Interview: Crude oil prices
>> crude oil prices rise. the u.s. department of energy projects stronger demand and opec prepares for its next meeting. in the final hour of trading in new york, oil briefly topped $55 a barrel. the rally extends to natural gas futures, gasoline and heating oil. su keenan has the latest on energy from new york. what can you tell us, su? it’s been a rally in the energy products. new york crude futures up 26% so far this year. gasoline futures are 42% higher than this time last year. you mentioned opec. while it is scheduled to meet next week and normally that would be a big focus, analysts such as citigroup’s kyle cooper, say opec is powerless to lower prices at this point. the international energy agency, opec and u.s. department of energy all cited economic growth in the u.s. and china when they boosted their oil demand forecast last month. the u.s. department of energy also raised its forecast for oil prices by 4% in a monthly report out today. bill o’grady says it’s hard to justify this rally on a fundamental basis when supplies of natural gas and oil here in the u.s. are rising above five-year averages.
>> once the market starts behaving like this, you sort of take off your fundamentalist hat and try to become a market psychologist so one of the key things we’ll watch for is as we make a run at old october highs, how does the market behave once it touches them. does it go through them with conviction? if it does, that’s telling me we’re probably heading to the next great round number, which is 60.
>> o’knady says it’s difficult to predict how much higher than $60 a barrel oil could go. friedman friedman billings ramsey’s analyst says the rally is unlikely to last.
>> you could see prices move up further because of momentum in the states, positive earnings revisions. but there is one negative you have to keep in mind and that’s u.s. gasoline inventories. they’re 10% higher now than they were a year ago. so if this trend continues, there will be excess supply in the spring and that could help bring prices back.
>> he has $44 a barrel as the target price for oil in 2005. stay tuned.
>> we will be. thank you. with a look at world news, here’s ron madison in tokyo. good morning.
>> good morning. russian forces have killed the top separatist leader in chechnya. president vladimir putin says rebel leader maskhadov was killed in an assault by russian security forces today. he was found after special forces discovered where he was hiding two days ago. the interfax news agency reports the pro moscow government as saying they will release the body if requested. the death leaves asayev to lead the opposing army, best known for leading the assault on school children. in lebanon, tens of thousands of protestors rally in lebanon, showing support for syria. the rally was called by the shiite muslim hezbollah leader. he spoke out against western meddling in the nation and warned disorder would erupt if syria withdraws soldiers. over the weekend, the president of syria and lebanon said syrian troops will retreat to the eastern border within a month, coming ahead of a full pullout, which has not been specified just yet. the u.s.-led coalition forces in iraq have ordered a follow-up investigation into the shooting death of an italian intelligence officer in iraq. nicola calipari was killed by u.s. troops as he drove with a freed hostage to baghdad’s airport. the hostage, guiliana sgrena, an italian journalist, was also wounded. u.s. officials called the shooting a horrific accident and have pledged a full investigation. a statement from the multinational force says that an american general will lead the probe in addition to the official inquiry into the incident. italian officials have been invited to participate. a statement says the u.s. embassy will be closely involved. the probe is expected to take just about three to four weeks to complete. that is the latest look at world news. back to you.
>> thank you. back to business. fannie mae agrees with the federal regulator to improve corporate governance. the biggest u.s. mortgage buyer will separate the duties of chairman and chief executive officer and make other changes. the move comes after the office of federal housing enterprise oversight found the company violated rules in accounting regarding hedges. fannie mae was blamed for deferring expenses to meet an earnings target that triggered maximum executive bonuses. hong kong names the son of the company’s founder as chief executive, qualcomm. the younger jacobs joined qualcomm in 1990.
>> and still to come, the dollar falls to a two-month low against the euro after an e.c.b. policymaker says the bank may raise rates. we’ll speak with a strategist in sydney about the higher rates.
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Listen Market briefing - Cathy (medium)
Sydney market -- David (fast)
welcome to “ live” from hong kong. i’m catherine yang. it is all about rising commodity prices and splation today. we’ll hear from the managing director of india’s second biggest steelmaker. he’ll tell us how tata steel mans to deal with the rising demand for the metal. microsoft is making new investments in south korea to do research for wireless devices. the company will start selling new versions of videoconferencing and messaging programs. we’ll speak to microsoft’s senior vice president, peter boockvar knook. investors are concerned supplies of raw materials are inadequate to meet growing global demand. the roundtableers c.r.b. index of commodities rose to the highest level since january 1981. commodity prices have risen 15% in the past year. the falling dollar makes commodities priced in the u.s. currency cheaper for international buyers. oil surged within a dollar of an all-time high in new york and to a record in london. traders speculate opec will not do much to lower prices when the group meets in iran march 16. copper touched a 16-year high in new york and reached a record in london. merrill lynch says in a report out today, smelters are not boosting output because some are closed for maintenance. inventory monitored by the london metal exchange has fallen 80% in the past year. the rally in commodities boosted gains of currencies in countries that boosted raw materials. the canadian, australian and south african currencies gained against the u.s. dollar. the dollar falls to a two-month low against the euro after the e.c.b. suggests it may increase rates to fight inflation. e.c.b. policymaker says in an interview with the “financial times,” that euro zone rates are very low and that will boost inflation. the dollar weakened against the yen on optimism japan will pull out of recession. a government report showed the number of japanese full-time workers rose for the first time since 1997. japan’s finance minister says policymakers are ready to act on volatile movements on the yen.
>> if there is abrupt movement or overshooting, in that case we are going to be freely moved in the market but in the last several months, 358 days, we don’t have such kind of situation at this moment.
>> watt nabi said that in response to questions at the foreign correspondents club in tokyo. japan sold more than $3 billion last year to protect the currency. the u.s. commerce department will release its trade report on friday. it’s expected to show the second highest deficit on record. according to economists we surveyed, the gap between imports and exports grew to $56.8 billion in january from $56.4 billion in december. microsoft chairman bill gates has been vocal about concern over america’s growing budget and trade deficit, saying the deficits will drive down the u.s. dollar. brian sullivan sat down for an exclusive interview with gates and asked him if a weaker currency helped microsoft sell more software.
>> the i.t. industry books a lot of sales in foreign currencies, including microsoft, but half our sales are outside the united states. whereas much more of our cost structure, because of our r&d focus is still very, very heavily here in the united states. so the weak dollar tends to increase the profit results of microsoft and other i.t. companies and it gives us a chance to take some of that, put more in r&d, take some of that, producer prices, and be pervasive.
>> you can see more of brian sullivan’s exclusive interview with microsoft’s bill gates on “morning call” on bloomberg television tonight at 6:00 p.m. hong kong, 7:00 p.m. tokyo. new york stocks fell as oil prices surged. texas instruments’ disappointing profit forecast drove down semiconductor stocks. the dow fell .2%, s&p 500 lost .5% and nasdaq fell .8%, wiping out almost all of monday’s gains. intel, nvidia and texas instruments were among the losers in semiconductors. intel releases its mid quarter update thursday in the u.s. google shares were upgraded by u.b.s. google is in a quest for talent as it gets ready to take on microsoft and yahoo. it hired a microsoft engineer who was on the original team that created the windows n.t. operating system. one fund manager says google has potential to achieve market cap of a trillion dollars.
>> at the end of the 1990’s, two stocks achieved market cap of 500 billion―microsoft and cisco. over the balance of this decade, a handful of companies will push that from 500 to a trillion. i would say google is a good candidate to do that.
>> and treasuries, 10-year note fell as rising commodity prices sparked concern about inflation. the decline in the note was the biggest in more than a a week and largest fluctuation of any government debt market in the world. asian stocks rose in new york trading. oil refiners including cnooc and miners like rio tinto gained. the index tracking commodity prices hit a 24-year high. bank of new york indexes tracking asian-pacific stocks rose. nikkei futures point to a lower start for japanese stocks. that currently in commodities is one factor pushing the australian dollar to its highest level in a year. even so, futures on australia’s s&p asx 200 indicate a lower opening for the country’s benchmark index. we’ll go to david tweed for more on that from sydney. good morning, david. what may australian stocks fall today?
>> first of all, you mentioned the rise in commodity prices. you would think that would be good for miners but that has pushed up the australian dollar to its highest in a year and that will have a negative effect on big dollar earnings. news corporation, whose shares dropped in new york overnight, look at rinker. oil prices trading near one dollar off a record. last year, when retail sales fell, one of the reasons was because of higher fuel costs. so watch consumer-related stocks like harvey norman which may fall, as well. the third one, the big story of the day, b.h.p. billiton. the market expects b.h.p. billiton’s price to drop because it’s concerned it could be involved in a bidding war for w.m.c. resources after agreeing to purchase that mining company. cathy?
>> as far as b.h.p. billiton’s bid for w.m.c. resources is concerned, what are the analysts saying―is this the final chapter in the takeover?
>> well, it’s true, some of the newspapers have been reporting this is the final chapter though chip goodyear, chief executive of b.h.p. billiton, was on abc radio this morning and he said that the possibility of another party coming in to play is certainly real. merrill lynch in a report this morning came out and said certainly rio tinto will look at coming out and making an extra offer. if you look at the market , the a.d.r.’s for w.m.c. resources did trade as high as $8.7. b.h.p. will get a better idea of what the market thinks about the bid when trading opens this morning in sydney.
>> thank you, david. china today may say exports and industrial production growth slowed in first two months of the year. falling demand is curbing overseas sales and factory output is slowing after china’s government clamped down on investment. china may report export and industrial production figures for january and february as soon as today. cathay pacific may say second-half profit fell 17% after the airline paid more to buy jet fuel. analysts surveyed by bloomberg expect cathay’s net income fell to $278 million. cathay imposed ticket charges after its fuel bill rose 47% in the first half and cut costs. lifts say lowering expenses further will be difficult. cathay reports financial results today. coming up, oil prices push to close to a record high. will crude keep rising? our new york reporter will tell us what traders and analysts expect.
