Inside Financial Markets



SINGAPORE, Dec 12 (Reuters) – Brent futures edged towards $109 a barrel on Thursday as a looming U.S. budget deal backed expectations the Federal Reserve may act soon to unwind a stimulus programme that has supported oil prices.

Oil fell along with most other commodities, while Asian shares fell to a four-week low, after Republicans in the U.S. House of Representatives were seen backing a two-year budget deal negotiated behind closed doors. (Full Story)

“Passing of the budget would give the Fed one last reason to exit the stimulus programme. Expectations are creating a weaker sentiment for oil and other commodities,” said Chee Tat Tan, investment analyst at Phillip Futures in Singapore.

Brent crude oil  LCOc1 fell as much as 21 cents to $109.49 a barrel and was down 3 cents at $109.67 by 0508 GMT, after settling 32 cents higher. U.S. crude futures for January delivery  CLc1 were 6 cents lower at $97.38.

A vote on a tentative budget agreement is likely to be held this week. A deal would remove fiscal uncertainty ahead of next week’s much-anticipated Federal Reserve meeting.


U.S. crude inventories fell 10.6 million barrels last week to 375 million barrels, according to the Energy Information Administration, much more than the 3-million-barrel draw forecasted by analysts polled by Reuters. EIA/S

But the U.S. benchmark oil contract closed $1.07 lower on Wednesday, as investors viewed the steep decline as a move by refiners to avoid taxes instead of a sign of strong demand.

Also weighing on prices was a sharp rise in U.S. gasoline inventories, signalling weak domestic demand ahead of the holiday season.

“This is a concern because crude production in the United States is rising. All put together we see a bearish picture,” said Tan of Phillip Futures.

Nevertheless, the International Energy Agency (IEA), the West’s energy watchdog, said surging oil demand, especially in the United States, and faltering supplies mean oil prices face upside risks over the next few months. (Full Story)

Last month, U.S. oil demand jumped above 20 million barrels per day (bpd) for the first time since the 2008 financial crisis, IEA data showed, although it was not clear whether part of this demand reflected higher exports from U.S. refiners.

Comments from Libyan officials that three oil ports that had previously shipped around 600,000 bpd of oil could reopen this weekend weighed on Brent prices. (Full Story)

Seizures of ports and oil fields by protesters demanding a bigger share of oil exports have slashed Libya’s oil shipments to some 110,000 bpd, from more than 1 million bpd in July.

Investors will keep an eye for U.S. weekly jobless claims due at 1330 GMT for signs of continued recovery of the world’s biggest economy.


ical en!� r�?� �k ades ago, its investment in Denver-based TransMontaigne is far more recent.


It bought the firm for $630 million in 2006, using it to extend the bank’s trading options that also included millions of barrels of fuel storage in New York Harbor and a deal to supply jet fuel to a major U.S. airline.

The TransMontaigne MLP includes some 48 fuel terminals with nearly 24 million barrels of storage capacity on the Gulf Coast, in Florida, the Midwest and across the Southeast, including along the strategically important Colonial Pipeline that ships gasoline and diesel from the Gulf to the East Coast.

With the U.S. oil market in upheaval due to the shale oil production boom, TransMontaigne is the bank’s “crown jewel”, said Pirrong.

Morgan Stanley executives have said since last year that they are exploring “different structures” for the commodity trading business, which has recently suffered some of its worst quarters in decades. Rising capital requirements and falling market volatility have cut earnings across Wall Street.

Chief Financial Officer Ruth Porat said in October the bank wanted “to be smart about what we do” regarding commodities, a division that brought in an estimated $3 billion at its peak in 2008. That fell to around $1 billion last year, according to Reuters estimates based on filings.

Although a number of potential buyers including Qatar, a Chinese oil major and Russia’s Rosneft have been mooted over the past year, until now it had been unclear whether Morgan Stanley would strike a deal or wait for the Federal Reserve to publish new rules that could force it out of the business.

The Federal Reserve is expected next year to make clear the results of a sweeping review of regulations governing how banks can trade in physical commodity markets. While most observes now believe that the Fed will make it all but impossible to continue owning infrastructure assets, many do not expect major new limits on trading raw materials.

Potential buyers are likely to include the MLP subsidiaries of major refiners or midstream companies.

Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Canadian Securities Institute


CSI is part of Moody's Analytics Learning Solutions, which offers educational programs and credentials throughout the world.

Email Newsletter

Subscribe to receive inspiration, news, and ideas in your inbox.

Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)