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Commodities Briefing 05.Mar 2015

Posted on 05 March 2015 by VRS |  Email |Print

Glencore Plc, the world’s biggest listed commodities trader, said 2015 could be a boom year for oil amid the biggest price swings in six years. “It is looking very well structured for oil trading,” Chief Executive Officer Ivan Glasenberg said in a conference call with analysts Tuesday. “If it continues like this, oil could have a blowout year.”
Volatility in Brent crude rose to the highest since 2009 last month, creating bigger gaps between prices that traders need to make a profit. Crude oil plunged 61 percent from June to January because of oversupply, before paring some of that slump. Glencore, based in Baar, Switzerland, and Vitol Group, the largest independent trader, will benefit from bigger price swings in 2015, said Fitch Ratings Ltd., a provider of financial information………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

Saudi Arabia’s oil minister said on Wednesday he expected oil prices, which hit a near six-year low in January, to stabilize, signalling cautious optimism about the market outlook. Giving a speech in the German capital, Ali al-Naimi also urged non-OPEC producers to help balance the oil market, saying it was not up to Saudi Arabia to subsidize higher-cost producers and that circumstances required non-OPEC to cooperate.
“Going forward, I hope and expect supply and demand to balance and for prices to stabilise,” Naimi said. “Global economic growth seems more robust.”……………………………………….Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

Saudi Arabia’s oil minister Ali al-Naimi Wednesday denied his country was waging a price war on U.S. shale producers and reasserted OPEC’s relevance, arguing that its actions have helped crude prices stabilize in recent weeks. “Some speak of OPEC’s ‘war on shale,’ others claim ‘OPEC is dead.’ Theories abound. They are all wrong,” Naimi said.
Naimi, an influential figure in the Organization of the Petroleum Exporting Countries, who often makes terse, sometimes opaque, remarks to reporters, used the speech to issue a lengthy and unusual defense of Saudi oil policy since crude prices began collapsing last summer………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The oil market bid farewell to $100 prices for West Texas Intermediate crude back in July, and many years may pass before it sees it again. Analysts at UBS on Wednesday said the market has entered a “new paradigm,” with WTI oil prices remaining “lower for longer.” They expect prices to trade in the $65 to $70 a barrel range “at least over the next several years.”
“The success of U.S. oil shale has been a game changer for the industry,” the analysts, led by Angie Sedita, said. “U.S. oil shales have lowered the cost of the marginal barrel of oil with roughly 60% of the basins economic at $65/bbl oil or lower.”……………………………………….Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

With oil’s price collapse, we can now declare that OPEC’s reign as king of the market is over. However, just as certain is the fact that there is no one to assume the throne. A new oil market and industry are taking shape—and without clear leadership, there will be many positive and negative consequences for global energy security.
As we consider OPEC’s fall, it is important to understand that it was never able to fully control the oil spigot at whim, nor the global economic forces most responsible for setting the oil price. In fact, at the rise of its intervention in the oil market in the 1970s, when its Arab members ordered an embargo that sent prices skyrocketing, OPEC’s actions actually hurt itself more than its consumers and contributed to its eventual decline………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The gold price failed to recover this morning after two days of losses resulting from India’s surprise decision to maintain an import duty on the metal.
Traders believe that US jobs data due on Friday might lead to a rally, reversing the downward trend that has seen the gold price drop from $1,300 per ounce at the end of January to little over $1,200 today. At noon, gold was trading at $1,204.02 per ounce, down 53 cents on Tuesday’s close………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

Gold’s relationship with silver and the stock market seems to have changed. The mint ratio is the gold price divided by the silver price. Assuming supply stays reasonably stable, the mint in recent times has tended to rise when equities fall.
When the S&P 500 hit its post-dotcom bubble low in 2003, the mint breached 80. Just before Wall Street’s credit crunch trough in early 2009, the mint brushed 90. The inverse correlation is explained by investors lowering the price of silver relative to gold as the tougher economic times hurting stocks are seen reducing demand for the grey metal. Gold has hardly any industrial uses………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The London Bullion Market Association (LBMA) believes the gold industry is ready for wholesale reform, including a tailor-made mechanism to report daily turnover and potential clearing following 2014’s shake-up of benchmarks. The transparency of financial markets has been a focus of global regulators after evidence of price manipulation in lending rates between banks with the LIBOR scandal in 2012.
Both gold and silver were included in a list of seven benchmarks that will be regulated by Britain’s watchdog Financial Conduct Authority (FCA) from April. New rules on over-the-counter derivatives are expected in Europe by 2016, while a broader review of UK markets is now evaluating the introduction of mandatory clearing and transaction-reporting obligations for precious metals………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The days of easy profits for aluminium traders benefiting from warehouse queues may finally be over as prices fall and new rules seek to change behaviour. When demand for aluminium cratered during the financial crisis, supplies swamped warehouses, where banks and commodity trading houses could borrow at low interest rates, store the metal and sell a futures contract for delivery at higher prices.
It was a trade that took significant amounts of metal off the market. Rather than suffering, producers from Alcoa to Rusal earned handsome profits by satisfying demand from industry as long queues built up at warehouses for metal that subsequently needed to be withdrawn………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The European Central Bank and the Bank of Japan are fighting hard against deflation and this will eventually have an impact on the global economy. Furthermore, underemployment in the United States has been a problem. As consumers earn less money, they logically spend less.
This, in turn, leads to decreased prices for goods and services in order to maintain demand. This is deflation and it’s happening right now…very slowly. To add to the problem domestically, companies are laying off workers due to healthcare reform so they can maintain profits. In addition, the decline in oil will lead to layoffs in that industry as well………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

Commodities may not suit everyone but can be a good diversification tool – especially precious metals. Commodities are hot at the moment. After three catastrophic years oil, copper and silver looks cheaper than ever. For a contrarian investor, this weakness could be an opportunity.
One of the purest ways to access commodities is through exchange traded commodities. Before ETCs were launched real assets like nickel, gasoline and wheat were only available to certain institutions. But commodities will not be suitable for all investors and some products are more risky and complex than others………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

As the Crimean crisis raged last summer, Tyler Mordy and his colleagues at Hahn Investment Stewards made a tactical call in the commodities market. Believing that Russia’s aggression would stoke a major political crisis, they invested in palladium, a silvery-white metal essential in the production of catalytic converters, fuel cells and countless types of electronics.
Russia is the largest source of palladium, and investors speculated about supply disruptions and dwindling stockpiles, sending prices skyward. “Palladium took off like a scalded cat. It worked out incredibly well for us last year,” recalls Mr. Mordy, who is director of research and co-chief investment officer at the Toronto-based firm………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The Swiss government has not asked its central bank to introduce a new cap on the value of the Swiss franc, a spokesman for the government said on Wednesday, after a Swiss newspaper reported that two ministers had suggested such a move.
Switzerland’s central bank stunned financial markets on Jan. 15 when it ended its cap on the value of the franc against the euro, stoking fears for the export-reliant Swiss economy. The Swiss National Bank (SNB) is independent of the government in its monetary policy decision making………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

The head of an independent US agency within the US Treasury that supervises national banks has issued new statements on virtual currencies and their “potentially revolutionary” impact on banking.
Speaking before the Institute of International Bankers this week, the head of the Office of the Comptroller of the Currency (OCC) Thomas J Curry discussed virtual currency as part of a speech aimed at addressing the Bank Secrecy Act (BSA) and its ability to adapt to new innovations………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

Reforms aimed at raising prices on Europe’s carbon market are likely to be agreed by the end of June at the latest, a senior official at the European Commission said on Wednesday. Peter Zapfel, head of unit implementation of the ETS (Emissions Trading System) at the European Commission, said he had every confidence that the Latvian presidency of the EU would be able to broker an agreement before its rotating EU presidency finishes on June 30.
“I am confident we will see an end to this legislative procedure by the end of the Latvian presidency at the latest,” he said at an industry event in Amsterdam………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

Coal is the most carbon-intensive fossil fuel by far and China is the world’s largest producer and most voracious consumer. According to estimates published in May by the US Energy Information Administration, China was responsible for 46% of global coal production and 49% of global coal consumption in 2012, having already accounted for 69% of the 3.2 billion ton increase in global coal production during the decade prior.
The existing reportage on the consequences of this dependence is legion: Higher heart disease and cancer rates due to polluted air; international airports temporarily shuttered by smog; vast tracts of land gutted, scraped and despoiled; people buried alive by collapsed illegal mines that churn out low-quality rock and depress prices………………………………………..Full Article: Source

Posted on 05 March 2015 by VRS |  Email |Print

ICE Futures Europe will continue to host Britain’s carbon auctions until November 2017, the bourse said on Wednesday. ICE was appointed in 2012 by the British government to carry out its auctions of EU Allowances (EUAs) until the end of 2015 but this contract has now been extended, the exchange said in a press release.
ICE Futures Europe is a part of the Intercontinental Exchange. EUAs are the currency of the EU’s Emissions Trading System, which regulates around half of Europe’s output of heat-trapping gases by forcing over 12,000 power plants, factories and airlines to surrender one allowance for every tonne they emit………………………………………..Full Article: Source

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