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IEA says oil supply will far outstrip demand in 2016

Posted on 10 February 2016 by VRS  |  Email |Print

The International Energy Agency says oil supply is set to outpace demand this year, keeping a lid on any expected price increases. The organization, which advises countries on energy policy, said in its monthly report Tuesday that global excess supply may reach 2 million barrels per day during the first quarter, and a further 1.5 million barrels a day in the second quarter.
Further stock-building of 300,000 barrels a day is forecast in the second half of the year. The IEA said “if these numbers prove to be accurate, and with the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term.”……………………………………….Full Article: Source

Don’t hold your breath for a Saudi-led OPEC push to cut output

Posted on 10 February 2016 by VRS  |  Email |Print

By now, any scenarios in which Canada’s battered economy is rescued by a sudden upturn in oil prices have largely disappeared from the conversation. All save one. A hope that one sunny morning Saudi Arabia may wake up, realize the error of its ways, and decide to curtail production remains alive for the oil industry. And why not?
A change of heart by the Saudis could send crude prices higher by $15 to $20 US a barrel in short order, offering some desperately needed breathing room to global oil producers groaning under the strain of job cuts and, for some, the threat of bankruptcy………………………………………..Full Article: Source

Russia And Commodities: A Tale Of 2 Bears

Posted on 09 February 2016 by VRS  |  Email |Print

Russia commands an interesting position in the world these days. On one hand, Vladimir Putin’s star has risen on the international scene. Alliances with Iran and China mean that the Russian leader continues to be a powerful and influential force with on the international scene.
The sanctions on his nation remain because of Russian aid to rebel forces in Ukraine but we have not heard much about that recently. What we have seen is Putin’s presence in Syria, his participation in the war against terrorism and his role as a conduit to the government in Iran. As Iran’s status in the Middle East grows so does Russian influence in the region………………………………………..Full Article: Source

As Big Oil shrinks, boards plot different paths out of crisis

Posted on 09 February 2016 by VRS  |  Email |Print

As oil and gas companies cut ever-deeper into the bone to weather their worst downturn in decades, boards have adopted contrasting strategies to lead them out of the crisis. Crude prices have tumbled around 70 percent over the past 18 months to around $35 a barrel, leading to five of the world’s top oil companies reporting sharp declines in profits in recent days.
Executives at energy firms face a tough balancing act: they must cut spending to stay financially afloat while preserving the production infrastructure and capacity that will allow them to compete and grow when the market recovers………………………………………..Full Article: Source

Secret Opec talks that raised oil price - will it happen again?

Posted on 05 February 2016 by VRS  |  Email |Print

After a year of secret diplomacy and hushed-up talks around the world, Opec’s Saudi Arabia and rival Venezuela were persuaded to cut a deal by non-Opec Mexico that eased the acrimony and led to a much-needed rise in oil prices.
It was 1998, trust had long broken down within Opec and it took outside mediation as a last resort to stop the squabbling to clinch deals at secret meetings in Riyadh, Madrid and Miami. Now, with oil prices touching their lowest level since 2003, Opec officials and deal-brokers are looking back nearly two decades and asking whether a behind-the-scenes deal to curb oil output between Opec and non-Opec Russia could be struck………………………………………..Full Article: Source

London gold market wrestles over future

Posted on 05 February 2016 by VRS  |  Email |Print

There aren’t many places in the UK where you can walk in off the street and buy gold as a retail customer. A new store in London’s St James’s Street a stone’s throw from the Ritz wants shoppers.
“There is unquestionably a physical renaissance going on,” says Ross Norman, of Sharps Pixley, flanked by cabinets showing gold roses and gold watches under a large chandelier. “People want the physical [gold], they don’t want the paper. It’s suggestive of an environment where trust is less than it used to be.”……………………………………….Full Article: Source

Oil could double despite OPEC supply flood

Posted on 03 February 2016 by VRS  |  Email |Print

Plunging oil prices — down more than 30% in the past year — have been the primary contributing factor to the S&P 500’s worst start of the year since 2009, with January clocking in a 5.1% decline. And with crude plunging below $30 again Tuesday, investors are still looking for clues as to when we’ll see a bottom.
While oil’s impact on the economy remains debated, the commodity is unquestionaingly affecting not only the indices but also a range of economic fundamentals from industrial production to earnings and credit………………………………………..Full Article: Source

Saudi Arabia ready to manage oil market but all must cooperate

Posted on 02 February 2016 by VRS  |  Email |Print

Saudi Arabia is ready to manage the oil market under the condition that “everybody must cooperate”, from OPEC members to other oil producers outside the exporting group, the Saudi-owned al-Hayat newspaper cited an OPEC source as saying.
“It is still early to talk about holding an OPEC emergency meeting, especially since the amount of crude that Iran would pump into the markets after lifting the sanctions is still unknown. That will not be entirely clear before at least two months from now,” al-Hayat quoted the OPEC source as saying on Monday………………………………………..Full Article: Source

Oil price gains amid Opec, Russia meeting speculation

Posted on 01 February 2016 by VRS  |  Email |Print

Oil capped a second weekly gain amid speculation that Opec and Russia will meet to discuss trimming crude production to bolster prices. Russian energy minister Alexander Novak said that while Opec member Venezuela proposed a meeting next month, nothing is scheduled.
Russia, after months of insisting it was happy to keep pumping at full throttle, suggested in recent comments it is open to compromise with Opec. Equities climbed as the Bank of Japan’s unexpected monetary stimulus boosted confidence that central banks remain vigilant for slowing economic growth……………………………………….Full Article: Source

Miners bracing for ‘doomsday’

Posted on 01 February 2016 by VRS  |  Email |Print

Glencore chief executive Ivan Glasenberg rejected predictions that copper would fall below $US4000 a tonne, dubbing it a “doomsday” price. Rio Tinto chief executive Sam Walsh last year said the idea that iron-ore prices would fall to $US30 a tonne was from “fantasy land.”
Since Mr Glasenberg’s comments in September, copper prices have tumbled nearly 20 per cent, falling close to $US4300 a tonne. It has risen in recent days, but was down 1.3 per cent at $US4530 in London on Thursday and an ­increasing number of analysts are now saying prices will go below $US4000 soon………………………………………..Full Article: Source

Commodity Price Plunge Threatens Developing Nations

Posted on 29 January 2016 by VRS  |  Email |Print

While the severe Chinese growth recession has already played havoc with major global economic nations’ export volume in a broad spectrum of industrial products, little has been publicized regarding the “Beijing bust’s” impact on dozens of developing nations’ commodity trade, both in volume and price drops.
Many of these nations, such as some in Africa and South America, as well as Australia, had literally owed their growth to the rapacious appetite of China’s 20-year economic expansion surge. This included such basic products as thermal coal, copper, oil, iron ore, nickel, zinc, aluminum, etc. which fed the Asian giant’s seemingly unstoppable drive to world economic leadership………………………………………..Full Article: Source

IMF, World Bank move to forestall oil-led defaults

Posted on 29 January 2016 by VRS  |  Email |Print

Officials from the International Monetary Fund and the World Bank are heading to Azerbaijan to discuss a possible $US4 billion ($5.7 billion) emergency loan package in what risks becoming the first of a series of bailouts stemming from the tumbling oil price.
The Baku visit, which follows a currency crisis triggered by the collapse in crude, comes amid concern at the two global institutions over emerging market producers from central Asia to Latin America. The fund and the bank have also been monitoring developments in other oil-producing countries such as Brazil, which is now mired in its worst recession in more than a century, and Ecuador………………………………………..Full Article: Source

Oil price: ‘we’re going to see more fireworks’

Posted on 28 January 2016 by VRS  |  Email |Print

Oil has steadied at a still-low $31 a barrel, with a major report on US inventories due later. The oil price endured wild swings on Tuesday, rising more than six per cent at one point to above $32 a barrel and touching session lows below $29.
Both the international and US benchmarks are extremely volatile at the moment as the determination of many analysts that painfully low and loss-making prices must soon turn higher runs up against stubborn negative sentiment on excess supplies. A sustained recovery remains unlikely until there is at least some movement from larger producers on output………………………………………..Full Article: Source

Russians want to talk to OPEC about output, pipeline chief says

Posted on 28 January 2016 by VRS  |  Email |Print

Russian officials have decided they should talk to Saudi Arabia and other OPEC countries about output cuts to bolster oil prices, the head of Russia’s pipeline monopoly said on Wednesday, remarks that helped spur a sharp rise in world prices.
Oil futures surged more than 5 percent after the comments by Nikolai Tokarev, head of oil pipeline monopoly Transneft, which gave the strongest hint yet of possible cooperation between the top non-OPEC oil producer and the cartel to try to reverse a record glut………………………………………..Full Article: Source

2016: Silver could go on a winning streak

Posted on 26 January 2016 by VRS  |  Email |Print

When gold prices rise, silver normally does too – and it tends to outperform the yellow metal. Some commodities specialists think silver prices could stage a recovery this year. “There’s an inherent link between the two. Silver is gold’s little sister and when gold moves higher, silver does too,” says Clive Burstow, manager of Barings Global Mining fund.
Silver is notoriously volatile, and is down 2.27 per cent in the last month. But silver has something gold hasn’t – its use in industry. While the prices of most metals fell last year amid broad negativity towards commodities in general, silver also suffered from weak demand for electronics and other goods………………………………………..Full Article: Source

Will OPEC Be Able to Make Oil Precious Again?

Posted on 25 January 2016 by VRS  |  Email |Print

OPEC has announced it would hold an emergency session due to falling prices in the global oil market. The participants will discuss countering the poor market conditions.
The Organization of the Petroleum Exporting Countries (OPEC) may hold an emergency session in March, Nigerian Minister of State for Petroleum Emmanuel Ibe Kachikwu said recently. According to him, with oil below $35 a barrel, oil producers have enough reasons to be worried………………………………………..Full Article: Source

An argument for commodities

Posted on 22 January 2016 by VRS  |  Email |Print

With oil trading below $30 a barrel and Chinese growth continuing to slow, it is understandable that investor sentiment toward commodities is close to hitting its all-time lows.
But, argues James Butterfill, this bodes well for the commodities complex over the longer term. Indeed, speaking at the firm’s investment conference in London, ETF Securities’ head of research and investment strategy argued that the level of bearishness is one of a number of contrarian indicators pointing to eventual better times ahead………………………………………..Full Article: Source

Chart shows oil not only commodity suffering from global glut

Posted on 21 January 2016 by VRS  |  Email |Print

It seems everyone knows the world is flooded with crude oil, but black gold is far from the only commodity that is saddled with a global glut. It’s the downside of the commodity supercycle. On the way up, ravenous demand led by China sent prices of everything from crude to soybeans to iron ore soaring. Producers responded in classic supply-demand fashion: Churning out more to meet demand.
But China’s economy has slowed and global demand has weakened, leaving many commodities grossly oversupplied. And while there’s a lot to the old saying that the “best cure for low prices is low prices,” demand has been slow to respond. China’s economy is slowing and global manufacturing is in less than stellar shape………………………………………..Full Article: Source

Venezuela Said to Request Emergency OPEC Meeting in Letter

Posted on 21 January 2016 by VRS  |  Email |Print

Venezuela wrote to fellow OPEC producers requesting an emergency meeting as the collapse in oil prices hurts the group’s most vulnerable members, according to five people with knowledge of the matter.
The letter was sent to the 12 other members of the Organization of Petroleum Exporting Countries, the people said, asking not to be identified as the document isn’t public. Venezuela has repeatedly called for OPEC members to meet as slumping oil prices sap government revenue. De facto leader Saudi Arabia, which has insisted it won’t cut production unless non-OPEC exporters cooperate, signaled again on Jan. 17 that it will stick to its strategy of defending market share………………………………………..Full Article: Source

Compass CEO Andrew Su says risk of Arab Spring may force Saudi Arabia, OPEC to cut oil output

Posted on 20 January 2016 by VRS  |  Email |Print

Holding on to around 30-million-barrel-a-day production ceiling could land OPEC’s powerbroker with its own Arab Spring, one industry expert has warned. The prolonged slump in oil prices has eaten away the huge cash pile of Saudi Arabia, forcing the oil giant to introduce austerity measures such as cuts to subsidies it offers its citizens that can potentially fuel social unrest.
Andrew Su, chief executive of Australian brokerage Compass Global Markets, told CNBC, “When the Saudis and OPEC moved to push prices lower last year, they were trying to keep pressure on Russia and the US shale producers. That has happened.”……………………………………….Full Article: Source

OPEC sees oil market rebalancing in 2016

Posted on 19 January 2016 by VRS  |  Email |Print

OPEC forecast on Monday that oil supply from non-member countries will post a larger-than-expected decline this year due to the collapse in prices, boosting the need for crude from the producer group.
Supply outside the Organization of the Petroleum Exporting Countries (OPEC) would decline by 660,000 barrels per day (bpd) in 2016, led by the United States, OPEC said in a report. Last month, OPEC predicted a drop of 380,000 bpd………………………………………..Full Article: Source

Gold miners say output has peaked as losses reshape the industry

Posted on 18 January 2016 by VRS  |  Email |Print

Gold output has peaked in this commodities cycle, according to mining industry leaders and analysts who say few big projects will reach the point of production amid falling prices. The lack of new assets and declining output at existing mines is expected to curb gold supply, a glimmer of hope for surviving producers of the precious metal in an industry coming to terms with a rush of investment when prices were far higher.
Kelvin Dushnisky, president of Barrick Gold, the world’s largest gold miner by annual output, said: “Falling grades and production levels, a lack of new discoveries, and extended project development timelines are bullish for the medium and long-term gold price outlook.”……………………………………….Full Article: Source

Why the commodities crunch could hurt stability in Latin America

Posted on 15 January 2016 by VRS  |  Email |Print

Much of Latin America has seen an unusually long period of relative political stability since the early 2000s. With the exception of Cuba, democratically elected governments seem embedded throughout the region.
The political rules of the game largely seem to be followed. Indeed, the international outcry following the 2009 coup that removed Honduras’ president, Manuel Zelaya, served to reinforce how much Latin American politics had changed since the 1970s, when military dictatorships were the dominant form of government………………………………………..Full Article: Source

An ‘Acute Shortage’ in Gold Can Boost Prices

Posted on 15 January 2016 by VRS  |  Email |Print

An acute shortage of readily marketable physical gold is developing that we believe will deepen in years to come. This possibility seems to be unrecognized by those who are short the gold market through paper contracts.
The relentless dumping of synthetic or paper gold contracts since 2011 by speculators in Western financial markets has caused the shortage. The steady selling has driven down the price of physical gold, hobbled the gold-mining industry, and drained the stores of gold held in the vaults of Western financial centers………………………………………..Full Article: Source

The bull and bear case for crude oil

Posted on 13 January 2016 by VRS  |  Email |Print

Oil’s dire performance since the start of the new year continued on Tuesday as prices of benchmark Brent crude and US marker West Texas Intermediate flirted with $30 a barrel. Concerns about China’s economy, whose growth led a surge in global oil demand over the past decade, together with still robust US production and a jump in output from Opec producers has taken prices to levels last seen more than a decade ago.
But where do prices go from here? The Bear Case — Ed Morse, global head of commodities research at Citigroup: “It would take an unusual series of supply disruptions to change this course of price behaviour. In the short-run the market outlook for oil is fairly bleak………………………………………..Full Article: Source

Gold Joins Commodities Selloff

Posted on 12 January 2016 by VRS  |  Email |Print

Gold prices gave up gains Monday as a broad selloff in commodities and a stronger dollar pulled the market down. Front-month gold futures for January lost $1.30, or 0.1%, to $1,096.50 a troy ounce on the Comex division of the New York Mercantile Exchange. Gains had approached 1% overnight but slid throughout traditional U.S. trading hours.
The market had lost ground Friday, too, after a surprisingly strong set of U.S. jobs numbers strengthened the dollar. Gold, like other dollar-denominated commodities, typically moves in the opposite direction of the dollar because an appreciating dollar makes gold more expensive for traders who primarily use another currency………………………………………..Full Article: Source

OPEC’s Trillion-Dollar Miscalculation

Posted on 11 January 2016 by VRS  |  Email |Print

I suspect if Saudi Arabia were able to travel back in time to OPEC’s November 2014 meeting, the oil markets would look very different today. Because at that meeting the group made a decision that has thus far proven to be very costly to OPEC members.
The decision left me scratching my head at the time. Whenever I try to anticipate an OPEC decision, I first ask myself, “What would I do if I were responsible for making that decision?” Of course to OPEC, the self-interests of its members are more important than the interests of the rest of the world………………………………………..Full Article: Source

Why Commodities Crashed in 2015

Posted on 07 January 2016 by VRS  |  Email |Print

Commodities have already had a tough 2015 – but earlier this week, prices for everything, from crude oil to industrial metals such as iron ore and copper, plummeted even further. The sector is contending with the lowest prices since the financial crisis, perhaps even this century. Here is a brief guide to what is happening, how each of the main commodities are faring, and why it matters for global growth.
How bad is this crunch?: Earlier this week, crude oil dipped below $40 a barrel for the first time since 2009. The situation was so dire that the Bloomberg Commodity Index, which covers a wide range of natural resources, dropped to its lowest level since June 1999. After two days of freefall, prices have plateaued, with the oil price managing a brief recovery………………………………………..Full Article: Source

Why gold’s mini-revival may be sustained

Posted on 07 January 2016 by VRS  |  Email |Print

Gold has started 2016 well. By mid-session on Wednesday, the metal was sporting a $28 jump since New Year’s eve, flirting with two-month highs. Crucially, the bullion’s latest strength comes despite the dollar index, with which it often sports an inverse correlation, crawling back towards December’s 12-year high, a function of a crumbling euro.
Chartists will note that gold in December hit a double bottom around $1,050 a troy ounce and has broken above its 50-day moving average. It may be tempting to see gold’s current mini revival as mainly a function of its haven status after North Korea’s bomb test added to the heightened geopolitical tensions from the Saudi/Iran fallout………………………………………..Full Article: Source

Why 2015’s Best Commodity Could Turn Into This Year’s Nightmare

Posted on 06 January 2016 by VRS  |  Email |Print

Last year’s best-performing commodity is poised to become the market’s worst nightmare. After the longest rally in London cocoa futures since at least 1989, farmers from Ivory Coast to Peru are preparing to revive supplies in the 2016-17 season that starts in October, creating a surplus that Rabobank International says will be the largest in six years.
With demand slowing, the bank is most bearish about prices for the chocolate ingredient this year among the dozen agricultural commodities it tracks. Prices surged 60 percent during a four-year rally through 2015, forcing candy makers from Hershey Co. to Lindt & Spruengli AG to charge more for their products………………………………………..Full Article: Source

Saudi Arabia-Iran conflict will crush oil prices further

Posted on 06 January 2016 by VRS  |  Email |Print

Rising tensions in the Middle East typically trigger a knee-jerk increase in the price of oil. But these are not typical times for the oil market. With several factors already weighing on the price of oil, increasing frictions in this historically tumultuous region are poised to counter-intuitively exacerbate the negative outlook for oil.
Analysts have a plethora of reasons to support the consensus view that oil will remain low for the foreseeable future — the slowing Chinese and stagnant European economies, Saudi Arabia’s reduced public subsidies, the impending resumption of Iranian exports, and the recent repeal of the U.S. export ban, just to name a few………………………………………..Full Article: Source

China sees energy consumption rising in 2016

Posted on 30 December 2015 by VRS  |  Email |Print

China expects its energy consumption to grow in 2016, the official Xinhua news agency of the world’s largest energy consumer said on Tuesday. China’s apparent demand for crude oil will reach 550 million tonnes (11 million barrels per day) and apparent demand for natural gas will hit 205 billion cubic metres, Nur Bekri, head of the National Energy Administration (NEA), said, according to Xinhua.
Electricity consumption will rise to 5.7 trillion kilowatt-hours and coal consumption will be 3.96 billion tonnes. Non-fossil fuels will also make up 13.2 per cent of primary energy needs in 2016, up from 12 per cent this year, while coal will fall to less than 62.6 per cent from 64.4 per cent, he said………………………………………..Full Article: Source

Iron ore rings in 2016

Posted on 29 December 2015 by VRS  |  Email |Print

Iron ore stockpiles at ports in China are heading into 2016 at the highest level in more than seven months as expanding low-cost supplies and sputtering demand in the biggest buyer spur concern that a glut will persist, hurting prices.
“Stockpiles have been on the rise because domestic demand is getting weaker and shipments from the major producers have increased,” Dang Man, an analyst at Maike Futures in Xi’an, said by phone on Monday. Mills have “been cutting production, which reduces demand for iron ore. So a lot of the stocks have remained at ports.”……………………………………….Full Article: Source

December Zinc Price Forecast: Bearish Thanks to Sister Metals

Posted on 29 December 2015 by VRS  |  Email |Print

On December 22, zinc futures traded close to 1% lower, representing an overall weak global trend for it and other metals. On the London Metal Exchange, zinc dropped by 0.7% with analysts attributing the bearish turn of zinc futures trade to a weakness in copper and other base metals in the global markets.
The reason? Questionable sustainability of Chinese demand, the world’s largest consumer of copper and other metals. This happened just several days after zinc futures rose nearly 0.5%, due to an increase in demand in India’s domestic spot market. According to the Economic Times, zinc for delivery in January also rose, 0.3% during the same time frame………………………………………..Full Article: Source

Oil back at $95 — but only in 24 years’ time: OPEC

Posted on 28 December 2015 by VRS  |  Email |Print

Oil prices will take decades to recover and will still not reach the peak seen in recent years, according to the latest World Oil Outlook (WOO) from OPEC. In the group’s latest outlook on supply, demand and prices to 2020 and 2040, OPEC predicted that a barrel of oil would cost (in real terms) around $70 by 2020 and $95 by 2040, a far cry from a high point of $114 a barrel last seen in June 2014 before prices began to plunge on oversupply.
Price declines were exacerbated by the decision last year by OPEC, the 12-member producer group led by Saudi Arabia, not to cut production. Still, OPEC’s Secretary General Abdalla Salem El-Badri said OPEC had been a bastion of stability amid volatile times for the oil industry………………………………………..Full Article: Source

Commodities Bust? Love It!

Posted on 21 December 2015 by VRS  |  Email |Print

For those who’ve grown used to a decade in which mining and energy companies bestrode the world, the current malaise in commodities markets can feel like the end times. At the start of 2011, 14 out of 53 companies with market values above $100 billion were in the oil and mining sectors.
That club has since expanded to 69 corporates, but only Exxon Mobil, PetroChina, Chevron, Shell and Total are still members. Back in 2009, both BHP Billiton and Petrobras were worth more than Apple. Now, Tim Cook could theoretically buy both businesses with net cash and still have money left over to pick up Glencore, Newmont, Barrick Gold, Anglo American and most of Goldcorp………………………………………..Full Article: Source

How to mine benefits from metal sector’s boom-to-bust

Posted on 21 December 2015 by VRS  |  Email |Print

The combination of growth in global demand, especially in emerging economies, and globalisation gave metal producers the opportunity to capture the opportunities of growing sales. However, after a decade-long boom in the industry, the prices of metals and commodities in the past few years have plunged amid sluggish growth in the developed markets and weakening expansion in the emerging markets.
The price of copper fell 27.2 per cent this year, while aluminium fell 20.3 per cent, the lowest prices in six years, according to Bloomberg. The negative outlook over the weakening macroeconomy and the uncertainty regarding growth in China will continue to weigh on the demand for metals and the health of the industry in the new year………………………………………..Full Article: Source

China’s steady-as-she-goes economy won’t rock commodity boat: Russell

Posted on 18 December 2015 by VRS  |  Email |Print

China is no longer a driver of commodity demand, rather it has become a constant factor that can be relied upon to import relatively steady volumes of major natural resources. Both China’s central bank and a respected think-tank expect further moderation in the economic growth rate next year, which underscores that the world’s second-largest economy is still undergoing a structural transformation, but is unlikely to fall victim to a hard landing.
The People’s Bank of China said in a paper published on Wednesday that annual growth will slow to 6.8 percent in 2016, from an estimated 6.9 percent this year………………………………………..Full Article: Source

China plans yuan gold pricing, India eyeing exchange – World Gold Council

Posted on 18 December 2015 by VRS  |  Email |Print

China’s Shanghai Gold Exchange plans to introduce a yuan-denominated gold pricing mechanism to facilitate regional market trading and the Indian gold trade is expressing an intent to establish a gold exchange.
The World Gold Council market intelligence head Alistair Hewitt predicts in a media release to Creamer Media’s Mining Weekly Online that the gold market will continue to improve in 2016 on the back of pro-gold Indian government schemes, further internationalisation of the renminbi and the increasing transparency of Chinese gold reserves. He expects yuan gold pricing to take shape in 2016, when he foresees gold continuing to provide a hedge against elevated stock valuations………………………………………..Full Article: Source

Copper drops as China-led commodity rout seen deepening

Posted on 16 December 2015 by VRS  |  Email |Print

Copper futures dropped the most in five weeks on concern the metals rout may deepen on slowing demand in China, the world’s biggest user. Continued concern over China’s economy, coupled with a stronger greenback as the Federal Reserve moves to raise US interest rates, will make it difficult for commodities to rebound, Stephen Roach, a senior fellow at Yale University and former non-executive chairman for Morgan Stanley in Asia, said in a Bloomberg Television interview in Hong Kong on Tuesday.
Fed policy makers start a two-day meeting on Tuesday. The Bloomberg Industrial Metals Subindex is trading near the lowest since 2004 as China’s slowest expansion in a generation cuts demand………………………………………..Full Article: Source

China’s Steel Output Drops Again With More Cuts on the Way

Posted on 14 December 2015 by VRS  |  Email |Print

Steelmakers in China, the world’s largest supplier, are cutting production yet again as faltering demand and a collapse in prices show no signs of abating. Crude steel output contracted 1.6 percent to 63.32 million metric tons in November from a year earlier, according to data from the statistics bureau Saturday.
Supply for the first 11 months dropped 2.2 percent to 738.38 million tons. The country makes about half the world’s steel. Demand in China is weakening as policy makers seek to steer Asia’s biggest economy away from investment-led growth to one driven by consumer demand and services………………………………………..Full Article: Source

OPEC’s Oil Market Disarray Looks Like 1990s Slump All Over Again

Posted on 08 December 2015 by VRS  |  Email |Print

OPEC has seemingly dropped any attempt at trying to fulfill its founding mission and manage the oil market, sending global benchmark Brent crude to a six-year low. For Saudi Arabia’s Ali al-Naimi, the most powerful and longest-serving of the group’s oil ministers, it may have seemed like history was repeating itself.
There are several striking parallels between the Organization of Petroleum Exporting Countries’ current situation and the period from 1997 to 1999, when the group lost control of the market and oil slipped to less than $10 a barrel………………………………………..Full Article: Source

OPEC ‘dead’ as oil countries go it alone on price and production

Posted on 07 December 2015 by VRS  |  Email |Print

OPEC has abandoned all pretence of acting as a cartel. It’s now every member for itself. At a chaotic meeting Friday in Vienna that was expected to last four hours but extended to nearly seven, the Organisation of Petroleum Exporting Countries tossed aside the idea of limiting production to control prices.
Instead, it went all in for the one-year-old Saudi Arabia-led policy of pumping, pumping, pumping until rivals - external, such as Russia and US shale drillers, as well as internal - are squeezed out of market share. “Lots of people said that OPEC was dead; OPEC itself just confirmed it,” Jamie Webster, a Washington-based oil analyst for IHS, said in Vienna………………………………………..Full Article: Source

Fed rate hike to hit commodities-linked firms, economies

Posted on 03 December 2015 by VRS  |  Email |Print

Companies and countries whose fortunes are tied to commodities could see their borrowing costs climb as an interest rate increase by the U.S. Federal Reserve exacerbates the impact of lower raw material prices, top asset manager Schroders warned on Wednesday.
“Tighter dollar liquidity is going to put quite a lot of pressure on companies who survived the last year with commodities prices having fallen,” chief economist and strategist for Schroders, Keith Wade, told CNBC’s “Street Signs” on Wednesday. “As they look into next year, they are going to be asking themselves: are commodities prices going to recover, are our banks going to continue to fund this if dollar liquidity is tightening? … The answers to those questions might be a bit more difficult.”……………………………………….Full Article: Source

Saudis seen rejecting calls for OPEC cuts as rivals pump more

Posted on 03 December 2015 by VRS  |  Email |Print

Saudi Arabia and its Gulf allies will reject calls from fellow OPEC members to cut oil output, Iran said on Wednesday, two days before the group meets amid falling prices and a worsening global glut.
“It is unlikely that these countries voluntarily cut their output,” Iran’s OPEC governor Mehdi Asali told Iranian news agency Shana. Iran is preparing to ramp up output after an expected lifting of Western sanctions on Tehran next year, and wants OPEC to accommodate the new volumes………………………………………..Full Article: Source

Saudis Will Discuss Then Decide Policy at OPEC Meeting, Says Ali al-Naimi

Posted on 02 December 2015 by VRS  |  Email |Print

Saudi Arabia’s oil minister Ali al-Naimi, under pressure to take action to prop up crude prices at this week’s OPEC meeting, took a conciliatory tone on Tuesday, saying the kingdom would have a discussion about the group’s next step. “We will listen, and then decide,” Naimi said.
Saudi Arabia, the world’s top exporter of crude oil, has led OPEC into its current yearlong policy of pumping up production even as prices have remained stuck below $50 a barrel, a departure from its past practice of lowering output to support robust prices………………………………………..Full Article: Source

Why Saudi Arabia won’t back an Opec output cut

Posted on 02 December 2015 by VRS  |  Email |Print

What do you do when your carefully crafted plan simply doesn’t pay off? Do you abandon it, cut your losses, but risk losing face, or hold on, risking further economic pain? Saudi Arabia’s oil minister must be pondering that very question ahead of the December Opec meeting.
Exactly one year ago, Saudi Arabia, Opec’s largest producer, caused one of the biggest ever upheavals in the oil market. At the 2014 Opec meeting, it blocked a cut in output, choosing to defend its market share instead of defending the oil price in the face of persistent oversupply. Its aim was to push out the highest cost producers and hope for prices to recover once supply fell. Basic economics 101………………………………………..Full Article: Source

Relief on lead is temporary

Posted on 30 November 2015 by VRS  |  Email |Print

It was a manic Monday in the metals complex last week as most of the metals fell to multi-year lows. The London Metal Exchange’s (LME) Metal Index declined to its six-year low of 2,097.4. Aluminium and copper also tumbled to their six-year lows. The worst hit among them all was nickel, which tanked to a 12-year low of $8,154 per tonne.
Fears about a surprise Fed rate hike, due to an unscheduled meeting, added to concerns about China, and undermined all metals. However, panic prevailed only for one day and metals have managed to reverse sharply higher thereafter to recover their losses. Lead prices also followed the other metals and fell to a six-year low of $1,554 per tonne on Monday last week………………………………………..Full Article: Source

Fed to blame for commodities rout, not China

Posted on 26 November 2015 by VRS  |  Email |Print

Blame China. A global glut of commodities has emerged because China suddenly decided it no longer wants mineral ores. Prices are now collapsing, which threatens the worldwide supply chain. It’s all China’s fault. I have one problem with this story. Look at the first chart on the quantity of China’s iron ore imports and you see scant sign that iron ore is no longer in demand. That demand curve has flattened out but this is after a 16-fold growth over the past 15 years. A breather was due at some point.
And what you see in iron ore you can also see in other major minerals and in petroleum. In some cases there has been no slowdown at all. Imports of copper ore and concentrates, for instance, are still growing at double digit rates………………………………………..Full Article: Source

Commodity prices struggle on

Posted on 23 November 2015 by VRS  |  Email |Print

Goldman Sachs claims that the low prices of natural resource commodities are set to continue. Natural resource commodities have had a tough year. From oil to metals, prices have been persistently low. According to Goldman Sachs, however, this trend is not going to shift anytime soon – and prices could fall even further.
The banking giant has said that the bearish nature of commodity markets is set to continue, with prices not yet bottoming out, unless supply is restricted or demand picks up again………………………………………..Full Article: Source

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