- Oil Advances a Fourth Day in New York as China Con
goendeavor.com | Nov 11, 2011 05:55:02
Oil traded near its highest in 12 weeks in New York on speculation China’s government will boost the economy of the world’s second-biggest crude consumer, while European leaders prepared to tackle the region’s debt crisis.
Prices gained as much as 0.8 percent after settling yesterday at the highest in almost three months. Chinese Premier Wen Jiabao said economic policy will be fine-tuned as needed and the industry ministry said it is studying “stimulative policies” for smaller companies. European government heads will hold a summit today to agree on a plan to rein in a sovereign- debt crisis that threatens to curb economic growth and slow demand for commodities.
“Crude oil has been extremely macro-driven lately because of the European crisis,” said Filip Petersson, commodity strategist at Stockholm-based SEB AB. “The general trends have been in the same direction as equities.”
Crude oil for December delivery was at $93.45 a barrel, up 28 cents, in electronic trading on the New York Mercantile Exchange at 12:15 p.m. London time. The contract yesterday increased 2.1 percent to $93.17, the highest settlement since Aug. 2. Prices are up 2.3 percent this year.
December futures were at a 19-cent premium to January, compared with 24 cents at yesterday’s close. The front-month contract settled higher than the next month Oct. 24 for the first time since Nov. 20, 2008. The so-called backwardation typically signals an increase in demand or decline in supply in the near term.
Brent Spread
Brent oil for December settlement was down 24 cents, or 0.2 percent, at $110.68 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $17.23 to New York crude, compared with a record settlement of $27.88 on Oct. 14.
“At the moment, it is all to do with spreads,” Amrita Sen, a London-based analyst at Barclays Plc wrote in an e-mail. “All crudes should be in backwardation. Demand-supply mismatches are growing and inventories are falling fast.”
U.S. crude supplies in Cushing, Oklahoma, fell on Oct. 21 to the lowest level in a year, according to measurement of tanks using satellite photographs. Total U.S. inventories dropped to the lowest level in 20 months in the week ended Oct. 14, the Energy Department said last week. The country is the world’s biggest crude-consuming nation.
China Stimulus
Chinese officials will make policy adjustments at a “suitable time and by an appropriate degree,” Wen said in a statement published late yesterday. The Ministry of Industry and Information Technology and other government agencies will work to help small businesses facing difficulties, it said separately in a statement today.
European leaders are in Brussels today for their 14th crisis summit in 21 months. A meeting of finance ministers scheduled to precede it was canceled, with officials now set to gather at an as-yet undetermined time to complete the rescue plan’s main elements.
Oil in New York earlier declined as much as 0.9 percent after the American Petroleum Institute reported that inventories rebounded 2.71 million barrels last week. An Energy Department report today may show supplies increased 1.48 million barrels.
The industry-funded API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Hurricane Rina “has the potential to become a major hurricane today or tonight,” the National Hurricane Center said. “Some weakening is likely after Rina moves near or over the Yucatan peninsula.”
Rina’s sustained winds were at 110 miles (175 kilometers) per hour, just below the 111 mph threshold that would make it a Category 3 storm on the five-step Saffir-Simpson scale, the center said in a 5 a.m. Miami time advisory.
Mexican crude output may be curbed by the storm. Kinetic Analysis Corp., which assesses the potential impact of hazards, estimated the storm may shut in 6.51 million barrels a day of oil produced by Petroleos Mexicanos, Latin America’s largest oil producer.
- BNP Paribas Sued by U.S. Over Alleged Commodities
goendeavor.com | Nov 11, 2011 05:54:39
BNP Paribas SA was sued by the U.S. over allegations the Paris-based bank aided a grain export fraud scheme involving commodity payment guarantees provided by the Department of Agriculture.
A corporate banker in BNP’s Houston office allegedly helped a scheme that defrauded the Agriculture Department of at least $78 million through deals he made with four U.S. grain exporters, according to a complaint filed yesterday in federal court in Houston.
The banker knew the exporters were secretly controlled by the same foreign businessman who owned the companies importing the shipments into Mexico, the U.S. said in the complaint. The Agriculture Department’s Supplier Credit Guarantee Program prohibits payment guarantees on commodity sales between a U.S. exporter and a foreign-owned importer controlled by the same person or group.
“Because the U.S. exporters and Mexican importers were under common ownership and/or control, which fact defendants knew, none of the commodity sales between these entities were eligible for SCGP payment guarantees,” Assistant U.S. Attorney Michelle Zingaro said in the complaint.
When the Mexican importers defaulted on payments for dozens of grain shipments from 1998 to 2006, BNP and Jovenal “Jerry” M. Cruz, its former trade finance manager, “presented or caused to be presented false or fraudulent claims to the USDA,” Zingaro said in the complaint, which also names Cruz, BNP Paribas (BNP) North America and BNP Paribas Houston Agency as defendants.
Michele Sicard and Julie Beuter, spokeswomen for BNP Paribas, didn’t immediately return e-mails seeking comment on the U.S. complaint after regular business hours yesterday.
Not Guilty Plea
Philip Hilder, Cruz’s attorney, said in a phone interview that the former BNP vice president has entered a plea of not guilty and is awaiting trial in February. Three other people charged in the scheme have pleaded guilty and are awaiting sentencing, according to court records.
The government seeks triple damages, or $234 million, plus penalties of as much as $11,000 for each violation of the False Claims Act.
The U.S. shipping companies assigned their falsely obtained export guarantees to BNP, “along with the payment obligation from the Mexican importer,” according to the complaint. In exchange, BNP provided the U.S. exporter a line of credit up to the amount of the guarantees, minus the bank’s fee.
“By financing these transactions, BNP earned fees in exchange for providing a line of credit to U.S. exporters that was fully secured by the United States,” the government said in the complaint. “Cruz solicited and received payments of kickbacks and/or bribes” from others in the alleged conspiracy “for BNP’s role in financing the scheme through expanding lines of credit from BNP to the U.S. exporters based on ineligible commodity sales to the Mexican importers.”
- Commodities Fall to Nine-Month Low in ‘Downward
goendeavor.com | Nov 11, 2011 05:54:28
Commodities fell to a nine-month low, led by routs in metals, on deepening concern that governments are running out of tools to avert a global recession, eroding prospects for raw-material demand.
European officials may accelerate the setup of a permanent rescue fund as the sovereign-debt crisis mounts. On Sept. 21, the Federal Reserve said the U.S. economy faces “significant downside risks.” In the next two days, gold plunged the most since 1983, and copper had the biggest slide in almost three years. Today, silver posted the largest drop in 32 years.
“We’re in a downward spiral, and no one knows when it’s going to end,” said Robin Bhar, an analyst at Credit Agricole SA in London. “There is a lot of uncertainty at this time as to how demand will develop.”
The Standard & Poor’s GSCI Index of 24 of energy, metal and agriculture prices fell 1.3 percent to settle at 599.25 at 3:47 p.m. New York. Earlier, the gauge touched 594.12, the lowest since Dec. 2. This week, the measure slumped 8.2 percent, the most in four months. The benchmark has tumbled 21 percent since touching a 32-month high in April.
The world economy will expand 4 percent this year and next, the International Monetary Fund said on Sept. 20, cutting forecasts made in June for a 4.3 percent expansion and 4.5 percent in 2012.
Economic ‘Fears’
“We are seeing commodity prices correcting, so they are more compatible with the global economy,” said Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen. “When we have fears over the economic cycle as we have now and a higher probability of contraction, it hits industrial metals and commodities.”
Copper futures for December delivery declined 20.85 cents, or 6 percent, to $3.28 a pound on the Comex in New York. In two days, the price tumbled 13 percent, the most since October 2008.
Yesterday, a preliminary index of purchasing managers in China, the world’s top consumer of industrial metals, indicated that manufacturing contracted.
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