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Crude oil futures held on to strong gains for the week in lackluster Friday trading, after higher-than-expected inventories earlier in the week threatened to cut short the rally.

At the same time, with the front-month July contract set to expire on Tuesday, analysts didn't see much incentive for prices to move above current levels next week.

The benchmark West Texas Intermediate contract settled at $77.18 a barrel on Friday, locking in a gain of 4.6 per cent for the week, compared with $73.78 a week earlier. The August contract, which becomes the benchmark on Wednesday, settled at $78.26 a barrel.

The weekly inventory report from the Energy Information Administration on Wednesday showed crude stocks increased 1.69 million barrels in the week ended June 11, compared with the consensus forecast for a decline of 1.3 million barrels.

Futures markets initially shrugged off the report, and, spurred by a rising stock market, pushed prices up on Wednesday to a $77.67 high for the week. Doubts set in again on Thursday, and the price fell below $77 a barrel before recouping some of the ground on Friday.

A new report put out under the aegis of the Organisation for Economic Cooperation and Development, the Paris-based grouping of industrial countries, purported to establish that increased trading by index funds did not contribute to price volatility in futures markets.

The report was authored by two Illinois university professors, Scott Irwin and Dwight Sanders, who have built an academic career on debunking the notion that speculation causes volatility. Not surprisingly, they found once again in their new study that there was "no evidence" to establish a link between large inflows of capital into commodity investment funds and increased volatility in crude oil prices.

The report comes as a conference committee in the US Congress is putting the final touches on regulatory reform legislation that will impose limits on most futures positions.

The authors analysed data from the Commodity Futures Trading Commission from 2006 to 2009 n a period in which crude oil prices shot up to $147 a barrel and then fell to $33 a barrel.

Even Gary Gensler, the CFTC chairman, expressed the opinion in congressional testimony during his confirmation hearings last year that the rapid growth of commodity index funds and increased hedge fund allocation to commodity assets contributed to the "bubble in commodities prices that peaked in mid-2008."

The article is written by Darrell Delamaide for who offer detailed analysis on Oil, alternative Energy, Commodities, Finance, and Geo-Politics International.




The Pakistan Pavilion organised by TDAP was awarded gold award for being the best Pavilion in the 3rd South Asian Countries Commodity Fair, held from 6 to 10 June 2010 at Kunming China.

Sri Lanka and India got silver and bronze respectively. Other Saarc member countries had also put up their pavilions and participated at official level.

Seventy five (75) companies selected by Trade Development Authority of Pakistan displayed a wide range of products which included textile products, leather and its products, cutlery, carpets & rugs, ladies garments, marble, handicrafts, wooden furniture, rock salt, jewellery, natural stone, gift items, surgical, dental and beauty instruments, herbal medicine, henna products etc.

The Governor of Yunan Province inaugurated the exhibition. Diplomatic Corps, senior government officials, heads of companies, representatives of trade bodies and prominent businessmen attended the ceremony.

Syed Mohib Ullah Shah, Chief Executive TDAP who was in Kunming to represent Pakistan in 5th China South Asia Business Forum was also present at this occasion.

After the ceremony, Chief Executive TDAP along with Commercial Counselor of Pakistan at Chengdu and Director Pakistan Pavilion visited every stall. He appreciated the quality of products displayed there by the exhibitors and advised them to avail this opportunity to explore the potential for exports of Pakistani products in the Chinese Market.

Pakistan Pavilion was located at a very good place which was just behind the entrance of Hall 6. Due to its excellent location and decoration, Pakistani Pavilion was centre of attraction for the visitors. During the event, a large number of businessmen not only from China but other parts of the world visited Pakistan Pavilion. They appreciated the high quality goods displayed by Pakistani exhibitors in their stalls.

Pakistani products of marble and onyx, brass, handicrafts, leather and its products, rugs and carpets rock salt and textile handicrafts received excellent response from the buyers and almost all the exhibits were sold out.

Exporters of surgical instruments, leather and its products, henna, herbal medicine and carpets and rugs negotiated business deals with foreign buyers and received sizeable orders.
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Publication:Pakistan & Gulf Economist
Geographic Code:9CHIN
Date:Jun 27, 2010

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