1 Into a world with cheaper energy (Linda Yueh on
BBC) OPEC's latest forecast shows that the supply of oil will exceed the demand
for oil next year. Whenever supply exceeds demand, prices fall. And they
certainly have. Brent, the international benchmark, has plunged to below $65
per barrel, down 43% since this summer, to the lowest level in five years, the
2009 global financial crisis.
OPEC accounts for less than half of global oil
production so their market power has also receded with the rise of both shale
and non-OPEC oil producers. Of course, lower energy prices are not all bad
news. It's not just airlines who benefit, we could too.
For instance, the US Energy Department estimates
that on current trends, petrol prices could drop 23% to $2.60 per gallon next
year. There are already reports of sub $2 per gallon in America. Lower prices
will eventually benefit Brits and Europeans too, as well as other energy
importing countries.
Cheaper energy prices would be welcome after a
decade which saw oil prices jump from $25 per barrel to nearly $150 even during
a global financial crisis. The uncertain road of getting to a new market
equilibrium of cheaper prices is what's causing market gyrations. And, of
course, as Middle East geo-politics could throw a wobbler into any price
forecast, how OPEC members cope with this transition will be closely watched.
2 Russian rouble falls with oil (Phillip Inman in
The Guardian) Russia’s central bank failed to stem a further dramatic fall in
the rouble on Thursday despite raising the headline interest rate to 10.5%. The
currency slid more than 1.5% against the dollar in a day of fevered trading
that reversed a short-lived rise in the currency’s value earlier in the week.
The central bank, which has used billions of dollars
worth of foreign reserves in a desperate attempt to prop up the rouble,
appeared impotent as it sought to lift the gloom over an economy hit by western
sanctions and falling oil prices. Russians have suffered two big rate rises in
two months – the latest a full percentage point – aimed at wooing investors
tempted to sell their Russian assets and take cash out of the country.
But the plan has proved weak and unable to reverse a
trend that started in the summer when oil prices began to tumble. Oil revenues
account for about 45% of government revenues and, with gas, account for 70% of
exports. In all the rouble has sunk by more than 40% this year as Russia has been
buffeted by sanctions over its role in the Ukraine crisis and a near-50% fall
in the oil price.
Russia’s dependence on oil let it build huge
reserves of foreign currency before 2008 and in the price boom of 2011-12. But
companies used their improved credit rating to borrow funds in dollars, forcing
them to the pay higher interest bills as the value of the US currency climbed.
3 US plea to save climate deal (Straits Times) The US
has urged developing countries to ease objections to a world deal on climate
change as deadlines loomed at a 12-day UN meeting in Lima.
The talks, meant to
pave the way to a landmark pact in Paris next year, are scheduled to conclude
on Friday, but delegates reported deadlock and a souring mood as the final day
neared.
In a speech touching on one of the thorniest issues,
US Secretary of State John Kerry called on developing nations to understand
they too had to curb carbon emissions even if they felt it was unfair.
"I know the discussions can be tense and
decisions are difficult and I know how angry some people are about the
predicament they've been put in by big nations that have benefited from
industrialisation for a long period of time," Kerry said.
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