Daily Sources 2/24

1. Ralph Atkins at the Financial Times reports that German business confidence fell from 83.0 in January to 82.6 in February, according to the Munich-based Ifo Institute's index.

"Germany is particularly exposed to eastern European economies, where the economic deterioration has gathered pace recently. German exports to the region, including to Russia, accounted for a higher proportion of the total than to the US, Mr Köbel said.

Hans-Werner Sinn, Ifo’s president, added that, 'overall the [Ifo] survey results do not point to a turn [around] in the economy.'"

2. Keith Johnson at Environmental Capital reports that Italy's industry minister Claudio Scajola told the media yesterday that Rome would sign a nuclear cooperation agreement with France on all aspects of nuclear power. "Scajola says Italy needs eight to 10 European Pressurized Reactors (EPR), known as improved third-generation plants." In October, Scajola indicated that Rome estimates that it paid €50 billion to phase out nuclear in the first place, and now plans to meet 25% of it power requirement from nuclear by 2030. At that time Scajola had complained that Italy's electricity prices were 30% above the European average and 80% above the French average. (see Daily Sources 10/17 #3.)

3. Jane Perlez at the New York Times reports that the Taliban unilaterally announced a cease fire in Swat. Army units in the valley have returned to their barracks, and the government has agreed to the introduction of sharia courts, but will not do so until peace in fact prevails. Islamabad would not confirm that an official agreement had been made, though the Taliban gave as "indefinite" the cease-fire's duration.

4. Charles Lee at Platts reports that Iraqi president Jalal Talabani--in the first state visit by an Iraqi leader to South Korea since the two nations established relations in 1989--signed a $3.5 billion oil for aid deal with South Korean president Lee Myung-Bak today.

"'With this agreement, [South Korea] can now acquire rights to develop oil reserves in Iraq's Basra region, where most Iraqi oil is produced,' the [energy] ministry said in a statement. In return, Seoul will help build social infrastructure such as power plants."

5. Helene Cooper reports that the Obama administration intends to provide Gaza with $900 million in aid. The aid would reportedly be funneled through non-governmental organizations as opposed to through Hamas, ie, the government. It will likely be difficult to get such a proposition through Congress, even as majority party, even with the monies not being sent through Hamas.

6. Platts reports that Shell is planning to lend Nigeria $3 billion at favorable terms to finance Abuja's side of its joint venture projects.

"The Financial Times reported last week that Shell has cut flaring in half but needs a further $3 billion of investment to stop it altogether. To fill that gap, Shell is offering Nigeria $3.1 billion in bridging loans at very low interest rates and project finance.

Some $1.1 billion of the loan has already been agreed, and the remaining $2 billion is expected to be confirmed soon, the UK paper said."

7. Jack Healy at the New York Times reports that the Case-Shiller home price index for December was released today showing that nationally home prices fell 2.5% from November to December. Real Time Economics carries a chart of the numbers for the 20 metro areas individually covered by the index.

"As of December, 18 of the 20 metro areas are in double digit declines from their peaks, with half posting declines of greater than 20% and four of those (Las Vegas, Miami, Phoenix and San Francisco) in excess of 40%."

Barry Ritholtz at the Big Picture provides an illustrative chart of the decline:



8. Melanie Tatum at Platts reports that Ron Denhardt, vice president of natural gas services for Strategic Energy and Economic Research, in his most recent report predicted that natural gas "prices are likely to average below $3.50/MMBtu during April through October and it is quite possible that prices will decline below $2.00/MMBtu."

"Among heavy gas-consuming
industries, primary metals output has fallen 36% [year over year in January], while agricultural chemicals have fallen back 20% and total chemicals production has fallen by 12%."

"Assuming normal weather, Denhardt projects storage levels at the end of March to reach 1.666 Tcf--well above the 1.247 Bcf reached last year and the five-year average of 1.486 Tcf. As a result, he said, unless producers take steps to substantially shut in production, working gas in storage could reach 4.4 Tcf by the end of the traditional injection season on October 31."

9. Juliet Eilperin at the Washington Post reports that the EPA is considering implementing national rules regulating greenhouse gas emissions from automobiles.

"For weeks, administration officials have been meeting with car companies as well as green groups and representatives from California--which is awaiting word on whether it will receive a federal waiver to regulate greenhouse gas emissions from vehicles -- to try to broker a deal on the issue. On Sunday, Carol M. Browner, assistant to the president for energy and climate, said she and others backed the idea of a single standard for cars and trucks.

'The hope across the administration is that we can have a unified national policy when it comes to cleaner vehicles,' Browner said at the Western Governors' Association meeting in Washington."