Oil prices lost some terrain this week and consolidated. On Wednesday, new US inventory data showed a solid build up of crude stocks...
Oil prices lost some terrain this week and consolidated. On Wednesday, new US inventory data showed a solid build up of crude stocks and record high imports. The US Energy Information Agency reported a boost of crude inventories by 3.1 million bbl to 279.3 million bbl. After three days of loses, prices recovered on Thursday as traders waited worrisome if the Hurricane Isabel on the US east coast might have greater impact than first expected on US oil infrastructure.
Remarkable was the Nickel performance this weak. It hit a 40-month high on Wednesday by breaking the $10?000 a tone level. It was feared that there could be a shortage in Nickel over the next two years which prompted huge speculative buying. Demand for the metal is expected to growth but there is doubt that supply can match the demand as there are no new major nickel mines opening until at least 2006. Nickel is mainly used for stainless steel production and the demand has been driven by the fast-expanding Chinese economy.
The New York Stock Exchange (NYSE) was shaken this week because of the resignation of its chairman and CEO It was know for several weeks that Richard Grasso earned between $12-15 million a year and made the stock exchange to pay out pension funds of $140 million. This was even too much for Wall Street bankers which are used to princely salaries. But that was not all, in the coming four years, other payments, amounting to $187.5 million were planned. Grasso claims that the board would have granted him the salary. However, in a time when stock exchanges are responsible to press for more corporate governance in companies, such sums look not only unreliable but out of touch with reality.
Global markets had a good week the US Federal Reserve triggered fresh hopes around the globe that the US economy is recovering. Alan Greenspan seems committed to hold interest rates low to support the economic uptrend as there are no signs of inflation.
The announcement that the US Federal Reserve will not change interested rates was also felt on the bond markets. US treasury yields fell to their lowest level in two month as investors brought bonds with the expectation that interest rates would remain low for a couple of time. Rates will stay low due to concerns about a weak labour market and disinflation in the US. However, analysts were divided about the question how long rates can stay so low.
This week also brought another trade escalation between the United States of America and China. US commerce secretary, Donald Evans accused China of pursuing unfair trade policies in some areas. China reacted on Tuesday with a mixture of defiance and foreboding to the criticism. One official said that the US is always speaking about free markets and that the Chinese competitive edge in textiles would be the result of ten years of reforms and restructuring. The US textile industry would better become leaner than asking for government support. The US however claims that jobs would be lost due to Chinese illegal production, theft of intellectual property and other abuses. On other important issue is the currency system. China is expected to keep its currency pegged to the US dollar at an artificially competitive rate. US request to remove the peg have been rejected. To avoid a full-scale trade war however, China is considering a more flexible exchange rate.