MF Global is a world leader in execution service for exchange trading and OTC transactions in the financial and commodities markets. Serge Pushinsky, an independent broker affiliated with MF Global, has described the current state of the global market and gave a forecast of oil prices. Mr. Pushinsky wished all the success to the international conference «Exchange and the OTC markets petroleum», taking place Oct 4,5 in Moscow.

Russian version

— Serge, please tell our readers a few words about MF Global: brief history, problems solved today.— MF Global was established in July 2007 when Man Financial was separated through an initial public offering from Man Group plc, a firm established more than 200 years ago.
MF Global is a world leader in execution and clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative foreign exchange, equities, and fixed-income products in the cash market.
We offer customized solutions in the global cash and derivatives markets to a wide range of clients that includes financial institutions, corporations, hedge funds and other asset managers as well as professional traders and private/retail clients. MF Global operates in 14 countries on more than 70 exchanges, providing access to some of the largest financial markets in the world; we are the leader by volume on many of these markets.
Through delivering access across multiple markets and geographic regions, along with a breadth of product offerings and extensive product knowledge, MF Global’s focus is on helping clients define and execute their trading and hedging strategies and capitalize on market opportunities.
MF Global operates across a broad range of markets, trading instruments focused on interest rates, equities, currencies, energy and metals, agricultural and other commodities. Our businesses serve the entire range of clients investing in futures and options marketplaces.
Our worldwide client base ranges from financial institutions, global corporations, hedge funds and other asset managers, to professional traders and individuals.
MF Global is a founding member of many of the world’s futures exchanges and we are the largest broker by volume of executed or cleared transactions in most of our markets. Our rankings on the exchanges on which we operate are testimony to our preeminent positions in these markets.

— What steps to end the crisis will be taken by the major players in the financial market?
— There are measures aimed at restoring liquidity in the market. Governments have undertaken certain steps such as buying out controlling stakes in banks which face insolvency,and diverting finance from state budgets to some banks in trouble. One of the major influencing factors was the dollar emission by the US authorities and this has become one of the reasons for the increase in oil market.

— Could you give a general view on the oil prices both the forecast for short-term (1 year)?
— I think that prices will be mixed-to-lower over the next year, with prices ranging from a high near $75-$80/bbl to a low near $50/bbl. Over the next year, prices should react to a market that has an abundance of oil and demand that is failing to recover. Economic policies in place in the U.S. include a future of higher taxes and a lack of incentive measures that would encourage growth. Chinese economic growth has generally been helped by stimulus measures, which will have to be extended next year in order to maintain oil demand growth. Supplies are still too high, with several OPEC members over-producing their quotas. There have been reports in the past few days that OPEC exports to southern Europe are competing with oil supplies from Russia, thereby lowering prices. OPEC will be reluctant to cut production at its March 17th 201th 2010 meeting because they don’t want to weaken the economic recovery. Countering these negatives will be potential that Iran’s uranium enrichment continues to grow, prompting Israel to strike. The U.S. is signaling potential exit from Afghanistan, which could cause that country to revert back to Taliban and terrorist control. Those risks could prevent oil from falling much below $50/bbl.

— What about the trend for 3-5 years?
— Price forecasts 3-5 years out are too difficult to make, but some factors to think about are whether a lack of investment now will create price increases later, and whether the CFTC puts regulations on oil futures and OTC contracts to prevent another upward spike in prices similar to that of 2008.

— Quotations of which exchanges are more important for Russia’s oil exporters — NYMEX or ICE?

— WTI is usually used, but it doesn’t really matter. From what I understand, prices are quoted differently for each consuming region. Sales to U.S. customers would use WTI, European customers would use Brent, and Asian customers use Dubai or Tapis. Usually the seller will peg prices to one of the above contracts and try to match API gravity and sulfur content. WTI has always been the most acceptable, but problems in the last two years with WTI/Brent spreads have caused some traders to call for Brent becoming the more acceptable benchmark.
In 2007, there was a glut of oil at Cushing Oklahoma due to a refinery fire that effectively reduced demand, and again in 2008 due to hurricane Gustav. Brent is mainly seaborne, and isn’t affected as much by occasional refinery issues. WTI is usually considered more of a benchmark than Brent and has about twice as much open interest as Brent.

— What is the mutual influence of oil exchange prices and Russia’s oil spot prices?

— This question is answered by all factors affecting supply and demand and should affect markets equally because oil is easily transported around the globe. Supplies are affected by OPEC, investment in production, and interest rates, while demand is impacted by the state of global economies, growth in automobile usage, temperatures, hurricanes, and refinery outages.

— Finally, could you say a few words for the participants of the Moscow conference «OTC and exchange petroleum products markets in Russia»
— I want to welcome the participants and organizers, I think such an event is very useful in terms of efficiency of commodity trade. Separately, I wish success to eOil.ru, its founders and participants, this is a very important tool for OTC exchange trade in Russia.