October 23, 2011
Links for 2011-10-23
Dave Altig and Patrick Higgins at the Federal Reserve Bank of Atlanta have raised their estimate of 2011:Q3 real GDP growth from 1.4% as of the beginning of September to 3.2% currently.
Enterprise Products Partners and Enbridge Inc. announced plans to build a new pipeline from oversupplied Cushing, Oklahoma to the Gulf Coast (hat tip: Jim Brown). I reviewed the great need for such a pipeline here, and this may be one way to get one built without having to wait forever for White House approval.
Federal Reserve Bank of San Francisco President John Williams reviews lessons from the last 3 years on the effects of unconventional monetary policy.
Michael Plante and Mine Yucel at the Federal Reserve Bank of Dallas review the evidence on the role of speculation in recent oil price moves.
Posted by James Hamilton at October 23, 2011 06:53 AMdigg this | reddit
This was a productive weekend!
I think I finally managed to match them!
Now I have a really superb forecasting /history study interest tool . Have a look at exercise behind matching GREAT DEPRESSION and GREAT RECESSION timelines for the first time ( once I managed to patternalize ( ?) OUT FED's grip on USA stock market prices) and, as usual, better visibility charts plus explanations here:
The supplement chart for rereading the history of GREAT DEPRESSION and rethinking the future as time line can be extended as well:
Posted by: Ivars at October 23, 2011 01:21 PM
Did Speculation Drive Oil Prices? Market Fundamentals Suggest Otherwise
by Michael D. Plante and Mine K. Yüce
There is no speculation in the oil markets,prices are and were driven by GDP growth and therefore demand.There is no excess stocks that may have driven the prices on the upwards,no time lag between offshore transportation or sea containers storage and onshore delivery either.Derivatives are the measure of growth and demand.
Bank of Canada
The Role of Financial Speculation in
Driving the Price of Crude Oil
by Ron Alquist and Olivier Gervais
Same conclusion sustained by a methodic apllication of Granger causality between two oil related agents the non commercial and the commercial.Through time series it is shown than none of the participants may have had a bearing on oil prices,they were docile and flexible markets agents.
No smoking guns but one may remember a time serie, showing victims in the commodities markets (Please refer to http://www.gao.gov/new.items/d11529.pdf, Econbrowser Changing behavior of crude oil futures prices)
No smoking guns, but one can detect the proverbial weapons of mass destructions the derivatives (please see Econbrowser, Fundamentals, speculation, and oil prices)
No stocks but increasing strategic reserves (http://crudeoilpeak.info/strategic-oil-reserve)
A Granger causality that may be applied to the wrong variables.How about applying the same Granger causality not between two variables the participants derivatives or physical positions but to the participants P$L (Banks,financial corporations,commodities funds versus oil producing companies) ?
Posted by: ppcm at October 24, 2011 04:40 AM
It appears that the new pipeline could actually cause the price of WTI to increase. The pipeline would ease the glut in Cushing and give the surplus access to transportation to exploit the European prices. Your thoughts.
Posted by: Ricardo at October 24, 2011 07:20 AM
Great links! Some of your best.
Posted by: Ricardo at October 24, 2011 07:28 AM
A pipeline which materially eases the Cushing bottleneck should bring WTI prices largely back in line with Brent.
Where the prices meet can be debated. Today, Brent is $110, WTI is $90. My guess: Brent would fall to somewhere above $105, and WTI would rise to the $105 range.
Posted by: Steven Kopits at October 24, 2011 10:07 AM
This conflicts with the popular narrative, is it right?
Posted by: aaron at October 25, 2011 09:41 AM
Exactly my analysis! With gold once again climbing signaling a returning weak dollar WTI could jump even to the level of Brent.
Posted by: Ricardo at October 25, 2011 10:43 AM
Interesting about that pipeline. The glut of light crude in Cushing has been a godsend to the few inland refineries still in business. Look at BP's Q3 statement and see how much they made at Whiting and Toledo.
I will be sad to see the party end when that pipeline opens in 2013.
Posted by: The Engineer at October 26, 2011 07:19 AM