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Goldman puts end date on commodities slump

Posted on 29 January 2015 by VRS  |  Email |Print

The light at the end of the tunnel for commodities may be but one year away. Goldman Sachs is sceptical that there will be any gains for commodities over the next three months, but is much more optimistic there will be gains over the next 12 months. In the short-term, things could get worse.
“Despite the large declines in commodity prices, we see risks as still skewed to the downside over the near-term,” Goldman Sachs advised. Much is down to oil. The plunge in oil prices will weigh on investment indexes based on commodities in the short-term. Until oil settles or starts to rise, there will be downward pressure in copper and gold markets, according to the bank………………………………………..Full Article: Source

Barclays, Goldman forecast bearish first half for oil prices

Posted on 29 January 2015 by VRS  |  Email |Print

Barclays Plc and Goldman Sachs Group Inc issued even more bearish forecasts for oil prices on Wednesday, predicting no significant recovery in the first half of 2015.
Barclays slashed its 2015 Brent crude oil price forecast to $44 a barrel from $72, while Goldman said it expected prices for West Texas Intermediate crude to trade close to $40 per barrel for most of the first half of 2015………………………………………..Full Article: Source

Goldman Downgrades Commodity Outlook as Energy, Metals Tumble

Posted on 28 January 2015 by VRS  |  Email |Print

Goldman Sachs Group Inc. downgraded its three-month commodity outlook to underweight as mounting global supply gluts sent energy and metals prices tumbling this year. There is a greater risk that raw material prices may drop in the near term than rise, Goldman strategists and analysts including Christian Mueller-Glissmann, Peter Oppenheimer and Jeffrey Currie wrote in a research report.
The Bloomberg Commodity Index of 22 components reached a 12-year low this week, with crude oil, hogs and copper leading losses in 2015. Inventories of grains, metals and energy are rising after a decade-long bull market for commodities spurred miners, drillers and farmers to increase production………………………………………..Full Article: Source

Goldman cuts base metal price forecasts, ups gold

Posted on 27 January 2015 by VRS  |  Email |Print

Goldman Sachs Group Inc on Friday slashed its 2015 price forecasts for several base metals including copper and aluminium while raising its estimate for gold by $62 per ounce. “The primary reason for the changes to our forecasts is cost deflation – driven by a combination of actual and anticipated U.S. dollar strength, cheaper energy and other input costs, and our expectation of an improvement in mining productivity,” Goldman Sachs said.
Weaker-than-expected Chinese and European demand has also contributed to the deflationary environment, it added. Goldman cut its 2015 average copper price forecast to $5,542 per tonne from $6,400, and aluminium to $1,788 per tonne from $2,075………………………………………..Full Article: Source

All of the major commodities may fall in price this year, World Bank says

Posted on 23 January 2015 by VRS  |  Email |Print

This year could mark the rare occurrence when all of the nine major commodity price indexes decline, according to a World Bank forecast released Thursday. The latest report on commodities comes at a time when oil prices have seen a 55% drop over the past seven months, only topped by the 75% drop during the Great Recession, and the 67% drop from November 1985 to March 1986.
John Baffes, senior economist in the World Bank’s development prospects group, says he hasn’t seen a decline in all of the major commodities simultaneously in at least the past 12 years. Though changes in index composition make comparisons difficult, the last time there was the simultaneous decline could have been the Asian financial crisis or the downturn in 1984 and 1985………………………………………..Full Article: Source

Commodities explained: The price-supply disconnect

Posted on 22 January 2015 by VRS  |  Email |Print

The commodities cycle is all about supply and demand responding to prices. To put it very simply, as prices rise companies invest and supply increases. Prices then fall, which leads to production cuts, and eventually demand increases, pushing up the market and the cycle starts all over again.
That is, at least, the theory. In practice the price signal usually takes time to take effect, especially in a market downturn. Although there are signs of oil producers responding to price declines, in some other commodities, such as metals, coal and sugar, the reaction has not been immediate………………………………………..Full Article: Source

IEA economist sees upward pressure on oil prices by year-end

Posted on 22 January 2015 by VRS  |  Email |Print

Oil prices will face upward pressure by the end of the year, the chief economist of the International Energy Agency (IEA) said on Wednesday, as a fall of more than 50 percent in the price of crude since last June is expected to eventually curtail some production.
Fatih Birol of the IEA was appearing on a panel with OPEC Secretary General Abdullah al-Badri at the World Economic Forum in Davos, Switzerland. Badri argued that OPEC oil producers were right not to cut production despite the price fall………………………………………..Full Article: Source

Commodities Are Pulling Chile And Brazil Lower

Posted on 19 January 2015 by VRS  |  Email |Print

For much of the past several months, investors have been keeping a close eye on plunging commodity prices and trying to decipher how lower prices will influence the value of their investments. South America is rich in oil and base metals, commodities that have been particularly hard hit recently, and the region is popular for investors interested emerging markets.
In the article below, we’ll take a look at several key exchange traded funds (ETFs) that are used by traders to track the performance of primary South American markets and see if the bottom is priced in or whether the momentum will continue to send prices lower………………………………………..Full Article: Source

Commodities Explained: Qingdao

Posted on 19 January 2015 by VRS  |  Email |Print

Qingdao is a port city in China famous for its Tsingtao brewery, but the name continues to cast a long shadow over the global metals market. Here’s why. What has happened?
After reports emerged last May alleging a fraud in the city’s warehouses, some of the world’s largest banks have been scrambling to assess the damage. That spurred a flurry of lawsuits, with a judgment due in the first case between Mercuria, a commodities trader based in Switzerland, and Citigroup, this month. Citi argues it is owed more than $270m………………………………………..Full Article: Source

December Sees Further Consolidation in Commodity Markets

Posted on 16 January 2015 by VRS  |  Email |Print

Commodities were lower in December, largely characterized by fundamental factors, according to Credit Suisse Asset Management. The Bloomberg Commodity Index Total Return performance was negative for the month, with 16 out of 22. Index constituents trading lower. Credit Suisse Asset Management observed the following: Energy was the worst performing sector, down 22.06%, led lower by Natural Gas.
Crude oil and petroleum products also declined due to increasing production amid expectations for weaker oil demand growth. Livestock declined 4.84%, led lower by Lean Hogs, as cheaper feed costs allowed farmers to achieve heavier hog weights, which increased pork supply expectations throughout the period. Industrial Metals ended the period 4.34% lower. Weak economic data out of China, including lower-than-expected Industrial Production data for November, heightened demand concerns for base metals. (Press Release)

Commodities explained: Contango

Posted on 16 January 2015 by VRS  |  Email |Print

The oil price plunge over the past several months has spooked the world’s biggest producer countries and energy companies. But those traders who buy and sell physical barrels of oil, such as Vitol and Trafigura, have spotted a moneymaking opportunity. It’s all about “contango”.
When the current price of a commodity, such as oil, is lower than prices for delivery in the future, the market structure in industry jargon is known as “contango”. This means it is attractive for traders to buy oil now at cheaper rates, store it, either on land or at sea, and sell it in time to come for higher prices and make a big profit. They lock in the profits by buying physical oil and selling forward on the futures market………………………………………..Full Article: Source

UBS lower 2015 gold price forecast, others also revised downward

Posted on 16 January 2015 by VRS  |  Email |Print

UBS has downgraded its average gold price forecast for gold largely because of greater downside risks stemming from lower oil prices and the implied absence of an inflation threat, it said. The broker lowered its 2015 gold price forecast to $1,190 from $1,200 – the spot metal price was last at a little-changed $1,228/1,228.70 per ounce.
“While the expected price direction remains the same, the magnitude of our previous price expectations was too aggressive and needed to be revised lower,” it said in a release on Thursday. “Fed [monetary policy] normalisation and dollar strength are considerable hurdles for gold, but reduced market length and the fact that much of the adjustment had already been made in the last couple of years should help limit the force behind a move lower,” it added………………………………………..Full Article: Source

ANZ: Falling Commodity Prices Will Not Help Global Growth

Posted on 15 January 2015 by VRS  |  Email |Print

ANZ’s head of market strategy Richard Yetsenga reckons there is more going on in global commodities than just the dynamics of supply and demand. He says even though there has been a big focus on the interaction of supply and price in the big price crashes of iron ore and crude oil, the broad-based nature of the commodity rout means US dollar liquidity is playing a big part in the falls.
Yetsenga says: While the focus in the past year has largely been on individual commodities — iron ore, coal, oil and increasingly copper — it has become a much broader story than that………………………………………..Full Article: Source

Is a global economic recession coming? Copper price say ‘yes’

Posted on 15 January 2015 by VRS  |  Email |Print

The market for copper, a metal that two years ago was being stolen by thieves looking for big profits, is crashing – the latest in a string of commodities nosedives that have experts worried about the broader implications for the global economy. The copper market crashed overnight to its lowest level since the middle of the financial crisis in 2008, fueling fears that the global economy is slowing more sharply than many experts had anticipated.
Wednesday’s drop is the sixth consecutive decline in copper prices. Currently trading at around $5,560 a ton, the prices are causing significant pain to mining companies like Glencore, whose stock responded to the copper crash by hitting a record low………………………………………..Full Article: Source

Global Economic Prospects to Improve in 2015, But Divergent Trends Pose Downside Risks, Says WB

Posted on 14 January 2015 by VRS  |  Email |Print

Following another disappointing year in 2014, developing countries should see an uptick in growth this year, boosted in part by soft oil prices, a stronger U.S. economy, continued low global interest rates, and receding domestic headwinds in several large emerging markets, says the World Bank Group’s Global Economic Prospects (GEP) report.
After growing by an estimated 2.6 percent in 2014, the global economy is projected to expand by 3 percent this year, 3.3 percent in 2016 and 3.2 percent in 2017 [1], predicts the Bank’s twice-yearly flagship. Developing countries grew by 4.4 percent in 2014 and are expected to edge up to 4.8 percent in 2015, strengthening to 5.3 and 5.4 percent in 2016 and 2017, respectively………………………………………..Full Article: Source

Why Africa is becoming less dependent on commodities

Posted on 12 January 2015 by VRS  |  Email |Print

For decades commodities have shaped Africa’s economic growth. When prices were high, growth was good; when prices dipped, so did the continent. But that is slowly changing. Despite big commodity-price falls this year—oil is down by 50%—the continent will probably grow by 5% in 2015 (and more in the following years). While lots of African currencies lost value in 2014, they have performed much better than during other periods when commodity prices were falling.
Few African countries will fall into recession in 2015—unlike other commodity exporters such as Russia and Venezuela. Why is Africa doing better than many expected? Two reasons stand out. First, the continent’s economic growth is coming from other places. Governments have worked hard to make life easy for investors. Second, many African governments are better at managing the inevitable booms and busts of commodity markets………………………………………..Full Article: Source

Commodities may trade flat in 2015, steady upturn in 2016: SMC Global

Posted on 12 January 2015 by VRS  |  Email |Print

Commodities are expected to trade flat in 2015 but in 2016 it should take slow but steady upturn on expected positive growth in world economy, according to an annual report by SMC Global. In the coming days, deflation is the bigger global risk. Though the latest fall in commodities curb the import bill of many countries, any further growth in economy may assist commodities to build base at current levels, the report said.
IMF has forecast for 2015 global growth to 3.2%. As regards, U.S is expected to rise from 2% GDP growth in 2014 to 3.2% by 2016, while the Eurozone is expected to stabilize at 1% growth in 2015 and 2016. Japan’s GDP is forecast to rise to 1.6% growth by 2016, while India is expected to post a rapid pickup, to 7.7% by 2016………………………………………..Full Article: Source

Soft outlook for commodities in 2015: Analysts

Posted on 12 January 2015 by VRS  |  Email |Print

2015 looks to be a somewhat lacklustre year for commodities - global demand remains weak while an appreciating US dollar makes them more expensive. Palm oil prices are being supported by a supply shock, but analysts said they expect prices to follow in trend with other commodities.
With China’s growth on a moderating trend, global demand for commodities appears to be softening. Analysts said this, coupled with a supply glut - particularly in crude oil - would keep commodity prices low in the near-to-mid term………………………………………..Full Article: Source

Facts and fantasies about commodities

Posted on 09 January 2015 by VRS  |  Email |Print

Commodities were the worst performing asset class for the third year running in 2014. Investors, including some of the world’s largest pension funds, have seen billions of dollars of wealth disappear as a result of investing in commodity index products over the last decade.
So it is essential to understand what went wrong to help prevent a similar problem recurring in future. “Facts and fantasies about commodity futures,” first published in 2004 by Gary Gorton and Geert Rouwenhorst, proved one of the most influential research papers in 21st century finance………………………………………..Full Article: Source

The commodities outlook for 2015

Posted on 08 January 2015 by VRS  |  Email |Print

Gold and palladium seen flat, upside potential in platinum and palladium. It will be another four or five years before commodity prices enter their next cycle and we start seeing an upward trend in prices again, says Cadiz Corporate Solutions Mining Specialist Peter Major.
Last year saw most commodities finish below their January starting price and, with the global economic growth outlook showing minimal upturn, there will be more of the same in 2015. “I don’t see gold going up. I definitely don’t see palladium going up. I think silver, zinc and lead look a bit cheap and copper is neutral to slightly pricy. But everybody is still happy to produce copper at current prices,” says Major………………………………………..Full Article: Source

China’s slowdown will see commodities falling 10pc in 2015

Posted on 05 January 2015 by VRS  |  Email |Print

IHS forecasts another tough year for commodities prices as China misses economic growth targets. If 2014 goes down as an “annus horribilis” for the commodities industry, few pundits are betting that prices will improve significantly over the next 12 months.
Across the board, from industrial metals through to soft commodities and oil, prices have dipped sharply over the last year as a combination of weakening demand growth and excess supply became a common theme across the entire sector………………………………………..Full Article: Source

Lead Outlook 2015: Another Small Deficit Expected

Posted on 05 January 2015 by VRS  |  Email |Print

2014 was a tough year for many metals, but fortunately for lead market participants, the base metal’s 2015 outlook is looking pretty positive. Case in point: the International Lead and Zinc Study Group predicts that demand for refined lead will increase by 2.1 percent in 2015, hitting 11.6 million tonnes, while refined lead output will grow by 2.2 percent, reaching just 11.5 million tonnes.
The organization thus anticipates a 23,000-tonne lead deficit in 2015, just slightly less than the 38,000-tonne deficit it sees coming in 2014. Similarly, a recent Reuters poll shows that analysts believe lead will sell for $2,387 per tonne in 2015 — that’s a year-over-year rise of 11.5 percent………………………………………..Full Article: Source

Commodities will continue to struggle in 2015: Credit Suisse

Posted on 02 January 2015 by VRS  |  Email |Print

Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report. Commodity prices fell this year and markets are still facing oversupply, commodity strategy analyst Stefan Graber noted.
He said that the oversuppy was due to “excessive” capital expenditure over the past few years. Since demand for commodities does not seem to be picking up, prices will have to fall further until production declines, he said, adding: “As commodity projects have long lead times, this process will take time.”……………………………………….Full Article: Source

Commodities outlook 2015: Economic prospects

Posted on 23 December 2014 by VRS  |  Email |Print

Following a number of years of sluggish performance, the UK economy finally seems to be heading in the right direction. But consumers continue to feel the pinch on spending, and with the European economy still depressed, selling into both domestic and export markets remains challenging, says Richard King, head of Andersons’ business research.
UK GDP growth improved to an estimated 3% in 2014 – and is forecast at 2.6% in 2015. “While this growth is good news, it may prove problematic to agriculture in the form of a stronger pound and bank base rate increases,” says Mr King………………………………………..Full Article: Source

Oil price drop to persist, help global growth: IMF

Posted on 23 December 2014 by VRS  |  Email |Print

The recent drop in oil prices should persist, helping to boost global economic activity by up to 0.7 percentage points next year, two senior IMF economists wrote in a blog on Monday. Brent prices have fallen more than 46 percent since the year’s peak in June of above $115 per barrel, sped up by the November decision of the Organization of Petroleum Exporting Countries (OPEC) not to reduce production.
Saudi Arabia has also convinced its fellow OPEC members it is not in the group’s interest to cut oil output, however far prices may fall, the kingdom’s oil minister said………………………………………..Full Article: Source

Global economy growth likely to be weaker than 2014: QNB

Posted on 23 December 2014 by VRS  |  Email |Print

As 2014 comes to an end, the global economy shows signs of weakness with significant downside risks. Some of these risks are likely to materialise next year, leaving the global economy in worse shape than in 2014, QNB said in its Economic Commentary yesterday. It made five predictions that will expected to shape the global economic outlook for 2015 and beyond.
“Looking back, our expectations for 2014 were for a moderate recovery in the world economy that would enable an orderly exit from US Quantitative Easing (QE) and a resumption of global growth to its pre-crisis levels. The reality turned out to be quite different,” the Economic Commentary said………………………………………..Full Article: Source

Amid gloom, some commodities show mettle

Posted on 22 December 2014 by VRS  |  Email |Print

The year 2014 has been a forgettable one for most commodities with many such as crude oil, copper, steel, rubber and cotton seeing their prices head relentlessly south. China cutting back on commodity imports, Europe and Japan slipping again on growth, and the US Fed rolling back its easy money policy affected all commodities. But amidst all the gloom, a few bucked the trend.
From being among the worst performing metals last year, nickel, used mainly for making stainless steel, emerged as one of the top gainers of 2014. Following the Indonesian government’s ban in January on export of unprocessed nickel ore, supplies from the world’s largest producer shrank drastically………………………………………..Full Article: Source

Global agri-commodities prices likely to remain volatile in 2015

Posted on 16 December 2014 by VRS  |  Email |Print

Agricultural commodities are likely to remain volatile globally in 2015, with strong buying support on lows to keep prices elevated in the first half. However, global oversupply could pull these down in the second half.
A Rabobank study says the fundamentals in agri commodities appear more balanced through 2015, resulting in narrower trading ranges for many commodities versus 2014. On the demand side, growth has slowed in recent years. However, lower price levels should now encourage consumption growth, which will support prices. However, a strengthening dollar, uncertain Chinese demand growth, slowing biofuel demand and weakness in crude oil prices might spoil the party………………………………………Full Article: Source

Rabobank issues 2015 commodity market outlook

Posted on 15 December 2014 by VRS  |  Email |Print

Agriculture financing giant Rabobank has published its outlook pertaining to global commodity markets in 2015, looking at issues of demand, supply and pricing across international commodities and forecasting a 12-month price outlook for 12 major commodities.
In the report, the bank’s Agri Commodities Markets Research analysts say fundamentals in the agri commodity markets appear more balanced through 2015, but they expect narrower trading ranges for many commodities versus 2014………………………………………..Full Article: Source

3 Things to Keep in Mind About Falling Oil Prices

Posted on 09 December 2014 by VRS  |  Email |Print

Ten years ago, the kind of steep drop in oil prices we’ve seen in recent weeks would have been cause for unmitigated celebration. Economists almost universally analogized higher oil prices to a tax, with the proceeds largely going abroad to OPEC oil-producing countries. So any reduction in oil prices was viewed like a taxcut. Who could be against that?
It’s an indication of how much has changed in energy markets over the past decade that fallen oil prices are viewed with mixed feelings. Yes, some consumers are understandably happy that gas prices almost everywhere have dropped below $3 a gallon. But others worry that the falling oil prices, now down to the mid-$60s per barrel, and possibly falling to about $60 per barrel, will crimp efforts by U.S. shale oil producers to pump more oil out of existing wells and, worse, induce them to quit looking for more………………………………………..Full Article: Source

The Economic Consequences of Global Oil Deflation

Posted on 09 December 2014 by VRS  |  Email |Print

A new wild card has just been introduced into an already increasingly unstable global economy: a growing world glut of oil and consequent oil price deflation. Since June 2014, the price of high grade (ICE Brent) crude oil has fallen more than 40 percent, declining from around USD$115 a barrel, in January 2014, to just USD$67 a barrel at the end of November.
That’s the lowest since the bottom of the 2009 recession. The price decline has not only been deeper than expected in a normal cyclical correction, but also appears more than just a temporary event. Some predict global oil prices will fall below USD$60 a barrel in 2015, and could potentially fall as low as the USD$40 a barrel collapse that occurred during the 2008-09 recession………………………………………..Full Article: Source

Rare Earth Metals Price Forecast: Will Cerium, Yttrium Demand Boost Future Prices?

Posted on 05 December 2014 by VRS  |  Email |Print

As MetalMiner‘s monthly Rare Earths MMI steadied at a value of 23 in December, we put the Rare Earths “Celebrity Deathmatch” between Jack Lifton and Dudley Kingsnorth on hold. Some interest-piquing information surrounding the rare earth metals price outlook and forecast has come to our attention, via our friend (and Lifton’s colleague) Gareth Hatch of Technology Metals Research.
Recently Gareth covered the rare earths outlook on his blog, specifically from the comprehensive, no-stones-unturned viewpoint of Ryan Castilloux of Adamas Intelligence (573 report pages’ worth!). “2014 marks the dawn of a cautious revival for the rare earth industry,” Castilloux said in a video produced by Hatch and TMR………………………………………..Full Article: Source

Rabobank issues agri-commodity market outlook for 2015

Posted on 04 December 2014 by VRS  |  Email |Print

Rabobank has published its outlook for the global agri commodity markets in 2015, looking at issues of demand, supply and pricing across international agri commodities, and forecasting a 12-month price outlook for 12 major agri commodities. In the report, the bank’s Agri Commodities Markets Research analysts say that fundamentals in the agri commodity markets appear more balanced through 2015, but they expect narrower trading ranges for many commodities versus 2014. On the demand side, growth has slowed in recent years.
However, lower price levels should now encourage consumption growth, which will support prices. Rabobank says key variables to watch in the year ahead are U.S. dollar strength, uncertain Chinese demand growth, slowing biofuel demand, and oil price weakness. Stefan Vogel, global head of Rabobank Agri Commodities Markets Research, said, “2015 will be another interesting year for agri commodities. Macro drivers remain very much in play and price swings from supply and demand shocks are still likely, given that the stocks for most commodities are not yet at levels necessary to provide an adequate buffer.” (Press Release)

CEOs: Economic growth will be weak in 2015

Posted on 03 December 2014 by VRS  |  Email |Print

CEOs from major U.S. companies do not expect strong economic growth in 2015. The Business Roundtable’s fourth-quarter CEO Economic Outlook Index, a composite index of CEO expectations, fell slightly from the third quarter with declines concentrated in capital spending.
The index declined to 85.1 for the fourth quarter, compared with 86.4 in the third quarter. A reading of 50 or above indicates economic expansion and below 50, an economic contraction. The long-term forecast is at 80.3. Gross domestic product in 2015 is expected to grow 2.4 percent, consistent with the CEOs’ 2014 forecast………………………………………..Full Article: Source

The 2015 Metals Outlook Series: Nickel

Posted on 02 December 2014 by VRS  |  Email |Print

The story of nickel is finally one of stability. Since 2005 the me­tal has been wracked by skyrocketing highs and sharp declines that have caused massive job losses and uncertainty that has seen an exodus from the sector by many of the larger players.
Much of this was due to a fall in stainless steel demand, working inversely to the growing demand for construction steel. IBISWorld put it succinctly: “Nickel prices, having reached unprecedented highs prior to the global financial crisis, plummeted as global economic growth slumped in subsequent years.”……………………………………….Full Article: Source

The 2015 Metals Outlook Series: Gold

Posted on 27 November 2014 by VRS  |  Email |Print

Gold has peaked, but the current price schizophrenia of spikes and troughs that have been experienced over the last six months will soon be at an end. However there is still likely to be pain for a number of unproductive gold miners as the commodity price goes through a rationalisation phase operations with high costs per ounce are likely to fall as the market becomes tighter.
But how did we get to this point, and how did the great decade long Bull Run get to its current state, and where will it head in 2015? The rise and fall of the gold market did not happen overnight; and it is not the first time this market has moved this frenetically either…………………………………..Full Article: Source

ANZ Cuts Commodity Price Forecasts on Slowing Chinese Growth

Posted on 14 November 2014 by VRS  |  Email |Print

Australia & New Zealand Banking Group Ltd. trimmed its price projections for commodities including oil, iron ore and nickel next year on slowing growth in China and rising inventories.
The bank cut its forecasts by an average 5.1 percent for next year and 3.8 percent for 2016, analysts including Mark Pervan wrote in a report today. The lender reduced its 2015 iron ore estimate by 22 percent to $78 a metric ton and its Brent crude outlook by 8.2 percent to $92 a barrel…………………………………Full Article: Source

Here’s What A Sustained $20 Drop In Oil Prices Does To The World’s Major Economies

Posted on 13 November 2014 by VRS  |  Email |Print

Oil prices have been tumbling in recent weeks. The price of brent crude fell below $80 per barrel today for the first time in since September 2010. That’s down from around $115 earlier this summer.
A research note from Societe Generale’s Michala Marcussen takes a look at the possible effects of a drop in oil prices on the world economy. She plugged a sustained $20/barrel drop in oil prices into Britain’s National Institute of Economic and Social Research’s NiGEM software, a sophisticated global macroeconomic model, and saw what would happen to global GDP in the following years………………………………………..Full Article: Source

Iron Ore Seen by Citigroup Below $60 as 2015 Forecast Cut

Posted on 12 November 2014 by VRS  |  Email |Print

Iron ore prices will plummet to less than $60 a metric ton next year as global supply increases and demand remains weak, according to Citigroup Inc., which slashed its quarterly forecasts for 2015 by as much as 23 percent.
The raw material will average $72 a ton in the first three months of 2015, down from an earlier forecast of $82, Ivan Szpakowski, an analyst in Hong Kong, wrote in a report dated today. The second-quarter forecast was cut to $65 from $80, while the third was reduced to $60 from $78 and the figure for the final three months was put at $62 from $78, he wrote………………………………………..Full Article: Source

Commodities Upturn Seen By 2016

Posted on 11 November 2014 by VRS  |  Email |Print

The resources boom may have faded, but the “super cycle” is far from over. That was the message from the Mining 2014 conference in Brisbane, Australia, with analysts forecasting an upturn even as key commodity prices continue to slide.
On Thursday, the price of iron ore dropped to a five-year low of $75.38 per ton in China, continuing a retreat that has seen the key steelmaking ingredient lose nearly half its value this year on a continued supply glut and weaker demand from China. According to Morgan Stanley, oversupply will drive the price of spot iron ore to $70 a ton by year-end, with the world’s biggest miners continuing to expand output………………………………………..Full Article: Source

Gold will get downside support from physical buying: Barclays

Posted on 05 November 2014 by VRS  |  Email |Print

In the near term, physical buying is likely to offer some support on the downside. The prospect of firmer rates, coupled with an expectation for a stronger dollar, present significant headwinds for gold and are likely to skew risks to the downside, a report by Barclays said.
Barclays has given a price forecast of Q4 2014:$1220/oz, 2014: $1271/oz, 2015: $1180/oz. Although the end of the asset purchase program was widely anticipated, the hawkish tilt was not, and the gold market again reacted negatively to the prospect of rate hikes. Gold has struggled to battle a stronger dollar and last week’s reaction underscores gold’s sensitivity to rising rates………………………………………..Full Article: Source

What Next for the Gold Price?

Posted on 29 October 2014 by VRS  |  Email |Print

Gold is often the gateway ETF for many investors eager for exposure to the perceived safe haven. But what should we expect from the precious metal in the future? Commodity ETPs have seen their largest inflows in six weeks, with bargain-hunters attracted by depressed valuations. Inflows into physical gold reach six week high.
Several commodities including Brent, platinum, palladium and most industrial metals rose last week rebounding on the back of the better investor sentiment toward commodities. With many commodities trading so close to their marginal cost of production, we believe that prices cannot fall much lower without triggering a supply response. Better-than-expected GDP and industrial production data from China, the world’s largest consumer of commodities, also helped boost cyclical commodity prices………………………………………..Full Article: Source

Goldman slashes its crude oil price forecasts by US$15 for 2015

Posted on 27 October 2014 by VRS  |  Email |Print

Goldman Sachs has cut its price forecast for Brent and West Texas Intermediate by US$15 a barrel for the first quarter of 2015 because rising production in non-OPEC countries outside North America is expected to outstrip demand.
The U.S. investment bank slashed its forecast for WTI to US$75 a barrel from US$90 and for Brent to US$85 a barrel from US$100, it said in a research note on Sunday. The bank’s analysts expect WTI to fall to as low as US$70 a barrel and Brent to US$80 a barrel during the second quarter of next year, when it expects oversupply to be the most pronounced………………………………………..Full Article: Source

5 reasons oil prices aren’t rising

Posted on 27 October 2014 by VRS  |  Email |Print

The old oil bull market, the one where oil went to $140 per barrel, now feels like ancient history. Oil prices have recently been challenging lows not seen since 2012. Continuously rising oil prices not only translate to higher prices at the pump but also to higher prices of goods because of the increased production and transportation costs. But now the economy is dealing with steadily falling oil prices in recent months, which can contribute to deflation — itself a source of concern.
24/7 Wall St. wanted to focus on five key reasons the price of oil is not rising. There are, of course, more than just five reasons for oil prices not rising. We avoided the role of currency movements, which have lately added a new curve ball — the dollar has rallied against major currencies, and oil is priced in dollars. Another factor we have not explored is Iran. If Iran’s energy infrastructure comes back online in full, this could further add to downward pressures on oil prices………………………………………..Full Article: Source

Bank of Canada to issue report on the effect of low oil prices

Posted on 23 October 2014 by VRS  |  Email |Print

The Bank of Canada’s latest read on the national economy is expected to explore a pressing question Wednesday: How much are low oil prices affecting the country’s bottom line? The price of oil recently hit a two-and-a-half year low, a sharp fall that is prompting Canadian policy-makers and the corporate world alike to reflect on the potential risks of lower prices.
The central bank has indicated it would attempt to measure the impact of tumbling prices in its quarterly monetary policy report, scheduled for release on Wednesday………………………………………..Full Article: Source

Gold demand up, more buying needed:Barclays

Posted on 22 October 2014 by VRS  |  Email |Print

Given that the Diwali holiday is this week, ahead of the wedding season, Gold demand is expected to improve, potentially offsetting macro headwinds in the near term. However, buying needs to pick up materially to overwhelm the gold-negative external drivers, a report by Barclays said.
Broad risk reduction amid tumbling equity markets, the sharp decline in US 10y Treasuries, and weaker-than-expected US retail sales have fueled uncertainty and aided gold’s bounce. The gold-supportive macro environment has seen gold extend its gains above the $1200/oz mark as the dollar has weakened, the St Louis Fed discussed the possibility of further stimulus, and, importantly, demand picked up amid the seasonally strong period for consumption………………………………………..Full Article: Source

Crude Falls on OPEC Production Concerns

Posted on 21 October 2014 by VRS  |  Email |Print

U.S. and global crude benchmarks ended lower Monday amid choppy trading and concerns that member nations of the Organization of the Petroleum Exporting Countries will maintain high production levels in a bid to compete for market share despite growing global crude supplies.
Light sweet crude futures for front-month November delivery ended the day down 4 cents at $82.71 a barrel on the New York Mercantile Exchange. The contract was steady in early trading but slipped through midmorning, and stabilized in the afternoon. November futures expire Tuesday and most of the volume in the market has moved forward into the December contract, which ended down 15 cents at $81.91 a barrel………………………………………..Full Article: Source

IEA reduces global oil demand forecast again on slower economic growth

Posted on 21 October 2014 by VRS  |  Email |Print

The International Energy Agency’s Oil Market Report (OMR) for October continues to reduce its forecast of global oil demand for 2014 by 200,000 b/d from the previous month, to 92.4 million b/d, in line with lower expectations of economic growth and the weak recent trend. Annual demand growth for 2014 is now projected at 700,000 b/d, rising tentatively to 1.1 million b/d in 2015, as the macroeconomic backdrop improves.
In its October World Economic Outlook, the International Monetary Fund (IMF) cut its forecast of economic growth for 2014 and 2015 for the third time this year to 3.3% and 3.8% (vs. July’s 3.4% for 2014 and 4% for 2015) respectively, led by revisions for Europe, China, Brazil, and Russia………………………………………..Full Article: Source

IEA reduces global oil demand forecast again on slower economic growth

Posted on 21 October 2014 by VRS  |  Email |Print

The International Energy Agency’s Oil Market Report (OMR) for October continues to reduce its forecast of global oil demand for 2014 by 200,000 b/d from the previous month, to 92.4 million b/d, in line with lower expectations of economic growth and the weak recent trend. Annual demand growth for 2014 is now projected at 700,000 b/d, rising tentatively to 1.1 million b/d in 2015, as the macroeconomic backdrop improves.
In its October World Economic Outlook, the International Monetary Fund (IMF) cut its forecast of economic growth for 2014 and 2015 for the third time this year to 3.3% and 3.8% (vs. July’s 3.4% for 2014 and 4% for 2015) respectively, led by revisions for Europe, China, Brazil, and Russia………………………………………..Full Article: Source

Why are commodity prices falling?

Posted on 20 October 2014 by VRS  |  Email |Print

Abundant supplies and a slowed global economy, especially in China, led to a considerable decline in commodity prices. Moreover, the strong dollar and fiscal stimulus withdrawal in the U.S., sanctions against and by Russia, as well as an increase in oil production were also influential. Bulgaria on Air reports.
The slowdown in Chinese demand for milk powder and a good harvest contributed to the drop, particularly in the foods market. The Food and Agriculture Organization’s (FAO) cereal price index in August dropped by 11.7 percent, in comparison to last year, and by 1.5 percent compared to July. Wheat and corn prices hit a four-year low. Iron-ore hit a five-year low, sugar is the lowest since 2009 and oil the lowest since June 2012………………………………………..Full Article: Source

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