next year, Broadcom says it will release a follow-up chip that will allow WVGA displays and as much power as today's high-end Smartphones at the same $75-$100 prices. That Nexus S that costs $530 now off contract will cost just a fraction of that in just one year.
To be clear, that sub $100 price is not the cost of materials, it is the suggested retail price after the manufacturers (and carriers) have taken their profits.
http://www.businessweek.com/news/2010-12-06/hedge-funds-raise-oil-bets-most-in-eight-weeks-energy-markets.html
Goldman Sachs increased its 2012 forecast to $110 from $100,
‘Bull Market’
“Looking toward 2012, the stage is set for a return to a structural bull market in oil,” Goldman Sachs analysts led by New York-based David Greely said in a report to investors on Dec. 1. The 2012 forecast is based on “the better prospects for continued robust world economic growth,” they said.
The funds and other large investors boosted so-called net- long positions, or wagers that oil prices will climb, by 18 percent in the seven days ended Nov. 30, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the largest increase since the week ended Oct. 5.
-----------------------------------
http://graphics.thomsonreuters.com/F/11/US_OILSTCK1110.gif
asr: after DEC 2002 , DEC 2006 the immediate JAN months seems turned positive , so it may happen again in JAN 2011 making crude falls to 80 dollars and spread DEC 2012/DEC 2011 to zero ( from negative)
---------------------------
asr: OIL curve is as of NOV 2007 prices
http://www.riskoverreward.com/2010/11/commodity-markets-vega.html
asr: GOLD curve is as of 2010 NOV
----------------------------------
http://sg.news.yahoo.com/rtrs/20101203/tap-oil-backwardation-c3bb44c.html
JPMorgan sees Brent backwardation through 2012
* Barclays says producer hedging help flatten curve
* U.S., China demand, one third of world total, booming
By Alejandro Barbajosa
SINGAPORE, Dec 3 - - Rising demand from emerging and developed economies and stable output from OPEC are helping reduce a surplus in global oil markets, reverting the price structure of Brent crude futures to patterns unseen since the spike to $147 in 2008.
ICE Brent contracts for earliest delivery or settlement are now trading at a premium to later contracts for the first time since May 2008, Barclays Capital said.
The January contract
This pricing structure, known as backwardation, is replacing the prevalent so-called contango of the past two years, where earlier contracts traded at a discount to future ones. Contangos are reflective of over supplied markets, while the turn to backwardation signals a tightening balance.
"The combination of
a) the effect of falling prompt inventory at the front of the curve and a
b) healthy degree of producers selling along the curve
has helped to pivot the curve back towards flat," Barclays Capital analysts headed by Paul Horsnell said in a weekly report.
An oil glut that has weighed on prices for two years is dissipating, with U.S. stockpiles falling their fastest in more than a decade this autumn, crude being whisked ashore from storage at sea, and China running refineries near full bore to replenish diesel supplies. [ID:nN24232122]
For a graphic: http://r.reuters.com/nud96q
As the Organization of the Petroleum Exporting Countries keeps a tighter lid on production, world demand is recovering faster than most forecasters, including OPEC itself, had expected. Daily oil demand this year should break a previous record set in 2007, analysts say.
"We think OPEC is unlikely to raise output ahead of its June 2011 meeting unless oil prices push above $100 a barrel for a sustained period," JPMorgan analysts headed by Lawrence Eagles said in a report dated Dec. 2.
"We expect oil inventories to continue their drawing trend over the first quarter, pushing Brent crude oil into backwardation - a structure that is likely to remain in place for much of 2011 and 2012," the bank added.
Demand from the world's top two users, the United States and China, which together account for about a third of global oil consumption, is growing at levels not seen since before the 2008-2009 recession.
U.S. oil demand in September rose 4.9 percent from a year earlier, or 913,000 barrels per day , revised up from an earlier estimate of a 3.5 percent increase, a government report showed earlier this week. [ID:nN29205219]
China's implied oil demand expanded by 12 percent in October from a year earlier to a record high, as new refineries added to bumper production at a time when government-mandated power cuts triggered a diesel shortage. [ID:nTOE6AA03M]
Cold weather in Europe and the U.S. Northeast is also lifting demand for products, a move likely to help reduce fuel inventories on both sides of the Atlantic.
Benchmark European gasoline traded at a two-year high and spot premiums on diesel doubled the late 2009 level on Thursday in a rare price rally for auto fuels during the Northern Hemisphere winter. [ID:nLDE6B115K]
As the Organization of the Petroleum Exporting Countries keeps a tighter lid on production, world demand is recovering faster than most forecasters, including OPEC itself, had expected. Daily oil demand this year should break a previous record set in 2007, analysts say."We think OPEC is unlikely to raise output ahead of its June 2011 meeting unless oil prices push above $100 a barrel for a sustained period," JPMorgan analysts headed by Lawrence Eagles said in a report dated Dec. 2.
"We expect oil inventories to continue their drawing trend over the first quarter, pushing Brent crude oil into backwardation - a structure that is likely to remain in place for much of 2011 and 2012," the bank added.
Demand from the world's top two users, the United States and China, which together account for about a third of global oil consumption, is growing at levels not seen since before the 2008-2009 recession.
U.S. oil demand in September rose 4.9 percent from a year earlier, or 913,000 barrels per day , revised up from an earlier estimate of a 3.5 percent increase, a government report showed earlier this week. [ID:nN29205219]
China's implied oil demand expanded by 12 percent in October from a year earlier to a record high, as new refineries added to bumper production at a time when government-mandated power cuts triggered a diesel shortage. [ID:nTOE6AA03M]
Cold weather in Europe and the U.S. Northeast is also lifting demand for products, a move likely to help reduce fuel inventories on both sides of the Atlantic.
Benchmark European gasoline traded at a two-year high and spot premiums on diesel doubled the late 2009 level on Thursday in a rare price rally for auto fuels during the Northern Hemisphere winter. [ID:nLDE6B115K]
------------
2010-12-06
* Brent and U.S. light crude both moving into backwardation
* Cold northern winter, Asian demand squeezing distillates
* Light-heavy crude oil spread widening on prompt demand
(Adds detail, comment, paragraphs 17-18)
By Christopher Johnson
LONDON, Dec 6 (Reuters) - Forward crude oil futures curves have moved into backwardation -- with forward prices discounted -- for the first time in more than two years as wintry weather in Europe and the United States has pushed up heating demand.
Brent crude oil futures saw forward prices drop by between 50 and 95 cents on Monday while the nearby January contract rose, pulling down the forward price curve.
Forward futures contracts for U.S. light crude moved into backwardation from mid-2011, although very prompt contracts stayed at small discounts.
Both crudes have been in solid contango -- with prompt prices below forward futures -- since oil prices collapsed during the global financial crisis in the second half of 2008.
"The cold spell is increasing demand for fuel at a time when stocks of some oil products are already low in Europe after French refinery strikes in October," said Christophe Barret, global oil analyst for French bank Credit Agricole.
"Demand into Asia is also strong with buying by Japanese customers of kerosene and of heating oil into China."
DEFICITS
Barret said the French strikes over pension reforms, which lasted almost a month and removed around 1.2 million barrels per day of refining capacity, left Europe with a deficit of around 8 million barrels of gas oil and 3 million barrels of gasoline.
This shortage of oil products has encouraged oil refiners to increase processing runs, particularly of light crude oils and those that yield high volumes of middle distillates.
As a result the premiums paid for some distillate-rich crude oil grades has risen steadily over the last three months.
Premiums paid for Nigerian Forcados crude oil, a crude oil with a significant yield of gas oil (heating oil and diesel) over the North Sea Brent benchmark have widened to as much as $3 per barrel in recent days.
Commerzbank said in a note to clients on Monday that the shape of the forward crude oil curves suggested a further tightening of the crude oil market was underway.
"This backwardation, which was rarely evident in the past few years, is likely to bring more buyers into the arena," the German bank's oil analysts said.
"Greater heating demand because of the outbreak of cold weather and stronger demand for diesel generators on account of the energy-saving measures in China should lead to further tightening of the diesel market."
David Wech, oil analyst at consultancy JBC Energy in Vienna, said European demand for distillates was coming on top of a surge in buying of diesel by Indian consumers and of kerosene by China. "Physical demand is driving this," Wech said.
Barret said the crude oil price curves were likely to stay in at least partial backwardation until the end of the northern hemisphere winter if the wintry weather persisted.
"If temperatures remain low, it is likely that crude prices will stay backwardated for two to three months, or until we return to a situation where prompt demand is less tight."
But Michael Wittner, analyst at Societe Generale, said the move to backwardation could be short-lived because global crude oil stocks were still high and well above the long-term average.
"I don't think it will last," Wittner said. "At the very front end, with this cold weather, there is some reason for the tightness. Further out, it is much harder to justify." (Editing by Alison Birrane)
-------------------------
http://www.advfn.com/news_Brent-Oil-Futures-Moved-To-Backwardation-Analysts_45501061.html
Brent Oil Futures Moved To Backwardation -Analysts |
Brent oil futures have moved into backwardation, analysts JBC said Friday, a move that could trigger a release of floating inventories to the market. The Vienna-based energy consultancy said the contracts closest to delivery were now trading higher than those expiring later, a phenomenon known to traders as "backwardation". Traders tend to store oil offshore hoping to capture higher prices in subsequent months compared with current ones, a trend called "contango". The Organization of Petroleum Exporting Countries warned in its November report that "the shrinking contango will likely trigger a release of crude oil from floating storage." It said: "the current level of calendar spreads are unlikely to be profitable for holding crude oil on vessels considering the cost of storage." |
3) The study was done at 20 public high schools in the Cleveland area last year, and is based on confidential paper surveys of more than 4,200 students.
a) It found that about one in five students were hyper-texters ( 1/5 => 20% ) ( 120 txt/day )
b) and about one in nine are hyper-networkers — those who spend three or more hours a day on Facebook and other social networking websites. ( 1/9 => 11%)
c) About one in 25 fall into both categories.
"This study demonstrates that it's a legitimate question to explore," said Douglas Gentile, who runs the Media Research Lab at Iowa State University.
The study found those who text at least 120 times a day are nearly three-and-a-half times more likely to have had sex than their peers who don't text that mu
The Appcelerator Titanium Mobile platform, a winner of this year's Jolt Productivity Award in the Mobile and Web Development category, holds two great promises to developers: First, it lets web developers, who have JavaScript and CSS skills, jump onto the mobile app bandwagon developing without learning quirky Objective-C for iOS or Java-based Android SDK. Second, it promises that apps developed in Titanium will be cross compiled into both iOS and Android native code, hence greatly reducing the need to re-write the same app for each device platform.
Most of the success stories seem to be with iPhone apps. With a block buster iPhone game like "Angry Birds", which has sold over four million copies, you can do quite well even with the ubiquitous $0.99 App store pricing. As can a high quality app, especially one that fills an enterprise need, like iTeleport, a $25 iPhone/iPad app for remotely controlling Windows and Apple PCs that generates over a million dollars in annual revenues.
But those results are atypical. Tomi Ahonen crunched the numbers and calculated the the average iPhone paid app or game returns a mere $682 per year to its developer. It's worse on Android where paid apps are only available in 13 countries. Android apps tend to be offered as a free ad-supported version with a paid upgrade that removes the ads and includes an additional feature or two. Mobile web publishers generally rely on mobile advertising as well.
To make any decent amount of money with mobile advertising you need volume, a whole lot of volume. Cost per click (CPC), the average payout to the publisher when a user clicks on a mobile ad, is about 4 cents in the US. Click Through Rate (CTR) for mobile ads varies widely but most reports, including these from Mobiclix and Chitika,put it at well under 1%. Assuming that you are lucky enough to get a 1% CTR you need about a quarter of a million daily ad impressions or 7.5 million ad impressions per month to make $100 a day! And that's assuming a 100% fill rate
So at the average fill rate, you would need 37 million monthly impressions to earn $100 day. As mobile sites and apps typically only carry one or two adds per page so that equates to at least 18 million monthly page views.
Eighteen million page views is a lot. To put it in perspective, last year People Magazine reported that its mobile site averaged 19 million monthly page views, the New York Times 60 million.
Why is it so hard to make money with mobile advertising? The biggest problem is inventory. There simply aren't enough ads to go around.
What Traders Should Watch this Hurricane Season |  |
Hurricane Watching
NOAA Map: www.nhc.noaa.gov
BP Oil Spill
There has been some speculation about whether the BP oil spill in the Gulf of Mexico will influence the strength or frequency of hurricanes this season. There are some theories that speculate it could change the rate of moisture entering the air from the ocean surface. However, while it might temporarily stall that energy out over the open ocean, it wouldn’t ultimately have a measurable impact as storms can quickly regain momentum. According to the NOAA, it is unlikely the oil spill will have much impact in that regard.
However, hurricanes can impact which direction the oil slick will move and how it spreads. A storm surge can cause the oil to move higher onto beaches and into the land. Oil mixed with chemical dispersants kills marsh grasses along the Gulf, it can also increase erosion. If there is a small silver lining to be found, the agitation of the water resulting from a hurricane would cause the oil to naturally biodegrade faster.
Oil and Gas Fields
The oil-producing region starts around Alabama, and runs through the southern coast of Texas. That’s the area to focus on when watching the path of a storm. The Henry Hub delivery point for NYMEX natural gas futures contracts is located in Southern Louisiana. Henry Hub took almost a direct hit from Hurricane Katrina in 2005.
Market Reaction: Natural Gas and Oil
Looking back on the 2005 season, Hurricane Katrina moved into the region on a Friday when the market was closed, and it was only a Category 3 storm moving across Florida. By Sunday night, it had been upgraded to Category 5. Natural gas gapped dramatically higher at the open Sunday evening for the trading session on Monday. Many investors who had short positions on in this market were facing large losses.
Then Hurricane Rita struck, and caused another market gap and spike higher. It didn’t prove to be a dangerous storm, but market participants were still shell-shocked from Katrina and the reaction in the October 2005 futures contract was overly dramatic. If you were trading the February 2006 contract, there was much less volatility as the market expected that even if there was storm damage, supplies would be back on line by the February delivery period.
It’s important to know how the spread between various delivery months can change. If there is a delay in the movement of supplies or damage to infrastructure, it can cause a dramatic move in one month but not in another. We saw this in 2005 as the October natural gas contract spiked (which was coming up for delivery soonest) but the February 2006 contract didn’t. The spread between the two narrowed to about $0.60 per mmBtu, which is very narrow in relation to the normal spread of about $1.40. Volatility was dramatic. If you trade the spreads in this market, you need to be aware of the impact on various contract months.
Trading Strategy
Aaron Fennell is a Senior Market Strategist based in Lind-Waldock’s Toronto office, and is serving clients in Canada. If you would like to learn more about futures trading you can contact him at 877-840-5333, or via email at afennell@lind-waldock.com.
The data and comments provided above are for information purposes only and must not be construed as an indication or guarantee of any kind of what the future performance of the concerned markets will be. While the information in this publication cannot be guaranteed, it was obtained from sources believed to be reliable. Futures and Forex trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Please carefully consider your financial condition prior to making any investments. Not to be construed as solicitation.
Lind-Waldock, a division of MF Global Canada Co.
MF Global Canada Co. is a member of the Canadian Investor Protection Fund.
(c) 2010 MF Global Holdings Ltd.
London, 26 October 2009 - John Kemp is a Reuters columnist. The views expressed are his own
New disaggregated data on traders' commitments from the Commodity Futures Trading Commission (CFTC), with back data published for the first time this week, reveal the increasing dominance of commodity indices and hedge funds in the NYMEX light sweet, oil contract
http://graphics.thomsonreuters.com/ce-insight/CFTC-DISAGGREGATED-WTI.pdf
For the first time, the disaggregated reports replace the old, discredited "commercial" and "non-commercial" categories with a new four-way classification: (a) producers, merchants, processors and users; (b) swapdealers, including index operators; (c) money managers, including trading advisers, pool operators and hedge funds; and (d) other reportable traders not included elsewhere.
The most important changes are to remove swap dealers from the old commercial category, and break out managed funds of various types from the old non-commercial category as a separate class.
The new classification is still not perfect. The Commission continues to allocate all positions held by a trader to a single category (e.g. producer or swap dealer) even when they are held for a variety of purposes (some as hedges, others as speculative positions as part of the proprietary trading book) based on its assessment of the trader's "predominant activity". Nonetheless, the disaggregated data marks a huge improvement, and provides a much more nuanced insight into the market, especially the scale of the index funds and hedge funds.
While the Commission began releasing disaggregated data at the start of September, this is the first time it has published position data on the same basis all the way back to June 2006, covering the years leading up to the vertiginous spike in crude oil prices during H1 2008. Conspiracy theorists who want to blame the spike on the work of "speculators" will be disappointed. There is no "smoking gun" in the back data. But it does confirm the spectacular rise of the swap dealers and other financial participants, and why both the forward curve and price behaviour have altered profoundly in the last five years.
Swap dealers (a category that includes investment banks using futures and options to hedge OTC deals and commodity index positions they have sold) have more than doubled their (gross) positions from 640,000 contracts (equivalent to 640 million barrels of physical oil) to 1.4 million contracts (equivalent to 1.4 billion barrels).
Swap dealers now account for more than one in every three futures and ( delta-adjusted) options positions on NYMEX (37 percent), up from 28 percent three years ago. Swap dealers have become indispensible providers of liquidity, essential to market functioning.
In fact, the CFTC data on swap dealers' positions understates their importance because it only shows their onexchange futures and options positions. As the Form Y-9C data on Goldman Sachs' and Morgan Stanley's trading books revealed, on-exchange positions were only a small part of their overall trading books at the end of Q2. Off-exchange forward contracts, OTC options and swap positions were much larger and only a portion of that was hedged out onto the exchanges.
Most of the growth in swap dealers' positions has come in the form of increased exposure to time spreads rather than outright longs or shorts. Spread positions have risen more than 1.5 times from 395,000 contracts to 1.051 million contracts, while combined long and short positions have remained broadly unchanged at about a third of this amount (300-400,000 contracts).
Spreads are most closely associated with the growth of commodity indices, exchange-traded funds and other investment strategies, rather than hedging, so the explosive growth in this category is some indication of how rapidly the sector has grown.
The sheer weight of spread positions helps explain why the traditional forward price structure in commodity markets has broken down, with the emergence of large and persistent contangoes in the markets for crude oil and products, 0devastating returns for long-only index investors.
http://graphics.thomsonreuters.com/ce-insight/CHANGING-FORWARD-STRUCTURE.pdf
By shifting the swap dealers' positions from the old commercial category to the old non-commercial one, then breaking them out, the disaggregated data has revealed just how far the market has become dominated by financial players rather than producers and consumers.
The scale and impact of swap dealers' positions is difficult to exaggerate. Swap dealers now account for many more positions (1.4 million contracts) than "traditional" market users such as producers, users, merchants and processors (822,000 contracts). If we include managed-money funds (604,000 contracts) and other reportable positions (698,000 contracts), then financial players' combined positions (2.7 million contracts) outnumber traditional market users by a ratio of 3:1.
In the traditional characterisation of a commodity futures market, most activity was linked to producer and consumer hedging, with a relatively small amount of speculative activity at the margin to provide liquidity and cover any imbalance between the amount producers wanted to sell forward and consumers wanted to buy.
In developing his theory of "normal backwardation", John Maynard Keynes assumed hedgers (who he thought would be predominantly producers wanting to hold a short position against future sales) would have to pay a "risk premium" to investors (who would have to be mostly long) to give them an incentive to take the price risk. The existence of this premium is crucial to long-run returns on long-only commodity indices.
But this characterisation no longer describes how the market works. It is producer and consumer hedging that now accounts for the marginal impact on the market, and financial positions which dominate. The idea that most positions involve producers and consumers, with speculators simply covering the remaining, narrow gap is not accurate.
Rather than being driven by actual, near-term changes in supply, demand and inventories ("physical fundamentals"), the price of oil and other commodities is increasingly being driven by investors' expectations about changes in availability and prices in the very far future, often over horizons of 5-10 years or more.
During the sharp run up in oil prices in H1 2008, and then again in H2 2009, analysts have been forced to cite the "forward-looking" component of prices and the risk of shortages far in the future to explain why the market rose strongly against a backdrop of ample supplies, insisting it was reflecting fears of shortages far in the future (1-4 years) rather than the present.
Most analysts are reluctant to ditch fundamental analysis in favour of an expectations based approach that treats commodity futures as a financial asset like equities or bonds. But the "financialisation" of commodity markets is increasingly embedded in both forecasts and market behaviour.
With financial players providing 75 percent of the interest, and almost all the liquidity, commodity futures markets are increasingly delinked from the underlying physical, trading more in line with macroeconomic and strategic influences alongside currencies, equities and bonds.
Ends –
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Oil and Gas Hedging: How will it change
Congressional representatives and White House officials have reached agreement on the details of a new law that will impact our nation’s financial system
JUNE 28, 2010
http://www.mercatusenergy.com/blog/bid/42728/Energy-Hedging-in-a-Reformed-Environment/
"Oil and Gas Hedging: How will it change?". In summary, their opinion, as we interpret it, is that oil and gas producers should still be able to engage in hedging "as usual" with a few, potential changes:
If you're interested in reading the full version of the "alert" it is available on the Thompson & Knight website.
On Tuesday, Alistair Barr at Marketwatch.com, authored an article titled, "Derivatives group sees $1 trillion regulatory impact." Among other things, the article states:
The International Swaps and Derivatives Association said Tuesday that the bill could lead to a requirement to post collateral for all over-the-counter derivatives that are not cleared, including those involving an end-user.
