Queensland with Petronas, as Kuala Lumpur-based Petroliam Nasional is known. Their A$7.7 billion venture is due to deliver its first LNG cargoes in 2014, Santos said today. It is one of five rival projects planning to convert gas extracted from coal seams into LNG for export to Asia.
“I think Gladstone is really going to stretch Santos funding-wise,” Arden of Ord Minnett said. “It is also a bit of a crowded space there, and it might be that not everyone gets their project up.”
Santos has gained 25 percent in the past six months in Sydney, compared with the 0.5 percent decline in the local benchmark index.
LNG is natural gas that has been chilled to liquid form for transportation by ship to destinations not connected by pipeline.
Read more here
Santos is offering investors two shares for every five they own at A$12.50 apiece, 27 percent below the last traded price of A$17.09, the Adelaide-based company said in a statement to the Australian stock exchange today. It would be the country’s largest share sale since National Australia Bank Ltd. raised A$3 billion in November.
Australia’s third-biggest oil and gas producer will use A$1.05 billion of the sale proceeds to fund spending at the $12.5 billion Exxon-led project. Santos expects a “step- change” in production in 2014 once the Papua New Guinea venture and a proposed gas-export project in Queensland with Petroliam Nasional Bhd. come online, it said May 6.
“Exxon putting their horsepower behind it makes this a very good project to be involved in,” said Peter Arden, a Melbourne-based analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. “It will be a stepping stone for Santos; it will help get them a lot of credibility.”
Of the stock on offer, A$1.65 billion for sale to institutional investors is fully underwritten. The A$1.35 billion retail portion of the sale isn’t underwritten, Santos said. Caliburn is advising Santos, while JPMorgan, Citigroup and Deutsche Bank are managing the sale, the Australian Financial Review reported earlier.
Queensland Project
Additional capital raised would fund other growth projects, which include a proposed LNG venture at Gladstone in Queensland with Petronas, as Kuala Lumpur-based Petroliam Nasional is known. Their A$7.7 billion venture is due to deliver its first LNG cargoes in 2014, Santos said today. It is one of five rival projects planning to convert gas extracted from coal seams into LNG for export to Asia.
“I think Gladstone is really going to stretch Santos funding-wise,” Arden of Ord Minnett said. “It is also a bit of a crowded space there, and it might be that not everyone gets their project up.”
Santos has gained 25 percent in the past six months in Sydney, compared with the 0.5 percent decline in the local benchmark index.
LNG is natural gas that has been chilled to liquid form for transportation by ship to destinations not connected by pipeline.
Read more here
Asian Bank Stocks Rise as Goldman Sachs Tips HSBC; Toyota Falls
(Bloomberg) -- Asian bank stocks rose as Goldman Sachs Group Inc. recommended investors buy HSBC Holdings Plc. Automakers fell after Toyota Motor Corp. cut its dividend and predicted a second annual loss.
HSBC, Europe’s biggest bank, climbed 3.3 percent in Hong Kong as Goldman Sachs said the company may benefit from possible write-backs as asset markets stabilize. Mitsubishi Corp., Japan’s No.1 trading company, gained 2.4 percent after crude- oil prices climbed on May 8. Toyota, the world’s largest automaker, slumped 5 percent in Tokyo, as it forecast a wider loss than analysts estimated.
“Banks are cyclical shares and investors buy them when they expect the economy to bottom out,” said Hisakazu Amano, who helps oversee about $39 billion at T&D Asset Management Co. “On the other hand, people are getting nervous as they aren’t sure if company profits justify current share prices.”
The MSCI Asia Pacific Index gained 0.4 percent to 98.34 as of 12:30 p.m. in Tokyo. The gauge has rallied 39 percent from a five-year low on March 9 amid mounting confidence the global economy is recovering. The index slumped by a record 43 percent in 2008.
Hong Kong’s Hang Seng Index rose 0.3 percent. Japan’s Nikkei 225 Stock Average lost 0.6 percent. Australia’s S&P/ASX 200 Index dropped 0.6 percent. Other markets in Asia advanced except New Zealand and Singapore.
Futures on the Standard & Poor’s 500 Index lost 0.8 percent. The gauge climbed 2.4 percent as Federal Reserve Chairman Ben S. Bernanke said a review of banks’ financial health should provide “considerable comfort” and a report showing fewer job losses than forecast signaled the worst of the recession is over.
Rising Valuations
The U.S. Labor Department said on May 8 that payrolls dropped by 539,000 last month after a 699,000 loss in March. The two-month rally in equities has driven the average valuation of companies in the MSCI Asia Pacific Index to 27 times reported profit, the highest since March 30, 2004.
“The overall message of the U.S. jobless report is that things are getting better,” said Tomochika Kitaoka, a strategist at Mizuho Securities Co. in Tokyo. “Government aid and a recovery in earnings will put American banks back on their feet.”
HSBC climbed 3.3 percent to HK$68.05 as Goldman Sachs raised its recommendation on the stock to “buy” from “neutral” and its share-price target to HK$84 from HK$55, according to a report today. HSBC may also benefit from a yuan trade settlement program, the report said.
China Citic Bank Co., the nation’s sixth-largest lender by market value, gained 2 percent to HK$4.09. The company will pay parent China Citic Group HK$13.6 billion ($1.8 billion) for control of a Hong Kong banking affiliate.
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HSBC, Europe’s biggest bank, climbed 3.3 percent in Hong Kong as Goldman Sachs said the company may benefit from possible write-backs as asset markets stabilize. Mitsubishi Corp., Japan’s No.1 trading company, gained 2.4 percent after crude- oil prices climbed on May 8. Toyota, the world’s largest automaker, slumped 5 percent in Tokyo, as it forecast a wider loss than analysts estimated.
“Banks are cyclical shares and investors buy them when they expect the economy to bottom out,” said Hisakazu Amano, who helps oversee about $39 billion at T&D Asset Management Co. “On the other hand, people are getting nervous as they aren’t sure if company profits justify current share prices.”
The MSCI Asia Pacific Index gained 0.4 percent to 98.34 as of 12:30 p.m. in Tokyo. The gauge has rallied 39 percent from a five-year low on March 9 amid mounting confidence the global economy is recovering. The index slumped by a record 43 percent in 2008.
Hong Kong’s Hang Seng Index rose 0.3 percent. Japan’s Nikkei 225 Stock Average lost 0.6 percent. Australia’s S&P/ASX 200 Index dropped 0.6 percent. Other markets in Asia advanced except New Zealand and Singapore.
Futures on the Standard & Poor’s 500 Index lost 0.8 percent. The gauge climbed 2.4 percent as Federal Reserve Chairman Ben S. Bernanke said a review of banks’ financial health should provide “considerable comfort” and a report showing fewer job losses than forecast signaled the worst of the recession is over.
Rising Valuations
The U.S. Labor Department said on May 8 that payrolls dropped by 539,000 last month after a 699,000 loss in March. The two-month rally in equities has driven the average valuation of companies in the MSCI Asia Pacific Index to 27 times reported profit, the highest since March 30, 2004.
“The overall message of the U.S. jobless report is that things are getting better,” said Tomochika Kitaoka, a strategist at Mizuho Securities Co. in Tokyo. “Government aid and a recovery in earnings will put American banks back on their feet.”
HSBC climbed 3.3 percent to HK$68.05 as Goldman Sachs raised its recommendation on the stock to “buy” from “neutral” and its share-price target to HK$84 from HK$55, according to a report today. HSBC may also benefit from a yuan trade settlement program, the report said.
China Citic Bank Co., the nation’s sixth-largest lender by market value, gained 2 percent to HK$4.09. The company will pay parent China Citic Group HK$13.6 billion ($1.8 billion) for control of a Hong Kong banking affiliate.
Read more here
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