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Falling oil prices put pressure on Russia, Iran and Venezuela

Posted on 20 October 2014 by VRS  |  Email |Print

The silver lining in the recent financial market turbulence has been the continued decline in the price of oil, which is down about 25 percent since June. In addition to creating a windfall for U.S. consumers — one analysis reckoned the savings could amount to $600 per household — the drop, if sustained, will place considerable pressure on three problematic petrostates: Russia, Iran and Venezuela.
The aggressively anti-American foreign policies pursued by all three countries in recent years have been financed in large part by soaring oil revenue. Though separated by culture and continent, the regimes of Vladi­mir Putin, Ali Khamenei and Nicolás Maduro have in common autocratic government and ambitions to dominate their regions………………………………………..Full Article: Source

Russia can withstand lower oil prices but not for very long

Posted on 20 October 2014 by VRS  |  Email |Print

Russia does not face an immediate threat from the sharp fall in oil prices over recent months. While the economy is heavily dependent on oil, the country’s accumulated reserves and the floating rouble will mitigate the shock, and Russia should be able to withstand levels of $80 to $90 a barrel for about two years. But in the longer term, persistently low prices – reinforced by the pressure imposed by western sanctions – could pose an existential challenge to Vladimir Putin’s regime.
The 25 per cent drop in the oil price over the past three months did come as a shock to the Russian government. The latest draft of the 2015-17 budget assumes a price of $100 a barrel (and average annual gross domestic product growth of 2.6 per cent)……………………………………….Full Article: Source

Hedge Funds Say Oil Is Going to $0

Posted on 20 October 2014 by VRS  |  Email |Print

Supply and demand are what typically fuel oil prices . However, market fundamentals aren’t the only factors at play. Speculators, like hedge funds and other big money investors, play a role in the price of oil as well. They can push it up past market fundamentals or, as they have recently, cause it to plunge — the latest dip sent global oil benchmark Brent down 25% to around $85 per barrel, and U.S. oil benchmark WTI even lower.
Energy traders are betting that oil prices will keep falling. In a recent Bloomberg article, Citigroup’s global head of energy strategy, Seth Kleinman, was quoted as saying that, “several big, smart commodity hedge funds said oil is going to zero.” He went on to say, “they are being somewhat dramatic, but they were incredibly bearish.”……………………………………….Full Article: Source

Gold price upside limited in 2015 - Scotiabank

Posted on 20 October 2014 by VRS  |  Email |Print

In the latest edition of the Scotiabank Commodity Price Index, published on Thursday, Scotiabank economist Pat Mohr observed, ““Spot gold prices fell as low as US$1,183 intra-day on October 5 - re-testing the previous low of US$1,180 on June 20, 2013 - after the Fed Chairman indicated that Federal Reserve Board would likely reduce its ‘asset purchase program’ in 2014 (quantitative easing),” Mohr observed in her analysis.
“Miners continue to cut costs in today’s lower price environment - reducing ‘all-in sustaining cash costs for high-cost producers at the 80th percentile to no more than US$1,055,” she said. “While we think the upside on gold prices will be limited in the coming year, the successful re-testing of the previous low shows some support for gold,” Mohr suggested……………………………………….Full Article: Source

Commodities Extend Decline to Five-Year Low on Oil to Tin

Posted on 17 October 2014 by VRS  |  Email |Print

Commodities extended declines to a five-year low led by industrial metals and oil on speculation supplies are more than sufficient with prices of everything from gasoline to food falling.The Bloomberg Commodity Index (BCOM) fell 0.6 percent at 12:55 p.m. in London after dropping to the lowest since July 2009. Zinc declined 3 percent, nickel retreated 2.5 percent and West Texas Intermediate fell below $80 a barrel for the first time since June 2012.
A Bank of America Corp. survey of fund managers this week showed the lowest optimism in the outlooks for economic growth and inflation in two years, pushing them to increase their cash balances and avoid commodities. An index of food prices compiled by the United Nations dropped to the lowest since August 2010 last month and regular gasoline prices in the U.S. are the lowest since February 2011………………………………………..Full Article: Source

Declines in commodity prices likely to continue through 2015, says WB report

Posted on 17 October 2014 by VRS  |  Email |Print

Prices of most commodities, particularly oil, are expected to remain weak for the remainder of this year and through much of 2015, says the World Bank’s latest issue of Commodity Markets Outlook. Growing concern over a slowdown in the Euro Area and emerging economies, a strong US dollar, a well-supplied oil market and good crop prospects have contributed to a weakening of many commodity prices since the summer. The World Bank energy price index declined by about 6 percent during the third quarter, after being broadly stable in the first half of the year.
“A broad-based expansion in commodity supply is coinciding with weakness in global growth, especially in emerging economies, where most of the demand expansion has been taking place,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group………………………………………..Full Article: Source

The oil price is tumbling. Is that good or bad news for the world economy?

Posted on 17 October 2014 by VRS  |  Email |Print

After declining gradually for three months, oil prices suddenly tumbled almost $4 on October 14th alone. It was the largest single-day fall in more than a year and brought the price of Brent crude, an international benchmark, to $85 a barrel. At its peak in June, a barrel had cost $115.
Normally, falling oil prices would boost global growth. A $10-a-barrel fall in the oil price transfers around 0.5% of world GDP from oil exporters to oil importers. Consumers in importing countries are more likely to spend the money quickly than cash-rich oil exporters. By boosting spending cheaper oil therefore tends to boost global output………………………………………..Full Article: Source

Recent decline in crude oil price artificial: Jim Rogers

Posted on 17 October 2014 by VRS  |  Email |Print

Even as crude oil prices have dipped to all-time lows, Jim Rogers of Rogers Holdings told ET Now that the decline is ‘artificial’. “Some of this (oil price decline) is artificial. OPEC is trying to drive down prices because of Shale competition. The oil situation is very artificial at the moment.”
“It looks like a lot of people are dumping. This is artificial. Though I would not be dumping oil myself,” Rogers said. Asked about the US Shale gas boom, Rogers said, The Shale boom will not continue very strong especially if prices do come down. That is high cost oil, and remember those are very short lived wells,” Rogers said. “The production runs down very quickly,” he added. ……………………………………….Full Article: Source

Saudi Arabia tests US ties with oil price

Posted on 17 October 2014 by VRS  |  Email |Print

By encouraging oil prices to fall, Saudi Arabia is taking a calculated gamble in its already strained relationship with the US, hoping that the potential damage to America’s shale industry will be offset by the geopolitical and economic prizes on offer to Washington.
At a time when the US and Saudi Arabia are fighting a new war together in Iraq and Syria, the Saudis have taken the bold step of asserting their pivotal role in the oil market and subtly squeezing the finances of some of America’s fledgling shale companies………………………………………..Full Article: Source

Global Oil Glut Sends Prices Plunging

Posted on 16 October 2014 by VRS  |  Email |Print

Oil prices posted their biggest one-day drop in nearly two years Tuesday as a U.S.-led wave of crude has crashed into weak global demand, threatening the stability of some countries and providing an economic lifeline to others.
Tuesday’s slide of 4.5% by U.S. crude oil to $81.84 a barrel on the New York Mercantile Exchange left the price down 20% since the start of June. That was the lowest closing price since June 2012, and some analysts predict the price will fall as much as $10 a barrel lower………………………………………..Full Article: Source

Winners and losers from oil price plunge

Posted on 16 October 2014 by VRS  |  Email |Print

Crude oil prices have plunged by $25, or more than 20 per cent, since mid-June, raising many questions. How low might prices go? If they rebound, at what level will they stabilise? Will Saudi Arabia and Opec move to cut output when they meet next month? At what price level might US shale oil production be affected and how severely?
One thing is certain: even the current lower prices are rapidly creating winners and losers. Losers are producers, countries and governments. If Brent falls to $80, Opec countries would lose some $200bn of their recent $1tn in earnings, affecting not only their ability to earn enough to cover the post-Arab Spring expanded budgets, but also their capacity to service debt without triggering defaults………………………………………..Full Article: Source

What’s behind the drop in oil prices?

Posted on 16 October 2014 by VRS  |  Email |Print

From oversupply and waning demand to economic concerns and politics — experts offer their views. Oil prices have been in a free-fall for nearly four months, and Tuesday’s $4 plunge was the biggest drop in more than two years.
Since hitting a peak of over $107 in June, the price of West Texas Intermediate crude oil has since fallen over 24%. It dropped as far as $80 a barrel on Wednesday, the lowest since June 2012. Brent crude oil has also struggled, falling as low as $84.85 a barrel Wednesday. That’s the lowest since November 2010………………………………………..Full Article: Source

Oil-Price Slump Is Double-Edged Sword for Asia

Posted on 16 October 2014 by VRS  |  Email |Print

Falling crude prices are a boon to Asia, reducing costs for businesses and consumers and giving authorities room to lower interest rates amid slow global economic growth. Yet the world’s largest oil-importing region still could suffer if crude prices fall further, after declining this week to two-year lows in the U.S.
While the decline would reduce Asia’s bill for imports, it also would signal slowing demand from China and Europe, which would risk hurting Asia’s exporters. “Falling crude is a double-edged sword for Asia,” said Frederic Neumann, an economist with HSBC Holdings PLC in Hong Kong. “The worry is it reflects weakening global demand. But it offers a bit of a cushion for many economies in Asia.”……………………………………….Full Article: Source

Gold price vs Dow Jones shows metal still cheap

Posted on 16 October 2014 by VRS  |  Email |Print

On Wednesday gold futures enjoyed another up day, lifting the price of the precious metal to a five-week high on the back of a huge selloff on equity markets after surprisingly weak economic data from the US. In late afternoon trade on the Comex division of the New York Mercantile Exchange gold for December delivery was changing hands for $1,241.70 an ounce, up $7.40 from yesterday’s close.
Some safe haven buying prompted by wars in the Middle-East and a spreading Ebola pandemic also attracted buyers. But it’s mainly falling bond yields (making gold which does not pay a coupon more attractive) and weakness on stock markets that have pushed the metal 4.2% higher in value from nine-month lows hit earlier in the month………………………………………..Full Article: Source

Saudi Prince Alwaleed says falling oil prices ‘catastrophic’

Posted on 15 October 2014 by VRS  |  Email |Print

Intervention of Saudi royal may pressure Opec to cut production at its forethcoming meeting to arrest the slide in prices. Saudi Arabia’s most high-profile billionaire and foreign investor, Prince Alwaleed bin Talal, has launched an extraordinary attack on the country’s oil minister for allowing prices to fall.
In a letter in Arabic addressed to ministers and posted on his website, Prince Alwaleed described the idea of the kingdom tolerating lower prices below $100 per barrel as potentially “catastrophic” for the economy of the desert kingdom………………………………………..Full Article: Source

Oil’s Price Drop Stands to Help Refiners

Posted on 15 October 2014 by VRS  |  Email |Print

Falling oil prices mean energy companies and their investors can expect lower profits in the coming months. But big, integrated oil companies are likely to find that a recently unloved part of their business—oil refining—provides a cushion.
Companies reporting earnings in the weeks ahead should show the early effects of the oil-price drop. Brent crude fell 16% in the third quarter. It has continued falling this month, hitting $88 a barrel Tuesday, down from $112.40 a barrel at the end of June………………………………………..Full Article: Source

IEA, OPEC Officials Say Shale Can Cope With $80 a Barrel

Posted on 15 October 2014 by VRS  |  Email |Print

Most U.S. shale production would remain profitable even if oil prices fall to $80 a barrel, energy watchdog the International Energy Agency said Tuesday. Its estimate, which is shared by some OPEC officials, suggests crude prices could fall further before supply starts to come out of the market.
In its monthly report for September the IEA said “further oil price drops would likely be needed for supply to take a hit” because most of shale oil “remains profitable at $80 a barrel.” Its comments came as crude prices sank further Tuesday. At 1545 GMT, Brent crude oil for November delivery was down 2.5% to $86.76 a barrel on ICE Futures Europe, on track to settle at a fresh near four-year low………………………………………..Full Article: Source

Crude Oil - So Very Bearish, But Is There A Price Floor At $80?

Posted on 15 October 2014 by VRS  |  Email |Print

Oil prices have dropped over 10% since September 1. OPEC increased production in September. Global economic conditions are weak. Oil is moving toward contango. Is this a free market response to current conditions, or is it all managed?
The oil price is denominated around the world in US dollars. The US dollar was up better than 7.5% during the third quarter. A stronger dollar weighs heavily on many commodity prices including crude oil………………………………………..Full Article: Source

Gold price set to average $1,170 in ’15 – Natixis

Posted on 15 October 2014 by VRS  |  Email |Print

Gold mines operating at higher costs represent a new potential source of supply in a market where prices will average $1,170 per ounce in 2015, Natixis said. Due to aggressive cost-cutting by gold producers, the all-in sustaining costs of production have fallen to somewhere around $960 per ounce, the research firm said in its latest report on Tuesday.
“That said there are still many mines operating at higher costs that could potentially need hedging,” it said. “This represents a potential source of supply in the market, which could help to accelerate any decline in prices.” The price of gold has been steadily declining since June, falling to a low near $1,180 in September before rebounding to $1,235.10/1,235.90 per ounce on Tuesday afternoon, effectively unchanged on Monday’s closing level………………………………………..Full Article: Source

Copper Ends at Highest Level Since Mid September

Posted on 15 October 2014 by VRS  |  Email |Print

Copper prices rose to their highest level in more than three weeks Tuesday, after China’s central bank cut short-term borrowing costs for banks, suggesting that officials may be willing to take the edge off an expected slowdown in the economy of the world’s largest copper consumer.
Copper for December delivery, the most actively traded contract, closed up 1.6% at $3.0900 a pound on the Comex division of the New York Mercantile Exchange, its highest level since Sept. 19………………………………………..Full Article: Source

China commodities imports rebound on low prices, stimulus hopes

Posted on 14 October 2014 by VRS  |  Email |Print

China posted a strong rebound in commodities imports in September, with iron ore, copper and coal seeing double-digit percentage growth from the previous month, although the gains were linked to opportunistic buying due to weak global prices.
Crude oil imports also rose a stronger-than-expected 13 percent in September from August, but analysts said the country may be boosting its strategic reserves given demand growth in the world’s largest energy consumer remains subdued………………………………………..Full Article: Source

Oil price slump yet to hit US shale oil production: IEA chief

Posted on 14 October 2014 by VRS  |  Email |Print

The vast majority of shale oil in the United States is produced at costs far below the current price of crude, the head of the west’s energy watchdog said, which means U.S. projects can withstand the market slump squeezing other producers.
Brent oil stands at around $88 per barrel, down more than 23 percent from the year’s peak above $115 in June, raising concern that some shale oil projects will become un-economic. However Maria van der Hoeven, executive director of the International Energy Agency said that only a tiny minority of shale oil production would be affected by the slump in prices to near-four-year lows………………………………………..Full Article: Source

Oil Prices Hit 3-Year Low

Posted on 14 October 2014 by VRS  |  Email |Print

As OPEC squabbles over sharing pain of lower prices. The price of crude oil fell to a new three-year low Monday as a split between the world’s most important producers on how to share the pain of lower prices becomes increasingly apparent.
Prices for the U.S. and European benchmark blends fell nearly 2% in early trading Monday, on a Reuters report suggesting that Saudi Arabia was willing to accept a price of as low as $80 a barrel for the next year or two, in order to defend its share of the global market. The New York Mercantile Exchange’s crude contract traded at $84.65 by 0700 EDT, down from a peak of over $107 a barrel as recently as June………………………………………..Full Article: Source

Oil prices could fall below $80 as Opec keeps pumping

Posted on 14 October 2014 by VRS  |  Email |Print

Top energy watchdog says most oil produced in the world is still profitable at prices around $80 per barrel in potential boost for global growth. Oil prices are anticipated to fall below $80 per barrel as the Organisation of Petroleum Exporting Countries (Opec) is increasingly expected to keep its spigots open as the world’s biggest drillers fight for market share.
Brent crude has fallen 23pc this year and was down briefly below $87 per barrel in London trading hours Monday after Saudi Arabia - the world’s biggest exporter - had indicated it would be comfortable for prices to remain depressed in the short term………………………………………..Full Article: Source

Barclays remains cautious on gold prices

Posted on 14 October 2014 by VRS  |  Email |Print

The precious metals endured intense downward pressure a week ago amid a stronger dollar and firmer rates, and last week a reversal of the macro dynamics has enabled the precious metals, gold in particular, to stage something of a bounce.
In line with Barclays expectations, from the lows reached at the end of last week, both of the PGMs have staged the strongest recovery with gold prices trading back above $1200 an ounce, as physical buying has returned in both India and China w/w. However, Barclays remains cautious on gold prices, and continue to see the macro environment presenting headwinds and would look for opportunities to sell into a rally………………………………………..Full Article: Source

OPEC Members’ Rift Deepens Amid Falling Oil Prices

Posted on 13 October 2014 by VRS  |  Email |Print

A rift between OPEC members deepened over the weekend, as producers in the cartel moved in different directions amid falling oil prices. Venezuela, which has been one of the most outspoken proponents of a production cut by the Organization of the Petroleum Exporting Countries, called over the weekend for an emergency meeting of the group to respond to falling prices. But Kuwait said Sunday that OPEC was unlikely to act to rein in output.
Saudi Arabia, meanwhile, appeared to expand on its recent move to defend its market share at the expense of other members by aggressively courting customers in Europe. Traders said Saudi Arabia is now asking for stronger commitments from some of its buyers in Europe, a move that would lock in those customers, including any new ones it would gain with recent price reductions………………………………………..Full Article: Source

Kuwait says OPEC unlikely to cut output to support prices -KUNA

Posted on 13 October 2014 by VRS  |  Email |Print

OPEC is unlikely to cut oil production in an effort to prop up prices because such a move would not necessarily be effective, Kuwait’s oil minister Ali al-Omair was quoted as saying by state news agency KUNA on Sunday.
Brent crude oil settled at $90.21 a barrel on Friday after earlier falling to $88.11, the lowest since December 2010, as Saudi Arabia said it raised production last month, adding to perceptions that the kingdom is looking to defend market share, rather than prices. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015………………………………………..Full Article: Source

Oil price unlikely to go down to $60 per barrel

Posted on 13 October 2014 by VRS  |  Email |Print

The oil price on the international market is unlikely to drop to $60 per barrel, although it may go down for some time to $80-$85, but should stabilize around $90, says Russian Finance Ministry long-term strategic planning department head Maxim Oreshkin. “I don’t really believe in $60.
What looks more realistic is $90, and we already talked about this level. When oil cost $100, we said that $90 was the level where it could stabilize. It goes without saying that we could drop to $85 or $80 for a short period of time, but we will orient ourselves at $90 in the midterm,” Oreshkin told journalists. To make forecasts regarding oil prices, it is important to understand the causes of and the nature of price shocks, Oreshkin said………………………………………..Full Article: Source

Oil price fall disrupts Mexico’s hedging and threatens spending

Posted on 13 October 2014 by VRS  |  Email |Print

Falling crude prices have disrupted Mexico’s annual oil hedging programme – the largest of its kind in commodity markets – and raised fears the government may have to trim spending just as the economy starts to pick up steam.
Luis Videgaray, the finance minister, took the extraordinary step this month of confirming that the highly secretive programme had kicked off. His comments came after the Financial Times uncovered terms of Mexico’s hedging contracts from a new derivatives database………………………………………..Full Article: Source

Oil Prices Dip Below $90 for First Time in Two Years

Posted on 10 October 2014 by VRS  |  Email |Print

Global oil prices dipped below $90 a barrel for the first time in more than two years Thursday as investors saw new signs that global supplies will continue to surpass demand. Both Brent, the global benchmark, and the U.S. standard are trading more than 20% below a recent high, meeting the definition of a bear market. Prices have slumped for nearly four months as global supplies remain ample.
At the start of PIRA Energy Group’s widely attended seminar in New York on Thursday, the research firm predicted oil prices have further to fall, Reuters reported. PIRA is typically considered optimistic on energy prices, market participants say. The seminar is closed to the press………………………………………..Full Article: Source

Oil prices have plunged through another psychological barrier

Posted on 10 October 2014 by VRS  |  Email |Print

Global oil prices today fell below $90 a barrel—good news for the global economy at a time of fears of a renewed contraction, but a risk for Saudi Arabia, whose unremitting war for market share is one reason for the plummet.
The price of the internationally traded Brent benchmark fell to $89.46 in after-hours trading, about 22% lower than its 2014 peak of $115.71 on June 19. US and European GDP could get a lift if oil prices stay this low for awhile, which is not far-fetched given projections of a continuing US oil production surge in 2015………………………………………..Full Article: Source

BMO cuts gold, silver, platinum price outlook

Posted on 10 October 2014 by VRS  |  Email |Print

BMO Capital Markets warns miners should prepare for a “prolonged period of sub-US$1,200/oz gold prices.” As a result, “many of the gold producer equities will struggle, especially those with higher cash costs and/or high debt loads,” cautioned BMO Nesbitt Burns analyst Jessica Fung in a report issued October 7th.
“Gold, silver and platinum prices remain under considerable pressure due to expectations for the U.S. dollar to continue strengthening,” Fung advised. BMO has lowered 2015-16E gold prices from $1,275 to $1,190 in 2015 and from $1,250 to $1,238 in 2016 to reflect recent price performance, adding “BMO Research does not expect any upset for gold from current levels until H2/16E based on U.S. dollar forecasts.”……………………………………….Full Article: Source

Silver Price Optimism Still in the Cards

Posted on 10 October 2014 by VRS  |  Email |Print

It’s no secret that silver is having a bad time. Though prices for the white metal generally pick up in September, when investors return to the market after vacation, that simply hasn’t held true this year. Instead, silver has trended downward, with its slide culminating in a fall below $17 per ounce just over a week ago.
That’s pretty poor news, especially when silver’s overall 2014 price performance is taken into account — the metal has dropped 19 percent in the last quarter alone, and is down 22 percent for the year as a whole. However, that’s not to say silver is a lost cause; in fact, the current situation has a couple of pluses………………………………………..Full Article: Source

Copper Price Rises Most in Three Weeks on Dollar’s Drop

Posted on 10 October 2014 by VRS  |  Email |Print

Copper prices rose the most in three weeks in London as the dollar’s decline enhanced the appeal of industrial metals as alternative investments. Federal Reserve policy makers maintained a pledge to keep interest rates low for a “considerable time,” and said growth “might be slower than they expected if foreign economic growth came in weaker than anticipated,” minutes of last month’s meeting showed.
In the previous three days, the dollar posted the biggest drop since July 2013, against a basket of 10 currencies. Today, prices from aluminum to zinc climbed………………………………………..Full Article: Source

Commodities: Growth worries push oil and copper futures lower

Posted on 09 October 2014 by VRS  |  Email |Print

The commodity space was pressured lower on Tuesday as worries regarding weak growth in the Eurozone and Asia continued to filter through all asset classes. Concerns regarding excessive US dollar strength going forward seemed to be a common ‘talking-point’ in markets.
So much so that US Treasury Secretary Jack Lew told his audience at a speech delivered at the Petersen Institute that the US cannot be the world’s only growth engine. It was against that backdrop that front-month West Texas crude futures fell $1.6 to $88.85 per barrel on the NYMEX. Three-month copper futures were also lower, finishing the session down 0.6% to $6,670 per metric tonne on the LME………………………………………..Full Article: Source

OPEC’s Oil Price Falls Below $90 for First Time Since June 2012

Posted on 09 October 2014 by VRS  |  Email |Print

The average price of benchmark OPEC crudes dropped below $90 a barrel for the first time in more than two years amid muted demand and ample supplies.
The so-called OPEC basket, a weighted average of the main grades produced by the Organization of Petroleum Exporting Countries, slipped to $89.37 a barrel yesterday, the group’s Vienna-based secretariat said by e-mail today. It’s the first time their reference price has dropped below $90 since June 25, 2012………………………………………..Full Article: Source

IMF forecasts weigh on oil

Posted on 09 October 2014 by VRS  |  Email |Print

Oil prices fell further in Asian trade on Wednesday on demand concerns after the International Monetary Fund (IMF) cut its the global economic growth forecasts, analysts said. The US benchmark, West Texas Intermediate for November delivery, was down 35 cents at a 17-month low of $88.50 a barrel in late-morning trade and Brent crude eased 36 cents to $91.75 - lows not seen since mid-2012. Both contracts tumbled on Tuesday.
Singapore’s United Overseas Bank said in a note that prices were being “pressured by reduced economic and demand growth forecasts”. The IMF on Tuesday said the global economy would grow 3.3 percent this year, down 0.1 percentage point from July’s estimate and 0.4 points off its April forecast………………………………………..Full Article: Source

Saudi Arabia absorbs lower oil prices

Posted on 09 October 2014 by VRS  |  Email |Print

As the price of Brent crude continues its seemingly relentless slide – down more than 20 per cent since a mid-June high of $115 a barrel to $90 on Wednesday – a number of conspiracy theories have started to do the rounds.
Most focus on Saudi Arabia – Opec’s largest producer – and its apparent reluctance to cut production in any meaningful way to support the oil price. Before we examine them, some context………………………………………..Full Article: Source

Can Saudis beat North Dakota in an oil price war?

Posted on 09 October 2014 by VRS  |  Email |Print

With oil prices tumbling — and dragging gasoline prices at U.S. pumps further below $4 a gallon — investors wonder if Saudi Arabia will cut production in an effort to stop the slide. Don’t count on it.
In a note, commodity strategists led by Seth Kleinman at Citi argue that the Saudis aren’t likely to throttle back output, in part because they apparently “think that they can win any price war” with U.S. shale producers. In other words, Saudi producers are playing a long game, confident that “full cycle” shale production costs are considerably more than their own………………………………………..Full Article: Source

So you want to control PGM prices…

Posted on 09 October 2014 by VRS  |  Email |Print

Central banks buying and selling platinum and palladium to control prices: it’s the least silly idea circulating in the bid to boost platinum prices. In case you missed it, ahead of a Russia-South Africa meeting a month or so from now, Sergei Donskoi, Russia’s Minister of Natural Resources, suggested the two countries buy the metal through their central banks to affect prices, according to a Bloomberg report on Tuesday.
Consider the main alternative: platinum and palladium miners getting together to form a true cartel. Here the PGM houses would have to coordinate and control production, somehow addressing the politically thorny issue of unprofitable shafts; stick to said production plans; and then agree, presumably, only to sell for a fixed price………………………………………..Full Article: Source

Chinese alumina prices rangebound as market returns from holidays

Posted on 09 October 2014 by VRS  |  Email |Print

The spot alumina price in China’s Henan was rangebound Wednesday at Yuan 2,860/mt ($465/mt) for 70:30 cash and credit payment terms, unchanged from September 30, as the market returned from an extended break from October 1-7 to celebrate National Day.
On Wednesday, Henan refiners’ offers remained at Yuan 2,900/mt cash, with tradable levels pegged at Yuan 2,850-2,900/mt cash to partial credit terms. Spot trade was lacking as market participants took a wait-and-see attitude on their first day back, especially in view of weaker domestic aluminum prices………………………………………..Full Article: Source

Is there a reason to fear downturn in commodity prices?

Posted on 08 October 2014 by VRS  |  Email |Print

With few exceptions, commodity prices have fallen sharply in recent months, to their lowest levels in over a year. Relative to stock market indices, broad commodity indices are now at their lowest levels since the late-1990s dot com boom.
But key commodity price ratios, such as those between precious and industrial metals, are already at levels associated with financial crises such as that of 2008. In other words, there is already ‘blood on the commodity streets’, presenting investors and commodity traders with potentially attractive opportunities………………………………………..Full Article: Source

Oil Prices Drop on Weaker Demand Forecasts

Posted on 08 October 2014 by VRS  |  Email |Print

U.S. oil prices fell to fresh multi-month lows Tuesday as economic data and forecasts suggested slower demand growth next year than previously expected. Weak oil demand, particularly in Europe and Asia, has weighed on oil prices in recent months, as global supplies have remained ample and producers have had to cut prices to lure buyers.
On Tuesday, the International Monetary Fund lowered its global economic growth outlook by 0.2 percentage point to 3.8%. Earlier in the day, German factory data showed a 4% slump in August, well below expectations for a 1.5% decline. Prices fell further midday after the U.S. Energy Information Administration cuts its forecast for global oil-demand growth and oil prices in 2015………………………………………..Full Article: Source

Iran says no plan for OPEC emergency meeting on price fall

Posted on 08 October 2014 by VRS  |  Email |Print

Iran Oil Minister Bijan Zanganeh said on Tuesday that OPEC has no plans to hold an emergency meeting to discuss the recent slide in oil prices, Iran’s oil ministry news agency Shana reported. Brent crude oil fell towards $92 a barrel on Tuesday, pushing towards 27-month lows as weak demand and ample supply outweighed the price support from a weaker dollar.
Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015. “For the moment, there is no plan for an OPEC emergency meeting,” Shana quoted Zanganeh as saying………………………………………..Full Article: Source

Palladium, Platinum Gain After Recent Slide

Posted on 08 October 2014 by VRS  |  Email |Print

Platinum and palladium futures rose Tuesday, as traders swooped in to take advantage of beaten-down prices in the precious metals. Palladium for December surged 2.7%, the biggest one-day gain for the most actively traded contract since Oct. 13, 2013. The contract ended up $20.90 at $787 a troy ounce on the Comex division of the New York Mercantile Exchange.
Platinum for January delivery, the most actively traded contract, settled up $12.70, or 1%, at $1,261.90 a troy ounce. Both metals, which are used primarily as a component in auto exhaust filters, have been pummeled in recent months, as an absence of growth in Europe and an economic slowdown in China sparked fears of weaker car demand. Platinum is down 17% from its highs of the summer, while palladium is off 15%………………………………………..Full Article: Source

Australia’s Hockey Says Falling Commodity Prices to Hurt Budget

Posted on 07 October 2014 by VRS  |  Email |Print

Falling commodity prices will hurt Australian government efforts to rein in its budget deficit, spurring possible new savings measures, Treasurer Joe Hockey said. “Lower commodity prices in iron ore and coal are going to have an impact on our budget bottom line,” he said in an interview in New York. “There are many variables at play but there will be a negative impact.”
Iron ore has fallen 41 percent in China this year, according to Metal Bulletin, while steelmaking coal is trading at the lowest level in six years. The government aims to bring the budget back to surplus over the medium term after recording a deficit of A$48.5 billion ($42.5 billion) for the 12 months that ended June 30, Hockey said last month………………………………………..Full Article: Source

Long-term Forecast for Commodity Prices and Mining Industry Funding

Posted on 07 October 2014 by VRS  |  Email |Print

Rising global scarcity of resources – metals, minerals and energy – that an ever-increasing human population uses every day to sustain its unsustainable lifestyle, has been the most important topic since the burst of the dotcom bubble in 2000. The reason is simple: we live on a planet with a distinctly finite resource base and a rapidly growing population.
For over the last twelve years supply has struggled to keep pace with demand. Yet we experience a collective breakdown among junior miners of epic historical proportions. Confused investors have been questioning their portfolio strategies and have withdrawn their money from “value in the ground” to re-invest it into scarily overvalued internet companies with questionable earnings and even more precarious business models built on promises of more bites and bytes………………………………………..Full Article: Source

As crude oil prices tumble, why isn’t gas cheaper?

Posted on 07 October 2014 by VRS  |  Email |Print

Despite cheap crude oil prices and a seasonal dip in the cost of gas, Canadians are not seeing a big discount at the pumps because of a backlog at the country’s largest refinery. The cost of a barrel of crude oil was US$101.70 on Sunday – more than $5 cheaper than it was on the same day last year. But gas in many Canadian cities is actually more expensive now because of refinery issues, experts say.
“Gasoline is made from crude oil and crude oil needs to be refined,” EnPro chief petroleum analyst Roger McKnight told CTV News. McKnight said that while Canada has a strong supply of cheap crude oil, its largest refinery has been slow to turn that crude into gasoline, meaning the gas supply isn’t as plentiful………………………………………..Full Article: Source

Why the oil price decline is failing to boost Europe

Posted on 07 October 2014 by VRS  |  Email |Print

Forget quantitative easing by the European Central Bank. Surely the precipitous oil price decline in the last couple of weeks will finally be the catalyst to give the down-trodden European economy the big boost it needs. I mean, after three years of prices north of $100 a barrel surely a big cut in the European energy bill will provide the stimulus effect that ECB President Mario Draghi could only dream of?
Well, I’m afraid it appears there will be no energy-induced bonanza as, like many other peculiar aspects of the European economy, consumers will hardly see the benefits of market falls in commodities………………………………………..Full Article: Source

Higher oil prices coming in 2015?

Posted on 07 October 2014 by VRS  |  Email |Print

Let’s kick off this last quarter of 2014 right. See, this is the quarter when we get to see those thousand page reports on the forecasts for 2015. This is when all of those overpaid commodity analysts get to tell the trading community how it’s going to be. They’ll throw out charts and statistics that are going to back each other up. We’ve already heard about declining demand and $80 oil.
How the world is going to grind to a halt, U.S. oil production is going to become unprofitable and we’ll be once again leaning on the great and powerful OPEC to be the best barrel out there. Hold on there Cassandra. First off, we’d raise tariffs on foreign imports before we would let our pride and joy of US crude oil production fall apart………………………………………..Full Article: Source

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