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Goldman Sachs still bearish on gold despite recent price rally

Posted on 09 March 2016 by VRS  |  Email |Print

Goldman Sachs has maintained its bearish view on gold despite the metal’s recent rally alongside other commodities, it said. Gold climbed to its highest in 13 months last week – the yellow metal has been in demand as a safe-haven asset, supported by turbulence in financial markets since the start of the year, the broker said in a note on Tuesday.
This flight to safety pushed the metal into official bull territory, which is defined as a 20-percent move from its recent low. The price has also been boosted by an uninspiring dollar – the dollar index was last lower at 97.03………………………………………..Full Article: Source

While market debates commodities bottom, inflation warnings rise

Posted on 08 March 2016 by VRS  |  Email |Print

Some traders have been ringing the bell for the bottom of the commodities collapse, just as markets are sniffing out the earliest signs of inflation. That’s important since a turn in commodities prices could mean a pickup in inflation, which is already starting to materialize, and that could get the Fed moving faster on interest rate hikes.
Fed funds futures on Monday began to price in a full rate increase for December, for the first time since late January. Futures had been pointing to the first rate hike in March 2017. “Services inflation has remained steady for a while. All you needed was commodities prices to stop going down and that changed the inflation calculation here,” said Peter Boockvar, chief market analyst at The Lindsey Group………………………………………..Full Article: Source

Global politics and economics Oil price prognosis

Posted on 07 March 2016 by VRS  |  Email |Print

Predicting the oil prices is a hundred million dollar question; in literal sense, it’s a game of billions of dollars. This is one of the most difficult tasks, given that there’re too many variables and moving parts on the economic, and more so, on the political fronts. Market punters are not willing to take a view for longer tenors and quote forward rates for larger volumes beyond 2/3 months. The recent phenomenon is surely more political than otherwise.
The similar situation was witnessed almost 30 years back, in 1985-86 when there was oversupply situation whilst demand, and hence prices, remained subdued. The meaningful difference this time round, however, is the enhanced world storage capacity availability - 85 million tons………………………………………..Full Article: Source

Gold overvalued, time to sell: SocGen

Posted on 02 March 2016 by VRS  |  Email |Print

The recent gold price rally looks unsustainable and it’s time to sell, Societe Generale analysts say, taking an opposite view to rival Deutsche Bank that only last week advocated buying the precious metal. Gold prices have rallied 20 percent just two months into 2016 as investors seek refuge from the turbulence in developed equities and emerging markets.
The fear is also prompting investors to trim expectations of further interest rate hikes from the U.S. Federal Reserve this year but the reality is likely more upbeat, according to SocGen………………………………………..Full Article: Source

Gold still a buy, says Deutche Bank

Posted on 01 March 2016 by VRS  |  Email |Print

Gold remains a buy even though it has it has rallied over 16 per cent since the start of the year, according to a note from Deutsche Bank, with global central bank misfires making a strong case for bullion’s safe-haven status.
And in Australian dollars, gold has come within shooting distance of all-time highs, prompting Macquarie Bank to call Western Australia’s gold fields the “golden west”, whose operators were in a “purple patch”. However, while Macquarie predicts Australian dollar gold will break those record highs later this year, it is too late to be buying most gold shares, the bank warned………………………………………..Full Article: Source

This chart suggests Chinese demand for commodities will remain weak in 2016

Posted on 29 February 2016 by VRS  |  Email |Print

Last week we brought you the news that new home prices in the southern Chinese city of Shenzhen soared by more than 50% in the 12 months to January, a figure that put the likes of New York, London and Sydney to shame in terms of annual rates of growth.
However, while prices are ripping higher in Shenzhen, along with other major Chinese centres such as Shanghai and Beijing, the gains elsewhere in the country are nowhere near as strong, doing little to lift sentiment towards the outlook for construction, commodity demand or a broader housing market recovery in China in the period ahead………………………………………..Full Article: Source

French central bank head cautions on oil price impact

Posted on 29 February 2016 by VRS  |  Email |Print

The European Central Bank could extend money printing, the head of France’s central bank told a German newspaper on Sunday, as the long-term impact of low oil prices weighs on euro zone economies.
ECB governors from across the euro zone, including France and Germany, will meet in early March to decide whether to adjust interest rates or extend a scheme known as quantitative easing, creating money to buy government bonds in a bid to revive inflation and boost recovery………………………………………..Full Article: Source

USDA: 2016 to be another bad year for farm commodities

Posted on 26 February 2016 by VRS  |  Email |Print

Commodity prices will not recover this year, the federal government said Thursday in a forecast that will be a blow to producers hoping for a rebound in the slumping farm economy.
The U.S. Department of Agriculture said producers should expect slumping farm income, modest declines in land values and cash rents and a less-than-favorable trade environment. Even so, the USDA declared that the financial health of the agriculture sector is strong because producers took advantage of record harvests and high prices in past seasons to strengthen their bottom line………………………………………..Full Article: Source

Big Banks Cut Oil-Price Forecasts

Posted on 26 February 2016 by VRS  |  Email |Print

Big banks are slashing their outlook for oil and see prices recovering more slowly than previously anticipated as the market remains caught in the grip of a supply glut. A survey of 13 investment banks by The Wall Street Journal foresees Brent crude, the international oil-price benchmark, averaging $39 a barrel this year, down $11 from the survey in January.
The banks see West Texas Intermediate, the U.S. oil gauge, averaging $38 a barrel this year, also down $11 from the previous survey. The banks have cut their price outlook in every survey since August………………………………………..Full Article: Source

BNP Paribas Sticks To Sub-$1000 Gold Forecast For 2016, Despite 17% Rally

Posted on 25 February 2016 by VRS  |  Email |Print

Although some banks have shifted their outlook on gold, as global market uncertainty propelled prices up more than 17.5% on the year, one bank remains firm that prices will move lower. Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, said that the bank is in no hurry to change its forecast and there is still a possibility for gold to drop below $1,000 an ounce.
In January, the firm said that it expects gold prices to average $980 an ounce this year and $860 in 2017; and, Tchilinguirian said that fundamentally nothing has changed. In fact, the latest rally has made selling out of the money call options — the bank’s preferred way to take advantage of a weaker gold market — a lot more compelling, he added………………………………………..Full Article: Source

IMF report urges G20 to prepare global economic stimulus plan

Posted on 25 February 2016 by VRS  |  Email |Print

The Group of 20 nations must plan now for a coordinated stimulus programme to keep a slowing global economy from stalling, International Monetary Fund staff said in a report on Wednesday.
The report was prepared for senior G20 officials who are meeting in Shanghai later this week amid falling equity markets, volatile currencies and signs of economic weakness throughout the world. “The G20 must plan now for coordinated demand support using available fiscal space to boost public investment,” IMF staff said in the report………………………………………..Full Article: Source

Global growth not to pick up on Commodity price slump, China:Moody’s

Posted on 19 February 2016 by VRS  |  Email |Print

Global growth will fail to pick up steam over the next two years as the slowdown in China, lower commodity prices and tighter financing conditions in some countries weigh on the economy, Moody’s Investors Service said in a quarterly report.
The downside risks to Moody’s forecasts for G20 GDP growth of 2.6% in 2016 and 2.9% in 2017 have increased since the rating agency’s last Global Macro Outlook in November. Furthermore, G20 policymakers in some countries have limited fiscal and monetary policy space to boost growth or mitigate these risks………………………………………..Full Article: Source

Commodities glut here to stay? - ANZ

Posted on 17 February 2016 by VRS  |  Email |Print

Analysts at ANZ noted that, overnight, Saudi Arabia and Russia reached a preliminary agreement to freeze their oil output at near-record levels. “This is described by Bloomberg as “the first significant cooperation between OPEC and non-OPEC producers in 15 years”.”
“Qatar and Venezuela are also on board. No cuts in production were agreed, however, given oil producers are battling for long-term market share, which weakens the impact of the agreement significantly, as does the lack of involvement by Iraq and Iran.”……………………………………….Full Article: Source

Goldman Sachs: Short gold on market ‘overreaction’

Posted on 17 February 2016 by VRS  |  Email |Print

Hefty stock market plunges this year have not been justified, according to commodity analysts at Goldman Sachs, who are urging clients to short gold which has found favor during this period of fear and volatility. “Systemic risks from oil, China and negative rates are very unlikely,” a team at the bank, led by Jeffrey Currie and Max Layton, said late Monday.
“Banks have ample liquidity to maintain funding against higher capitalization, the negative macro impacts from low oil prices have likely already played out and are not systemic while the spillovers from China are limited and the U.S. is far from recession.”……………………………………….Full Article: Source

Silver forecast and analysis for Q1 2016

Posted on 17 February 2016 by VRS  |  Email |Print

Silver fell for a third straight year in 2015, falling 12 percent to its lowest since 2009. It continued to come under downward pressure in the fourth quarter, dropping five percent, in a challenging macro environment and amid disappointing industrial demand and poor investment sentiment.
But the metal should enjoy a recovery in the current quarter, trading in a $13.80-14.95 range – a rise that reflects improved investor sentiment – before it faces renewed downward pressure later in 2016 due to weaker industrial demand and lower gold prices………………………………………..Full Article: Source

Strong H2 Uptick In Gold Demand In 2015 - WGC

Posted on 12 February 2016 by VRS  |  Email |Print

The World Gold Council’s latest Gold Demand Trends report for full-year 2015 is now out, utilising data prepared by the London-based precious metals consultancy - Metals Focus.
Unlike the latest supply/demand report from the rival consultancy GFMS, the WGC figures put China as firmly the World No. 1 gold consumer at 985 tonnes as compared with India’s 849 tonnes………………………………………..Full Article: Source

5 new oil market insights from Wood Mackenzie that you need to hear

Posted on 11 February 2016 by VRS  |  Email |Print

Harold “Skip” York told Calgary financial analysts that while there is a lot of health looking 2020+, survival will be challenging until we get there. 1. York said that oil will not return to $110/bbl. “We now think that fundamentally this long-term oil market is about an $80 to $85 world.”
2. Costs are going to come down as producers are forced to become more efficient, driven by a design once, build many approach. 3. “The risk for Canada and Brazil isn’t 2016 or 2017, it’s 2018 and beyond because the project pipeline is empty because you aren’t sanctioning any new projects.” 4. The price of oil will start its recovery this year………………………………………..Full Article: Source

Won’t be surprised to see oil below $20: Goldman Sachs

Posted on 10 February 2016 by VRS  |  Email |Print

Goldman Sachs commodity strategist Jeff Currie sees a potential for oil price to drop below $20 a barrel if storage capacity is breached. “The $20 is based upon what we call cash cost, meaning that once you breach storage capacity, prices have to spike below cash cost because you’ve got to shut production in almost immediately,” he told a TV channel.
“I wouldn’t be surprised (if) this market goes into the teens. But we do know that when we got to that $26-28 range we started to see action. We started to see price volatility turn into fundamental volatility for the first time,” Currie added………………………………………..Full Article: Source

Oil price recovery will be short-lived, says IEA

Posted on 10 February 2016 by VRS  |  Email |Print

A recent rise in oil prices is a “false dawn” and the oversupply of crude is set to worsen, according to the International Energy Agency (IEA). The IEA expects oil stocks to grow by two million barrels a day in the first quarter and 1.5 million barrels a day in the following three months.
In January, Brent crude hit a 13-year low of $27.67. It recovered a bit, but on Tuesday was down 7.2% at $30.50. But that is still a long way from the $112 level reached in June 2014………………………………………..Full Article: Source

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

You won’t see $70 oil until 2018: Morgan Stanley

Posted on 05 February 2016 by VRS  |  Email |Print

Morgan Stanley has downgraded its outlook for oil prices, expecting low prices to persist for longer than previously thought as the supply and demand imbalance looks set to continue for at least another two years.
The bank lowered its average 2016 Brent price forecast to $30 per barrel, down from $49 previously. Morgan Stanley now expects an average price of $40 per barrel in 2017 as oversupply persists, before climbing past $50 by the end the year to average $70 by 2018………………………………………..Full Article: Source

The Science (Or Art) Of Forecasting Oil Prices

Posted on 02 February 2016 by VRS  |  Email |Print

The past few years have greatly encouraged those who consider oil price forecasters to be little more than astrologers (on a good day), but there are some basic lessons that tend to be overlooked amidst all the noise and confusion.
It doesn’t help that today’s news cycle requires constant commentary on oil price movements, as well as predictions short- and long-term, nor that free publicity is available, particularly to those willing to make the most extreme predictions. In fact, a most reasonable forecast can garner attention if the possibility of an extreme movement is included—and it will get the attention………………………………………..Full Article: Source

What volatile markets say about the world economy

Posted on 02 February 2016 by VRS  |  Email |Print

January is usually expected to be a good month for stock markets, with new money gushing into investment funds, while tax-related selling abates at the end of the year.
Although the data on investment returns in the United States actually show that January profits have historically been on only slightly better than the monthly norm, the widespread belief in a bullish “January effect” has made the weakness of stock markets around the world this year all the more shocking………………………………………..Full Article: Source

World Bank and Credit Suisse slash oil price forecast for 2016

Posted on 28 January 2016 by VRS  |  Email |Print

Both the World Bank and Credit Suisse recently reduced its oil price forecast for 2016. This is amid increasing supply of oil and low demand prospects from emerging markets.
While the Washington-based institution forecast crude oil prices at $37 (£26, €34) a barrel for 2016 by using an average of Brent, Dubai and West Texas Intermediate (WTI) oil prices equally weighted, Credit Suisse projected that Brent will average $36.25 a barrel and WTI Crude will trade at a premium of $1.50 to Brent in 2016………………………………………..Full Article: Source

World Bank slashes outlook for 80% of commodity prices

Posted on 27 January 2016 by VRS  |  Email |Print

The World Bank has cut its price forecast for 80 percent of the world’s major commodities as oversupply and weaker emerging market growth prospects weigh on demand. In its latest report, out Tuesday, the bank has cut its 2016 forecast for crude oil prices to $37 per barrel, down from $51 per barrel in its October report, citing the sooner-than-anticipated resumption of exports by the Islamic Republic of Iran and greater resilience in U.S. production.
Oil prices fell by 47 percent in 2015 and are expected to decline, on an annual average, by another 27 percent in 2016, according to the World Bank………………………………………..Full Article: Source

Oil prices to stay near current level throughout 2016, World Bank says

Posted on 27 January 2016 by VRS  |  Email |Print

Bank forecast plays down likelihood of further collapse with average price of oil expected to stabilise below $40 a barrel. The World Bank has slashed its forecast for oil prices this year, saying the cost of a barrel of crude will stay near its current lows for the rest of 2016.
The Washington-based institution said a glut of oil that sent prices crashing by almost half last year and another 27% this month will continue to dominate the market for the next year………………………………………..Full Article: Source

Global oil prices to remain low throughout 2016: analyst

Posted on 27 January 2016 by VRS  |  Email |Print

Global oil prices are expected to remain low in the near future according to analysts, even though the price has lately climbed to about 30 U.S. dollars a barrel. On Monday, the West Texas Intermediate for March delivery moved down 1.85 U.S. dollars to settle at 30.34 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery decreased 1.68 dollars to close at 30.5 dollars a barrel on the London ICE Futures Exchange.
Crude oil prices began to recover when the United States faced a patch of extreme cold weather last week, while Europe raised hopes of more economic stimulus measures………………………………………..Full Article: Source

Reuters Research Says Gold to Rebound in 2016

Posted on 27 January 2016 by VRS  |  Email |Print

Gold demand fell 2 percent last year, GFMS analysts at Thomson Reuters said on Tuesday, but is set to recover in 2016 as U.S. rate hikes arrive more slowly than expected, while concerns over economic growth and yuan weakness stimulate Chinese buying.
In 2016 GFMS sees gold prices, currently near $1,100 an ounce, recovering to above $1,200 an ounce by year-end, and averaging $1,164 an ounce in the full year. Gold demand is expected to grow by 5 percent this year, it said. Chinese consumers concerned about a falling yuan eroding their wealth may seek gold as an alternative store of value, GFMS said………………………………………..Full Article: Source

China is a $US460 bln a winner from the commodities rout

Posted on 25 January 2016 by VRS  |  Email |Print

The pain from the rout in global commodity prices is sweeping through nations from Brazil to South Africa. The biggest beneficiary? Arguably it’s China, the nation often blamed for driving prices lower due to its slowing economic growth. China’s annual savings from the commodities rout amount to $US460 billion, according to calculations by Kenneth Courtis, former Asia vice chairman at Goldman Sachs Group Inc.
About $US320 billion of that is from cheaper oil, with the rest from other energy, metals, coal and agricultural commodities. Benefits are rippling through the economy, pushing down or steadying prices of everything from home heating and petrol prices to the cost of raw materials at factories. That’s also boosting China’s efforts to recalibrate its economic growth model away from a reliance on heavy industries and investment toward consumption and services………………………………………..Full Article: Source

BRICS unlikely to drive commodities demand

Posted on 25 January 2016 by VRS  |  Email |Print

“Another day, another record high in commodity prices,” wrote Goldman Sachs analysts in a May 2006 report in which they said the BRICs – Brazil, Russia, India and China – would continue to fuel demand for a wide range of commodities.
Almost ten years later, the commodities super-cycle is over, the BRICS economies – now including South Africa – are in trouble and the demand prospects for commodities appear bleak. Much of the commodity markets woes are being blamed on slowing growth in China and an oversupply driven by some of the large mining companies’ rush to capitalise on the country’s economic heydays………………………………………..Full Article: Source

The world economy: Who’s afraid of cheap oil?

Posted on 22 January 2016 by VRS  |  Email |Print

Low energy prices ought to be a shot in the arm for the economy. Think again. The world is drowning in oil. Saudi Arabia is pumping at almost full tilt. It is widely thought that the Saudis want to drive out higher-cost producers from the industry, including some of the fracking firms that have boosted oil output in the United States from 5m barrels a day (b/d) in 2008 to over 9m b/d now.
Saudi Arabia will also be prepared to suffer a lot of pain to thwart Iran, its bitter rival, which this week was poised to rejoin oil markets as nuclear sanctions were lifted, with potential output of 3m-4m b/d………………………………………..Full Article: Source

Moody’s cuts oil price estimates as supply glut continues

Posted on 22 January 2016 by VRS  |  Email |Print

Moody’s Investors Service has reduced its price estimates for Brent crude and West Texas Intermediate crude amid continued oversupply in the oil markets and the risk of additional supply from Iran. Moody’s has lowered its price estimate in 2016 for both Brent crude oil, the international benchmark, and West Texas Intermediate (WTI) crude, the North American benchmark, to $33/barrel (bbl). For Brent, this marks a $10/bbl reduction from the rating agency’s previous estimate, and for WTI, a $7/bbl reduction. Moody’s expects that both prices will rise by $5/bbl on average in 2017 and 2018.
“OPEC countries continue high levels of production in the battle for market share, contributing to the current oil glut despite moderate consumption growth by key consumers such as China, India and the US,” said Terry Marshall, a Moody’s Senior Vice President. “In addition, we expect the rise in Iranian oil output this year to offset or exceed production cuts in the US.”……………………………………….Full Article: Source

Citigroup Cuts Commodity Forecasts as Resources Rout Resumes

Posted on 21 January 2016 by VRS  |  Email |Print

Citigroup Inc. cut its commodities forecasts on concern slowing global growth will prolong the time it takes for markets to swing back into balance. Shares of resources companies resumed their drop as raw material prices slid.
Brent crude may average $40 a barrel this year, compared with an estimate of $51 in a November report, while the outlook for nickel was cut 22 percent to $8,450 a metric ton, analysts including Ed Morse wrote in a report received on Wednesday. Gold was a rare bright spot, with Citigroup raising its forecast 7.5 percent to $1,070 an ounce………………………………………..Full Article: Source

Canada needs five years to adjust to commodities rout: central bank

Posted on 21 January 2016 by VRS  |  Email |Print

Canada will adjust to lower commodity prices in three phases over the next five years, with the impact of lower incomes to be felt more strongly later on and economic growth by 2020 being 2 percent lower than it otherwise would have been, according to staff at the Bank of Canada.
Restructuring in the resource sector is the dominant factor in the first phase as collapsing profits prompt firms to curtail business investment and employment, a staff analytical note said. That restructuring phase should peak in the middle of this year, then stay roughly constant. The impact of lower incomes will start to hurt domestic consumption, while the lower Canadian dollar will boost non-commodity exports………………………………………..Full Article: Source

Investec cuts base metals forecasts, sees ‘disincentive’ prices

Posted on 21 January 2016 by VRS  |  Email |Print

Investec has cut its base metals price forecasts for 2016 and 2017, with zinc and nickel in particular now seen sharply lower than in its previous report at the end of October. “Falling intensity of commodity consumption in China, a strong US dollar and significant overproduction in many commodities, lead us to highlight the disincentive nature of our revised commodity price forecasts from 2016 onwards,” the investment bank said in its latest mining sector review.
Investec defined disincentive prices as “exceptionally low prices maintained long enough to force out excess supply in order to rebalance markets and deter new investment.”……………………………………….Full Article: Source

IMF cuts global growth forecast as China slows

Posted on 20 January 2016 by VRS  |  Email |Print

The International Monetary Fund cut its global growth forecasts for the third time in less than a year on Tuesday, as new figures from Beijing showed that the Chinese economy grew at its slowest rate in a quarter of a century in 2015.
To back its forecasts, the IMF cited a sharp slowdown in China trade and weak commodity prices that are hammering Brazil and other emerging markets. The Fund forecast that the world economy would grow at 3.4 percent in 2016 and 3.6 percent in 2017, both years down 0.2 percentage point from the previous estimates made last October. It said policymakers should consider ways to bolster short-term demand………………………………………..Full Article: Source

Commodities demand and China: An explainer

Posted on 20 January 2016 by VRS  |  Email |Print

Falling commodity prices have been treated as one of the clearest indications available that China’s resource-hungry economy is slowing. Yet the latest data on metals consumption paint a more nuanced picture, with demand still rising even as the pace of growth has slowed.
While copper may have halved in price since its peak in 2011, China’s consumption is estimated to have still grown 1.8 per cent last year, according to a report from HSBC………………………………………..Full Article: Source

Crude oil could rally more than 35% from here: Societe Generale

Posted on 20 January 2016 by VRS  |  Email |Print

The International Energy Agency renewed concerns about a global oil glut after it said crude oversupply should continue through the end of 2016. The announcement follows the lifting of U.S. sanctions on Iran over the weekend, which experts project will add more crude to the market. Oil prices fell more than 3 percent Tuesday, settling at their lowest level since September 2003.
Despite the overwhelmingly bearish picture for the energy space, one expert maintains his view that we will see oil back above $40 by the end of the year………………………………………..Full Article: Source

There’ll be a commodities bull market in 2016: Goldman

Posted on 18 January 2016 by VRS  |  Email |Print

As crude oil prices collapse below $30 per barrel and metals trade near record lows, Goldman Sachs forecasts that 2016 will nonetheless bring a “new bull market” for commodities.
The investment bank predicted that commodity producers this year would finally make the cuts needed to bring supply and demand back into balance. This would be helped by the globalization and increasing liquidity of commodity markets, which will mean surplus production will be absorbed more easily than at present………………………………………..Full Article: Source

Don’t Blame China For Commodity Price Drops

Posted on 15 January 2016 by VRS  |  Email |Print

Commodity producers worldwide had a long and profitable run of high prices thanks to strong worldwide demand which was largely driven by China. In the past few years prices have fallen as China’s economy slows at the same time as new production hit the markets.
Falling demand and rising supply is a bad combination for producers but it can happen when producers scramble to chase high price and arrive late to the party. Producers and investors should not blame China’s economic weakness for their problems; they are to blame for their current predicament………………………………………..Full Article: Source

Barclays hacks its 2016 oil price forecast to $37 and says everything supporting a rally has disappeared

Posted on 14 January 2016 by VRS  |  Email |Print

Barclays analysts have slashed their oil-price forecast for 2016 as nothing seems to suggest prices will jump soon. With oil now trading at levels that seemed inconceivable not too long ago, Barclays’ Kevin Norrish and Michael Cohen revised their prior expectations in a note to clients on Monday.
They lowered their forecast for the average price of Brent and West Texas Intermediate crude oil - the international and US benchmarks, respectively - to $37 per barrel this year, down from $60 and $56 previously………………………………………..Full Article: Source

Commodities: How low can you go? - ANZ

Posted on 13 January 2016 by VRS  |  Email |Print

Research Team at ANZ, suggests that the aggressive broad-based declines since mid-2014 means commodity prices are now at levels that are loss-making, or at best only marginally profitable, for many globally traded hard and soft commodities.
“This means many producers are scratching their heads and saying surely things can’t get too much worse. However, you don’t have to look too far back in the history archives to see international prices could well move lower yet in 2016. Indeed even at the low point mid last year for our ANZ commodity price index it was still a third higher than the depths of the GFC………………………………………..Full Article: Source

Global commodities glut and the slump in China

Posted on 12 January 2016 by VRS  |  Email |Print

Chile is expanding its largest open-pit copper mine below the northern desert to dig up 1.7 billion additional tons of minerals, even as metal prices plummet around the globe. India is building railroad lines that crisscross the country to connect underused coal mines with growing urban populations, threatening to dump more resources into an already glutted market.
Australia is increasing natural gas production by roughly 150 percent over the next four years, as energy companies build half a dozen export terminals to serve dwindling demand. Across the commodities landscape, this worrisome mismatch mainly traces back to the same source: China………………………………………..Full Article: Source

Oil price forecast to fall to $20 a barrel, predicts Morgan Stanley

Posted on 12 January 2016 by VRS  |  Email |Print

Leading Wall Street bank says price will keep falling if China’s currency continues its plunge against US dollar. The price of crude oil could tumble to $20 a barrel in the coming months if China’s currency continues to decline against the US dollar, one of Wall Street’s leading investment banks has predicted.
On a day when the cost of crude hit a new 12-year low and edge closer to the $30 a barrel level, Morgan Stanley posted a forecast on Monday of $20-25 a barrel for oil based on movements in currencies………………………………………..Full Article: Source

BofA cuts forecasts for crude oil price in 2016, 2017

Posted on 12 January 2016 by VRS  |  Email |Print

Bank of America Merrill Lynch on Monday lowered its forecasts for crude oil prices for this year and next, amid a global glut in supply that looked poised to continue and a likely swift yuan depreciation in China.
The investment bank cut its 2016 Brent price forecast to $46 per barrel from $50, and lowered its price view for West Texas Intermediate (WTI) to $45 per barrel from $48. BofA said impending Iranian supplies that are about to hit the market, coupled with yuan depreciation, could push oil prices down to the mid-$20s, given the extremely high inventories already………………………………………..Full Article: Source

Chart Of The Year: Scooping Commodities At The Bottom

Posted on 08 January 2016 by VRS  |  Email |Print

Global financial markets have opened the year with selling and elevated fear. And it’s been led, again, by China. This brings back very fresh memories of August of last year, when a Chinese devaluation set off confusion in markets, sharp selling in Chinese stocks, which spilled over to global markets.
This actually plays in perfectly to what we expect to be the biggest theme of the year for markets – a surprisingly aggressive action from China to stimulate their economy and, in turn, fuel the global economy and a recovery in commodities. The behavior in Chinese stocks and the Chinese currency in the past few days underpin that investment thesis, and likely put policymakers in China in position (under pressure) to act sooner rather than later………………………………………..Full Article: Source

All about commodities

Posted on 08 January 2016 by VRS  |  Email |Print

Launching its flagship “Global Economic Prospects” report, the World Bank has warned that 2016 could be the year of a “perfect storm” for the world economy. In particular, it held out concerns that a simultaneous slowdown in the five big emerging-markets economies - Brazil, Russia, India, China and South Africa, or the Brics countries - was likely, and could be intensified by a new round of stress in the financial markets.
The World Bank predicts that China will see relatively modest growth, and that recessions in Russia and Brazil will continue. Only India will continue to expand at a robust pace. “If, in 2016, Brics growth slows further, by as much as the average growth disappointment over 2010-14, then growth in other emerging markets could fall short of expectations by about one percentage point, and global growth by 0.7 percentage point,” warned the Bank………………………………………..Full Article: Source

Oil options lurch closer to $20 Goldman doomsday forecast

Posted on 08 January 2016 by VRS  |  Email |Print

When U.S. investment bank Goldman Sachs said last year that oil could fall as low as $20 per barrel, it assigned a fairly low probability to that scenario. Fast-forward five months and in some parts of the world the forecast has already proved correct. Canadian physical crude has been selling this week at below $20 per barrel, less than it costs to extract and transport.
Traders in the options market, meanwhile, are taking protection against prices falling below $25. The developments reflect growing concerns that a market already awash in too much oil is now suffering the double-whammy of a sharp slowdown in U.S. and Chinese demand………………………………………..Full Article: Source

Deloitte says oil price to stay below $50 US into 2017

Posted on 07 January 2016 by VRS  |  Email |Print

Deloitte says oversupply in the oil market will lead to a continued slump in 2016, with the price per barrel staying below $50 US into 2017 before starting a slow rise to $80 US a barrel by 2022. The Edmonton Light price forecast anticipates an average 2016 price of $51 Cdn a barrel — keeping in mind a low exchange rate is propping up Canadian oil prices — the company said in a release Wednesday.
Demand for oil has increased this past year, most likely attributed to the drop in prices making consumption more affordable. But the trend is not expected to continue into the next year, according to Deloitte’s fourth quarter oil and gas price forecast………………………………………..Full Article: Source

Gold might be the way forward, says UBS

Posted on 07 January 2016 by VRS  |  Email |Print

2015 was a volatile year for the stock markets and 2016 opened with a near obliteration of Chinese stocks on the first day back. And for this reason, technical analysts Michael Riesner and Marc Muller at UBS told clients in a research note on Wednesday morning that they should plough into gold (emphasis ours):
Gold has been trading in a cyclical bear market since 2011. In 2016, we expect gold and gold mines moving into an eight-year cycle bottom as the basis for the next multi-year bull market. Initially, we see gold profiting as a safe haven and as of 2017, gold could profit from the US dollar moving in a major top and starting a bear market………………………………………..Full Article: Source

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