May 2010 Archives - 3/9 - Money Morning - Only the News You Can Profit From
- Will the Financial Reform Bill Really Rein In Wall Street?
Crack Spread Plummets as Refineries Suffer Through Petroleum Supply Glut
U.S. refineries are in the midst of a petroleum supply glut that's driving down profit margins for refining crude –the crack spread-and depressing prices by over 25% since last week.
U.S. supplies of oil and all petroleum-based fuels were at the highest levels in at least 20 years, jumping to 1.81 billion barrels for the week that ended May 14, knocking profit margins at refineries off a 15 month high.
The crack spread–the profit margin that an oil refinery can expect to make by "cracking" three barrels of oil into two barrels of gasoline and one barrel of heating oil-traded as low as $11.33 a barrel Friday on the New York Mercantile Exchange (NYMEX). It touched $16.909 on May 13, the highest price since Feb. 12, 2009. The margin has dropped 62% from a record $30.479 reached on May 17, 2007.
What Insiders Don't Want You to Know About "Peak Oil"
Why did the oil industry impose a media blackout at a recent summit of industry giants in Mexico? The answer explains why thirsty nations are already pitted against each other in a cutthroat brawl for ever-dwindling oil supplies. Read this report to find out two ways to profit from the coming shortage of black gold.
Dodge a Possible Debt Debacle With These Two Stimulus-Plan Safety Plays
U.S. President Barack Obama's $862 billion stimulus plan, passed in great haste after his inauguration, has now revealed its true costs and benefits. It didn't revive the U.S. economy – that bottomed about May 2009, before a dollar of it had been spent. Further, combined with the mad wave of similar "stimulus" outlays across the planet, it has destabilized global bond markets – which may end up being very expensive indeed.
For details of the two stimulus-plan safety plays, read on…
Money Morning Mailbag: The Euro and Other Hot Topics Spark Reader Debate
The Money Morning Facebook page is gaining more members daily and the Money Morning Mailbag feature is fueling a record number of reader comments and e-mails, giving us a better picture of how readers feel about recurring content like the euro, company profits, and emerging economies. Some articles like the evaluation of Australia's mining super tax have sparked lengthy reader conversation and argument we enjoy observing – and hope readers enjoy being a part of.
Here is another look at some recent articles generating the most attention and some additional links for further reading.
- How to Profit from the Other Oil Story in the Gulf
Surge in Strategic Defaults Threatens Housing Market Recovery
A growing number of homeowners who owe more on their mortgages than their property is worth are opting for "strategic default," which means walking away from their homes, even though they can afford to make their monthly payment.
If the trend accelerates, it could put more empty houses on a market that's already overburdened with vacancies and snuff out any recovery in the moribund housing market.
Right now, more than 10% of borrowers are 25% or more underwater on 4.9 million mortgages. The total valuation could saddle banks with as much as $656 billion of bad loans, according to the latest report from Corelogic.
Germany's Short-Selling Ban Lacks the Political Muscle to Go Global
Hoping to win more public and political support for its involvement in the bailout of Greece, Germany has banned the naked short-selling of European sovereign debt instruments. However, other European governments are refusing to follow suit, highlighting the lack of political will that's needed to regulate the credit default swap (CDS) market.
German Chancellor Angela Merkel said that the ban would remain in place until the EU comes up with a comprehensive plan for financial reform.
"This will all remain in place until other rules are established on the European level," she said.
Occidental Petroleum Leads Onshore Oil Hunt as Offshore Drilling Faces Tighter Regulation
Occidental Petroleum Corp. (NYSE: OXY) announced yesterday (Wednesday) it was doubling the capacity estimate for a California oil field discovery as U.S. offshore drilling restrictions fuel onshore interest.
The Los Angeles-based oil explorer has focused on onshore oil production for years and estimates its current discovery near Bakersfield, California holds up to 500 million barrels of oil, valuing it at more than $34 billion at current prices.
"There is a lot of new interest in onshore-production potential in the U.S. and Occidental is at the forefront of that," Brian Youngberg, an analyst with Edward Jones & Co., told Bloomberg.
Occidental, the fourth largest U.S. oil and gas producer, made the announcement at a meeting with investors and analysts Wednesday in New York. Chief Executive Officer Ray R. Irani detailed the company's long-term strategy for profitability.
What Does Germany's Credit-Default-Swap Ban Mean for You?
Germany did something on Tuesday that I've been hoping would happen for three years: It outlawed naked short-selling and speculation on European government bonds with naked credit default swaps.
The financial institutions that have been profiting from this type of speculation immediately went on the offensive.
German officials justified the surprise, unilateral move by financial regulator BaFin by stating that the "exceptional volatility" in government debt – if accompanied by massive short-selling and naked CDS trading – could result in excessive price movements that would actually "endanger the stability of the entire financial system."