John Boehner is the Republican speak of the House of Representatives, one of the two houses of the United States Congress, the other being the Senate. The House of Representatives is roughly evenly divided between Republicans and Democrats.
Sunday, 16 December 2012
Thursday, 6 December 2012
Shape of the Futures Curve
For the given commodity, as of December 2012, is the curve in contango, backwardation or BOTH (contango AND backwardation)?
WTI Crude Oil Futures: currently trading around $88 a barrel. (Each contract is for 1,000 barrels of crude, so notional value of 1 future is ...wait for it... $88,000). The minimum fluctuation is one cent per barrel. WTI is in CONTANGO out to December 2013 (a one-year contango) when it reaches about $91 and 40 or 50 cents (roughly $3.50 premium for oil in one year versus oil now). After Z13 it's all backwardated and the curve looks like an inverted quadratic function.
The natural follow-on question..what about Brent?
Brent Futures is around $108 a barrel and the curve is simple - PURE backwardation. One future here is also for a thousand barrels, so the notional of a Brent future is rougly $108,000 (or about 1.1x the value of the TI notional).
There are interesting contract differences between Brent and TI futures. For example, Brent futures come with the option to cash-settle, whereas the TI always results in physical delivery (delivered "Free-On-Board" at Cushing, Oklahoma). TI futures are traded on CME Globex. Brent can be traded on WebICE.
WTI Crude Oil Futures: currently trading around $88 a barrel. (Each contract is for 1,000 barrels of crude, so notional value of 1 future is ...wait for it... $88,000). The minimum fluctuation is one cent per barrel. WTI is in CONTANGO out to December 2013 (a one-year contango) when it reaches about $91 and 40 or 50 cents (roughly $3.50 premium for oil in one year versus oil now). After Z13 it's all backwardated and the curve looks like an inverted quadratic function.
The natural follow-on question..what about Brent?
Brent Futures is around $108 a barrel and the curve is simple - PURE backwardation. One future here is also for a thousand barrels, so the notional of a Brent future is rougly $108,000 (or about 1.1x the value of the TI notional).
There are interesting contract differences between Brent and TI futures. For example, Brent futures come with the option to cash-settle, whereas the TI always results in physical delivery (delivered "Free-On-Board" at Cushing, Oklahoma). TI futures are traded on CME Globex. Brent can be traded on WebICE.
Wednesday, 5 December 2012
George Osborne Extends Austerity Program
The UK Chancellor (tantamount to a Minister of Finance) George Osborne has extended Britain's "Austerity Program" through to 2018 with a series of cuts to government spending and stated "Britain is on the Right Track". What will be the likely impact on Fixed Income markets, specifically on UK debt?
If Britain's credit rating suffers (currently AAA), credit default swaps on UK debt will get more expensive.
As a historical note, the Exchequer, as used in the appellation "Chancellor of the Exchequer", was a government department responsible for collecting taxes and other income, a kind of "ancient" Inland Revenue service which collected revenues on behalf of the King.
David Cameron is the current leader of the Coalition government (made up of Conservatives and Liberal Democrats) that came to power in May 2010 following the resignation of Gordon Brown (the former Chancellor who "could not fail").
If Britain's credit rating suffers (currently AAA), credit default swaps on UK debt will get more expensive.
As a historical note, the Exchequer, as used in the appellation "Chancellor of the Exchequer", was a government department responsible for collecting taxes and other income, a kind of "ancient" Inland Revenue service which collected revenues on behalf of the King.
David Cameron is the current leader of the Coalition government (made up of Conservatives and Liberal Democrats) that came to power in May 2010 following the resignation of Gordon Brown (the former Chancellor who "could not fail").
Wednesday, 28 November 2012
BP Temporarily Banned from new US Contracts
The Environmental Protection Agency (EPA) has temporarily banned BP from new contracts with the US government. The decision is linked to BP's handling of the 2010 oil spill in Gulf of Mexico caused by problems on the Deepwater Horizon drilling rig, (this mainly affected the coastline of Louisiana, Mississippi and Alabama - the NY Times has an interactive map). BP has kindly agreed to pay $4.5bn in fines.
Wednesday, 14 November 2012
Citigroup Beefs up Commodities Trading
Citigroup is importing new commodities executives from BNP Paribas and Barclays - Jose Cogulludo becomes global head of Corporate Sales. This comes at a time when some banks are purportedly considering selling commodities operations as limits on proprietary trading have squeezed profitability.
Monday, 12 November 2012
Essar Oil Increases Processing of Ultra Heavy Crudes by Factor of Four
Who is Essar Oil?
Essar Oil is India's second largest private refiner. It is also known as "EOL" (Essar Oil Limited).
It has quadrupled processing (Q3,2012 vs. Q3,2011) of ultra heavy crudes (which are cheaper and offer higher margins than "regular" crude or "light" crude) at its Vadinar plant in Jamnagar district, Gujarat, which started commercial production in May 2008 (Here we take Q3 to equal July-September period, which is sometimes called Q2 in reports). Vadinar boasts Asia's largest crude column at 97m tall - this means enhanced separation of petroleum products.
How much did Essar Oil make per barrel of oil turned into petroleum product in the quarter?
Answer: USD 7.86 per barrel vs. GRM of USD 5.07 per barrel in the same period a year ago. GRM is the difference in dollars between the petroleum product output and the input (cost of crude oil plus any purchased additives like butane). Basic refinery economics, bro.
The company believes there will be "healthy" refining margins for Asian refiners due to "continuous, strong diesel demand in India, China and the Middle East".
Essar Oil is India's second largest private refiner. It is also known as "EOL" (Essar Oil Limited).
It has quadrupled processing (Q3,2012 vs. Q3,2011) of ultra heavy crudes (which are cheaper and offer higher margins than "regular" crude or "light" crude) at its Vadinar plant in Jamnagar district, Gujarat, which started commercial production in May 2008 (Here we take Q3 to equal July-September period, which is sometimes called Q2 in reports). Vadinar boasts Asia's largest crude column at 97m tall - this means enhanced separation of petroleum products.
How much did Essar Oil make per barrel of oil turned into petroleum product in the quarter?
Answer: USD 7.86 per barrel vs. GRM of USD 5.07 per barrel in the same period a year ago. GRM is the difference in dollars between the petroleum product output and the input (cost of crude oil plus any purchased additives like butane). Basic refinery economics, bro.
The company believes there will be "healthy" refining margins for Asian refiners due to "continuous, strong diesel demand in India, China and the Middle East".
Tuesday, 30 October 2012
Japan Invests £700m in Building UK Power Plants
Hitachi (TYO: 6501) is investing £700m to co-build two nuclear plants in Britain with Rolls-Royce and Babcock International, the engineering support services firm. This will be a "hundred year commitment". One of the sites is the Isle of Anglesey, in North West Wales. Hitachi stock gained about 10 Yen in the days following the announcement.
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