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Commodities Briefing - Category | Market Moves more

The commodities supercycle’s not dead, it has evolved - Barings

Posted on 18 June 2015 by VRS  |  Email |Print

With Chinese GDP growth moderating and demand for many commodities still lacklustre, it is understandable that the commodities supercyle’s obituary continues to be written. But, there are those that see it less as a death and more like a pupation, with the commodities complex in the midst of a transformation from a coal and iron ore driven caterpillar to a zinc and aluminium winged butterfly.
The Barings commodities team is one of those, pointing out in a note yesterday that the sharp falls in the prices of commodities like iron ore, thermal coal and oil, have prompted many observers to conclude that the cause for the falls (and, indeed the death of the supercycle) lies with China’s faltering economic activity………………………………………..Full Article: Source

Banks Balk at China Commodities Deals

Posted on 18 June 2015 by VRS  |  Email |Print

Once bitten, twice shy. Banks are wary of commodities deals in China a year after officials started investigating alleged fraud that led to a $193 million writedown for Standard Chartered Plc and $147 million at Standard Bank Group Ltd.
Traders in the world’s biggest consumer of metals are finding it harder to get credit from lenders after the probe at the eastern ports of Qingdao and Penglai, according to Guotai & Junan Futures Co. and Everbright Futures Co., Chinese commodity brokers whose clients include trading companies and financial institutions………………………………………..Full Article: Source

Forget $100: Will the oil market remember $80?

Posted on 18 June 2015 by VRS  |  Email |Print

May felt like a déjà vu month in the oil markets with crude attempting another rally, much like the one we saw in February, albeit at slightly higher levels, and once again failing to lift off. A strengthening US dollar and renewed focus on bearish supply-side fundamentals took the bounce out of Brent, which at one point in early May was perched at the year’s high within sight of $68/barrel.
The 5 June decision by the Organization of the Petroleum Exporting Countries (Opec) to leave its production ceiling untouched—predictable as it was—dragged the benchmark light sweet crude back to $62/barrel levels as the second week of June got underway………………………………………..Full Article: Source

Rouhani: Iran isolated from weak oil market

Posted on 18 June 2015 by VRS  |  Email |Print

Iran is less squeezed by the low price of oil than other export-dependent nations because of budgetary moves away from energy, the country’s president said. Iranian President Hassan Rouhani said the budget for the current Iranian year, which started March 21, is the least dependent on oil revenue ever for the country.
Crude oil prices are robbing major exporters like Russia of revenue, though Iran’s president said his country was largely shielded from those constraints. “All oil exporting countries, even those who plotted for an oil price decline, are facing problems due to this issue and our problems might be even less than this group,” he said………………………………………..Full Article: Source

Russia’s Sechin says U.S., not OPEC, rules oil markets

Posted on 18 June 2015 by VRS  |  Email |Print

Igor Sechin, the head of Russia’s top oil producer Rosneft, said on Wednesday the United States is calling the shots on global oil markets, while the influence of OPEC has shrunk. The United States emerged with renewed vigour as a top producer thanks to its shale boom. By refusing to curb its output to prop up oil prices, OPEC has tried to maintain its share in the global market, shrugging off lower prices which damage U.S. producers.
“In essence, the sole market, which has all the sets of financial and technological tools, is the U.S. market, which has became the key regulator,” Sechin told reporters, adding that oil prices in the United States set the tone of the global industry………………………………………..Full Article: Source

El Niño’s Pacific typhoon link threatens energy and shipping

Posted on 17 June 2015 by VRS  |  Email |Print

A strong El Niño phenomenon this year is expected to increase the number of cyclones and typhoons in the Pacific and Indian oceans, leading to disruptions in energy and shipping markets.
The climatic event tends to dampen hurricane activity in the Atlantic, reducing the risk to US oil markets serviced by refineries in the Gulf of Mexico. However, the hurricane season in the Pacific is likely to affect crude oil and product supply chains, according to commodity brokers Marex Spectron………………………………………..Full Article: Source

Gold Market Drivers Are Changing, Says HSBC

Posted on 17 June 2015 by VRS  |  Email |Print

Drivers of the gold market are changing, says HSBC. During the rally up to 2012, investment demand set the tone, but now demand from emerging markets is increasing its influence. Jewelry demand in Asia, particularly in India, remains robust even as investors sell out of their positions.
“These [emerging market] buyers and sellers hunt for bargains, and are hugely price sensitive. They now largely define the range for gold,” says HSBC. Furthermore, central banks in emerging markets are likely to increase their gold purchases by 25% this year, the bank says. Spot gold is trading down 0.2% at $1,183.26/oz………………………………………..Full Article: Source

How Important Is Brazil To The World’s Oil Market?

Posted on 16 June 2015 by VRS  |  Email |Print

Two things put Brazil’s oil wealth in the public eye again this year. One good. One not so good. First the not so good: Petrobras. The state-owned oil firm is up to its eyeballs in scandal. It’s led to the bankruptcy of around four Petrobras partner firms, and the arrest of dozens of executives, including high level Petrobras managers implicated in money laundering and accounting fraud.
So that’s the bad side of Brazil’s oil business. Then the good side. That was brought to light recently when Shell Oil bought out the BG Group, a U.K. driller that partners with Petrobras on four wells in the Atlantic Ocean. Shell’s CEO Ben van Beurden said that one of the most attractive aspects of the BG deal was Petrobras………………………………………..Full Article: Source

A Funny Thing Happened on the Way to an Oil Market Rebalance

Posted on 16 June 2015 by VRS  |  Email |Print

As oil prices collapsed last fall and winter, conventional wisdom in the market held that the global glut of crude would stop growing in the second half of 2015 and then shrink as demand picked up, bringing the market back into balance.
Mid-year is now just two weeks away, but the expected re-balance is nowhere in sight. Two data points tell the story: The Organization of the Petroleum Exporting Countries is continuing to produce well above its quota, and U.S. output is still rising even as the industry slashes infrastructure tied to production………………………………………..Full Article: Source

Saudi market opening can end ‘oil only’ story, says T Rowe star

Posted on 16 June 2015 by VRS  |  Email |Print

The opening of the Saudi Arabian market can help the country further push away from the international belief it is only a play on its oil-rich image, T Rowe Price’s Oliver Bell has said. Citywire A-rated Bell made the comments in an investor update for the T Rowe Price Africa & Middle East fund.
His comments coincide with the Saudi market announcing on June 15 it had formally opened its stock exchange to foreign traders for the first time. Bell said, while many investors will set their sights on accessing the country’s world famous oil and gas sector, the reality means the prime investment areas lie elsewhere and the Saudi government is aware of this………………………………………..Full Article: Source

Platinum Prices Hit Six-Year Low

Posted on 16 June 2015 by VRS  |  Email |Print

Platinum prices fell to a six-year low on Monday on concerns over growing supplies of the precious metal. Platinum for July delivery, the most actively traded contract, closed down 0.8% at $1,088.60 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since March 18, 2009.
Investors are worried about platinum stockpiles, which are growing as miners in South Africa ramp up output following a five-month strike in 2014. South Africa is the world’s largest producer of the metal, and Barclays estimated platinum production from the country is on track to hit a five-year high in 2016………………………………………..Full Article: Source

Money-making opportunities in gold

Posted on 16 June 2015 by VRS  |  Email |Print

Gold prices have been weak for many weeks now. But if you are an Indian investor, there are still a couple of money-making opportunities in bullion. One, gold ETFs in India are now trading at a discount to their NAVs, on the stock exchanges. Market prices have dropped as there is not much demand for paper gold from investors.
Gold BeES (Goldman Sach’s gold ETF), the largest gold fund in India, trades at a price of Rs2,448/unit. This is at a discount of 2 per cent to the NAV of Rs2,492.63. Similarly, UTI’s Gold ETF trades at a 2.8 per cent discount to NAV. Gold prices in India swung into discount to global prices in May following a drop in demand, and are still at a $3-4/ounce discount………………………………………..Full Article: Source

Citi faces headwinds in commodity trade finance, presses on with expansion

Posted on 16 June 2015 by VRS  |  Email |Print

Citigroup Inc and rivals in the commodity trade finance sector are facing headwinds of weak oil prices, sanctions on Russia and stiff competition, which have pressured fees. The U.S. bank, which launched its business in the sector three years ago, has shifted attention from China, where fees are weak, to Africa and Latin America, said Kris van Broekhoven, global head of commodity trade finance.
“It’s still a tough environment,” he told Reuters. “China is not an easy market. It’s very competitive and pricing is low. We want growth, but not at any cost.”……………………………………….Full Article: Source

Commodity prices rebounded?

Posted on 15 June 2015 by VRS  |  Email |Print

Bloomberg commodity Index is slightly gaining its value in last three month. However, its returned still decline by 24.89% on year on year basis. Bloomberg Commodity Index is calculated on the basis of an excess return and reflects twenty commodity exchange traded futures price movements, including energies, Industrial metals, precious metals, grains, soft commodities and livestock.
Demand for global commodity markets slumped in last one year due to booming in global equity markets. Investors reduced their interest in commodity to markets. Index slid mainly due to tumbled in crude prices as lower demand in the market against higher supplies. Dollar-denominated commodities such as gold, crude and copper prices tend to decline when dollar gains, as this makes it costlier for buyers for other currencies………………………………………..Full Article: Source

Supply cutbacks to push oil prices: QNB

Posted on 15 June 2015 by VRS  |  Email |Print

The average oil prices are expected to rise to 64.1 per barrel in 2016, from an expected 56.2 per barrel in 2015, according to a research note issued by the QNB. Oil prices have rebounded by 33.1 percent since their trough in January to 62.0 per barrel. A research conducted by QNB to find out what is behind this recovery showed that demand was ingle-handedly behind the recent recovery, but that supply was responsible for the majority of the 60 percent collapse in oil prices in the second half of 2014.
“Our conclusions about the relative roles of demand and supply are supported by independent data from the International Energy agency (IEA). This suggests that the recovery in oil prices still has legs as the adjustment through lower supply is yet to happen………………………………………..Full Article: Source

OPEC output plan based on maintaining market dominance

Posted on 15 June 2015 by VRS  |  Email |Print

International oil prices saw a strong rebound in April, leading to more optimistic market sentiment. If the Organization of the Petroleum Exporting Countries (OPEC), which produces around 30 percent of the world’s oil, had chosen to cut production at that point, international oil prices would have increased further.
However, the 12-nation oil cartel decided to maintain its production levels. Data from OPEC showed that oil production in Saudi Arabia, the world’s largest oil exporter, actually increased to 10.31 million barrels per day in April, the highest in nearly 30 years. Saudi Arabia is also planning to raise the number of its drilling rigs to as many as 250 in 2016 from the current 212………………………………………..Full Article: Source

Global Oil Demand Rising, IEA Says

Posted on 12 June 2015 by VRS  |  Email |Print

Low oil prices and economic growth have helped drive up consumer demand for energy across the world in 2015, the International Energy Agency said Thursday, a phenomenon seen from U.S. gasoline stations to Chinese auto dealerships.
The IEA’s closely watched oil-market report lent some support to an idea pushed by the Organization of the Petroleum Exporting Countries and other producers: that collapsing oil prices would spur more consumer demand and eventually send prices back up. The benchmark U.S. oil price hit a six-month high on Wednesday………………………………………..Full Article: Source

Crude to trade in $55-75/bbl range, gold to slip: ANZ

Posted on 12 June 2015 by VRS  |  Email |Print

The crude oil market is at an interesting juncture at the moment. The prices around where we are now USD 65-70 per bbl is the market cannot find equilibrium there. We are expecting the market would trade somewhere between USD 55 per bbl and USD 75 per bbl probably for the next 12 months.
Gold prices will drift lower, probably over the next four months. Gold has been stubbornly range bound for probably the past three-six months just trading between that 1,170 up to 1,220-1,230 area. We had a pretty good attempt at a lower break after the non-farm payrolls on Friday where we touched 1,165 on the lows. But the markets really traded back up………………………………………..Full Article: Source

Assets in world’s largest gold fund slump 48% to lowest level since financial crisis

Posted on 12 June 2015 by VRS  |  Email |Print

Assets in the world’s biggest exchange-traded product backed by gold slumped to the lowest since the start of the financial crisis as equities rallied and investors prepared for higher U.S. interest rates.
Holdings in the SPDR Gold Trust dropped 0.2% to 704.22 metric tons on Wednesday, the lowest since September 2008. That’s the month that Lehman Brothers Holdings Inc. collapsed, spurring a rout across global markets. Since peaking in December 2012, assets have contracted 48%………………………………………..Full Article: Source

Commodities broker Marex Spectron up for sale

Posted on 12 June 2015 by VRS  |  Email |Print

Marex Spectron Group Ltd is up for sale, four years after the global energy and metals broker was formed from two different entities, four sources close to the company said. The firm, which is majority-owned by private equity investment firm JRJ Group, emerged in 2011 from the merger of metals dealer Marex Financial and energy broker Spectron Group.
Sources said JRJ Group has considered selling Marex Spectron for some time. It has appointed an investment bank to follow the process, a source with direct knowledge of the matter said, but declined to name the bank………………………………………..Full Article: Source

Azerbaijan sees 10% growth in commodity market year-on-year

Posted on 12 June 2015 by VRS  |  Email |Print

In January-May 2015, AZN 9.5 bln-good were sold to consumers in the retail trade subjects, up 9.7% from previous year. State Statistical Committee says AZN 50.1% of the sold products fell to share of food products, drinks and tobacco products, 49.9% – to share of non-food products. Share of non-food products rose 1.2 percentage points.
E-retail trade turnover soared 1.9 times to AZN 4.9 mln. 96.5% of e-trade turnover made non-food products. Catering turnover soared 13.9% to AZN 372.4 mln………………………………………..Full Article: Source

IMF’s “never again” experience in Greece may get worse

Posted on 11 June 2015 by VRS  |  Email |Print

For the International Monetary Fund, five years of playing junior partner in European bailouts for Greece has been a “never again” experience, and the worst may be yet to come. The global lender has lent far more to Athens than to any other borrower, contributing nearly one-third of the total 240 billion euros, with the rest coming from euro zone governments and the bloc’s rescue fund.
But it has sat uncomfortably in the side-car of the Greek rescue. Called in by EU paymaster Germany to try to keep the European institutions and the Greeks honest, the Washington-based IMF has never had control of the programme………………………………………..Full Article: Source

U.S. Ousts Russia as Top World Oil, Gas Producer in BP Data

Posted on 11 June 2015 by VRS  |  Email |Print

The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.
U.S. oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined………………………………………..Full Article: Source

OPEC says oil market oversupply to ease, but raises output again

Posted on 11 June 2015 by VRS  |  Email |Print

OPEC voiced confidence that excess supply in the oil market will ease as demand picks up and supply growth slows from producers outside the group, an indication its strategy of letting prices fall, reaffirmed at a meeting last week, is working.
In a monthly report on Wednesday, OPEC pointed to its expectations that supply from rival producers would decline in the second half of the year after rising in the first. World oil demand will grow faster than it did in 2014, OPEC said………………………………………..Full Article: Source

OPEC swears by market stability, despite high output

Posted on 11 June 2015 by VRS  |  Email |Print

Despite risking the oil market with further volatility after it decided last week to stick with its current high production levels, the Organization of the Petroleum Exporting Countries (OPEC) used its latest oil market report to stress that it was committed to market stability.
In the report, out Wednesday, the 12-member oil producer group justified its decision to keep production at 30 million barrels a day, reiterating its forecasts that the current oversupply in the market was likely to ease over the coming quarters against a backdrop of a global economic recovery and growing oil demand………………………………………..Full Article: Source

Prepare for an upcoming conflict in OPEC

Posted on 10 June 2015 by VRS  |  Email |Print

Since the beginning of 2015 there have been reports that the three largest producers in the Organization of the Petroleum Exporting Countries, namely Saudi Arabia, Iraq and Iran, would increase their exports to record levels by end of year. This has happened for both Saudi Arabia and Iraq and will likely occur with Iran once a nuclear deal is reached with the United States.
The reasons differ of course, but the result will be the same: Either OPEC is effectively broken up, or more likely, Iraq and Iran will get their way. In May the Iraqi Oil Ministry exported an average of 3.15 million barrels per day and has preparations to ship 3.25 million b/d in June, moving sharply toward a new all-time record in the coming months………………………………………..Full Article: Source

OPEC Set to Play the Waiting Game in Oil Market

Posted on 09 June 2015 by VRS  |  Email |Print

Following OPEC’s decision not to cut production at its June 5, 2015 meeting in Vienna, oil prices should likely continue their descent that began in early May (Figure 1). Prices may fall into the $50+ per barrel range since there is no tangible reason for their rise from January’s $46 low.
Saudi Arabia’s longer view of demand and market share dominated the decision not to cut. World oil production has undergone a structural shift from supply dominated by relatively inexpensive conventional production to increasingly more supply coming from expensive deep-water and unconventional production………………………………………..Full Article: Source

Oil slips after OPEC keeps output high, China slowdown

Posted on 09 June 2015 by VRS  |  Email |Print

Oil prices fell on Monday on news of a slide in China’s fuel imports and as markets digested OPEC’s decision to maintain its production target, which analysts said could prolong a supply glut for the rest of the year.
China, the world’s biggest net oil importer, bought nearly a quarter less crude in May than it did in the previous month, official data showed. China’s imports of oil products also fell by more than 6 percent while oil product exports fell 10 percent………………………………………..Full Article: Source

Gold And Silver Price: Too Many Are Still Getting It Wrong

Posted on 09 June 2015 by VRS  |  Email |Print

Americans labor under the misguided belief that they have freedom, and by extension, freedom of choice. This simply is not true. Corporations are dictating more and more how Americans live, what to think, what to eat, and more. Google is a perfect example of what was once a superior search engine-turned-government-tool-for-propaganda.
Searches have been sanitized to provide only that information the corporate federal government wants you to know, and no more. It used to be the will of one in this country was protected against the majority. You can no longer find any references to this line of thinking when one Googles “rights for the will of one.”……………………………………….Full Article: Source

Fundamental factors to the fore for PGMs – Citi

Posted on 09 June 2015 by VRS  |  Email |Print

The differing market fundamentals of platinum and palladium are more important to its direction that their relationship to the dollar, Citi said. The bank would favour going long on palladium and short on platinum over the next six months, it said in a weekly report. Platinum recently traded at $1,097/1,102 per ounce, up $5 on Friday’s close, while palladium was $2 higher at $749/755.
Reduced expectations for a deficit in platinum this year are weighing on the metal, it said. It sees a rebound in mine supply of close to 20 percent in volumes this year, limiting its projection of a 2015 market deficit to 327,000 ounces – a level easily filled by above-ground stocks………………………………………..Full Article: Source

New EU rules may hasten commodity liquidity flight

Posted on 08 June 2015 by VRS  |  Email |Print

Planned EU regulations on position limits in commodities are fuelling intense debate about whether the move could prompt traders to flee to Asian markets, further hurting European liquidity and potentially hurting economic growth.
Restrictions on banks and capital requirements has already subdued enthusiasm for commodity trading. The new rules aimed at stopping abuses of pricing power on commodity markets will encompass position limits, or curbs on how much one trading house can hold of a specific commodity, possibly on thousands of futures contracts………………………………………..Full Article: Source

OPEC’s Open Oil Spigots Spur Retreat for Bulls and Bears Alike

Posted on 08 June 2015 by VRS  |  Email |Print

Oil speculators accelerated their retreat from both bullish and bearish wagers before OPEC ministers held firm in their plan to pump ever more crude. Speculators reduced short wagers in West Texas Intermediate crude by 8.6 percent and long bets by 2 percent, for an overall 0.2 percent contraction in the net-long position, U.S. Commodity Futures Trading Commission data through June 2 show.
OPEC stuck to its strategy of defending market share rather than prices at a meeting in Vienna June 5. The group is pumping the most oil since 2012, even with prices 45 percent below last year’s peak. The supply glut persists because even though U.S. producers idled a record number of rigs and global drillers slashed spending plans, output has yet to collapse………………………………………..Full Article: Source

Saudi oil minister ‘100 per cent comfortable’ with market: al-Hayat newspaper

Posted on 08 June 2015 by VRS  |  Email |Print

Saudi Arabian Oil Minister Ali al-Naimi said he was “100 per cent comfortable” with the oil market, in terms of supply and demand, the Saudi-owned al-Hayat newspaper reported on Friday. Naimi’s remarks come ahead of an OPEC meeting on Friday in which the organisation is widely expected to stick by its policy of unconstrained oil output for another six months.
He told the newspaper the market was witnessing an increase in demand for oil and a slight improvement in global growth and that supply from outside of OPEC member countries had declined. “I am 100 per cent comfortable with the market situation, but prices are a different issue,” he said………………………………………..Full Article: Source

Iran won’t seek any permission to reenter world oil market: minister

Posted on 08 June 2015 by VRS  |  Email |Print

Iranian Oil Minister Bijan Namdar Zanganeh has said that the country will not seek any permission to reenter the world oil market. “Before the [OPEC] 167th meeting, we submitted letters to all ministers of the member states, announcing our readiness to reenter the oil market once the sanctions on the country are lifted,” the Shana news agency quoted Zanganeh as saying on Saturday.
“To boost production to the pre-sanction level, we do not need any permission and we will not transfer our share to others,” he stressed. “In my opinion, OPEC will promptly adapt itself to the issue and will make room for us.”……………………………………….Full Article: Source

OPEC Ministers Find Key to Happy Union as Iran Met With Silence

Posted on 08 June 2015 by VRS  |  Email |Print

About the only surprise to come from OPEC’s decision on June 5 to leave oil output unchanged was that everyone got along. “I have been in OPEC for some many years, and it is the first time I had seen this,” OPEC Secretary-General Abdalla El-Badri said after the meeting. “Very, very positive.”
Last November, when the Organization of Petroleum Exporting Countries introduced its strategy of maintaining production to take market share from higher-cost producers, the group’s weaker members like Venezuela argued for a cut to boost prices. This time, even they were supportive amid signs the strategy is working………………………………………..Full Article: Source

OPEC not losing market control to US shale oil: Analysts

Posted on 08 June 2015 by VRS  |  Email |Print

Oil industry analysts say despite fears among member states of the Organization of the Petroleum Exporting Countries (OPEC) about losing market control, the organization is still the dominant player in global oil market. During its latest ministerial meeting in the Austrian capital, Vienna, OPEC decided to keep its output unchanged, with observers believing that the decision reflects fears inside OPEC about the growing influence of booming US shale oil industry, AFP reported.
“OPEC members continue to play a key role in the current conditions of the oil market,” said senior energy analyst, Myrto Sokou, at the Sucden brokerage in London………………………………………..Full Article: Source

Will the new gold monetisation scheme glitter?

Posted on 08 June 2015 by VRS  |  Email |Print

The crux of the matter is that gold, which the scheme hopes to draw in, is not often stored as bars or coins — forms that lend themselves easily to be valued as a financial instrument. In India, gold is held by households in the form of jewellery.
The Finance Minister had spoken about it in the budget. The Finance Ministry published draft guidelines during the third week of May of a new gold monetisation scheme, which it proposes to implement after incorporating feedback from different sections. The idea to monetise gold is by no means new. In fact, various schemes to tap the gold hoard already exist. Though launched with a lot of fanfare, they have garnered very little subscription………………………………………..Full Article: Source

Commodities: Where is the value?

Posted on 05 June 2015 by VRS  |  Email |Print

The prices of core commodities, including oil and iron ore, have plunged in recent years. Michael Hulme, commodity equities fund manager at Carmignac Gestion, analyses the areas still able to offer value as industries consolidate and respond to price changes
Though last year’s plunge in oil prices was partly offset by a near-50% rebound from March 2015 onwards, volatility continues to unsettle investors within the asset class. There is reason to be cautiously optimistic on the outlook for some commodities, particularly oil, which continues to gain ground as US shale production begins to fall. Our long run forecast remains $80 to $90/barrel………………………………………..Full Article: Source

No action at OPEC, but what about shale?

Posted on 05 June 2015 by VRS  |  Email |Print

Volatile oil prices are expected to finish the year near current levels, even though crude may make another plunge in the second half of 2015, according to a new CNBC Oil Survey. The respondents were uniform in their view that OPEC will take no action at its meeting this week. But the upstart U.S. shale industry has proven trickier to predict, and answers were nearly equally split on whether it would increase, decrease or keep production steady this year.
Seventy-seven percent of the participants in the survey say they believe oil prices have already hit their lows for the year. Nine percent expect even lower prices, while 14 percent say they are not sure………………………………………..Full Article: Source

Nigeria: falling oil price, crumbling legitimacy?

Posted on 05 June 2015 by VRS  |  Email |Print

Depressed oil prices mean that government revenue in Nigeria is sliding but raising revenue without alienating Nigeria’s most vulnerable will be a difficult feat. Euromoney has already pointed out that Nigeria’s transition into legitimate democracy – masterfully illustrated by the peaceful election in March where the incumbent Goodluck Jonathan graciously accepted defeat to his rival Muhammadu Buhari – could soon come under pressure.
And just a couple of months after the election, cracks are starting to show. The depressed oil price, felt the world over, is beginning to take its toll in Nigeria, Africa’s largest crude oil producer. Nigeria’s oil revenues are due to decline by 23% year-on-year in 2015, and will account for around 49% of the government’s total revenue. This marks a substantial drop, from around 58% in 2014 and 66% in 2013………………………………………..Full Article: Source

Time for a new toolkit to de-risk portfolios

Posted on 05 June 2015 by VRS  |  Email |Print

With ever-evolving financial markets we have seen increased liquidity, leverage and sophistication but also higher asset volatility and correlations. Cross-asset investors are questioning the efficacy of traditional approaches, having witnessed the failure of risk models over the 2008 crisis.
Asset class diversification, the basic tenet of cross-asset investing, did not work because the risk factors embedded in traditional asset classes turned out to be highly correlated, and provided no shelter in turbulent markets. Investors are now realising that in order to deliver a truly diversified, risk-controlled portfolio, it is necessary to diversify the risk factors themselves – and this means looking outside the traditional asset class toolkit………………………………………..Full Article: Source

Investment: Revaluing commodities

Posted on 04 June 2015 by VRS  |  Email |Print

Commodities “couldn’t be hated more”, said the publicity for an investment conference in New York last month. The reason is simple: investors feel let down after a revolutionary attempt to invest in basic materials went horribly wrong.
Four years of negative returns for indices tracking futures, with a fifth under way, have undermined the idea that leaving part of one’s portfolio in a basket of oil, natural gas, soyabeans, copper and other commodities was prudent. “There’s zero interest right now from the institutional space,” says Lawrence Loughlin of Drobny Capital, which hosted the conference……………………………………….Full Article: Source

Energy & Commodities Market Study

Posted on 03 June 2015 by VRS  |  Email |Print

The perfect storm in energy and commodities is the result of a confluence of events; any of which, in a “normal” market, would require time for the markets to absorb and return to equilibrium, according to a new report from SunGard.
These events are: weakening energy and commodities demand due to slow global economic growth, overinvestment in, and a return of previously constrained, production capacity leading to an extended period of excess supply, a strong dollar policy reducing the value of dollar denominated commodities and increasing regulatory intervention in commodities markets that impacts broad segments of the commodities value chain………………………………………..Full Article: Source

Core Gulf OPEC members in ‘consensus’ on oil ceiling -delegate

Posted on 03 June 2015 by VRS  |  Email |Print

Core Gulf OPEC members and others have a consensus to keep the organization’s oil production ceiling intact at its meeting this week, a senior Gulf OPEC delegate told Reuters on Tuesday, reinforcing a view among a growing chorus of members.
“There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged,” the source said after an informal meeting of the four core Gulf Arab OPEC members earlier in the day. “Nobody wants to rock the boat. The meeting is expected to be smooth sailing.” The source said the outlook for the oil market is positive, especially in the second half, echoing comments from other members even as the market remains in surplus………………………………………..Full Article: Source

Gold price to remain rangebound in June, analyst says

Posted on 03 June 2015 by VRS  |  Email |Print

Gold prices will likely remain rangebound in June, in line with its recent spread, INTL FCStone analyst Edward Meir said in a monthly report yesterday. If the US Fed maintains a cautious stance towards an eventual rate hike at its June meeting, as is widely expected, it would generate little downside pressure, while ‘sloppy’ fundamentals are seen capping any big gains.
Coming off May, gold was evidently not strong enough to break above key resistance levels despite significant weakness in the dollar, indicating that the yellow metal will likely remain more resistant to currency movements until more clarity on Fed rates is presented………………………………………..Full Article: Source

Will Chinese stimulus be able to revive metals’ fortunes?

Posted on 03 June 2015 by VRS  |  Email |Print

Post 2012, base metals have witnessed a dismal performance. China – the biggest consumer of base metals – has been losing steam rapidly. Growth levels have dropped to the lowest in 24 years. Prime reason for flagging growth in the world’s second largest economy is declining industrial production which increased at its slowest pace in March 2015.
Not only this, gloomy economic scenario just worsens as retail sales, a sign of consumer demand, rose at the slowest rate in nearly a decade and land purchases by developers, a major source of revenue for China’s heavily indebted local governments, fell 32 per cent in the first three months of 2015………………………………………..Full Article: Source

How Long Can OPEC Maintain Its Current Strategy?

Posted on 02 June 2015 by VRS  |  Email |Print

If prices don’t recover, and U.S. is not making big cut backs on shale production, the grumbling within OPEC could grow louder. The six-month clock is up. OPEC is convening this week in Vienna, as it does every six months, to discuss and decide on how the group will coordinate.
The November 2014 meeting was one of the most widely covered in years. After leaving its collective output quota unchanged for several consecutive meetings in a row, much of the world watched for a major policy change. The glut of oil had led to a crash in prices, falling from well over $100 per barrel, down to the $70 range. As it had in the past, surely the cartel would pull the production lever downwards, switching off a million barrels per day or so in order to stop the bleeding?……………………………….Full Article: Source

‘Cautious optimism’ abounds in Asia commodities: Russell

Posted on 01 June 2015 by VRS  |  Email |Print

There appears to be an outbreak of “cautious optimism” in the Asian commodities sector. It was easy to lose track of the number of times the phrase popped up in presentations and conversations at four major commodities conferences in the region in the past two weeks.
However, defining what people meant by being cautiously optimistic was somewhat more challenging, although the common thread was a view that the worst is over for commodity prices, and the sector is once again worth looking at from an investment perspective. Of course, it’s easy to dismiss participants at the SGX Iron Ore Forum and the Asia Mining Congress in Singapore, the Asia Oil & Gas Conference in Kuala Lumpur and the LME Week Asia in Hong Kong as talking their books, or at least to their hopes………………………………….Full Article: Source

Speculators Temper Crude-Oil Wagers Before OPEC Meets on Output

Posted on 01 June 2015 by VRS  |  Email |Print

Speculators retreated from both bullish and bearish wagers on crude-oil prices before OPEC ministers meet to determine their output for the next six months. With bearish bets on West Texas Intermediate falling at a faster pace than bullish holdings, the net-long position rose for the first time in three weeks, U.S. Commodity Futures Trading Commission data for the seven days ended May 26 show.
OPEC will keep favoring market share over prices when it meets in Vienna on June 5, according to all but one of 34 analysts and traders surveyed by Bloomberg. Saudi Arabia and other members of the Organization of Petroleum Exporting Countries have been pumping above the group’s output target for months, seeking to drive out higher-cost producers………………………………….Full Article: Source

OPEC’s Front Lines in the Shale Fields and Wall Street

Posted on 01 June 2015 by VRS  |  Email |Print

Oil bulls pinning their hopes on tumbleweeds in East Texas may now be peering further south. The argument for oil rebounding after last year’s crash rests largely on cash flow-constrained shale drillers in Texas and other states downing tools. The roughly 30% rally since mid-March in front-month oil futures, to almost $60 a barrel, has mirrored a falling rig count.
To date, though, actual U.S. oil output doesn’t appear to have dropped markedly. Indeed, the latest Energy Department estimates indicate production hitting its highest in decades. Those data are far from perfect. But alongside rig counts that have suddenly stopped falling, they suggest U.S. output is proving resilient so far………………………………….Full Article: Source

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