Risk Is A Four Letter Word

- Risk Is A Four Letter Word

Thursday, August 18, 2011
Rigzone Staff
by Trey Cowan

The average investor often overlooks the simple concept of how the market discounts risk. Risk and reward typically correlate strongly with one another. Currently, the risk premium that an investor demands in exchange for lending to broader markets is expanding. In broad terms, investors must be anticipating that future risk levels are increasing.

To better define the risk/reward relationship, we first point to the current situation surrounding the 10-Year Treasury Note. From July through the week ending August 12, 2011, the note's yield has declined 26 percent from 3.18 percent to a 2.34 percent. Today, the 10-Year dropped below 2 percent.

Previously, the lowest the yield on the 10-year was 2.12 percent, set in December 2008; when fears regarding the global credit freeze were near their highest levels. Yields for fixed income instruments respond inversely to price. Investors buy the 10-Year to reallocate their holdings away from risk and into this safe-haven, which has the effect of driving the price up. We note the key concept in finance: the yield on a 10-Year is often looked upon as the proxy for the risk-free rate of return.

Another component in the valuation of assets is the risk premium. As the risk-free rate of return shrinks the average risk premium an investor demands must rise. In other words, if the 10-year yield is falling, then market risk is actually on the rise. Let's assume for a moment that an investor wants a 10 percent return on their investment. If the risk free rate has dropped from 3 percent to 2 percent, then the risk premium that investor is willing to take on has grown by a corresponding amount. Otherwise, the investor's required return falls to 9 percent (signifying their aversion to taking on additional risk). Therefore, when we see dramatic drops in the 10-year, like what just took place, all else equal, investment risks must be perceived to be on the rise. Such a move is justified to mathematically keep the overall return at equilibrium.

Using the earnings estimates we can prove that these financial concepts are factoring into current market valuations. For our example we are using the earning's yield of the the S&P 500 Index. We took the recent annual earnings for the S&P 500, $112.8, and divided it by the index value for the week ending August 12, 2011 (1178.81). What we found was that the earnings-to-price (E/P) yield was 9.5 percent. If you subtract the corresponding 10-year treasury yield (i.e. the risk-free rate) of 2.3 percent from the E/P, the remainder is the risk premium for the S&P 500 Index (i.e. 7.2 percent).

The risk premium for the S&P 500 is relevant for two issues. First, the S&P 500 includes only well-capitalized U.S. operated firms of a significant size. If the market expects a total earnings yield of 9.5 percent for blue-chip U.S. firms, then obviously the required return (and associated risk) for lesser quality investments is going to be higher. Second, the current risk premium at 7.3 percent for the S&P 500 is well outside the norm (3.85 percent average since 2005 and 5 percent YTD).

This growing level of inherent risk in the broader markets and the market's appetite for risk does have an impact on oil prices that is worth considering. Although the Fed's posture towards interest rates (and their vow to hold them low into 2013) would suggest that the dollar will remain weak, this is no time to get bullish on oil. Look no further than price variability to understand our reasoning. Since 2005, one standard deviation in the price of a barrel of oil represents 25 percent of the total price. Conversely, one standard deviation in the S&P 500 Index approximates 15 percent of the total. Therefore, at a time when the market is risk averse, an investment in crude oil bears with it 66 percent more risk than the total market.

Suppose that inherent in recent market sentiment is a fear that the U.S. economic growth profile for next year will slip by about 10 percent or approximately three-tenths of one percent of GDP. Ultimately, such a scenario would be accompanied by less demand for oil. We used regression analysis to compute the value of one barrel of oil based on a 10 percent decline in S&P 500 earnings using observations starting in 2005. Our calculations peg the implied value of WTI crude oil at $84/barrel based on if NTM earnings estimates drop $11 for the S&P 500 Index. Our calculations would be well below what the EIA and leading economist recently had considered a reasonable assumption for next year (+$100/bbl).

Also, consider how much the current risk premium exceeds its average 52-week value. Recent history suggests that a growing risk premium (that is well outside this 52-wk norm) spells trouble for oil prices. Back in 2008, risk premium exceeded its own norm by 2 percentage points. Oil prices in the subsequent 10 weeks fell 53 percent. Again in 2010, the S&P 500 risk premium broke 2 percent above its norm and oil prices fell 5 percent in the following ten weeks. With the markets now showing a risk premium that is again 2 percent above the norm, a repeat of this pattern does not seem far-fetched.

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EDITORIAL: World's Watching

- EDITORIAL: World's Watching

Thursday, August 04, 2011
Houston Chronicle

The excitement across Texas about possibilities for new natural gas and oil plays is palpable, particularly across South Texas, site of the rich Eagle Ford Shale formation.

Like most Texans, we're supporters of responsible, environmentally sensitive development of these resources that can help bring well-paying jobs to Texas, greatly increased revenues to the state and greater energy and economic security to the country as well.

For those and other reasons we're pleased to see the Texas Railroad Commission take a pro-active position in overseeing safe and responsible development of the area's resources.

Commissioner David Porter has created an Eagle Ford Task Force to head off the kind of public backlash that has troubled the Barnett Shale area in North Texas.

Porter is on target with his diagnosis of what went wrong in North Texas: too little information about the development process, which has been near populated areas, and a perception that the energy companies doing the work were calling the shots while the Railroad Commission was largely AWOL or doing the minimum to direct the process to ensure that public and environmental interests were protected.

To his credit, Porter is trying to avoid a repeat of that situation in South Texas and the public backlash that could hinder development of the region's immense resources. He has assembled a group of 22 stakeholders that includes representatives of drilling, pipeline and trucking companies, green energy experts and environmentalists, county and economic development officials, landowners and those who represent landowners, according a report by Vicki Vaughan of the San Antonio Express-News that ran in last Thursday's Chronicle ("Eagle Ford advisers ready to tackle goals," Page D3, July 28).

The significance of this work was probably best summed up by an Eagle Ford landowner and member of the Sierra Club: "We're on a world stage," said Teresa Carrillo. While noting the "fantastic" economic opportunity presented by the drilling, Carrillo also focused on the challenge to do it right.

Others have emphasized the opportunity that Eagle Ford offers the industry to "do it right and establish best practices" that can be used in other areas going forward.

This attitude is imperative, we would argue, and appears to be gaining traction across the industry, judging by the remarks of visitors from the industry meeting with the Chronicle's editorial board recently.

We detect a consensus that when it comes to caring for the environment, the entire industry must be cleaner than clean -- more rigorous than the regulators.

We hope that mind-set prevails and believe the Railroad Commission is setting the proper tone in its approach toward development in the Eagle Ford Shale area.

Copyright (c) 2011, Houston Chronicle

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GOM Employment Could Increase if Admin. Allows -Study

- GOM Employment Could Increase if Admin. Allows -Study

Monday, July 11, 2011
American Petroleum Institute

Almost 190,000 new jobs could be created in 2013 if permitting in the Gulf of Mexico for offshore development returned to levels before the Obama administration's moratorium, a study by Quest Offshore Resources, Inc., says. The study, "United States Gulf of Mexico Oil and Natural Gas Industry Economic Impact Analysis," also projects a 71 percent increase in Gulf development spending to $41.4 billion and a 70 percent increase in economic activity related to Gulf development to $44.5 billion.

"The slow pace of Gulf development since the accident has cost jobs, revenue and energy production," said API President and CEO Jack Gerard. "The study shows what could be accomplished on jobs if project approvals and permits could get back to a normal pace. We've done the necessary work raising the bar on safety. We cannot continue to delay developing energy and hiring people in the Gulf. The disappointing unemployment numbers from the government last week make this more important than ever," Gerard added.

Quest Offshore conducted the study for API and the National Ocean Industries Association. Quest based its forecasts on actual project development data and historical benchmarks of spending for specific equipment and services.

"Total employment related to offshore Gulf of Mexico oil and natural gas industry operations could reach 430,000 jobs in 2013 if the permitting slowdown is reversed," Gerard said. "As large as the jobs numbers are, however, they are just a fraction of all the jobs our industry could create with more forward-looking development policies in all federal onshore and offshore areas. And along with the increased jobs and energy production could come hundreds of billions of dollars of desperately needed additional revenue to the government. Policymakers now debating tax increases on the industry should understand that producing at home more of the oil and natural gas our nation will need is a far better way to help fix our economy and pay down our debt," Gerard said.

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Nonfarm Payrolls Rose By 18,000 In June, Missing Consensus Estimates For A Rise Of 125,000

- Nonfarm Payrolls Rose By 18,000 In June, Missing Consensus Estimates For A Rise Of 125,000



Jul 8, 2011

The U.S. economy added jobs at a slower pace in June than in May, suggesting that the slowdown in the economy might be longer-lasting and more severe than previously expected.

Nonfarm payrolls rose by 18,000 in June, below consensus estimates for a 125,000 gain.

Job gains in May were revised down to 25,000 in May from the initial estimate of 54,000.

The unemployment rate rose to 9.2% in June from 9.1% in May, reaching the highest level since December. Economists had expected the unemployment rate to remain steady.

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Commodity Corner: Oil Rises on Economic Data

- Commodity Corner: Oil Rises on Economic Data

Thursday, July 07, 2011
Rigzone Staff
by Saaniya Bangee

Propelled by forecasts that better days—and improved petroleum demand—are ahead for the global economy during the second half of this year, oil prices ended the day higher Thursday.

The front-month WTI contract price rose 2.09 percent Thursday, settling at $98.67 a barrel. Positive employment news contributed to the increase. According to the U.S. Labor Department, claims for unemployment benefits fell by 14,000—the lowest level in seven weeks. Meanwhile, payroll processor ADP said private-sector employment grew by 157,000 jobs last month. This is more than double of what economic experts had anticipated.

In addition, top U.S. retailers reported better-than-average sales for the month of June.

Light, sweet crude oil futures traded between $96.99 and $99.42—the highest intraday since June 15.

Its European counterpart gained nearly 5 dollars, settling at $118.59 per barrel on the ICE futures exchange. Brent prices fluctuated between $114.20 and $118.68 Thursday.

Natural gas for August delivery fell 8.8 cents Thursday on EIA reports. The U.S. Energy Information Agency reported a 634,000 barrel-decline in gasoline stocks, while distillate stocks fell by 191,000 barrels. Prices for natural gas peaked at $4.25 and bottomed out at $4.11, before settling at $4.138 per thousand cubic feet.

Gasoline futures added 9.23 cents a gallon, ending the trading session at $3.09 a gallon.

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Economic Data Reveals Positive Outlook in Jobs and Unemployment

- Economic Data Reveals Positive Outlook in Jobs and Unemployment



Jul 7, 2011

Exciting news in economic data today....

The Labor Department reported that people applying for unemployment benefits fell last week to the lowest level in seven weeks. Applications for benefits dropped by 14,000 to a seasonally adjusted 418,000.

Claims for the prior week were revised up to 432,000 from an original reading of 428,000. Economists had expected new requests for jobless benefits to drop to 424,000. The average of new claims over the past four weeks fell by 3,000 to 424,750.

Continuing claims fell 43,000 to 3.68 million in the week ended June 25. Overall, 7.46 million people received some form of state or federal benefit in the week of June 18, down 61,327 from the prior week.

Not only were jobless claims down in the month but private sector jobs were up.

Private sector companies in the U.S. increased adding 157,000 jobs in the month of June, according to the Automatic Data Processing Inc. (ADP) report.

The job reading in June is higher than what analysts had expected of a increase of 70,000. The ADP announced that the goods-price sector totaled 27,000 jobs in June along with 24,000 in manufacturing. As for the service sector, it added 130,000 jobs.

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Toreador Comments on France's Fracking-Ban

- Toreador Comments on France's Fracking-Ban

Wednesday, July 06, 2011
Toreador Resources Corp.

Toreador commented on the recent French law, voted on June 30, 2011, banning the use of hydraulic fracturing for oil and gas extraction.

Craig McKenzie, President and CEO of Toreador, said, "As a longstanding operator in France, we have demonstrated our expertise and ability to conduct our Paris Basin operations in full respect of the environment and local residents where we operate. Notwithstanding the new law, we believe the oil resource potential of the Paris Basin can create jobs, provide local economic development, generate substantial revenues for the State and benefit all stakeholders. We reaffirm our commitment to define and develop this basin to reach its potential for all stakeholders, in compliance with French legislation and through cooperation with French authorities."

Added McKenzie, "It is important to note that our plan to evaluate our exploration licenses does not call for hydraulic fracturing. We will not conduct hydraulic fracturing operations within any of our permit areas. We will make full disclosures and representations to the French regulatory authorities as may be required."

Concluded McKenzie, "As we recently outlined at our annual shareholder's meeting, the company has been able to significantly advance its assessment of traditional exploration and development opportunities across its entire Paris Basin portfolio. It is our goal to bring these plans forward and to take the operational and strategic steps to create long-term value for our shareholders."

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Q1 GDP Growth Revised up to 1.9%

- Q1 GDP Growth Revised up to 1.9%



Jun 24, 2011

The Bureau of Economic Analysis revised real gross domestic product growth up to an annual rate of 1.9% for the first quarter of 2011 today, in the agency's 3rd estimate.

Economists had been expecting first quarter growth to be revised up to 2.0%. As of now, the consensus expects Q2 growth to accelerate slightly to 2.3%.

The estimate released today is based on more complete source data than was available last month for the second estimate, in which growth was estimated at 1.8%.

The revision was due primarily to a downward revision to imports and a larger inventory buildup than was first recorded.

Core inflation was revised higher, to 1.6% in the quarter, from the 1.4% estimate released last month.

Corporate profits increased $48.7 billion in the first quarter, outpacing the $38.2 billion increase in the fourth quarter of 2010.

The Q1 growth reflected positive contributions from personal consumption expenditures, private inventory investment, exports, and nonresidential fixed investment, that was offset by negative contributions from federal government spending and state and local government spending.

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CPI Rises 0.2% in May, Gas Drops for First Time in 11 Months

- CPI Rises 0.2% in May, Gas Drops for First Time in 11 Months



Jun 15, 2011

The Consumer Price Index (CPI) increased a seasonally adjusted 0.2% in May, the Bureau of Labor Statistics reported today, showing prices moderating somewhat from the 0.4% increase in April.

Economists had expected a 0.1% increase. The index has now increased 3.6% over the last twelve months.

The core CPI, which excludes food and fuel actually increased at a faster rate in the month, rising 0.3%. Economists had been expecting a 0.2% rise.

That's the largest increase in the core rate since July of 2008. Apparel, shelter, new vehicles, and recreation all contributed to the increase, more than offsetting declines in the prices for airline fares, tobacco, and personal care.

The food index rose as well, with the food at home index gaining 0.5% for the second month in a row.

The energy index declined 1.0%, with gasoline falling 2% alone. It's the first decline in the gas index since June of 2010.

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Commodity Corner: Oil Rallies on Economic Data

- Commodity Corner: Oil Rallies on Economic Data

Tuesday, June 14, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices surged Tuesday on brighter economic news and the dollar's decline. Light, sweet crude futures gained $2.07 to settle at $99.37 a barrel on the New York Mercantile Exchange (NYMEX).

According to U.S. government reports, retail sales dropped for the first time in 11 months. A decline in car sales, which were affected by the earthquake in Japan, caused retail sales to fall by 0.2 percent. However, ruling out auto sales, purchases rose by 0.3 percent. Additionally, the U.S. Labor Department reported a decrease in food costs.

For the first time in two weeks, the Dow Jones Industrial Average, Nasdaq and the S&P 500 were up by more than 1 percent.

On Tuesday, the greenback declined against the euro and other foreign currencies after Chinese economic reports eased concerns about global demand. As the dollar drops, the dollar-denominated commodity becomes cheaper amongst foreign buyers.

The intraday range for oil was $96.51 to $99.44 a barrel.

Prices for front-month gasoline surged 2.3 percent, settling at $3.065 a gallon Tuesday. The increase came on news of BP’s 457,000 bpd refinery being shut down Monday night and an upset at Shell's 327,000 bpd refinery. Both refineries are located in Texas. The 6.78 cent-gain came after fluctuating between $2.997 and $3.07 Tuesday.

Meanwhile, natural gas for July delivery fell 6.5 cents to settle at $4.581 per thousand cubic feet. Natural gas prices traded between $4.56 and $4.65 Tuesday.

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U.S. Retail Sales Fall 0.2% In May, Smaller Drop Than Expected

- U.S. Retail Sales Fall 0.2% In May, Smaller Drop Than Expected



Jun 14, 2011

The U.S. Census Bureau estimated retail and food services sales for May at $387.1 billion today, down 0.2% from April, but up 7.7% from May of 2010.

Economists had expected a drop of 0.7% for May. The increase from March 2011 to April 2011 was revised down from 0.5% increase to a 0.3% increase.

Excluding slumping motor vehicle sales, which fell 2.9% from April, total retail sales rose 0.3%.

Core sales, which exclude automobiles, gasoline, and building materials, increased 0.2% in May from April.

For the first five months of the year, retail sales have totaled $1.87 trillion, an 8% increase over the same period in 2010.

Sales at gasoline stations, up 17.5%, lead the pack, followed by sales of motor vehicles, which despite slumping in April and May due to the Japanese earthquake, are still up 13.3% so far this year.

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U.S. Employment Rose Far Less than Expected

- U.S. Employment Rose Far Less than Expected



Jun 3, 2011

Reuters reported that the US employment climbed less than expected in May to record its weakest reading since September. The unemployment rate increased 9.1 percent as cost of energy prices are higher and the impact of the Japan earthquake and tsunami bogged down the economy.
In a poll conducted by Reuters, economists had expected payrolls to increase 150,000 and private hiring to improve. The government even adjusted employment figures for March and April to confirm that 39,000 fewer jobs were created than previously estimated.

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Commodity Corner: Economic Reports Pull Crude

- Commodity Corner: Economic Reports Pull Crude

Thursday, May 26, 2011
Rigzone Staff
by Saaniya Bangee

Oil futures declined Thursday after reports showed slow economic growth in the U.S.

Crude futures for July delivery fell from a two-week high Thursday to settle at $100.23 a barrel. The $1.09-drop came after the Commerce Department reported that the U.S. economy grew a mere 1.8 percent during the first quarter of the year—much lower than expectations.

Oil prices were also pressured by an increase in the number of applications filed for unemployment benefits. The U.S. Labor Department reported that applications for jobless benefits rose by 10,000 for the week ended May 21.

The intraday range for oil prices was $99.61 to $101.90 a barrel.

Front-month natural gas futures plummeted Thursday after the Energy Department reported an increase in stockpiles. The U.S. Energy Department claimed that inventories for the week ending May 20 increased by 105 billion cubic feet to 2.024 trillion cubic feet. The June contract, which expired at the end of floor trading, settled at $4.335 per thousand cubic feet. It bottomed out at $4.195 and peaked at $4.14 during Thursday's session.

Meanwhile, gasoline prices added 3 cents to settle at $3.05 a gallon. June contract prices for RBOB gasoline fluctuated between $3.01 and $3.06.

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Commodity Corner: Oil Falls on Weak Economic Data

- Commodity Corner: Oil Falls on Weak Economic Data

Thursday, May 19, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices fell below the $100-mark Thursday on weak economic reports.

Front-month crude lost $1.66, settling at $98.44 a barrel Thursday. At its quarterly meeting, the International Energy Agency (IEA) urged oil producers to increase supply. The agency, which acts as a watchdog for 28 industrialized nations, claimed that the high oil prices are hindering global economic recovery. Additionally, the Conference Board reported an unexpected decline in April's index of U.S. leading economic indicators. This marks the first decline in nearly a year.

Other U.S. economic data showed a decrease in home sales for the month of April while Mid-Atlantic manufacturing activity barely grew in May.

Although the U.S. Department of Labor announced a decrease in unemployment filings for the second straight week, traders were unable to get past the bigger picture. Oil prices bottomed out at $98.16 Thursday.

June natural gas futures plummeted to their lowest in nearly six weeks. Prices for natural gas settled 10.4 cents lower at $4.09 per thousand cubic feet. The 2.5 percent-drop came after the Energy Information Administration (EIA) reported that inventories grew by 92 billion cubic feet for the week ended May 13, almost 11 percent lower than the previous year. As the seasonal maintenance for nuclear power plants nears its end this month, some analysts predict the size of gas inventory builds may increase over the next few weeks.

The intraday range for natural gas was $4.09 to $4.20 Thursday.

RBOB gasoline prices fell by 2.95 cents Thursday. Prices traded within $2.91 to $3.00, before settling at $2.93 a gallon.

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Commodity Corner: Oil Drops on Weak Economic Data

- Commodity Corner: Oil Drops on Weak Economic Data

Tuesday, May 17, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices continued to fall Tuesday on disappointing economic data and concerns about the euro's stability.

Light, sweet crude futures dropped $1.34, settling at $96.03 a barrel Tuesday. According to the U.S. Commerce Department, housing starts declined by 10.6 percent in April to 523,000. Additionally, the Federal Reserve reported a 0.4 percent decrease in April's industrial production—the first drop in 10 months. A decrease in industrial production represents a weak economic situation, signifying a lower demand for goods including crude oil.

Earlier in the day, the dollar received a boost as concern escalated on the instability of the euro. The euro retreated from earlier losses but remained vulnerable on anticipation that Greece may restructure its debt.

The intraday range for June crude was $95.02 to $97.81.

Likewise, gasoline futures also fell again Tuesday. Traders continued to sell Tuesday as fears eased over the effect of the Lower Mississippi River flooding on the refinery corridor from Baton Rouge to New Orleans. Front-month gasoline traded between $2.84 and $2.95 before settling a penny lower at $2.92 a gallon.

A report that industrial production declined in April caused natural gas prices to decrease for the first time in four days. Analysts worry that the data may cause the demand for fuel to soften. Natural gas futures settled at $4.25 per thousand cubic feet, down seven cents from Monday. Prices peaked at $4.33 and bottomed out at $4.16 Tuesday.

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March Consumer Spending Grows 0.6%, Personal Income Up 0.5%

March Consumer Spending Grows 0.6%, Personal Income Up 0.5%



Apr 29, 2011

March consumer spending was better than many had feared, showing a 0.6% rise in current dollar terms according to the Commerce Department, slightly higher than the 0.5% increase economists' had expected.

When adjusted for inflation, spending increased 0.2% in the month after rising 0.5% in January.

Consumer spending in both January and February was revised higher, with February spending getting bumped to 0.9% from 0.7%, and January spending to 0.5% from an initially estimated 0.3% increase.

It was feared higher energy prices could more severely slow consumers' spending. The personal consumption index (PCE) rose 0.4% in March after an increase of the same amount in February. Year-over-year the PCE is up 1.8%.

Core PCE, which excludes food and fuel, was up only 0.1% in March, after rising 0.2% in February, and is up 0.9% year-over-year.

Personal income for the month rose 0.5% in March, beating the expectation for a 0.3% gain.

Commodity Corner: Oil Edges on Economic Worry

Commodity Corner: Oil Edges on Economic Worry

Thursday, April 28, 2011
Rigzone Staff
by Saaniya Bangee

Front-month crude settled nearly flat on Thursday as concerns grew of slowing U.S. economic growth.

Light, sweet oil retreated earlier highs to end the trading session at $112.86 a barrel, 10 cents higher than the previous day. Crude prices peaked as high as $113.97 a barrel. On Thursday, a weaker dollar provided support for crude prices. Likewise, the Dollar Index, which compares the greenback to a basket of foreign currencies, fell to its lowest level since July 31, 2008.

Although the U.S. economy grew by 1.8 percent in the first quarter, investors remain weary of the economy. At Wednesday's press conference, Fed Chairman Ben Bernanke said he didn't know when the Fed would tighten interest rates. Investors interpreted Wednesday's comments as the economy not being strong enough to handle higher interest rates.

According to the U.S. Labor Department, initial unemployment claims soared to their highest in three months. Analysts fear this could mean fewer cars on the road as it gets closer to the summer driving season.

Meanwhile, natural gas rallied Thursday after government reports signaled an increase in demand. Natural gas for June delivery rose 3.7 percent, settling at $4.571 per thousand cubic feet. Prices fluctuated between $4.396 and $4.599, before ending the day at their highest since Jan. 24.

During the week ended April 22, 31 billion cubic feet of gas was added to stockpiles, as reported by the U.S. Energy Information Administration (EIA).

May gasoline hit fresh 33-month highs settling at $3.43 a gallon. The intraday range for gasoline was $3.39 to $3.48 Thursday.

Fed Lowers 2011 GDP Growth Estimate, Raises Core Inflation Expectation

Fed Lowers 2011 GDP Growth Estimate, Raises Core Inflation Expectation



Apr 27, 2011

The US Federal Reserve on Wednesday lowered its expected rate of growth for the US economy in 2011, citing a slower pace than anticipated for the start of the year. In an unprecedented press conference after a meeting of the Fed's Board of Governors, Chairman Ben Bernanke said that the employment picture appears to be better than expected. January's unemployment rate forecast of 8.8- 9% was lowered to 8.4-8.7% for the end of the year.

Concerns about jobs and inflation eased in April

Concerns about jobs and inflation eased in April



Apr 26, 2011

The Associated Press is reporting that a monthly survey by The Conference Board says concerns about jobs and inflation eased in April. According to the report, the Consumer Confidence index rose to 65.4 from a revised 63.8 in March. Economists expected a smaller rise to 64.8. This comes after an unexpected drop in March stemming from worries about rising gas prices and other household items. The index is still far from the reading of 90 that indicates a healthy economy. The AP says it hasn't approached that level since the recession began in December 2007.

Commodity Corner: Crude Climbs on Weaker Dollar

Commodity Corner: Crude Climbs on Weaker Dollar

Tuesday, April 19, 2011
Rigzone Staff
by Saaniya Bangee

Crude futures retreated Tuesday's earlier losses as the dollar weakened against foreign currencies.

Light, sweet crude gained $1.03 to settle at $108.15 a barrel. Tuesday marks the last trading session for the May contract.

Reaching as low as $105.50 a barrel, oil prices reversed course soaring in afternoon trading. As the dollar weakened, the euro gained strength on speculation that the European Central Bank will further increase interest rates. Additionally, strong economic data from France and Germany outweighed fears of Greece restructuring its debt. A weaker greenback increases crude's appeal amongst foreign buyers, making it cheaper.

Prices also bounced back from Monday's lows after Treasury Secretary Timothy Geithner assured there was "no risk" that the U.S. government debt would lose its top-tier rating.

Meanwhile in the Middle East, OPEC Secretary General Abdullah Al-Badri said there isn't a shortage of oil in the global market, even after the supply disruptions in Libya. OPEC believes an increase in crude production will not decrease oil prices worldwide.

Likewise, natural gas futures for May delivery rose to two-week highs settling at $4.26 per thousand cubic feet. The 12.4-cent increase came on a surprising surge in the Midwest's heating demand Tuesday. An unusual drop in weather across most of the Northwest and upper-Midwest and unexpected warmth in the south has increased demand for fuel. The intraday range for natural gas was $4.13 to $4.28 Tuesday.

As retail gasoline rose, May gasoline continued to decline, trading down 1.97 cents Tuesday. Futures settled at $3.23 a gallon increasing concerns that fuel costs will hinder economic recovery and decrease demand for motor fuel in the U.S. Gasoline prices peaked at $3.259 a gallon, before bottoming out at $3.198 Tuesday.