Financial life in a big town

Oil prices dropped slightly on Wednesday after the government reported an increase in U.S. supplies.

Benchmark West Texas Intermediate crude lost 22 cents to $103.33 per barrel in New York. Brent crude, which sets the price of oil imported into the U.S., lost 28 cents to $117.88 per barrel in London.

Prices dipped after the Energy Information Administration reported that U.S. oil supplies increased by 4 million barrels last week. The increase was a surprise following an industry trade group’s prediction late Tuesday that supplies had declined last week. The price of oil tends to fall as more supply becomes available to refineries.

Crude supplies climbed close to a record high in Cushing, Okla., where benchmark crude is delivered. High oil supplies in Cushing have pushed the benchmark price lower than other oil varieties. Those supplies are expected to begin falling in May when the Seaway Pipeline begins carrying crude oil from Cushing to the Gulf Coast.

Supplies also rose last week on the East Coast, Gulf Coast, Midwest and Rocky Mountains.

Petroleum demand fell by 3.2 percent when compared with the same time last year.

At the pump, gasoline prices fell for a ninth day to an average $3.84 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The price of gasoline has declined by an average of 9.6 cents per gallon since it hit $3.936 per gallon on April 6.

In other energy trading, heating oil was flat at $3.1314 per gallon and gasoline futures gave up 3.05 cents to $3.1288 per gallon. Natural gas added 2.9 cents to $2.004 per 1,000 cubic feet.

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The tornadoes that swept through Missouri last year will cost homeowners who didn’t feel so much as a stiff breeze. Home insurance rates in Missouri are rising a little more than 5 percent, according to figures from the Missouri Department of Insurance.

Illinois state insurance officials wouldn’t provide an estimate on how much homeowners premiums may be rising this year.

People in the insurance industry call 2011 “the year of the cat,” as in catastrophe. And that partly explains the rising cost of home insurance here.

Several tornadoes ripped through St. Louis: one on New Year’s Eve of 2010 and then on April 22. Tornadoes laid waste to parts of the mid-South in April, then a massive twister erased much of Joplin in May. All told, twisters killed 1,900 people last year.

The result was the fourth biggest disaster loss in the history of insurance. The $21.3 billion tornado loss ranked just short of the $24 billion cost of 9-11, $25 billion for Hurricane Andrew in 1992 and $47.6 billion for Katrina in 2005.

The tornadoes capped a decade of disaster, in which catastrophic losses of all sorts more than doubled from the 1990s. This year is also shaping up as nasty with 270 tornadoes reported as of March 5, compared to a 7-year average of 123, according to the insurance rating firm A.M Best.

Tornado losses used to be a minor headache for insurers, who were more worried about hurricanes on the coast.

“Insurers are starting to say, ‘maybe this is the new normal,’” said Steve Weisbart, chief economist for the Insurance Information Institute, an insurance trade group. “They’re building into rates a little more margin for catastrophic loss.”

They’re also trying to bolster sagging profits. Earnings for property and casualty insurers dropped about 40 percent last year to $11.7 billion as “catastrophe-related losses wreaked havoc,” according to A.M. Best.

And so, St. Louis homeowners will be paying higher prices for coverage. The Missouri Department of Insurance says that insurers covering 80 percent of homes have filed rate increases averaging a bit over 5 percent from July of last year to early this month.

That was actually lower than in previous years. “Base rates” – rates before any discounts - rose 14 percent in 2009 and 9 percent in 2010, according to Missouri Insurance Director John Huff.

Those 2009 and 2010 increases were due in part to another ‘catastrophe’ hitting insurers — poor returns on their investments. 

Investment income has taken a big hit in recent years because of low interest rates, and falling investment income was pushing up rates before the rash of tornadoes.

Insurance premiums also depends on other factors, such as the amount of competition in the market and the amount of loss claims.

Huff says competition remains strong in Missouri with 130 companies angling to cover homes.

Insurers are looking for ways to lower their disaster losses beyond simply raising rates. More are moving to percentage deductibles, under which the homeowner pays a fixed percentage of any loss, says Weisbart. That’s a step away from fixed deductibles, in which the homeowner pays a certain dollar amount with the insurance company paying everything else up to the policy limit.

In Missouri, regulators are seeing some insurers move away from coverage that replaces damaged property with new property. If an old roof is blown off, they may give the owner a check for the value of an old roof, even if it costs more to replace it with a new roof.

Homeowners have to read their policy to know that they’re getting. “It’s really up to the consumer to do their own homework,” says department spokesman David Owen.

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Oil prices rose slightly to near $107 a barrel Monday in Asia as simmering tensions over Iran’s nuclear program kept crude near 10-month highs.

Benchmark oil for April delivery was up 29 cents to $106.99 in electronic trading on the New York Mercantile Exchange. Brent crude was up 15 cents to $123.80 per barrel in London.

Crude jumped to $110.55, the highest since May, late Thursday after an unconfirmed Iranian media report of a pipeline explosion in Saudi Arabia. Saudi officials denied the report, which helped send crude down $2.14 to settle at $106.70 per barrel in New York on Friday.

“The magnitude of the response to the unfounded rumor highlights a tight crude supply situation that will be keeping the entire market highly responsive to even the smallest hint of a supply disruption,” energy consultant Ritterbusch and Associates said in a report.

Crude has risen from $96 last month amid investor fears that growing tension over Iran’s nuclear program will spark an armed conflict and disrupt global crude supplies. Analysts say Saudi Arabia and other oil producers do not have enough spare capacity to quickly make up for Iran’s 4 million barrels a day of crude.

Traders will also be closely watching the latest U.S. economic indicators this week. The economy has been showing signs of gradual improvement in recent months, which has bolstered investor optimism and pushed crude prices up from $75 in October.

Monthly employment data is scheduled to be released on Friday.

In other energy trading, heating oil added 0.2 cent to $3.20 per gallon and gasoline futures were up 0.7 cent at $3.28 per gallon. Natural gas fell 4.9 cents at $2.44 per 1,000 cubic feet.

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Official data show that Germany’s unemployment rate edged up to 7.4 percent in February, due to a spell of bitterly cold weather.

The Federal Labor Agency said Wednesday the unadjusted jobless rate was up from 7.3 percent in January. The number of people registered as unemployed was 3.11 million _ that’s 26,000 more than in January but 203,000 fewer than a year ago.

Germany’s job market is nonetheless remains in a good condition after two years of strong economic growth.

Its strength contrasts with high unemployment in economically weaker countries that have been hit hard by the eurozone debt crisis. Spain and Greece have jobless rates above 20 percent.

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OTTAWA

Boeing Co., Sikorsky, Eurocopter and Bell, the top four helicopter makers, are focused on Asia as 1,000 orders from countries spanning India to Korea are set to make it the fastest growing military-chopper market by 2015.

Tenders in half a dozen nations should produce sales of $10 billion over the next three years, Norbert Ducrot, executive vice president for the Asia-Pacific region at Eurocopter, the world’s No. 1 manufacturer of rotorcraft, said in an interview.

Key bids include naval tenders in Korea and India, for which Sikorsky, a unit of United Technologies Corp., is pitching its Seahawk antisubmarine model, a version of the Black Hawk.

Asian military spending rose 14 percent last year, funded by the world’s fastest-growing regional economy. The helicopter market is surging as nations race to replace aging Western, Soviet and home-grown models, led by emerging powers seeking the means to extend their military reach, according to Craig Caffrey, a defense analyst at IHS Jane’s DS Forecast in London.

“In China and India, the market is being driven by attempts to improve the mobility of their ground forces, which requires the procurement of large quantities of tactical transport helicopters,” said Caffrey, adding that Asia represents “one of the most open and diverse” markets for the aircraft.

While the U.S. will remain the biggest military-helicopter market over the next decade, its share of sales will dip to 38 percent from 50 percent with its exit from Iraq last year and a withdrawal from Afghanistan planned for 2014, according to London-based Visiongain no fax cash loans.

Competition intensified last week in Singapore, with major manufacturers pushing their products at the last major air show before a series of contract announcements begins with an Indian order for 197 light helicopters valued at $1.5 billion.

India, whose existing chopper fleet is dominated by Soviet models, also has a contest under way for 55 naval helicopters, worth $2.2 billion, for which France-based Eurocopter is pitching the NH90 against Sikorsky’s Seahawk and Textron Inc.’s Bell 429.

The south Asian nation is also seeking 22 attack choppers in a tender for which Chicago-based Boeing says its AH-64 Apache, built in Mesa, Ariz., has been selected as preferred bidder over the Russian Mil Mi-28 Havoc, together with 15 heavy-lift models that have attracted proposals from the Boeing Ch-47 Chinook, built in Ridley Park, Pa., and the Mi-26 Halo.

Boeing is offering the Chinook model used in Afghanistan.

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The Dow has edged teasingly close to 13,000, a marker it hasn’t reached since before the financial crisis brought the U.S. economy to its knees.

The Dow Jones industrial average rose 46 points to 12,950, its highest close for the year so far. That followed a 123-point surge the day before.

The Standard & Poor’s 500 also popped, rising 3 points to 1,361, also securing its highest close for the year. The Nasdaq composite fell 8 points to 2,952.

Among the biggest movers were Campbell Soup and ketchup maker H.J. Heinz, both of which beat analysts’ expectations for quarterly results.

The yield on the benchmark 10-year Treasury note rose to 2.01 percent from 1.99 percent, a sign that investors are becoming more comfortable with riskier stock investments.

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A multiple sclerosis drug made by industry giant Novartis is under investigation after at least 11 patients taking the medicine died.

The drug, Gilenya, was licensed last year in the European Union to treat patients with a severe type of multiple sclerosis.

The deaths raise concerns Gilenya could trigger heart problems after patients take their first dose, according to a statement issued Friday by the European Medicines Agency. The agency, which is now investigating the drug, said it isn’t clear if it caused the deaths.

One of the deaths was in the U.S., where a patient died within 24 hours of taking the first dose.

The European agency said it didn’t know where the other 10 deaths occurred, but that they were reported to its drug database, which monitors side effects from medicines in the European Union.

A spokeswoman at the U.S. Food and Drug Administration said it also is conducting a data analysis but has not made any definitive conclusions and does not know when its review will be complete.

More than 30,000 patients have taken Gilenya worldwide payday loan. The European Medicines Agency advised doctors to increase their monitoring of patients after the first dose of the medicine. The agency said the risk of a slow heart rate after the first dose of Gilenya was known when it was approved.

Novartis AG said it was advising doctors of new recommendations on using Gilenya. They had previously recommended all patients be monitored for six hours after their first dose, but are now tightening that to include continuous heart monitoring using electrocardiograms and measuring blood pressure and heart rate every hour. In certain patients, that monitoring should be extended, the drug maker said in a statement.

This new guidance applies only to patients taking their first dose, Novartis said in a statement.

The EU drug regulator hopes to finish its review of the drug by March.

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PARIS

Two executives at MF Global are seeking to distance themselves from an estimated $1.2 billion in customer funds that has gone missing, according to their prepared testimony for a Senate hearing.

Bradley Abelow, the president and chief operating officer, and Henri Steenkamp, the chief financial officer, both say they don’t know where the money is or why it is missing.

Abelow says he cannot explain what happened to the money without access to MF Global documents, which a trustee now controls.

Steenkamp says he had no direct involvement with transfer of funds.

Former Sen. Jon Corzine, who led MF Global as CEO until last month, told a congressional panel last week he doesn’t know what happened to the money. All three will testify Tuesday before the Senate Agriculture Committee.

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