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Asian Financial Crisis: Now and Then

Lior Alkalay - INO.com Contributor - Forex

Are we set for a rerun of the 1997 Asian Financial crisis? Well, as Mark Twain said once, history does not repeat itself but it rhymes. The current turmoil does strikingly resemble that of the original 1997 Asian financial crisis. However, unlike the 1997 crisis, today’s circumstances are quite different.

Asian Financial Crisis of 1997

What initiated the Asian financial crisis back in the 90s? Well, it was the culmination of many things. Primarily, though it was the inability of Asian and other emerging economies to finance themselves. This was generally due to large current account deficits which led emerging markets to accumulate foreign debt. Eventually, they become dependent on foreign creditors.

When investors’ appetite for emerging market debt waned, those Asian economies had difficulty financing themselves. And let’s not forget Russia, which, coupled with its own circumstances, was pushed to default. [Read more...]

Would You Invest In Saudi Arabia? How About Iran?

Adam Feik - INO.com Contributor - Energies

Saudi Arabia opened its $590 billion stock market to foreign investors Monday – a move aimed at helping the country’s companies endure a potentially extended period of lower oil prices.

Interestingly, only about one-fifth of the companies traded on the Tadawul Saudi Stock Exchange are directly in the oil business. But most others are, of course, heavily affected by oil, which has long been the major driver of Saudi Arabia’s economy.

By opening the exchange to all foreign investors, the Saudis hope to help its domestic companies raise significant capital, thereby helping to strengthen – and diversify – the country’s economy. The Kingdom may also be hoping some new foreign investment can help plug a hole in its budget, which has expanded to pay Saudi companies that rely on government contracts for construction, infrastructure, agriculture, education, and other areas. According to the Saudi Gazette on Sunday, the country’s breakeven crude oil price has risen from just under $75 in 2009 to about $90 today, translating into an estimated $38.6 billion budget deficit for fiscal year 2015. [Read more...]

Oil price rises above $97 as Fed fears ease

The price of oil rose above $97 a barrel Thursday, as the latest U.S. economic data raised hopes for an increase in gasoline demand but suggested the Federal Reserve can wait to pull back on its current stimulus measures.

Meanwhile, the price of natural gas fell to nearly a 4-month low, and the cost of filling up the family car dropped again as the July Fourth holiday approaches.

The number of Americans seeking unemployment benefits fell by 9,000 to a seasonally adjusted 346,000 last week, evidence that the job market is still improving modestly. Steady job gains could help the economy expand later this year, and would mean more people driving to work. [Read more...]

Potential Oil Glut! Raymond James Analyst's Contrarian Forecast

The Energy Report: Why are you expecting an oil glut in 2014?

Andrew Coleman: Because of the evolution of North American shale oil plays, we are on track to add about 3 million barrels (3 MMbbl) of new supply over the next five years. Yet we know oil demand has been falling across the developed nations and is still weak coming out of the global financial crisis. Those developments point toward a glut.

TER: Saudi Arabia surprised you last year by cutting production when oil was more than $110 per barrel ($110/bbl). Why would Saudi or other suppliers not do that again?

AC: What hurt production outside the U.S. last year and helped keep the demand side a little more in balance was that Saudi cut 800,000 barrels a day (800 Mbbl/d) in Q4/12, sanctions in Iran reduced exports by about 800 Mbbl/d as well, conflict in Sudan took 300 Mbbl/d offline and the North Sea average was lower by about 130 Mbbl/d. These reductions kept last year's supply more balanced than we thought it would be. Going forward, Saudi's ability or willingness to cut is certainly going to be tested, because by our model the country may need to cut 1.5 million barrels a day (1.5 MMbbl/d), about double what it cut last year. It would have to do that for a longer period of time, given the amount of excess storage that could show up on the global markets.

TER: But, as you just pointed out, Saudi Arabia's cut came in the context of actions by other players. The other players are going to be as unpredictable as they were last year, aren't they? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/tzym3nYV5pA/15334

Oil drilling technology leaps, clean energy lags

Technology created an energy revolution over the past decade just not the one we expected.

By now, cars were supposed to be running on fuel made from plant waste or algae or powered by hydrogen or cheap batteries that burned nothing at all. Electricity would be generated with solar panels and wind turbines. When the sun didn't shine or the wind didn't blow, power would flow out of batteries the size of tractor-trailers.

Fossil fuels? They were going to be expensive and scarce, relics of an earlier, dirtier age.

But in the race to conquer energy technology, Old Energy is winning. [Read more...]

Hugo Chavez Is Gone, but His Oil Legacy Lives On

On March 5, 2013, Hugo Chávez, one of the most iconic presidents in the world, died at the age of 58. While he was alive, Chávez was a highly controversial figure, calling George W. Bush a drunkard and a "psychologically sick man" and Tony Blair an "imperialist pawn who attempts to curry favor with Danger Bush-Hitler."

Like him or hate him, Chávez definitely had a huge following in Venezuela, as well as the entirety of Latin America. His anti-American and socialistic rhetoric made him an ally of Fidel Castro in Cuba and Ahmadinejad in Iran. Combined with Correa in Ecuador, Fernández in Argentina, and Morales in Bolivia, Chávez was able to make a front in South America against the "evil imperialist gringos."

But with him no longer in the picture, things will change, and cheap Venezuelan oil will be able to flow into the markets, right? [Read more...]

Porter Stansberry: End the Ban on US Oil Exports

The Energy Report: As a history enthusiast, Porter, to what extent do you believe technology has changed investing?

Porter Stansberry: The future will be unlike the past in every way related to technology, but it will be exactly like the past as it relates to people. Technology changes a great deal, but people don't. You can count on politicians to be scumbags and most people to be lazy. But as for investing, technology gives far more people access to information. Only one person in the world knew the actual price of a high-yield bond 25 years agoMichael Milkenand he made a fortune with that information advantage. Today, everybody has access to trading information. Everyone has access to price. In general, technology has made finance a smaller-margin business. It's led to enormous scale in our financial institutions, which is the only way they can really survive. But fear and greed are still the underlying forces that drive the markets, and investors are just as subject to irrational emotional decisions as they've ever been. I don't expect technology will ever change that.

TER: Getting specifically into energy, a few weeks ago the International Energy Agency World Energy Outlook (WEO) said the U.S. would become the world's largest oil producer, overtaking Russia and Saudi Arabia, before 2020. Then Goldman Sachs said it would happen by 2017.

PS: They stole my thunder. I've been saying 2017 for maybe a year now. If Goldman is saying 2017 and IEA is saying 2020 it will probably happen in 2016.

TER: How will the geopolitical and socioeconomic landscape change when the U.S. becomes the largest oil producer? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/xg2gpCzaRZg/14851

Oil and Gas Volatility Creates Winners and Losers: Robert Cooper

The Energy Report: It's been about one year since we last spoke, Robert. What do you think have been the most significant developments in the North American oil and gas industry since then?

Robert Cooper: It's a dynamic business, and a number of changes have occurred. First, the macroeconomic backdrop remains murky, resulting in persistent volatility in equity and commodity markets. Investors remain wary of putting on riskier trades because the visibility simply isn't there. The fear that some Monday morning we'll wake up with a negative surprise is inhibiting risk taking and impacting small-cap growth equities, particularly.

"The winners tend to be experienced managers with proven track records."

Second, the rapid increase in U.S. oil production has negatively impacted Canadian producer net-backs. The spread between Canadian light oil prices and the U.S. equivalent has been much more volatile than historical rates. The lack of pipeline capacity has exacerbated this trend and given rise to alternative methods of transportation, such as oil-by-rail. But overall, the "differential risk" has been added to the list of risk factors investors assume when investing in the oil and gas sector.

Finally, the natural gas market, after a period of massive oversupply, has, in our view, self-corrected and appears to have returned to balance. [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/RpGPnOA7hUk/14729

Africa and Kurdistan Show Great Oil and Gas Potential: Lionel Therond

The Energy Report: Let's start with Kurdistan, Lionel. It's one of the hottest countries in the world for oil and gas exploration, especially in terms of production share contracts. A few prescient firms, such as WesternZagros Resources Ltd. (WZR:TSX.V) and Genel Energy Plc (GENL:LSE) control promising properties in Kurdistan. What's the back story?

Lionel Therond: Prospects have never been better for players in Kurdistan. The key factor has been the recent entry of Turkey into the export debate. Allow me to explain: Turkey has an energy-hungry economy ready to buy oil and gas production directly from Kurdistan as long as the physical routes exist for exports. In response, the Kurdistan Regional Government (KRG) has started building pipelines toward Turkey, which should be operational at the end of 2013/early 2014.

"International majors are voting with their feet and entering Kurdistan."

That was a paradigm change. We had been waiting three years for an agreement between the KRG and the Iraqi federal government on the commercial conditions for exports, and Baghdad's initial stance was to declare all licenses in Kurdistan illegal. But with new export routes that could potentially bypass Iraqi territory and lead directly into Turkey, Baghdad's agreement is no longer necessary, which has brought the Iraqi government back to the negotiating table. [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/ybfy9GfV7RI/14642

Doug Casey Uncovers the Real Price of Peak Oil

Doug Casey, chairman of Casey Research and expert on crisis investing, is on the search for real wealth – not investments in companies that push around paper. In this exclusive interview with The Energy Report, Casey shares his pragmatic take on what's next for oil, gas, and nuclear power.

The Energy Report: There will be a Casey Research Summit on Navigating the Politicized Economy in Carlsbad, California, in September. At the last conference, Porter Stansberry caused some excitement with his argument that oil could go to $40/barrel (bbl). What's your view?

Doug Casey: We like to have a range of defensible views represented at our conferences. But personally, I don't think it's realistic to suggest oil prices will drop as low as $40/bbl. [Read more...]

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