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VRS - who has written 40662 posts on Opalesque Commodities Briefing.


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Commodities’ Biggest Drop of 2015 Underscores Goldman Bear View

Posted on 27 May 2015

Commodities fell, heading for the biggest two-day selloff since November, as speculation over rising U.S. interest rates fueled a rally in the dollar. The Bloomberg Commodity Index slid 1.9 percent as of 1:20 p.m. in New York, led by losses in wheat, natural gas and crude oil. The U.S. currency strengthened versus all 16 of its major peers.

Dollar rise hits commodity prices

Posted on 27 May 2015

Commodity prices felt the impact of a jump in the dollar to a four-week high, with oil, gold and wheat prices leading the decline. ICE July Brent, the international oil marker, fell more than 2.5 per cent to a low for the month below $64 a barrel. Gold fell almost 2 per cent to a two-week low of $1,185.35 a troy ounce, while CBOT July wheat fell more than 3 per cent.

Financial markets undercut commodities

Posted on 27 May 2015

Financial markets are undercutting commodities. Renewed concerns about European Monetary Union and the euro have surged again this week, thereby spurring big U.S. dollar gains and sending stock indexes lower. Both of those reactions are seen as negative for commodity demand, which is probably a big reason corn futures fell this morning.

Oil Price Hurt by Dollar Strength

Posted on 27 May 2015

Oil prices slipped Tuesday on a stronger dollar and concerns that the recent rally in oil prices could spark an increase in production. Oil prices have climbed sharply since hitting six-year lows in March on expectations that cutbacks in oil drilling would lead to a decline in U.S. production, shrinking the global glut of oil. However, the market remains oversupplied, and some analysts warn that at these price levels, U.S. producers can profitably keep drilling.

Iraq About to Flood Oil Market in New Front of OPEC Price War

Posted on 27 May 2015

Iraq is taking OPEC’s strategy to defend its share of the global oil market to a new level. The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout.

Saudi Arabia rewrites its oil game with refining might

Posted on 27 May 2015

Saudi Arabia’s rapid transition into one of the world’s largest oil refiners adds an extra dimension to the oil exporter’s role as the driver of OPEC policy. When it attends OPEC’s next meeting in two weeks, it does so with major new state-of-the-art oil refineries that can profit from cheaper crude and reviving world fuel demand - exactly as international oil firms have over the past six months.

Non-OPEC production growth reduced by over 2 MMbopd towards 2020

Posted on 27 May 2015

Non-OPEC liquids growth potential of 5.5 MMbopd over the next five years has been reduced by over 2 MMbopd to 3.3 MMbopd, according to Rystad Energy’s most recent forecasts. Latest oil field research shows investments in oil and gas production are estimated to drop 20% in 2015 compared to 2014. Outside OPEC, $200 billion in yearly capex is considered to be axed over a two-year period.

Gold price back under $1,200/oz as dollar strength weighs

Posted on 27 May 2015

The gold price dropped under $1,200 per ounce during early Tuesday sessions as the yellow metal came under pressure from a stronger dollar following comments from the US Fed chair at the end of last week. On Friday, US Fed chair Janet Yellen said that despite mixed signs on the US economy, she expected to go through with an interest rate hike this year – with many in the market predicting a September date.

The truth about gold prices

Posted on 27 May 2015

Boris Gerjovič, from Maribor, Slovenia, accomplished a thorough examination of the real impact of interest rates on the price of gold. The results may surprise you. For quite some time, central banks around the globe — first and foremost the Federal Reserve System — are tinkering with the threat of a hike in interest rates, whereas the prompt result is a ‘Damocles Sword’ hovering above the markets, especially gold (higher US interest rates are generally believed to lead to a higher US dollar impacting the price of gold in US [...]

When Is the Best Time to Buy Gold?

Posted on 27 May 2015

Call it superstitious, call it good marketing, or call it tradition, writes Adrian Ash at BullionVault. But where India has Akshaya Tritiya in spring and Diwali in autumn, China then has Lunar New Year – the most ‘auspicious’ time of year for people to buy gold.

Silver Is Shaping Up To Be The Best Precious Metal Play Of The Decade

Posted on 27 May 2015

Despite being caught in a long-term bear market, silver offers considerable long-term potential upside. The gold-to-silver ratio indicates that silver is significantly undervalued in comparison to gold.

Aluminum market eyes SHFE, LME arbitrage as support for premiums

Posted on 27 May 2015

Some traders in Asia are closely monitoring the spread between Shanghai Futures Exchange and London Metal Exchange aluminum contract prices, as a wider spread may see more of the metal head to China. Front-month SHFE June aluminum traded at Yuan 13,150-Yuan 13,160 ($2,152-$2,153)/mt Tuesday, while the most recent LME settlement on May 22 was $1,726/mt.

Is US Steel Consumption Headed for a Slowdown?

Posted on 27 May 2015

As per the World Steel Association (or WSA), US (SPY) steel consumption grew at 11.7% last year. US steel demand grew at the fastest pace among the major steel-consuming countries. However, for this year, the WSA expects US steel consumption to decline 0.4% over the previous year. Demand slowdown from the energy sector, which accounts for almost 10% of US steel consumption, is the prime reason behind the slowdown in steel demand.

China’s bid to lock in cheap iron ore

Posted on 27 May 2015

With iron ore prices still at multi-year lows, a reported interest by China’s biggest steelmaker for indebted Australian iron ore miner Fortescue Metals makes business sense for both parties, depending on how much the deal is worth, analysts say. “It’s logical that Baosteel would try to secure future supply,” Patersons Securities’ director of research Robert Brierley told CNBC. But “I doubt Andrew (Forrest, Fortescue Group’s chairman) would sell at these prices,” he said.

China’s new $16bn gold fund at centre of new ‘Silk Road’

Posted on 27 May 2015

Gold prices could be boosted by China’s plan to establish a $16bn (£10bn) fund to stockpile the precious metal as part of a scheme known as the ‘Silk Road’ initiative aimed at boosting trade. State endorsed media in China has reported that the new fund Shandong Gold Group and Shaanxi Gold Group will each take stakes of 35pc and 25pc respectively in the new fund alongside other investors.

ANZ to launch 6 ETFs in Australia’s USD15bn market

Posted on 27 May 2015

ANZ Banking Group, the third largest bank by market capitalisation in Australia, is launching six exchange traded funds linked to currency, gold and equities as it embarks on its first venture into the domestic ETF market that is now valued at AUD18bn (USD14.1bn).

Invest In These ETFs To Tap Into Cross-Border Merger Boom

Posted on 27 May 2015

A cross-border merger boom is boosting ETFs holding Catamaran, Dresser-Rand and other pharma and energy companies that are hot takeover targets. Merger-arbitrage exchange traded funds profit from the difference between a stock’s price when a deal is announced and its final purchase price. Typically, that’s an upward move.

China’s yuan currency ‘no longer undervalued’: IMF

Posted on 27 May 2015

China’s yuan currency, which Washington has long alleged was manipulated, is “no longer undervalued,” the International Monetary Fund said. “Our assessment now is that the substantial real effective appreciation over the past year has brought the exchange rate to a level that is no longer undervalued,” the IMF said in a statement after a consultation mission to China.

Coal ETF Outlook Growing Dim

Posted on 27 May 2015

Some bargain hunters may be looking at the downtrodden coal industry and related exchange traded funds as the market remains near historic lows. However, coal remains depressed for a reason. Over the past three months, the Market Vectors-Coal ETF , which tracks the coal industry, has declined 6.9%. Additionally, the recently launched GreenHaven Coal Fund, which is designed to offer investors with exposure to daily changes in the price of coal futures contracts, has decreased 3.6%.

Venezuela’s Currency Just Collapsed 30% on the Black Market

Posted on 27 May 2015

The stunning collapse of Venezuela’s bolivar in black market trading this month — it fell to as low as 423 bolivars per dollar from 279 at the start of the month — has left Venezuelans scratching their heads, with many wondering why it has sunk below the value of gold and hard currency the central bank has to back it.

Global schemes to price CO2 emissions worth almost $50 billion: World Bank

Posted on 27 May 2015

The value of global schemes to put a price on carbon dioxide (CO2) emissions and designed to reduce greenhouse gases blamed for global warming totalled almost $50 billion as of April 1, the World Bank said in a report on Tuesday.

Carbon Market Value Expands to $34 Billion as Korea Joins

Posted on 27 May 2015

The value of global carbon permits expanded to $34 billion in the past year, with gains led by South Korea, California and Quebec, the World Bank said. Permits aimed at reducing greenhouse gases were worth 6.3 percent more than the $32 billion a year earlier, the Washington-based lender said Tuesday in an e-mailed report compiled with Ecofys International BV. With taxes of $14 billion, the total value of such carbon pricing programs is $48 billion, the bank said.

EU carbon market expects price rise for first time in four years

Posted on 27 May 2015

Participants in the European Union’s carbon market expect average prices to rise for the first time in four years, an annual survey published by the International Emissions Trading Association (IETA) showed on Tuesday. The survey conducted by PwC drew on responses from 122 IETA members including utilities, trading houses and banks.

Goldman Sticks to Commodity Bear Call as Copper Vulnerable

Posted on 26 May 2015

Commodities will reverse a rally that started in March as a stronger U.S. dollar, cheaper oil and cooling China again pressure raw materials, especially copper, according to Goldman Sachs Group Inc. Copper will lose at least 16 percent over the coming 12 months on China’s weakening demand growth and slowdown in construction completions, analysts including Jeffrey Currie said in a report e-mailed Monday.

Why you shouldn’t get too excited over the commodity rally

Posted on 26 May 2015

Commodity prices have been on a roll lately, but investors shouldn’t get too excited over the rally, say analysts. Although the BMO Capital Markets Commodity Price Index rose 4.6 per cent in April and BMO analysts expect another solid showing this month, they pointed out crude oil played a big part in the increase and cast doubts on further gains.

Oil prices hit struggling oil companies

Posted on 26 May 2015

Low oil prices are endangering an increasing number of exploration and production companies. According to a new report from Moody’s Investors Service, the oil and gas industry could see the rate of defaults rise over the next year. The companies in danger of going belly up, not surprisingly, are the ones that already have low credit ratings.

No Reason For OPEC To Relent in Oil Market Tussle

Posted on 26 May 2015

As the next OPEC summit draws closer, another round of commentary centered on the cartel not “relenting” in the ongoing oil market tussle has flooded media outlets. Such chatter risks regurgitating the obvious.

OPEC producers to defend market share in face of mounting competition and domestic needs

Posted on 26 May 2015

Gulf oil producers, led by Saudi Arabia, will resist attempts to cut output at a Organisation of Petroleum Exporting Countries (OPEC) meeting next month as preserving market share remains their top priority, industry analysts said.

OPEC oil supply is expected to rise

Posted on 26 May 2015

OPEC supply is expected to increase by 0.2-0.3 million barrels per day (bpd) between now and end-3Q2015, analysts of the US JP Morgan bank said in a report, obtained by Trend. OPEC supply growth has slowed from end- 1Q2015 level of 1.4 million bpd year-over-year, analysts said.

Oil moves further below $60 as dollar firms up

Posted on 26 May 2015

Crude-oil futures fell in early European trade on Monday as a rising dollar put pressure on the commodity as holidays across some major markets, including the U.S., were expected to keep trading thin. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $59.31 a barrel, down $0.67 in the Globex electronic session. July Brent crude on London’s ICE Futures exchange fell $0.20 to $65.17 a barrel.

Africa’s economy to strengthen in 2015 despite Ebola, oil price

Posted on 26 May 2015

Africa’s overall economy should advance in 2015, expanding by 4.5 percent, showing resilience despite weak commodity prices and the devastating Ebola epidemic, an annual report published Monday said. And future growth could be spurred by the continent’s population doubling to two billion over the next 35 years, repeating in Africa the economic boom seen in Asia’s biggest countries.

India’s proposed gold deposit scheme could be a game-changer worldwide

Posted on 26 May 2015

If the much-vaunted gold deposit scheme that seeks to tap into the country’s idle stock of 20,000-22,000 tonnes of the yellow metal succeeds in unleashing a fraction of that trapped wealth into the market, a likely supply-demand imbalance will turn the bullion market into a topsy-turvy state, said analysts.

Gold Market Remains Vulnerable To A Stronger U.S. Dollar

Posted on 26 May 2015

Gold prices ended up Friday, just a few dollars off their weekly low, but managed to hold on to the $1,200 an ounce level as a stronger U.S. dollar and low liquidity in the marketplace created some week-end selling pressure, Friday. Gold ended the week in negative territory, after two consecutive weeks of positive gain. Comex June gold futures ended Friday at $1,204 an ounce, down more than 1.5% from Monday’s opening price.

Should you be investing in gold right now?

Posted on 26 May 2015

Is this the best time to stay invested in gold? Gold, which neared the keenly-watched $1,400 (Dh5,138) an ounce in 2014, had been an investor’s darling, but the yellow metal has mostly been curtailed in a range so far in 2015. But analysts are painting a bearish picture on gold over the short to medium term.

Why the Economist is wrong on gold

Posted on 26 May 2015

When reading the financial press, the amount of coverage one sees on the topic of precious metals, is almost nonexistent. Most pundits don’t care for the metal, nor do they understand it. In fact, former Federal Reserve Chairman Ben Bernanke told Congress that he doesn’t understand gold. Yet, when you read articles on gold from media pundits, all one hears is negativity about why you shouldn’t invest in the yellow metal.

Silver is a Special Metal

Posted on 26 May 2015

It always has been. And on a value basis, it’s also a good buy. Silver has been chugging more than gold but once it pops up, it could take off like a bandit. There are many reasons why silver will go higher and it’s just a matter of time. And as our dear friend Richard Russell points out, JP Morgan is aggressively accumulating physical silver by the hundreds of millions of ounces.

Platinum price – the cheese and biscuits analogies

Posted on 26 May 2015

Platinum has been in a large deficit for the last two to three years – and a substantial one at that, last year in particular with the five-month long platinum miners’ strike in South Africa taking perhaps a further 1 million ounces away from the production picture. But, over this same period, the price has not risen, but has fallen, thus seemingly being counter to the normal supply/demand process.

Eastern China steelmakers cut ferrous scrap buying prices on lower rebar prices

Posted on 26 May 2015

Steel mills in eastern China cut ferrous scrap buying prices over the weekend, in line with declines in rebar prices. Jiangsu Shagang Group, the largest scrap user in China, on Sunday cut its buying price by Yuan 20/mt ($3/mt) in tandem with falling rebar prices, a company source said.

Chinese Hedge Funds Bearish on Copper Ring Alarm Bells for Bulls

Posted on 26 May 2015

Nobody may be more bearish on China copper than Chinese hedge funds. That should be a warning to investors who’ve ridden the metal’s rebound from a five-year low into a bull market. Gains of as much as 20 percent since late January haven’t convinced the money managers that demand is improving in the world’s biggest copper-consuming country, where the economy is growing at the slowest pace in a generation.

ANZ enters $18b ETF market with six listings

Posted on 26 May 2015

ANZ Banking Group has become the first Australian bank to enter the $18 billion Australian exchange traded fund market, teaming up with London based ETF Securities to list six new securities on the Australian Securities Exchange that are tied to currencies, commodities and the share-market.

Hedge funds still gloomy on ags, despite deep cut to wheat shorts

Posted on 26 May 2015

Hedge funds’ dramatic turn less gloomy view on wheat price prospects has not been reflected in their thinking on ags overall, with corn and soybeans bearing the brunt of fresh bearish positioning. Managed money, a proxy for speculators, lifted its net short position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 32,354 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

Bernanke Says Currency Mismatch a Risk for China Policy Makers

Posted on 26 May 2015

China needs to create deep and liquid markets to avoid currency risks as it makes the yuan a convertible currency, former Federal Reserve Chairman Ben S. Bernanke said in Shanghai.

China and Chile sign currency swap agreement

Posted on 26 May 2015

China’s Prime Minister Li Keqiang and Chilean President Michelle Bachelet signed a currency swap deal seeking to deepen economic ties by boosting trade and investment. The currency swap agreement between Chile’s central bank and the People’s Bank of China was announced yesterday. It eases the exchange of up to 2.2 trillion pesos (about USD 3.6 billion) for the next three years.

U.S., Canada and Mexico create new climate change partnership

Posted on 26 May 2015

North American energy ministers said on Monday they had set up a working group on climate change and energy, a partnership designed to help Canada, the United States and Mexico harmonize policies. The partnership does not include binding targets, but will enhance cooperation and integrate more climate change-related policies into energy discussions between the countries, Canadian Natural Resources Minister Greg Rickford said during a conference call.

China’s Hubei carbon market postpones compliance deadline to June

Posted on 26 May 2015

The carbon exchange in China’s Hubei is likely to postpone a May compliance deadline by about a month as the province tries to tackle a massive glut that is currently weighing on the market, industry sources said.

China readies national carbon market to fight climate change

Posted on 26 May 2015

At first, the numbers and company names flashing on a big board in Beijing’s financial district suggest a booming market. A closer look indicates otherwise: The scrolling list rotates the same dozen or so trades, all from last year.

Westpac eyes China, India for commodities trade growth

Posted on 25 May 2015

A recent entrant in Asia’s commodities markets, Australia’s Westpac Banking Corp is ramping up to take advantage of a commodities “supercycle” that it says has at least another 30 years to run. While some global banks have exited commodities due to more stringent regulations, Westpac is setting itself to support a deeper push into the region by its corporate customers, a senior executive told Reuters.

3 Safe Investments in Commodities

Posted on 25 May 2015

Commodity prices can be very volatile and change without notice. In the past year alone the key commodities of oil, natural gas, iron ore, silver, and gold have all dropped by double-digits at some point in the year. Looking out even farther all of these commodities are down by at least a third from the peak price over the past decade.

Why the oil market isn’t worried about world turmoil

Posted on 25 May 2015

When Islamic State fighters in Iraq captured the town of Ramadi this week, just 80 miles (129 kilometres) from the capital of the Middle East’s second-largest oil producer, crude markets shrugged.

Oil price slide puts producers under pressure

Posted on 25 May 2015

The oil price plunge has triggered a string of bankruptcies, debt defaults and rescue measures to save companies nearing collapse, with almost two dozen oil and gas groups now under stress. A 40 per cent slide in Brent crude prices from a peak of $115 a barrel last June, has put smaller, cash-strapped producers in financial trouble, according to City analysts, with up to a quarter of a million barrels a day of oil supply at risk of being curtailed.

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