Opec leader vows not to cut oil output even if price hits $20 - FT.com:
"Opec will not cut production even if the price of oil falls to $20 a barrel, the cartel’s de facto leader said, spelling out a dramatic policy shift that will have far-reaching implications for the global energy industry.
In an unusually frank interview, Ali al-Naimi, the Saudi oil minister, tore up Opec’s traditional strategy of keeping prices high by limiting oil output and replaced it with a new policy of defending the cartel’s market share at all costs.
“It is not in the interest of Opec producers to cut their production, whatever the price is,” he told the Middle East Economic Survey. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.”"
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Tuesday, 23 December 2014
Russia faces full-blown crisis, says Kudrin - FT.com
Russia faces full-blown crisis, says Kudrin - FT.com:
"Russia faces a “full-blown economic crisis” next year that will trigger a series of defaults and the loss of its investment-grade credit rating, a respected former finance minister has warned.
Real incomes will fall by 2-5 per cent next year, the first decrease in real terms since 2000, said Alexei Kudrin, a longtime ally of President Vladimir Putin and widely tipped to succeed Dmitry Medvedev as prime minister.
His warning came as Russia’s central bank was forced to prop up a midsized lender in a sign of the strains on the banking system."
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"Russia faces a “full-blown economic crisis” next year that will trigger a series of defaults and the loss of its investment-grade credit rating, a respected former finance minister has warned.
Real incomes will fall by 2-5 per cent next year, the first decrease in real terms since 2000, said Alexei Kudrin, a longtime ally of President Vladimir Putin and widely tipped to succeed Dmitry Medvedev as prime minister.
His warning came as Russia’s central bank was forced to prop up a midsized lender in a sign of the strains on the banking system."
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UAE markets mixed amid recovering crude | GulfNews.com
UAE markets mixed amid recovering crude | GulfNews.com:
"The Dubai index traded choppy in early trade on Tuesday, after gaining more than 25 per cent in the past three sessions, amid rising crude oil.
The Dubai Financial Market general index was down 0.73 per cent at 3,723.78 at 10.52am, after moving in the positive and negative territory. The Abu Dhabi Securities Market General Index was 0.11 per cent higher at 4,483.36.
Oil advanced for the second time in three days as investors weighed a projected decline in US crude inventories against signs that Iraq is joining other OPEC members in defending market share. "
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"The Dubai index traded choppy in early trade on Tuesday, after gaining more than 25 per cent in the past three sessions, amid rising crude oil.
The Dubai Financial Market general index was down 0.73 per cent at 3,723.78 at 10.52am, after moving in the positive and negative territory. The Abu Dhabi Securities Market General Index was 0.11 per cent higher at 4,483.36.
Oil advanced for the second time in three days as investors weighed a projected decline in US crude inventories against signs that Iraq is joining other OPEC members in defending market share. "
'via Blog this'
Bank of Russia Pledges to Rescue Trust as Ruble Crisis Hits - Bloomberg
Bank of Russia Pledges to Rescue Trust as Ruble Crisis Hits - Bloomberg:
"Russia’s central bank provided a 30 billion-ruble ($531 million) bailout for National Bank Trust, its biggest rescue since the ruble crisis began this month.
The Deposits Security Agency will take control of National Bank Trust, one of the country’s top 15 lenders by retail savings, while the central bank selects an investor to help shore up the company, the Bank of Russia said in a statement today.
The ruble has depreciated 38 percent against the dollar since June and volatility has soared to the highest since Russia defaulted on local-currency debt 16 years ago, stoking concern that Russian lenders’ asset quality has deteriorated. Russian banks’ willingness to lend to each other is declining. The Mosprime overnight rate hit 27.3 percent on Dec. 18, the highest since Bloomberg started compiling the data in 2006."
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"Russia’s central bank provided a 30 billion-ruble ($531 million) bailout for National Bank Trust, its biggest rescue since the ruble crisis began this month.
The Deposits Security Agency will take control of National Bank Trust, one of the country’s top 15 lenders by retail savings, while the central bank selects an investor to help shore up the company, the Bank of Russia said in a statement today.
The ruble has depreciated 38 percent against the dollar since June and volatility has soared to the highest since Russia defaulted on local-currency debt 16 years ago, stoking concern that Russian lenders’ asset quality has deteriorated. Russian banks’ willingness to lend to each other is declining. The Mosprime overnight rate hit 27.3 percent on Dec. 18, the highest since Bloomberg started compiling the data in 2006."
'via Blog this'
Russia Crisis Makes East European Firms Fret Over 1998 Redux - Bloomberg
Russia Crisis Makes East European Firms Fret Over 1998 Redux - Bloomberg:
"Shedding communism and embracing the European Union was supposed to shield the former eastern bloc from Russia’s economic pains. A quarter of a century later, there are companies that remain vulnerable.
The ruble’s decline is reviving memories of the 1998 default. Moscow’s former satellites have tied their economic fortunes to western Europe and the proportion of exports to Russia is less than 5 percent, yet the financial turmoil is aggravating the pain caused by the trade confrontation between the 28-member EU bloc and Russia.
“A successful year is becoming unsuccessful,” said Miroslav Student, the commercial director at Abovalve, a Czech producer of butterfly and check valves for industrial applications. “The weak ruble is a headache for us. It’s causing financial problems, since our branch there has to pay more rubles for euros, and it’s also complicating trade.”"
'via Blog this'
"Shedding communism and embracing the European Union was supposed to shield the former eastern bloc from Russia’s economic pains. A quarter of a century later, there are companies that remain vulnerable.
The ruble’s decline is reviving memories of the 1998 default. Moscow’s former satellites have tied their economic fortunes to western Europe and the proportion of exports to Russia is less than 5 percent, yet the financial turmoil is aggravating the pain caused by the trade confrontation between the 28-member EU bloc and Russia.
“A successful year is becoming unsuccessful,” said Miroslav Student, the commercial director at Abovalve, a Czech producer of butterfly and check valves for industrial applications. “The weak ruble is a headache for us. It’s causing financial problems, since our branch there has to pay more rubles for euros, and it’s also complicating trade.”"
'via Blog this'
Egypt Debt Rally Missed by Outsiders Shows El-Sisi Challenge - Bloomberg
Egypt Debt Rally Missed by Outsiders Shows El-Sisi Challenge - Bloomberg:
"For all of the gains in Egypt’s financial markets since President Abdel-Fattah El-Sisi took over this year, one trend exposes the fragility of the economy: Foreigners want no part of the country’s domestic debt.
Non-Egyptians have cut their holdings in the $67 billion Treasury-bill market to less than 0.2 percent from 21 percent in 2010, according to central bank data. Investors say yields are too low to compensate for the risks in an economy weakened by almost four years of political turmoil.
T-bill rates have continued to plunge in the most indebted Arab nation behind Lebanon, even without foreign buyers, as local banks sought safety in government securities over loans to customers or companies. Without international investors, Egypt is reliant on handouts from Gulf allies that Citigroup Inc. says may start to dry up with falling oil revenue."
'via Blog this'
"For all of the gains in Egypt’s financial markets since President Abdel-Fattah El-Sisi took over this year, one trend exposes the fragility of the economy: Foreigners want no part of the country’s domestic debt.
Non-Egyptians have cut their holdings in the $67 billion Treasury-bill market to less than 0.2 percent from 21 percent in 2010, according to central bank data. Investors say yields are too low to compensate for the risks in an economy weakened by almost four years of political turmoil.
T-bill rates have continued to plunge in the most indebted Arab nation behind Lebanon, even without foreign buyers, as local banks sought safety in government securities over loans to customers or companies. Without international investors, Egypt is reliant on handouts from Gulf allies that Citigroup Inc. says may start to dry up with falling oil revenue."
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Rosneft Feels Sanctions’ Chill in Failed Oil-Unit Deal - Bloomberg
Rosneft Feels Sanctions’ Chill in Failed Oil-Unit Deal - Bloomberg:
"Morgan Stanley (MS)’s failure to complete the sale of its oil storage, trading and transport unit shows the chilling effect U.S. sanctions are having on Russian companies including OAO Rosneft.
The U.S. bank and Rosneft, the Russian state-owned oil giant, said Monday that their deal, for an undisclosed amount, had expired after the companies failed to win regulatory approval. Morgan Stanley had warned in October that the agreement might not be completed.
U.S. sanctions against Rosneft explicitly prohibit selling certain oil-exploration equipment to the company or giving it long-term debt financing. The sale of Morgan Stanley’s oil-trading unit didn’t appear to trigger those prohibitions. Even so, such a sale would have undercut the broader U.S. goal of isolating the energy company."
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"Morgan Stanley (MS)’s failure to complete the sale of its oil storage, trading and transport unit shows the chilling effect U.S. sanctions are having on Russian companies including OAO Rosneft.
The U.S. bank and Rosneft, the Russian state-owned oil giant, said Monday that their deal, for an undisclosed amount, had expired after the companies failed to win regulatory approval. Morgan Stanley had warned in October that the agreement might not be completed.
U.S. sanctions against Rosneft explicitly prohibit selling certain oil-exploration equipment to the company or giving it long-term debt financing. The sale of Morgan Stanley’s oil-trading unit didn’t appear to trigger those prohibitions. Even so, such a sale would have undercut the broader U.S. goal of isolating the energy company."
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The upcoming petrodollar bifurcation risk? | FT Alphaville
The upcoming petrodollar bifurcation risk? | FT Alphaville:
"
One of the still to be appreciated side-effects of falling oil prices is a reduction in so-called petrodollar recycling by oil producers.
As we’ve already noted, there are analysts who believe petro-induced liquidity shortages may already be impacting certain eurodollar markets. Furthermore, there’s also the fact that as liquidity shortfalls manifest in external markets, the opposite could become true for internal US markets. So, just as the dollar liquidity tap gets switched off externally, it gets turned on with gusto back at home.
But Bank of America Merrill Lynch’s Jean-Michel Saliba gets to the same point somewhat differently."
'via Blog this'
"
As we’ve already noted, there are analysts who believe petro-induced liquidity shortages may already be impacting certain eurodollar markets. Furthermore, there’s also the fact that as liquidity shortfalls manifest in external markets, the opposite could become true for internal US markets. So, just as the dollar liquidity tap gets switched off externally, it gets turned on with gusto back at home.
But Bank of America Merrill Lynch’s Jean-Michel Saliba gets to the same point somewhat differently."
'via Blog this'
Rout of the rouble hits Thai tourism | beyondbrics
Rout of the rouble hits Thai tourism | beyondbrics:
"Half a world away from snowy Moscow, Russia’s deepening economic crisis is reverberating upon the palm-fringed beaches and castaway islands of Thailand. The droves of holidaymakers from Russian cities visiting Thai resorts are dwindling, deterred not so much by the southeast Asian nation’s military coup earlier this year as by the rout of the rouble.
As the chart below shows, Russians seeking a warm refuge from the prolonged winter of home were relatively unfazed in early 2014 by the mounting political tensions in Thailand that led to the May military coup.
They flocked to favoured resorts such as Pattaya and Phuket during January, February and March, with year-on-year visitor increases in those months rising 26 per cent, 21 per cent and 8 per cent respectively. This hardy attitude was in contrast to that of tourists from other parts of the world, many of whom decided to stay away in early 2014 (see chart).
"
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"Half a world away from snowy Moscow, Russia’s deepening economic crisis is reverberating upon the palm-fringed beaches and castaway islands of Thailand. The droves of holidaymakers from Russian cities visiting Thai resorts are dwindling, deterred not so much by the southeast Asian nation’s military coup earlier this year as by the rout of the rouble.
As the chart below shows, Russians seeking a warm refuge from the prolonged winter of home were relatively unfazed in early 2014 by the mounting political tensions in Thailand that led to the May military coup.
They flocked to favoured resorts such as Pattaya and Phuket during January, February and March, with year-on-year visitor increases in those months rising 26 per cent, 21 per cent and 8 per cent respectively. This hardy attitude was in contrast to that of tourists from other parts of the world, many of whom decided to stay away in early 2014 (see chart).
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