The recent news that Dubai suspended the repayment of its $59 billion debt sent shockwaves through the markets. Some shockwaves were expected, others came completely out of the blue.
In the first category there are the news of the spreads widening. In the second enter the appreciation of the yen, completely unexpected. Nobody was thinking that the panic will make the yen become what it was once – a safe haven for the investors. Yet, the yen continues to trade higher and higher.
The main resource of Dubai was the oil. And the government from Dubai has to repay somehow their debts. Even in the case of default, they must repay at least partially those bonds. It means that the Dubai sovereign funds and the Dubai asset owners must pump more oil to sell on the global market. Read More »Dubai Default Will Depress the Oil Prices
There is a lot of debate whether the oil will come back or not to the levels from 2008 (mostly May and June levels, where it reached a peak of $140/barrel. Since then, it continued to drop until February 2009, since it started again to grow. This time, in a much slower manner.
It is true that the recent economical news are slightly better than the previous ones. The US GDP has decreased in quarter 3within the economists expectations. The important word here is “decreased”. And the S&P 500 companies have seen a small recovery. Yet, I think we are several months from the economic recovery whcih could turn recession into a growth trend.
And of course, there is a debate of whether oil prices will anticipate these oil price increases or whether it will go down further, before it picks up.Read More »Oil Prices Creep Back
Well, that is an interesting question I think – and it shares some of the reasons why the Detroit auto makers are now desperately looking for a bailout from the US government similar to the banking ones.
For a long time, OPEC countries though to be the masters of the moving universe. These highly power-concentrated countries have names which resound like a big mantra for some and a big curse for the others – Venezuela, Saudi Arabia, Iran etc. They base all of their fortunes on oil supply and the founding of OPEC was done to control the oil supply and to make them richer.
Everybody knows that from the beginning of this month the oil price has breached a new record:
Oil soared by more than $6 a barrel to over $134 on Friday June 6, bringing gains in the last two days to $12 as the dollar weakened further on a jump in the jobless rate in the United States.