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IEA trims forecast for growth of global oil demand in 2005, 2006
Paris: The International Energy Agency has trimmed its forecast for the growth of oil demand this year and next, saying that the market appeared to have weathered the latest price shock.

The IEA said it is revising down its forecast for growth of global oil demand this year by 70,000 bpd to 1.2 mln bpd and for next year by 90,000 bpd to 1.66 mln bpd.

The agency said: 'With crude and product prices now below pre-hurricane levels and refinery and crude capacity returning, the market appears to have weathered the storm.

'But while spot prices are below their peaks, it must not be forgotten that just a few months ago 60-dollar per barrel crude prices reflected extreme market tightness. Moreover there is potential for further tightness to emerge, particularly if the weather (in the northern hemisphere) turns cold and recent buoyant economic growth continues.'

The report also said that there had been little sign that an offer by the Organisation of Petroleum Exporting Countries to make available spare capacity of 2 mln bpd had been taken up.

World supplies of oil grew by 865,000 barrels per day in October and averaged 84.4 million barrels per day, and half of the increase arose in North America. Total global supply in October was 145,000 barrels per day higher than the figure 12 months earlier.

Gulf of Mexico supply was still down by about 1.1 mln bpd from normal levels owing to hurricane disruption, and supplies from the area covered by the Organisation for Economic Cooperation and Development were 1.4 mln bpd below the figure for October of 2004.

Aggregate non-OPEC supply estimated for 2005 was little changed from the September figure at 50.3 million barrels per day but the agency said it had increased its estimated supply figure for 2006 by 20,000 barrels per day to 52.6 million barrels.

Supplies of oil from OPEC had averaged 29.6 mln bpd in October. But after allowance for a fall of production by Iran by 220,000 bpd, remaining OPEC production had risen by 265,000 bpd.

Stockpiles of oil held by industry in the OECD area were steady in September at 2.645 bln barrels, or 61 mln barrels more than the figure 12 months earlier, representing 52 days of consumption from 53 days in August.

Chinese demand for oil, having shown relatively weak growth for some months, had increased by an estimated 8.6 pct in September and demand for most oil products had also been strong. 'Apparent demand for gasoline surged by approximately 14.4 pct in September,' the agency added.

The IEA said it expected total Chinese demand for oil would rise in 2005 by 3.3 pct, and by 6.5 pct in 2006, after a surge of 15.4 pct in 2004.
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US trade deficit for September at record high
New York: Record oil prices and a drop in overall exports have pushed US trade deficit to a record $US66.1bn in September, shattering the previous high of $US60.4bn set in February, the Government says.

The record trade gap was much wider than a mid-point forecast of $US61.0bn made by Wall Street economists.

The US Commerce Department says the deficit widened 11.4 per cent from August, the largest month-to-month jump since June 2004.

A second government report showed overall US import prices unexpectedly fell 0.3 per cent last month, their first decline since May, as petroleum costs eased.

Petroleum import costs slipped 4.4 per cent in October but were still up 30.9 per cent over the past year, the Labor Department said in the report, which may ease pressure on the Federal Reserve to keep hiking interest rates. Wall Street economists had expected import prices to be flat in October after September's 2.3 per cent surge, which was the largest monthly advance in almost 15 years.

Over the past 12 months, US import prices have gained 8.1 per cent.

Despite the disruption to US exports and US Gulf Coast ports caused by Hurricane Katrina, and later Hurricane Rita, overall imports jumped 2.4 per cent in September to a record $US171.3bn, led by the record value of petroleum imports.
Imports of food, animal feed and beverages and industrial supplies and materials also hit records and imports of services were near all-time highs, the Commerce Department said.

US exports tumbled 2.6 per cent to $US105.2bn, the biggest setback since the September 2001 attacks on the United States.
In addition to the Gulf port problems, a strike at aircraft maker Boeing took a big bite out of commercial aircraft exports, which fell $US2.4bn to $US925mn. However, exports of autos and auto parts, as well as consumer goods, hit records.

The politically sensitive trade deficit with China hit a record $US20.1bn in September, as imports from that country rose to a record $US23.3bn.
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British hedge fund Man Group wins Refco auction
New York: British hedge fund Man Group has won the auction for the futures brokerage business of Refco, the US group hit by financial scandal last month.

Man will pay US$323mn including the assumption of US$37mn of liabilities. The agreement includes the customer accounts and employees of Refco's regulated futures brokerage in the US, Britain, Canada and Asia.

Refco was the largest independent futures and commodities broker in the US market. The acquisition still needs to be approved by the bankruptcy court. A consortium of creditors has filed an objection, asking for more time to assess the winning bid.

Refco was floated in New York in August, with its chief executive, Phillip Bennett, ringing the stock exchange's opening bell that day. In October, the company disclosed that Bennett had hidden US$430mn in bad debts in a company he controlled. A little more than a week later the business filed for bankruptcy and Bennett was charged with securities fraud. He has denied any wrongdoing.
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News Corp profits on the up, even as company takes US$1bn charge
New York: News Corporation, parent company of The Times, has taken a US$1bn once-only charge against the value of its American television stations, which has wiped out a 19 per cent improvement in operating profit in the company's first quarter.

The media group reported a loss of US$433mn, after the non-cash charge, even as operating profits at six of the company's seven businesses improved. The exception was the television arm.

Operating income was US$909mn in the quarter to September, up from US$766mn. The biggest contribution came from News Corp's Twentieth Century Fox film studio.

Group revenues improved 10 per cent to US$5.69bn.

Rupert Murdoch, News Corp's chairman and chief executive, said that the "sustained revenue, profit and cashflow strength" had given the company "the opportunity to invest in several non-traditional media businesses that are experiencing explosive growth".

David DeVoe, chief financial officer, said the company expected fiscal 2006 operating income to rise by about 12 per cent.

During the quarter, News Corp acquired Intermix Media, owner of the myspace.com websites, for US$580mn, and IGN Entertainment, an owner of computer games community sites, for US$650mn. Both operations will be absorbed into the newly created Fox Interactive Media.

The Fox film studio earned US$368mn, up 26 per cent, reflecting the international box office performance of Fantastic Four, which has grossed more than US$320mn to date, and DVD sales of Robots, plus the pay-TV availability of Alien vs Predator.

The newspaper arm, which includes The Sun, the News of the World and The Sunday Times as well as The Times, reported operating profit of US$125mn, an increase of 6 per cent.
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Siemens looks ahead to 2007 even as profits fall
Siemens, the German engineering major announced a sharp drop in annual net profits as it disposed of its mobile phone arm and its fourth-quarter earnings failed to meet expectations. It however expressed confidence about its future.

Net profits for the year, to the end of September, fell 51 per cent to €2.25bn, including a €810mn loss relating to the divestment of its mobile phone unit to BenQ of Taiwan.

Fourth-quarter operating income fell 37 per cent to €926mn, below analysts' expectations, after the IT services unit SBS was hit by almost €500mn of restructuring charges and goodwill writedowns. Earnings at its telecommmunications wing fell to €53mn, a fifth of profits in the same quarter last year.

However, Siemens said full-year sales rose 7 per cent to €75.4bn, thanks to a string of aquisitions, and orders were up 11 per cent to €83.8bn, with sales increasing at all divisions except transportation systems.

It also said that the final quarter had revealed strong performances from several of its units, with automation and drives, turbines and healthcare equipment leading earnings growth. Six of its divisions - reduced to 11 from 12 after the ailing logistics unit was disbanded - met quarterly targets compared with 5 out of 12 in the year ago quarter.

The company said it had met its target for a flat income from continuing operations at €3.1bn and that it was on track to meet its goal that all Siemens' units should reach targets set for operating profit margins by 2007.
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Fannie Mae's woes: More accounting errors
Washington, USA: Fannie Mae, the biggest U.S. mortgage finance company, said Thursday that it had found more accounting violations that may add to a $10.8 billion restatement of earnings. The company also hired a new chief financial officer, filling an 11-month vacancy.

The government-sponsored company, which finances one of every five home mortgage loans in the United States, also missed another regulatory deadline for filing a financial report - this time for the third quarter.

The accounting mistakes include misreporting how the company accounted for tax credits and insurance, the chief executive, Daniel Mudd, said during a conference call with investors. "We have a ways to go" in cleaning Fannie Mae's accounting errors, he said.

Fannie Mae's stock has lost more than a third of its value this year as it corrected its financial reports.

Robert Blakely is joining Fannie Mae from MCI, where he was chief financial officer when the company, then known as WorldCom, was preparing to exit bankruptcy protection.

Fannie Mae "has come a long way and there's no question they will find more minor things," said David Dreman, of Dreman Value Management. "There's no black hole here," or mistakes that appear to be "material," he said.

Fannie Mae shares were down 30 cents at $46.10 in afternoon trading on the New York Stock Exchange.

The company was created by the U.S. government in 1938 to provide financing for home mortgages. Fannie Mae and a smaller company, Freddie Mac, own or guarantee almost half the $7.6 trillion mortgage market. Freddie Mac has finished restating three years of income higher by $5 billion after finding bookkeeping errors.

Fannie Mae removed Franklin Raines, its chief executive, and its chief financial officer, J. Timothy Howard, in December.

Fannie Mae disclosed new accounting problems that have been uncovered in several areas, including recording losses on mortgages and the mortgage-backed securities it guarantees as well as expenses for financing some real estate investments and accounting for low-income housing tax credits and mortgage insurance. The company did not provide an estimate of the amounts of the errors.

The errors are in addition to the accounting-rule violations that came to light last year involving derivatives, the financial instruments Fannie Mae uses to hedge against swings in interest rates, and its mortgage commitments.

U.S. regulators in September 2004 accused Fannie Mae of serious accounting problems and earnings manipulation to meet Wall Street targets. The Securities and Exchange Commission is investigating the company's accounting and the U.S. Justice Department is pursuing a criminal investigation.

Additional problems are expected to come to light in the investigations by the SEC and other U.S. regulators and in Fannie Mae's own review.
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