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Commodities Briefing 30.Sep 2016

Posted on 30 September 2016 by VRS |  Email |Print

Commodities will probably see a broad-based recovery next year after what’s expected to be an unusually strong performance in the final quarter as demand improves, investors plow funds into raw materials and the dollar shows signs of weakness, according to Barclays Plc.
Raw materials are poised to buck what’s been a trend in recent years for posting losses in the second half, analysts including Kevin Norrish wrote in a report on Thursday, which said that the bank expects fundamentals to improve into 2017. In the final months of 2016, commodities may perform robustly with oil prices poised to move higher, according to Norrish………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

In recent years, the fourth quarter has heralded a big fall in commodity prices. But this year will be different, according to Barclays, which says stronger economic growth in Asia and supply curbs across commodities should support prices through the end of the year.
Commodities prices have fallen in the fourth quarter for the last five years. In the last two years that decline has been particularly steep, according to the Bloomberg Commodity Index, which fell by 16.8% in 2014 and 24.8% in 2015………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Supply/demand fundamentals may prove more supportive of prices. Nice timing from Barclays. The bank’s commodities research team put out a note midweek that argued the raw materials sector this year may shrug off its tendency for fourth-quarter weakness.
Cue the latest surge in oil prices. Barclays sees three reasons for a generally sturdy commodity sector performance in coming months. What it terms the macro environment is supportive. Asian economic growth is set to improve while the bank thinks the rally in the US dollar, which tends to have an inverse relationship with buck-denominated assets, is starting to fade………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Reports of the cartel’s demise were exaggerated — but who will cut output, and when? As he emerged from nearly five hours of talks in Algiers on Wednesday evening, Iran’s oil minister Bijan Zanganeh stopped to speak to reporters.
“Opec made an exceptional decision,” he said, as the Saudi energy minister left the meeting without taking questions. After two years of squabbling, the cartel had finally crafted a provisional deal to cut production and tackle the global supply glut in crude oil………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

OPEC may now have come around to the idea of capping output, but any efforts by the cartel to boost oil prices longer-term could easily be quashed by an unexpected player in the energy market: China.
Taking advantage of the slump in oil prices, the country has in recent years aggressively accelerated its buildup of strategic petroleum reserves, giving it a strong tool to cap a rally in oil prices, energy experts said………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Oil barrel prices could climb between US$7 and US$10 by the end of the first half of 2017, according to Goldman Sachs analysts. Yesterday, OPEC surprised nearly everyone and reached a deal to curtail oil production.
And now, if all members of OPEC strictly comply with their new quotas, which are to be (and that’s a reasonable “if”) agreed upon at the November meeting of the organization, Goldman is predicting a sizable recovery for the price of a barrel of oil. For this scenario to take place, all other circumstances on oil markets must remain unchanged………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

This is what the oil market looks like in 2016: Traders and investors this week had one eye on Algiers, where the Organization of the Petroleum Exporting Countries on Wednesday vowed to cut production for the first time in eight years.
And OPEC has one eye on what is happening in the bountiful shale fields from the Permian Basin in Texas to the Bakken formation on the plains of North Dakota where exploration firms are poised to drill more………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries agreed to curb production for the first time since 2008 on Wednesday, but just a day later, energy market analysts are questioning the meaning of the deal.
OPEC minted a preliminary plan to cut production to as little as 32.5 million barrels a day, from about 33.2 million barrels in August, sources told Reuters. But output quotas for each of the cartel’s 14 members would be left undecided until its annual meeting Nov. 30………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Proving pundits wrong and overcoming skepticism, two days of round-the-clock deliberations in Algiers brought about a landmark agreement in which the Organization of Petroleum Exporting Countries agreed to slash output. The decision marks the end of the battle for market share.
“This is the end of the ‘production war’ – OPEC claims victory,” Phil Flynn, analyst at Chicago-based brokerage Price Futures Group, told Reuters. “The cartel proved that it still matters, even in the age of shale.”……………………………………..Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Shale? OPEC is competing with something far bigger and harder to tame: U.S. capital markets.The morning after the night before in Algiers, Chesapeake Energy announced a private placement of $850 million in 10-year convertible notes.
Chesapeake, which pioneered the shale-gas land-grab strategy before 2008, is better known these days for its creative efforts to chip away at its debts. The placement’s timing may be an accident, of course. But I’m going to go out on a limb and suggest maybe not.Why?……………………………………..Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

OPEC finally blinked in its two-year price war with U.S. oil producers. Whether that translates into a financial victory for the American shale industry remains to be seen.
Oil prices and the shares of U.S. drillers kept climbing on Thursday, a day after the Organization of Petroleum Exporting Countries promised its first production cut in eight years. The U.S. companies will need oil to hold above $50 a barrel for months before they commit to more spending, according to analysts at firms including S&P Global Platts and Oppenheimer & Co………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Safe-haven demand will continue to drive gold and silver prices higher next year and support the precious metals market in the next three years, according to one Canadian bank that is making across-the-board revisions to its precious metals forecast.
In a report published Thursday, analysts at BMO Capital Markets, said that they see gold prices averaging $1,413 for 2017, up 5% from their previous forecast $1,350 an ounce. “We look past the upcoming Fed meeting in December – though it undoubtedly drives short-term volatility – and instead focus on monetary policy that is anything but “normal” for the next year or two at least,” the analysts said………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Gold, and its brother silver, have always been the basis of money, back to the beginnings of “money,” in the late fourth millennium B.C. Already by 2000 B.C., gold and silver had been “money” for over a thousand years – the entire history of “civilization” on this planet.
Gold was still the basis of money in the 1960s, in an unbroken line stretching back to the beginnings of history. One somewhat counterintuitive requirement for “money” is that it does not have a utilitarian purpose; at least, not one whose value is comparable to its money value………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

India’s gold demand is likely to fall to around 750-800 tonnes in 2016, as against 860 tonnes last year, mainly due to sharp rise in prices and jewellers’ strike following new regulations, World Gold Council has said.
“In the first half of this year, gold demand fell to 248 tonnes. We think that demand will be better in the second half on the back of good monsoon,” WGC India MD Somasundaram PR said. He pegged the gold demand at 750-800 tonnes for the 2016 calendar year………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Gold investment is set to keep growing into 2017 says a new report from leading analysts, because the financial and economic backdrop to this year’s “remarkable” return of Western money managers to precious metals is set to continue.
The price of silver, platinum and palladium will likely rise faster however, the research says, with the three white metals attracting “speculative” money, offering “value” relative to gold, and enjoying “healthy fundamentals” respectively. “Investor confidence in precious metals is forecast to continue improving next year,” says the new Precious Metals Investment Focus……………………………………..Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Russia plans to stock up on about 200 tons of gold this year, nearly matching the 208 tons it purchased in 2015. That’s according to Anton Navoi, the deputy head of the statistics department at the Russian Central Bank.
Navoi explained that it’s profitable for the state to buy the precious metal, since Russia is a world leader in its production. Speaking at a conference on Wednesday, the official said that “last year, the Central Bank purchased 208 tons of gold. This year, it will purchase around 200 tons.”……………………………………..Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Following a multiyear downtrend, 2016 has been something of a rebirth for the gold market. Since the beginning of the year, gold’s per-ounce price has risen by more than $260, or 25%, with gold turning in its best quarter in 30 years in Q1!
What’s been driving the lustrous yellow metal higher? First, the Federal Reserve’s dovish monetary policy has been a big help. Perhaps gold’s biggest influencer is opportunity cost, or the act of giving up a gain in one asset for the possibility of a greater gain in another………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

China’s drivers will increasingly demand rust-proof cars. That’s good news for the price of zinc, the anti-corrosion fighter that’s already this year’s top performer among base metals.
Annual passenger vehicle sales in China will rise to 24 million in 2020, from 19 million last year, McKinsey & Co. forecasts. Only about a third of locally-manufactured autos use galvanized panels to prevent corrosion and rusting, according to Heron Resources Ltd., a developer that’s joining rivals who are building or reopening zinc mines………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Oil, gold, and silver are all moving in sideways patterns following strong rallies earlier in the year. Given that these commodities are all in what is likely to a long-term uptrend, a breakout to the downside from these patterns will present an opportunity for longer-term investors to buy at more favorable prices.
Bearish traders will also likely pounce on the opportunity to profit from the short-term decline. An upside breakout from these patterns indicates another wave higher and will attract both short-term and longer-term traders………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

It took Exchange Traded Funds 18 years to reach $1 trillion in assets, but only four to reach $2 trillion. And with assets expected to double again in a couple years alongside a never-ended stream of new products hitting the market, how can an investor make the most of this innovative new tool set?
Cantor Fitzgerald’s Reginald M. Browne, Ritholtz Wealth Management’s Joshua M. Brown and OppenheimerFunds’ Sharon French discuss at the Bloomberg Markets Most Influential summit in New York………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

The CME Group, owner and operator of the world’s largest derivatives marketplaces, has moved to a low-code platform for business process management. Commodities trading is fast-paced, highly regulated, and critical to the economy. CME Group owns and operates the Chicago Mercantile Exchange, the largest options and futures trading exchange in the world, along with the Chicago Board of Trade, the New York Mercantile Exchange (NYMEX), and COMEX.
CME Group sounds like the sort of organization that would hew to a conservative, time-tested development platform for applications. But according to Ari Studnitzer, managing director of architecture and product management at CME Group, the company has embraced a low-code platform that is helping keep both users and regulators happy………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

The U.S. dollar hit a more than one-month low against the Swiss franc and trimmed gains against the yen on Thursday on concerns over Deutsche Bank, while increased expectations for a December Federal Reserve rate hike kept the greenback generally afloat.
The franc and the yen, which are perceived to be safe-havens, benefited from the worries surrounding Germany’s biggest lender. U.S.-listed shares of Deutsche Bank (DB.N), which is fighting a $14 billion U.S. demand to settle claims over mortgage-backed securities, fell by more than 8 percent after touching record lows in Europe this week………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

The Australian dollar would suffer most if Donald Trump were to win the U.S. presidential election, according to one foreign exchange strategist who calls the currency a “surprise trade” in this arena.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, pointed out the Mexican peso has been the “inverse proxy for Trump’s political fortunes in the currency market for the last month,” appearing to rise and fall conversely on the Republican nominee’s favorability in the polls………………………………………Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Two years after President Obama and Chinese President Xi Jinping announced that their countries would work together to combat climate change, Republicans and conservatives in the U.S. continue to cite China’s rising carbon emissions as a reason not to bother cutting our own.
Earlier this month, Donald Trump’s economic advisor Stephen Moore claimed that limiting our carbon pollution is pointless because of China’s supposedly growing coal dependency. “Every time we shut down a coal plant in the U.S., China builds 10,” Moore told E&E News. “So how does that reduce global warming?”……………………………………..Full Article: Source

Posted on 30 September 2016 by VRS |  Email |Print

Coal-heavy states and companies have centered their political challenges to U.S. EPA’s Clean Power Plan on arguments that the rule is unachievable. But those arguments didn’t fare well this week in front of federal judges.
A range of studies have shown that many states’ power companies are already near the 2030 greenhouse gas levels EPA has assigned. Those that are not could use carbon trading to get there while keeping costs low for consumers. The rule would allow companies that do not shut down enough coal units to reach their own carbon levels to purchase allowances or credits from companies with greener portfolios………………………………………Full Article: Source

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