Wednesday 1st April 2015
NEWS TICKER: WEDNESDAY, APRIL 1st 2015 : The EBRD is considering a credit line of up to €15m to Všeobecná úverová banka a.s. (VUB) in the form of an extension of a €5m existing facility signed in December 2014, bringing the total amount provided to VUB under SlovSEFF III to €20m. This operation will enable VUB to provide sub-loans to companies and residential sector borrowers (housing associations) for energy efficiency and renewable energy investments in the Slovak Republic and provide financing for sustainable energy projects with a focus on reducing greenhouse gas emissions and assist in mitigating high energy and carbon intensity in the region - CMS says it has advised Orifjan Shadiyev, owner of Capital Bank Kazakhstan, on the acquisition of RBS’s business in Kazakhstan (RBSK). The CMS team was led by Graham Conlon, a partner in the corporate and international private equity team, and supported by senior associate Tetyana Dovgan - CBRE Group Inc says it has agreed to acquire the Global WorkPlace Solutions (GWS) business of Johnson Controls Inc. (JCI) for $1.475bn in cash. GWS is a provider of integrated facilities management solutions for occupiers of commercial real estate and has operations around the world – The Securities and Exchange Board of India (SEBI) says it has allowed OTC Exchange of India (OTCEI) to exit as a bourse from the nation's securities markets. According to SEBI, OTCEI had complied with the regulator's conditions for exit and is therefore "a fit case to allow exit" from capital markets adding that the bourse had made payment of necessary dues to the regulator, including 10% of the listing fee and the annual regulatory fee. "From the valuation report and undertaking of OTCEI, it is observed that all the known liabilities have been brought out and that there is no other future liability that is known as on date," SEBI said in the order dated March 31. In allowing the exit, SEBI has asked the bourse to change its name and not to use the description ‘Stock Exchange’ or any variant of it and to avoid any representation of present or past affiliation with the stock exchange, in all media. The central government had granted recognition to OTCEI, as a stock exchange on August 23, 1989 initially for a period of 5 years, which was subsequently renewed from time to time. As per SEBI’s rules, a stock exchange, whose annual trading turnover on its platform is less than Rs1,000 crore, can apply for voluntary surrender of recognition and exit, while a bourse which fails to achieve a turnover of Rs 1,000 crore, is subject to a compulsory exit process - Independent subsea remotely operated vehicle (ROV) services provider, ROVOP, has established a Western Hemisphere headquarters and support base in Houston and has hired three ROV industry professionals to lead the business. Scott Wagner, Brett “Gonzo” Eychner and Wayne Betts bring a combined total of more than 100 years’ global experience in the ROV services sector to ROVOP. They join an established management team and staff of 130 based in Aberdeen, Scotland, who have developed ROVOP into a leading player in the ROV field. The company’s client portfolio includes oil & gas, offshore wind and telecommunications companies. Mark Vorenkamp, chairman of ROVOP, said: “ROVOP is changing the market for ROV services. Over the last two decades, ROV technology, capability and service has fallen behind the pace of change seen in other industries. ROVOP’s facility is located in North West Houston on a 1.5 acre site which includes a 4,500 ft2 office and 17,300 ft2 workshop where the company will manage their fleet of FMC Schilling Robotics and SAAB Seaeye ROVs. “The recent mobilisation of two Schilling Ultra-Heavy Duty (UHD) Generation III ROVs, capable of closing a blowout preventer (BOP) within 45 seconds to meet American Petroleum Institute (API) requirements, illustrates ROVOP’s commitment to supporting clients with industry leading technology in the Gulf of Mexico,” says Wagner - The Straits Times Index (STI) ended +0.01 points higher or 0.00% to 3447.02, taking the year-to-date performance to +2.43%. The FTSE ST Mid Cap Index gained +0.02% while the FTSE ST Small Cap Index declined -0.04%. The top active stocks were CapitaLand (unchanged), SingTel (-0.23%), UOB (+0.22%), DBS (+0.15%) and ST Engineering (unchanged). The outperforming sectors today were represented by the FTSE ST Technology Index (+1.13%). The two biggest stocks of the FTSE ST Technology Index are Silverlake Axis (+1.83%) and STATS ChipPAC (unchanged). The underperforming sector was the FTSE ST Basic Materials Index, which declined -1.24% with Midas Holdings’s share price unchanged and Geo Energy Resources’s share price gaining+0.52%. The three most active Exchange Traded Funds (ETFs) by value today were the DBXT MSCI Indonesia ETF (+0.14%), LYXOR China H (+0.29%), DBXT FT China 25 ETF (+1.75%).

Bunking the myth of oil price hikes and speculation

Monday, 05 March 2012
Bunking the myth of oil price hikes and speculation The question of whether speculators are responsible for the recent spikes in the price of oil has been one of the most hotly debated topics in the oil market in the last few years. Most recently it has prompted US regulators to put limits on some speculative positions and re-define what they consider to be speculative positions. Vanja Dragomanovich met up with Rita D'Eclessia, professor at the Department of Economic Theory and Quantitative Methods for Political Choices at the University of Rome and a visiting lecturer at Birkbeck University in London, who has run these theories through a set of mathematical tests and has produced some slightly surprising results. http://www.ftseglobalmarkets.com/

The question of whether speculators are responsible for the recent spikes in the price of oil has been one of the most hotly debated topics in the oil market in the last few years. Most recently it has prompted US regulators to put limits on some speculative positions and re-define what they consider to be speculative positions. Vanja Dragomanovich met up with Rita D'Eclessia, professor at the Department of Economic Theory and Quantitative Methods for Political Choices at the University of Rome and a visiting lecturer at Birkbeck University in London, who has run these theories through a set of mathematical tests and has produced some slightly surprising results.

Vanja Dragomanovich (VD): Why has the issue of oil prices attracted so much attention outside the actual oil market?
Rita D'Eclessia (RD’A): Analysis and empirical evidence shows that four out of the last five global recessions were preceded by oil shocks. In the case of the 2007-2008 crisis oil prices cannot be ignored as a culprit of what happened: the oil price increased over 300% and this caused the annual fuel bill of OECD countries to increase dramatically. Exceptional oil price volatility affects many economic variables and their related markets. Oil price fluctuations affect consumers, producers and marketers, especially in terms of costs, incentives to invest in technology and trading strategies. The importance of oil prices is further increased by the fact that other forms of energy such as coal, gas, and, to a lesser extent, electricity are sometimes priced in order to compete with oil, so that oil price fluctuations become reflected in broader energy price changes.

VD: As part of your research you looked into the link between the volatility in oil prices and the involvement of speculators in the market. Can you talk us through your findings?
RD’A: Economists and financial experts are divided over who they think was responsible for driving crude oil prices to their peaks in the first half of 2008. Basically trend-following speculation and institutional commodity index-buying have reinforced the output pressure on prices. In my research I tried to identify which economic and financial variables provide insights into understanding oil price dynamics. Our proposition was that the changes in the oil price are an example of an economic variable which is largely unpredictable. In such a context the role of futures markets, considered as a measure of the speculative component in the market, is also investigated. However, our conclusion was that using the data we had, we could not find any evidence that the oil price depends on speculative activity in the market.



VD: What data did you base your research on? For instance, how did you define speculators and how did you distinguish between speculative and non-speculative activity? Was your research based on information from several commodity exchanges?
RD’A: I set up an econometric model to capture possible long run equilibrium between some macroeconomic variables and some financial variables. The data used to measure speculation is the number of the benchmark US futures oil contracts, the West Texas Intermediate (WTI) spot crude oil held by speculators; this is data published by the US Commodities Futures Trading Commission (CFTC).
I used monthly West Texas Intermediate spot oil prices between 1993 and 2011 and assumed that speculators are participants who trade oil as an investment and not to hedge.

VD: Once you established that the link between speculative activity and oil price volatility was weak which other factors proved most influential in the oil market?
RD’A: Surprisingly, by far the strongest influence is the price of gold, followed by the strength of the euro against the dollar. For instance we found that for any one basis point move in the euro/dollar exchange rate the oil price moved by $2.8 dollars. Given that the euro was only introduced in 2000 we ran the analysis using the Deutschmark from 1993 till the introduction of the euro.
In all, we tried six different variables to try and find some meaningful correlation. We tried open interest, US interest rates, imports of WTI and WTI oil futures, all of which proved not to have a strong impact on the oil market.

VD: Your analysis was primarily statistical. However, in that period of time oil would have also moved for other reasons such as geopolitical crises, conflicts in the Middle East, economic crises, and political changes in Europe. How do those factors feature in your analysis?
RD’A: That is correct, but we can infer the influence of political events through the fluctuations of the dollar exchange rate and the price of gold. In any case the debate continues; oil price changes certainly cannot be explained solely by looking at the supply and demand dynamics.

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