BRICS to establish development bank, reserve arrangement

The emerging-market bloc of BRICS on Tuesday announced plans to establish a development bank and a contingent reserve arrangement (CRA).

The five members of the group -- Brazil, Russia, India, China and South Africa -- laid out the designs of the New Development Bank (NDB) and the CRA in a declaration released following their sixth summit in this Brazilian city.

The NDB, to be headquartered in Shanghai, will have an initial authorized capital of 100 billion U.S. dollars, and its initial subscribed capital of 50 billion dollars will be equally shared among founding members, according to the Fortaleza Declaration.

The five countries decided that the first chair of the Board of Governors shall be from Russia, the first chair of the Board of Directors from Brazil, and the first president of the bank from India.

They also agreed to set up an African regional center of the NDB in South Africa, which will be established concurrently with the headquarters.

The bank, said the declaration, is aimed at "mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies."

"Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth," said the document.

The CRA, with an initial size of 100 billion dollars, "will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements," it added.

In addition, the five countries also voiced their readiness to further facilitate trade, enhance financial ties, tackle tax-related challenges and tap the cooperation potential in insurance and reinsurance markets.

Chinese President Xi Jinping attended the summit along with Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and South African President Jacob Zuma.

Asia stocks brace for China test, oil on the slide

Asian stocks held steady on Wednesday as markets braced for a data deluge from China, while a slide in oil prices to the lowest in over three months was taken as a potential positive for global growth.

Chinese reports on gross domestic product, retail sales and industrial output are expected to confirm the economy stabilised in the second quarter after a shaky start to the year.

Estimates are the economy grew 7.4 percent last quarter, but anything less would likely pressure stocks in the region while crimping risk appetite globally. 

MSCI's broadest index of Asia-Pacific shares outside Japan was flat while Japan's Nikkei <.N225> barely budged.

Wall Street had provided scant direction after investors gave a muddled reaction to testimony from Federal Reserve Chair Janet Yellen.

Yellen reiterated that the U.S. labour market was far from healthy and signalled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are "completely gone."

Yet bond investors fixed on a comment that rates could rise more quickly should the labour market continue to improve at a rapid pace, and shoved up short-term Treasury yields .

The latest U.S. economic news was generally upbeat as a solid rise in core retail sales in June combining with upward revisions to past months and led analysts to nudge up estimates for economic growth in the second quarter.

The Dow <.DJI> ended up a bare 0.03 percent, while the S&P 500 <.SPX> lost 0.19 percent and the Nasdaq <.IXIC> dropped 0.54 percent.

High-flying social media and biotechnology shares took a hit after the Fed singled out the valuation of the sector as

"substantially stretched." [.N]

JPMorgan Chase & Co and Goldman Sachs outperformed after reporting strong results. JPMorgan finished up 3.5 percent and was the biggest gainer on the Dow.


EURO BLUES

The contrast to Europe was stark as banking shares were sideswiped when Portugal's Banco Espirito Santo slumped 17.5 percent to a fresh record low. Traders blamed concerns over the bank's Angolan loan portfolio and the sale of a stake at a low price by the bank's founding family on Monday.

Also not helping was the ZEW survey showing German analyst and investor morale dropped in July for a seventh straight month to its lowest level since December 2012.

European shares <.FTEU3> ended down 0.4 percent, while the euro took collateral damage and fell to $1.3567 .

The single currency also took a mauling from the pound which jumped when UK inflation surprised with a high reading, stoking speculation that interest rates would rise this year.
The euro sank to a two-year trough at 79.08 pence , while sterling made a six-year peak on the dollar at $1.7191 . The U.S. currency still managed to gain elsewhere and its index edged up to a three-week high at 80.409 <.DXY>.

An early mover in Asian hours was the New Zealand dollar which slid to $0.8722 after the country reported softer-than-expected inflation.
In commodity markets, gold prices fell back to $1,295.65 an ounce and further away from last week's peak at $1,345.

Oil prices extended their recent decline as rising Libyan supplies and downbeat economic data from Europe sharpened concerns the global market was heading into a near-term glut.

World oil prices have been falling for three weeks now as traders shift their focus from violence in Iraq and Libya to weak global fundamentals.

Brent futures lost another 18 cents to $105.84 a barrel, having shed over a dollar on Tuesday. U.S. crude futures recouped a little of their losses to be up 22 cents at $100.18 a barrel.

Source: Reuters

China's GDP grows 7.4 pct in H1

China's economy grew 7.4 percent year on year in the first half of 2014, the National Bureau of Statistics (NBS) announced on Wednesday.

Growth in the second quarter stood at 7.5 percent, picking up from the 7.4 percent expansion in the first quarter.

"The Chinese economy showed good momentum of stable and moderate growth in the first half," said NBS spokesman Sheng Laiyun at a press conference.

"However, we should keep in mind that the domestic and international economic environment is still complicated and the national economy still faces many challenges," he said.

China will continue to deepen reform, promote innovation, adjust economic structure and transform development patterns to consolidate the momentum, Sheng said.

Source: Xinhua

Oil rout may go further say some analysts; RSI flashes oversold

A deepening rout in global oil prices that has pushed Brent crude to near its lowest level in a year may run further, according to some technical analysts, even as one key indicator suggests the market is already oversold.

On pace to post a fourth consecutive weekly loss, Brent fell by more than $2 on Tuesday, extending its losses over the past four weeks to more than 9 percent at $104.39 a barrel, the lowest since early April. Brent has traded below that only three times in the past year.

While also on pace for a fourth straight weekly loss, the decline in U.S. light sweet crude futures has not been as severe, but the front contract still slipped below the psychologically important $100-a-barrel level on Tuesday, and then below its 200-day moving average at $99.92.

"The near-term downside target is $97.25," said John Kilduff, a partner at Again Capital LLC in New York, in a report on Tuesday.

Support might form in a congested area around $97.25 where the most recent reversal to upside occurred in May, said Kilduff, who added that a break of that level could send prices to the March low of $95.05.

On Brent, a drop below $105.60, confirming Brent's break below $105.98, was expected to target the $103.95 low from April 2, Reuters analyst Wang Tao wrote.
"The last two times Brent was pushed back, it held in the $103 area and if it does not hold there, you would look back to the area around $97, where it fell to in April 2013," said Walter Zimmerman, chief technical analyst at United-ICAP.

Other technical flags suggested the selling might ease sooner rather than later.

Brent's 14-day relative strength index (RSI), a technical momentum indicator watched by market technicians and analysts, has collapsed to just 23 from more than 70, well below the 30 mark considered an indication of an oversold condition. It was Brent's first reading under 30 since mid-April 2013, when prices staged a rebound from below $97 a barrel.

The WTI 14-day RSI stood at 25.8.

Intraday on Tuesday, U.S. crude dropped below $99.49, the 50 percent retracement on the rise from the Jan. 9 low of $91.24 to the June 20 high of $107.73. That $99.49 area was expected to provide some support, Tao wrote.

The rapid pullback in prices may have been exacerbated by the retreat of big hedge funds and speculators, who had built up a record net long position of 398,746 contracts in U.S. crude oil futures by June 22, according to CFTC data. That is the equivalent to nearly 400 million barrels of oil. They cut nearly 50,000 contracts over the following three weeks.

"The extent and severity of the long liquidation is made more severe because there is nobody short, nobody left to buy the next dip," added Zimmerman.

Source: Reuters

Copper price steadied, China growth in focus

Copper prices steadied on Tuesday as optimism about demand for industrial metals from top consumer China and shrinking supplies at warehouses offset selling by some traders who cashed in following recent gains.

Benchmark London Metal Exchange (LME) copper traded at $7,102 a tonne in official rings, down 0.3 percent, before steadying at $7,122.75 a tonne at 1222 GMT as it bounced off two-week lows of $7,078.25 hit earlier in the session.

Investors will focus on gross domestic product data from China due on Wednesday. Analysts polled by Reuters expect that the economy probably steadied in the second quarter with annual growth holding firm at 7.4 percent, suggesting a recovery is taking hold.

"It is clear that credit conditions in China are beginning to ease, and this has been supportive for base metals," said Nic Brown, head of commodities research at Natixis.

"There is a positive confirmation of what we knew already, that stimulus measures are feeding through to the economy."

The metal used in power and construction had jumped 9 percent from June lows to hit a four-and-a-half month peak of $7,212 a tonne on July 8 but has failed to build on the gains, despite generally improving economic sentiment.

Traders said the failure to break any higher indicated a chart-based signal to sell.

"Technical and speculative selling is getting more confident with lack of upside follow through," said a trader in Hong Kong. The trader sees support at $7,080, $7,045, and $6,900.

Helping underpin prices were signs of tight physical stocks. Copper inventory levels in LME-registered warehouses, at 159,375 tonnes, were around their lowest in nearly six years. 

But in a move that has spooked markets, LME warehouses in Asia have registered a flurry of small deliveries this month, sparking a reminder of a copper surplus that is expected to feed into the market in the second half.

Aluminium stocks also registered a downtrend, falling by 9,100 tonnes to a 22-month low below 5 million tonnes. Analysts said, however, that vast amounts of aluminium were held in financing deals and not available to the market.

"(Aluminium) stocks have been reduced by 8.5 percent since the start of the year, partly on account of cancelled warrants. Nonetheless, cancelled warrants remain close to a record level at 2.93 million tonnes," Commerzbank analysts said in a note.

"In other words, a large proportion of the stocks is still not available to the market."

Reflecting a tightening market, the discount for cash aluminium to three-month prices narrowed to $20.07, its narrowest since late 2012. 

Aluminium traded up 0.2 percent at $1,946 a tonne.

"We are moving from a chronic global surplus (in aluminium) to a modest deficit," Brown said.

In industry news, miners PanAust and OZ Minerals said full-year copper production was expected to be at the upper end of their guidance range.

Zinc traded 0.5 percent lower at $2,295.50 a tonne, while tin traded at $22,150, lead was down 0.7 percent at $2,198 a tonne and nickel traded down 0.1 percent at $19,325 a tonne.

Source: Reuters

FED CHAIRMAN: Accomodative monetary policy remains appropiate

      The WSJ reports, "A high degree of monetary policy accommodation remains appropriate," Ms.Yellen said in testimony to the Senate Banking Committee, the first of two days of congressional hearings on the economy and monetary policy.

Stocks bounced around after her testimony began. For the Dow Jones Industrial Average, an early gain gave way to a slight loss before flitting around zero in the hour ahead of noon.

Ms. Yellen's comments come after a run of strong U.S. jobs data. U.S. payroll employment gains averaged 230,000 a month during the first six months of the year and the unemployment rate has fallen to 6.1% in June from 6.7% in March. The last major jobs report, which was released by the Labor Department after the Fed's June policy meeting, showed outsized gains in hiring last month and continued decline in the jobless rate.

"Broader measures of labor utilization have also registered notable improvements," Ms. Yellen said.

However, she responded cautiously to these encouraging developments, pointing in her prepared testimony to low levels of labor-force participation and slow wage growth as signs of continued "significant slack" in the job market.

In answers to questions later, she added that the Fed has been fooled in the past during this economic recovery by "false dawns" and that she wanted to proceed cautiously.

Some regional Fed bank presidents have argued of late that the central bank needs to start turning its eyes toward raising short-term interest rates as the job market improves.

Ms. Yellen did note that if the job market continued to improve more quickly than expected, that could lead to an earlier rate increase, but she gave no other indications that she is yet seriously considering such a move.

"Too many Americans remain unemployed," Ms. Yellen said. "Inflation remains below our longer-run objective."

She added later, in answer to one senator's question, "We need to be careful to make sure the economy is on a solid trajectory before we consider raising interest rates," she said."

She did note that most Fed officials don't expect to start raising short-term rates until next year, according to projections they made going into their June policy meeting. Those projections show officials expect the Fed's target rate to reach 1% by the end of next year. Many officials have affirmed investors' belief that the Fed won't start rate increases until about the middle of 2015.

"The [Fed] recognizes that low interest rates may provide incentives for some investors to 'reach for yield,' and those actions could increase vulnerabilities in the financial system to adverse events," she said. One worry: Issuance of junk bonds has been brisk and "valuations appear stretched." The Fed is also working to toughen supervision of leveraged-loan issuance.

Ukraine taxes cut Gazprom cash flow

OAO Gazprom, Russia’s biggest company, was stuck with record export duty payments in May as Ukraine imported more gas without paying for it.

Gazprom paid 61.9 billion rubles ($1.8 billion) on all its exports, data on the Treasury’s website show, almost 60 percent more than the same month in 2013. Most of the surplus stemmed from deliveries to NAK Naftogaz Ukrainy, a government official said, asking not to be identified because the information isn’t public.

Ukraine imported more gas in May to fill storage tanks as Russia raised prices in the wake of President Vladimir Putin’s decision to annex Crimea. Ukraine refused to pay for the gas, so the company had to find the tax from its own resources. Gazprom halted supplies to Naftogaz in June.

“Ukraine taxes cut Gazprom cash flow,” Ildar Davletshin, an oil and gas analyst at Renaissance Capital in Moscow, said in an interview. “The company had to pay them despite Ukraine non-payment.”

Shares in Gazprom fell 1.1 percent to 147.11 rubles at 4:48 p.m. in Moscow trading.

Ukraine owes Gazprom $5.3 billion for the past deliveries, the gas exporter said this week. Naftogaz won’t pay unless Russia sets a new, fair price, according to the Ukrainian company.

Source: Bloomberg

The Empire State manufacturing survey climbed to 25.6 in July

A poll of New York-area manufacturers surged to its highest level in more than four years, according to data released Tuesday.

The Empire State manufacturing survey climbed to 25.6 in July, up from 19.3 in June, the highest level since April 2010, the New York Fed said.

Economists polled by MarketWatch had expected a 17.3 reading, in the gauge where readings above zero indicate improving conditions.

The shipments index improved to 23.6 from 14.2, and the new-orders index rose to 18.8 from 18.4. Also of note, the prices paid index rose to 25 from 17.2, while the prices received only rose to 6.8 from 4.3.

One downbeat part was that expectations for six months later fell noticeably, to 28.5 from 39.8 in June.

The Empire State is the first of the regional manufacturing surveys to be released; the Philadelphia Fed survey comes out Thursday.

Source:Marketwatch

U.S. Retail sales posted a dissapointing 0.2 percent rise in June

Retail Sales

Released On 7/15/2014 8:30:00 AM For Jun, 2014 Prior Prior Revised Consensus Consensus Range Actual Retail Sales - M/M change 0.3 % 0.5 % 0.6 % 0.5 % to 1.3 % 0.2 % Retail Sales less autos - M/M change 0.1 % 0.4 % 0.6 % 0.4 % to 1.2 % 0.4 % Less Autos & Gas - M/M Change 0.0 % 0.3 % 0.5 % 0.3 % to 1.0 % 0.4 %

Highlights Retail sales disappointed for June but again there were upward revisions to the prior month. Retail sales posted a 0.2 percent rise in June, following a 0.5 percent increase the month before (originally up 0.3 percent). Expectations were for a 0.6 percent advance in June. Motor vehicles surprised on the downside, declining 0.3 percent in June after jumping 0.8 percent the month before. Excluding motor vehicles sales gained 0.4 percent, following a rise of 0.4 percent in May (originally up 0.1 percent). Analysts called for a 0.6 percent boost. Excluding motor vehicles and gasoline, sales increased 0.4 after gaining 0.3 percent the month before (originally flat). Analysts projected 0.5 percent for May. Outside the core, strength was seen in general merchandise, health & personal care, and nonstore retailers. Notable declines were seen in building materials & garden equipment and food services & drinking places. While June was disappointing, upward revisions point to a healthy second quarter for consumer spending. This is especially the case for PCEs in GDP as the Bureau of Economic Analysis will use industrial data for motor vehicles instead the retail sales auto component. Source:Econoday, Bloomberg

European stocks and the euro fell on Tuesday

European stocks and the euro fell on Tuesday after shares in Portugal's biggest listed bank hit a record low, while a plunge in German economic sentiment pushed up borrowing costs for some peripheral euro zone countries.

Global stock markets have recently been supported by dovish policy measures from major central banks and signs that economies are recovering, though worries persist over the pace of growth in Europe and the health of the region's banks.

U.S. Federal Reserve Chair Janet Yellen is due to testify to

Congress on monetary policy later on Tuesday.

A surprise jump in British inflation in June sent sterling higher and gilts lower. The 1.9 percent reading was the highest since January, picking up from May's 1.5 percent, a 4-1/2-year low. [ID:nUKLFIEA7Q]

The pan-European FTSEurofirst 300 <.FTEU3> share index slipped 0.1 percent, with benchmark indexes in Frankfurt, Paris and London trading 0.1 to 0.5 percent lower after German economic morale sank to its lowest level since Jan. 2013. The weaker-than-exected ZEW survey also pushed the euro to a one-month low versus the dollar. [ID:nF9N0N0018] [ID:nL6N0NZ29J]

The banking sector was a sharp underperformer, with Portugal's Banco Espirito Santo slumping 17.5 percent to a fresh record low. Traders blamed concerns over the bank's Angolan loan portfolio and the sale of a stake at a low price by the bank's founding family on Monday. [ID:nL6N0PQ1YV]

The MSCI All-Country World index <.MIWD00000PUS> traded flat, near record highs hit earlier this month.

"The key takeaway is that the banking sector globally continues to struggle despite time having been bought, and policy being tremendously supportive," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.

"The sector feels like a minefield."

Bond yields for Portugal and Greece were up 4 basis points and 3 basis points respectively, though Spanish and Italian yields were slightly lower.

German bund futures gained 0.2 percent and the U.S. dollar index <.DXY> rose against a basket of currencies including the euro and yen after ECB chief Mario Draghi said a stronger euro was a risk to the sustainability of the recovery.

Draghi said on Monday the European Central Bank's Governing Council was unanimous on the use of unconventional measures if inflation stayed too low. [ID:nL6N0PP5C7]

"With the ECB signalling that it will continue to maintain an easing bias, with the possibility of quantitative easing in coming months, peripheral (bond) spreads probably have scope to come further in," said Nick Stamenkovic, bond strategist at RIA Capital Markets.

The Bank of Japan maintained its stimulus programme and stuck to a forecast that inflation will approach its 2 percent target next year, unfazed by recent data casting doubt on its scenario of an investment-led economic recovery. [ID:nL4N0PQ0LC]

"The BOJ have essentially backed off the idea of quantitative easing for now but are sending some cautious signals on growth," said Simon Derrick, head of currency strategy at BNY Mellon. "Everything is stable and we are heading slowly and jerkily back towards higher inflation."


CITI STRENGTH

U.S. and Asian stocks gained ground, with the Dow Jones Industrial average <.DJI> hitting an intraday record on Monday, helped by Citigroup's better-than-expected earnings and more deals in the healthcare sector.

In Asia, Japan's Nikkei average <.N225> rose 0.7 percent while South Korea's Kospi <.HS11> gained 1.0 percent. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 0.2 percent.

The MSCI Emerging Market index <.MSCIEF>, MSCI's benchmark emerging equity index, inched up to a 16-month high.

Asian stock markets showed little reaction to stronger-than-expected new loan and money supply data for China. Chinese banks gave 1.08 trillion yuan ($173.90 billion) of new loans in June, beating expectations of 915 billion. [ID:nL4N0PQ1BO]

The data, coming ahead of GDP and other numbers from China due on Wednesday, underscored the perception that the Chinese economy is stabilising after a shaky start to the year but still needs more policy support to meet Beijing's growth target.

In the Middle East, Israel approved an Egyptian-proposed deal that would halt the week-old Gaza shelling war on Tuesday but the Palestinian territory's dominant Hamas Islamists said they had not been consulted by Cairo.

U.S. crude oil slipped to $100.45 and Brent crude futures edged down to $106.04.

GLOBAL MARKETS-BES slide, tumbling German sentiment hit markets

European stocks and the euro fell on Tuesday after shares in Portugal's biggest listed bank hit a record low, while a plunge in German economic sentiment pushed up borrowing costs for some peripheral euro zone countries.

Global stock markets have recently been supported by dovish policy measures from major central banks and signs that economies are recovering, though worries persist over the pace of growth in Europe and the health of the region's banks.

U.S. Federal Reserve Chair Janet Yellen is due to testify to

Congress on monetary policy later on Tuesday.

A surprise jump in British inflation in June sent sterling higher and gilts lower. The 1.9 percent reading was the highest since January, picking up from May's 1.5 percent, a 4-1/2-year low. 
The pan-European FTSEurofirst 300 share index slipped 0.1 percent, with benchmark indexes in Frankfurt, Paris and London trading 0.1 to 0.5 percent lower after German economic morale sank to its lowest level since Jan. 2013. The weaker-than-exected ZEW survey also pushed the euro to a one-month low versus the dollar. 
The banking sector was a sharp underperformer, with Portugal's Banco Espirito Santo slumping 17.5 percent to a fresh record low. Traders blamed concerns over the bank's Angolan loan portfolio and the sale of a stake at a low price by the bank's founding family on Monday.

The MSCI All-Country World index  traded flat, near record highs hit earlier this month.

"The key takeaway is that the banking sector globally continues to struggle despite time having been bought, and policy being tremendously supportive," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.

"The sector feels like a minefield."

Bond yields for Portugal and Greece were up 4 basis points and 3 basis points respectively, though Spanish and Italian yields were slightly lower.

German bund futures gained 0.2 percent and the U.S. dollar index <.DXY> rose against a basket of currencies including the euro and yen after ECB chief Mario Draghi said a stronger euro was a risk to the sustainability of the recovery.

Draghi said on Monday the European Central Bank's Governing Council was unanimous on the use of unconventional measures if inflation stayed too low.
"With the ECB signalling that it will continue to maintain an easing bias, with the possibility of quantitative easing in coming months, peripheral (bond) spreads probably have scope to come further in," said Nick Stamenkovic, bond strategist at RIA Capital Markets.

The Bank of Japan maintained its stimulus programme and stuck to a forecast that inflation will approach its 2 percent target next year, unfazed by recent data casting doubt on its scenario of an investment-led economic recovery.

"The BOJ have essentially backed off the idea of quantitative easing for now but are sending some cautious signals on growth," said Simon Derrick, head of currency strategy at BNY Mellon. "Everything is stable and we are heading slowly and jerkily back towards higher inflation."


CITI STRENGTH

U.S. and Asian stocks gained ground, with the Dow Jones Industrial average <.DJI> hitting an intraday record on Monday, helped by Citigroup's better-than-expected earnings and more deals in the healthcare sector.

In Asia, Japan's Nikkei average <.N225> rose 0.7 percent while South Korea's Kospi <.HS11> gained 1.0 percent. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 0.2 percent.

The MSCI Emerging Market index <.MSCIEF>, MSCI's benchmark emerging equity index, inched up to a 16-month high.

Asian stock markets showed little reaction to stronger-than-expected new loan and money supply data for China. Chinese banks gave 1.08 trillion yuan ($173.90 billion) of new loans in June, beating expectations of 915 billion.

The data, coming ahead of GDP and other numbers from China due on Wednesday, underscored the perception that the Chinese economy is stabilising after a shaky start to the year but still needs more policy support to meet Beijing's growth target.

In the Middle East, Israel approved an Egyptian-proposed deal that would halt the week-old Gaza shelling war on Tuesday but the Palestinian territory's dominant Hamas Islamists said they had not been consulted by Cairo.

U.S. crude oil slipped to $100.45 and Brent crude futures edged down to $106.04.
Source: Reuters

Energy: WTI & Brent Trades Near Two-Month Low Before Supply Data

Brent crude declined to the lowest level in more than three months as supply threats in Iraq abated. West Texas Intermediate crude traded at a two-month low before inventory data.

Brent dropped as much as 1.2 percent in London. Supplies from Iraq remain unaffected by an insurgency while Libya seeks to boost exports after two ports reopened. U.S. gasoline stockpiles probably increased to the highest since March and distillate supplies also rose, a Bloomberg News survey shows before an Energy Information Administration report tomorrow.

“For crude generally, what you are seeing is a correction from the highs of the Iraqi crisis as expectations around a possible supply disruption reversed course,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by e-mail.

Brent for August settlement dropped as much as $1.30 to $105.68 a barrel on the ICE Futures Europe exchange, the lowest since April 7, and was at $105.85 at 11:58 a.m. London time. The contract expires tomorrow. The more-active September futures were 79 cents lower at $106.92. The European benchmark crude traded at a premium of $5.54 to WTI, compared with $6.07 yesterday.

WTI for August delivery fell as much as 83 cents, or 0.8 percent, to $100.08 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since May 12. The volume of all futures traded was about 64 percent above the 100-day average for the time of day. Prices have advanced 1.9 percent this year.

The discount on front-month Brent contracts widened to more than $1 a barrel for the first time in four years. A discount, or contango, on immediate deliveries typically signifies that supplies are outpacing demand.

WTI has declined the past three weeks as oil supplies expanded at Cushing,Oklahoma, the delivery point for New York-traded futures. Crude inventories nationwide probably shrank by 2.5 million barrels to 380.1 million in the seven days ended July 11, according to the median estimate in the Bloomberg survey of nine analysts.

Distillate stockpiles, including heating oil and diesel, climbed by 2 million barrels last week, the survey shows before tomorrow’s report from the EIA, the Energy Department’s statistical arm. U.S. gasoline stockpiles probably increased by 900,000 barrels. The industry-funded American Petroleum Institute inWashington will publish separate data today.

Source: Bloomberg

China FDI Barely Grows as Economy Slows

        The WSJ reports, "the amount of new foreign direct investment that China attracted in June barely increased over its year-earlier figure as overseas companies battled higher operating costs and slowing economic growth.

On Wednesday, China is due to release its closely watched second-quarter gross domestic product results, which will provide a closer look at the health of the world's second-largest economy.

"Given the current situation in China, the FDI number will stay low," said CIMB economist Fan Zhang. "If you look at the China economic environment, it's not as good as in previous years. So it's not a good time to enter China."

China's Ministry of Commerce said Tuesday that China attracted $14.42 billion of foreign direct investment in June, a slight 0.2% increase over June 2013.

June's FDI number was up from May's $8.6 billion, which was 6.7% lower than a year earlier.

FDI in the first six months rose a tepid 2.2% year on year to $63.33 billion.

Higher labor costs remain a key concern for foreign companies operating in China. The average monthly wage for migrant workers at the end of 2013 was 2,609 yuan ($420), a 13.9% increase over 2013, the National Bureau of Statistics said in a recent annual survey. That compares with year-over-year rise of 11.8% in 2012 and a jump of 21.2% in 2011.

Slower economic growth after decades of double-digit expansion has also made China less attractive. China's GDP grew by 7.4% year-over-year in the first quarter, its weakest pace in 18 months, down from the 7.7% year-over-year growth seen in the fourth quarter of 2013. Economists expect the second-quarter GDP results due out Wednesday to come in at about the same level as the first quarter.

In a survey released in late May by the European Union Chamber of Commerce in China, just 21% of member companies said China was their first investment choice, compared with 33% two years ago. Intended expansion plans and planned mergers and acquisition figures were also down sharply, the chamber said, as companies grappled with tighter profit margins, stepped-up competition and market-access problems.

A report by the American Chamber of Commerce in China earlier in the year noted a similar trend, although the decline in confidence was less dramatic among U.S. companies. For the first time, those U.S. companies who said they planned to increase their investments in China by 10% or less in 2014 formed the biggest category, while the proportion of companies planning no increased investment in China this year rose to 27% from 16% in 2013".

WSJ: Alibaba Pushes Further Into Entertainment

       The WSJ reports,"Chinese e-commerce giant Alibaba Group Holding Ltd. is making a major push into entertainment to capture a share of what it thinks will be the next boom market in Chinese consumption online.

Although Alibaba has shared only parts of its vision publicly, interviews with roughly two dozen people who have been approached by the company or are familiar with its strategy say that its plans span from taking stakes in Chinese film studios and commissioning original material to acquiring the rights to TV shows or films from inside and outside the country.

On Tuesday, Alibaba is expected to announce a deal with U.S. production studio Lions Gate Entertainment Corp.  to make available on Alibaba set-top boxes offerings such as the "Twilight" hit vampire movie series and the TV show "Mad Men." The partnership beefs up Alibaba's entertainment menu as China's Internet-savvy consumers are increasingly going online to watch TV shows, videos and movies.

"Alibaba is a tremendously successful and dominant partner to have in China," said Jim Packer, Lions Gate's president of world-wide television and digital distribution. "They touch millions of consumers now."

The entertainment industry is a logical next battleground for Alibaba, whose online shopping sites handled $248 billion of business last year, and which is preparing for a U.S. listing that could be one of the largest in history, analysts say. Alibaba and other Chinese rivals such as Internet giant Tencent are trying to find new avenues to get Chinese consumers to open up their wallets.

Alibaba has already made a few important steps toward its goals, paying more than $800 million in June for a majority stake in Chinese film and production studio ChinaVision Media Group Ltd.  , which it subsequently renamed Alibaba Pictures Group. In April, Alibaba announced a tie-up with Internet TV operator and license holder Wasu Digital TV Media Group. Last year, Wasu and Alibaba jointly launched a television set-top box using an operating system developed by Alibaba. Alibaba also has Tmall-branded set-top boxes.

"This is a real knockdown, drag-out type battle in terms of Internet supremacy—trying to capture the hearts and the pocketbooks of Chinese consumers," said Peter Schloss, a Beijing-based media-industry veteran and investor.

In 2012, China became the world's second-biggest movie market, behind the U.S. Revenue from China's film market, including box-office receipts, is expected to grow 33% this year to $5.94 billion, six times more than in 2009, according to market research firm EntGroup.

At the same time, China's more than 600 million Internet users are increasingly watching videos online, especially on smartphones. The number of people who watched or downloaded videos on their mobile phones last year rose 84% to 247 million, according to a January report from the China Internet Network Information Center. The figure is expected to grow as Chinese mobile carriers adopt faster fourth-generation networks that are more suitable for video viewing.

One challenge for Alibaba will be showing investors that it has sizable growth opportunities outside China's e-commerce industry, where it is the dominant player, according to David Wolf, managing director of the global China practice for Allison + Partners LLC, a marketing and consulting firm.

In recent days, Alibaba has approached film studios in China about creating or acquiring films and TV shows it can stream online, according to people familiar with Alibaba's plans. Alibaba is also looking to stream international film and video, other people familiar with Alibaba's plans said.

The e-commerce giant has also approached film studios in China with proposals to invest in them. In exchange for stakes in those studios, Alibaba, in some cases, offered them both cash and a stake in Alibaba Pictures Group, according to one person familiar with the discussions.

Executives representing Alibaba in those discussions included the head of Alibaba's investment arm, according to the person. Alibaba told some studios that it could help fund their film projects, as well as distribute and promote them, this person said. Alibaba could sell and promote movie tickets on Taobao, its online bazaar of 7 million merchants, the person recalls being told.
Source: Reuters

BOJ stands pat on policy, trims economic forecast

The Bank of Japan kept monetary policy steady on Tuesday and slightly trimmed its economic growth forecast for the current fiscal year, reflecting soft exports and a bigger-than-expected slump in household spending after the April sales tax hike.

In a quarterly review of its long-term projections, the central bank maintained its forecast that consumer inflation will gradually accelerate towards its 2 percent target next year.

As widely expected, the BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion to 70 trillion yen ($592-$691 billion).

BOJ Governor Haruhiko Kuroda will hold a news conference from 3:30 p.m. (0630 GMT).

The BOJ has stood pat since launching an intense burst of stimulus in April last year, when it pledged to double base money via aggressive asset purchases to achieve its 2 percent inflation target in roughly two years.

The central bank issues a semiannual report on the outlook of the economy and prices in April and October of each year. It reviews the forecasts in January and July.
Source: Reuters

China eases cross-border investment, financing controls

China announced another modest easing of foreign exchange controls Monday, allowing offshore investment and financing through special purpose entities (SPEs).

SPEs are legal entities created overseas to isolate a firm from financial risk or even to hide ownership or debts.

Citizens can invest onshore assets or equities in offshore SPEs after they register at with State Administration of Foreign Exchange (SAFE) and can trade in foreign currencies to raise capital for offshore SPEs. SAFE also removed the restriction on domestic enterprises transferring assets or equities to offshore SPEs.

It is no longer necessary for SPEs to remit profits, bonuses or income from capital changes within 180 workdays, according to the SAFE document.

The new rules are the latest step in the internationalization of the yuan.

Source: Xinhua

China stocks rise on new energy drive

 Chinese shares closed higher on Monday, led by a surge in new energy-related shares as authorities unveiled a plan to encourage government organs to buy more new energy vehicles.

The benchmark Shanghai Composite Index rose 0.96 percent to finish at 2,066.65 points, and the Shenzhen Component Index gained 1 percent to close at 7,278.86 points.

The new energy vehicle plan, released on Sunday, has been hailed as a move to fight pollution and boost this nascent sector of the car market.

From 2014 to 2016, new energy vehicles will account for no less than 30 percent of cars newly purchased by state organs every year, under the plan.

Boosted by the news, shares including those related to charging stations and lithium batteries rallied across the board.

Ankai Automobile Co., Ltd, a producer of new energy coaches, surged by the daily limit of 10 percent to end at 4.91 yuan (0.8 U.S. dollar) per share, while Sinoma Science and Technology Co. gained 8.74 percent to end the day at 11.95 yuan.

Source: Xinhua

China: More bank loans help redevelop rundown areas

China Development Bank (CDB) granted loans totaling 219.5 billion yuan (35.70 billion U.S. dollars) to redevelop rundown urban areas in the first half of 2014, benefiting 2.13 million families, it said on Monday.

Of the total, 195 billion yuan was lent after an early-April State Council meeting laid special stress on accelerating renovation projects.

CDB Chairman Hu Huaibang said the loans will exceed 400 billion yuan this year and the bank will do its best to improve efficiency in the use of the money.

China is speeding up efforts to provide decent housing for people living in rundown areas as one of its major tasks in the urbanization process.

Source: Xinhua

Xinhua: China's fiscal revenue growth modest, expenditure surges

China's fiscal revenue grew by a modest 8.8 percent in the first half of 2014 while its expenditure surged upon accelerated spending on key projects, the Ministry of Finance (MOF) said on Monday.

Fiscal revenue rose 8.8 percent year on year to 7.46 trillion yuan (1.21 trillion U.S. dollars) from January to June, with 3.43 trillion yuan collected by the central government, up 6.2 percent from a year ago.

The 6.2-percent growth was slower than a budgeted increase of 7 percent set during the annual legislative meeting in March.

In June alone, central government revenue stood at 547.7 billion yuan, up 5.8 percent year on year, while local government revenue amounted to 798.4 billion yuan, up 10.9 percent from the same period last year.

June's total fiscal revenue increased 8.8 percent year on year to 1.35 trillion yuan, accelerating from a 7.2-percent rise in May, according to the ministry.

It explained that revenue received by the central government last month continued a trend of slow growth due to a decline in value-added tax (VAT) and increasing tax rebates for exports.

Revenue from the transfer of land use rights for state-owned land, a source of revenue for local governments other than taxation, rose 26.3 percent from a year ago to 2.11 trillion yuan in the first half, but logged a meager 7.3-percent growth in June, the ministry added.

However, fiscal expenditure maintained double-digit growth. In the first six months, total national fiscal spending expanded 15.8 percent from a year ago to 6.92 trillion yuan. For June alone, the figure surged 26.1 percent to 1.65 trillion yuan.

Local governments spent 1.45 trillion yuan in June, drastically up 28.3 percent year on year, while the central government spent 201.7 billion yuan, up 12.3 percent.

Spending on key projects in housing security, transportation, urban and rural development, and grain and oil reserves reached as high as 20 percent or more, the MOF said.

The combination of a modest growth in fiscal revenue and fast fiscal spending posed a challenge for governments at various levels, especially as the country tries to push forward across-the-board reform amid downward pressures.

China's economy grew 7.4 percent year on year in the first quarter, the highest of all major economies but below the full-year target of 7.5 percent. Data for the first half is expected to come out on Wednesday.

As part of the grand reform plan, China has vowed to build a comprehensive, transparent and efficient fiscal and tax system, pointing to fiscal revenue and spending of higher quality, as indicated in a statement released after a central leadership meeting in late June.

One of the highlights of the reform is a program to replace business tax with VAT in some service sectors, which analysts said may reduce tax revenue to some degree in the short term.

China aims to fulfill key tasks in the new round of fiscal and tax reforms by 2016, and establish a "modern fiscal system" by 2020.

China June fiscal spending jumps 26.1 pct y/y as Beijing spurs flagging economy

 China's fiscal expenditure surged 26.1 percent in June from a year earlier to 1.65 trillion yuan ($265.84 billion), reflecting government efforts to speed up spending to shore up the economy.

Spending growth accelerated from a rise of 24.6 percent in May.

Of the total 6.9 trillion yuan of government spending in the first six months, money disbursed on public housing projects grew the most, surging 30.2 percent from a year ago to 201.9 billion yuan, the finance ministry said on Monday.

Expenditure on medical and healthcare sectors rose 18.4 percent in the first half to 490.5 billion yuan, while spending on rural-urban community projects grew 23.6 percent to 618 billion yuan.

The finance ministry had earlier urged local governments to quicken the pace of budget allocation to guarantee the completion of key projects and lift the slowing economy.[ID:nL3N0OE20L]

Recent data and activity surveys have pointed to some signs of stabilisation in the economy as a raft of government stimulus measures kick in, but many economists believe more policy support still may be needed if Beijing wants to deliver on its 2014 economic growth target of around 7.5 percent.

"Data in June so far have looked relatively weaker compared to past periods of rebound," HSBC said in a research report late last week.

"This means downside risks to growth still cannot be underestimated in the second half and policy makers should step up their easing effort to sustain the recovery."

Monday's data also showed China's fiscal revenues rose 8.8 percent in June from a year ago to 1.3 trillion yuan, the ministry said in a statement published on its website,www.mof.gov.cn

The June reading of fiscal income is a touch higher than an increase of 7.2 percent in May, though the finance ministry warned that the slowing broader economy and tax cuts for selected industries could continue to weigh on fiscal revenues in the second half of this year.

The government reports second-quarter gross domestic product on Wednesday.

Aided by stimulus measures, China's economy probably steadied in the second quarter with annual growth holding firm at 7.4 percent, a Reuters poll showed, suggesting that a recovery is taking hold.
Source:Reuters

YouTube weighs funding efforts to boost premium content

 YouTube has embarked on a new round of discussions with Hollywood and independent producers to fund premium content, two sources with knowledge of the talks told Reuters, a move that could bolster a three-year-old multimillion-dollar effort that has had mixed success so far.

The talks underscore Google Inc's desire to complete YouTube's transition from a repository for grainy home videos to a site sporting the more polished content crucial to securing higher-priced advertising.

Over the past two months, YouTube executives have begun making the rounds, talking to Hollywood producers to explore the kinds of support it could offer its content creators and produce more must-see programming, according to the two people.

Executives did not lay out exactly how a program would be structured. One of the two people said the site may offer between $1 million and $3 million to produce a series of programs, and might contribute marketing funds as well.

The second person said the site was interested in videos shorter than the 30-minute, TV network-quality Web shows that Amazon.com Inc and other online sites have recently funded.

"We are always exploring various content and marketing ideas to support and accelerate our creators," a YouTube representative said in an email. The site declined to comment on the meetings.

The latest round of discussions is in its initial phases and actual measures may never materialize, the sources said.

YouTube is by far the world's most popular location for video streaming, with more than 1 billion unique visitors a month, far surpassing Netflix Inc and Amazon. But it is trying to lure more marketers for premium video advertising, boosting margins as overall prices for Google's advertising declines.

YouTube set aside an estimated $100 million in late 2011 to bankroll some 100 channels, though it never confirmed amounts spent or other details. Beneficiaries of that largesse included Madonna and ESPN, as well as lesser-known creators. Reuters was one of the companies that received funds for a channel.

But few of those have garnered much mainstream attention.

"Over 115 of the channels launched as part of that initiative are now in the top 2 percent most-subscribed to channels on the platform," a company representative said in an email.

YouTube has continued to provide backing for its content creators. It provides production facilities for creators, offers tips on how best to create content, and provides small amounts of funds for creators to test ideas.

The site also provides marketing support for online celebrities, including paying for billboards and TV ads for the likes of beauty blogger Michelle Phan and baker Rosanna Pansino.

Source: Reuters

The real shale revolution by John Kemp

 By now everyone knows the shale revolution was made possible by the combination of horizontal drilling and hydraulic fracturing.

But although fracking has captured the popular imagination, and is often used as a synonym for the whole phenomenon, horizontal drilling was actually the more recent and important breakthrough.

Mastery of horizontal drilling around 1990, originally for oil rather than gas exploration, was the decisive innovation that lit the long fuse for the shale revolution that erupted 15 years later.

"Horizontal drilling is the real marvel of engineering and scientific innovation," David Blackmon wrote in Forbes magazine last year ("Horizontal drilling: a technological marvel ignored", January 2013).

"While impressive in its own right, the main innovations in fracking have been beefing up the generating horsepower to accommodate horizontal wells rather than vertical ones, and refining of the fluids used to conserve water and create better, longer lasting fractures in the target formation."

Fracking has captured the imagination because it is controversial, sounds sinister and like an expletive, makes for good headlines, according to Blackmon.

But that has obscured the far more important role played by horizontal drilling in enabling oil and gas to be produced from previously inaccessible rock formations, revolutionising energy output and even international relations.


DAWN OF FRACKING

Fracking has been in widespread use for more than 50 years. U.S. companies began to experiment with using fracturing to release coal seam gas in the 1940s.

"The basic principle behind underground coal gasification seeks to find an economically feasible process of burning coal seams that are so situated that they do not lend themselves to being mined profitably," the New York Times explained in 1954

("New tests made to gasify coal", Oct. 31, 1954).

"The gases captured from burning the coal seams would eventually be turned into usable fuels for commercial or industrial power."

"The test will be performed by hydraulic fracturing," the paper noted, "in an effort to open up air passages inside the coal seam" to make it burn more freely and produce a greater quantity of natural gas.

"Waste petroleum oil bolstered with napalm is pumped into the well by high-pressure pumps. Sand is mixed with the oil. Pressure as high as 12,000 pounds per square inch can be built up."

"The tremendous pressure cracks the formation and the penetrating liquid oozes into the open channels," the Times observed. "Kerosene is added to thin the fracturing liquid and the opening is pumped out. The sand remains to prop open the fractures."

In the next few decades, hydraulic fracture treatments, as well as treatments using concentrated acids to shatter carbonate formations, were performed on tens of thousands of ordinary oil and gas wells across the United States and in other parts of the world (though the use of napalm was eventually phased out).

The initial experiments were conducted by the U.S. Bureau of Mines, in conjunction with oilfield services firm Halliburton and others - underscoring the critical role which the federal government has played in association with private enterprise in fostering innovation at every stage in the energy revolution.


THE TURNING POINT

Horizontal drilling is both newer and older than fracking.

The first horizontal wells were drilled more than 2,000 years ago to produce water on Iran's central plateau and in Egypt's Western Desert at the time of the pharaohs.

Horizontal wells were noted by the ancient Greek historian Polybius, who explained how they were used to increase water production. The history of horizontal drilling was related in the January 1996 special edition of Schlumberger's "Middle East Well Evaluation Review: Horizontal Highlights," which is worth reading in full.

The modern history of horizontal drilling dates back around 100 years. The first patent for a horizontal drilling technique was issued in 1891. The main application was for dental work but the applicant noted the same techniques could be used for heavy-duty engineering.

The first true horizontal oil well was drilled in Texas in 1929. Another one was drilled in Pennsylvania in 1944.

China tried horizontal drilling in 1957 and the Soviet Union tried the technique in the 1960s and 1970s, according to the U.S. Energy Information Administration (EIA) ("Drilling sideways: a review of horizontal well technology and its domestic application", April 1993).

But horizontal drilling was expensive, costing up to three times as much as conventional vertical wells, and therefore remained rare.

The turning point when horizontal drilling went mainstream can be dated quite precisely.

"Before 1990, horizontal drilling was not a popular technique. The oil industry only drilled horizontal wells as a last resort," Schlumberger explained.

"The global total for 1989 was just over 200 horizontal wells. In 1990, that total leapt to almost 1,200 wells, with nearly 1,000 of these drilled in the United States."

The extra cost for drilling horizontally had shrunk to just 17 percent, according to the EIA, as more companies experimented with the technique and benefited from learning curve effects.

To drill horizontal wells quickly and cost effectively, the industry had to master the use of flexible drill pipe and steerable down-hole motors, as well as technology enabling drillers to monitor changes in the rock in real time so the well bore can be kept within the target formation.


THE LONG FUSE

Most oil and gas is found in sedimentary basins where the rock formations underground are layered like a stack of pancakes.

The most promising formations may only be a few hundred feet thick, even if they extend for hundreds of square miles in area.

For that reason, vertical wells only come into contact with the reservoir rock for a few hundred feet. By contrast, a well drilled through the target formation horizontally can contact the reservoir for hundreds of metres or even several kilometres.

Originally, horizontal drilling was restricted to formations which were hard to produce because they had low permeability

(like shale and chalk), or were nearing exhaustion, or where conventional drilling produced too much water too quickly and not enough oil and gas.

French oil firm Elf Aquitaine drilled the first modern horizontal wells in southwest France and in the Mediterranean off Italy in the early 1980s. BP used horizontal wells at Prudhoe Bay in Alaska to minimise unwanted water and gas intrusions into its oil reservoir.

But from 1990, the technique started to proliferate. Most of the early wells were drilled into the Austin Chalk in Texas at the Giddings Field and Pearsall Field, as many as 850 in 1990 alone. Most of the rest were drilled into North Dakota's Bakken, according to the EIA.

By August 1990, horizontal wells were producing 70,000 barrels per day of oil in Texas.

In 1986, Oman's national oil company drilled three horizontal wells into a problematic reservoir, with disappointing results. But from 1990, a much more ambitious and successful programme was begun. By the end of 1994, Petroleum Development Oman had drilled more than 200 horizontal wells.

In the early 1990s, more than 50 horizontal wells were also drilled in Abu Dhabi, and Saudi Arabia also embraced the technique for its depleted Watra oil field in the Neutral Zone shared with Kuwait, according to Schlumberger.


AMBITIONS FULFILLED

The tremendous potential of horizontal drilling was recognised right from the start. "Success led some people to speculate that by the end of the century 50 percent of all new wells drilled in the United States would be horizontal," Schlumberger wrote in 1996.

That prediction turned out to be premature - but only by a few years. The number of oil and gas wells being drilled horizontally overtook the combined number of vertical and directional (slanted) wells for the first time in March 2010 (http://link.reuters.com/wan42w).

Two-thirds of oil and gas wells are now drilled horizontally, according to the weekly rig counts published by oilfield services company Baker Hughes .

It took roughly a decade of experimentation, between 1993 and 2003, to work out how to combine horizontal drilling and hydraulic fracturing in the Barnett shale in Texas, an approach pioneered by George Mitchell at the eponymous Mitchell Energy.

Many of the improvements developed producing gas from the Barnett were then applied back to oil production from North Dakota's Bakken and then the Eagle Ford shale in Texas.

From 2003, however, the number of wells drilled horizontally has grown exponentially. In fact, horizontal wells have largely replaced vertical and directional wells, on account of their greater reservoir contact and efficiency.

The shift was foreseen by Schlumberger: "In simple terms, horizontal wells allow us to do things more efficiently than vertical wells. It would be short-sighted to ignore a technique which offers improved drainage in typical reservoirs and more discrete compartments in complex reservoirs, while helping reduce gas and water coning."


LESSONS LEARNED

Commentators often write about the shale revolution as if it began in Texas in the early years of the 21st century. But no revolution emerges from nowhere. The fuse for the shale revolution was lit at least at decade earlier.

The authors of articles about horizontal drilling back in the late 1980s and mid-1990s would have been surprised it is seen as a 21st century phenomenon given how much of the revolution had been anticipated 20 years earlier.

Commentators, particularly those sceptical about fracking, also draw a sharp distinction between "good" conventional oil and gas well and "bad" unconventional fracked ones.

But history shows there is no clear division between conventional and unconventional oil and gas production.

Fracking and horizontal drilling have both been widely applied in both conventional and unconventional contexts.

Techniques pioneered to extract oil and gas from conventional but complicated formations have then been applied back into unconventional contexts, and vice versa.

Finally, the history of fracking and horizontal drilling demonstrates the long lead times needed to perfect and diffuse new technologies.

New technologies often go unrecognised, at least by those outside the field, for years before they burst into mainstream discourse.

So the next generation of technologies which will revolutionise oil and gas production are probably already out there being practised on a small scale – waiting to be improved and discovered more widely.

Source: Reuters