Behind Oil's Surprising Surge

Demand for oil, which almost always rises, is likely to drop by 3% in 2009—the worst decline in almost 30 years. Stockpiles are so high that an ocean of oil is building up around the world in tankers or in depots. Yet since hitting a low of $34 per barrel on Feb. 12, the price of light, sweet U.S. crude has more than doubled, to $71 per barrel.

Investors, who dumped oil last fall, are no longer deterred by the prospect of a glut. Instead, with extreme pessimism about the world economy giving way to cautious optimism, markets are reverting to last year’s worries about future supply shortages. Spooked by last fall’s price collapse, OPEC announced 4.2 million bbl. per day in cuts and is doing a better job than usual sticking to quotas. Even typically recalcitrant Venezuela and Iran are curbing output.

Source: BusinessWeek

Executive Pay Targeted

The Obama administration has named a “compensation czar” to oversee salaries and bonuses at some of the U.S.’ biggest firms. Washington attorney Kenneth R. Feinberg will take up the role aimed at curbing excessive compensation at companies including Bank of America, Citigroup, General Motors and American International Group.

Source: Washington Post

Beijing Auto May Bid for Volvo

Beijing Automotive Industry Holding may submit a bid for Volvo. A bid by Beijing Auto would put it in competition with Chinese private automaker Geely, also interested in acquiring the troubled Swedish unit of Ford Motor.

Source: Wall Street Journal

Koreans Hold Rare Talks

South Korean officials traveled to North Korea’s Kaesong Industrial Zone for talks aimed at restarting business at the jointly-run manufacturing park. Tensions remain high on the Korean peninsula following a recent nuclear test by Pyongyang.

Source: Telegraph

Home Depot Raises Full-Year Profit Forecasts

Home Depot’s May sales, its biggest month every year, were better than expected, although still down from last year. Chief Executive Frank Blake said Wednesday that the “worst of the correction” in the U.S. housing market is past and raised full-year profit forecasts.

Source: MarketWatch

China’s Exports Fall by Record 26.4%

Hit by declining world demand, China saw its exports fall by a record 26.4% in May. Beijing has raised export tax rebates on steel, toys, electronics, and other products in an effort to stem factory closures and preserve jobs.

Source: Bloomberg

GE Pushes into Middle East

General Electric will announce Thursday a $500 million deal to sell steam and gas turbines to the Kingdom of Bahrain. Over the past year, the New York company has signed more than $6 billion of business deals in the Middle East, helping make up for a slump in business in the U.S.

Source: Financial Times

Japan Economy Shrinks Record 3.8%

Japan registered a 3.8% fall in gdp in the first quarter, its worst ever. Now analysts are predicting Japan’s economy will grow slightly this quarter.

Source: BBC.com

In Your Face: FedEx’s Anti-Union Drive

Reader Danny Writes:“How can unions be called ‘gangster-like’ for doing the same kind of lobbying for workers’ rights as big corporations do against them, only with smaller budgets?”

Tell Us: Thoughts on FedEx’s ‘Brown Bailout’ Campaign?

Hot Topic on the Business Exchange: US Economy

The US economy is in turmoil. Shirley Brady and others are sharing their insights on the crisis.