State of the Union Speech, Reserves and NYMEX Oil Futures
Just a short snippet from Bill Cara's post with the chart of Nymex oil futures
That spike during the trading hours on Tuesday is hard to explain and in the light of CAR/event studies this is a typical pre-announcement leak. Take a look at what happened on Wednesday in the morning when the news should have been priced in - essentially a usual flat trend with no discernible upward trend.
7 comments:
Claudia Mora Maestria en Administracion La Salle
Yo pienso que por el momento de deben encontrar mas campos petroleros ya que los aque hay actualemnte no son suficientes para abastecer a todo el pais, pero una venaja que tenemos es el uso del gas natural ya que aparte se ser mas barato es un combiustible ideal eficiente y muy limpio no contamina tanto com el petroleo, cada vez lo va a ir apacando por sus cualidades.
Pero de todos modos es indispensable tener mas petroleo para abastecer a todo el pais. Aparte que muchas veces cuesta demasiado caro invertir en la extraccion de petroleo y es mas caro lo que se invierte que lo que se recupera.
The Oil strikes back
I'd love reading Bush's speeches, there're great!! (Applause.) Bush's staff writes it very spirited even if half of it never come true. (Applause.)
State of Union 2007 can't be an exception.(Applause.)
Bush said, regarding Arsenio's comment:
"Tonight, I ask Congress to join me in pursuing a great goal. Let us build on the work we've done and reduce gasoline usage in the United States by 20 percent in the next 10 years. (Applause.) "
Shall I translate it? No more oil from the Middle East. (Applause.)
I'd like to drop four Bush's ideas, in order to accomplish such a great goal:
a) Supply of alternative fuels
b) Reform and modernize fuel economy standards for cars
c) Reduce our dependence on foreign oil
d) Double the current capacity of the Strategic Petroleum Reserve
You may find interesting the following link:
http://www.whitehouse.gov/news/releases/2007/01/20070123-2.html
(Applause.)
Juan Pablo de Leon
ECONOADM3
Juan Pablo:
That was a great comment! (Applause)
And yes, I agree that State of the Union speeches do carry an air wishful thinking. However, out of 4 points you mentioned the last one is the easiest to accomplish. Evidently markets also thought the same and did so ahead of the formal announcement. There is a reason why this type of seminal speeches is done after hours to avoid excessive very short-term volatility and market "flights". Here, however the info leaked through to the markets before the announcement.
Anyway, thanks for the interesting comment!!
Claudia:
Well the topic of alternatives is a whole new world in itself, here we are more or less interested in the dynamics of market-pricing of a strategic good.
The cost mentioned in your post is relatively stable, price however fluctuates a lot. Ergo, the net benefit which determines the profitability also fluctuates a lot. Saudi Arabia, 2-8 usd/barrel and Iran (10-18 usd/barrel) for extraction allow for pricing out of the competitor in variable time periods (depends on the trade balance sit and industry composition)
Este mensaje muestra claramanente la intencion de generar confianza en los mercados internacionales principalmente porque en Estados Unidos existe incertidumbre por el incremento tan agresivo que tuvo el precio del barril de petroleo en un o periodo tan corto 5 diás del 19 al 24 de Enero. (51.50 a 55.50) un 8% sobre el precio anterior.
Estas fluctuaciones es posible que contienen por las siguientes razones:
- Los pronosticos de que continuara la ola de frio en el oriente de estados Unidos.
- La Cotización de contratos a futuro (Marzo 2007) por parte de la OPEP.
- Y los fuertes rumores de una intervención militar de de USA a Irán.
Nota: esto nos lleva a refleccionar sobre la necesidad de invertir y modernizar en México, nuestras plantas extractoras y así tener combustibles a mejores precios para la población.
JuanFranciscoDuránOlguín.MBALaSalle.EconAdm3
This message knows the objetive clearly to generate confidence in the international markets, Had mainly to the aggressive increase in a so short period (19 to the 24 of January 2007) of 4.00 usd in price of the barrel of crude versus 51.50 to 55.50 what represents in percentage terms or 4%. In addition several reasons for that exist the markets are nervous:
- The prognoses of which it will follow the Wave of Fried in the coast this of the United States.
- The quotation of contracts to future (march 07) on the part of OPEP.
- The strong rumors that the United States can invade militarily to Iran.
Note: This does that the next months it hopes that they continue the series of fluctuations in the prices of the barrel of crude.
JuanFranciscoDuránOlguín.MBA.LaSalle.EconAdm3.
this message knows the objetive clearly to generate confidence in the international markets.had mainly to the so aggressive increase in a so short period (19 to the 24 of January 2007 ) of 4.00 usd in price of the barrel of crude versus 51.50 to 55.50 what represents in percentage terms or 8% in addition several reasons for that exist the market are nervous:
- The prognoses of which it will follow the wave of cold in the eastcost of the United States.
- The quotation of contracts to future (March 07) on the part of OPEP
- The strong rumors that the United States can invade militarily to Iran.
Note: This does that the next months it hopes thata they continue
the series of fluctuations in the prices of the the barrel of crude.
JuanFranciscoDuránOlguín.MBA.Lasalle.EconAdm3.
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