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VRS - who has written 42186 posts on Opalesque Commodities Briefing.


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China Seen Driving Commodities Lower as Uncertainty Spreads

Posted on 02 September 2015

China will continue to hurt commodities in coming months as a volatile equity market and political uncertainty add to concern that economic growth is weakening, according to Citigroup Inc.

Moody’s cuts 2016 global economic forecast; no commodities rebound in near future

Posted on 02 September 2015

It was a surprise move from the firm, coming just 12 days since its last forecasts. It put average growth in the top 20 world economies at 2.8% on average, versus the 3% it had forecast previously. It said the fresh cut reflected information that had become available since the earlier forecasts were published.

The End of the Commodity Super Cycle

Posted on 02 September 2015

The recent decline in commodity prices resembles a downhill mountain biking expedition. The price drop has been so severe that we’ve seen a nearly one-sided market, with buyers largely absent in futures, commodity indices, and exchange-traded funds (ETFs). As a result, many commodity hedge funds have closed and are returning capital, despite their ability to trade short.

Commodities: Winners, Losers

Posted on 02 September 2015

Commodities have been in a bear market for the past seven years. In the past several months, the downturn has accelerated significantly. This produces losers, but also winners, namely the developed world. Three of the largest economic areas of the globe, Europe, Japan and the U.S., receive a net benefit from lower commodity prices.

El Niño Sends Strong Signal as Pacific Temperatures Soar

Posted on 02 September 2015

A strong El Niño has sent sea temperatures in parts of the Pacific Ocean to their highest level since the late 1990s, Australia’s government weather watchdog said Tuesday. The water in some areas is now within 0.9 degree Fahrenheit (0.5 degree Celsius) of the level seen during the El Niño of 1997-8, Australia’s Bureau of Meteorology said, with temperatures expected to peak later this year.

A Corner of the Oil Market Shows Why It’s So Tough to Read China

Posted on 02 September 2015

Glencore Plc’s Ivan Glasenberg has lamented the difficulty of reading China’s commodity demand. The nation’s oil traders aren’t helping. State-run China National United Oil Corp., a unit of the country’s biggest energy company, bought 36 million barrels of Middle East crude last month as part of a pricing process in Singapore used to determine commodity benchmarks around the world.

Oil Price Forecast 2015: Will the Oil Market Rebound from Here?

Posted on 02 September 2015

Oil Price Forecast 2015: The WTI crude oil price is coming off one of the most volatile months since the Great Recession. WTI crude oil prices gained 3.5% in August. But the U.S. benchmark saw a 20% drop during the first three weeks followed by a 29% surge during the last week.

Why are oil prices all over the map?

Posted on 02 September 2015

Oil prices crashed last week only to rebound at lightning speed. On August 28, oil prices surged 10 percent, the largest one-day gain in seven years. So, what happens next for oil prices? On the face of it, the crash and massive rebound makes little sense, with many oil market analysts undoubtedly left shaking their heads.

Don’t Count on OPEC Cuts While Iran Plans to Go It Alone

Posted on 02 September 2015

Any speculation the 12 members of OPEC may rein in oil production underestimates Iran’s determination to go it alone. Oil in London surged about 8 percent Monday, capping the biggest three-day increase in 25 years. The gain was partly driven by the Organization of Petroleum Exporting Countries saying that it’s ready to talk to other producers to achieve “fair and reasonable prices.”

Everything You Need to Know About OPEC

Posted on 02 September 2015

The Organization of the Petroleum Exporting Countries (OPEC) is a group of oil-producing nations that was first established in Baghdad, Iraq, in 1961. OPEC is one of the most powerful international organizations in the world and was a major player in the shift towards state control over natural resources.

Gold price edges up but mood could turn

Posted on 02 September 2015

Gold is marginally higher this morning but remains rooted within a narrow range. According to one analyst, the metal is vulnerable to a fresh wave of selling from funds poised to increase bearish bets. Having risen slightly on the latest Asian market declines, which the Wall Street Journal claims have boosted gold’s “safe haven appeal”, gold continued its gradual positive trend in European trading and was up around $6 an ounce to $1,141.

India: Gold demand to surge by 70% during festive season

Posted on 02 September 2015

Gold demand during the festive season of Dhanteras, Dusshera and Diwali will surge by up to 70 per cent despite a rise in price of the yellow metal, according to gold jewellers and traders. The price of gold is expected to go up by almost Rs 2,000 per 10 grams during the season.

Gold forecast to drop to $800 an ounce in 2016

Posted on 02 September 2015

The overall sentiment towards the yellow metal will turn increasingly bearish next year and the prices are likely to hit below $1,000 by March, analysts have said. According to ABN Amro’s forecasts, the price of the bullion will trade hands at $1,000 an ounce by December this year. Prices will fall further in the coming year, with the rate hitting as low as $800 by December 2016.

Gold would be $1,450 if it followed oil price gains of the past three days

Posted on 02 September 2015

The spotlight has been on the oil price over the past three trading days with a spectacular bounce of 27 per cent. Apply the same gain to the gold price and we would be looking at $1,450 an ounce. Experts are uncertain exactly why the oil price has rallied. There have been no fundamental changes to the oversupply or demand. If anything the economic data out of China points to weaker demand.

Silver Price Set To Start 70s Style Rally?

Posted on 02 September 2015

In terms of gold, silver is currently better value than at the beginning of the bull market in 2001. In November of 2001, when silver bottomed, the Gold/Silver ratio was about 66 compared to 78 today. In other words, gold has actually outperformed silver since the beginning of this precious metals bull market.

Collapse in premiums hits aluminium trade

Posted on 02 September 2015

While aluminium prices have declined to six-year lows, what has really hurt big trading houses such as Glencore and Noble Group is the sharp fall this year in what is known in industry speak as “premiums”.

Direct reduction iron ore pellet premiums down on weaker demand

Posted on 02 September 2015

Direct reduction (DR) pellet premiums moved lower for September as participants looked to factor into contract pricing talks weaker overall pellet demand and DRI growth prospects in the Middle East for the current year. Estimated premiums for September cargoes fell to $39.50/dry mt, down $1.50/dmt from $41/dmt in August as a resumption in discussions starting after Ramadan and the summer break looked to finalize terms.

Are Energy ETFs Primed For a Comeback?

Posted on 02 September 2015

Without a doubt, one of the more shocking revelations from the 2015 stock market correction is how sharply crude oil prices are rebounding. Just when you turn your back on the seemingly endless sea of red in this sector, it begins to perform during one of the most stressful periods of the last three years.

6 ETFs With Big Gains In 2015

Posted on 02 September 2015

This has been a pretty rough year for the global stock market, especially after the turbulence seen last week. Several China-driven offhand events, subdued inflation even in the U.S. and growth worries in global superpowers like Japan and Canada led the global market to hit the dirt last week.

ISIL says its new currency will destroy “America’s capitalist financial system of enslavery”

Posted on 02 September 2015

The Islamic State of Iraq and the Levant (ISIL), the al Qaeda offshoot that now controls parts of Iraq and Syria, says in its latest video they are introducing a new currency that will bring about the end of the American “petro-dollar system” and “cleanse the entire earth of corruption.”

Yuan not ready to be reserve currency

Posted on 02 September 2015

Towards the end of this year, the International Monetary Fund (IMF) will decide on whether to include the Chinese yuan in its basket of currencies represented by the Special Drawing Rights (SDR). The SDR is an international reserve asset comprising an elite league of currencies - the United States dollar, the pound sterling, the Japanese yen and the euro.

Could A Carbon Tax Prevent The Catastrophic Consequences Of Climate Change That Obama Fears?

Posted on 02 September 2015

In recent days, President Obama has painted the risks of climate change in apocalyptic terms. Speaking in Anchorage, AK on Monday, Obama warned that without quick action to slow or reverse global warming, “entire nations will find themselves under severe, severe problems: More drought. More floods. Rising sea levels. Greater migration. More refugees. More scarcity. More conflict.”

Dutch double down on emissions ruling

Posted on 02 September 2015

The Dutch government said Tuesday it plans to appeal against a court decision which ordered it to slash emissions, arguing the verdict could set a precedent for courts to interfere with government policy.

Pain in global commodities to continue for the long term

Posted on 01 September 2015

Stocks of leading companies producing iron ore, crude oil, steel, aluminium,and zinc have fallen 40-60% over the past 12 months to fresh lows. This fall has mirrored the 40-60% rout in underlying global commodity prices such as crude, iron ore, and steel. So, is this the time to do value buying or distressed asset buying? Not really.

Why the commodities super cycle was a myth

Posted on 01 September 2015

In 1980, the economist Julian Simon challenged doom-mongering biologist Paul Ehrlich to a bet that the prices of any five metals would be lower in 10 years’ time. He won, and made his point: over the long run, technological progress means commodity prices are likely to fall in real terms.

Jim Rogers Still Optimistic On Commodity Prices

Posted on 01 September 2015

When Jim Rogers speaks, investors listen. His Quantum Fund gained 4,200% to the S&P 500′s 47% from 1973-1983 – just one feat exemplary of Rogers’ market intuitiveness. The commodities guru is credited with calling the bottom in oil prices in the late 1990s.

Oil Prices Soar Amid Lower U.S. Output Estimates, OPEC Article

Posted on 01 September 2015

Oil prices soared Monday, marking their strongest three-day rally since Iraq’s 1990 invasion of Kuwait, on doubts the global glut of crude would be as long-lasting as many investors and traders had earlier believed.

BofA-ML cuts oil price forecast to $55-70 per barrel

Posted on 01 September 2015

With concerns on China’s growth, expectation of rising Iranian oil production, and persistent dollar strength, Bank of America-Merrill Lynch has announced a cut in its Brent oil price forecast from $60-80 per barrel to $55-70 per barrel.

Arab OPEC producers brace for oil-price weakness for rest of 2015

Posted on 01 September 2015

A second oil price rout of 2015 has forced Arab OPEC members to cut their price expectations for this year, showing they are prepared to tolerate cheaper crude for longer to defend market share and curb rivals’ output. OPEC delegates, including those from core Gulf OPEC countries, see economic troubles in top energy consumer China as short-term and unlikely to have much impact on demand for crude which will rise seasonally in the fourth quarter.

OPEC says there’s ‘no quick fix’ for low oil prices

Posted on 01 September 2015

The Organization of the Petroleum Exporting Countries on Monday said there is “no quick fix” for the low oil-price environment and voiced concern about its impact on the petroleum industry. In commentary released Monday, OPEC said continuing pressure on prices “remains a cause of concern for OPEC and its members,” as well as for “all stakeholders in the industry.”

Gold regains shine in August amid market turmoil

Posted on 01 September 2015

Gold has had its best month in seven. The yellow metal rose 3.6 per cent to $1,134.93 an ounce in August — its best month since January, when it jumped 8.4 per cent. Gold’s lacklustre performance for much of the year (even through the crisis in Greece and Ukraine) prompted chatter that it was losing its safe haven appeal, as the market increasingly focused on the looming rate rise from the Federal Reserve.

Hedge fund positioning shows why gold price rally fizzled

Posted on 01 September 2015

On Monday, the gold price continued to drift sideways as a measure of calm returned to global equity markets and the focus shifted back to a recovering US economy. In afternoon dealings on the Comex market in New York, gold futures with December delivery dates lost $0.70 to $1,133.40 an ounce in quiet trade.

Gold Prices May Move Higher in September Says U.S. Global CEO

Posted on 01 September 2015

As markets gear up for September, U.S. Global Investors CEO Frank Holmes said he expects to see a boost for gold in September. ‘Historically, when football season starts in September, gold is up,’ he said in an interview with Kitco News. He added that opportunities may present themselves in the gold space and in the mining sector.

Why gold mine output is not yet falling

Posted on 01 September 2015

Logic suggests there should be a sharp reduction in mined gold output due to lower gold prices, but this has not been the case. The fall in the gold price over the past few years has generated numerous predictions that this would lead to a big drop in global gold production. Mining companies ought to close unprofitable mines, halt expansion plans, and put new projects on hold.

Are Depressed Gold Prices an Opportunity in Gold Stocks?

Posted on 01 September 2015

The volatile trading over the past two weeks claimed many victims, but perhaps the most surprising of which was gold. In theory, gold prices should rise in times of fear and uncertainty, as gold is long considered an unofficial barometer of economic health. And the current dynamics are chock full of fear and uncertainty.

Iron ore eyes monthly gain, but soft China steel to weigh

Posted on 01 September 2015

Spot iron ore prices are set to end August higher, supported by lean inventory at Chinese mills and a recovery in futures markets, although expectations of increased supply later in the year may cap upside potential. Inventory of imported iron ore at major Chinese ports fell to 80.45 million tonnes as of Aug. 28, the lowest since late June, according to data tracked by consultancy SteelHome.

Base metals rebound on physical buying on lows

Posted on 01 September 2015

Most base metals gained upto 5.7% on bargain hunting due to fresh support from weak sentiment in global equity markets. Renewed support from China prompted traders to book afresh amid expectations of a rebound in equity trade, which got global markets into panic due to consistent fall earlier last week.

Another Dull View of Silver and Platinum ETFs

Posted on 01 September 2015

The iShares Silver Trust and the ETFS Physical Platinum Shares are among the precious metals exchange traded funds that have been drubbed this year and some analysts see even more downside ahead for platinum and silver prices. Of course, the strong dollar is a thorn in the side of commodities, which are dollar-denominated.

Why Consider Currency Hedged ETFs

Posted on 01 September 2015

With U.S. equities coming off a multi-year rally, more investors are starting to look to overseas markets as a way to diversify their investment portfolio. However, some are beginning to see specific risks in foreign equities exposure, notably foreign exchange currency risks.

Global trade damaged by weakness in emerging market currencies

Posted on 01 September 2015

Weakness in emerging market currencies is hurting global trade by reducing imports without any benefit to export volumes, according to FT research based on more than 100 countries. The findings suggest any currency war between developing nations is likely to be even more damaging than previously thought, leading to a reduction in global trade and possibly economic growth, rather than just reapportioning a fixed level of trade between “winners” and “losers”.

U.S. Currency Probe Expands to Russia, Brazil Trades

Posted on 01 September 2015

U.S. prosecutors have expanded their probe of currency-market manipulation by some of the world’s largest banks to include the Russian ruble and Brazilian real, according to two people familiar with the matter.

Washington’s Financial Currency War on China: The Eclipsing of the US Dollar by the Yuan

Posted on 01 September 2015

The Chinese are in the process of displacing the monopoly of the US dollar. They are dropping their US Treasury bonds, stockpiling gold reserves, and opening regional distribution banks for their own national currency. This will give them easier access to capital markets and insulate them from financial manipulation by Washington and Wall Street.

UN launches new climate finance centre in Thailand

Posted on 01 September 2015

The UN is hoping to boost the roll out of clean technology in developing countries, after last week announcing it has opened its fifth dedicated climate finance centre. The latest move saw the United Nations Framework Convention on Climate Change (UNFCCC) launch a new Regional Collaboration Centre (RCC) to promote the Clean Development Mechanism (CDM) carbon offset scheme in Bangkok, Thailand.

Even a modest slowdown in China sacks the global commodities market

Posted on 31 August 2015

Until recently, China was a beast whose appetite knew almost no limit. It feasted on the world’s raw materials, buying them in a voracious, globe-spanning spree. Indonesian coal powered villages that morphed into mega-cities. Peruvian copper lined power cables for nearly 100 new mass-transit rail lines. Brazilian and Australian iron ore was turned into steel for skyscrapers rising in Shanghai at a rate of one per week.

China isn’t the crisis some would have you believe

Posted on 31 August 2015

Other global economies have plenty to look forward to, despite the blustery conditions in Asia. It is never possible to be sure that we aren’t about to face disaster. Some people seem to have made a living by foreseeing trouble ahead. The American stock market has “forecast” something like 10 of what turned out to be the past two recessions. And there is no reason why the Chinese stock market shouldn’t follow the same pattern.

Hedge, to cope with commodity swings

Posted on 31 August 2015

Oil, gas and non-ferrous metals are currently undergoing their biggest price correction since the recession of 2008. Economic volatility has shaken up the commodities market. China’s uncertain economic situation is likely to loom large over the metals sector in 2015.Recently, the Thompson Reuters Core Commodity index hit its lowest point since April 2003. Effectively, the market has erased all gains of the decade-long commodities “super-cycle”{+.}

Oil market turmoil generates speculations

Posted on 31 August 2015

Tumult in oil markets was enough to create speculations about a possible de-pegging of riyal with dollar and possibly of using a mixed basket for oil revenues. Fears about the growth of Chinese economy and equities rout in Beijing sent currency values reeling.

Why So Much Oil Price Volatility? Blame The Speculators

Posted on 31 August 2015

Oil prices crashed last week only to rebound at lightning speed. On August 28, oil prices surged 10 percent, the largest one-day gain in seven years. So, what happens next for oil prices? On the face of it, the crash and massive rebound makes little sense, with many oil market analysts undoubtedly left shaking their heads.

China’s Economic Slowdown Hurts Oil Market

Posted on 31 August 2015

The 2015 budgets did take account of the near halving in the previous year of oil prices which had remained broadly stable at $110 a barrel between 2010 and 2015. When the oil price halved past year, from $110 to $55 a barrel, the cause was obvious: Saudi Arabia’s decision to increase its share of the global oil market by expanding production.

Oil price slump hits Islamic financial services

Posted on 31 August 2015

The decline in global oil prices and the weak oil price outlook for 2015 and 2016 are already seen a taking toll on both Islamic banking and the Islamic financial services sector, according to analysts. Rating agency Fitch has warned that the global Islamic financial services industry could face further pressure in terms of low demand for sukuk issuance due to a combination of factors such as fall in oil prices, potential rise in global interest rates and contraction across global emerging markets.

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