Can the Banks stay away from an opportunity here?

Oil continued its rally rising above $67 for the first time since November 08 (Oil prices climbed 30% in May 09, the largest monthly gain since 1999) on sustained hopes for a global economic recovery with the Saudi oil minister Ali al-Naimi predicting prices will reach $75 sometime this year.

Can the Banks stay away from an opportunity here?

Source BBC, Reuters etc. Citigroup mentioned today (1st June 09) that it will boost its Asia energy and commodities business by increasing its trade and marketing staff as it aims to sustain double-digit growth to capitalize on the region's rising influence on world markets.Also, there will be expansion into soft and some of the more esoteric commodities that we are currently doing out of London. It's a case of offering more of our global products to Asian client base."

Barcap also confirmed today that they have seen increased volumes across its commodities trading business since the start of this year and Coal & agricultural commodities would be growth areas for the next 2-3 years.

RBS mentioned in a recent interview how Commodities is their focus and continues to contribute to their bottomline.

Goldman Sachs & Morgan Stanley stay the undisputed leaders in trading oil, including physical cargoes, for the past 10-20 years but are being challenged by Barclays, Citigroup, JP Morgan, RBS Sempra & Standard Chartered.

Up to 2007-08, Citigroup's trading business was divided into 60 percent for oil, 30 percent for metals and 10 percent others but this could change ! They have announced that its current trading strategy is to link the bank's extensive client network, where it is seeing new investor appetite, with expertise across the oil barrel that will include naphtha; as well as coal, LNG, emissions and freight, filling the void left by some investment banks like Merrill Lynch, Bearn Sterns, UBS and some Hedge funds. Citigroup will grow further into trading of agricultural commodities, which will become more popular among its clients as the economy recovers in China and India, and will give more focus to metals.Efforts at developing exchanges across Asia would help to boost liquidity in the energy and commodities markets, though it is difficult for now to see prices being driven from Asia.NYMEX Clearport volumes for Asia mainly for fuel oil during January to May 2009 showed a 300-600 percent jump versus the same period last year, signaling traders' shift toward clearing in a risk-averse climate.


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