Interview: Global Insight---Lindemer, Kevin---Director of Global Energy
>> crude oil and heating oil fell after an energy department report today showed u.s. inventories surged as refinery operations and imports went up over the last week. joining us now with a closer look at that weekly inventory report and to share his outlook for energy prices next year is kevin lindemer, director of global energy at global insight. he comes to us from lexington, massachusetts.
>> good afternoon.
>> welcome.
>> thank you.
>> help me put the energy inventory report in confixture today. context today. we had rising inventories with crude oil, distillates and gasoline. any chance concerns about winter supplies are overblown?
>> certainly the supply situation is improving faster than many expected. and the markets worked the way you would hope with help from the weather. up until recently, we had imports strong, demand slow a little and refineries coming back and inventories have grown to a comfortable position.
>> will crude prices around the $60-a-barrel mark control demand?
>> we haven’t seen a lot of response globally from high oil prices on the demand side. if we get cold weather between now and the new year, the situation early on could be robust for prices. if it stays warm, prices could come down.
>> i want to ask you about the oil refinery situation. right now, operating about 90% capacity since the hurricanes. any chance of getting closer to 100% to meet winter demands?
>> probably not 100%. we do have one major refinery coming back online shortly. at this time of the year, you don’t really run at 100% and when you look at the inventories, we don’t need it at 100%.
>> you’re talking about the weather so crude prices are down 15% from the august 30 hurricane high. where do you see crude prices going into next year as we pass the winter peak?
>> we think the crude prices will stay relatively stable between now and the end of the first quarter, driven by the global supply demand situation and not the u.s. domestic situation.
>> an opec meeting on monday. should we be concerned opec, i believe, saying they’re basically pumping as much oil as they possible can through the end of the year. is this a situation where there’s a buffer in case of disaster, terrorist attack?
>> there probably isn’t much of a buffer in crude oil supplies. the situation is really light sweet crude that is in short supply. there’s a lot of heavy sour crude around and opec does not have light sweet crude oil spare capacity.
>> what should we listen for in the opec meeting?
>> what kind of price level opec would support into 2006. i think most people. expect that surplus capacity in the system will grow over the course of the next year or so and subsequently we -- consequently, we should see softness in price so it’s where will opec support price.
>> looking at distillates including heating oil, demand expected to be 12% higher than last year. where do we stand in terms of distillate supplies?
>> it’s in very good shape in the united states, especially the east coast. when you look at gulf coast where a lot of domestic supply originates or on the import market , everything is looking pretty good so we expect the winter to be well supplied.
>> how will that translate into heating oil prices?
>> heating oil prices are wide right now compared to crude oil and will probably stay that way through the end of this month. the weather will determine whether or not we see a drop in heating oil prices after the first of the year. if it’s cold for the next 30 days, we’d expect to see softness after that.
>> moving to natural gas, futures still flirting with the $14-per-b.t.u. level, rising again today. what’s the supply shortage issue with natural gas?
>> the incremental gas will all have to come from storage. l.n.g. is the only noncontinental gas supply, already pretty much programmed in. on the natural gas side, the market is very concerned about cold weather sustained through past the end of january.
>> is natural gas really the point of concern among all the energy?
>> it still is and has been for a while. gas prices went up again today and i think it’s going to stay pretty sketchy through the next couple of months.
>> does this translate into the fact, you heat your home with natural gas, you stand to possibly face the steepest price increase this winter?
>> well, the market is already, i think, anticipating maybe a little bit of the worst. so if we do get a cold snap, the price spike probably shouldn’t last too long. what will be key is what do power generators do with their natural gas and some of the large industrials. does the price get high enough to turn it back into the system or do they continue to operate?
>> let me ask you about pump prices, 12% higher right now than a year ago but certainly down from the $3.05 gallon high on september 2. gasoline inventories, we learned today, rose last week. have we seen the peak in prices at the pump?
>> i think we’ve seen a plateau. it’s come down from the high and a lot of that decrease was due to two reasons, softness in crude price and narrowing of the gasoline-to-crude oil spread. that spread has narrowed to as narrow as it’s going to get so unless there’s significant improvement in the retail price, we’ll see gasoline fairly stable.
>> our thanks to kevin lindemer of global insight. car racing in the u.s. has an audience second in size only to the national football league. espn and abc have bought rights to the next year’s nextel season.
点击播报
Listen Market briefing ---Lori (slow)
G.M. --- Jeff (slow)
Texas Instrument --- Ellen (slow)
Coke --- Suzanne (slow)
43 points -- we did see weakness in shares of semiconductors today. also, we begin with the developing story on general motors. on top of several management changes, g.m. is confirming that the automaker’s asked a representative of billionaire investor kirk kerkorian to join its board of directors. kerkorian owns a 9.9% stake in g.m. and the representative is jerome york, former chief financial officer from chrysler. jeff green who reports on g.m. for bloomberg news joins us from our newsroom in southfield, michigan. hi, jeff.
>> just to clarify, they haven’t yet said it’s jerry york but have said they’re in discussions with kerkorian and jerry york is his adviser on general motors and has a stake in whatever profit kerkorian gets, so he is the person expected to be on the board if kerkorian gets a representative.
>> what are analysts saying?
>> people i talked to respect york. they say he will work with the board. he’s been through restructures before and understands how this works so they see him as an asset, not an agitator and since he’ll be on the board, it will be in kerkorian’s best interests to get along with general motors versus being outside and making demands.
>> the move would give kerkorian a de facto place on the board. what’s in it for york?
>> york gets 4% of whatever profit kerkorian gets by 2009 so it’s potentially a lot of money. right now, he’s losing money. kerkorian’s investment is $400 million under water so g.m.’s stock must recover.
>> this comes at a time when g.m. and ford face global challenges. what is york’s take on the auto industry today?
>> we haven’t talked to york, although he has said in at least one conversation―he expects a rebound. he thinks g.m. and ford are undervalued and shares will rebound and that seems to be their reason for investing in general motors. they think they bought in low and that it will increase and they expect to make a profit.
>> jeff, thank you for your insight. bloomberg news reporter jeff green. news after the bell on texas instruments. going right to our stocks editor, ellen braitman.
>> the company after the bell is out with its mid quarter update, saying it will come in at the high end of previous forecasts. it’s raising the lower end of the forecast both for sales as well as profit. let’s go through the fourth-quarter numbers in terms of what the company is saying. texas instruments saying that fourth-quarter revenue will be 3.56 billion to 3.7 billion dollars. previously, the company had said revenue may come in between 3.4 and 3.7 billion. so, again, raising that lower end of the sales forecast. also what the company is saying, for profit, it anticipates earning 38 to 40 cents a share, including the stock expense. if you take out that expense, it sees 41 to 43 cents a share for the quarter. again, raising the lower end of that forecast. previously, the company had said those fourth-quarter earnings per share would come in at 36 to 40 cents a share. keep in mind, context here. new mobile phones that surf the web and play videos have propelled sales in the holiday shopping season, reflected in the mid quarter update we’re getting after the close. c.e.o. rich templeton has sped up production in order to fill orders, easing concern demand would outstrip manufacturing capacity. what’s key is the faster growth in phone chips has overshadowed slowing demand for the d.l.p. chips for tv screens as well as computer monits. shares were up ahead of the close. shares up 35% this year and among the analysts, expecting gains to continue with 26 buy ratings, 17 holds and two sell ratings. after the close, the company reporting it will come in at the high end of the forecast.
>> thank you very much. coke’s analyst meeting took place in new york city, finishing around 4:00 p.m. new york time. the stock was little changed, closing at the $42-a-share level. suzanne o’halloran was at the meeting and joins us now.
>> thank you very much, lori. today, coke’s c.e.o. told investors the company is making good progress on its turnaround and the long-term financial goals will be met. the company expects operating income of between 6% and 8% and earnings per share to be in the high single digits. c.e.o. said the company is is making progress in areas such as marketing and non-carbonated products. he did admit there is still a lot of work to be done and analysts and investors i spoke to agree.
>> it’s a huge challenge. they’re transforming the company from product lines to organizational structure to people to networks and retail emphasis so there’s a big transformation taking place. they have to execute, that’s the challenge going forward.
>> as for 2006, isdell said expect weak performance in europe, india and the philippines and currency will be a drag on results. the dollar has risen about 14% this year against a basket of major currencies. one of the more interesting points from the meeting was that the c.e.o. shareholder the spotlight with mary minnick of global marketing . analysts say it’s the first time in a while they’ve been given details about what’s ahead on the marketing front. coke plans to roll out a global marketing campaign and target each region of the world. this will be available on all platforms, including internet blogs. they speak to 50,000 people who drink beverages and the new campaign will be focused on coke being relevant to daily life. the company said non-carbonated products are key to balance out the dependence on carbonated drinks and putting emphasis on health and wellness with teas.
>> oil supplies rose. our next guest is an energy economist with global insight.
