Thread: Archive News - Iraqi Dinar Think Tank - 06/10/2010 - 24/01/2011

Investors Hold Biggest Commodity Positions On Record; Viral Nonsense About Silver
http://www.favstocks.com/investors-h...ilver/1029620/

The Commodity Futures Trading Commission says futures positions in commodities are 17% higher now than when the commodity index peaked in June 2008. The Wall Street Journal picks up the story in Investors Pile Into Commodities
Investors are holding their biggest positions on record in the commodities markets as prices surge and debate intensifies among U.S. regulators about whether to limit the amount that any one trader can bet in markets for energy, metals and agricultural products.
Hedge funds, pension funds and mutual funds dramatically ramped up their holdings in everything from oil and natural gas to silver, corn and wheat this year. In many cases, the number of contracts held for individual commodities now far exceeds the amount outstanding in mid-2008, the last time commodity markets were soaring to records and debate raged about whether excessive speculation was driving up prices.

Contracts held by investors have risen 12% this year through October and are 17% higher than June 2008, according to data from the Commodity Futures Trading Commission, the market regulator.

In several commodities, including the $200 billion crude oil market, so-called speculative investors now make up a significantly larger proportion of the market than they did in 2008. Investors increased their bullish bets on crude oil by 24% since June 2008 and now represent 16% of the market, up from 13% just over two years ago. Bets in the copper market are up 58% and for silver they are up 52%, according to the CFTC data.

Debate within the CFTC is adding to the tension. Bart Chilton, a CFTC commissioner, has been pushing fellow commissioners to crack down on excessive speculation.

“Speculative money from the likes of hedge funds, index funds and pension funds is coming into the commodity markets at a blistering pace,” Mr. Chilton said in prepared remarks for a speech he plans to make on Wednesday at a conference in New York. He said that while speculation may not drive up prices, it can distort them. “If prices are skewed in a manner that is not fair by speculators, consumers can pay more than they should,” he said.............

OPEC Dismisses $90 Oil Price as `Blip,' Maintains Production Targets Again
http://www.bloomberg.com/news/2010-1...ut-quotas.html

OPEC discounted last week’s $90 oil price and kept its output targets unchanged yesterday, betting supplies in storage and a fragile global economic recovery will prevent crude from surging.

Supply and demand are “in balance,” and $70 to $80 is “a good price” for oil, Saudi Arabian Oil Minister Ali al-Naimi said at the group’s meeting in Quito, Ecuador. OPEC forecasts demand growth will slow as the economy struggles to recover, amid ample supplies, according to a group statement.

“The issue they looked at was whether $90 is a blip or a trend,” said Bill Farren-Price, founder of consultant Petroleum Policy Intelligence, based in Winchester, U.K. “They’ve taken the view that there are one-off factors such as the cold snap, a weak dollar, that won’t be sustained in the new year.”

The Organization of Petroleum Exporting Countries has kept production limits at 24.845 million barrels a day since December 2008, when it announced the biggest reduction in output quotas ever as demand collapsed and prices plummeted at the onset of the global recession. Crude tumbled more than $100 in the latter half of 2008 to $32.40 a barrel.

Oil prices jumped to the highest level since October 2008 last week on cold-weather forecasts for the U.S. and Europe and speculation the U.S. may extend stimulus measures, causing the dollar to weaken. A declining dollar boosts the appeal of commodities as an alternative investment.

Oil Price

Crude futures fell 58 cents on Dec. 10 to $87.79 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 1. The contract touched $90.76 on Dec. 7. Futures dropped 1.6 percent last week, while they’ve risen 24 percent from a year ago.

“The market is better than before, but it’s not good because the growth rate of the global GDP is low,” Iranian Oil Minister Masoud Mir-Kazemi said.

The Organization for Economic Cooperation and Development cut its 2011 global growth forecast last month to 4.2 percent from 4.5 percent in May, predicting a “soft spot” as stimulus spending fades before investment spurs a 2012 revival.

“Right now the market is very comfortable for consumers,” OPEC Secretary-General Abdulla El-Badri said. There is “plenty of oil” in the market, and OPEC won’t act to raise production until those levels decline. Compliance with the quotas is about 60 percent, he said.

OPEC Supply

OPEC has 6 million to 7 million barrels a day of spare capacity, El-Badri said. OPEC supplies about 40 percent of the world’s oil.

The International Energy Agency said Dec. 10 that global oil supply rose by 400,000 barrels a day to 88.1 million barrels a day in November, its highest-ever level, largely on increased non-OPEC production. Global output is up by 1.6 million barrels a day from the year before. Half of that amount comes from non- OPEC producers, the Paris-based group said in its monthly Oil Market Report.

“The market is well supplied and it doesn’t require a price of above $90 a barrel,” Edward Morse, head of commodities research at Credit Suisse Group AG in New York, said in an interview.

Global oil demand growth was forecast to slow to 1.6 percent in 2011 from 2.8 percent this year, according to the IEA.

2011 Demand

The “increase in the annual average oil demand in 2011 is likely to be lower than in 2010,” according to the OPEC communiqué. Lower demand will accompany “challenging risks to the fragile global economic recovery, including the adverse effect of possible currency conflicts and fears of a second banking crisis in Europe, all of which would negatively impact on oil demand.”

Europe’s debt crisis has prompted rescues of Greece and Ireland this year and European leaders are now debating plans for a permanent financial backstop. The European Central Bank has stepped up buying bonds from the region’s most-indebted countries to prevent the market rout from spreading.

Oil prices will rise to $100 a barrel next year, a “fair” price for both producers and consumers that would make up for the dollar’s weakness, Venezuelan Energy and Oil Minister Rafael Ramirez said. Prices “are recovering, the economy is showing a slow but sure recovery so we should get to those levels at some point next year.”

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system. The next scheduled meeting is in June at OPEC’s Vienna headquarters.

“If they start producing significantly more, they implicitly or explicitly start sending a signal to the market that they want to dampen down prices,” said Mike Wittner, head of oil market research at Societe Generale SA in New York. “They seem to have enough oil, inventories are still high and crude stocks particularly in the U.S. are still quite ample.”

OPEC Cheating Most Since 2004 as Options Signal Oil Hitting $100 Next Year
http://www.bloomberg.com/news/2010-1...next-year.html

OPEC is breaching its production limits the most in six years, signaling the world’s biggest suppliers are ready to pump more crude next year as oil rallies toward $100 a barrel.
The Organization of Petroleum Exporting Countries excluding Iraq pumped 26.78 million barrels a day this year, exceeding the quotas by an average of 1.934 million a day, the highest level since 2004, according to data compiled by Bloomberg. Crude rose 12 percent in 2010 as demand recovered, trading at about $90 for the first time in two years. Options to buy at $100 next December are near a five-month high.
Flouting quotas lets OPEC, which provides about 40 percent of the world’s oil, boost profits without changing targets set when the first global recession since World War II caused prices to tumble 78 percent. Analysts say the rally may lead the 12- member group to raise output next year after leaving quotas unchanged at this weekend’s meeting in Quito, Ecuador.
“Definitely $100, that would be a trigger,” said Leo Drollas, the London-based director and chief economist at the Centre for Global Energy Studies, a market researcher founded by former Saudi Oil Minister Sheikh Ahmad Zaki Yamani. “Bells are ringing in the corridors already. If this carries on, if it’s a really cold winter, we can see prices heading up to $100. At some stage even the Saudis will realize there’s something going on here, and that they should respond. And they will.”
Raising Forecasts
OPEC has maintained a production target of 24.845 million barrels a day since December 2008, the longest period that quotas have stayed unchanged since they were first used in 1982. The 11 members with quotas pumped 26.7 million barrels a day last month, 1.9 million more than targeted, Bloomberg data show.
Wall Street is raising its price forecasts for next year after crude on the New York Mercantile Exchange reached $90.76 a barrel on Dec. 7, the highest level since Oct. 8, 2008. Futures for January delivery traded at $89.11 a barrel as of 7:16 a.m. local time. Oil is up 30 percent from this year’s low on May 20, though down 40 percent from the record $147.27 on July 11, 2008.
“We are more inclined to believe that Saudi Arabia will act responsibly and encourage OPEC members to increase output early next year” to avoid a surge in oil prices, Francisco Blanch, head of commodity research at Bank of America-Merrill Lynch in New York, said in an e-mail after the Quito meeting.
Goldman Sachs Group Inc. said Dec. 1 that crude will average $100 in 2010 and $110 in 2012. In June last year, Goldman had predicted oil would rally to $85 by the end of 2009, though that level wasn’t attained until this April. JPMorgan Chase & Co. said Dec. 3 oil will average $93 in 2011, increasing its estimate from $89.75, and reach $120 before the end of 2012.
Higher Revenue
“OPEC will sequentially need higher revenues to pay for increasing social, investment and energy costs,” analysts at JPMorgan led by New York-based Lawrence Eagles wrote Dec. 3. “If the world economy can bear it, they will allow the acceptable price range to step up both in 2011 and 2012.”
Options that give investors the right to buy December 2011 futures at $100 rose to $7.10 on Dec. 7, the highest price since August, according to Nymex data. They averaged $6.39 this year. There are 44,981 outstanding contracts, the largest open interest for any oil-options contract in New York.
Higher prices are a tax on consumers that may stunt growth, Blanch wrote in an Oct. 17 report. Every $10-a-barrel increase adds $42 billion to the cost of U.S. imports, $49 billion in Europe, $19 billion for China and $16 billion to Japan, he said.
“Within about two weeks of oil being at $100, I think you would get more consumer-nation pressure on OPEC” to increase production, said Ann-Louise Hittle, a senior analyst at Wood Mackenzie in Boston. “Their number one concern is not to damage heavily the economic recovery that is under way.”
Consumer Confidence
Confidence among U.S. consumers increased more than forecast in December to the highest level in six months at the same time Americans began stepping up holiday spending. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 74.2 from 71.6 in late November.
Stockpiles in Organization for Economic Cooperation and Development nations unexpectedly fell in the third quarter, dropping 11.5 million barrels, according to the International Energy Agency, compared with the five-year average gain of 38.6 million for that period. Growth in demand last quarter was “giddy,” with North America “remarkably strong,” the Paris- based agency said in a Dec. 10 report.
“Against a backdrop of much stronger-than-expected global oil demand growth and oil prices above two-year highs, OPEC may come under pressure to increase supplies to the market in the new year,” the IEA said in its monthly Oil Market Report.
Forward Curve
The narrowing difference between prices for futures of different maturities has pushed part of the market into so- called backwardation, where crude for soonest delivery is more expensive than for later months. That’s another sign dropping stockpiles will drive oil higher, according to Adam Sieminski, chief energy economist at Deutsche Bank AG.
Falling inventories make rallies “more sustainable,” Washington-based Sieminski wrote Dec. 3, raising his 2011 average forecast to $87.50 a barrel, from $80.
Crude for December 2011 delivery traded at $91.01 a barrel on the Nymex, 97 cents higher than December 2012 futures. It was 87 cents less than the 2012 contract on Nov. 30.
OPEC’s gathering in Quito two days ago was the seventh meeting with no change in production quotas. The group meets next in June. Asked what price level is appropriate, Saudi Arabian Oil Minister Ali al-Naimi told reporters: “How many times do I have to tell you. $70 to $80 is a good price.”
‘Fundamentals Wrong’
An increase to $100 may indicate “something wrong with fundamentals” in the market and lead OPEC to act, Abdalla El- Badri, the organization’s secretary-general, said on Dec. 9.
Venezuelan Energy Minister Rafael Ramirez told reporters after the Dec. 11 meeting ended that $100 is “fair” and he expects oil to reach that level next year.
Higher prices rather than increased production may help Iran, which can’t lift output as fast as other nations, and Venezuela, whose heavy crude deposits make drilling more expensive, according to Wood Mackenzie’s Hittle.
Iraq will account for 54 percent of the increase in OPEC’s supply capacity in the six years ending 2015, according to the IEA, replacing Iran as the biggest producer after Saudi Arabia.
Saudi Aramco, the world’s largest state-owned oil company, will start pumping 500,000 barrels a day from its Manifa field in 2013, Chief Executive Officer Khalid Al-Falih said in Dubai on Dec. 8. The kingdom has the capacity to pump 12.08 million barrels a day, of which it is now using 8.3 million barrels a day, IEA data show.
Above $100
“I don’t think you’ll see Saudi Arabia starting to eat out of the spare capacity until inventories go below the five-year average or oil prices go above $100 a barrel,” said Torbjoern Kjus, senior oil-market analyst at DnB NOR in Oslo.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.
The group agreed on a record 4.2 million barrel-a-day supply cut at the end of 2008 in response to the recession. Adherence to that pledge peaked at 89 percent in March 2009 and was 56 percent last month, according to Bloomberg estimates.
“They could raise the quotas by a million and a half barrels a day and in theory it wouldn’t matter,” said Sieminski. “It wouldn’t change anything. They’d still be producing more than their targets.”

Thanks for all the hard work

Thank you very much to Richardson53 for holding the fort and all your hard work.

I'm sorry, my broadband was knocked out due to the severe weather conditions we have been experiencing here in the UK. I have only just been able to get back online this evening.

I hadn't realise how much I use the internet for practical things, like paying bills, sorting out my bank accounts etc. It has been quite challenging.

Anyway, I will be catching up on news tonight and will be back to posting tomorrow. Fingers crossed.

Hope everybody has been well.

U.N. set to lift some Iraqi sanctions
http://www.thehindu.com/news/interna...icle953832.ece

The U.N. Security Council is set to take new steps to restore Iraq to the international standing it held before Saddam Hussein’s 1990 invasion of Kuwait, including lifting sanctions that prohibited the country from pursuing a civilian nuclear programme.

The United States holds the council presidency this month and U.S. Vice-President Joseph Biden will preside at Wednesday’s council meeting where American officials say action is also expected to return control of Iraq’s oil and natural gas revenue to the government and terminate all remaining activities of the oil-for-food programme which helped ordinary Iraqis cope with sanctions.

U.S. Ambassador Susan Rice said in a letter to Secretary-General Ban Ki-moon circulated Tuesday that the goal of the session is “to recognize and reinforce Iraq’s recent progress and to explore ways in which the United Nations can continue to support the Iraqi government and people.”

She said the council recognizes that Iraqi leaders have made important strides toward fulfilling the country’s U.N.-mandated obligations and have nearly completed the formation of a new government.

The council also has acknowledged “the substantial changes Iraq has undergone” since it adopted the first of more than 70 resolutions under Chapter 7 of the U.N. Charter -- which is militarily enforceable -- after the August 1990 invasion, Rice said.

Iraq’s Foreign Minister Hoshyar Zebari is scheduled to attend the meeting.

In May 2003, weeks after the U.S. invaded Iraq, the council lifted economic sanctions against Iraq, opening the country to international trade and investment and allowing oil exports to resume. In June 2004, it lifted an embargo on the sale of conventional weapons to the government.

But there are still limits on some activities related to the possible production of nuclear, chemical and biological weapons, and missiles with a range of more than 150 kilometres (90 miles) are still banned. Militias and other non-state actors are also banned from importing conventional weapons.

Iraq also still has outstanding issues with Kuwait, including demarcation of the border, accounting for 600 missing Kuwaitis, returning missing property and archives, and the $24 billion debt Baghdad owes Kuwait as reparations for the invasion.

A senior U.S. official, speaking on condition of anonymity ahead of Wednesday’s meeting, said the council will allow Iraq to pursue a peaceful civilian nuclear program, but the international community will want to ensure that the government can safeguard nuclear material.

Iraq is a party to the main nuclear, chemical, biological and missile treaties and is applying the additional protocol to the Nuclear Non-proliferation Treaty -- which allows unannounced inspections -- even though parliament hasn’t ratified it because of the lengthy dispute over forming a new government, the official said.

Rice said the Security Council is also expected to take action to end the international management of the Development Fund for Iraq which was set up in 2003 to try to ensure that the proceeds of the country’s gas and oil sales were used to help its people and restore its economy.

The official said the resolution will terminate the fund’s international management on June 30, 2011 but ensure that 5 percent of oil and gas revenue still goes into a compensation fund, used mainly to pay Kuwaiti claims from the war.

Council members have still not finalized a resolution that will terminate all remaining activities of the oil-for-food programme and return about $650 million in its accounts to the Iraqi government but agreement could be reached before Wednesday’s meeting, the official said.

Under the oil-for-food programme, which ran from 1996 to 2003, Iraq was allowed to sell oil provided most of the money went to buy humanitarian goods. It was aimed at easing Iraqi suffering under U.N. sanctions and was a lifeline for 90 percent of the country’s population.

But an 18-month U.N.-sanctioned investigation led by former Federal Reserve Chairman Paul Volcker found massive corruption in the program. Its final report in October 2005 accused more than 2,200 companies from some 40 countries of colluding with Saddam’s regime to bilk the humanitarian program of $1.8 billion.

The U.S. official said there are about 32 contracts for which there is no documentation and no evidence of delivery of goods and these would be terminated if the resolution is adopted.

Iraq will still need to comply with Kuwait-related resolutions despite lifting sanctions tomorrow
[14/December/2010]
http://www.sabanews.net/en/news230935.htm

UNITED NATIONS, Dec 14 (Saba) -- Although the Security Council is scheduled to vote unanimously tomorrow Wednesday, under the Presidency of US Vice-President Joe Biden, to lift sanctions on Iraq, Baghdad will still have to abide by its obligations concerning the Iraq-Kuwait issues until they are resolved, according to Kuwait News Agency (KUNA).

The Council is set to vote on three resolutions Wednesday. The first would lift sanctions imposed on Iraq following its 1990 invasion of Kuwait, mainly on weapons imports, the second would close the files of the Oil-for-food Programme, and the third would extend the immunity for Iraq's Development for Iraq (DFI) for six months.
The Council is also scheduled to approve a Presidential statement which would reaffirm its "commitment to the independence, sovereignty, unity and territorial integrity of Iraq, support the inclusive political process, welcome the positive developments, and recognize that the situation now existing there is significantly different from that which existed" when the sanctions were imposed.

The Council is also expected to welcome the "progress" made by Iraq and Kuwait towards the resolution of the "outstanding issues" and "encourage their further cooperation," calling on Iraq to "quickly fulfill its remaining obligations under the relevant Chapter VII resolutions" pertaining to the situation between the two countries.

These include the maintenance of the border posts between Iraq and Kuwait, the contribution to the Compensation Fund for the victims of the invasion of Kuwait, accounting for the remains of Kuwaiti and third countries nationals, and the return of Kuwaiti property, mainly the Government documents stolen by Iraqi forces during the invasion.

In a statement to KUNA, Iraqi Ambassador Hamid Al-Bayati said the Kuwaiti matters are still there and "we will continue to abide by our commitment towards Kuwait and Kuwaiti matters. All Kuwaiti issues continue to be the same. They will remain under Chapter VII. When we fulfill our commitment, it will end. We complied with disarmament, that's why the sanctions will be lifted tomorrow." Asked if Iraq is willing to allow UN experts to travel to the region next March to maintain the border posts, as proposed by Secretary-General Ban Ki-moon in his latest report, Al-Bayati said "that depends on having a new Government, because so far we haven't received an answer from Baghdad. We are waiting for the new Government to solve all these issues." Tomorrow's meeting will be attended by Iraqi Foreign Minister Hoshyar Zebari and a number of Foreign Ministers representing Council members, such as Turkey and Japan. The UK will be represented by Alistair Burt, Foreign Office Minister for Middle Eastern Affairs. France will be represented by its Ambassador here Gerard Araud.

Saba

Glad you are back. You are the backbone of this forum. Sydney6174 is a very good currency speculator as well.

Originally Posted by Seaview

Thank you very much to Richardson53 for holding the fort and all your hard work.

I'm sorry, my broadband was knocked out due to the severe weather conditions we have been experiencing here in the UK. I have only just been able to get back online this evening.

I hadn't realise how much I use the internet for practical things, like paying bills, sorting out my bank accounts etc. It has been quite challenging.

Anyway, I will be catching up on news tonight and will be back to posting tomorrow. Fingers crossed.

Hope everybody has been well.

New electricity tenders to be announced in Iraq

The Electricity Ministry is to announce on Saturday new tenders for the construction of several power stations and is urging foreign firms to participate.

The ministry’s spokeseman Musaab al-Modaris said the contracts are designed to generate an additional 2,750 megawatts.

The U.S. General Electric has drawn the designs and specified the type of machinery that should be imported for the construction of gas-driven power plants, he said.

“We urge firms interested in the tenders to send their representatives to the press conference which the ministry is to hold on Saturday when the tenders, specifications and conditions will be announced,” Modaris said.

Companies will have 40 days to present their final offers, he added.

The power-generating units will be constructed at currently producing plants, he said.

The construction should be completed in two years, Modaris said.

The new gas-driven units will supplement power production at plants in Basra, Diwaniya and Amara, he said.

Modaris did not say how much the contracts were worth.

http://www.azzaman.com/english/index...12-14\kurd.htm

A British company acknowledges that it violated United Nations sanctions on Iraq

Approved a British engineering firm Weir violated UN sanctions imposed on Iraq under the oil for food, announcing its readiness to admit in court and pay a fine so heavy.

The company said in a statement it had agreed to reserve 16.5 million euros from its accounts, saying it would recognize that it violated the UN sanctions to win contracts had been granted between 2000 and 2002 under the Oil for Food program. The company produces ware, which are taken from the Glasgow-based, pumps, industrial platforms of oil and pumps to extract water., "Said its director, Lord Smith said (what happened is bad, and I was disappointed because it happened in a ware), adding (since 2004 when we unveiled for the first time this problem, we reviewed our procedures in full). Ware revealed in 2004 it paid 3.1 million pounds 3.7 million euros in bribes in exchange for contracts in Iraq. It was decided to program the United Nations "oil for food" to help alleviate the suffering of Iraqis to the international sanctions imposed on Saddam's regime after it invaded Kuwait in 1990. A report of the independent commission of inquiry that more than 2200 companies and sixty countries are interested in this scandal.

http://www.alsabaah.com/paper.php?so...age&sid=112950