Mexico Looks Forward to Multi-Billion Oil Investments

Petroleum Industry MexicoMexico hopes to draw US$50.5 billion worth of investments from foreign and local private corporations four years from now.

This can be part of the launching of its oil venture that starts in 2015 with several pacts, according to oil officials of the country.

It has been labelled as “Round One Tender” and will offer up to 169 exploration and extraction activities. This includes a combination of onshore and offshore locations. It covers an aggregate of 28,500 square kilometres.

The National Hydrocarbons Commission of Mexico will put in order this proposal and will take place sometime in the middle of 2015 but not later than September, according to commission head Juan Carlos Zepeda.

The milestone offer prioritizes areas that will enhance outputs promptly and set aside deep water projects in the meantime.

The government’s energy ministry also allocated 83 percent of Mexico’s likely reserves to Mexican Petroleum (PEMEX) under this Round Zero allocation.

The subsidy offers the Mexican oil firm with a new portfolio of assets to build up on its own or go into joint undertakings with global oil conglomerates such as Chevron Corp.

Mexico is tenth-biggest producer of crude worldwide. However, after reaching production of 3.38 million barrels per day in 2004, this went down to 2.52 million barrels daily in 2013.

It was learned that PEMEX will collaborate with other entities in heavy oil offshore sites and massive deep-water gas expansion.

Central Banks Support Interest Rate Hikes

There is increasing discord in the top two central banks in the world regarding interest rate hikes.

It appears that the period of cheap rates will be coming to an end after nearly six years. Interest rates globally dropped to exceptional lows to avert another economic downfall.

Transcript from the monthly meeting of the Bank of England showed that two Monetary Policy Committee members favoured an immediate increase of 0.25 percent. This was the first disagreement at the BoE since July of 2011. This opposition will probably be a big test for Bank

Governor Mark Carney considering that many economists did not anticipate any rate hike until May of next year.

In a related development, the US Fed released the summary of its July meeting and revealed that disturbing dissent has become more prevalent than usual.

The Federal Reserve also divulged that Philadelphia Fed head Charles Plosser was opposed to the present amicable language. However, the minutes confirm that is just him who clamours for higher rates. The Reserve observed that certain personalities were thinking the central bank was nearing its twin mandate to reckon with rate hikes.

Right now, the Fed is unwinding a US$85-billion bond-buying monthly program which it announced two years ago. This was meant to keep long-term percentages down and fuel the national economy.

Canadian Currency Ascends against other Currencies

Canadian FOREXCanada’s currency moved up against other principal currencies at the trading markets in New York as oil prices increased sooner than the release of official data regarding US oil inventory.

The United States Energy Information Administration (EIA) report is expected to display decline of crude oil stocks by 1.750 million barrels.

A report from the American Petroleum Institute disclosed that crude oil supply dropped less than the likely 1.4 million barrels during the previous week.

Statistics Canada revealed that Canada’s wholesale sales got better for the third successive month. There was an increase of 0.6 percent to C$53.0 billion last June.

Economists projected an increase of 0.4 percent, after a modified 2.3 percent gain one month before.

Meanwhile, Japan had merchandise trade shortfall of 963.99 billion yen last month while Euro zone construction output went down for the second straight month last June, based on Euro Stat data.

Construction output fell 0.7 percent in June from the previous month but the percentage of decline lessened from the 1.4 percent diminution last May.

Current Australian Dollar Performance

Wednesday showed the easing of Australian dollar slightly further after the country’s CB chief downed the currency in a testimony he gave before parliament.

Governor Glenn Stevens of the Reserve Bank of Australia warned last Wednesday that the market has undervalued the danger of an ailing Australian dollar and said it would be possible based on economic fundamentals if the current levels be maintained by the currency.

This was the statements he gave in his early testimony before the Australian parliament committee where he will answer several questions on monetary policy.

The Westpac-MI leading index due in Australia is at1030 (0030 GMT). In the last few readings, the index have been directing to sub-trend growth and more of the same is expected next month.

The Aussie dollar is weaker versus the stronger greenback, after its show of a promising US economic data.

Wednesday morning, the local currency was trading down from 93.29 US cents, to 93.03 cents on Tuesday.

Fed Policy Makers Averse to SEC Controls on Money Market

forex tradingEconomists of the Federal Reserve have cautioned against restrictions imposed by the Securities and Exchange Commission on the $2.6 trillion money market and mutual fund industries.

The Feds claim this will unintentionally encourage a rush by investors instead of controlling them.

The economists said the SEC’s plan will facilitate withdrawal fees and briefly obstruct investor exchanges. The imposition of fees or other costly measures can counteract strong incentives to investors in the middle of a crisis. Restraints on redemptions if liquidity becomes inadequate may jeopardize financial steadiness.

The Financial Stability Oversight Council, composed of prominent financial regulatory officials, declared it will scrutinize the effectiveness of new rules particularly inadvertent effects of

Meanwhile, the SEC admitted that runs on money funds can occur because of new policies although these may not take effect within the next two years.
However, the risks are eased partly because investors will get more information about the condition of funds.
SEC officials also claim that riskiest funds applicable to the big group of institutional investors must give up their permanent $1 share price and float in terms of value.
Money funds refer to cash-like instruments used by private individuals, companies and municipalities to secure cash.

Metals Update

Exchanging at 19.648, silver gained 13 points and was on its own left with a little direction and support. Copper recovered 3 points trading at 3.112 while London copper stayed firm on Tuesday bringing positive prospects for the U.S. economy. However, it was warned over China’s faltering property market, meanwhile a mightier dollar eroded a recovery from seven-week lows.

On Monday, homebuilding stocks in U.S. escalated by data in August reaching its highest level since January. A 234,000 tonne deficit in January to June from global zinc market was shown by a monthly bulletin from Lisbon-based International Lead and Zinc Study Group. The homebuilding stocks of U.S. went up on Monday, boosted by data showing its rising sentiments in August. Increase in copper futures was attributed by analyst to a stable global trend before Chinese data of China considered as the world’s largest users of industrial metals.

Gold gained was under $2 trading at 1301.20 following specific direction before data from US and the forthcoming Jackson Hole conference.  There is little change in bullion trading near the $1300 an ounce mark.

Australian Currency Advances as RBA Restates Secure Interest Rates

australian forexThe Australian note performed well on the trading floor following disclosure of the transcript of the Reserve Bank of Australia’s monthly board meeting.

It indicated a tentative outlook for the economy but hinted that rates will continue at a historic low 2.5 percent showing stability.

Meanwhile, the New Zealand dollar declined as producer prices fell during the second quarter fell and sooner than the central bank projection regarding inflation.

The NZD/USD currency pair traded at 0.8436. This was down 0.46 percent ahead of the Reserve Bank of New Zealand’s pronouncements on inflation possibilities for the third quarter.

Earlier, the one-year inflation expectation of the Reserve Bank of New Zealand was pegged at two percent as well as two-year outlook of 2.35 percent. The RBNZ says it will strive to maintain basic price increases between two and three percent.

The NZ Government reported that producer prices for the second quarter decreased by one percent as against a likely gain of less than one percent.

On the other hand, the US currency traded higher against many major currencies propped up by positive data from the country’s housing industry. The government hopes that diplomatic initiatives by both sides to end hostilities in the Ukraine will produce positive effects.

There have been talks between the foreign ministry officials of both nations. However, no resolution was reported as the movement of humanitarian aid to Ukraine from Russia carried on. This managed to allay fears in the international markets.

Prices of Russian Crude Oil Falter

The price of crude oil in Russia waned for eight consecutive trading days as a result of weak refining demand in the euro zone. It fell well below $100 per barrel for the first time in one year due to economic sanctions imposed by Western powers on this country.

The Russian government kept its budget at $114/ barrel as President Vladimir Putin is poised to increase social military expenditures in the midst of the Ukraine dispute. Relations between the West and Russia grew worse.
The restrictions are expected to affect new Russian oil projects which led to a fall in output during the last few months.

Oil prices worldwide continue to fall despite the fighting in Ukraine and Iraq because of poor demand from a feeble world economy and soaring oil supplies from the United States.
According to economic analysts, declining oil prices have affected the Russian stock market as well with its currency which is trading near all-time lows. The $2 trillion economy of Russia depends a lot on energy taxes for ½ of its budget earnings.

Crude in the Baltic traded below $98 per barrel. This was the lowest since May of last year.

Rupee in Forex Market

In Mumbai, Forex and money markets, as well as many of the other commodity markets, aside from oils & oilseeds, are closing on Monday as the nation is celebrating the Parsi New Year.

For the second week in a row last week, the rupee upped and closed up by 39 paise culminating at a two-week high of 60.76 versus the US dollar during the short week under study following the supported dollar that was selling by exporters and some banks within bullish local equities.

In the Forex market, the local unit started better the week at the amount of 61.09 per dollar from close of last weekend of the amount of 61.15 and down to 61.30 last Wednesday on fresh dollar demand coming from importers between retail inflation and slow growth of industrial production.

Later in the week, it jumped back to remain for the rest of the highest level of 60.76, presenting a rise of 39 paise, or 0.64%.

Last Thursday, the 45 paise achieved the best single day gain for the last three months despite wholesale inflation to five-month down in July.

Meanwhile, industrial production (IIP) of the country slowed down to 3.4% in June versus 5% in May. Meanwhile retail inflation, as measured by consumer price index (CPI) increased by 7.96% in July from 7.46 % in June, as per government data announced last Tuesday.

Resurgence of European Union Economy Flounders

european unionThe EU seemed to be inching closely to economic healing. However, the unstable recovery stopped during the second quarter of 2014 after last year’s paltry progress.

Media reports said growth was nil after recording a low of 0.2 percent during the first quarter.

Is the European Central Bank capable of turning things around with an additional monetary incentive? The governments of France and Italy are reportedly moving very slowly in making their respective economies business-friendly.

The Ukraine crisis has compounded the situation by frightening investors. This can result into a total recession, according to observers.

However, not many economists believe that the euro zone will go back into its third downturn in only six years. The sluggish recovery will persist and this is not good for a global economy.

One of the main reasons for this is Germany’s fall of 0.2 percent during the second semester compared to the same period of last year. Nonetheless, Europe’s largest economy is still the number one performer. It has a low rate of unemployment and carried out measures to reduce business tariffs and costs several years ago.

The festering economies of Italy and France are also among the culprits. France was dull for the period and Italy’s own economy was down by 0.2 percent.

The ECB can expect more pleas for the roll-out of additional incentives for the deteriorating economy and this could be done by quantitative easing.