Archive for the ‘Energy’ Category


The information is a bit outdated, 2007, but still interesting nevertheless…

Understanding Chinese Energy 

Infographic

As the world looks to a more energy efficient future, it is economic and population powerhouses such as China that will come under the most intense scrutiny. By carefully examining the Chinese energy policy (in fields such as wind and solar), and conjoining this with surveys on popular opinion, WellHome have managed to compile this interesting infographic.
However, the source of energy use are left largely unexplored yet a brilliant piece on Chinese energy gives us a clearer indication of the forces at play (the PDF is worthy of downloading): 

What’s driving demand: An explanation of the internal dynamics fueling China’s energy needs. Our key point: It’s not air conditioners and automobiles that are driving China’s current energy demand but rather heavy industry, and the mix of what China makes for itself and what it buys abroad. Consumption-led demand is China’s future energy challenge. [Source: China Energy: A Guide for the Perplexed (PDF)]

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Google Invests in World’s Largest Solar Power Tower Plant

Google has just sealed a deal to invest $168 million in a Mojave Desert solar energy plant.
The investment is going to BrightSource Energy, a company that developes and operates large-scale solar power plants, specifically to fund its Ivanpah project.
Ivanpah is a solar electric generating system that uses solar thermal technology and “an environmentally responsible design,” according to the project’s website, to deliver reliable, clean and low-cost power to Californians.
The plant will generate energy with a technology called power towers. Mirrors, called heliostats, are arranged in an array and aim the sun’s rays at a receiver atop a tower. The receiver generates steam; the steam causes a turbine to rotate; the rotation causes a generator to generate electricity. Because such large quantities of solar energy are being directed to such a small area, the power towers are very efficient.
The power tower at Ivanpah will be around 450 feet tall. The plant will use 173,000 heliostats, and each heliostat will have two mirrors, making Ivanpah the largest project of its kind.
Construction at Ivanpah should be completed in 2013. Here’s a video from the plant’s groundbreaking ceremony:
Google’s been on something of a clean energy investment kick over the past year or so. The company was granted the ability to buy and sell energy as a public utility last February, ostensibly to find better ways to power its own massive data centers.
A short time later, Google began making significant investments in green energy technologies. The company sealed a $38 million wind farm investment in May, bought 20 years’ worth of wind farm energy in July, and provided a substantial investment for a huge offshore wind farm in October.
Rick Needham is Google’s Director of Green Business Operations. On the company blog, writes, “We hope that investing in Ivanpah spurs continued development and deployment of this promising technology while encouraging other companies to make similar investments in renewable energy.”

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Print Edition

Photo by: AP
Israel’s clean-tech megaproject
By AMIRAM BARKAT
12/02/2011
Bid to become a leader in renewable-energy technologies aims to help wean world off oil.
‘The global interest in Israel’s energy R&D and technology is out of all proportion to the size of the country,” says Dr. Eli Opper, a former chief scientist who is now the chairman of the Eureka High Level Group.

Israel holds the chairmanship of Eureka, the European R&D program, of which more than 40 countries are members. According to Opper, Israel’s technological achievements were an important consideration in the award of the chairmanship.

“The world looks for two things in Israel: R&D and technology,” he says. “Our manufacturing and marketing capabilities are of far less interest to it.”

Opper says Israel has an impressive record in developing breakthrough energy technologies.

“Israel was a world pioneer in developing water-desalination and solar-energy technologies,” he says. “Unfortunately, in Spain and California there are solar installations that operate using Israeli technologies, but in Israel itself we have missed the opportunity to implement them, among other things, for political reasons.

“Another reason is the small size of the Israeli market. On this point, Israel has a great deal to gain from cooperation with the large European market. Moreover, Israelis have a lot to learn from the Europeans when it comes to environmental protection. This is an area in which Israel considerably lags behind European countries.

Up to now, Israelis have preferred to deal with more urgent issues on the agenda.”

This highlights the importance of the conference organized by the European Friends of Israel in Jerusalem last week, in collaboration with Globes. The conference was attended by about 500 of the European Parliament’s 736 members.

Over the course of the conference, the European parliamentarians visited Israel’s leading industrial plants. This is no small thing, given that they represent a market of 375 million consumers who could help promote Israeli technology.

OPPER defines clean-tech as comprising three sub-fields: water, environment and renewable energy.

One of the most interesting Israel developments, he says, is in water.

“The hot topic in water technologies these days is prevention of leaks from water pipes,” he says. “There are some very interesting Israeli developments in this area that could be especially relevant to large European cities with antiquated water infrastructure.

In cities like London and Paris, the rate of water loss can be counted in tens of percents.

“The Israeli technology is twostage: The first stage is locating the leak, using sophisticated control systems; the second is blocking the leak, by introducing special, nontoxic materials.”

A few years ago, one of the technology incubators operating in Israel, Kinrot, decided to become a dedicated water-technologies incubator. Another incubator, L.N. Innovative Technologies, based near Haifa, has declared itself an “environmental incubator.”

More clean-tech technologies are at various stages of development in more than 26 incubators that operate in Israel under the aegis of the Chief Scientist’s Office in the Industry, Trade and Labor Ministry.

Opper, who was chief scientist from 2002 to 2010, says there are eight to 10 companies that have been in the incubators for an average of two years, and altogether, the state supports about 200 startup companies.

Opper says the past three years have seen substantial change in the scope of activity and investment in clean-tech R&D in Israel.

“Energy has expanded in recent years because the market understood that money could be made from it,” he says. “The figures are dramatic and indicate a very clear trend: Investment in clean-tech is growing steadily from year to year.”

In 2007, applications received in the Chief Scientist’s Office for research projects in clean-tech were worth a total of NIS 150 million.

By 2010, the amount had jumped to NIS 380m., representing a rise of more than 250 percent in three years. The amount of grants and the number of applications approved have grown by similar rates. At the same time, it must be remembered that cleantech still accounts for only a small proportion of the total of R&D projects approved by the Chief Scientist’s Office, which are worth about NIS 5 billion annually.

Investment in a technology center

The technology incubators and research budgets are only two elements of the R&D activity in Israel in renewable energy.

Another important factor that will soon come into play is the Renewable Energy Technology Center. The center will be set up by a private consortium selected by the Industry, Trade and Labor Ministry. Opper says a second technology center is planned in the next few years for developing water technologies.

Under the terms for setting up and operating the Renewable Energy Technology Center, the state committed to injecting NIS 57m. over five years, while the franchisee committed to match that amount of funding. In September, the tender for the center was won by the Eilat-Eilot Renewable Energy Initiative, a consortium that comprises some of Israel’s most important companies in R&D (Ormat, Elbit Systems, and Rafael Advanced Defense Systems), together with leading research bodies in renewable energy (Ben-Gurion University of the Negev and the Arava Institute for Environmental Studies) and venture- capital firm ProSeed.

The center will be constructed in the Arava, north of Eilat, in the Eilot Regional Council. The Eilat- Eilat Renewable Energy Administration is an important partner in the winning consortium. The win in the tender consolidates the Eilot region as the Israeli center for renewable energy.

THE MAIN focus of the region’s activity in renewable energy is the Eilat-Eilot International Renewable Energy Conference.

This year, the fourth year it is being held, the conference will take place in Eilat next Tuesday through Thursday. In 2010, the conference received official recognition as one of the most important renewable-energy events in the world, when the European Commission, the executive arm of the European Union, chose to include the event in the ECO4B (environment cooperation for business) project, promoted by the Enterprise Europe Network, which links business support organizations from 47 countries.

The conference will bring together more than 2,000 business people, academics, government representatives and large investment entities from Israel and around the world. Among other things, a large Italian delegation is expected, to be led by Economic Development Minister Paolo Romani, alongside delegations from the UK, France and Spain. Two sessions at this year’s conference are being sponsored by Eureka, which at the same time will hold its annual gathering under Luuk Borg, head of the Eureka secretariat in Brussels.

Among prominent Europeans in the renewable-energy field expected in Eilat this year are European Climate Action Commissioner Connie Hedegaard; Dr.

Karl-Josef Kuhn, principle engineer of Siemens AG and head of Siemens Corporate Technology E-Car; and Dr. Gabriel Marquette, director of European Affairs at Schlumberger Research and president of Eurogia. Besides focusing on ways of removing bureaucratic obstacles to implementation of renewable-energy projects, a large part of the discussion will be devoted to innovation and the latest technological developments in the field.

NIS 14 billion to replace oil

In the coming years, Israel’s R&D efforts will not be devoted to clean-tech so much as to a subject close to it: substitutes for oil. Last February, the government decided on “a national effort to develop technologies that reduce the world’s use of oil in transport.”

The goal could hardly be more ambitious: The developed world’s dependence on oil for transport is a political problem, but it’s also an economic and environmental problem.

Dr. Gal Luft, executive director of the Institute for the Analysis of Global Security in Washington, DC, believes this is the world’s number-one problem.

The root of the problem, he says, is that oil is a monopoly in fuel for transport that is produced by a cartel, OPEC, which controls nearly 80% of the world’s oil reserves and is committed to raising its price.

At the Globes Israel Business Conference in Tel Aviv in December, Luft predicted that oil prices would continue to rise under any possible scenario.

“Our ‘luck,’ in inverted commas, is that we have been in a global recession,” he said. “Just imagine what will happen if we emerge from the recession. On the other hand, oil prices will also rise under less optimistic scenarios, such as an outbreak of inflation or substantial weakening of the dollar.

If those things happen, investors will rush to oil as a defensive commodity, like gold.”

Over the past year, since the government decision, comprehensive staff work has been undertaken by the National Economic Council under Prof.

Eugene Kandel. Last month, the government approved a national plan for developing alternatives to oil.

The plan, which will operate between 2011 and 2020, will have a budget of NIS 4b. for its first five years and at least NIS 10b. for the next five years. The government’s participation in the budget will be NIS 1.5b.

The main goal of the plan is for Israel to become a world center of know-how in alternatives to oil.

This goal will be achieved if, by 2016, more than 100 start-up companies and research projects are set up, with the involvement of 20 Israeli global companies.

Also, by 2016, about a 100 research and academic groups in the field are due to be formed.

THE PLAN encourages investment in venture-backed companies active in alternatives to oil.

The program, which has been allocated government funding of NIS 400m., will enable the financing of pilot installations to test new technologies, and it will promote implementation of the new technologies in industry. In addition, a NIS 1.5m. annual prize will be awarded by the prime minister for world innovation in alternatives to oil.

The future scientific activity in Israel will be reinforced by collaboration programs and agreements with foreign countries. Preference will be given to countries with high research and technological capabilities and to countries with the strongest interest in finding alternatives to oil. The government’s decision specifically mentions countries such as India and China, where the number of motorized vehicles is expected to grow substantially in the coming years.

Uri Ben-Porat, economic adviser to President Shimon Peres, recommends teaming with developing countries – such as Kazakhstan, for example – that are dependent on oil exports and seek to diversify their risk. At the recommendation of Opper, the plan states that Israel will seek to strengthen collaboration between Israeli companies and multinational companies active in areas connected to alternatives to oil and with leading research bodies in that area.

“Players like automobile makers and fuel companies are conducting research on a huge scale to find alternatives to oil, and there is a great deal of strategic sense in linking up with them,” Opper said at the Israel Business Conference.

Opper, who was a member of the steering committee that formulated the national plan, believes its ambitious goal is attainable.

“If Israel helps to solve the world’s dependence on oil, it will turn out to have been a very important decision,” he says.

Israel’s clean-tech megaproject

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In a Computer Worm, a Possible Biblical Clue

September 29, 2010
Deep inside the computer worm that some specialists suspect is aimed at slowing Iran’s race for a nuclear weapon lies what could be a fleeting reference to the Book of Esther, the Old Testament tale in which the Jews pre-empt a Persian plot to destroy them.
That use of the word “Myrtus” — which can be read as an allusion to Esther — to name a file inside the code is one of several murky clues that have emerged as computer experts try to trace the origin and purpose of the rogue Stuxnet program, which seeks out a specific kind of command module for industrial equipment.
Not surprisingly, the Israelis are not saying whether Stuxnet has any connection to the secretive cyberwar unit it has built inside Israel’s intelligence service. Nor is the Obama administration, which while talking about cyberdefenses has also rapidly ramped up a broad covert program, inherited from the Bush administration, to undermine Iran’s nuclear program. In interviews in several countries, experts in both cyberwar and nuclear enrichment technology say the Stuxnet mystery may never be solved.
There are many competing explanations for myrtus, which could simply signify myrtle, a plant important to many cultures in the region. But some security experts see the reference as a signature allusion to Esther, a clear warning in a mounting technological and psychological battle as Israel and its allies try to breach Tehran’s most heavily guarded project. Others doubt the Israelis were involved and say the word could have been inserted as deliberate misinformation, to implicate Israel.
“The Iranians are already paranoid about the fact that some of their scientists have defected and several of their secret nuclear sites have been revealed,” one former intelligence official who still works on Iran issues said recently. “Whatever the origin and purpose of Stuxnet, it ramps up the psychological pressure.”
So a calling card in the code could be part of a mind game, or sloppiness or whimsy from the coders.
The malicious code has appeared in many countries, notably China, India, Indonesia and Iran. But there are tantalizing hints that Iran’s nuclear program was the primary target. Officials in both the United States and Israel have made no secret of the fact that undermining the computer systems that control Iran’s huge enrichment plant at Natanz is a high priority. (The Iranians know it, too: They have never let international inspectors into the control room of the plant, the inspectors report, presumably to keep secret what kind of equipment they are using.)
The fact that Stuxnet appears designed to attack a certain type of Siemens industrial control computer, used widely to manage oil pipelines, electrical power grids and many kinds of nuclear plants, may be telling. Just last year officials in Dubai seized a large shipment of those controllers — known as the Simatic S-7 — after Western intelligence agencies warned that the shipment was bound for Iran and would likely be used in its nuclear program.
“What we were told by many sources,” said Olli Heinonen, who retired last month as the head of inspections at the International Atomic Energy Agency in Vienna, “was that the Iranian nuclear program was acquiring this kind of equipment.”
Also, starting in the summer of 2009, the Iranians began having tremendous difficulty running their centrifuges, the tall, silvery machines that spin at supersonic speed to enrich uranium — and which can explode spectacularly if they become unstable. In New York last week, Iran’s president, Mahmoud Ahmadinejad, shrugged off suggestions that the country was having trouble keeping its enrichment plants going.
Yet something — perhaps the worm or some other form of sabotage, bad parts or a dearth of skilled technicians — is indeed slowing Iran’s advance.
The reports on Iran show a fairly steady drop in the number of centrifuges used to enrich uranium at the main Natanz plant. After reaching a peak of 4,920 machines in May 2009, the numbers declined to 3,772 centrifuges this past August, the most recent reporting period. That is a decline of 23 percent. (At the same time, production of low-enriched uranium has remained fairly constant, indicating the Iranians have learned how to make better use of fewer working machines.)
Computer experts say the first versions of the worm appeared as early as 2009 and that the sophisticated version contained an internal time stamp from January of this year.
These events add up to a mass of suspicions, not proof. Moreover, the difficulty experts have had in figuring out the origin of Stuxnet points to both the appeal and the danger of computer attacks in a new age of cyberwar.
For intelligence agencies they are an almost irresistible weapon, free of fingerprints. Israel has poured huge resources into Unit 8200, its secretive cyberwar operation, and the United States has built its capacity inside the National Security Agency and inside the military, which just opened a Cyber Command.
But the near impossibility of figuring out where they came from makes deterrence a huge problem — and explains why many have warned against the use of cyberweapons. No country, President Obama was warned even before he took office, is more vulnerable to cyberattack than the United States.
For now, it is hard to determine if the worm has infected centrifuge controllers at Natanz. While the S-7 industrial controller is used widely in Iran, and many other countries, even Siemens says it does not know where it is being used. Alexander Machowetz, a spokesman in Germany for Siemens, said the company did no business with Iran’s nuclear program. “It could be that there is equipment,” he said in a telephone interview. “But we never delivered it to Natanz.”
But Siemens industrial controllers are unregulated commodities that are sold and resold all over the world — the controllers intercepted in Dubai traveled through China, according to officials familiar with the seizure.
Ralph Langner, a German computer security consultant who was the first independent expert to assert that the malware had been “weaponized” and designed to attack the Iranian centrifuge array, argues that the Stuxnet worm could have been brought into the Iranian nuclear complex by Russian contractors.
“It would be an absolute no-brainer to leave an infected USB stick near one of these guys,” he said, “and there would be more than a 50 percent chance of having him pick it up and infect his computer.”
There are many reasons to suspect Israel’s involvement in Stuxnet. Intelligence is the single largest section of its military and the unit devoted to signal, electronic and computer network intelligence, known as Unit 8200, is the largest group within intelligence.
Yossi Melman, who covers intelligence for the newspaper Haaretz and is at work on a book about Israeli intelligence over the past decade, said in a telephone interview that he suspected that Israel was involved.
He noted that Meir Dagan, head of Mossad, had his term extended last year partly because he was said to be involved in important projects. He added that in the past year Israeli estimates of when Iran will have a nuclear weapon had been extended to 2014.
“They seem to know something, that they have more time than originally thought,” he said.
Then there is the allusion to myrtus — which may be telling, or may be a red herring.
Several of the teams of computer security researchers who have been dissecting the software found a text string that suggests that the attackers named their project Myrtus. The guava fruit is part of the Myrtus family, and one of the code modules is identified as Guava.
It was Mr. Langner who first noted that Myrtus is an allusion to the Hebrew word for Esther. The Book of Esther tells the story of a Persian plot against the Jews, who attacked their enemies pre-emptively.
“If you read the Bible you can make a guess,” said Mr. Langner, in a telephone interview from Germany on Wednesday.
Carol Newsom, an Old Testament scholar at Emory University, confirmed the linguistic connection between the plant family and the Old Testament figure, noting that Queen Esther’s original name in Hebrew was Hadassah, which is similar to the Hebrew word for myrtle. Perhaps, she said, “someone was making a learned cross-linguistic wordplay.”
But other Israeli experts said they doubted Israel’s involvement. Shai Blitzblau, the technical director and head of the computer warfare laboratory at Maglan, an Israeli company specializing in information security, said he was “convinced that Israel had nothing to do with Stuxnet.”
“We did a complete simulation of it and we sliced the code to its deepest level,” he said. “We have studied its protocols and functionality. Our two main suspects for this are high-level industrial espionage against Siemens and a kind of academic experiment.”
Mr. Blitzblau noted that the worm hit India, Indonesia and Russia before it hit Iran, though the worm has been found disproportionately in Iranian computers. He also noted that the Stuxnet worm has no code that reports back the results of the infection it creates. Presumably, a good intelligence agency would like to trace its work.

Ethan Bronner contributed reporting from Israel, and William J. Broad from New York.

 In a Computer Worm, a Possible Biblical Clue – NYTimes.com

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OPEC Reaching Comfortable Middle Age, Turns 50 Tomorrow With Oil at $75

OPEC Turns 50 Years Old
A ceremony for the new OPEC headquarters in Austria on March 17, 2010. Photographer: Vladimir Weiss/Bloomberg

The Organization of Petroleum Exporting Countries turns 50 years old tomorrow, having survived a tumultuous history of wars, embargoes and in-fighting. The world’s oldest and largest energy producer group is now enjoying prices close to the $75 a barrel level that its largest member Saudi Arabia considers “ideal.”
OPEC’s Timeline:
Sept. 14, 1960: The organization was born in Baghdad. The five founding members — Iran, Iraq, Kuwait, Saudi Arabia and Venezuela — created the group during a five-day meeting in the Iraqi capital, dedicated to “the coordination and unification of the petroleum policies of Member Countries and the determination of the best means of safeguarding their interests.”
Sept. 1, 1965: The group moved its headquarters from Geneva to Vienna, where its secretariat is now based. Between 1961 and 1971 the following six countries join: Qatar, Indonesia, Libya, the United Arab Emirates, Algeria and Nigeria.
October, 1973: The six-month Arab oil embargo pitted OPEC’s Arab members against the U.S. and Israel in a politically-motivated suspension of exports that pushed prices above $12 a barrel. The Paris-based International Energy Agency was created in 1974 by consumer nations, in response to the oil price shock. Ecuador and Gabon join OPEC in 1973 and 1975, respectively, only to leave the group later.
Dec. 20, 1975: Ilich Ramirez Sanchez, known as Carlos the Jackal, took more than 60 hostages during a raid on OPEC’s Vienna headquarters to protest against treatment of Palestinians by Israel.
October, 1978: Protests and strikes in OPEC member Iran against ruling Shah Reza Pahlavi, deposed the following year in a revolution, cut the country’s oil production within three months to a 27-year low.
Sept. 23, 1980: Iraq invaded Iran in the first war between OPEC members. During the eight-year conflict, with its attacks on oil-tankers in the Persian Gulf, group production plunged to a 20-year low.
October, 1981: OPEC members agreed to maintain oil prices within a range of $32 to $38 a barrel.
August, 1985: Saudi Arabia abandoned the system of “posting” oil prices to one in favor of letting the retail value of refined products such as gasoline determine the cost of crude.
1986: OPEC members switched to a new pricing system in which futures contracts traded on exchanges in New York and London effectively determined the cost of oil shipments.
Aug. 2, 1990: Iraq’s invasion of Kuwait marked the second war among OPEC members. Repelled the following year by a U.S.-led coalition, withdrawing Iraqi troops set fire to Kuwait’s oil wells.
Nov. 29, 1997: At a meeting in Jakarta, OPEC raised production quotas for the first time in four years as the Asian financial crisis unfolds, sending prices as low as $10 the following December. Analysts often refer to the event as “the Ghost of Jakarta.”
June 24, 1998: OPEC was assisted by non-members including Mexico, Russia and Norway in cutting production as demand collapsed, helping revive prices. The coordinated action followed initial talks between Saudi Arabia, Venezuela and Mexico.
March 19, 2003: Aircraft and missile attacks on Iraq begin, followed by a U.S. and U.K. troop invasion that subsequently topples Saddam Hussein’s government in Baghdad.
Jan. 1, 2007: Angola joined OPEC, its first new member since the 1970s. In November, Ecuador re-joined the organization following a 15-year absence.
Sept. 10, 2008: Indonesia exited the oil group after becoming a net importer, leaving the total number of members at 12.
Dec. 18, 2008: OPEC announced the largest production cut in its history as the financial crisis sent prices plunging from a record $147.27 a barrel in July, 2008, to near $30 by the year- end. Oil prices then climb 78 percent during 2009.
Sept. 14, 2010: In happy middle age, OPEC turns 50, with oil prices near $75 a barrel and above $70 a barrel for all but two weeks of this year.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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Goldman Backs Oil, Copper, Gold, Maintains `Overweight’ Commodities Call

Commodities demand from emerging markets and limited growth in supplies will help to support prices toward the end of the year, according to Goldman Sachs Group Inc., which backed oil, gold, copper, zinc and platinum.
The bank reiterated an “overweight” recommendation on commodities, analysts led by Allison Nathan and Jeffrey Currie wrote in a report. Goldman pared its 12-month forecast for the S&P GSCI Enhanced Total Returns Index to a 19 percent gain from 21.6 after recent gains in agricultural commodities and metals.
Commodities last week had the worst weekly performance in six after the Federal Reserve said the recovery is weakening and European industrial output fell, stoking concern that there may be a double-dip recession. Reports also showed China’s retail sales and new lending grew in July at a slower pace than June.
“We are not overly optimistic about commodities prices in the second half,” Ni Xiaolei, a trader at Donghai Futures Co., said from Jiangsu today. “‘We saw a very sharp ascent in commodity prices last month, which will be hard to sustain as global macroeconomic data emerges weaker than expected.’’
Goldman’s commodity ‘‘overweight’’ call was maintained even as the bank has been paring forecasts for U.S. and Japanese economic growth for next year. Ed McKelvey, Goldman’s senior U.S. economist in New York, has also said that the chance the U.S. may tumble back into recession is as high as 30 percent.
Gold, Crude
Gold, which surged to a record $1,265.30 an ounce in June amid concern sovereign-debt levels in Europe may be excessive, traded at $1,29.60 at 2:11 p.m. in Singapore, 11 percent higher this year. Goldman forecast a rise to $1,260 in three months and to $1,300 in six. New York crude futures were at $75.86 a barrel, 4.4 percent lower over 2010. Goldman’s report put them at $92 a barrel in three months.
‘‘The current softness in economic data, combined with increasingly mixed signals from the underlying commodity markets, is likely to continue to generate choppy commodity-price action in the near term,” the Goldman analysts wrote in the Aug. 13 report. Still, “high and rising emerging-market demand levels against limited supply growth in key commodities are likely to increasingly tighten balances,” they wrote.
Japan’s economy expanded at an annualized 0.4 percent in the three months to June 30, the Cabinet Office said today. That’s the slowest pace in three quarters. U.S. industrial production figures are due for release tomorrow, the same day as data on investor confidence in Germany.
Chinese Demand
Commodity prices may advance into the end of the year on evidence of increased oil demand in China, a decline in crude stockpiles in Europe and the U.S., and further falls in metals inventories, the report said.
“We expect upside to be greatest for crude oil, copper, zinc, platinum and gold,” it said. “Improved data will likely be required to sustain rising prices.”
Goldman Sachs last week backed gold to resume a rally and climb to a record $1,300 an ounce within six months on renewed investor interest. The precious metal, which has risen for nine years to last year, may also climb in 2011, the report said.
A ban on wheat exports by Russia helped to drive futures to $8.68 a bushel earlier this month, the highest price in almost two years. The country is battling reduced grains production amid the worst drought in at least 50 years.
‘Sharp Gains’
“Commodity returns rose over the past month led by sharp gains in the agricultural complex owing to weather-related supply shocks in wheat,” according to the Goldman report.
Zinc, trading today at $2,080 a metric ton, has fallen 19 percent this year, making it the worst performer on the London Metal Exchange. Goldman’s analysts forecast that the metal may climb to $2,121 a ton in six months, according to the report.
Copper rose 1.3 percent to $7,246.50 a metric ton, paring this year’s loss to 1.7 percent, while platinum gained 0.8 percent to $1,535.75 an ounce, 5 percent stronger this year. Goldman forecast copper at $7,925 a ton in six months.
Japan will grow 1.4 percent in 2011, compared with an earlier forecast of 1.7 percent, Goldman’s Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. The week before that Goldman lowered its projection for U.S. growth for the same year to 1.9 percent from 2.5 percent.
To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net

Goldman Backs Oil, Copper, Gold, Maintains `Overweight’ Commodities Call – Bloomberg

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Hedge Funds Cut Bets on Rising Gas by 23% as Prices Fall: Energy Markets

Hedge funds slashed their bets on rising natural gas to the lowest level this year as prices fell, a sign the fuel may repeat last year’s 19 percent August slide during a so-far quiet hurricane season in the Gulf of Mexico.
Hedge funds and other large speculators cut their bullish bets by 23 percent in the week ended Aug. 10, the Commodity Futures Trading Commission reported. Natural Gas has declined 14 percent this month, dropping to $4.228 per million British thermal units today on the New York Mercantile Exchange.
Investors retreated from gas markets this year as prices declined 22 percent amid forecasts that stockpiles will be near record highs by the end of October. Demand for the fuel will be slow to recover as consumer confidence hovers near an eight- month low.
“Last year, we saw prices go significantly below $4,” said Andy Lipow, president of consulting firm Lipow Oil Associates LLC in Houston. “There’s a significant amount of supply out there and the overall economy is really having trouble recovering and growing. The increases in demand for natural gas are going to be slower than people expect.”
Net-long positions in futures and options combined in four natural-gas contracts decreased by 28,719 futures equivalents, or 23 percent, to 94,058 in the week ended Aug. 10, the CFTC data showed.
Whether hedge funds and other large speculators will profit from their short bets remains to be seen, Lipow said.
“We’ve seen funds be big winners and big losers in the natural gas markets,” Lipow said.
Gas futures last year dropped to $2.508 per million Btu on Sept. 3, the lowest price in more than seven years.
Vulnerable Positions
The increase in short positions leaves hedge funds vulnerable to sharp moves higher in prices that would probably accompany the threat of a hurricane heading toward the Gulf of Mexico, said Teri Viswanath, director of commodities research at Credit Suisse Securities USA in Houston.
“We’re right around the corner from the heaviest portion of the hurricane season,” Viswanath said. “Given that possibility, is the market getting ripe for a short squeeze? I think it is.”
The U.S. on Aug. 5 reduced its forecast for the 2010 Atlantic hurricane season to 14 to 20 named storms, down from 14 to 23, because of less activity than expected in the first two months of the season.
Eight to 12 of those storms are expected to become hurricanes, according to Gerry Bell, the lead seasonal hurricane forecaster for the U.S. Climate Prediction Center in Camp Springs, Maryland.
Reduced Gulf Output
The sluggish economy, combined with rising production and inventories, will continue to weigh on gas, Lipow said. The bullish impact of any hurricane will be muted since the Gulf of Mexico accounts for 10 percent of U.S. gas production, down from 17 percent in 2005.
Consumer spending, which makes up 70 percent of the world’s largest economy, may not pick up in the absence of a recovery in the labor market, according to the Federal Reserve. Fed policy makers last week made their first attempt to shore up a recovery they said was likely to be “more modest” than earlier anticipated.
Natural gas inventories rose 37 billion cubic feet to 2.985 trillion in the week ended Aug. 6, the Energy Department reported Aug. 12. U.S. gas stockpiles at the end of October may reach 3.752 trillion cubic feet, the department said in an outlook on Aug. 10. Supplies touched a record 3.84 trillion cubic feet in November 2009.
Price Pressure
“Pressure is likely to continue on the natural gas prices,” Lipow said. “Supply disruptions are minimal and we’re seeing the forecast for storms decline.”
The Atlantic hurricane season so far has had less of an impact than expected on gas production, the department said in the outlook last week. Hurricane Alex and Tropical Storm Bonnie this year reduced production by 8 billion cubic feet, less than the 20 billion the government had expected, the report showed.
The funds’ “view of the market is bearish,” said Tim Evans, an energy analyst at City Futures Perspective in New York. “It’s a flow of selling that has weighed on prices, and we’ve got to get through that before prices can rise.”
The measure of net longs includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swaps, Nymex Henry Hub Penultimate Swaps, and ICE Henry Hub Swaps. Henry Hub in Erath, Louisiana, is the delivery point for the Nymex futures, a benchmark price for the fuel.

To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net





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