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Oil, Gold and the US $


mangrove

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The guy to read on oil, in my opinion, is Matthew Simmons.

 

The best single place to go is probably here ...

http://www.simmonsco-intl.com/research.asp...esearchspeeches

 

As background, he is a Houston energy investment banker, so he's coming from a finance/stakeholder perspective, rather than being an obviously interested producer or a consumer.

 

Ian Whitchurch

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Hi there Ian,

 

Long time no see !

Thanks for the website http://www.ShareScene.com/html/emoticons/smile.gif

 

Very interesting report : New! Energy: A Global Overview Deloitte & Touche's 2004 Oil & Gas Conference, November 17, 2004 23 pages.

 

Still reading, cheers again http://www.ShareScene.com/html/emoticons/wink.gif

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In reply to: ian_whitchurch on Monday 22/11/04 08:53pm

Really great link Ian, thanks.

 

For an alternate view see here (I don't agree with this view but it's worth being aware of the arguments): http://hnn.us/roundup/comments/4535.html

 

Yergin's Book The Prize is well worth a read (gripping history): http://www.amazon.com/exec/obidos/tg/detai...984918?v=glance

 

QUOTE
Daniel Yergin: Are We Running Out of Oil?


Daniel Yergin, in the NYT (April 4, 2004):

[O]il is a finite resource, and fear of running out has always haunted the petroleum industry. In the 1880's, John Archbold, who would succeed John D. Rockefeller as head of the Standard Oil Trust, began to sell his shares in the company because engineers told him that America's days as an oil producer were numbered.

After World War I, the American government's top oil expert predicted a coming "gasoline famine." One solution was to cobble together the three easternmost provinces of the defunct Ottoman Empire into a new country, called Iraq, believed to be rich in oil resources and safely under British control.

After World War II, fears of shortages spiked again, and the industry invented offshore drilling. (Today, 30 percent of America's crude oil comes from the Gulf of Mexico.) Reserves in Saudi Arabia and Kuwait, discovered just before World War II, were rapidly developed.

The oil crises of the 1970's - the 1973 Arab oil embargo and the 1979-80 Iranian revolution - were also seen as the harbingers of the "end of oil." In 1972, an international research group called the Club of Rome predicted the world would soon run short of natural resources. Spiraling oil prices in the following years - from $3 a barrel to $34 a barrel - seemed like a confirmation.

Of course, that's not what happened. Supply steeply increased from new non-OPEC sources like Alaska and the North Sea; coal and nuclear power plants pushed oil out of electricity generation, and conservation reduced demand. By the mid-1980's, oil, supposedly headed for $100 a barrel, instead fell to as low as $6.

Historically, then, dire oil predictions have been undone by two factors. One is the opening (or reopening) of territories to exploration by companies faced with a constant demand to replace declining reserves. The second is the tremendous impact of new technology. After World War I, seismic technology, used for locating enemy artillery, was adapted to oil field exploration. And in the 1990's, it became feasible to drill into deep offshore fields, which was inconceivable during those crisis years of the 1970's.

Better technology and management have increased Russian output by 45 percent since 1998, making Russia the world's second-largest oil producer. And if United States sanctions are lifted on Libya, new investment there could push up production. In the meantime, advanced information technologies and sophisticated remote sensing techniques are making exploration and production much more efficient, which could make an additional 125 billion barrels available over the next decade, an amount greater than the current proved reserves of Iraq.

Those who don't believe a shortage is imminent do not deny that a peak will eventually be reached. They just believe that it is much farther off into the future.

"You can certainly make a good case that sometime before the year 2050 conventional oil production will have peaked," said the head of exploration for a major oil company. He and others believe, however, that oil production will simply plateau, and then farther into the future begin to decline.

 

 

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Gold forecast to recover lost ground

 

Friday, January 14, 2005

 

 

AN OPTIMISTIC forecast that gold will average US$447 an ounce in the first half of 2005 was contradicted by another lacklustre performance of the metal in overnight trading on the New York Comex market where gold drifted down US$1.50 to US$425.10.

 

Gold Fields Mineral Services published the high-priced forecast in its latest Gold Survey Update in which it forecast a "shaky" start to the year followed by "sustained levels of investment".

 

Bruce Alway from GFMS told a presentation in Toronto that while some observers believed the gold price rally was over he thought otherwise.

 

He said key positive signs for gold included the well-publicised "twin deficits" problem of the US and their downward pressure on the value of the US dollar, and the absence of aggressive short-selling by speculators.

 

Alway said the GFMS forecast was for the gold price to trade between a low of US$415 and a high of US$465 in the first half of 2005, with the average being US$447.

 

Overnight trade in New York did not support this confidence, though GFMS could argue that it was in line with its prediction of a sluggish start to the year.

 

James Quinn from AG Edwards & Sons told Reuters that gold trade on Thursday in New York saw the market "backing off", a trend emphasised by an early close to business on Friday and no trade on Monday because of the Martin Luther King public holiday.

 

Quinn also noted that the dollar had firmed marginally, which was suggesting a "sideways to lower" trend for the gold price next week.

 

 

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Gold and copper up in USA.

 

Gold futures up for the day, week

Prices end near three-week high; other metals up on week

 

 

By Myra P. Saefong, CBS.MarketWatch.com

Last Update: 1/21/2005 2:27:52 PM Data provided by

 

SAN FRANCISCO (MarketWatch) -- Gold futures ended higher Friday, marking their highest closing level since early January, as expectations of lasting weakness in the U.S. dollar and broad market uncertainty fueled investment and physical demand for the precious metal.

 

Gold for February delivery closed at $426.90 an ounce on the New York Mercantile Exchange, up $4.30 for the session and up $3.90 for the week. The contract thus finished at its highest closing level since Jan. 4.

 

"The dollar's failure to extend its gains recently, despite a flurry of news and economic numbers in its favor, eroded the market's support for the currency," said Brien Lundin, editor of Gold Newsletter.

 

"In traders' views, if the greenback can't rise, then it's destined to fall," meaning that "if you're going to bet on a fall in the dollar, you also want to bet on a rise in gold," he said.

 

The metal has also found support from the "ongoing, extremely strong level of physical demand from Asia and the Middle East," he said.

 

This physical demand shows "no sign of abating and, contrary to historical experience, appears to be investment-related," Lundin noted.

 

Overall, "the buyers have shown little price resistance, and their appetites for gold seem to increase along with the price," he said.

 

Gold's outlook remains positive for the longer term, with the "return of a weaker dollar the likely catalyst," said James Moore, an analyst at TheBullionDesk.com. Investors will continue to watch action in oil prices and the "broader geopolitical picture" as well, he said.

 

In Friday dealings, the dollar turned lower, losing ground against the major global currencies. See Currencies.

 

Other metals futures in New York strengthened Friday, led by a 3.9 percent rally in March silver. The contract rose 25.4 cents to close at $6.812 an ounce, up 3.3 percent for the week.

 

March copper tacked on 1.95 cents to close at $1.4345 a pound, translating into an advance of 2.5 percent for the week.

 

March palladium closed at $192.05 an ounce, up $4.90 for the day and up 4.3 percent for the week, while April platinum added $5.60 Friday to close at $869.30 an ounce, up 1.6 percent from a week ago.

 

Tracking inventories, copper supplies were down 166 short tons at 47,981 short tons as of late Thursday, according to Nymex. Silver stocks were up 24,985 troy ounces at 102.4 million troy ounces, while gold inventories stood at 5.93 million troy ounces, down 643 troy ounces from the previous session.

 

Indexes rise

 

In equities, metals shares traded mainly higher, promoting strength among the sector's indexes, which were poised to end the week higher.

 

The Philadelphia Gold and Silver Index (XAU) rose 1.7 percent to stand at 94.74, after tapping its lowest level in two weeks on Thursday. The index closed at 93.25 last Friday.

 

Shares of Meridian Gold (MDG) were among the biggest index-component gainers, up 4.2 percent.

 

The CBOE Gold Index (GOX) reached 85.07, up 2.1 percent, and the Amex Gold Bugs Index (HUI) stood at 209.15, up 2.3 percent. Both sector trackers were about 3 percent above their closing levels from a week ago.

 

In metals news Friday, Goldcorp's board urged shareholders to reject a hostile, all-stock takeover bid valued $3.4 billion by Glamis Gold (GLG), with the Canadian miner (GG) calling the offer "inadequate."

 

Goldcorp's board also delayed a shareholder vote on the company's friendly $2.2 billion all-stock takeover offer for Wheaton River Minerals (WHT) to give investors more time to ponder the two possible transactions. See full story.

 

 

 

Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

 

 

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Crude oil hovers near $US50

 

 

Richard Valdmanis in New York

27jan05

 

US oil prices flirted with $US50 yesterday, jumping to their highest level in eight weeks after a fire at a big Louisiana refinery slowed the plant's fuel production.

 

 

 

The gains built on recent strength from a cold snap in the US's northeast that fired up furnaces in the world's largest heating oil market and on trader jitters ahead of an OPEC production policy meeting on January 30.

 

New York crude settled up US83ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ at $US49.64 a barrel, after hitting a peak of $US49.75 in open-call trade, the highest level since November 30.

 

London Brent gained US95ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ to $US46.96 a barrel after hitting $US46.99, the highest since November 4.

 

Dealers said the strength tracked a rally in gasoline futures after ConocoPhillips confirmed it had been forced to slow production at its Belle Chasse, Louisiana, refinery after a fire on the weekend.

 

"All of this has kept us with a bullish bias," said Tom Bentz of BNP Paribas.

 

"The cold really helped early in the week and today there were a few refinery issues."

 

Oil prices have been climbing steadily in recent weeks as Arctic cold blew into the US northeast after a mild start to the winter, boosting demand for heating oil.

 

US supplies of the key winter fuel were running about 4 per cent below last year, according to the most recent government figures, and analysts were predicting the cold would trigger further declines in stockpiles.

 

The market on Tuesday also drew support from concern about attacks on Iraq's oil infrastructure with the election there approaching, and from disruptions in Nigeria.

 

 

 

Oil traders are also on alert for any surprises on Sunday when the Organisation of the Petroleum Exporting Countries meets to debate production policy.

 

OPEC members look to be moving toward a rollover in the cartel's output ceiling, as prices hovering near $US50 make it unlikely that the group will tighten its taps despite fears of a potential oversupply in the second quarter.

 

Kuwait's Oil Minister Sheikh Ahmad al-Fahd al-Sabah said that OPEC should keep its output unchanged as prices remain high and stocks are not building too fast.

 

 

 

Reuters

 

 

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Go gold later

 

Friday, February 04, 2005

 

THERE are no compelling reasons to be invested in the gold sector over the next three months according to Goldman Sachs JB Were. However, that situation changes "dramatically" on a 12-month timeframe.

 

The big American broker (with the Melbourne outstation) believes gold has a "benign outlook" in the short term, so much so that it could well "UNDERPERFORM" the broader market.

 

Goldman Sachs describes the gold price as captive to the US dollar and trading as an alternative currency.

 

"Our economic colleagues have the US$ weakening against the Euro," the broker's gold analyst Ian Preston said.

 

"We are forecasting a decline in the US$:Euro to 1.35 by April and essentially the same by mid year.

 

"However, on a 12 month view, we have the US$:Euro weakening to 1.39 ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦ (we can see the gold price around or above US$450/oz).

 

"Thus we see the next three to six months as a period when the gold stock micro issues dominate share price performance, but the sector in general UNDERPERFORMING the broader market.

 

"On this basis, we favour those stocks where the positive news flow (exploration and development) and volume growth should be realised in this time frame."

 

Meantime on the micro front, analyst Preston says the December quarterly results showed gold stocks covered by Goldman Sachs reporting production as expected and efforts being made to reduce the size of hedge books.

 

On the latter he said "sold call" positions have, in general, been used to assist in reducing the impact of near term committed positions that are well below the current spot gold price.

 

"[The] standout restructure is AngloGold Ashanti where total commitments have been reduced by 2.2 million oz (delta adjusted) and gold price leverage has been in creased in FY05 to 83% (from around 60%) exposure to the spot gold price," Preston said.

 

On the costs front, gold miners are suffering the impact of higher diesel costs, labour and general consumables, while more is also being spent on exploration.

 

"However, in terms of adding real value and not just providing extensions to the operating life of mines, Newcrest Mining's exploration results from the Kencana property in Indonesia stands out."

 

Late last month Newcrest said it expected to spend $33 million developing the $40 million Kencana project near Toguraci in Indonesia in which it has an 82.5% stake.

 

Kencana has a total resource of 1.7 million tonnes grading 41gpt (for 2.2 million ounces), with Newcrest expecting to recover around 1.6Moz at an average rate of 350,000oz per annum. Cash costs are put at US$130/oz and total costs US$172/oz.

 

First production from the underground mine is expected in late 2006, with development pegged for the last quarter of 2005.

 

Also on Newcrest, Preston said the increased cost of developing Telfer due to labour shortages was becoming a significant issue for the mining sector in general.

 

"New projects will undoubtedly be impacted," Preston said.

 

Newcrest remains a Goldman Sach's preference in the sector, as does Oxiana. At the smaller end of town, the current favourites are Resolute Mining and Pan Australian.

 

On Resolute Preston said; "the cost out story for Ravenswood is being delivered and the upside from Mt Wright has not been factored in by the market. Medium term (but short term for the news flow perspective) Syama should provide a major growth opportunity".

 

 

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  • 1 month later...
I wonder if these guys (GS) are busy unravelling positions while they spruik the oil price ever higher??? last one out turn out the lights.....probably shifting into gold.....maybe just feeling cynical on a Friday but would not surprise eh.
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