Fri, Jul 29, 2016
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Commodities Briefing 29.Jul 2016

Posted on 29 July 2016 by VRS |  Email |Print

The World Bank has revised upwards its forecast for many commodity prices in the second half of 2016. Some, it says, might end the year with a lower average price than in 2015 but on the whole, prices have already seen a bottom. It has a positive outlook for energy, non-energy, crude oil and gold; that for fertiliser and metal & minerals is still negative.
Its Commodity Markets outlook for July, a quarterly publication, shows most commodity price indices rebounded in the year’s second quarter (Q2) from January lows, on improved market sentiment and tapering supply………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

A recent divergence between commodity prices and spreads for bonds of companies in the commodity sector is flashing “mind-the-gap” warnings for the market. After a strong advance earlier in the year, oil prices recently plunged to a three-month low, pulling down the shares of energy companies and even weighing on the broader equity benchmarks.
But bonds of companies in energy, metals, mining and steel seem unaffected by oil’s decline — a trend that baffles analysts and suggests that bonds might actually be mispriced………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Crude oil prices will remain in the $45-$50-a-barrel range till mid-2017, with little to change the global supply and demand situation, Goldman Sachs said. The investment bank’s analysts ran through the many scenarios that would keep the oil market in stasis.
“The improvement in oil fundamentals remains fragile and continues to feature large offsetting forces: wildfires have helped offset surprisingly strong Iran production, slowing demand growth in India and China in 2H16 will help offset production issues in Nigeria and Venezuela and finally product builds have offset crude draws,” they said………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Crude oil’s quiet slide from its 2016 high sharpens questions about the outlook. The major US crude oil benchmark has fallen into a bear market, heaping more pressure on oil companies and major producing countries that had hoped the worst of the rout was over.
West Texas Intermediate, the main US crude benchmark, fell to $41.14 on late Thursday afternoon, down 20.4 per cent from its intraday peak of $51.67 per barrel on June 9. A 20 per cent decline is the technical definition of a bear market………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

After two years of spending cuts, canceled projects and tens of thousands of layoffs, Europe’s biggest energy companies are still struggling to cope with a prolonged oil-price rout.
Royal Dutch Shell PLC Thursday reported a 93% drop in profit and rocketing debt for its most recent quarter, sending shares down sharply. Smaller peers such as France’s Total SA and Spain’s Repsol SA also booked lower profits Thursday, while rivals BP PLC and Statoil ASA announced similarly grim results earlier in the week………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Non-Opec oil field decline rates have accelerated to 5 per cent as a result of the impact on output from a 41 per cent or $285 billion reduction in global oil & gas capex from the 2014 peak, a Bank of America Merrill Lynch (BofAML) report said.
This figure is higher than the 4.87 per cent recorded in 2009, and it is also slightly higher than previous estimates for this year of 4.9 per cent, explained the report titled, “Global Energy Weekly: Oil decline rates speed up” authored by the Global Commodities team at BofAML………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Investors in European coal, the year’s best-performing commodity, should strap in for a bumpy ride as demand for the fuel wanes.
Coal for delivery in Europe in 2017 will fall about 11 percent by December, taking the gloss off the longest rally in year-ahead prices since 2010, according to a survey of traders and analysts by Bloomberg. The mineral’s 48 percent jump this year is more than double crude oil’s advance………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Looking more Las Vegas casino than Oval Office, the stage on which Donald Trump delivered his nomination acceptance speech last week was all gold, from the stairs to the podium, completely befitting of his showman-like style.
Whether you support or oppose Trump, it’s time to face reality. This is really happening, and we should all brace ourselves for what will surely be one of America’s messiest, ugliest general election seasons………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

If you poke around on the internet, you’ll find a lot of people who have criticized me for being a “gold hater.” Here are two different pieces that took me just a few seconds to find. There are plenty of tweets out there saying the same thing.
These people have been basically right. Over the years, I’ve said a lot of bad stuff about gold — how it’s a lousy currency, how it’s just a rock that shouldn’t have any value, how love of it is primitive and irrational, how it has no justifiable basis in the economy. But I’m changing my mind, and it’s all due to Donald Trump………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

The lesser known precious metals have had a stellar month, catching up with gold. Platinum has eclipsed gold’s performance this year and palladium is close to doing so, after demand from the car industry and investor appetite sent the two precious metals on a blistering rally this month.
Palladium is set for its best monthly performance in over eight years, leaving it just shy of the 26 per cent rise in gold this year. Platinum and palladium, which are used in auto catalysts, are trading at their highest levels in more than a year………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

A surprise rally in gold and silver caught the eyes of investors in the first half of the year. Now, platinum and palladium are shining brighter. Platinum is up 12% in July, putting prices on track for the best month since 2012. Palladium is even better, jumping 17%, the most since 2008. By comparison, gold added less than 2% in July as it lost momentum after gains in the first half.
The two lesser-known precious metals, used in devices that control toxic car emissions, are benefiting from better auto sales in China, concern over labour in South Africa and loose monetary policy from central banks around the world………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Further to its outlook on gold, Citibank is analyzing potential rate hikes by the Federal Reserve over a period of time to get clues on gold’s direction. The fluctuations in the US dollar are also being considered in the bank’s study of gold prices.
In the bank’s research report, it has listed three possible scenarios: In its “base-case” scenario, the bank points out a 65% chance that gold’s price will be $1,325 per ounce in 3Q16 and $1,280 in 4Q16. It has considered only one rate hike before the year’s end. The weakness of the dollar and the restoration of depressed Asian demand could also provide a helping hand to gold………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Under normal circumstances, when an investment is up double digits in just seven months, it’s a good time to sell. But with gold and silver, up 24% and 41%, respectively, so far this year, this may just be the beginning of a much bigger rally.
Of course, with that big of a jump in a short period of time, either one might be due for a pullback (more on that later). But even if the price of either falls, it will likely just be a short-term consolidation. Both gold and silver still have a long way to run. As we’ve previously explained, it’s not unreasonable to think gold prices could rise by as much as 500%. And, historically, when gold climbs, silver climbs even higher………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

The metals deals market remained sluggish in the second quarter of 2016, with mergers and acquisitions activity down to its lowest level in two years, according to a report by PwC. While some metals commodity prices rebounded, metals prices, global demand, and production all generally remained low during the quarter, and companies continued to be challenged by global economic uncertainty and volatility, the report noted.
However, PwC said it was cautiously optimistic that improvement will be seen in the second half of 2016. “Growth in US gross domestic product and continued improvement in relevant end-use sectors like automotive, aerospace, and construction are expected to begin to drive increased demand for metals, and in turn, increased production and stabilisation in the industry,” PwC said………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Canada’s exchange-traded fund industry is on pace for another record year, with more than $10.6-billion in inflows so far in 2016, says BMO Global Asset Management’s semi-annual ETF Outlook Report, released Thursday. The report also says assets under management have surpassed the $100-billion mark, which is double what the industry had under management four years ago.
This growth is expected to continue, said Mark Raes, BMO Global Asset Management Canada’s head of product. “I’m surprised with all their benefits, [ETFs are] not more mainstream and accepted now,” he said. “Especially compared to the United States. We have some catching up to do.”……………………………………….Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

ETFs tracking major domestic indexes closed mixed Thursday, as the stock market digested corporate earnings and fretted about an oil glut. The Dow industrials continued their losing streak for a fourth day.
Oil prices struck a new three-month low on Thursday after official data showed a surprise increase in crude oil and gasoline stockpiles. U.S. light crude settled at $41.14 per barrel. United States Oil (USO), a commodity exchange traded fund, dropped more than 2% as it fell for the sixth consecutive session. The ETF is now down roughly 22% from its 2016 high of 12.45, which technically marks bear market territory………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Investors love having as many options as possible available to them to make a profit. Stock trading software and platforms are a dime a dozen, and option trading has become equally ubiquitous in the everyday investor’s world. However, commodities always seemed just out of reach for all but the wealthy or professional investor.
Futures exchanges carry commodities, which can be traded. Futures are typically used by companies to hedge their product against adverse price movements. For example, a gold mining company may use futures to lock in a specific price for the gold it mined………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Mark Cutifani is avoiding the temptation to feel complacent. The head of Anglo American has seen the miner’s share price almost triple this year, topping gains in the benchmark FTSE 100 Index. But that can’t erase the bad times Cutifani’s seen since becoming chief executive officer in 2013.
“We’re not convinced the worst is behind us,” he said in a Bloomberg Television interview with Manus Cranny and Caroline Hyde on Thursday. “There will be pressure on supply right across the commodity suite.”……………………………………….Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

A controversial practice in currency trading known as “last look” is beginning to change, according to the Bank of England, which is among the regulators to have scrutinized such market rules.
Some foreign-exchange platforms have changed their policies, giving priority to orders that are less susceptible to exploitation, the BOE said in a report on Thursday. It comes a year after Britain’s central bank said last look was vulnerable to abuse. London is the global center for currency trading, a $5.3 trillion market………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Most climate scientists think the world is getting warmer and that humans are at least in part responsible. Almost every country in the world has pledged to make efforts to stabilise greenhouse gas concentrations in the atmosphere in order to prevent dangerous “interference with the climate system”. But exactly how to do this raises interesting questions about fairness.
To discuss them, we put Harvard philosopher Michael Sandel in a state-of-the-art digital studio - connected to 60 people in 30 countries. Here producer David Edmonds outlines three key puzzles………………………………………..Full Article: Source

Posted on 29 July 2016 by VRS |  Email |Print

Climate change is a global problem — but its solution relies on national, regional, and local policy actions. Take the issue of greenhouse gas emissions markets, which put a price on, say, the amount of carbon a country can release into the atmosphere.
There are about 45 substantial climate-focused markets around the world, including some operating within parts of a single country, such as California’s cap-and-trade program. But 195 countries developed the Paris Agreement in 2015 to reduce emissions. Can the trading schemes used in one place be readily adopted by others?……………………………………….Full Article: Source

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