| Oil nudges higher after $2 fall, eyes dollar
SINGAPORE: Oil rose marginally in thin trade on Friday after falling sharply a day ago on concerns about the US economy, the strengthening dollar and the market's failure to break above a key resistance level.
US light sweet crude futures for January delivery rose 36 cents to $92.61 a barrel after falling by $2.14 a day ago, halving gains from Wednesday when the market was buoyed by a US oil stock draw and a global central bank cash injection.
London Brent crude rose 41 cents to $92.53. Oil prices touched a two-week high of $94.85 a barrel on Wednesday and Thursday, which may have triggered the reversal.
"We have been feeling that there seems to be quite heavy resistance at $95 at the moment, we failed to break above it for two days, which is why people may have taken profits," said Tetsu Emori, a fund manager at Astmax Futures Co Ltd in Tokyo.
Market Watch | An arbitrage opportunity, almost risk-free
There are two ways to participate in a retail-fuelled momentum market. The aggressive way is to buy stock futures in momentum stocks and hope the party lasts long enough. The conservative way is to milk the substantial arbitrage opportunities that arise out of the general appetite for stock futures. Something which a lot of institutional investors do actively. This is like the good old badla: in times of heightened speculative activity like this, badla rates would shoot up to 20-25 per cent. Virtually risk-free returns. Exactly what you can capture today by playing between the cash and futures market. The thing to monitor is how much premium the futures of any stock is trading at above the cash market price. If the premium is 1 per cent or more, it opens up a good arbitrage opportunity.
Working Paper Synopsis: The Search for the Beta of Commodity Futures
In accordance with the principles of modern portfolio theory, sophisticated investors have increasingly sought to diversify their portfolio through the use of alternative investments. An "alternative investment" is generally regarded as supplementary assets or trading strategies other than long-only exposure to "traditional assets" such as stocks, bonds and/or cash. Alternative investments include various assets such as commodities, currencies, emerging markets and private equity, as well as a variety of trading strategies such as convertible arbitrage, distress securities, global macro, long-short equities, managed futures, short selling, etc. Adherents commonly assert that alternative investments has (i) a low to negative correlation compared to traditional investments, (ii) historical performance which reflects the potential for attractive positive expected returns, and (iii) is capable of acting as a hedge against inflation.
Little liquidity pours cold water on plan
It's a common question in financial circles. It's why those with plenty of cash can swoop in and profit on sure-things that really are sure-things, like Google. It's why many of us will never qualify to own an Outback Steakhouse franchise. And it's why there's a limit on the profit I'll eke out of the Iowa Electronic Markets. Or so I thought. Of the $500 I invested in the IEM, a presidential futures market that works like a real stock market, I have just 24.7 cents in cash. Not even enough to play a game of Ms. Pac-Man, or to tumble dry my socks. Everything else is tied up in investments, and that makes it terribly difficult to pounce when a presidential Google appears. But a thread of logic winnowed its way through my needlepoint investing brain Tuesday morning.
Cost of corn pinches plants
High corn prices have created a cash-flow problem for a South Dakota ethanol plant.
Poet Biorefining in Chancellor has borrowed $6.3 million from its partner, Poet, in response to an increase in the price of corn futures that shows little sign of abating.
On Jan. 14, the Chancellor ethanol company and Poet agreed to a short-term loan to be repaid Feb. 13, including interest at an annual rate of 9.25 percent. According to a filing with the Securities and Exchange Commission, the money was needed to cover margin calls triggered by a price increase in the corn futures market at the Chicago Board of Trade. "We did not have the necessary funds from operations to cover the margin calls," General Manager Rick Serie wrote in the filing.
The plant, which produced about 51 million gallons of ethanol last year, was securing grain with plans to distill 100 million gallons this year.
|
