Lending rates mostly fell Monday as banks welcomed government aid, but financial institutions remained wary as the global economy continues to struggle.
U.S. Treasury prices were lower ahead of auctions and stocks appeared headed for an upbeat opening.
The 3-month Libor rate fell to 2.24% from 2.29% Friday, according to Bloomberg.com. The overnight Libor rate edged higher to 0.35% from 0.33%.
Libor, the London Interbank Offered Rate, is a daily average of what 16 different banks charge other banks to lend dollars in the U.K. and is a key barometer of liquidity in the credit market.
Both the 3-month and overnight rates have fallen significantly since hitting record highs during the height of the credit crisis.
The overnight Libor rate has been hovering near its all-time low of 0.32% after falling from a high of 6.87% on Sept. 30. The three-month Libor rate has come down 2.58 percentage points since its October high of 4.82%.
The declines came after the U.S. government launched a number of programs aimed at easing funding concerns for banks and encouraging lending between financial institutions have also helped lower Libor rates. Such initiatives include lowering interest rates, injecting capital into banks and providing insurance on all non-interest bearing accounts.
But ongoing economic challenges appear to be tempering the effects of improved lending conditions.
In a sign of the difficulties still facing the financial services industry, giant insurer American International Group got a $150 billion deal from the federal government Monday, as policymakers made significant changes to the terms of the company's original bailout.
While inter-bank lending conditions have improved, many economists say banks remain wary of lending to businesses and consumers as the outlook for global economic growth is cloudy.
Treasurys. Prices for ultra-safe U.S. government debt fell Monday as investors appeared upbeat about the restructured AIG plan and China's $586 billion economic stimulus package.
U.S. stock futures were higher about 1 hour before the opening bell. Asian markets rallied and major indexes in Europe were about 3% higher.
The benchmark 10-year note was down 14/32 to 101-7/32 and its yield rose to 3.85% from 3.78% on Friday. Bond prices and yields move in opposite directions.
The 2-year note slid 4/32 to 100-6/32 with a yield of 1.4%, up from 1.33%.
The 30-year bond fell 19/32 to 103-5/32 and yielded 4.31%, up from 4.24%.
Meanwhile, the Treasury Department is set to auction $25 billion in 3-year notes Monday. And on Wednesday, the government will auction $20 billion in 10-year notes.
segunda-feira, 10 de novembro de 2008
terça-feira, 4 de novembro de 2008
Oil blows past $70 as stocks rally
Oil prices rose above $70 a barrel Tuesday, propelled by a slipping dollar, a stronger equities market and OPEC production cuts, as Americans went to the polls.
U.S. crude for December delivery spiked $7.73 to $71.64 a barrel in electronic trading, as stocks turned higher and crude investors became less worried about market risk.
The equities market rebounded, sending the Dow up by as much as 300 points, as interbank lending loosened, allowing more cash to flow through the system.
"If we continue to see improvements in the credit markets, we could see oil stabilize or gain more ground," said Rachel Ziemba, energy analyst at economic research firm RGE Monitor.
Credit and rate cuts: The London interbank lending rate (Libor), a measurement of how much banks charge to lend money to each other, has been on the decline thanks to efforts by the world's governments and central banks.
The Federal Reserve cut its key lending rate last Wednesday to 1%, a low not seen since 2003. The Bank of Japan followed on Friday, cutting rates for the first time in 7 years.
The 3-month Libor rate had fallen to 2.71% from 2.86% on Monday. The lower the rate, the cheaper it is for banks to borrow cash, and the more dollars are available to the market.
Additionally, the Bank of England and the European Central Bank are expected to cut rates on Thursday, according to Ziemba.
Stocks: Stock markets rallied Tuesday on anticipation of rate cuts from Europe's central banks, and after several major companies reported better than expected earnings.
Credit card giant MasterCard (MA) reported stronger than expected earnings, not including a massive legal settlement with rival Discover Financial Services (DFS), which analysts discount when trying to determine the health of the company.
Meanwhile Illinois-based food producer Archer Daniels Midland Co. said its quarterly profit more than doubled as selling prices rose.
Markets have also been buoyed by the fact that, over the past several weeks, the financial markets have not seen any of the large bank blowups that have characterized the economic crisis since Bear Stearns crumbled in March.
"You're not getting that big heavy body blow to the market," said Tom Orr, head of research for investment brokerage Weeden & Co.
Potential collapses of global financial institutions such as UBS (UBS) and Barclays (BCS) have been averted by influxes of foreign cash, or by government action.
Stock market advances point out a "willingness by investors to take on more risk," said Ziemba.
However the bump may only be temporary, she added, since the global economy is still slow.
Over the past several months, worry about a stagnating global economy, and the corresponding decline in fuel demand, helped drive oil prices down from a record high of $147.27 a barrel in July.
Dollar: A slipping dollar also helped support crude prices.
The U.S. dollar fell compared to the 15-nation euro as investors sought the more lucrative returns of stocks and commodities. Investors often buy the dollar as a safe investment to avoid risk in other markets.
Oil, like most commodities, is traded in U.S. dollars. So when the value of the dollar falls, oil becomes more affordable to non-U.S. investors, and its dollar-denominated price goes up.
OPEC cuts: Also pushing oil higher were reports that members of the Organization of Petroleum Exporting Countries had begun implementing the cartel's planned production cuts.
Saudi Arabia cut exports by 900,000 barrels per day, according to media reports. Iran also said it was committed to cutting 199,000 barrels a day, according to reports.
While OPEC pledged in October to cut production by a total of 1.5 million barrels a day, there was real concern among investors about whether or not members would comply with the guideline, according to Ziemba.
The production cuts, along with strength in the equities markets have led many commodity investors to re-examine oil's supply and demand picture, according to Orr.
"People are starting to look a little more rationally about where commodity prices should be," said Orr.
However concerns remain that cuts may not be enough to give oil a bottom.
"Despite the production cuts, we're still in a global recession, and that's bad for oil demand," said Ziemba.
U.S. crude for December delivery spiked $7.73 to $71.64 a barrel in electronic trading, as stocks turned higher and crude investors became less worried about market risk.
The equities market rebounded, sending the Dow up by as much as 300 points, as interbank lending loosened, allowing more cash to flow through the system.
"If we continue to see improvements in the credit markets, we could see oil stabilize or gain more ground," said Rachel Ziemba, energy analyst at economic research firm RGE Monitor.
Credit and rate cuts: The London interbank lending rate (Libor), a measurement of how much banks charge to lend money to each other, has been on the decline thanks to efforts by the world's governments and central banks.
The Federal Reserve cut its key lending rate last Wednesday to 1%, a low not seen since 2003. The Bank of Japan followed on Friday, cutting rates for the first time in 7 years.
The 3-month Libor rate had fallen to 2.71% from 2.86% on Monday. The lower the rate, the cheaper it is for banks to borrow cash, and the more dollars are available to the market.
Additionally, the Bank of England and the European Central Bank are expected to cut rates on Thursday, according to Ziemba.
Stocks: Stock markets rallied Tuesday on anticipation of rate cuts from Europe's central banks, and after several major companies reported better than expected earnings.
Credit card giant MasterCard (MA) reported stronger than expected earnings, not including a massive legal settlement with rival Discover Financial Services (DFS), which analysts discount when trying to determine the health of the company.
Meanwhile Illinois-based food producer Archer Daniels Midland Co. said its quarterly profit more than doubled as selling prices rose.
Markets have also been buoyed by the fact that, over the past several weeks, the financial markets have not seen any of the large bank blowups that have characterized the economic crisis since Bear Stearns crumbled in March.
"You're not getting that big heavy body blow to the market," said Tom Orr, head of research for investment brokerage Weeden & Co.
Potential collapses of global financial institutions such as UBS (UBS) and Barclays (BCS) have been averted by influxes of foreign cash, or by government action.
Stock market advances point out a "willingness by investors to take on more risk," said Ziemba.
However the bump may only be temporary, she added, since the global economy is still slow.
Over the past several months, worry about a stagnating global economy, and the corresponding decline in fuel demand, helped drive oil prices down from a record high of $147.27 a barrel in July.
Dollar: A slipping dollar also helped support crude prices.
The U.S. dollar fell compared to the 15-nation euro as investors sought the more lucrative returns of stocks and commodities. Investors often buy the dollar as a safe investment to avoid risk in other markets.
Oil, like most commodities, is traded in U.S. dollars. So when the value of the dollar falls, oil becomes more affordable to non-U.S. investors, and its dollar-denominated price goes up.
OPEC cuts: Also pushing oil higher were reports that members of the Organization of Petroleum Exporting Countries had begun implementing the cartel's planned production cuts.
Saudi Arabia cut exports by 900,000 barrels per day, according to media reports. Iran also said it was committed to cutting 199,000 barrels a day, according to reports.
While OPEC pledged in October to cut production by a total of 1.5 million barrels a day, there was real concern among investors about whether or not members would comply with the guideline, according to Ziemba.
The production cuts, along with strength in the equities markets have led many commodity investors to re-examine oil's supply and demand picture, according to Orr.
"People are starting to look a little more rationally about where commodity prices should be," said Orr.
However concerns remain that cuts may not be enough to give oil a bottom.
"Despite the production cuts, we're still in a global recession, and that's bad for oil demand," said Ziemba.
domingo, 26 de outubro de 2008
Gas prices fall again
Gasoline prices fell again, tumbling to the lowest price in a year, according to a daily survey of credit card swipes released Sunday.
The average price of unleaded regular fell to $2.699 a gallon, down three and six-tenths of a cent, according to the Daily Fuel Gauge Report issued by motorist group AAA. Prices have fallen $1.15, or 30%, in the last 39 days.
The current national average is $1.41, or 34.3%, off the record high price of $4.11 that AAA reported July 17.
The decline comes as hurricane season winds down and oil prices drop over concerns that a prolonged economic slump would curb demand for energy.
The last time the average price for a gallon of regular unleaded gasoline was close to this price was October 18, 2007, when the price averaged $2.795.
Alaska has the most expensive gas with prices averaging $3.76. The cheapest gas is found in Oklahoma with prices averaging $2.30.
The average price of unleaded regular fell to $2.699 a gallon, down three and six-tenths of a cent, according to the Daily Fuel Gauge Report issued by motorist group AAA. Prices have fallen $1.15, or 30%, in the last 39 days.
The current national average is $1.41, or 34.3%, off the record high price of $4.11 that AAA reported July 17.
The decline comes as hurricane season winds down and oil prices drop over concerns that a prolonged economic slump would curb demand for energy.
The last time the average price for a gallon of regular unleaded gasoline was close to this price was October 18, 2007, when the price averaged $2.795.
Alaska has the most expensive gas with prices averaging $3.76. The cheapest gas is found in Oklahoma with prices averaging $2.30.
quinta-feira, 23 de outubro de 2008
Initial unemployment claims up
The number of out-of-work Americans filing new claims for unemployment insurance rose last week, the government said Thursday, reflecting continuing weakness in the nation's economy.
The U.S. Department of Labor reported that initial filings for state jobless benefits increased by 15,000 to a seasonally adjusted 478,000 in the week ended Oct. 18. That's a 44% increase from last year, when it stood at 333,000.
The effects of Hurricane Ike in Texas added roughly 12,00 claims to the total, the department reported.
For the week prior, initial claims were revised up by 2,000 to 463,000.
Economists surveyed by Briefing.com expected the number to rise to 465,000.
The four-week average of jobless claims, which smoothes out fluctuations, fell to 480,250 from the week before. A level of more than 400,000 was present throughout the last two recessions. A year ago, the average was 327,750.
The number of American workers collecting benefits for more than one week decreased to 3.72 million in the week ended Oct. 11, the most recent week available, from the prior week. The 4-week moving average increased to 3.68 million, an increase of 44% from the 2.55 million average reported last year.
Three weeks prior, unemployment claims spiked to 499,000, the highest level recorded since the 517,000 claims filed in the wake of the Sept. 11 terrorist attacks.
This week, Yahoo said it plans to cut 1,500 jobs, drug maker Merck said it will slash 7,200 jobs and auto manufacturer Chrysler announced it would lay off 825 workers and close a plant earlier than expected.
Earlier this month, Labor Department reported net payroll nationwide declined by 159,000 in September, the ninth straight month the economy lost jobs. Nationwide, the unemployment rate stands at 6.1%.
The U.S. Department of Labor reported that initial filings for state jobless benefits increased by 15,000 to a seasonally adjusted 478,000 in the week ended Oct. 18. That's a 44% increase from last year, when it stood at 333,000.
The effects of Hurricane Ike in Texas added roughly 12,00 claims to the total, the department reported.
For the week prior, initial claims were revised up by 2,000 to 463,000.
Economists surveyed by Briefing.com expected the number to rise to 465,000.
The four-week average of jobless claims, which smoothes out fluctuations, fell to 480,250 from the week before. A level of more than 400,000 was present throughout the last two recessions. A year ago, the average was 327,750.
The number of American workers collecting benefits for more than one week decreased to 3.72 million in the week ended Oct. 11, the most recent week available, from the prior week. The 4-week moving average increased to 3.68 million, an increase of 44% from the 2.55 million average reported last year.
Three weeks prior, unemployment claims spiked to 499,000, the highest level recorded since the 517,000 claims filed in the wake of the Sept. 11 terrorist attacks.
This week, Yahoo said it plans to cut 1,500 jobs, drug maker Merck said it will slash 7,200 jobs and auto manufacturer Chrysler announced it would lay off 825 workers and close a plant earlier than expected.
Earlier this month, Labor Department reported net payroll nationwide declined by 159,000 in September, the ninth straight month the economy lost jobs. Nationwide, the unemployment rate stands at 6.1%.
sexta-feira, 17 de outubro de 2008
Consumer prices flat in September
Consumer prices were flat in September as retreating costs for gasoline, clothes and new cars helped to offset rising prices for food, medical care and other things.
The new reading on the Consumer Price Index, the government's most closely watched inflation barometer, came after prices actually dipped by 0.1% in August, the Labor Department reported Thursday.
Those two months, however, had offered Americans a rare reprieve. Consumer prices have marched upward most of the year, spiking by an eye popping 1.1% in June.
The toll of galloping prices for much of this year is eating into paychecks, further straining consumers who are pulling back sharply. Recent readings on retail sales were grim. The prospects that consumers will retrench further would spell more trouble for the already ailing economy.
Other economic reports showed that filings for unemployment benefits remained elevated and big industry production plunged by the most since late 1974, largely reflecting fallout from hurricanes Gustav and Ike.
On Wall Street, the Dow Jones industrial fell more than 100 points.
In the inflation report, when energy and food products are stripped out, "core" prices inched up by just 0.1% in September, an improvement from a 0.2% advance in August.
The latest showing on inflation was better than economists expected. They were forecasting a 0.1% increase in overall prices and a 0.2% rise minus energy and food.
Paychecks continued to shrink.
Weekly wages dropped by 2.5% in September compared to a year ago, the 12th straight month in which wages have been down.
Labor market
Another Labor Department report showed the number of new people signing up for unemployment benefits last week dropped. Even with the decline, new claims totaled 461,000 - a figure associated with deep troubles in employment conditions.
Indeed, the four-week moving average of jobless claims is at a seven-year high. And, the number of people continuing to collect jobless benefits rose to 3.7 million, the highest since late June 2003, when the labor market was still struggling to get back on its feet after the 2001 recession.
Vanishing jobs, dwindling nest eggs and shrinking paychecks are straining millions of ordinary Americans. Economic anxiety is the voters overarching concern as they get ready to head to the polls in just a few weeks to select the country's next president.
Whether that's Democrat Barack Obama or Republican rival John McCain, the next leader will be confronted by a troubled economy.
Industrial production
A report from the Federal Reserve said that production at the nation's factories, mines and utilities plunged 2.8% last month, on top of a 1% drop in August.
The Fed estimated that disruptions related to the hurricanes accounted for about 2.25 percentage points of the total drop in industrial production in September. In addition, a strike affecting the commercial aircraft industry also was a factor in the poor showing, accounting for around a half percentage point of the overall decline, the Fed said.
Fed Chairman Ben Bernanke warned Wednesday that a quick rebound is not in the cards for the stumbling economy - even if financial turmoil were to disappear.
Inflation
With the economy in for a period of weakness that could extend well into next year, inflation should also moderate, Bernanke and other Fed officials predict. Tamer inflation would give the Fed more leeway to slice rates again or at least keep them at low levels for some time.
"The rapidly disappearing inflation threat is providing the Federal Reserve full latitude to move to an easing bias on rates to combat the recession as well as the ongoing financial crisis," said Brian Bethune, economist at Global Insight.
Many economists believe there's a strong chance the Fed will lower rates at its next regularly scheduled meeting later this month. In an unprecedented assault on the financial crisis, the Fed and other major central banks together reduced rates last week. The Fed's main rate dropped to 1.50%, from 2%.
Cheaper oil
Oil prices on Wednesday dipped below $75 a barrel for the first time in 14 months, suggesting gas prices will keep falling. Oil prices have plunged almost 50% since hitting a record high of $147.27 in mid July.
The retreat in these and other commodity price "as well as the likelihood that economic activity will fall short of potential for a time, should lead to rates of inflation more consistent with price stability," Bernanke said.
So far this year, consumer prices have risen at an annualized pace of 4.5%, faster than the 4.1% increase for all of 2007. Core prices in the first nine months of this year have increased at a pace of 2.4%, matching the rise for all of last year.
The new reading on the Consumer Price Index, the government's most closely watched inflation barometer, came after prices actually dipped by 0.1% in August, the Labor Department reported Thursday.
Those two months, however, had offered Americans a rare reprieve. Consumer prices have marched upward most of the year, spiking by an eye popping 1.1% in June.
The toll of galloping prices for much of this year is eating into paychecks, further straining consumers who are pulling back sharply. Recent readings on retail sales were grim. The prospects that consumers will retrench further would spell more trouble for the already ailing economy.
Other economic reports showed that filings for unemployment benefits remained elevated and big industry production plunged by the most since late 1974, largely reflecting fallout from hurricanes Gustav and Ike.
On Wall Street, the Dow Jones industrial fell more than 100 points.
In the inflation report, when energy and food products are stripped out, "core" prices inched up by just 0.1% in September, an improvement from a 0.2% advance in August.
The latest showing on inflation was better than economists expected. They were forecasting a 0.1% increase in overall prices and a 0.2% rise minus energy and food.
Paychecks continued to shrink.
Weekly wages dropped by 2.5% in September compared to a year ago, the 12th straight month in which wages have been down.
Labor market
Another Labor Department report showed the number of new people signing up for unemployment benefits last week dropped. Even with the decline, new claims totaled 461,000 - a figure associated with deep troubles in employment conditions.
Indeed, the four-week moving average of jobless claims is at a seven-year high. And, the number of people continuing to collect jobless benefits rose to 3.7 million, the highest since late June 2003, when the labor market was still struggling to get back on its feet after the 2001 recession.
Vanishing jobs, dwindling nest eggs and shrinking paychecks are straining millions of ordinary Americans. Economic anxiety is the voters overarching concern as they get ready to head to the polls in just a few weeks to select the country's next president.
Whether that's Democrat Barack Obama or Republican rival John McCain, the next leader will be confronted by a troubled economy.
Industrial production
A report from the Federal Reserve said that production at the nation's factories, mines and utilities plunged 2.8% last month, on top of a 1% drop in August.
The Fed estimated that disruptions related to the hurricanes accounted for about 2.25 percentage points of the total drop in industrial production in September. In addition, a strike affecting the commercial aircraft industry also was a factor in the poor showing, accounting for around a half percentage point of the overall decline, the Fed said.
Fed Chairman Ben Bernanke warned Wednesday that a quick rebound is not in the cards for the stumbling economy - even if financial turmoil were to disappear.
Inflation
With the economy in for a period of weakness that could extend well into next year, inflation should also moderate, Bernanke and other Fed officials predict. Tamer inflation would give the Fed more leeway to slice rates again or at least keep them at low levels for some time.
"The rapidly disappearing inflation threat is providing the Federal Reserve full latitude to move to an easing bias on rates to combat the recession as well as the ongoing financial crisis," said Brian Bethune, economist at Global Insight.
Many economists believe there's a strong chance the Fed will lower rates at its next regularly scheduled meeting later this month. In an unprecedented assault on the financial crisis, the Fed and other major central banks together reduced rates last week. The Fed's main rate dropped to 1.50%, from 2%.
Cheaper oil
Oil prices on Wednesday dipped below $75 a barrel for the first time in 14 months, suggesting gas prices will keep falling. Oil prices have plunged almost 50% since hitting a record high of $147.27 in mid July.
The retreat in these and other commodity price "as well as the likelihood that economic activity will fall short of potential for a time, should lead to rates of inflation more consistent with price stability," Bernanke said.
So far this year, consumer prices have risen at an annualized pace of 4.5%, faster than the 4.1% increase for all of 2007. Core prices in the first nine months of this year have increased at a pace of 2.4%, matching the rise for all of last year.
terça-feira, 14 de outubro de 2008
Oil climbs above $84 a barrel
Oil prices climbed above $84 a barrel on Tuesday on hopes the economic fallout from the financial crisis would be curbed by U.S. and European government pledges to pump capital into the banking sector.
Light, sweet crude for November delivery on the New York Mercantile Exchange was up $3.37 to $84.56 a barrel in electronic trading by middayn Europe. The contract rose $3.49 to settle at $81.19 on Monday.
Boost for banks
Markets have cheered signs that governments plan to inject money into major banks in an effort to recapitalize the ailing sector.
Tokyo's benchmark Nikkei 225 index jumped 14.25 percent Tuesday -- its largest ever one-day gain -- after the Dow Jones industrial average on Monday rose over 11%, its biggest daily rally since 1933.
"The bailout announcements have eased some of the deep-seated fear of a global meltdown and instilled a degree of confidence in markets," said Peter Luxton, analyst at Informa in London.
He warned, however, that oil prices are unlikely to rally much higher in coming days as doubts over global demand in the longer-term remain very much on traders' minds.
Oil fell to a 13-month low on Friday, settling at $77.70. Crude is down 44% since reaching a peak in mid-July as the credit crisis has steadily eroded the growth outlook for world economies.
Bailout plan
To counter any further trouble in the banking sector, the U.S. plans to spend an initial $250 billion of a $700 billion bailout buying stock in private banks, industry and government officials said Monday night. President Bush planned to announce the details later Tuesday.
That followed Monday's news that European governments were putting up over $2 trillion to safeguard their own banks and kick start credit markets back to life.
But analysts say the meltdown in financial markets may have already done its damage to global economic growth.
"The outlook for oil prices is still very much bearish as the risk of global recession -- or at least a global slowdown -- remains," said Luxton, who expects prices to drop to the $60 to $70 a barrel region next year.
He said prices may hover around the current levels until mid-November, when the OPEC meeting will be held. OPEC warned it intends to cut production to stop the decline in oil prices, but markets are uncertain how effective that will be.
"Demand is driving oil markets now," said Luxton.
He noted OPEC has a poor record of boosting prices with production cuts during economic downturns.
Meanwhile, other analysts are revising down forecasts. Goldman Sachs on Monday cut its year-end crude price forecast from $115 a barrel to $70.
Trading markets
In other Nymex trading, heating oil futures rose 5.28 cents to $2.39 a gallon, while gasoline prices gained 6.44 cents to $1.98 a gallon. Natural gas for November delivery rose 7.7 cents to $6.77 per 1,000 cubic feet.
In London, November Brent crude rose $2.92 to $80.38 a barrel on the ICE Futures exchange.
Light, sweet crude for November delivery on the New York Mercantile Exchange was up $3.37 to $84.56 a barrel in electronic trading by middayn Europe. The contract rose $3.49 to settle at $81.19 on Monday.
Boost for banks
Markets have cheered signs that governments plan to inject money into major banks in an effort to recapitalize the ailing sector.
Tokyo's benchmark Nikkei 225 index jumped 14.25 percent Tuesday -- its largest ever one-day gain -- after the Dow Jones industrial average on Monday rose over 11%, its biggest daily rally since 1933.
"The bailout announcements have eased some of the deep-seated fear of a global meltdown and instilled a degree of confidence in markets," said Peter Luxton, analyst at Informa in London.
He warned, however, that oil prices are unlikely to rally much higher in coming days as doubts over global demand in the longer-term remain very much on traders' minds.
Oil fell to a 13-month low on Friday, settling at $77.70. Crude is down 44% since reaching a peak in mid-July as the credit crisis has steadily eroded the growth outlook for world economies.
Bailout plan
To counter any further trouble in the banking sector, the U.S. plans to spend an initial $250 billion of a $700 billion bailout buying stock in private banks, industry and government officials said Monday night. President Bush planned to announce the details later Tuesday.
That followed Monday's news that European governments were putting up over $2 trillion to safeguard their own banks and kick start credit markets back to life.
But analysts say the meltdown in financial markets may have already done its damage to global economic growth.
"The outlook for oil prices is still very much bearish as the risk of global recession -- or at least a global slowdown -- remains," said Luxton, who expects prices to drop to the $60 to $70 a barrel region next year.
He said prices may hover around the current levels until mid-November, when the OPEC meeting will be held. OPEC warned it intends to cut production to stop the decline in oil prices, but markets are uncertain how effective that will be.
"Demand is driving oil markets now," said Luxton.
He noted OPEC has a poor record of boosting prices with production cuts during economic downturns.
Meanwhile, other analysts are revising down forecasts. Goldman Sachs on Monday cut its year-end crude price forecast from $115 a barrel to $70.
Trading markets
In other Nymex trading, heating oil futures rose 5.28 cents to $2.39 a gallon, while gasoline prices gained 6.44 cents to $1.98 a gallon. Natural gas for November delivery rose 7.7 cents to $6.77 per 1,000 cubic feet.
In London, November Brent crude rose $2.92 to $80.38 a barrel on the ICE Futures exchange.
segunda-feira, 13 de outubro de 2008
Goldman applies for N.Y. charter
Recently minted commercial bank Goldman Sachs Inc. has applied for a New York state banking charter, state officials said Monday.
Governor David Patterson praised the decision, calling Goldman Sachs the "bedrock" of New York's financial community and that it reflects the state's ability to "effectively regulate" banks.
"We look forward to working with [Goldman Sachs] as they transition a substantial portion of their business from an investment bank to a new regulatory scheme," Patterson said in a statement.
Goldman Sachs (GS, Fortune 500) and fellow brokerage Morgan Stanley (MS, Fortune 500) were the last remaining investment banks on Wall Street before federal officials granted the firms' requests to become bank holding companies last month.
The decision to become commercial banks came as rival brokerages Bear Stearns and Lehman Brother collapsed in the fallout of the nation's credit crisis.
As commercial banks, Goldman and Morgan have the ability to purchase other retail banks, which could give them a more steady foundation of cash. It also gives them access to loans from the Federal Reserve that were not available to brokerages.
But it also puts Goldman and Morgan under the Fed's supervision, increasing the agency's regulatory oversight and possibly forcing them to raise additional capital. As banks, Morgan and Goldman will be forced to take less risk, which will mean fewer profits.
A call to Goldman Sachs requesting comment was not immediately returned Monday.
The decision to apply for a New York state charter will not preclude Goldman from expanding its business or opening branches outside of the state, according to Bert Ely, principal of Ely & Co., a financial institutions and monetary policy consulting firm in Virginia.
"Banks can have multiple charters," Ely said. Having a New York charter "does not bar them from having other charters," he added.
Governor David Patterson praised the decision, calling Goldman Sachs the "bedrock" of New York's financial community and that it reflects the state's ability to "effectively regulate" banks.
"We look forward to working with [Goldman Sachs] as they transition a substantial portion of their business from an investment bank to a new regulatory scheme," Patterson said in a statement.
Goldman Sachs (GS, Fortune 500) and fellow brokerage Morgan Stanley (MS, Fortune 500) were the last remaining investment banks on Wall Street before federal officials granted the firms' requests to become bank holding companies last month.
The decision to become commercial banks came as rival brokerages Bear Stearns and Lehman Brother collapsed in the fallout of the nation's credit crisis.
As commercial banks, Goldman and Morgan have the ability to purchase other retail banks, which could give them a more steady foundation of cash. It also gives them access to loans from the Federal Reserve that were not available to brokerages.
But it also puts Goldman and Morgan under the Fed's supervision, increasing the agency's regulatory oversight and possibly forcing them to raise additional capital. As banks, Morgan and Goldman will be forced to take less risk, which will mean fewer profits.
A call to Goldman Sachs requesting comment was not immediately returned Monday.
The decision to apply for a New York state charter will not preclude Goldman from expanding its business or opening branches outside of the state, according to Bert Ely, principal of Ely & Co., a financial institutions and monetary policy consulting firm in Virginia.
"Banks can have multiple charters," Ely said. Having a New York charter "does not bar them from having other charters," he added.
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