Oil, Gold, EU and U.S. Deficits

123jump.com Staff
30 Nov, -0001
New York City

Oil reached a new high and is likely to continue its advance in the coming weeks. Market observers blame lack of new refining capacities in the U.S., economic growth in Asia, war in Iraq and OPEC

TOP 10 STORIES OF THE WEEK

European Union summit of 25 nations ended with no clear conclusion on the EU budget and clear prospects of EU constitution ratification.

Precious metals markets in the coming weeks may trade higher as political uncertainty persists in the European nations union and ever widening current and trade account deficits in the U.S. For the week gold closed up 2.5% and for the year it is up 3.98%.

Crude oil for the week closed up 9.21% and for the year it is up 39.98%. Traders believe that oil refining shortage and lack of excess crude supply to support global economic growth may take price of crude beyond $60 per barrel in the summer months ahead.

Crude oil for the week jumped more than 9% and reached new intra-day high before settling at $58.47 per barrel at Friday's close in New York trading. The briefly visited news intra-day high of $58.60 was all-time high.

The U.S. current account trade deficit for the first quarter 2005 widened to $195.1 billion on top of 28% in its increase for the entire year 2004. Trade deficit in goods and services which accounts for more than 90% of the current account deficit continues to grow and reached a new high for the first quarter to $172 billion. The current account deficit now stands at 6.4% of the nation's GDP.

Varig, Brazilian airline, filed for bankruptcy protection to prevent 11 aircrafts from being hypothecated by a division of AIG. The 82 planes carrier, owned by a non-profit employee controlled foundation, is in negotiations with Portuguese state controlled airlines TAP to sell stake and negotiate with creditors to reduce its debt burden of $4 billion.

At Paris Air show two traditional rivals Airbus and Boeing continue to announce deals at a break-neck pace. Airbus has announced orders of 280 planes at a list price of $33 billion and Boeing has received oreders or commitments for 146 planes at a list price of $15 billion. The final prices are routinely discounted to the tune of more than 50%.

Constellation Brands reported that it has abandoned the pursuit of Allied Domecq. France's Pernod Ricard is set to acquire Allied Domecq close to $14 billion.

Mexican shares rallied for the entire week and closed up 2.6% for the week only 2% below the all-time high. Shares of home builders, cement makers and cellular phone company American Movil were in demand.

Ambani brothers at the helm of largest private sector company in India with a turnover of $23 billion have reached a settlement to split the company. The recent dispute between brothers had transfixed the nation and worried foreign investors that the prolonged dispute may hurt the current course of India's private sector growth.