Jim Rogers Investment strategy in time of crisis CNBC

Words of wisdom, as usual, from my man Jim Rogers.



"Protectionism is getting worse and worse. I'm terribly worried about because protectionism lead to the Great Depression... I'm worried about a lot of things. A 50% rise in 6-9 months is something to worry about. You usually have corrections after that.

World Bank discusses investing in Africa with China Investment Fund

BEIJING -- World Bank President Robert Zoellick said he is talking to Chinese government officials about cooperating on investments in Africa, which he said could help boost the continent's economic growth.

Mr. Zoellick told reporters Wednesday during a visit to the Chinese capital that China Investment Corp., the nation's sovereign-wealth fund, has expressed interest in investing in the World Bank's recently launched asset management company, which invests private-sector funds into places like sub-Saharan Africa and Latin America.

World Bank President Robert Zoellick
On Wed, stated he will press Group of 20
for more aid to developing countries [WSJ]

"CIC expressed interest in this as a commercial investment vehicle, but obviously there is no decision yet on their part," Mr. Zoellick said. Other sovereign-wealth funds and pension funds are also interested in the new investment vehicle, he said, which manages some $4 billion in funds.

Click here to read J.R. Wu and Andrew Batson's complete article at the WSJ

China becomes L America's privileged partner: ECLAC official

Xinhua news reports,

China has become a "privileged partner of Latin America," and the region needs to define a joint strategy to develop its ties with China, an official of the Economic Commission for Latin America and the Caribbean (ECLAC) said Wednesday.

The "post- (economic) crisis will find a bigger and more important China than the one it has been in the world economy," said Osvaldo Rosales, ECLAC's director for international trade and integration.

Citing the World Trade Organization's report on Tuesday that China had displaced Germany in the first half of 2009 as a leading exporter, Rosales observed that "this has been reflected in its (China's) growing relative presence in the world's trade, mainly in Latin America."
"The numbers of destinations and exporters show that China has become a privileged partner of Latin America," Rosales told Xinhua in an interview.

This was because the Chinese government had "already defined the strategy for Latin America in its white book," Rosales explained, adding that the region needed to do the same.

Regarding bilateral trade relations, Rosales worried about Latin America's export structure, which focused on a few products and natural resources. He called for a diversification of the export basket.

"Latin America is in some ways linked with China, the world economy's engine of the 21st century, but it is doing that with an export structure from the 20th century," Rosales observed.

Click here to read the full story from Xinhua

Chinese Oil Firms Bid for Repsol's Argentine unit

Chinese oil conglomerates China National Petroleum and Cnooc have offered to pay an estimated $17 billion usd for all of Repsol YPF's state in its Argentine unit called YPF.

You can read the Wall Street Journal's paraphrased article (the original costs money) at thestreet.com, by visiting this article.

Will this deal actually be completed? China South America reported on this possible deal back on July 7, 2009. You will notice, the offer at this point was only $14.5 billion for a 75% stake. China has since upped the offer and is now looking to buy the entire thing.

Why China? Are you angry over Australia rejecting your Rio bid? Are you feeling flustered that countries from the industrialized world, but also in Africa and Latin America are starting to think twice about selling the rights to their raw materials?

I don't blame them, after all, Australia is quite similar to South American commodity producing countries. Two note worthy and simple similarities include

1. A large portion of GDP is generated from commodity exports
2. The relative strength or weakness of domestic currencies such as the Ausie Dollar, Argentine Peso, Peruvian Sol and Brazilian Real, are all inherently linked to the global market price of the commodities the countries export. [ie: if the spot price for copper drops 50%, observe what happens to Peru and Chile's Peso's.
   

According to the WSJ article, the main obstacles to this deal include

• Spain is hesitant to see some of its best assets in Argentina be sold to China

• Argentina's government has no financial stake in YPF, but nonetheless under Argentine law has the right to veto decisions such as transfer of ownership. In my personal opinion, this translates into who is willing to pay more “under the table” to the Argentine government.

• China National Petroleum and Cnooc are state owned organizations. Despite their growing influence and presence in oil markets around the world, many governments still remain weary of doing business with companies officially tied to a foreign government.

Peru lowers interest rates to 2.5%

Peru's macro economic picture is not as hot as one might think from
watching Bloomberg anchors on live TV talk up how the country's stock
index is one of this year top performing, year to date. Ironically
the following excerpt is also from Bloomberg
(http://www.bloomberg.com/apps/news?pid=20601086&sid=a0pA8xgoGZi8)

Peru's central bank will probably cut its benchmark lending rate for a
sixth month today after consumer prices fell for a second month and
the economy shrank for the first time in almost eight years.

The seven-member board, led by bank President Julio Velarde, will
lower its reference rate by a half-point to 2.5 percent from 3
percent, according to 11 of 20 economists surveyed by Bloomberg. Nine
analysts expect a one-point cut.

The global financial crisis has blunted demand for Peru's exports and
sapped domestic spending, reining in economic growth and consumer
prices. The economic slump, deflation and local currency gains will
push the bank to extend its longest rate cutting cycle on record, said
Neil Shearing, an emerging markets economist at Capital Economics Ltd.

"There's been very aggressive action across the region to combat this
slump," Shearing said in a telephone interview from London. "Cuts will
continue, but will probably slow to see the effects of earlier
rate-cutting."

--
Sent from my mobile device

Benito
International Trade Consultant
Mir Global Marketing LLC
http://www.mirglobalmarketing.com
http://www.chinasouthamerica.com

Asian smelters to benefit from Doe Run Peru shutdown

Doe Run Peru shut down its lead and zinc smelter on June 2 after the company ran out of money and credit, therefore rendering it unable to buy the raw materials being produced at near by mines.

According to this Bloomberg article, guess who's stands poised to benefit from this? You guessed it Asia's smelters, who despite the global slow down remain hungry for
more.

Alex Emery in Lima down in Lima writes:

Glencore International AG, the world's biggest commodities trader, and Trafigura Beheer BV are benefiting as suppliers of Doe Run Peru's shut lead and zinc smelter seek international traders to sell their concentrates.

"We're looking for more clients abroad, particularly Asian smelters," to buy the extra production, Glencore's Peruvian manager Fernando Cafe said in a July 3 interview.

Cia. De Minas Buenaventura SA, Pan American Silver Corp. and about 30 other miners in the central Peruvian Andes have had to seek alternative buyers after the Renco Group Inc. unit smelter ran out of cash and halted all operations on June 2...

To read the complete article please visit the complete Bloomberg article.

Newswire: China South America

[Peru - China] -- Peru, China relations "at best moment"

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru "are at their best moment" in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

"I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit," said Zhengyue.


[Latin America - China - Africa] -- China's new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) -- At phone operator Movistar's sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don't realize, though, that the company providing the gear for their broadband connections isn't a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China's telecom suppliers are coming to the Americas. Pursuing the same formula they've used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain's Telefónica: "Price is important."


[Caribbean - China] -- China's expanding relations with Latin America and the Caribbean

Commentary
By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil's state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China's oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil's two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.

Peru ETF (EPU) launched Monday, June 22

Peru's first exchange traded fund, MSCI All Peru Capped Index Fund (EPU), started trading yesterday, Monday June 22, 2009.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Seeking Alpha Reports:

The iShares MSCI All Peru Capped Index Fund (EPU) will allow US investors to easily access one of Latin America's hottest markets by tracking a pure free float market cap weighted index. Its 25 names are heavily concentrated in the materials sector (65%), with a particular focus on gold, silver, and copper. Its largest holding at 19% Cia De Minas Buenaventur (BVN) who produced nearly half a million ounces of gold last year (compared to Goldcorp's 2.4), and its second largest at 15% is Southern Copper (PCU), the biggest player in the world's fourth largest copper producing nation.

The fund also holds an 11% weighting in Credicorp (BAP) - Peru's largest financial firm with operations in commercial banking, insurance, and investment banking - whose shares have held up well during the crisis, and several smaller miners with operations in lead, zinc, and iron.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Now then... it is time for a few "million dollar questions.

a) Does this ETF facilitate investment in Peruvian equities for international investors?
Yes, as one of the world's best performing benchmarks of the year, loaded with companies seeing gains of well over 60-70% from the beginning of 2009, it will indeed offer investors a way to tap into these companies not listed via ADR's or OTC.

b) Does this ETF accurately track a Peruvian benchmark , like the Lima General Index?
Time will tell. ETF's always claim that they do, but I won't fully believe it until I see hard data supporting such. This ETF does not track Peru's Lima General Index, but rather MSCI All Peru Capped Index. Click here to access a PDF that explains the methodology behind MSCI All Peru Capped Index.


c) Is now the right time to invest?

Here are some factors to consider when doing your own due diligence:

• Markets around the world are down and it seems the downward trends in recent markets might continue throughout the summer months.

• Copper, gold and silver have already had pretty amazing run ups in recent months and are Peru's crown jewels of commodity exports (yes there are others like zinc, but lets emphasize these major Peruvian money makers for the time being).

• Volatility due to the political risk associated with the upcoming Peruvian elections in 2011 which pit two extreme candidates of the left and right against one another. Ollanta Humala, the left-wing buddy of Chavez and Keiko Fujimori, right wing, daughter of former president & dictator Alberto Fujimori.

• Recent political unrest in the Amazon region which only calmed down after heated disputes between the government and indigenous protesters lead the deaths of many Peruvian police officers and the massacre of protesters, forced to rely on wooden spears to defend themselves against high powered weapons. *** Note, this is the opinion of this sites humble and open minded Peruvian-American blogger, who can trace his ancestry on his maternal grandfathers side back to the amazon provinces of San Martin and Amazonas, Peru.

• Perceived instability (political and financial) as a result of plummiting approval ratings of President Alan Garcia, who was instrumental is creating the climate for the recent protests in the Amazon--contrary to the popular belief of those who believe his propaganda. Garcia's administration loves to blame Hugo Chavez and Evo Morales for everything wrong with Peru and as crazy as it might be, it is a great deal like Ahmadinejad in Iran who blames the West whenever something goes wrong.

I have used this statement from Iran's state television station about the protests occurring right now to articulate my point.

"At least 10 people were killed in the latest unrest to shake Tehran (Bagua), state television said on Sunday as Iranian leaders (President Garcia's administration) took aim at Western "meddling" (Hugo Chavez and Evo Morales "meddling") in the post-election tumult (Peruvian Amazon Region) that has triggered the worst crisis since the Islamic revolution (the worst political unrest in his Presidential Term).

Invest wisely my friends! More to come on this topic at the end of the week.

Analysis by Benito

Lack of China South America Updates -- Sorry! Lo Siento! 对不去！

I must apologize to all readers and internet surfers who have arrived at China South America in recent days to find that no updates had been made.

This blog was started in response to my personal interests in the following:

1- Sino-Latin American Foreign Policy; Economic and Political
2- Commodity Investment
3- Mining in South America
4- International Investment Opportunities
5- Microfinance in Peru, Bolivia and Colombia

Since graduating from American University in May 2008 with a degree in Economics I have been on a post-collegiate journey to find a greater purpose in life that can one day encompass some these interests.

Opportunity came a'knockin' and I now find myself a international businessman selling South American wines in China and Singapore.

Recent weeks have been particularly hectic with a few deals looming in the horizon this summer.

I promise to get back to the usual flow this weekend.

Thank You -- Gracias -- 谢谢

The only fundamentals improving are commodities

Jim Rogers makes an real life appearance on CNBC and talks to the masses of finance news junkies in the United States.

CNBC's website is bombarding readers with articles about this Jimmy Rogers interview. If you follow this site, or if you happen to keep your eyes and ears open for Jimmy Rogers in your daily information news sessions, you know he really is not saying anything he hasn't said before.

Basic conclusion – when the reality of printing so much cash catches up with the major economies of the world, people are going to realize their stock gains are in worthless, debased currencies. When this happens, hard assets and the companies producing them will flourish. Demand for copper and steel are not going to disappear, but is just may greatly diminish for U.S. Bonds and Dollar assets if hyper inflation hits.

Get the picture?

Jim Rogers: Profit from commodities, currencies and bonds in times of crisis

Can't seem to find part 2. Rogers covers his general view of where markets currently are and where he's putting his money right now.

China to launch iron ore trading platform - AP

China will launch its first iron ore trading platform next week in a move that may lead to setting up its own pricing index and possibly exerting more influence over import costs, an official and reports said Friday.


The Rizhao International Iron Ore Trade Center will begin providing electronic commercial services for iron ore suppliers and steelmakers on Monday, said Liu Qiang, sales manager of Shandong Huaxin Trading Co., which is heading the project.

The center, a joint venture by Shandong Huaxin and four other local companies involved in bulk commodity dealings, will handle electronic transactions, information exchange, quality inspection, storage, transport, insurance and trade settlement, Liu said.

The center will act as a clearinghouse for information on iron ore trading, Liu said.

"As it gains influence in the long-term, it may have some influence on price negotiations," he said.

Rizhao, a port in eastern China's Shandong province, is one of the country's biggest handlers of iron ore imports.

The trading platform would likely mainly serve China's numerous smaller steelmakers. They buy independently from the biggest mills and do not pay the same benchmark prices the big steelmakers agree to each year in sometimes tortuous negotiations with overseas miners like Brazil's Companhia Vale do Rio Doce SA and global miner Rio Tinto Group.

Meanwhile, the annual negotiations with overseas iron ore suppliers dragged on, according to the government-affiliated China Iron & Steel Association, which vehemently denied reports that Chinese steelmakers had settled for 30 percent to 35 percent price cuts.

"China's steel industry and those of Japan and Korea are facing severe shocks from the global financial crisis," CISA said in a statement posted on its Web site. It said the annual negotiations were continuing on a basis of "mutual interest and long-term stability."

Unlike in previous years, when Shanghai-based Baosteel Group led the talks, this year CISA is handling the negotiations. Analysts say it is seeking at least a 40 percent cut in this year's benchmark prices.

China imported 444 million tons of iron ore in 2008 - half of the volume of all imports worldwide, according to government figures. Imports in January through April surged to 188 million tons, as traders took advantage of lower prices to build up stockpiles.


Iron ore pricing has long been a point of contention between China, the world's biggest steel producer and consumer, and foreign raw materials suppliers.

Such friction intensified in recent years as surging demand due to the booming economy and speculative buying drove prices for iron ore and other commodities higher.

But a slowing in industrial production due to the global economic crisis has raised expectations that Chinese and other steelmakers may win big concessions in this round of talks after yielding to demands for double-digit increases in ore prices in previous years.

_

[Source] -- Associated Press researcher Ji Chen contributed to this report.

Democracy in Mongolia -- Opposition wins elections

The transition of power in democratic countries is not always peaceful. That's why ChinaSouthAmerica has taken a great interest in Mongolia's presidential elections. Mongolia's opposition Democratic Party candidate Tsakhiagiin Elbegdorj has won the presidential election, according to both sides in the campaign, reports Reuters.



Mongolia's democracy is a mere 20 years old, so lets give this country sandwiched between communist China and Putin's Russia, a nice round of applause.

*applause for Mongolia*

Voters head to the polls in Mongolia

Mongolia is a country sandwiched between Asiatic giants of the People's Republic of China and the Russian Federation. A tight race for president is underway. President Enkhbayar Nambaryn, the the incumbent from the Mongolian People's Revolutionary Party is fighting for his political survival, against Elbegdorj Tsahia from the rival Mongolian Democratic Party

[CIA Factbook Background]

The Mongols gained fame in the 13th century when under Chinggis KHAN they established a huge Eurasian empire through conquest. After his death the empire was divided into several powerful Mongol states, but these broke apart in the 14th century. The Mongols eventually retired to their original steppe homelands and in the late 17th century came under Chinese rule. Mongolia won its independence in 1921 with Soviet backing and a Communist regime was installed in 1924. The modern country of Mongolia, however, represents only part of the Mongols' historical homeland; more Mongols live in the Inner Mongolia Autonomous Region in the People's Republic of China than in Mongolia. Following a peaceful democratic revolution, the ex-Communist Mongolian People's Revolutionary Party (MPRP) won elections in 1990 and 1992, but was defeated by the Democratic Union Coalition (DUC) in the 1996 parliamentary election. The MPRP won an overwhelming majority in the 2000 parliamentary election, but the party lost seats in the 2004 election and shared power with democratic coalition parties from 2004-2008. The MPRP regained a solid majority in the 2008 parliamentary elections but nevertheless formed a coalition government with the Democratic Party. The prime minister and most cabinet members are MPRP members.

Mongolia has large deposits of copper, uranium and other commodities. Naturally, the question of how to spread the benefits of foreign investment in their countries natural resources is at the top of both candidates respective messages to the voters.

According to article from AP, about 50 election observers from 11 international organizations and embassies such as the U.S., Sweden and Japan monitored the balloting.

In this Reuters video, voters express their sense of frustration from shanty towns on the outskirts of are is heading to the polls



Hopefully things will progress a lot smoother than they did last year when Elbegdorj's Democrats lost and he claimed fraud by election committees, which coincidentally are dominated by the ruling party. What followed was a "vodka-fueled riot that left five dead and 300 injured." -- AP

This is the 5th election is for the new democracy which experienced a relatively peaceful uprising that brought down the pro-Soviet Union government in 1990. Internationally the country has come to be seen as a success story for democracy in a region dominated by authoritarian governments, reports AP.

Weekend Newswire: Latin America

Bolivia and US agree to improve bilateral ties
Bolivian President Evo Morales has called for a complete overhaul of his country’s strained ties with the US. He urged “mutual respect” between the two nations, saying Washington should not interfere in Bolivia’s affairs.


Venezuelan Bonds Sink to Six-Week Low as Chavez Takeovers Fuel `Distrust'
Venezuela’s benchmark bonds fell to a six-week low after President Hugo Chavez announced the government will take over the hot-briquetted iron industry and other metal companies.


Chavez Takes Control of Venezuela's Hot-Briquetted Iron, Steel Industries
Venezuelan President Hugo Chavez announced the government will take over the hot-briquetted iron industry and other metal companies, increasing its control over the nation’s mineral-wealth industries.

Venezuelan Oil Keeps Attracting Bidders in Bets That Chavez Isn't Forever
Chevron Corp. and Total SA are pursuing new Venezuelan oil projects after President Hugo Chavez tore up past agreements, seized assets of contractors and expelled producers that wouldn’t accept new terms.


Cash short Venezuela negotiating loans from Brazil
Venezuelan President Hugo Chavez, whose administration is facing cash shortages as oil revenues plunge, is negotiating loans from Brazil’s development bank to fund infrastructure projects, revealed the Brazilian newspaper Folha de Sao Paulo.


Brazilian Stocks Gain on Signs of Rising Demand, Commodities; Bolsa Rises Brazil’s
Bovespa index climbed, capping a weekly advance, on speculation domestic demand is recovering and as investors bought commodities to hedge against a weakening dollar.


Brazil's Vale Lowers This Year's Planned Investments to $9 Billion From $14 Billion
Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, said falling costs and a stronger dollar allowed it to cut 2009 planned capital spending by 37 percent.


Mexican Billionaire Salinas May Enter California to Boost Hispanic Banking
Banco Azteca, controlled by Mexican billionaire Ricardo Salinas, says the financial crisis offers the bank a chance to enter the U.S. market and lure Hispanic customers.


Pemex Is `Too Optimistic' About Chicontepec Development, Board Member Says
Petroleos Mexicanos, the state-owned oil company, should reconsider its $11.1 billion plan for the Chicontepec field because lower oil prices make the investment less attractive, said newly appointed board member Fluvio Ruiz.

Brazil, India - Bilateral trade to reach $10 bil by 2010

[South-South Cooperation] -- Brazil, India -- ChennaiVision


Mumbai, The bilateral trade between India and Brazil is targeted to reach USD 10 billion by 2010 in view of the new dynamics of South-South cooperation, accelerated by recession hitting the West, CII International Trade Panel Chairperson Harshbeena Zaveri said today.

”The bilateral trade between the two countries has grown from a mere 500 million US dollars in 2000 to 3.12 billion US dollars in 2007 and is targeted to reach USD 10 billion by 2010”, Ms Zaveri, who is also president of NRB Bearings Pvt Ltd said during a conference with the Brazilian industry delegation, that is visiting the to give an impetus to trade and investment.

Click here to access the complete article from ChennaiVision

Weekend Newswire: Commodities

[Crude Oil] -- Oil Falls on Speculation Recovery Will Falter, Reducing Global Fuel Demand
Crude oil fell the most in almost a month on concern the global economic recovery may falter, reducing demand for fuel.


[Natural Gas] -- Nymex Gas Falls as Reports Show Industrial Demand Will Be Slow to Recover
Natural gas futures fell for a third day as reports showed that demand for the fuel from factories and power plants will be slow to recover during the recession.


[Copper] -- Copper's U-Shaped Base Signals Rise, StanChart Says: Technical Analysis
Copper may rise to levels not seen since October in the month ahead, as the metal forms a U-shaped base, Standard Chartered Bank said, citing trading patterns.


[Gold & Silver] -- Gold Advances in N.Y. on Speculation Equity Rally May Stall; Silver Gains
Gold prices rose, extending a rally to two weeks, as investment demand increased on rising consumer prices and signs that a rally in U.S. equities may be ending. Silver futures fell.


[Platinum & Palladium] -- Platinum Falls as Dim Auto Outlook Cuts Demand in N.Y.; Palladium Gains
Platinum prices fell as the U.S. auto- industry slump eroded demand for the metal used in pollution- control parts. Palladium rose for the first time this week.


[Steel] -- China Steel Industry Likely to Post Loss in 2009, Baosteel Chairman Says
China’s steel industry may post a loss this year, Baosteel Group Corp. Chairman Xu Lejiang said at a conference in Shanghai today. Xu said the Chinese steel industry is oversupplied and faces severe structural problems that have been worsened by the financial crisis.


[Soybeans] -- Soybeans Head for Third Weekly Gain as Demand Cuts U.S. Supply
Soybeans climbed, heading for a third weekly gain, on speculation that increased global demand may further reduce inventories in the U.S., the world’s biggest grower and exporter of the crop.


[Investments] -- Where Commodities Fit In Your Portfolio
Commodities are a great way to diversify your portfolio, but if you are considering allocating some money to the group, don’t expect to catch a draft in the near future, even if there are signs the worst of the global slowdown may be over.

Jim Rogers: "We are going to have serious food shortages in a few years"

Jim Rogers sits down with Bloomberg host Haslinda Amin in his home base of Singapore. Haslinda gets a full twenty minutes to test his patience while she asks what his opinions are on investing in a variety of investment categories. Commodities. Currencies. North American Natural Gas. Yen Carry Trade. Agriculture. Equities. ETF's.

As usual, Jim Rogers is sticking to what he knows best-raw materials. If you're a new reader, or have not heard of Jim Rogers definitely run a search on the right of his name to bring up past posts and videos including him.


Part 1 /3




Part 2 / 3




Part 3 / 3

Commodities: Natural Gas Outlook

[Rigzone] -- Natural Gas Prices and LNG's Dirty Little Secret, by Allen Brooks

Optimism about the ending of the U.S. recession and its impact on future demand for natural gas coupled with positive comments from large domestic gas suppliers about the trend in gas supplies has ignited a rally in natural gas futures prices during the past week. Natural gas prices jumped from a low of $3.25 per thousand cubic feet (Mcf) on April 27th to a recent high of $4.31 per Mcf last Friday. A near 33% rise in gas prices in such a short time-period reflects a severely oversold market. The dramatic price run-up may have more to do with commodity short-sellers than people buying into the view of a sustainable and healthy recovery for the market.


There were several very positive statements made by the CEOs of major natural gas producers about the changing supply/demand dynamics of the business on their company earnings conference calls with analysts. Mark Papa, CEO of EOG Resources, Inc. (EOGNYSE), said he expects the impact from the decline in gas-oriented drilling will result in natural gas production falling by 4.5 billion cubic feet per day (Bcf/d) by the end of the year.He believes the resulting North American natural gas production declines could be reversed by early in 2010 if $7 per Mcf gas prices return or the gas-directed rig count falls below 650. This view compares with that of the Petroleum Industry Research Association (PIRA) that believes gas production will be 3 Bcf/d lower at year end.

Equally bullish was Aubrey McClendon, CEO of Chesapeake Energy (CHK-NYSE), who sees gas storage being full by October and that gas production would be 10% lower at year-end compared to 2008. That implies natural gas production should fall by 4 Bcf/d. Should these estimates prove accurate, the supply drops would go most of, if not all, the way to wiping out the perceived supply/demand imbalance in the domestic gas market of about 5 Bcf/d due to the falloff in industrial and commercial consumption related to the economic recession and credit crisis.

Click here for complete article from Rigzone

Jim Rogers: Speak Mandarin, Don't Buy America

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