Davos participants not interested in higher oil price – ex-Russian finance minister The Davos forum participants are mostly oil importing countries and aren’t interested in interfering with OPEC’s policy, since they receive billions in benefits from falling oil prices, ex-Russian finance minister Aleksey Kudrin told RT. In November OPEC decided against cutting oil production and let market forces balance the price. No one plans to stop it or come up with other decisions, said Kudrin ahead of the forum in Davos. “Moreover, the world is interested in OPEC staying onside, as the whole world receives benefits of around $1.5 trillion from falling oil prices, since it cuts spending on energy products,” he said. “This adds more than 1 percent to global economic growth, that’s why mostly consumers, importers of energy products gathered here. They are not interested in the situation changing and prices starting to rise.” However, both the IMF and EBRD cut their world growth forecast this week, saying that the benefits of lower oil prices won’t cover the losses from a slowdown in some of the world’s biggest economies, such as China and the EU. READ MORE: Low oil prices create ‘window of opportunity’ for China and India - World Bank Apparently, the key exporters such as Saudi Arabia and the UAE aim at maintaining their share of world oil production and thus bring down the share of other producing countries by leaving output unchanged, he said, adding that prices are likely to keep falling for some time. This will help level the oversupply that emerged on the world market in recent years, largely due to the shale boom. Falling oil prices and Western sanctions are the main reasons why the Russian economy is experiencing a downturn. Kudrin believes the Davos forum brings a good opportunity for Russia and the West to hear each other and understand what steps both sides should take in order to stop the economic war of sanctions. Video: /files/news/36/d9/b0/00/2485559_kudrin_web.mp4 Davos is a platform where in a narrow range, at round tables in smaller formats, at the level of experts, government officials and businessmen we will talk about the goals of economic policy, sanctions and what are the prospects for their lifting. We need to understand each other and take the following steps to reduce mutual claims,” he said. The ruble’s credibility was eroded after its devaluation over the last year, but if Russia reforms its economy and the West lifts their sanctions credibility could be restored and even strengthen within a decade, Kudrin said. “Until last year the ruble was one of the leading convertible currencies. It has almost become a regional currency among post-Soviet countries. The reason is that the devaluation has undermined its credibility,” he said. Kudrin explained that any accounting unit must be stable in order to compare the prices of goods in different countries. UPDATE 1-Russia may see oil output fall by 1 mln bpd at most- deputy PM Jan 21 (Reuters) - Russia may see a natural decline in oil output by around 1 million barrels per day (bpd) at most but has no plans to cut production in coordination with OPEC, Deputy Prime Minister Arkady Dvorkovich said on Wednesday. Russia is the worlds biggest oil producer and output hit a post-Soviet high at an average 10.58 million bpd last year, but Western sanctions over Ukraine and low prices pose a threat to the development of what is the countrys key source of revenue. Dvorkovich ruled out the cut in tandem with OPEC despite oil prices sinking to five-year lows. OPEC, an oil producing group of which Moscow is not a member, decided to keep output levels stable last year. If the oil (price) stays at $50 for a long time, of course some projects will become less attractive and a small output decline may start. But we will not cut production on purpose, Dvorkovich told Reuters. We could lose at maximum a 10th of output but more likely 300,000-400,000 bpd. There are no grounds for a bigger decline, he said on the sidelines of the World Economic Forum in Davos. Dvorkovich also said that Russia could balance its budget at any oil price, which he expected to stay low for a long time. Prime Minister Dmitry Medvedev is due to present an anti-crisis plan to President Vladimir Putin on Wednesday. The budget now foresees an average oil price of around $100 per barrel. Dvorkovich said the biggest risk from lower oil prices and sanctions was a weakening in domestic demand. The rouble has lost half of its value against the dollar since last year. He said Russia could cut budget spending in all areas except in the social sector but added that he saw no need to lower military spending as it was important to make the Russian army effective, well-equipped, modern. ($1 = 65.8100 roubles) Gold rises to $1,300 on haven demand High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft to buy additional rights. ft/cms/s/0/28e605ba-a14f-11e4-bd03-00144feab7de.html#ixzz3PSIUNCcZ Gold rose past $1,300 a troy ounce, its highest level since August, as investors sought havens ahead of expected stimulus by the European Central Bank. The metal has risen 9.8 per cent in the first three weeks of this year as the euro has fallen to an 11-year low against the dollar and the Swiss central bank abandoned the franc’s peg against the single-market currency. This has resulted in a resurgence of investor interest in gold amid forecasts of weak global growth and fears the ECB will not be able to successfully revive the eurozone when it meets on Thursday. Adding to the gloom over the economic outlook, the International Monetary Fund cut its global economic growth forecasts by 0.3 percentage points for both 2015 and 2016 on Tuesday. While gold is historically positively correlated to the euro, demand for haven assets has driven the recent divergence, James Steel, an analyst at HSBC, said. “If the euro were to weaken in a more rapid fashion as a result of what happens on Thursday then that could trigger a little more rallying of gold,” he said. Gold also tends to rally on expectations of easier global monetary policies, he said. Investors are betting that the ECB will launch a large-scale package of bond purchases. Intended to tackle deflationary pressures and revive economic activity, it will be the latest in a round of quantitative easing undertaken since the financial crisis by the world’s central banks. Asset purchases would probably reduce interest rates on euro-denominated bonds, prompting investors to search for yield abroad, which would lower the value of the euro. Quantitative easing has pushed global real bond yields into negative territory, making gold attractive since it provides no yield but the potential for price gains. Holdings in the SPDR Gold Trust, the largest gold exchange-traded fund, have risen by 33 tonnes so far this year, reversing a decline seen in the second half of last year. Holdings in gold ETFs saw the highest two-day inflows since November 2011 on Thursday and Friday last week, according to Investec. Other precious metals also received a boost from gold with silver up 1.49 per cent to $18.215, its highest level since September. Still, other headwinds could stall gold’s rally, analysts say. Higher prices will eventually deter physical buying in India and China, the world’s largest consumers of the metal. That demand has only remained robust so far because of the Chinese new year, yet after that it could start to fall off at these price levels, David Govett, head of precious metals at broker Marex Spectron in London, said. “People have jumped into gold on the back of nothing much else giving returns and I think the market is overly long up at these levels. Without a macro shock
Posted on: Wed, 21 Jan 2015 11:48:28 +0000
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