Crude edges above $96

Oil gains on concerns about Middle East supply disruptions; gas futures at record high.

December 31 2007: 5:58 AM EST

SINGAPORE (AP) -- Oil prices edged up Monday in Asia after declining in the previous session on a housing report that ignited fresh concerns about the U.S. economy.

Light, sweet crude for February delivery added 16 cents to $96.16 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The contract fell 62 cents to settle at $96 a barrel Friday after a report showed weak figures on new home sales in the United States. The data again raised fears about a possible economic slowdown in the world's largest consumer of oil products.

Oil prices remain supported, though, by concerns about supply disruptions from the oil-rich Middle East.

Turkish jets hit suspected Kurdish rebel shelters in northern Iraq for a third time on Dec. 26. Turkey has also launched a cross border raid and fired artillery at Kurdish rebel positions since the first airstrike on Dec. 16. The rebels have vowed to take the group's battle for autonomy deep inside Turkey if the cross-border airstrikes do not stop.

The heightening of tensions in the Middle East usually brings worries that oil shipments from the region will be reduced or halted.

In late November, oil threatened to rise to $100 a barrel. It has since retreated as supplies appeared to be growing and demand seemed to be falling. But over the past several weeks, inventories have fallen in the U.S. while demand has remained strong.

Gasoline futures have been pushed to new records in recent days, in part by the Goldman Sachs Commodity Index's plan to boost its gasoline futures holdings next month. Nymex gasoline futures were untraded Monday, after closing at $2.4597 a gallon Friday.

The $90 billion fund, administered by Standard & Poor's, will boost its gasoline futures holdings by about $3 billion, according to Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. That would raise its percentage holding in gasoline futures to 4.55 percent of the fund from 1.37 percent.

In other Nymex trading Monday, heating oil futures rose 1.31 cent to $2.6501 a gallon while natural gas prices dropped 6.4 cents to $7.322 per 1,000 cubic feet.

In London, February Brent crude added 12 cents to $94 a barrel on the ICE Futures exchange.

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synnexo
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31-Dec-2007 14:21

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Wow...harryp just gave a KISS to our silly goat.

Brilliant harryp... Smiley

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harryp
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31-Dec-2007 11:51

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Plesae don't make trading decisions basing on these nice writeups. Those little market wisdoms mentioned should have been already internalised for a trader. Just keep it simple and stupid..:))

""cut your losers early and ride your profit"

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31-Dec-2007 11:30

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Published December 29, 2007

Uptrend or window-dressing? Bulls and bears differ in views

Short-term traders buy big stocks in anticipation of year-end prop-up for index

By R SIVANITHY
SENIOR CORRESPONDENT

THE bulls may choose to highlight the fact that the Straits Times Index gained 47 points or 1.4 per cent over four trading days this week to hit 3,445.82, maintaining its recent uptrend.

The bears, on the other hand, may choose to point out that the index dropped 31.38 points yesterday in low volume with most investors absent. They may say that it would have been easy to window-dress the index, and that one need look no further than trades done in the Jardine group over the past few days, when large price shifts occurred in very thin volume.

More on Jardine later, but truth be told, it was pretty much business as usual yesterday for this time of the year.

Like everyone else, short-sellers have had to cover themselves before year-end, so given the selling suffered in November, a short-covering bounce was always likely.

What's more, short-term traders know there is usually index propping as Dec 31 draws nearer; so, to capitalise on this, it makes sense to buy some of the big index stocks beforehand.

It's not just the index that enjoys this sort of support. For example, funds stuck with mountains of underperforming China shares also have an incentive to do some price-fixing to make themselves look better.

In fact, pretty much everything that happens at this time of year can arguably be traced to vested interests fiddling with prices to their benefit.

Such could well be the case with Jardine stocks, in particular Jardine Cycle & Carriage, which has consistently been among the top gainers and losers in the past couple of weeks, though volume traded in every case was low.

Yesterday, the counter could have been affected by activity in the buying-in market - the segment where uncovered short-sold positions are forcibly covered by the exchange. But this does not explain the swings seen in earlier sessions. And even the buying-in explanation was brushed off by some observers yesterday, since the stock traded in a wide range spanning $21.04 and $21.80 before closing just two cents firmer at $21.04 on 178 lots.

Observers also pointed out the odd bid-ask spread at 5pm, which was a wide $21.04-$21.32, and the fact that the great majority of trades were just one lot each time.

On Thursday, Jardine Matheson shot up in low volume, preventing the STI from slipping into negative territory. The most popular explanation for that rise was an abnormally large amount that needed to be bought-in in the buying-in segment.

Other interesting plays during the week involved commodity and/or palm oil stocks, while there was also a brief push on penny stocks - especially those from Catalist - mid-week.

South Korean shipping firm STX Pan Ocean, which has a dual listing here and in Korea, saw its shares shoot up 60 cents to $3.51 with 36 million traded yesterday after it announced that from Jan 1, investors seeking to migrate shares between the two exchanges need not seek official approval.

However, the company added several caveats, such as possible unforeseen rules and laws that could hamper arbitrage between the two exchanges.

'Furthermore, the company cannot precisely predict the length of time it takes for such migration,' it warned, adding that 'because of inherent risks associated with share migration, the company recommends investors wishing to migrate their shares to consult with qualified professionals such as legal advisers'.

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Pension
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31-Dec-2007 11:28

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Published December 31, 2007
STOCKS
Pundits' bullishness may well be just a facade By R SIVANITHY SENIOR CORRESPONDENT A DIFFICULT first half for stocks but a better second half because the US Federal Reserve will have cut interest rates aggressively to revive an ailing economy. That's the gist of what most of the pundits are predicting for 2008. Given that brokers, analysts and politicians have a vested interest in painting as rosy a picture as possible, it's probably as fair an assessment of how things stand at the moment as any other. Here's a thought though: One can't help but get the feeling that pressure on the Fed from the investment community to cut rates isn't so much due to a stalling economy but more because of a stalled stock market and the possibility of powerful Wall Street personnel losing their jobs if the market there doesn't recover soon. If so, then you'd have to wonder whether a supposedly independent Fed would consider bowing to this pressure, given that it should be a strong economy which is a prerequisite for a strong stock market and not the other way around. Assuming that the economy comes first and not the market, are lower interest rates really justified? The majority answer would be yes, simply because lower rates are believed to lead to economic expansion. There is, however, a fine line between a healthy expansion and a bubble economy and so far, only a few contrarian voices have touched on this topic. Perhaps the most prominent is Morgan Stanley Asia chairman Stephen Roach who last week wrote that the coming recession will be worse than that suffered in the 2001 post-dotcom crash, and that the tonic for avoiding more bubbles is higher, not lower, interest rates. 'The dotcom-led downturn was set off by a collapse in business capital spending which at its peak in 2000, accounted for only 13 per cent of GDP. The current recession is all about the capitulation of the American consumer, whose spending now accounts for a record 72 per cent of GDP,' said Mr Roach. He added that with a crashing housing market, consumers will have to cut back spending and this will come as a rude awakening for the rest of the world. On whether consumers from other, rapidly developing parts of the world can take up the slack, he said: 'Don't count on it. American consumers spent close to US$9.5 trillion last year. Chinese consumers spent around US$1 trillion and Indians spent US$650 billion. It is almost mathematically impossible for China and India to offset a pullback in US consumption.' After criticising the Fed for mismanaging the biggest risk of our times by cutting interest rates whenever the market called for it, he said that the Fed needs to rethink its 'reckless, bubble-prone policy' and that the only hope of breaking the endless but lethal chain of inflating bubbles is by raising, not lowering, interest rates. Of course, with 2008 being an election year, it's highly unlikely that the US central bank would do this - a much more likely scenario is that it would try to accommodate all parties by a gradual easing in the hope that this would avoid inflating yet another bubble. One suspects that, by now, the majority of analysts, investors, and others, privately agree with Mr Roach's view but continue to publicly present a different front for the sake of business or appearances. Speaking of appearances, last week's window-dressing action fell well within expectations. This column last Monday recommended that traders buy the large index stocks in anticipation of artificial year-end support but to sell quickly into strength because the risks have not abated. As it turned out, the index rose for three days but dropped sharply on Friday following a steep Thursday plunge on Wall Street. Naive commentators might attribute the US's Thursday fall to political instability created by events in Pakistan but the truth is that Wall Street futures on Thursday already weakened in Asian trading, several hours before the tragic episode in Pakistan. We're convinced that hedge funds, via programme trades, played the 'buy in anticipation . . .' card last week and may well continue to do so this week.

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