...just an fyi...
http://www.blah3.com/article.php?story= ... 9185557200
Hmm.. China Has Launched An Energy Bourse... Saturday, August 19 2006 @ 06:55 EDT
Contributed by: Monkeyfister
Views: 51
This will change things. To think we were worried about the Iranian, and Russian Oil Bourses...
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Fledgling Shanghai oil exchange reports robust tradeShanghai Petroleum Exchange, China's first commodity and futures exchange for oil products, reported robust trade on Friday, its first formal business day.
Friday's transactions of gasoline, which is among the first products to be traded on the exchange, totaled 72,120 tons and were valued at 253 million yuan (31.6 million U.S. dollars), the bourse's general manager Chen Zhenping told Xinhua.
Futures trading was brisk for October and November and the three biggest deals alone totaled 51,460 tons, 71.4 percent of the total, he said.
Yet bidding prices were stable on Friday and the difference between the highest and lowest bids was 60 yuan (7.5 U.S. dollars) per ton, said Chen.
The exchange started by trading gasoline and will also trade bitumen, methanol and glycol in the near future. In the long run, it will launch trading in other petroleum and chemical products including crude and refined oil and liquefied gas.The exchange has signed deals with 65 traders, ten warehouses and two banks.
Insiders say two overseas oil giants have set up branches in China to trade on the Shanghai Petroleum Exchange but their identities have not been disclosed.With the increasing participation of international petroleum groups, China is getting more prepared to fix oil prices on its own, said Ma Weifeng, a researcher at Shanghai-based Tongji University.
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Yeah... I really don't see us winning a bidding war with the Shanghai Bourse. China holds over $140Trillion of our debt. And China is right there, flush with cash, in Asia, near the Oil and NatGas supplies, and the Machine to back up it's claims. Friday was not a good day for America. We're going to feel this about six-months from now.
I do wonder who the "two overseas oil giants" are... I suspect BP, and Royal Dutch-Shell... maybe Exxon, but they're too CIA, too US-Owned... maybe it might be Exxon... Then again, it might be Venezuela... Let's stay tuned, eh?
...indeed, I found this particular sentence interesting...
"...China is getting more prepared to fix oil prices on its own."
...Hmmm, in the fallout of the massive China Aviation Oil (CAO) scandal from late 2004, is China becoming strategically interested in having some influence re oil prices via the Shanghai bourse? Trades via the Shaghai bourse are dollar-denominated as far as I can tell, and likely will remain so for some time - but this opens the door for a potential "basket of currencies" for oil prices and oil transactions in the future - should Bejing follow the path being pursued by Tehran and Moscow....
For some backdrop, I recently read an interesting statement by the former CEO of China Aviation Oil (CAO) company just a few days before he was forced to resign over millions lost in oil trades derivatives...the topics he addressed were "hedging" and dollar-based oil prices vis-a-vi the singapore currency...
http://www.comsoc.com/news33.htmlBT CEO's e-Club : Topic "The Art of hedging" The Business Times, 8 November 2004
(excerpt)
OIL prices are almost always denominated in US dollars. Oil companies therefore have a natural long position in US dollars and are vulnerable to a weakening in that currency.
In China Aviation Oil's case, revenue and commissions for our procurement business are denominated in US dollars, while many operating expenses are in Singapore dollars. A fall in the US currency relative to the Singapore unit therefore raises costs. As well, China is our main customer, and with its pegged currency, a weaker dollar raises the cost of imports such as oil, and puts pressure on enterprises and consumers to use less. {note: this dynamic has changed since China de-pegged from the dollar in July 2005}
It must be noted, however, that oil companies have been dealing with a weaker dollar for some time. The US dollar has been weakening against the euro and the yen since early 2002. Indeed, one of the major reasons oil prices have risen in dollar terms has been the weak currency. Because the US dollar is the currency of choice for oil transactions, this has had the effect of reducing effective costs to countries with currencies not pegged to the US dollar. {i.e. UK, eurozone, Japan, etc.} This, in turn, has helped oil demand remain quite robust, to the extent that the benefits of volume growth have exceeded the costs of a weaker dollar. We see this most readily in the positive financial results being reported by most oil companies in Singapore and around the world.
So while there is a clear and direct concern facing oil companies from a weaker dollar, there is also a less obvious, but just as important, gain in the business's overall demand.
- Chen Jiulin
Managing Director
China Aviation Oil
...and during that same month, November 2004, Mr. Chen Jiulin was forced to resign after it was exposed that he had lost
$550 million in
oil trade derivatives...initially betting that oil prices were going to drop...and I should note that the market value of CAO was only $570 million at the time. CAO supplies 1/3 of all avaition fuel to China's airlines, and creditors had to rush in to save the company from bankruptcy. Here's the outcome for Chen...
CAO's ex-CEO jailed for over 4 years(Reuters)
Updated: 2006-03-21 12:29
SINGAPORE - The former head of jet fuel trader China Aviation Oil (Singapore) Corp. was sentenced to 4 years and three months in prison on Tuesday for his role in the city-state's biggest trading scandal since the collapse of Barings Bank in 1995.
Chen Jiulin, 44, a Chinese national, was also fined S$335,000 ($207,400) for his role in concealing trading losses of $550 million from betting the wrong way on oil prices. The losses brought Singapore-listed CAO to the brink of collapse in 2004. Chen Jiulin, the former chief executive of China Aviation Oil (Singapore) Corp., arrives for his hearing at the subordinate court in Singapore in this March 15, 2006 file photo. [Reuters]
Chen was Chief Executive of CAO from 1997 until his suspension from the job in November 2004. He had admitted to six out of 15 charges last week, including making false or misleading statements, failure to inform the Singapore exchange of CAO's losses, conspiring to cheat Deutsche Bank, and procuring CAO's parent firm to commit insider trading.
The CAO scandal -- the worst to occur in the Southeast Asian financial centre since Singapore-based rogue trader Nick Leeson brought down Barings nearly a decade earlier --
was especially sensitive for the tiny city-state because of CAO's Chinese parentage and management.
Singapore has tried to attract mainland Chinese companies to list on its exchange, while government-linked investment firms such as Temasek Holdings and the Government of Singapore Investment Corp. have been big investors in China.
So, given all this backdrop, it would appear that not only are Russia and Iran interested in exerting some influence in the international oil trade prices (& currencies) - but China has also joined the fray to a limited degree. Washington, New York (NYMEX) and the City of London (ICE) are most likely not amused by these developments as this does not portend well for dollar hegemony....