BBC News - Give Ofgem new powers on energy bills - Ed Miliband

The energy regulator Ofgem should be given new powers to force firms to cut gas and electricity bills - to reflect falls in wholesale energy prices, Ed Miliband has said.

The Labour leader told Andrew Marr he would demand fast-track legislation on energy in a Commons debate next week.

Ofgem currently does not have the power to force a reduction in prices.

Trade body Energy UK said suppliers were already passing on price cuts to customers.

Wholesale energy costs have been dropping in recent months, with the price of a barrel of Brent Crude oil falling to below $50 this week.

'Immediate relief'

In an interview on the BBC's Andrew Marr Show, Mr Miliband said: "We do want to see those wholesale costs passed on to consumers.

"We're going to bring before the House of Commons a vote in Parliament to say the government should bring forward fast-track legislation to ensure that we give the regulator...the power to cut prices."

"We see wholesale costs go down 20% in gas prices over the last year and no reduction in bills."

The vote called by Labour which will be held during an opposition day debate on Wednesday would give Ofgem "the power to cut prices to bring immediate relief", Mr Miliband said.

He suggested that the necessary legislation could be pushed through Parliament before the general election on 7 May.

Chancellor George Osborne has launched a Treasury investigation into whether energy companies are passing on the savings from falls in the wholesale price of oil.

Mr Miliband said the government should "put their money where their mouth is".

Analysis

Joe Lynam, BBC News business correspondent

When energy prices were soaring in September 2013, Ed Miliband said the next Labour government would introduce a price freeze until 2017 on energy companies.

Yet since June last year, oil prices have gone down by 50% and wholesale energy prices have dipped by 30%. But the prices being paid by households to heat their homes have not fallen at anything like that speed.

That's partly because big energy companies bought up large quantities of oil and gas in advance - called "hedging" - at the higher prices to avoid being hit by a potential price freeze from May this year. So a political pledge - as opposed to actual legislation - has had the effect of sustaining prices at an artificially higher level than would otherwise be the case.

Now Labour wish to "double down". As well as its own pledge should it gain power, it is demanding new legislation from the coalition ahead of the election to allow Ofgem to force price cuts on big energy firms.

Ofgem currently doesn't have the power to set prices. All it can do is shout loudly if it feels that consumers are being overcharged.

A spokesman for Energy UK said no new powers were needed, adding: "Energy suppliers are already passing on price cuts to customers. With over 25 suppliers in the market, competitive pressure is forcing down prices every week.

"When people shop around they can easily find deals that are over £100 cheaper than this time last year and line with with falls in the wholesale energy price part of energy bills."

Ofgem said: "We've made it clear that we think energy suppliers should explain more clearly why the consistent fall in wholesale price hasn't fed through to consumer prices."

The Conservatives said Labour's energy policy was "in chaos" and that Ed Miliband was "late to the game".

"Ed Miliband has been saying he wanted to have an energy price freeze. If we had that freeze as he wanted prices would not have fallen as they have started to do now," Culture Secretary Sajid Javid told the BBC.

"He's running around looking for some new energy policy because the one he had before - the energy price freeze - has failed."

'Wage index'

In a wide-ranging interview, Mr Miliband discussed the terror threat following the Paris attacks, problems in the NHS and Conservative plans to make it harder to stage public sector strikes.

He also called for a new Living Standards Index to track how people's finances are affected by changes to wages, prices, taxes and benefits.

Mr Miliband has written to the UK Statistics Authority, suggesting this quarterly index should have equal status to other official measures.

Labour proposes the new indicator should be drawn up by the Office for National Statistics, and the Office for Budget Responsibility should be expected to issue LSI forecasts in the same way as it does for gross domestic product.

Mr Miliband earlier said: "We measure all kinds of things but the only thing we don't measure is the thing that matters most, and by which I will judge my government - the living standards of working people."

Reuters News - Oil heads for seventh weekly loss as supply glut drags

A man fills up his car at a petrol station in Rome January 6, 2015.

CREDIT: REUTERS/MAX ROSSI

(Reuters) - Oil prices were heading for a seventh weekly loss on Friday, with key producers showing no signs of cutting output in the face of a global supply glut.

Brent and U.S. crude futures both hit their lowest since 2009 this week and are down more than 50 percent from June, although they inched up on Friday after robust U.S. economic data brightened the outlook for demand.

Brent crude had climbed 9 cents to $51.05 a barrel by 0717 GMT.U.S. crude for February delivery was up 29 cents at $49.08. Brent's premium to U.S. crude fell near $2 a barrel, the narrowest since October.

But supply concerns remained as Saudi Arabia and its Gulf OPEC allies are showing no sign of considering cutting output to boost oil prices even as demand slows globally.

Meanwhile, annual consumer inflation in China remained near the lowest in five years, signaling persistent weakness in the world's largest energy consumer.

"Without any changes to fundamentals, selling appears largely to be jittery investors looking for supply-demand equilibrium," ANZ analysts said in a note.

Traders were wary of calling a floor price at $50 in the overwhelmingly bearish oil markets.

If recent market history is any guide, Brent prices could mark time around $50 a barrel for another few days before resuming their decline.

"We've seen oil hovering at around $60, but it fell way below," an Asian oil trader said.

Supply is piling up with some of the world's largest oil traders hiring supertankers this week to store crude at sea.

BNP Paribas has cut price forecasts for Brent and West Texas Intermediate (WTI) crude by more than $10 per barrel.

BNP now expects Brent to average at $60 per barrel this year, down $17 from a forecast made in November. The 2015 WTI average has been revised down to $55 from $70.

"Supply issues will dominate demand in terms of fundamental factors, with the market focusing on how the current supply surplus will ultimately resolve itself," BNP said.

(Reporting by Florence Tan; Editing by Joseph Radford and Tom Hogue)

BBC News - Deflation hits eurozone as energy prices fall

Inflation in the eurozone has turned negative, official figures have shown, with prices in December 0.2% lower than the same month a year earlier.

The tip into deflation adds pressure on the European Central Bank (ECB) to take further action to stimulate the bloc's economy.

The bank's inflation target is below but close to 2%.

The fall was driven mainly by lower energy costs due to the plunging price of oil.

Energy prices in December were 6.3% lower than a year earlier. If energy prices are excluded, December's inflation rate for the eurozone was 0.6%, the same as in November.

Prices for food, alcohol and tobacco were estimated to be unchanged from a year earlier, after rising 0.5% in November.

Prices for services, which had held steady in November, are estimated to have risen 1.2% compared with December 2013.

It is the first time the eurozone has experienced deflation since the depths of the financial crisis in 2009.

'Policy failure'

The estimate from Eurostat, the statistical office of the European Union, will be updated later in the month.

James Ashley, chief european economist at RBC Capital Markets, said Wednesday's data was a footnote to the wider economic picture.

Arguments over whether inflation was just above or below 0%, and whether the tumbling oil was to blame, were "specious," he said.

"The far more important question is why inflation is anywhere near 0% in the first place: in our view, the inconvenient truth for policymakers is that, in large part, that is a reflection of the failure of policy, both fiscal and monetary."

Howard Archer, chief European economist at IHS Global Insight called the inflation data "dire news for the ECB".

Debt worries

The central bank is increasingly expected to launch a new round of economic stimulus measures, or quantitative easing (QE), and the latest numbers will cement expectations. However, Germany reportedly opposes more QE.

The situation in Greece also complicates the issue. Deflation increases the debt burden, and Greece's indebtedness to its international bailout creditors is a key issue in the current general election campaign.

Greece's left-wing anti-austerity Syriza party, leading the election polls, wants to re-negotiate the terms of the bailout, sparking fresh worries about the stability of the eurozone.

On Wednesday, Greece's long-term borrowing rate rose above 10%. Yields on the 10-year bonds were trading at 10.07%, up from 9.746% on Tuesday.

The main stock market in Athens was also trading down more than 2%.

Separately, Eurostat reported that the unemployment rate in the eurozone remained at 11.5% in November, unchanged from October, but down from 11.9% in November 2013.

Among the euro-bloc states, the lowest unemployment rates in November were in Austria (4.9%) and Germany (5.0%), and the highest in Greece (25.7% in September 2014) and Spain (23.9%).

By Andrew Walker, BBC World Service Economics correspondent

So, the much-heralded slide into deflation has finally happened.

The falling oil price is the immediate cause and there is, up to a point, a positive aspect to that for the eurozone. It reduces costs for the majority of businesses and leaves consumers with more to spend on other items.

But there can be what the European Central Bank President Mario Draghi called second round effects. If this deflation influences expectations and is reflected in future decisions about prices and pay, it could become entrenched.

There are several reasons why persistent deflation can be damaging, but one big issue for the eurozone is the effect on the many people and governments with debt problems.

If incomes and tax revenues fall those, debts can be even harder to keep under control. That is why some - such as the consultants Capital Economics - have warned there's now a danger of re-igniting the region's debt crisis.

Bloomberg News - SNB Interventions Boost Currency Reserves to Record High

The Swiss National Bank’s foreign-currency reserves hit a record in December after an appreciation of the franc forced the institution to end a two-year hiatus in interventions.

Holdings increased to 495.1 billion francs ($490 billion) from a revised 462.7 billion francs in November, the central bank based in Zurich and Bern said on its website today. The holdings are calculated according to International Monetary Fund standards at the beginning of every month.

The SNB said on Dec. 18 that it had resumed purchases of foreign currencies after the franc hit its strongest since 2012 amid a weakening of the Russian economy and the prospect of more euro-area stimulus by the European Central Bank. It imposed a negative deposit rate to stave off capital inflows and lowered its target range for three-month franc Libor to reinforce its three-year-old minimum exchange rate of 1.20 per euro.

Pressure on the SNB’s cap was “very high in the first half of December,” said Evelyn Herrmann, an economist at BNP Paribas SA. “Geopolitical tensions, in particular the situation in Russia, were cited by the central bank as the main reason for increased safe haven flows into the currency.”

Negative rates don’t hinder the SNB in its ability to wage unlimited currency interventions, President Thomas Jordan told Swiss television SRF earlier this week.

The Swiss currency was unchanged at 1.2010 per euro at 9:20 a.m. in Zurich today. Against the dollar it stood at 1.01 francs.

As of the end of the third quarter, the SNB held 45 percent of its reserves in euros and 29 percent in dollars. The bulk was invested in highly rated government bonds, with 16 percent in equities.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

BBC News - China scraps quotas on rare earths after WTO complaint

China has scrapped its quota system restricting exports of rare earth minerals after losing a World Trade Organisation (WTO) case.

China is the largest producer of rare earth elements in the world

Beijing imposed the restriction in 2009 while it tried to develop its own industry for the 17 minerals, which are crucial to making many hi-tech products, including mobile phones.

Last year, a WTO panel ruled that China had failed to show the export quotas were justified.

China dominates rare earth production.

It is estimated to be responsible for 90% of its production, despite only having a third of the world's deposits.

The change was detailed in China's Ministry of Commerce trade guidelines, issued at the end of December.

Under the new guidelines, rare earths will still require an export licence but the amount that can be sold abroad will no longer be covered by a quota.

The United States, the European Union and Japan had complained that China was limiting exports in a bid to drive up prices.

The complaint, upheld by the WTO, also said the quota was designed to gain market advantage for domestic producers with cheaper access to the raw materials.

Reuters News - Oil hits five-and-a-half-year lows on supply glut

An man refuels a vehicle next to a pricing quotation board at a petrol station in Tokyo December 17, 2014.

CREDIT: REUTERS/ISSEI KATO

(Reuters) - Oil prices dropped to fresh 5-1/2-year lows on Monday as worries about a surplus of global supplies and lackluster demand dragged on oil markets.

Russia's oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7 percent thanks to small non-state producers, Energy Ministry data showed.

Iraq's oil exports were at their highest since 1980 in December, an oil ministry spokesman said, with record sales from the country's southern terminals.

But oil producer group OPEC has decided not to cut output, opting to let the market find its own level.

The two oil benchmarks - Brent and West Texas Intermediate - have now lost more than half of their value since mid-2014. Brentcrude for February dropped as low as $55.25 a barrel, its weakest since May 2009, before edging back to $55.67, down 75 cents, by 0815 GMT.

U.S. crude slid to $51.40 a barrel on Monday, also its lowest since May 2009, before recovering a little to trade around $51.90.

"It's hard to see much improvement in oil fundamentals near term," Morgan Stanley analyst Adam Longson said.

"New supply has entered the market, offsetting Libya woes. Additional exports are coming primarily from Russia and Iraq."

Lackluster economic data from the United States on Friday fueled worries about the state of the global economy and the strength of oil demand.

"Oil demand is unlikely be robust this year when we look at the state of economies in China,Japan and Europe," said Yusuke Seta, a commodity sales manager at Newedge Japan.

A weak euro may also have contributed to further oil losses as it reduces the purchasing power of euro holders for dollar-denominated oil. [MKTS/GLOB]

Investors are also increasing bets on lower oil prices.

Open interest for $40-$50 strike puts have risen several fold since the start of December, while $20-$30 puts for June 2015 have traded, said Stephen Schork, editor of Pennsylvania-based The Schork Report.

Conflict in Libya has reduced the OPEC producer's crude output to around 380,000 bpd, state-run National Oil Corp (NOC) has said.

Fighting was reported near the country's biggest oil export port Es Sider in the east even as a week-long fire at the port's storage tanks was extinguished on Friday.

BY CHRISTOPHER JOHNSON

BBC News - Russia annual inflation jumps to 11.4% as rouble falls

Russia's annual inflation for 2014 will hit about 11.4%, according to initial estimates, driven higher by the plunging value of the rouble.

The currency's falling value has pushed up prices, particularly of food, which rose about 15.4% during the year.

The state statistics service Rosstat said that consumer prices rose 2.6% in December, a month when the rouble suffered some of its steepest falls.

Meanwhile, Russia has intervened to support another bank, Gazprombank.

In 2013, the annual inflation level was 6.5%. The 2014 inflation figure is the highest since Russia's financial crisis in 2008.

Lower oil prices and Western sanctions imposed over Ukraine have driven down the value of the rouble, meaning that the price of many goods - especially imports - have risen.

Rosstat said that the price of non-food products rose by 8.1% during 2014, while service charges went up by 10.5%.

Rosstat is due to publish final inflation data on 12 January.

Russia's economy shrank in November for the first time in five years, and is expected to enter recession in the first quarter of 2015.

Bank intervention

A fall in the price of oil has cut revenues earned by the government, while sanctions imposed over Russia's actions in Ukraine have hit the banking sector by cutting off foreign lending.

On Wednesday, the government bought almost 41bn roubles (£437m; $683m) worth of state bank Gazprombank's shares as part of the support plan.

The cash injection helps the "bank to strengthen its capital structure and provides for sufficient scope to expand its operations", Gazprombank said in a statement.

On Tuesday, VTB, Russia's second largest bank, said it had received 100bn roubles ( £1bn; $1.8bn) from the country's national welfare fund, part of a scheme to recapitalise the banking system.

And last week, Moscow significantly scaled up rescue funds for Trust Bank, saying it would get up to $2.4bn in loans to bail it out.

Russia's President Vladimir Putin said early this month that domestic banks should be supported to boost lending to important projects in the real sector of the economy.

"We have a large amount of internal savings, they should become effective investments," he said in his annual state of the union speech.