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Commodities Briefing - Category | Market Moves more

Why Commodities Are More Than Economic Indicators

Posted on 03 March 2015 by VRS  |  Email |Print

We track the prices of everything from crude oil to milk for clues about the state of the economy. But what could they tell us about the environment? Tune in to any television or radio newscast, and you’ll hear how the stock market is performing today. The New York Times puts market indicators alongside the current temperature at the top of their website. Changes in unemployment or the prices of commodities like oil and milk regularly make headlines.
Environmental historian Dr. Ted Melillo, associate professor at Amherst College, says we need to re-envision what something like the price of oil really means - what it can reveal about not only our economic systems, but also our social, political, and environmental attitudes and practices………………………………………..Full Article: Source

China, Commodities Bust To Force RBA’s Hand

Posted on 03 March 2015 by VRS  |  Email |Print

It would be fair to say when China sneezes, Australia catches a cold. The Reserve Bank of Australia knows this all too well and is why it is likely to pull the trigger on another 25 basis point cut in interest rates to stave off pneumonia.
The pullback in China’s growth to its slowest pace since 1990 was worrying enough for the People’s Bank of China to cut interest rates for a second time in three months on Saturday, and some economists are arguing that RBA Governor Glenn Stevens will follow suit with a second successive rate cut when he convenes the monthly meeting of the central bank’s board in Melbourne on Tuesday………………………………………..Full Article: Source

Gold market ‘is booming’ in Bahrain

Posted on 03 March 2015 by VRS  |  Email |Print

Bahrain’s gold market has been booming over the last two years, according to official figures. The amount of gold jewellery, bars and other items sent for testing at the Gem and Pearl Testing Laboratory of Bahrain (GPTL) more than doubled from 6,000 at the end of 2013 to 13,000 at the end of last year.
Precious Metals and Gemstones Testing Directorate acting director Abeer Al Alawi said the number of items tested was much higher than any of the previous five years. “We maintained an average pace of around 5,000 items tested every year until 2012 and then there was a hike to 6,000 in 2013,” she told the GDN………………………………………..Full Article: Source

Commodities Set to Extend Gains as China’s Rate Cut Spurs Demand

Posted on 02 March 2015 by VRS  |  Email |Print

Commodities including iron ore, oil and copper are set to extend gains on Monday as China’s interest-rate reduction spurs demand from the construction to energy industries. China’s second cut to benchmark rates in three months will fuel gains as investors anticipate that cheaper credit will stimulate demand, Eugen Weinberg, head of commodity research at Commerzbank AG, said.
A Chinese factory gauge reported on Sunday signaled contraction in February. “The market was looking for some time for more easing in China on a back of economy weakness,” Weinberg said. “In a short term, the hopes for more monetary easing and additional stimulus are likely to support the prices.”……………………………………….Full Article: Source

Oil Drops as Gain in Saudi Arabian Output Boosts OPEC Production

Posted on 02 March 2015 by VRS  |  Email |Print

Oil fell after capping its first monthly gain since June as increased production from Saudi Arabia lifted OPEC’s output beyond its collective quota for a ninth month. Futures decreased as much as 1.1 percent in New York. The Organization of Petroleum Exporting Countries pumped 30.6 million barrels a day in February, above the group’s output target of 30 million a day, according to a Bloomberg survey.
U.S. drillers cut the number of rigs in service for a 12th week to the fewest since June 2011, Baker Hughes Inc. data showed. Saudi Arabia led OPEC’s decision in November to maintain the group’s output, exacerbating a global glut that drove oil almost 50 percent lower in 2014………………………………………..Full Article: Source

India’s new gold scheme may hit Qatar market

Posted on 02 March 2015 by VRS  |  Email |Print

India’s new “gold monetisation scheme”, announced by country’s Finance Minister Arun Jaitley in his annual budget speech yesterday, is expected to hit hard Qatar’s gold market, especially the demand for gold bars and coins (bullion, sold in 24 and 22 carats), according to trade sources.
“The scheme will definitely have an impact on Qatar’s bullion market. Many Indian expatriates who used to invest in gold may now prefer to buy gold bonds or gold coins back home,” Azim Abba, Managing Director of Al Sulaiman Jewellery and Watches,said………………………………………..Full Article: Source

IEA Sees Oil-Demand Boost Balancing Market in Echo of Saudi View

Posted on 27 February 2015 by VRS  |  Email |Print

The oil market will rebalance in the next several months as a price collapse boosts consumption and curbs supplies, the International Energy Agency said, a day after Saudi Arabia’s oil minister told reporters demand is rising.
An oil price as low as $45 a barrel is unsustainable, Fatih Birol, the chief economist for the Paris-based adviser to 29 nations, said at a conference in London Thursday. Investment cuts in the U.S., Russia and Brazil will curtail output growth, bringing supply and demand back in line, he said………………………………………..Full Article: Source

Noble overstated commodity values by at least US$3.8 bln: Iceberg Research

Posted on 27 February 2015 by VRS  |  Email |Print

Singapore-listed Noble Group overstated the value of commodities it holds by at least US$3.8 billion, Iceberg Research said in a report on the Asian commodity trading firm’s accounting practices. “Impairing these fair values dramatically impacts Noble’s performance indicators,” the little-known research firm said on its website on Wednesday, its second report this month raising questions about Noble’s books.
Iceberg released its first analysis on Feb 15, to which Noble issued a detailed rebuttal. The company’s shares fell a combined 13 percent in the two trading sessions following the initial report. It has recovered about 1 percent since then………………………………………..Full Article: Source

How Do Commodity Suppliers Go Sustainable?

Posted on 26 February 2015 by VRS  |  Email |Print

Social and environmental responsibilities are rarely at the top of mind when suppliers are racing to the bottom of the price curve. That’s why sustainability is hard to come by in commodity industries. But a small giant in New Zealand is changing all that, at least when it comes to wool.
Dave Maslen is global partnership and sustainability manager at the New Zealand Merino Co. (NZM). In this video interview (after the jump), he shares the story of how Merino brings traceable, sustainably-produced wool to market by working directly with farmers and the value chain………………………………………..Full Article: Source

Nigeria Proposes Cutting Oil Price Benchmark to $52 a Barrel

Posted on 26 February 2015 by VRS  |  Email |Print

Nigeria’s Senate and executive proposed cutting this year’s budgeted oil price benchmark to $52 per barrel from $65 suggested in December, as falling prices erode the income of Africa’s biggest crude producer.
Nigeria’s finance ministry said an agreement had been made with the Senate and most members of the House of Representatives, though the lower chamber has yet to approve. “The proposal is $52 a barrel for 2015 due largely to decline in crude oil prices,” Enyinnaya Abaribe, chairman of the Senate Committee on Information and Media, said……………………………………….Full Article: Source

The end of OPEC

Posted on 26 February 2015 by VRS  |  Email |Print

At first, people thought that OPEC was purposefully keeping prices low (by not reducing supply) in order to smother the emerging shale industry in the crib. With low oil prices, less investment would flow to alternatives to conventional oil, which can be expensive. But, as Bloomberg reports, that might not be the answer. The answer increasingly seems to be that OPEC isn’t raising prices because it can’t raise prices.
The cartel isn’t holding. The smaller OPEC members don’t want to shrink output — which would have to happen to raise prices — because their economies are too unstable and they can’t afford it. Even Saudi Arabia, the most important OPEC member, is in favor of staying the course………………………………………..Full Article: Source

Will a dry spell in Chile curb a global oversupply of copper?

Posted on 26 February 2015 by VRS  |  Email |Print

A raging seven-year drought affecting copper-rich Chile is making miners grow anxious as the dry spell is now affecting the supply of power necessary to sustain their operations, responsible for around a third of global copper output. Companies such as BHP Billiton and Anglo American have recently highlighted the impact of the country’s extreme conditions in their latest financial reports.
Output at BHP’s Escondida, the world’s largest copper mine, dropped 2% percent in the second half of 2014. Water scarcity at Anglos’ Los Bronces — the world’s sixth-largest copper operation— may cost the company as much as 30,000 tonnes of lost production, equivalent to 4% of Anglo’s overall copper output this year, Reuters reports………………………………………..Full Article: Source

Oil market is stabilising, $60 is OK for now - Gulf OPEC delegate

Posted on 25 February 2015 by VRS  |  Email |Print

Oil prices have started to stabilise around current levels of $60 a barrel and demand is showing signs of improving in Asia and other regions, a senior Gulf OPEC delegate said on Tuesday.
The comments indicate that the core Gulf members of the Organization of the Petroleum Exporting Countries are showing no sign of wavering in their strategy to focus on market share rather than cutting output, despite concerns from other members about falling oil revenue………………………………………..Full Article: Source

Aluminium restarts not just a matter of price: Andy Home

Posted on 25 February 2015 by VRS  |  Email |Print

Non-Chinese aluminium production was unchanged in January, according to the latest figures from the International Aluminium Institute (IAI). Producers, it might be inferred, are still holding the line in terms of keeping capacity off-line in the face of low prices and historical stocks overhang.
Their continued discipline is a subject of much market conjecture, although the fear of restarts waxes and wanes with the price. A combination of lower London Metal Exchange (LME) basis price and softer physical premiums, particularly in Europe, has seen the all-in price slide back to just above $2,100 per tonne from over $2,450 as recently as November………………………………………..Full Article: Source

PwC Metals Deals Outlook: buyers and sellers to play a waiting game

Posted on 25 February 2015 by VRS  |  Email |Print

There will be weak momentum in the metals deals market in 2015 according to a new report from PwC. The report, Metals Deals: Forging ahead, predicts that, as in 2014, the lack of convincing, strong and sustainable growth in the global economy will keep metals deals in a low gear, or even stalling in some parts of the world.
Jim Forbes, global metals leader at PwC, said: “With the current level of commodity prices and the downward pressure on economic forecasts, we don’t expect dealmakers to be rushing to the table in 2015. The deal making that will take place is likely to be driven primarily by specific country, industry or company considerations, rather than the global cycle, the direction of which remains uncertain.”……………………………………….Full Article: Source

Commodities explained: China’s new normal

Posted on 24 February 2015 by VRS  |  Email |Print

As the Chinese return from their New Year celebrations, commodities traders and industry executives will be wondering what the year of the sheep holds for the sector. Why is Chinese growth on the minds of commodities traders? China has been the most important factor in commodities demand in the past decade.
The commodities “supercycle” that started in the early 2000s was largely driven by the country as investment in infrastructure, property, and factories producing exports for the globe required increasing imports of raw materials. Beijing’s 2009 stimulus further prolonged the demand, with loose credit encouraging the use of metal as collateral for loans………………………………………..Full Article: Source

Oil’s Plunge Could Help Send Its Price Back Up

Posted on 23 February 2015 by VRS  |  Email |Print

If something is cheaper, people will likely buy more of it. That core principle of economics is proving to be especially true with oil after its recent plunge. Over the past six months, 53% of vehicle purchases in the U.S. were light trucks or sport-utility vehicles, which tend to consume more gas than cars, according to Commerce Department data.
That was the highest share in a decade and up from 51% last June, when oil prices peaked for the year. The Transportation Department estimates Americans drove more than three trillion miles in the 12 months through November, the most since mid-2008 and the biggest annual increase—38 billion miles—in a decade………………………………………..Full Article: Source

Gold Fever Fading as $4 Billion Erased From Funds: Commodities

Posted on 23 February 2015 by VRS  |  Email |Print

Judging by the barometer of hedge-fund interest, there’s less to get excited about in gold these days. Even as Greece battled with its creditors to avoid default and keep the euro zone intact, speculators retreated from the metal used as a haven from economic and political upheaval. Money managers cut their net-long wagers by the most in 15 weeks, U.S. government data show.
The strengthening dollar and record valuations for global equities are diminishing bullion’s appeal as a store of wealth. As the combined market capitalization of stocks thundered through $67 trillion last week and the dollar traded at its highest level in at least a decade, this month’s losses in exchange-traded products backed by gold reached $4 billion………………………………………..Full Article: Source

We like the fundamentals for gold

Posted on 23 February 2015 by VRS  |  Email |Print

Medium to long term, we like the fundamentals for gold. On the supply side, although mine production was up for the sixth consecutive year due to mines that were developed over the last decade, we do not believe there is a large enough pipeline of new projects to satisfy future demand.
This is due to a cost structure that is approaching (or even exceeding) the current spot price. On the demand side, we see continued strength in Asia and throughout the emerging markets, central banks and the investment sector as price goes up — hence a real “push/pull” phenomenon in the years ahead………………………………………..Full Article: Source

Major banks’ commodities revenue up 9 pct in 2014-report

Posted on 20 February 2015 by VRS  |  Email |Print

Commodities revenue at the top 10 investment banks climbed by 9 percent last year, reversing three years of declines, due to increased activity in energy markets as oil went into freefall, a consultancy said on Thursday. Revenue earned by leading banks from commodity trading, selling derivatives to investors and other activities in the sector rose to $4.9 billion from $4.5 billion in 2013, London-based financial industry analytics firm Coalition said.
“Despite significant business downsizing, revenues rose due to increased activity in the energy markets. Meanwhile, metals continued to be impacted by regulatory pressures and weak underlying demand,” Coalition said………………………………………..Full Article: Source

Oil’s Volatility Reflects Debate: Is Worst Over Yet?

Posted on 20 February 2015 by VRS  |  Email |Print

New evidence of surging U.S. oil supplies sent prices on a roller-coaster ride Thursday, reflecting the growing divide among traders over whether an eight-month rout is over. The U.S. Energy Information Administration said oil inventories grew by 7.7 million barrels in the week ended Feb. 13. Analysts said swelling stockpiles are a sign that producers aren’t cutting back on output despite a more than 50% collapse in prices since last summer.
In its report, the EIA said U.S. oil production was on track to reach a 42-year high this month. But traders in the futures market had been bracing for much worse, and many took the data as a cue to buy. On Wednesday, an industry group had estimated a jump of 14.3 million barrels for last week, which would have been a record had it been borne out in the government data……………………………………….Full Article: Source

Oil-Drop Pain Spreads to Saudi Arabia’s Energy Behemoth

Posted on 20 February 2015 by VRS  |  Email |Print

Saudi Arabia’s refusal late last year to rein in oil production helped trigger the price crash that has hurt oil-producing countries and publicly listed energy companies alike. And now even the kingdom’s own oil company is feeling the pain.
As a result, state-owned Saudi Aramco is looking for ways to cut costs everywhere, from pushing contractors for better deals on oil-well services to negotiating discounts on its phone and power bills, according to people familiar with the matter………………………………………..Full Article: Source

Copper Is Shining Bright After Dull Start to the Year

Posted on 20 February 2015 by VRS  |  Email |Print

Copper prices rose to a one-month high on Wednesday, as the possibility of a deal between Greece and its European creditors sparked optimism in metals markets. Copper for March delivery, the most actively traded contract, closed up 1.3% at $2.6145 a pound on the Comex division of the New York Mercantile Exchange. It was the highest settlement since Jan. 13.
Greece will seek an extension to its rescue deal from the rest of the eurozone, officials said, signaling a shift in the standoff between Athens and its creditors. The possibility of an agreement that would keep the EU whole sparked optimism in copper markets, which saw a sharp drop Tuesday………………………………………..Full Article: Source

The oil price: The Saudi project, part two

Posted on 19 February 2015 by VRS  |  Email |Print

Stage one of Saudi Arabia’s plan—or perhaps hope—to restructure the oil market is taking longer than expected. By refusing to rein in production while prices fell, the Saudis permitted a big surplus to grow and served notice on higher-cost rivals (Russia, Venezuela, American shale-oil producers) that they would not prop up other people’s profit margins at the expense of their own market share.
That signal has been weakened by the growing amount of oil in storage, which is absorbing most of the glut. World oil stocks rose about 265m barrels last year and Société Générale, a French bank, reckons they will increase by a further 1.6-1.8m barrels a day (b/d) in the first six months of this year, adding roughly 300m barrels to the total. At the moment, global oil output is exceeding demand by about 2m b/d, so the build-up of stocks is enough to take most of the glut off the market……………………………………….Full Article: Source

Oil tumbles as huge supplies raise doubts about rally

Posted on 19 February 2015 by VRS  |  Email |Print

The comeback rally in oil paused on Wednesday, with crude prices falling 5 percent or more after traders and investors were overwhelmed by the latest estimates for U.S. supply builds that came in nearly five times above market expectations.
Benchmark Brent oil fell below the psychological $60 support and U.S. crude traded not far above $50 after industry group American Petroleum Institute estimated a supply build of more than 14 million barrels last week. A Reuters poll had expected a growth of just about 3 million barrels for the week to Feb. 13………………………………………..Full Article: Source

Gold price starting to look ‘vulnerable’ on seasonality: UBS

Posted on 19 February 2015 by VRS  |  Email |Print

The price of gold is starting to look vulnerable as the market heads into the “seasonally weak period” with the Lunar New Year around the corner, UBS said. New Year holidays in China begin Wednesday, and participants will be out through to Tuesday next week.
“The absence of this key physical market in a sense removes a natural cushion and therefore increases gold’s downside potential should negative catalysts emerge in the coming days,” analyst Joni Teves said in a research note. The price of gold had been enjoying a solid run in recent weeks spurred by a myriad of bullish factors including the unpegging of the Swiss franc against the euro and concerns about a possible exit by Greece from the eurozone and any potential ramifications………………………………………..Full Article: Source

What the oil price crash means for investors

Posted on 18 February 2015 by VRS  |  Email |Print

Why has the oil price crashed? The oil price has nearly halved over the last eight months. The cost of a barrel of Brent crude, the most common measure of oil, hit $115 last June but stands at just $62 today. Price falls this dramatic are down to one of two things: a drying-up of demand or a glut of supply.
Experts side with the latter. Figures for oil demand can paint a confusing picture. The International Monetary Fund (IMF) has estimated that between 35% and 40% of the fall in the oil price in the second half of 2014 can be accounted for by a decline in demand. However, monthly data from the US Energy Information Association shows global oil demand rising at a steady pace up to December………………………………………..Full Article: Source

Gold demand and supply trend in 2014 stands fundamentally bullish for gold prices

Posted on 18 February 2015 by VRS  |  Email |Print

Today we make a short break from the news from the main financial markets in order to analyze the gold demand trends for the full 2014 year, published a few days ago by the World Gold Council. How did the demand for gold behave last year?
A full year gold demand amounted to 3,923.7 tons, which means a 4 percent drop. It was caused by a10percent decline in jewelry demand. The decline is not surprising given the price-driven jewelry demand surge in 2013, however the 33 percent plunge in Chinese demand is substantial (on the other hand, Indian demand for jewelry was up 8 percent)………………………………………..Full Article: Source

Gold price 2015 rally evaporating

Posted on 18 February 2015 by VRS  |  Email |Print

Negative sentiment swamped the gold market on Tuesday as traders bet on a positive outcome for Greek debt negotiations and the breach of key technical levels put further pressure on the metal. In heavy post-holiday volumes on the Comex division of the New York Mercantile Exchange, gold futures for April delivery – the most active contract – plunged to $1,202.71 an ounce in mid-morning trade, down $24 or 2% from Monday’s close.
Gold gapped down shortly after the open and after breaking through its 100-day moving average, succumbed to more weakness. After a big bounce on Friday, silver’s stellar 2015 also ran into trouble with March contracts falling as much as 6% or more than $1.00 to $16.26 an ounce………………………………………..Full Article: Source

Time to start treating commodities as currencies?

Posted on 17 February 2015 by VRS  |  Email |Print

A few weeks ago, Michael Masters, of the eponymous US investment firm, made the point to FT Alphaville that bad things can happen whenever investors mistake the fruits of production for the means of production, and apply long-standing “long only” strategies (more suited to equity index markets) to assets like commodities.
Earlier this month, Nomura put out a note that observed much the same point. Specifically, they argued that commodities should be treated like currencies and valued with macro-trading tools that incorporate the concepts of carry, value and momentum………………………………………..Full Article: Source

Will commodities be able to sustain their rally?

Posted on 16 February 2015 by VRS  |  Email |Print

The WTI was $52.78/barrel and Brent was $61.52/barrel by the end of last week. It had surged recently due to fall in the number of oil drilling rigs in the US to its lowest since August 2011. The number of rigs drilling for oil in the US fell by 84 last week to 1,056, a clear sign of the pressure that tumbling crude prices have put on oil producers.
Oil prices have rebounded since late January, partly due to expectations the lower rig count will eventually shrink US production, curtailing the supply glut. Oil price also arose on account of eurozone growth of 0.3% in last quarter of 2014. The eurozone’s biggest economy, Germany, was a clear outperformer, growing by 0.7% in the quarter. The positive job data from US economy also contributed to surge in oil prices………………………………………..Full Article: Source

Russia’s Biggest Bank Boosts Commodities Staff Amid Slump

Posted on 16 February 2015 by VRS  |  Email |Print

Sberbank CIB boosted commodities staff as a slump in oil and metals spurred demand from Russian companies for a protection from volatile prices. The bank’s commodities trading team now consists of 20 people, up from four 18 months ago, said Francois Mantion, head of commodity trading at Sberbank.
As global lenders from JPMorgan Chase & Co. to Deutsche Bank AG trim or exit raw materials operations, Russia needs a bank with expertise in the field, he said. Russia, the world’s biggest energy exporter, gets about half of its budget revenue from oil and gas. “Commodities is a natural asset class for a bank in Russia,” Mantion, who joined the corporate and investment banking arm of Russia’s biggest lender from JPMorgan in 2013, said……………………………………….Full Article: Source

Global oil demand estimated to have grown in 2014: OPEC

Posted on 16 February 2015 by VRS  |  Email |Print

Global oil demand is estimated to have grown by 0.95 million barrels per day (mb/d) in 2014, representing an upward revision of 20 thousand barrels per day (tb/d) from the previous month, according to OPEC Monthly Oil Market Report (MOMR).
According to a report by UAE’s official news agency Wam, quoting OPEC MOMR, the adjustment mainly reflects better-than-expected oil demand data from OECD America and China. In 2015, world oil demand is anticipated to rise by 1.15 mb/d, following an upward revision of 30 tb/d due to expectations of higher oil requirements in OECD America and Other Asia, the MOMR said……………………………………….Full Article: Source

Three important questions for the oil market

Posted on 16 February 2015 by VRS  |  Email |Print

The oil market is in a state of flux, says former Bank of England economist Spencer Dale. Is it now on the road to recovery? The oil market is in a state of flux. Prices have fallen by over 50pc since last summer. The Organisation of the Petroleum Exporting Countries (Opec) seems to have forgotten its lines. There are howls of pain from large and small oil producers alike.
Against such a backdrop, it is tempting to focus on the here and now. Although prices may be down for some years, the world’s demand for energy is likely to increase by almost 40pc over the next 20 years or so, driven by growth in developing economies………………………………………..Full Article: Source

Higher Oil Forecasts Suggest OPEC Tactics Are Paying Off

Posted on 16 February 2015 by VRS  |  Email |Print

The world’s three big energy agencies are forecasting higher demand for OPEC’s crude oil this year, a sign the producing nations’ strategy to let prices fall is starting to win them back market share from rivals who are cutting output. After an oversupply of world oil sent prices tumbling in 2014, top OPEC exporter Saudi Arabia urged fellow members not to prop up the market and to try to knock out competing sources like U.S. shale, which, because it has higher production costs, had to cut output when prices fell.
In reports this week, The International Energy Agency and the Organization of the Petroleum Exporting Countries have raised by at least 200,000 barrels per day (bpd) their estimates of demand for OPEC crude in 2015, while the U.S. government’s Energy Information Administration forecasts OPEC will pump 140,000 bpd more………………………………………..Full Article: Source

Global Demand for Gold Fell in 2014

Posted on 16 February 2015 by VRS  |  Email |Print

Global demand for gold fell last year as buying plunged in two important markets, China and India, the World Gold Council said Thursday. Total demand in 2014 weighed in at 3,924 tons, compared with 4,088 tons the previous year. However, growth in demand increased into the end of the year: Fourth-quarter demand was 988 tons, up 6% from the year-earlier quarter.
Last year “was a year of stabilization…after the record-breaking level of buying seen in 2013,” said Marcus Grubb, managing director of investment strategy at the World Gold Council………………………………………..Full Article: Source

Turkish banks capitalize on savers’ preference for gold

Posted on 16 February 2015 by VRS  |  Email |Print

From the outside, it looks like any other automatic bank machine on the streets of Istanbul. But rather than notes, this one distributes small pieces of gold. Gold is hugely prized in Turkey not just for ornamentation or investment by banks but as a secure way for private individuals to hold their savings.
Many people in Turkey – which has one of the lowest private savings rates among major economies – keep gold as security for a “rainy day” rather than products offered by banks. According to estimates, Turks hold some 3,500 tons of gold. Banks have sought to capitalize on the tradition by offering accounts denominated in gold………………………………………..Full Article: Source

Commodity prices go back to basics

Posted on 13 February 2015 by VRS  |  Email |Print

Commodity markets are going back to basics. Instead of moving up (or down) in lockstep with each other, and with other assets, they are beginning to show variation. The “backwardation” seen in some commodities is an indication of this change. Referring to conditions where it costs more to buy a commodity in the spot market than for future delivery, this is not a term you hear much in the commodities world these days.
Backwardation usually signals a tight near-term supply and demand situation. When supplies are plentiful and commodity prices are falling, prices tend to be in the opposite condition, known as “contango”………………………………………..Full Article: Source

Here’s how a $50 drop in oil prices affects every country in the world

Posted on 13 February 2015 by VRS  |  Email |Print

The oil crash has impacted oil importers and exporters differently. The 50% plunge in oil prices will be a roughly $1.7 trillion gain for consumers in oil importing nations, according to BlackRock. But exporters will suffer, especially countries that are counting on revenues from higher oil prices to balance their budgets.
“Winners in this climate should be global consumers, oil importers such as India and Japan, and the transport and retailing industries,” BlackRock’s Jean Boivin wrote in a research report. “Oil-exporting nations and companies with limited cash buffers and poor access to debt markets (think Venezuela or over-leveraged U.S. shale plays) look to be the biggest losers.”……………………………………….Full Article: Source

Iraq minister predicts oil price recovery

Posted on 13 February 2015 by VRS  |  Email |Print

An eight-month slump in the oil market has reached a bottom and prices will recover, Iraq’s oil minister predicted Tuesday. Oil prices have slumped more than 50% since June amid a surge in oil supply led by U.S. shale oil production and sluggish demand.
Iraq and other members of the Organization of the Petroleum Exporting Countries have taken a hands-off approach to the selloff, opting to defend market share rather than cut production to bolster prices as the group had done in the past………………………………………..Full Article: Source

Global gold demand hits four-year low

Posted on 13 February 2015 by VRS  |  Email |Print

Global gold demand fell 4 per cent last year to its lowest level since 2010 as China failed to repeat its record buying of 2013, according to the World Gold Council, an industry body. Demand in China fell 38 per cent, as sales of gold bars and coins halved on the back of domestic equity markets recovering and the Communist party’s anti-corruption campaign having a “strong impact”, it said.
Gold has bounced back more than 3 per cent this year on renewed haven buying amid turmoil in the eurozone, after falling 28 per cent over the past two years as global inflation failed to materialise………………………………………..Full Article: Source

Indian Gold Consumption Fell, But Is Still the Highest in the World

Posted on 13 February 2015 by VRS  |  Email |Print

In the Olympics, India rarely brings home gold medals but when it comes to actual gold, it brings home more than any other country. The World Gold Council said Thursday that the South Asian nation consumed less gold last year than it had in five years but it still bought tons more of the precious metal than any other country.
India has been desperate to wean its citizens of their addiction to gold. It has slapped new restrictions and import taxes on gold to rein in trade imbalances. Overall Indian consumer demand for gold only fell 12% to 842.7 tons last year. That’s the least amount of gold India has bought in one year since 2010, but still more than China or any other nation bought in 2014………………………………………..Full Article: Source

Rio Tinto dismisses talk of deal with Glencore

Posted on 13 February 2015 by VRS  |  Email |Print

Rio Tinto does not need to do a deal with Glencore, its chief executive Sam Walsh said after the Anglo-Australian miner defied the gloom in the commodities sector by increasing its dividend and announcing a $2bn share buyback.
Rio has been under pressure to make good on promises to increase returns to shareholders and ward off any fresh approach from Glencore. The Swiss-based mining house can make another approach in April under UK takeover rules, after a merger proposal was rebuffed by Rio last year………………………………………..Full Article: Source

Shale and Non-OPEC Producers Hit Hardest By Low Oil Prices

Posted on 12 February 2015 by VRS  |  Email |Print

The plunge in global crude prices makes it difficult for North American shale oil producers to survive, the chairman of Russian gas giant Gazprom said in Saudi Arabia on Wednesday. Viktor Zubkov told an industry gathering that “a lot” of shale producers are suffering from the drop in oil prices and current conditions make shale production “nonsense.”
“The low price of oil, $45, $50, or even $60 (per barrel), it’s not a driver for shale business,” he told the International Energy Forum (IEF) in Riyadh. Crude prices dropped from around $100 to below $50 per barrel over the past year on concerns over a supply glut and weakening demand………………………………………..Full Article: Source

Chinese banks bulk up in London’s commodity sector

Posted on 11 February 2015 by VRS  |  Email |Print

Under large chandeliers in London’s ornate Gibson Hall, China’s largest bank earlier this month celebrated its $690m purchase of a 60 per cent stake in Standard Bank’s global markets unit. The acquisition will help Industrial and Commercial Bank of China offer a full range of commodities services to its clients, some of China’s largest natural resources companies, as it moves to compete with western banks such as Citi and Goldman Sachs.
ICBC’s purchase is the latest foray by a Chinese entity into London’s commodities market, as such banks see an opportunity to service Chinese clients who produce and consume the bulk of the world’s resources as western banks withdraw from the sector………………………………………..Full Article: Source

Oil market rebalancing ‘could take years’: IEA

Posted on 11 February 2015 by VRS  |  Email |Print

The global oil market could be out of balance for years, and it will never be the same because of U.S. shale production, the International Energy Agency said Tuesday.
“A partial rebound in oil prices over the last month following a 60 percent crash since June suggests market participants are seeing light at the end of the tunnel and growing confident that spending cuts by oil companies will lead to a market recovery,” the IEA said in its February oil market report……………………………………….Full Article: Source

Russia will be biggest loser from oil price fall, warns IEA

Posted on 11 February 2015 by VRS  |  Email |Print

International Energy Agency uses market report to point to biggest potential loser from oil price slump. Russia will be the biggest loser from the current downturn in oil prices as the Organisation of the Petroleum Exporting Countries (Opec) seizes back a bigger share of the world crude market, the world’s top energy watchdog has said.
In its closely-watched medium-term market report the International Energy Agency (IEA) said that Russia’s output of crude would contract by 560,000 barrels per day (bpd) through to 2020. “Russia facing a perfect storm of collapsing prices, international sanctions and currency depreciation, will likely emerge as the industry’s top loser,” said the IEA………………………………………..Full Article: Source

Oil drops sharply as IEA expects inventories to rise

Posted on 11 February 2015 by VRS  |  Email |Print

Crude oil prices fell for the first time in four sessions on Tuesday after the International Energy Agency (IEA) warned that ample supplies will raise global inventories before investment cuts begin to significantly dent production.
Oil stockpiles in member countries of the Paris-based Organization for Economic Cooperation and Development (OECD) may approach a record 2.83 billion barrels by mid-2015, said the IEA, advisor on energy policy to a group of Western nations. US March crude futures fell US$2.84, or 5.37 per cent, to settle at US$50.02 a barrel, after dropping to US$49.86………………………………………..Full Article: Source

Singapore DBS says total commodities exposure is S$30 bln

Posted on 11 February 2015 by VRS  |  Email |Print

Singapore’s DBS Group Holdings has total commodities exposure of S$30 billion ($22.18 billion), with the bulk of it in trade finance, Chief Executive Officer Piyush Gupta said on Tuesday.
DBS, Singapore’s biggest bank, took some charges on the commodities exposure in China in its fourth-quarter results. It reported a small rise in core fourth-quarter net profit which fell short of analysts’ estimates………………………………………..Full Article: Source

Commodities Are Down—but Hardly Out

Posted on 10 February 2015 by VRS  |  Email |Print

Do commodities still have a place in the average investor’s portfolio? The 2007-09 recession caused everyone to re-evaluate their tolerance for risk, and nowhere was this felt more strongly than in the commodities arena, where anything from a coffee-eating pest to severe drought could cost an investor hundreds of thousands of dollars.
Several years of negative returns for most commodities haven’t endeared the asset class to investors: For the three years through January, the S&P GSCI Commodity Index posted a negative return of 40%. That came after a 52% decline between June 2008 and June 2011………………………………………..Full Article: Source

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