U.A.E. Economy to Expand 3.2% in 2010 With Oil at $85 a Barrel

May 29 (Bloomberg) -- The United Arab Emirates’ economy may expand as much as 3.2 percent this year with crude oil prices around $85 a barrel, according to Economy Minister Sultan bin Saeed al-Mansouri.

If oil prices are at $75 a barrel, the Arab world’s second- largest economy will grow between 2 and 2.5 percent this year, al-Mansouri said at a press conference in Dubai today. That’s above the International Monetary Fund’s estimate of 1.3 percent for 2010.

The U.A.E.’s economic growth slowed last year to 1.3 percent, according to the U.A.E. government’s annual economic report, as credit conditions tightened, global trade slowed and demand for commodities weakened.

“Given the state of the global economy, the OPEC-mandated contraction in the oil sector and the problems in Dubai, I’m very surprised the economy showed growth last year,” Simon Williams, a Dubai-based economist at HSBC Holdings Plc, said in an interview today. “I’m still forecasting growth of 2 percent this year.”

Crude oil for July delivery yesterday fell 58 cents, or 0.8 percent, to settle at $73.97 a barrel on the New York Mercantile Exchange. This month’s 14 percent decline was the biggest decrease since December 2008, when prices touched $32.40.

Oil Prices

Oil in New York dropped more than $12 a barrel in May as the euro’s retreat reduced the appeal of commodities as an alternative investment. The cut increases concern that Europe’s sovereign-debt crisis will worsen and undermine the global economic recovery.

“What we are seeing now is a drop in the price of oil from $80 down to $68, $67, then up to $70, $75,” al-Mansouri said. “This kind of fluctuation and this kind of range we have to take into account. I would be very comfortable with a figure of $80.”

The U.A.E. government expects oil prices between $70 and $90 a barrel in the “short term,” according to the government’s annual economic report released today. Al-Mansouri said oil prices will be between $80 and $85 a barrel this year and in 2011.

The Organization of Petroleum Exporting Countries’ fifth- largest producer plans to increase output to meet a 4 percent rise in Asian demand this year and next, according to the annual report. In May, U.A.E. production was unchanged at 2.32 million barrels a day from April, according to Bloomberg data.

Exposure

U.A.E. banks don’t have much “direct” exposure to the European sovereign debt crisis, al-Mansouri said.

Banks in the U.A.E. faced a shortage of funds after the global credit crunch blocked access to foreign money and investors betting on a currency revaluation withdrew cash from the emirates. The government has offered liquidity facilities to banks, lowered the repurchase rate and is discussing a law to allow the federal government to issue debt.

“Oil price trends will be significant, but the ability of U.A.E. banks to restart lending and of local corporates and financials to raise funding from overseas will be more important,” HSBC’S Williams said.

U.A.E. inflation will ease to 1.1 percent this year, after slowing to 1.6 percent in 2009 from 12.3 percent in 2008, the government said in its report today.

To contact the reporter on this story: Camilla Hall in Dubai

FORECAST THIS MONTH ( LONG TERM POSITION )

1. CURRENCY :USD/JPY


1.1.1 ENTER TIME

26 MAY 2010 - 3 JUN 2010( BUY POSITION ) TARGET PROFIT ( 10 - 50- 100 - 300 PIP ) STOP LOSS ( SL ) 50 PIP





PRICE RESISTANCE:

1. 89.89-90.09
2. 90.17-90.33
3. 90.54-91.11
4. 91.30-92.15




DISCLAIMER

Perdagangan di dalam pasaran Forex melibatkan beberapa risiko, termasuk kebarangkalian untuk mengalami kerugian dana dan beberapa kerugian yang lain dan tidak sesuai untuk semua ahli.Pelanggan seharusnya membuat penilaian sendiri yang bebas dan tidak berkaitan dengan pihak lain untuk melakukan perdagangan yang bersesuaian dengan diri sendiri berdasarkan faktor kewangan persendirian, pengalaman di dalam bidang pelaburan, kemampuan untuk bertoleransi dengan risiko dan beberapa faktor lain.
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U.S. Stocks Erase Losses as Euro Pares Drop Against Dollar, Yen

U.S. stocks erased losses, paring a global retreat in equities, while the euro wiped out most of its declines against the dollar and yen on speculation financial reform will hurt bank earnings less than estimated. Equities rebounded after briefly falling to the weakest levels of 2010.

The Standard & Poor’s 500 Index rose less than 0.1 percent, recovering from a 3.1 percent slump, after dropping its February low of 1,044. The MSCI World Index of shares in 23 developed nations fell 1.5 percent after losing up to 3.4 percent. The euro climbed to $1.2374 and 111.75 yen at 5:50 p.m. in New York, jumping from $1.2178 and 108.84 yen. The yield on 10-year Treasuries dropped 4 basis points to 3.16 percent after touching 3.06 percent as investors snapped up the safest assets earlier.

The recovery in U.S. equities reduced losses from a global selloff that sent the MSCI World Index to the lowest intraday level since July 30 and pushed Russian shares down 20 percent from their April peak. U.S. Representative Barney Frank, who will lead congressional talks to produce a financial-regulation bill, said Senate language that would require commercial banks to wall off their swaps-trading operations “goes too far.”

“Bulls were inspired to go back into the market,” said Michael O’Rourke, chief market strategist at BTIG LLC in Yardley, Pennsylvania. “It’s tough to sustain that kind of drop without a strong a catalyst. We didn’t see a default.”

Bank Mergers

Concern the European debt crisis will spread has driven the MSCI World Index down 16 percent after Greece, Spain and Portugal had their credit ratings cut. Four Spanish banks said they will combine as regulators push lenders to merge with stronger partners, boosting speculation that the nation’s ailing lenders signal widening turmoil.

Goldman Sachs Group Inc. rose 4.3 percent to help the S&P 500 Financials Index erase a 3.4 percent drop. Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. jumped at least 2.3 percent as a gauge of commodity producers reversed a 3.3 percent tumble. The Dow Jones Industrial Average slipped 22.82 points to 10,043.75 after plunging 292 points in the morning.

“It was a technical rebound,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “The stock market was oversold. We’ve breached so many levels so quickly. The economic recovery is still in place.”

Consumers gained more confidence in May than projected as a recovering U.S. economy raised expectations hiring will pick up in coming months. The Conference Board’s confidence index rose to 63.3, exceeding all estimates of economists surveyed by Bloomberg News and the highest level in two years, according to a report today from the New York-based private research group.

Libor Rises

Earlier declines in stocks came after bank borrowing rate known as Libor rose for an 11th straight day and North Korea said it will sever ties with South Korea as tensions between the nations escalate. The U.S. announced plans yesterday to conduct anti-submarine exercises with South Korea following the March 26 torpedoing of the Asian nation’s warship.

U.S. stocks are “oversold” and likely to rebound to a level short of this year’s intraday high of 1,219.80, according to Marc Faber, publisher of the Gloom, Boom & Doom report. The S&P 500 has slumped 12 percent from its 19-month high on April 23 amid concern the global economic rebound will be derailed as European governments struggle with swelling budget deficits.

“The market is near-term oversold,” Faber said in a Bloomberg Television interview today. “I don’t think we’ll go and make a new high above 1,219 on the S&P, but I think we can rally here somewhat.”

To contact the reporters on this story: Rita Nazareth in New York at

Update for 2010

Hi there,we will publish our analysis from Februari 2010 onwards.

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