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Why China, commodities won’t sway Fed: Ex-Fed prez

Posted on 29 July 2015 by VRS  |  Email |Print

As the Fed headed into its two-day meeting, former Richmond Fed President Al Broaddus said Tuesday it’s a “very close call” on whether policymakers will decide to increase interest rates for the first time in nine years in September or December.
“I think the expectation right now probably has to be December,” he told CNBC’s “Squawk Box”—though he personally would like to see a September hike. “I think they’d like to get on with it. And they should get on with it.” The motivation behind his urgency has nothing to do with worries about a “big bulge” in inflation around the corner, said Broaddus. “I’d just like to see us get it off the table. … It’s a distraction.”……………………………………….Full Article: Source

Commodities Hit The BRICs

Posted on 24 July 2015 by VRS  |  Email |Print

Aside from $ trillions in monetary stimulus from the world’s major central banks, a major source to the recovery from the 2008-9 global financial crisis emerged from the BRICs economies. The dependence on commodities exports from Brazil, Russia and China proved instrumental in these economies’ rapid comeback thanks to the cushion from rapid gains in agricultural and energy prices from 2002 to 2008.
But now that agricultural commodities have crashed, metals crumbled and energy plummeted, what becomes of the BRICs engine to the world economy? Russia continues to depend on oil and gas with 83% of exports coming from commodities. Brazil never diversified away from its dependence on iron ore, soya, coffee and sugar and boasts a 64% commodities/exports ratio………………………………………..Full Article: Source

In Commodities Meltdown, Gas Is a Fleeting Bright Spot

Posted on 24 July 2015 by VRS  |  Email |Print

In the meltdown that is the commodities market, natural gas has emerged as a bright spot, barely touched by the turmoil that’s contributed to a global slump. Oil has tumbled 19 percent over the past three months on the Bloomberg Commodity Index, and gold is down 8.6 percent, helping send the gauge to a 13-year low this week. And U.S. natural gas? Up 5.5 percent. That’s because shipments are limited for now to North America, where hot weather has boosted demand for the power-plant fuel.
That all changes when exports, starting as soon as this year, take the gas market global. The fuel has been eating away at coal’s market share at U.S. power plants. Liquefied natural gas exports stand to erode domestic supplies, giving coal a reprieve in the U.S. but thrusting the competition between the two fuels onto an international stage………………………………………..Full Article: Source

Gold price: six reasons it slumped – and why it could stay low

Posted on 23 July 2015 by VRS  |  Email |Print

The gold price mounted a modest recovery yesterday following a sharp fall on Monday, but after closing below $1,100 for the first time in five years it is still hovering around this key threshold. Analsts once predicted that gold prices would surge to $5,000 an ounce, but now many are saying that the precious metal could fall back through the $1,000 mark before the end of the year – and a slump into three figures could well trigger more falls.
Investors are beginning to take notice. Listed funds tracking the metal, which have been growing in popularity, saw the biggest outflow in two years on Friday, The Times reports. So what is driving the recent slump and is it likely to continue?……………………………………….Full Article: Source

If it doesn’t glitter, it is gold! Time to look at other assets?

Posted on 23 July 2015 by VRS  |  Email |Print

Gold has been consistently falling and was trading around its five-year low on Wednesday, reflecting sustained pressure on the metal. Experts feel that investors who are looking to get back into the yellow metal should wait for some more time as there is more downside left.
Besides, there are are other asset classes that have emerged more attractive since the global risks in the form of Greece, and China are fading and the US Fed is on course to begin raising rates this year itself………………………………………..Full Article: Source

Agricultural Commodities in the Spotlight

Posted on 20 July 2015 by VRS  |  Email |Print

Over the past month, prices of agricultural commodities including corn, soybeans, and wheat have spiked in response to poor growing conditions in North America and Europe. While the fundamental story may play out over the long term, this highlights the pronounced impact of weather conditions on the agricultural complex.
The Bloomberg Agriculture Subindex gained about 14% in the trailing one-month period through July 15. Longer-term performance, however, has been very uninspiring, as the index has posted annualized losses of more than 13% over the past three years. For those looking at potential investments in the category, there are some offsetting forces at play that are worth considering. The bullish thesis is based on a growing global population and a finite amount of arable land for farming. ……………………………………….Full Article: Source

Global growth outlook spooks crude oil

Posted on 20 July 2015 by VRS  |  Email |Print

After threatening to spiral upwards, crude oil prices have started to fall again. After registering a multi-year low at $42 in mid-March this year, WTI (West Texas Intermediate) crude oil prices on the Nymex began to head northwards. In a short span time of seven weeks, the commodity had appreciated 48 per cent to mark a high at $62.5 on May 6.
However, it has since failed to sustain its upward momentum and resumed its decline. Crude oil has now closed on a negative note for the third consecutive week, falling below a key technical support at $54. Financial factors such as the strong appreciation in the US dollar against major currencies, the global commodity rout due to lower Chinese growth, continued benign interest rates in the US and monetary easing in other regions have played a role in the renewed pressure on oil prices………………………………………..Full Article: Source

Oil in Latin America: The good oil boys club

Posted on 17 July 2015 by VRS  |  Email |Print

Latin America’s oil firms need more foreign capital, but a historic auction in Mexico shows that investors can be hard to attract. It should have been a day of high excitement. A public auction on July 15th marked the end of a 77-year monopoly on oil exploration and production by Pemex, Mexico’s state-owned oil company, and ushered in a new era of foreign investment in Mexican oil that until a few years ago was considered unimaginable.
The Mexican government had hoped that its first-ever auction of shallow-water exploration blocks in the Gulf of Mexico would successfully launch the modernisation of its energy industry. In the run-up to the bidding, Mexico had sought to be as accommodating as its historic dislike for foreign oil companies allowed it to be. Juan Carlos Zepeda, head of the National Hydrocarbons Commission, the regulator, had put a premium on transparency, saying there was “zero room” for favouritism………………………………………..Full Article: Source

China copper: CIF import offers inch up on ‘normal fluctuation,’ trades thin

Posted on 16 July 2015 by VRS  |  Email |Print

Spot import offers for London Metal Exchange-registered brands of copper cathode on a CIF China basis inched up due to “normal price fluctuation” despite thin trade on the prevailing weak import interest, industry sources said Wednesday. Platts lifted its CFR China copper premiums assessment to $60-70/mt Wednesday, from $55-65/mt last week on higher indications heard in the market.
A Southeast Asian trader indicated the CIF China premiums at $60-70/mt, up around $5/mt from last week, as he had seen a slight pickup in demand from China market participants due to a brief arbitrage opportunity between the LME and Chinese copper prices. A second Southeast Asian trader, however, heard steady premiums around $65/mt………………………………………..Full Article: Source

Iran Deal Raises Prospect of Fresh Oil Glut

Posted on 15 July 2015 by VRS  |  Email |Print

New supply could further pressure prices, but any selloff depends on Tehran increasing production in the face of competition. A nuclear deal between Iran and six world powers raises the specter of a fresh oil glut further pressuring prices, but any selloff depends on how successfully Tehran can increase production and sell crude in the face of competition.
The possibility of up to a million new barrels of Iranian oil flooding global markets, the amount Iranian officials aim to deliver within months, comes at a critical time. China’s stock-market turmoil in recent weeks could slow an economy that was expected to account for a lot of energy-demand growth………………………………………..Full Article: Source

Will OPEC allow Iran to increase oil supply?

Posted on 10 July 2015 by VRS  |  Email |Print

Iran, as never before, is close to resolve its problems related to the economic sanctions. Despite the protraction of the talks between the P5+ 1 (the US, UK, Russia, China, France and Germany) and Iran, there are quite real chances for success. One of the results of lifting the sanctions imposed on Iran will be the country’s access to the world energy resources’ market.
Iranian authorities have already expressed readiness to double the oil supply from the current 1.2 million barrels per day to 2.3 million barrels if the sanctions are lifted. The country started to prepare the ground for his several months ago: it said that OPEC member states should make room for Iran to allow it to increase the export. Currently, Iran calls for returning to the individual quotas for oil production for the OPEC members………………………………………..Full Article: Source

Commodities Plunge on Fears of China Cutback

Posted on 09 July 2015 by VRS  |  Email |Print

Prices for a raft of commodities sank to multiyear lows this week, as China’s inability to stem the slide in its domestic equity markets intensified fears about economic growth in one of the world’s largest consumers of oil, metals and food.
Coming after a brief period of rising prices, the sudden downturn served as a reminder to investors of the weak fundamental outlook for several commodities already beset by weak demand and excessive supply………………………………………..Full Article: Source

Let commodities lead the way

Posted on 09 July 2015 by VRS  |  Email |Print

There are two ways to diversify an economy: by responding to markets or by bureaucratic mandate. Smart governments will look to how the market is contributing to diversification in Canadian industry.
Canada’s C-suite leaders, unfortunately, favour the bureaucratic mandate route, seeking more investment in the clusters of Toronto and Waterloo to drive more technology jobs. As recent history with BlackBerry (formerly RIM) has shown us, and before that Nortel, our country’s high-tech track record, so favoured by the diversify-by-decree set, is spotty at best………………………………………..Full Article: Source

Goldman Sees Negative Loop in Commodities From Excess Money

Posted on 09 July 2015 by VRS  |  Email |Print

It’s going to take a prolonged slump in commodities to break a cycle of too much money and excess production, according to Goldman Sachs Group Inc. The market is caught in a “negative feedback loop,” where lower raw-material prices are strengthening the dollar and lowering production costs for countries with weaker currencies, Goldman analysts wrote in a report.
That boosts the prospects of higher U.S. interest rates and a reduction in emerging-economy debt, according to the bank. Demand for commodities will subsequently decline, capping prices and further reinforcing the greenback, it said. “Commodity markets still have access to far too much capital relative to future demand and a declining cost structure,” analysts including Jeffrey Currie in New York wrote in the note………………………………………..Full Article: Source

London loses golden touch as China’s build-up of bullion continues apace

Posted on 08 July 2015 by VRS  |  Email |Print

London, the traditional home/hub of the world’s gold trade, could be slowly losing its grip on power as more and more of the world’s physical gold moves from London’s vaults to Asia, chiefly China. This part of the story isn’t really anything new. Since 2013 when Western investors started to liquidate Exchange Traded Fund holdings of gold, and the dollar price in turn started its descent from historic highs, China has been stocking up gold.
Now, exact data of gold imports is sketchy at best, as the mainland doesn’t officially report figures, so analysts use fancy calculations from Hong Kong and Switzerland to get to a rough number. ANZ, for instance, said recently that as much as 75% of the world’s gold reserves have now been shipped from London vaults to the Middle East and China………………………………………..Full Article: Source

OPEC output update

Posted on 06 July 2015 by VRS  |  Email |Print

OPEC recorded its highest output since August 2012 in June as the bloc pumped over 32.1 million b/d. Total production is 2 million b/d higher than OPEC’s recently rolled over production target and is 744k b/d higher than a month earlier, according to Emirate NBD.
The biggest increase came from Iraq, where production surged by 567,000 b/d to 4.39 million b/d, its highest ever recorded output. Saudi Arabia raised production by 150k b/d to 10.45m b/d as OPEC’s largest producer maintained its policy of increasing output to secure market share………………………………………..Full Article: Source

Indian gold still at heavy discount, inventories keep rising

Posted on 03 July 2015 by VRS  |  Email |Print

The heavy discount on physical gold remains intact across much of India this week while high inventories and dwindling demand continue to take their toll. Discounts are still averaging around $8 per ounce to the London spot price on .995 gold in Ahmedabad, a gateway for gold into Mumbai, although larger international dealers are still holding out for smaller discounts or even parity on some higher-quality brands, they said.
Large inventories have been amassed since late last year and a seasonal slowdown is in full effect, they added. The country has imported a sizeable volume of gold since the removal of the 80:20 legislation in November – around 63 tonnes in May, 81 tonnes in April and 125 tonnes in March. Sources suggest another 50-60 tonnes came in to India in June………………………………………..Full Article: Source

Output of most commodities in India at half or two-third of world average

Posted on 25 June 2015 by VRS  |  Email |Print

With a good progress of rains across the country, as policy makers are busy tracking the area being planted under different crops and the crops competing with each other for area, the agribased industry is worried about getting more yield from the same area.
With yields of most commodities barring wheat and rice, at half to two-thirds of the world average yields, processors and exporters think focus on improving yields is the only way to increase production. “Demand for soybean is more than its supply as the productivity levels have been stagnant. We cannot compete with the top soymeal exporting countries as our yields are just about one-third of the world average yields,” said Devish Jain, chairman, Soybean Processors’ Association of India (SOPA)………………………………………..Full Article: Source

Russia’s much-needed oil price bump unlikely to come any time soon

Posted on 19 June 2015 by VRS  |  Email |Print

Russia desperately needs high oil prices to lift its energy-fuelled economy out of recession. But according to some of Europe’s top oil executives and ministers who attended Russia’s version of the World Economic Forum in Davos, there will be no return to triple-digit oil any time soon.
Speaking on a panel at the St. Petersburg International Economic Forum (SPIEF), the showpiece business and investment conference of Russian President Vladimir Putin, Russian Energy Minister Alexander Novak said oil at about $65 (all figures U.S.) a barrel could endure for “two to three years.”……………………………………….Full Article: Source

Gold Is Down But Not Out

Posted on 15 June 2015 by VRS  |  Email |Print

Gold had a range of $10 on Friday, closing down slightly in the middle of that range at a bid of $1,181.30. Silver has been acting weaker than gold the last 30 days, 6.34% lower while gold is down 2.78%. Over the past year, silver is down 18.28% while gold is lower by 7.21%. This is not what investors in gold and silver want to see.
Meanwhile, over the past year, the dollar is up 17.75%. If you think about it, lovers of gold, your dollars should have bought you 17.75% more today versus a year ago. Conversely, if you bought gold a year ago, you are down 7.21% on that investment. But all is not negative, because your purchasing power went up because gold is priced in dollars………………………………………..Full Article: Source

OPEC pumping at highest level since Aug 2012: IEA

Posted on 12 June 2015 by VRS  |  Email |Print

The supply of oil from the Organization of Petroleum-Exporting Countries (OPEC) reached its the highest level since August 2012 in May, according to the latest oil market report from the International Energy Agency (IEA).
OPEC supply in May edged up to 31.33 million barrels a day (mb/d), according to the IEA, with Saudi Arabia, Iraq and the United Arab Emirates pumping at record monthly rates to keep output 1 mb/d above OPEC’s official supply target for a third month running………………………………………..Full Article: Source

OPEC says crude oversupply to ease by the end of 2015

Posted on 11 June 2015 by VRS  |  Email |Print

OPEC expects the oversupply of oil to ease in the coming months with demand picking up due to higher consumption in the developed markets. The group continues to predict US output will decline by the end of 2015.
“The projections for market fundamentals indicate that the current oversupply in the market is likely to ease over the coming quarters,” OPEC said in its report released Wednesday. The surplus on world markets will shrink to 440,000 barrels per day in the second half of 2015 if OPEC continues pumping at last month’s rate, the report said………………………………………..Full Article: Source

OPEC is experimenting, and the U.S. shale sector is the guinea pig

Posted on 10 June 2015 by VRS  |  Email |Print

OPEC has decided to stay the course, but that doesn’t mean there isn’t a rough ride ahead for the oil industry. The cartel late last week took no action to adjust oil production, agreeing to continue pumping about 30 million barrels a day. That is about a third of what the world consumes.
While some claim OPEC’s inaction means the group is now impotent, it’s important to remember that the cartel’s 12 nations still control 40 percent of the world’s oil reserves. It is, in fact, using its power to test the market, and the North American shale oil companies are the guinea pigs………………………………………..Full Article: Source

Gold Isn’t Cheap, Nor Should It Be

Posted on 09 June 2015 by VRS  |  Email |Print

Although it is not possible to determine an objective value for gold (the value of everything is subjective), by looking at how the metal has performed relative to other things throughout history it is possible to arrive at some reasonable conclusions as to whether gold is currently expensive, cheap, or ‘in the ballpark’.
In particular, gold’s market price can be measured relative to the prices of other commodities, the stock market, the price of an average house, the earnings of an average worker, and the real (purchasing-power-adjusted) money supply………………………………………..Full Article: Source

OPEC unlikely to lose oil market influence to US shale producers

Posted on 08 June 2015 by VRS  |  Email |Print

The Organization of Petroleum Exporting Countries (OPEC), which announced at its recent meeting that it would not change output levels, remains the dominant force in the global oil market, analysts said, despite the growing influence of US shale producers.
The 12-nation OPEC switched its production strategy in November to push down prices and hurt high-cost US shale producers, who need elevated prices to stay profitable. OPEC ditched its traditional role of supporting higher prices to boost revenues, and instead left its output ceiling unchanged at 30 million barrels per day - despite a collapse in prices and a stubborn global supply glut that is fueled partly by US shale………………………………………..Full Article: Source

Commodity prices weigh heavily on top 40 mining giants

Posted on 05 June 2015 by VRS  |  Email |Print

The tough fight faced by the global mining industry in 2014 would escalate into a brawl this year as mining companies worldwide struggled to emerge from depressed markets, PwC’s Africa Mining Centre of Excellence head Michal Kotze said on Thursday. Widespread government intervention, significant conflicts surrounding strategy debates and other internal industry conflicts, “huge” competition, weakening commodity prices with increasing short-term volatility and rising shareholder activism had left industry on the ropes.
A reduction in capital spend, somewhat higher production and “unexpected help” from currency devaluations and lower input costs had assisted the mining industry to “manage expectations” during 2014 despite continued headwinds from weak commodity prices, the latest PwC ‘Mine’ report showed. ……………………………………….Full Article: Source

Opec’s nervy quota kept competition at bay – but is it still calling the shots?

Posted on 05 June 2015 by VRS  |  Email |Print

By cutting back to 30m barrels a day this past November, Opec was said to have launched a price war for global market share. But the US oil boom still presents a heretofore unknown foe: another player capable of ramping up production.
The last time the Organization of Petroleum Exporting Countries (Opec) met, it wanted to send a message to oil producers that weren’t cartel members: cut it out. The members of the world’s most powerful energy club are likely to allow themselves a congratulatory smile when they meet again on Friday. The message was received………………………………………..Full Article: Source

OPEC’s Problem: There Is No Minister of Shale

Posted on 04 June 2015 by VRS  |  Email |Print

When Saudi Arabia launched a global oil-price war last year, most market players assumed America’s high-cost, financially fragile shale producers would be first to retreat. Some retreat. American companies have been quick to idle rigs and lay off workers, but U.S. onshore oil production has gone up since last fall, not down.
As oil ministers from member countries of the Organization of Petroleum Exporting Countries meet this week, they are grappling with the fact that the world’s new swing producer is a very different animal from their traditional competitors………………………………………..Full Article: Source

Gold investing demand stabilizes with prices

Posted on 04 June 2015 by VRS  |  Email |Print

Since hitting five-year lows at Christmas, gold investing sentiment amongst Western households has now seen the strongest sustained upturn since summer 2013, writes Adrian Ash at BullionVault.
That’s according to our latest Gold Investor Index, which counts buyers against sellers on the world’s No.1 vaulted bullion platform online. It’s further shown on our public Daily Audit of client property by the additional 1 tonne of gold bought by BullionVault users since February. That’s the heaviest addition by weight since the winter of 2012-2013……………………………………….Full Article: Source

Opec meets big oil in an altered landscape

Posted on 03 June 2015 by VRS  |  Email |Print

When the oil industry descends on Vienna this week it will survey a market transformed by Opec’s historic decision six months ago not to lower output to prop up falling prices. But the main event may not be Friday’s ministerial meeting, at which the 12-member cartel is widely expected to stick with the policy it launched in November.
Instead, many will be focused on a summit that will bring the world’s most powerful big oil executives face to face with the architects of Opec’s strategy that has forced them to slash costs and cut investment in new projects………………………………………..Full Article: Source

Here’s What the Next Gold Bull Market Will Look Like

Posted on 03 June 2015 by VRS  |  Email |Print

We measured every bull cycle of gold stocks and found there have been eight distinct upcycles since 1975. We also discovered something exciting: Only one was less than a double. (A second was 99.9%.) Even more enticing is that the biggest one—a 601.5% advance in the early 2000s—occurred just after a prolonged bear market.
And our current bear market is longer than that one. To get a sense for the potential upside, we applied the percentage gain from each of those upcycles to our recommended BIG GOLD picks………………………………………..Full Article: Source

Gold Gains Allure as U.S. Economy Stumbles

Posted on 02 June 2015 by VRS  |  Email |Print

Some investors who aren’t sold on the strength of the U.S. economic recovery are taking a shine to gold. After shunning the precious metal for years in favor of bonds and stocks, which often pay a steady income, investors are returning to the gold market to safeguard their wealth.
Lofty valuations in stocks and bonds, which have rallied in recent years while gold prices slumped, also are prompting some investors to revisit gold amid fears of a downdraft in these markets. Some traders also are pointing to easy money policies in Europe, which have pushed deflation worries off the table, and to similar efforts by other global central banks that could ultimately reignite inflation………………………………..Full Article: Source

OPEC says global oil glut to persist till 2017

Posted on 29 May 2015 by VRS  |  Email |Print

Crude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said.
“Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-OPEC supply is still showing some growth,” OPEC’s long-term strategy report says, Reuters reported on Thursday. Supply from rival non-OPEC producers will grow at least till 2017, the document said. The OPEC report comes ahead of the group’s landmark meeting in Vienna on June 5 where it’s expected to make a decision on production quotas…………………………………Full Article: Source

Bullish And Bearish Forces In The Gold Market

Posted on 28 May 2015 by VRS  |  Email |Print

The price of gold has gone nowhere in the last two years and has created a 2-year basing pattern. That is constructive for gold prices as the stronger the base, the stronger the next trend. But a trendless market also indicates a battle between bullish and bearish forces.
The strong U.S. dollar has pressured precious metals since last summer. Also, the talk of interest rate hikes by the Fed is said to have negatively influenced gold. We have explained previously that we hold an alternate view on the relationship between interest rates and gold, as detailed in “What Is Really Driving Gold.”……………………………………Full Article: Source

Iron ore rebounds but outlook remains grim

Posted on 28 May 2015 by VRS  |  Email |Print

A recent rebound in iron ore prices has done nothing to sway the downbeat outlook from forecasters, with Atlas Iron declaring lower price assumptions will see it write $130 million to $160 million off the value of development assets, and Citi slashing its long-term forecast to $US55 a tonne.
The Atlas writedowns come after the company this month survived the dual pressure of low prices and a highly geared balance sheet by striking plans to raise $180m of equity and agreements with contractors to lower operating costs to let it restart its suspended West Australian mines…………………………………….Full Article: Source

Financial markets undercut commodities

Posted on 27 May 2015 by VRS  |  Email |Print

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.
The outsized wheat breakdown apparently weighed on corn as well. July corn futures slumped 5.0 cents to $3.55/bushel just before lunchtime Tuesday, while December lost 5.0 to $3.7275. Argentina’s labor situation may be supporting the soy complex. The recent rebound in palm oil prices is probably boosting the U.S. soyoil market as well, but one has to wonder if the worsening Argentine labor situation is supporting the whole soy complex…………………………………..Full Article: Source

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

Posted on 26 May 2015 by VRS  |  Email |Print

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.
“With WTI up around 12% month-to-date in May, the index is primed for another energetic jump this month,” the analysts said. “Further out, we continue to expect a subdued recovery in commodity prices given tepid global growth and rising supply in key markets.”……………………………………….Full Article: Source

Iran says OPEC unlikely to change output ceiling: Mehr news agency

Posted on 25 May 2015 by VRS  |  Email |Print

OPEC is unlikely to change its production ceiling when the group meets in June, Iran’s Oil Minister Bijan Zanganeh said on Sunday, according to the semi-official Mehr news agency. “Lowering OPEC’s production ceiling requires consensus between all members … under current conditions it seems unlikely that the OPEC production ceiling will change,” Zanganeh was quoted as saying.
Last month, Zanganeh said the producing group should cut its target daily crude production by at least 5 percent, or approximately 1.5 million barrels per day. The Organization of the Petroleum Exporting Countries will meet on June 5. At its last meeting in November, OPEC, led by oil kingpin Saudi Arabia, decided against cutting output to defend its market share, resisting calls by some members such as Iran and Venezuela to reduce production to shore up prices………………………………………..Full Article: Source

Saudi central bank insists economy can manage oil price slump

Posted on 22 May 2015 by VRS  |  Email |Print

The Saudi central bank, the Saudi Arabian Monetary Agency (SAMA), has announced that the recent slump in oil prices had not hurt the country’s economy. In a rare statement, Governor of the Central Bank Fahd al-Mubarak expressed his “confidence in the steadfastness of the Saudi economy in the face of the oil price decline in the medium term.”
The governor’s comments come amidst reports of potential massive losses in revenues by the countries that mainly export oil. Saudi Arabia is the number one economy in the Middle East in terms of size, but that’s mainly due to its 10.5 million barrels of oil being produced on a daily basis………………………………………..Full Article: Source

Crude Oil Market Outlook

Posted on 21 May 2015 by VRS  |  Email |Print

The North Sea crude oil market showed mixed signals May 15, with Dated Brent versus second-month cash up $0.21/barrel at minus $0.94/b, even as Forties came off a touch. A late May cargo traded at Dated Brent minus $1.00/b, Gunvor to Unipec.
However traders were not convinced this signaled Forties as a whole would continue to trade weaker, with June still seen as tighter due to two or three VLCC fixtures this week. “Maybe, it is just that Forties cargo is too prompt,” said one trader………………………………………..Full Article: Source

Is US Shale Becoming The Global Swing Producer?

Posted on 21 May 2015 by VRS  |  Email |Print

Many industry experts predicted that US shale oil companies would quickly go bankrupt when oil prices started to decline in the last quarter of 2014. Jobs would be forever lost, financing would dry up and OPEC would remain the world’s oil cartel.
Instead, merger activity has been relatively muted, companies are driving down costs, and drilling activity appears to be picking up again in the second quarter of 2015 as the oil market finds its equilibrium. All this means that US shale is likely to remain a permanent feature of the global energy landscape, with the US, not only OPEC, as the new “swing producer” in the global oil market………………………………………..Full Article: Source

India: Gold monetisation scheme to help bring idle gold into market

Posted on 21 May 2015 by VRS  |  Email |Print

The government on Tuesday proposed a new scheme offering tax-free interest on depositing the yellow metal with banks. The idea is to mobilise idle gold worth up to Rs 60 lakh crore held by households and institutions.
According to the draft gold monetisation scheme, there will be incentives for banks, too. While individuals and institutions could deposit even 30 grammes of gold, the interest earned on these deposits would be exempt from both income tax and capital gains tax………………………………………..Full Article: Source

LME’s Owner Seeks Commodities Trade Link to Mainland China

Posted on 21 May 2015 by VRS  |  Email |Print

Hong Kong Exchanges & Clearing Ltd. is in the early stage of creating a commodities trading connection with mainland China. HKEx, owner of the London Metal Exchange, the world’s biggest metals bourse, aims to make international benchmark commodity futures available to traders in China while offering mainland contracts to overseas traders, Chief Executive Officer Charles Li said Wednesday.
The country opened its stock market to foreign investors through the Shanghai-Hong Kong exchange link in November and authorities are planning a similar equity link between Hong Kong and Shenzhen later this year. “We are trying to see whether we can connect the international product to domestic liquidity and the domestic product to international liquidity,” Li said in an interview with Bloomberg………………………………………..Full Article: Source

Finding Some Shine In This Gold Bear Market

Posted on 19 May 2015 by VRS  |  Email |Print

Two factors drive gold: the Love Trade and the Fear Trade. In 1997 and 1998, the bottom of the emerging market meltdown took place. Four years later, we saw China and Asia starting to take off and GDP per capita rise. This is an important factor in this whole run-up that I would characterize as the Love Trade. A strong correlation is rising GDP per capita, and in China, India and the Middle East, they buy gold and many gifts of love.
We saw the Fear Trade starting to take place after 9/11. The biggest factor behind the Fear Trade is negative real interest rates. So when you had both—negative real interest rates and rising GDP per capita in the emerging countries—you had gold demand going to record numbers………………………………………..Full Article: Source

Shale-Oil Companies Ready to Raise Output—Energy Journal

Posted on 15 May 2015 by VRS  |  Email |Print

U.S. shale-oil companies that cut production when prices plunged are prepared to return rigs to operation as prices rise, Georgi Kantchev and Bill Spindle report. The companies are being seen as so-called swing producers that can boost production when prices are high and cut back when they fall. U.S. benchmark West Texas Intermediate settled at $60.50 a barrel on Wednesday in the wake of a 40% rally in crude prices since March, and some companies said they would resume production if WTI reaches $70.
U.S. shale companies could provide some counterbalance to big global market swings, although that flexibility hasn’t been fully tested in a major market downturn. Big cuts have left the industry with 930 fewer rigs, a 58% reduction from their 1,609 peak in October, according to Baker Hughes Inc., which tracks drilling activity…………………………………..Full Article: Source

Zinc’s Rally Is Not Just Speculation

Posted on 15 May 2015 by VRS  |  Email |Print

The prices of some commodities, such as oil and iron-ore, may remain depressed in the near term, but zinc appears poised for growth. The price of the base metal, which is used mainly to galvanize steel and mixed with copper to make brass, has climbed by 20% since mid-March to last week’s peak of $2,400 per tonne.
Overall, zinc has climbed 7% this year at the London Metals Exchange, and could continue going higher. The recent increase in prices is due in part to the growth in speculative interest. As per LME’s most recent Commitments of Traders Report dated May 8, traders held 98,417 lots of net long positions in zinc - that’s equivalent to more than one-fifth of the total number of futures contract. No other base metal at the LME has higher long positions…………………………………..Full Article: Source

US shale has ‘blinked’ in battle against OPEC: IEA

Posted on 14 May 2015 by VRS  |  Email |Print

U.S. oil producers appear to have lost their battle with OPEC (Organization of the Petroleum Exporting Countries) over market share, but the war is only just beginning, the International Energy Agency (IEA) warned Wednesday..
“In the supposed standoff between OPEC and U.S. light tight oil (LTO), LTO appears to have blinked,” the Paris-based energy think tank said in its new monthly report. “Following months of cost cutting and a 60 percent plunge in the U.S. rig count, the relentless rise in U.S. supply seems to be finally abating.”……………………………………Full Article: Source

Saudis spend like there’s no oil price drop

Posted on 14 May 2015 by VRS  |  Email |Print

If lower oil prices are straining Saudi Arabia’s economy, it certainly does not show. In Riyadh, dozens of cranes loom over the King Abdullah Financial District, destined to be the kingdom’s answer to Canary Wharf in London, with around 60 gleaming towers and its own monorail. Across the city, immigrant workers toil on new residential developments aimed at plugging the country’s acute housing gap. Meanwhile, roads are being dug up for a new metro system.
It is quite a transformation for a place that started off as a mud-brick stopover on a desert trading route. With its glass-clad skyscrapers, spanking new universities, five-star hotels and outposts of western department stores like Harvey Nichols, Riyadh is transforming itself from a somewhat shabby city into a gleaming symbol of the kingdom’s oil wealth…………………………………….Full Article: Source

Gold – looking vulnerable as resistance persists

Posted on 13 May 2015 by VRS  |  Email |Print

Despite an initial lift from safe-haven demand early in the year, gold remained overshadowed by dollar strength – markets continued to price in the start of higher interest rates in US later this year. Seasonally strong physical demand helped cushion the impact of speculative and investor disinvestment and will continue to do so into the second quarter.
But while this demand fades, gold will be increasingly vulnerable to downside pressure, we feel. Still, the dollar may have run ahead of itself so a period of dollar weakness could provide some lift. For the second quarter we are looking for a range of $1,170-$1,250 per ounce………………………………………..Full Article: Source

Commodities hit bonds again

Posted on 12 May 2015 by VRS  |  Email |Print

The first half of Q2 has seen a strong rally develop in commodities prices. Brent crude oil is up 24% (after performing flat in Q1), copper 12% and even gold has risen a little. Despite the fact that agricultural commodities and livestock prices have continued to be weak, the S&PGSCI spot price index has made its best start to a year since 2011, up 8% in the year-to-date.
Although the price rebound is directly benefitting commodity index investors much less then the spot price gains might suggest (because the high cost of carry has reduced total returns), the strength of the commodity recovery is greatly influencing global growth expectations and movements in other asset classes………………………………………..Full Article: Source

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