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Commodities, precious metals funds outflows biggest since 2013 -Lipper

Posted on 22 May 2015 by VRS  |  Email |Print

Investors in U.S.-based funds pulled $597 million out of funds that specialize in commodities and precious metals in the week ended May 20, data from Thomson Reuters’ Lipper service showed on Thursday. The outflows were the biggest since December 2013. Stock funds posted $1.7 billion in outflows over the latest week after attracting $3.7 billion in inflows the prior week.
U.S.-based non-domestic-focused stock funds attracted $3.3 billion of inflows, their 15th straight week of net new cash. “I’m speculating here but possibly stronger economic news caused investors to pull money out of commodities and into stocks,” said Patrick Keon, research analyst at Lipper………………………………………..Full Article: Source

Moody’s Predicts Big Jump in Oil and Gas Defaults

Posted on 20 May 2015 by VRS  |  Email |Print

So far oil and gas companies have largely weathered the sharp drop in oil prices with minimal carnage. But that carnage is coming, according to a new report from Moody’s Investors Service. Analysts at Moody’s predicts that the default rate for oil and gas companies with lower credit ratings — B2 or lower — could increase to 7.4% by March 2016 from 2.7%.
Moody’s Senior Vice President David Keisman said in the report that even if energy prices recover gradually to roughly $70 to $75 per barrel in 2016, the “weaker oil & gas issuers” will still be positioned for a “much greater risk of default.”……………………………………….Full Article: Source

Oil prices to recover, says BHP

Posted on 19 May 2015 by VRS  |  Email |Print

Cheap oil prices will not last for long, with significant rises to come in two to three years because of a lack of new discoveries, BHP Billiton’s petroleum boss says. Equally weak natural gas prices will take longer to bounce back though, according to industry leaders attending Australia’s largest oil and gas conference.
The predictions on gas are good news for consumers, particularly manufacturers, but not the energy companies that have invested an estimated $75 billion on three new liquefied natural gas projects in Queensland that about to come online………………………………………..Full Article: Source

Global outlook increasingly uncertain

Posted on 18 May 2015 by VRS  |  Email |Print

An increasing number of clouds are rolling in from Greece to Britain to the US, which may give investors a reason to pause their bullish bets on equities. Increasingly erratic and extreme shifts in asset pricing are unnerving investors everywhere.
On one level the backup in global bond yields makes sense. The deep-seated deflation that was built into bonds after last year’s oil price collapse now has to be rethought and repriced. But the speed and shock of the bond backlash has exposed illiquidity and overcooked, over-correlated investment positions………………………………………..Full Article: Source

Palladium to outperform platinum, move towards convergence – ANZ

Posted on 15 May 2015 by VRS  |  Email |Print

Palladium will continue to outperform platinum, with the prices of the two metals moving further to convergence amid differing fundamentals, ANZ Research said. Platinum was recently quoted at $1,149/1,155 per ounce, up $4 on Wednesday’s close and recovering from March’s sub-$1,100 lows – its softest since July 2009. Palladium, meanwhile, was last at $784/789, up $1.
“The price of the two metals should move closer to parity over the next few years, based on how we expect the market supply/demand balances to evolve,” the broker said in a note on Thursday. “But it is likely to be a long grind rather than a quick shift. In reality, this would just be a continuation of the downtrend in the platinum/palladium ratio in place since 2009,” it added…………………………………..Full Article: Source

EIA ups 2015 crude-price forecasts, cuts 2016 view

Posted on 13 May 2015 by VRS  |  Email |Print

The U.S. Energy Information Administration raised its 2015 forecasts for West Texas Intermediate and Brent crude prices in a monthly report issued Tuesday. The government agency said it expects WTI prices to average $54.32 a barrel this year, up from a previous forecast of $52.52.
The EIA, however, said it expects WTI crude to average $65.57 a barrel in 2016, down from the prior view of $70.07. Brent crude is forecast at $60.79 this year, up from a previous forecast of $59.39. The EIA said it expects natural-gas prices to average $2.93 per million British thermal units this year, down from the earlier estimate of $3.07………………………………………..Full Article: Source

ETFs poised to outstrip hedge funds

Posted on 08 May 2015 by VRS  |  Email |Print

The high-profile hedge fund world is about to be surpassed in terms of total assets by the unstoppable juggernaut that is the exchange-traded fund (ETF) industry, new research shows. Assets held globally in ETFs reached $2.93trn (£1.9trn) at the end of the first quarter of this year, according to research and consultancy firm ETFGI.
Meanwhile, a report from Hedge Fund Research has revealed there was $2.94trn in hedge funds at the same time. The difference in assets is the closest it has ever been (see top chart) and ETFGI predicts that given the much faster rate of inflows into ETFs seen in recent years, the tracker funds should overtake hedge funds within the second quarter of this year………………………………………..Full Article: Source

World Seen Saving $153 Billion on Food Bill After Costs Tumble

Posted on 08 May 2015 by VRS  |  Email |Print

Hefty supplies and cheaper shipping costs mean countries will pay less to import food than anytime in the past five years, the United Nations predicted. Food prices globally have fallen for most of the past year given an oversupply in everything from wheat to sugar and dairy, according to a report released Thursday by the UN’s Food & Agriculture Organization.
The group said the world food import bill may drop $153 billion, or 12 percent, to $1.13 trillion this year. While poorer countries, such as those in sub-Saharan Africa, will be able to get cheaper food in the international market, in some cases the benefit is diminished because their currencies have weakened relative to the dollar, the FAO said………………………………………..Full Article: Source

Gold an ‘unreliable’ hedge against geopolitical risk – SocGen

Posted on 08 May 2015 by VRS  |  Email |Print

Gold is not reliable as a hedge against geopolitical risks, Société Générale said on Thursday. The performance of the yellow metal in periods of regional military conflicts is mixed and it has not performed well consistently, the bank said in a note on Thursday.
One of the most recent examples is the annexation of Crimea by the Russian military during which gold initially rallied towards $1,400. “[But] the gold rally didn’t last very long and it wasn’t long before gold was trading at levels below when armed men seized Crimea’s parliament,” SocGen said………………………………………..Full Article: Source

Global surge in silver output passes SA by

Posted on 08 May 2015 by VRS  |  Email |Print

South Africa is Africa’s second-largest silver producer, but it is minuscule when compared with global supply, which last year notched up a 12th consecutive year of growth to reach 877-million ounces. Silver in SA is largely a by-product of other mining processes, and production has remained constant at about 2.8-million ounces a year over the past decade.
Silver is used mainly in industrial, jewellery and investment applications. The silver market ended last year with a 4.9-million ounce deficit, but the price fell 20% to $19.08/oz, the lowest average annual price since 2009, according to the 2015 World Silver Survey compiled by Thomson Reuters GFMS………………………………………..Full Article: Source

15 Precious Metals Terms All Gold Buyers Should Know

Posted on 07 May 2015 by VRS  |  Email |Print

For the sake of simplicity, “gold” in any of the definitions below can be replaced with silver, platinum, or palladium. 1. Ingot: A mass of metal formed into a convenient shape for shipping, storing, or further processing. Ingot and bar may be used interchangeably in regards to precious metals.
2. Bullion: Precious metals in the form of bars, coins, or other ingots. Not to be confused with bouillon, the French word for broth. 3. Circulated/Uncirculated: Circulated coins have been used as currency by the public, and uncirculatedcoins have not. Uncirculated coins are usually in much better condition than circulated ones………………………………………..Full Article: Source

How QE impacts commodities

Posted on 06 May 2015 by VRS  |  Email |Print

The economic cycle of depression/recession has created the need for Quantitative Easing (QE), the occasionally used and effective tool used by central banks across the globe. The world knows all about it and will be remembered for ages. Before we delve deep in to this topic, it is essential to understand the basic definition of this much hyped “Quantitative Easing” and how it is supposed to work.
Quantitative Easing can be defined as monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective. The new money swells the size of the bank reserves and lower interest rates will stimulate the economy by encouraging banks to make more loans which in turn boosts investment………………………………………..Full Article: Source

Africa and commodity prices: No longer the kiss of death

Posted on 24 April 2015 by VRS  |  Email |Print

In 2014 commodity prices tumbled. Many economists feared the worst for Africa. For decades the continent has been hopelessly dependent on commodities to power economic growth. When prices crashed, economies would go into tailspin. This time around, though, things seem different. The continent is holding up well.
The map above looks at how forecasts from the International Monetary Fund for African growth in 2015-16 have changed in the past year. Compared to what they were predicting in April 2014, the IMF now expects economic growth to fall in most African economies. For instance, the IMF now expects Nigeria to grow by 10% over the next two years, whereas in April 2014 it had predicted growth of 14%. Thus growth expectations have fallen by 4 percentage points, as the map’s colouring shows…………………………………..Full Article: Source

Continued Weakness in Commodity Markets May Signal Long Term Easing of Prices

Posted on 23 April 2015 by VRS  |  Email |Print

Well-supplied markets are continuing to drive down prices of commodities, across the board, says the latest issue of the World Bank’s Commodity Markets Outlook (CMO). Most indices edged further down during the first quarter of 2015, with food down 7.3 percent, crude oil down 13 percent and metals down 9 percent compared to the fourth quarter of 2014. Prices are expected to stay weak for the rest of this year, with only a marginal recovery expected in 2016.
“Surplus production and subdued demand due to weak global growth are continuing to depress commodity prices. The slowdown in emerging economies, coupled with a strong U.S. dollar, will likely keep the lid on prices. Although weaker prices will mean lower revenues for commodity exporting countries, they will help reduce current account and fiscal deficits in many commodity-importing countries,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group……………………………………Full Article: Source

Greece is ‘main threat to global economy’s recovery’

Posted on 21 April 2015 by VRS  |  Email |Print

World finance officials worry about unevenness of growth as the Greece’s debt crisis poses the biggest problem that now needs solving. World finance officials said they see a number of threats on the horizon for a global economy still clawing back from the deepest recession in seven decades, and a potential Greek debt default presents the most immediate risk to the recovery.
After finance officials wrapped up three days of talks on Saturday, the International Monetary Fund’s policy committee set a goal of working toward a “more robust, balanced and job-rich global economy” while acknowledging growing risks to achieving that objective…………………………………..Full Article: Source

Global financial risks have risen, says IMF

Posted on 16 April 2015 by VRS  |  Email |Print

The risks to global financial stability have risen, the International Monetary Fund (IMF) has said. In a new report, the IMF says that countries that export oil and other commodities have been severely affected. Some emerging economies have been hit by sharp moves in the global currency markets.
And the report says financial stability is still not “fully grounded” in the rich countries. “Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address,” said Jose Vinals, financial counsellor at the IMF………………………………………..Full Article: Source

Commodities squeeze growth

Posted on 15 April 2015 by VRS  |  Email |Print

Economic growth in sub-Saharan Africa is expected to slow to 4% this year, from 4.5% in 2014 on the back of falling commodity prices before picking up moderately next year, according to World Bank projections. This is while problems in the electricity sector continued to curtailed South Africa growth. The World Bank insisted that oil exporters such as Angola and Nigeria, were especially hard hit by sharply lower oil prices.
While in South Africa the energy power supply and policy uncertainty were having a negative impact. The World Bank’s Africa’s Pulse report focused on the continent’s economic prospects and pointed out that the downturn on growth largely reflected the fall in the prices of oil and other commodities………………………………………..Full Article: Source

US Shale oil production may have maxed out - EIA

Posted on 15 April 2015 by VRS  |  Email |Print

The shale oil boom may be over, judging from the latest report from the US Energy Information Administration, which said oil output from America’s seven most productive shale formations will decrease for the first time in four years.
The report has had an effect on the oil market with Brent, the benchmark for more than half of the world’s oil, trading above $58.25 per barrel, a 0.55 percent increase, and WTI, the North American blend, advancing one percent to $52.44 at the time of publication………………………………………..Full Article: Source

World Bank says sharp slowdown in China would hurt NZ, Australia

Posted on 14 April 2015 by VRS  |  Email |Print

A sharp slowdown in China would hurt commodity exporting countries like New Zealand and Australia and spill over into Pacific Island countries, the World Bank says in its latest East Asia Pacific Update. The global institution yesterday lowered its 2015 growth forecast for China, Asia’s largest economy, to 7.1 percent from a previous estimate of 7.2 percent, and its 2016 estimate to 7 percent from 7.1 percent.
China will release its first quarter gross domestic product data tomorrow, which is expected to show the economy expanded 7 percent from a year earlier, according to a Bloomberg survey of economists. That would be the slowest pace since the first quarter of 2009………………………………………..Full Article: Source

Gold price to end 2015 between $1,151-$1,250/oz: conference

Posted on 14 April 2015 by VRS  |  Email |Print

The gold price will end 2015 somewhere between $1,151 and $1,250/oz, delegates at the Dubai Precious Metals Conference voted Monday. In the closing remarks the audience was electronically polled on where the price will close the year, the results were down from $1,251-$1,350/oz at the start of the conference Sunday.
Still, 51% of delegates said they would prefer to be long the metal, up from 43% at the start. On the sidelines talking to Platts one banker said that overall mood at the conference was neither “bullish nor bearish, it’s neutral.”……………………………………….Full Article: Source

Thomson Reuters publishes GFMS Gold Survey 2015

Posted on 13 April 2015 by VRS  |  Email |Print

Thomson Reuters released “Gold 2015”, the 49th in the series of annual Surveys, looking at the shifts and developments in the global gold markets, their fundamentals and their drivers, over the year and setting the scene for future.
“Like most markets, gold takes time to recover from periods of turbulence and in early 2015 it is continuing the stabilisation of 2014 following the hurricane that swept through it in the previous year. Demand contracted sharply in 2014 as some key regions, notably China, suffered from over-purchasing in 2013, while lack of confidence in any near-term price recovery deterred investment purchases elsewhere. There are signs that confidence is starting to return, however, as the physical market adjusts and takes comfort from the price stabilisation since November 2014………………………………………..Full Article: Source

With the end of commodities prices ’super-cycle’, UN panel lowers Latin American growth forecast to 1%

Posted on 10 April 2015 by VRS  |  Email |Print

The Economic Commission for Latin America and the Caribbean (ECLAC) has revised downward its economic growth projection for the region in 2015, forecasting a 1.0% increase in the regional Gross Domestic Product (GDP), the United Nations organization said today in a press release.
This revision reflects a global environment characterized by less economic dynamism than what was expected at the end of 2014. With the exception of the United States, industrialized countries have revised their growth estimates downward, and emerging economies continue to decelerate. The region is expected to keep economic growth at around the same level as in 2014 (1.1% according to the ECLAC’s annual report Preliminary Overview of the Economies of Latin America and the Caribbean 2014)……………………………………….Full Article: Source

Tough first quarter for commodities markets

Posted on 02 April 2015 by VRS  |  Email |Print

It’s been a tough first quarter in the commodities markets. Oversupply, a stronger dollar and crude weakness weighed on the price of many raw materials. Iron ore led the decliners, closing the quarter at $51 a tonne, a post financial crisis low.
Nevertheless, money flowed into energy exchange traded funds supporting overall investment inflows. Here is a look at some other issues which came under the spotlight. Is the world running out of crude storage? Concerns have mounted that the current supply glut would overwhelm storage tanks from Oklahoma to Xinjiang and depress prices further………………………………………..Full Article: Source

How Much U.S. Oil and Gas Comes From Fracking?

Posted on 02 April 2015 by VRS  |  Email |Print

Hydraulic fracturing has unleashed vast new quantities of crude oil and natural gas. The percentage of fuel flowing from shale-rock compared with traditional oil and gas fields has been steadily rising. But lackluster energy demand and low prices are expected to curb growth later this year. Here’s a graphic that helps explain fracking:……………………………………….Full Article: Source

JP Morgan lowers gold, silver price forecast for 2015

Posted on 02 April 2015 by VRS  |  Email |Print

The sharp decline in gold prices during February and Early March has forced JP Morgan to lower its gold price forecast for the entire year 2015. According to them, prices of the yellow metal are likely to drop further during the second and third quarters of the year. However, strong physical buying may offer some support during Q4 2015. JP Morgan has also lowered the average silver price forecast for the year.
The gold price forecast for the full year has been lowered by 3.6% to $1,188 per ounce. The U.S. interest rate hikes may drag gold prices, despite temporary boosts from geopolitical events. The escalating tensions in Yemen and deadlock over Iran nuclear deal may provide temporary support to gold prices………………………………………..Full Article: Source

Goldman Sachs warns that peak gold may happen in 2015

Posted on 02 April 2015 by VRS  |  Email |Print

Goldman warns that peak gold may happen in 2015. New report says there are only “20 years of known mineable reserves of gold”. Discoveries of new sources of gold production peaked in 1995 despite major bull market .
Production lags new finds in 20 year cycle – Indicates 2015 may be year of peak gold production. Production in major gold mining countries has dropped in recent years. This will provide support and should lead to higher prices in long term. For many years, we have written about ‘peak gold’ and the ramifications of the underappreciated peak gold phenomenon for the gold market………………………………………..Full Article: Source

Gold price to average $1,183/oz this year, silver $16.20/oz – BarCap

Posted on 02 April 2015 by VRS  |  Email |Print

Gold should hammer out a base this year and next, providing good buying opportunities for the long-term investor, Barclays Capital said on Wednesday. The broker sees gold averaging $1,183 per ounce this year. Spot metal was last at $1,185.40/1,186.20, up a $2.50 increase on Tuesday’s close.
With the relationship between gold and US interest rates crucial to prices, the timing and extent of the Federal Reserve’s raising of US interest rates from near-zero levels will be closely watched. BarCap expects the increases to be gradual, with the first increase to come later in the year. “A June rate hike would have exposed a weak gold price floor, whereas in September, physical demand tends to strengthen in light of seasonal buying in India. Thus, although a rate hike is likely to lead to disinvestment, physical demand should buffer prices, limiting the downward pressure,” it said………………………………………..Full Article: Source

The global oil price drop may last for the next couple decades, Stanford economist says

Posted on 31 March 2015 by VRS  |  Email |Print

Global oil prices may stay low for the next 10 or 20 years, according to Stanford economist Frank Wolak. The most likely medium-term outcome is $50 to $70 per barrel, according to Wolak. He is the Holbrook Working Professor of Commodity Price Studies in the Department of Economics at Stanford University.

And while geopolitical and environmental issues may unexpectedly arise that turn oil prices upward, Wolak said many factors point to lower oil prices for the foreseeable future. Crude oil prices fell from a high of $115 a barrel in June 2014 to a low of $45 in January of this year. The lower prices have generated ripple effects throughout the global economy………………………………………..Full Article: Source

Morgan Stanley Cuts Commodities Outlook on China Demand

Posted on 25 March 2015 by VRS  |  Email |Print

Morgan Stanley cut its price forecasts for almost all base metals and bulk commodities as China’s “dormant” industry fails to bolster demand in the world’s biggest consumer of copper and iron ore.
The bank reduced its 2015 estimate for nickel by 23 percent from its previous estimate to an average $14,815 a metric ton and lowered copper by 16 percent to $5,945 a ton. It cut its iron ore outlook by 28 percent and coking coal by 16 percent. Industrial metals will perform better than bulk commodities as growth in developed countries supports demand, analysts Tom Price and Joel Crane said in a report on Tuesday………………………………………..Full Article: Source

Fed hike, Indian demand will be key for Gold: Barclays

Posted on 24 March 2015 by VRS  |  Email |Print

A likely Fed hike and seasonal physical demand will determine the intensity for risks in store for Gold, a report by Barclays said. In Q315 gold will likely be caught between scope for disinvestment as markets look for a rate hike and seasonal physical demand materializing from India.
“Our economists now see a much lower likelihood that the committee raises rates in June given the downward revision to NAIRU which means that the Fed’s estimate of labour market slack has risen. In turn, the Fed now looks for the first rate hike to occur in September and for the target range for the federal funds rate to reach 50-75bp in December, the report said………………………………………..Full Article: Source

Commodity Traders Aren’t Too Big Too Fail, Trafigura Report Says

Posted on 23 March 2015 by VRS  |  Email |Print

Commodity traders don’t pose systematic risks to the global financial system and shouldn’t be subjected to bank-style regulation, according to a paper published Monday by the second-largest metals trader Trafigura Beheer BV.
The report ‘Not Too Big To Fail,’ funded by Trafigura and written by University of Houston finance professor Craig Pirrong, argues against imposing capital requirements on commodity trading firms. It says commodity traders aren’t highly leveraged compared with banks, have strong capital structures and use syndicated lending to mitigate risk………………………………………..Full Article: Source

Gold price to double by 2030 thanks to Asia

Posted on 19 March 2015 by VRS  |  Email |Print

Asia’s financial system liberalization and its population’s growing wealth are two key factors expected to boost demand for gold and push the price of the key commodity over US$2,400 an ounce by 2030, a report published Wednesday claims. According to the Australia and New Zealand Banking Group (ANZ) predictions, as incomes rise across Asia, particularly in China and India, so will the appetite for gold rings and necklaces.
In its report “East to El Dorado: Asia and the Future of Gold,” ANZ estimates that annual retail and investor demand for the precious metal in the 10 largest economies in Asia could double to 5,000 tonnes within 15 years. The bank dubbed these nations “the A10″ – China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam………………………………………..Full Article: Source

Citi Sees Slower Commodities Demand Growth as China Recedes

Posted on 18 March 2015 by VRS  |  Email |Print

Global commodity markets will see slower and less synchronized demand growth from across the world as China’s dominance fades, according to Citigroup Inc. Global demand expansion, which centered on the rise of China in the 2000s, will slow in the next decade and be driven increasingly by India, Southeast Asia, the Middle East, Latin America and Africa, the New York-based bank said in a report e-mailed Tuesday.
While demand will increase from these regions, dubbed the “Emerging 5”, it won’t be enough to offset the impact of slower growth from China, Citigroup said. Commodities tumbled to a 12-year low on Monday, with crude oil in New York slumping 18 percent in 2015. Inventories are rising after a decade-long bull market spurred farmers, miners and drillers to increase production just as economic growth slowed in China………………………………………..Full Article: Source

China is irreplaceable for the commodities market

Posted on 18 March 2015 by VRS  |  Email |Print

The commodities supercycle may be over but there’s no replacement for China as the world’s factory, according to Citi. From now on commodities demand will come from a diversified group of regions including India, the Middle East, Latin America, Africa and countries belonging to ASEAN in Southeast Asia, writes Henry Sanderson, commodities correspondent.
But this won’t be enough to offset China, leading to slower worldwide demand growth for commodities as well as weaker global trade flows, the bank said. Hardest hit will be thermal coal, steel iron ore and coking coal, due to their exposure to China’s manufacturing, infrastructure, and real estate sectors, they said. Base metals such as aluminium and copper are likely to do better, with emerging market demand growth in the 3 per cent to 5 per cent range into the 2020s, they said………………………………………..Full Article: Source

Preqin: Hedge funds turn the tide on poor 2014 performance

Posted on 18 March 2015 by VRS  |  Email |Print

Hedge fund managers have got off to a strong start in 2015. Following a year which saw the average hedge fund deliver returns of 3.78%, managers have already returned 2.52% on average two months into the year. Given that performance was named as the key concern in the industry in 2015 by investors in a Preqin survey at the end of 2014, managers will have been keen to deliver strong performance early in the year. The challenge, and opportunity, still remains for hedge funds to continue this performance, particularly amidst strong equity markets and turbulent commodity markets.
Other Key Hedge Fund Performance Stats: Equity Strategies Leading the Pack: All main hedge fund strategies generated positive returns in February 2015, with equity strategies posting the highest monthly return of 3.28%. . Oil Prices Causing Problems: The reversal in falling oil prices led to CTAs generating their lowest monthly return since October 2014, and only just hung on to positive performance with average returns of 0.20%. (Press Release)

What is a Structured Product?

Posted on 18 March 2015 by VRS  |  Email |Print

Much maligned structured products are back on the investor’s radar as we seek post-retirement solutions that pay a sustainable income. But should they be avoided? A structured product has a very broad definition. It’s a pre-packaged product based around a series of derivatives; and really through a structured product you can get exposure to a range of different underlying assets. It could be single stocks, baskets of stocks, indices.
You can get exposure to commodities, debts, foreign exchange. It’s almost a definition a little bit like hedge fund, in the fact that it’s very broad brush and can really encompass a range of different underlying exposure and risk being taken as well………………………………………..Full Article: Source

OPEC Warns U.S. Oil Boom Could Be Over by Year-End

Posted on 17 March 2015 by VRS  |  Email |Print

OPEC said Monday the U.S. oil boom could be over by the end of this year, offering a pessimistic view of American producers’ ability to withstand a historic collapse in crude prices and predicting that global petroleum supplies would realign with demand.
The cartel, in its closely watched monthly oil-market report, cited spending cuts by U.S. producers and the falling number of American rigs drilling for oil in recent months after crude prices fell by about 60% from last summer to January before rallying in February. For instance, rig counts fell faster in February than they did in January, according to the latest Baker Hughes report………………………………………..Full Article: Source

The Real Reason Behind the Oil Price Collapse

Posted on 13 March 2015 by VRS  |  Email |Print

It’s not overproduction in shale fields, and it’s not global economic stagnation. It’s something far more threatening to Big Oil’s business model. Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States;
The decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that’s not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil’s production-maximizing business model………………………………………..Full Article: Source

Oil & Gas: PwC’s Annual Global CEO Survey

Posted on 11 March 2015 by VRS  |  Email |Print

The reality facing oil and gas industries has changed dramatically over the last year. The industry is facing over-supply and lower prices – so it’s not surprising that nearly two-thirds of oil and gas CEOs say their companies are facing more threats to growth than they did 3 years ago.
For oil and gas companies, an increasing tax burden, over-regulation and geopolitical uncertainty top the list, followed by government response to fiscal deficit and debt burden and protectionist tendencies of national governments. Taxes are a particular issue for the sector, which also rates an internationally competitive and efficient tax system as the top outcome it would like to see from government………………………………………..Full Article: Source

OPEC is still kicking, but the World Bank thinks the oil cartel’s days could be numbered

Posted on 11 March 2015 by VRS  |  Email |Print

As OPEC ’s refusal to curb oil production contributes to a nine-month plunge in prices, a new paper suggests the cartel’s days may be numbered. OPEC, the Organization of the Petroleum Exporting Countries, has vowed to defend its market share against higher-cost producers such as U.S. shale drillers and companies developing Canada’s oil sands.
Its strategy hinges on the odds that an extended period of low prices will lead other producers to scale back output, enabling the group to reassert its influence. Yet a brief history detailed by the World Bank Group shows how difficult it can be to maintain a commodities cartel in the face of market forces and technological advances………………………………………..Full Article: Source

World Bank Analyzes Oil Price Plunge

Posted on 06 March 2015 by VRS  |  Email |Print

Rapid expansion of oil supply from unconventional sources, a significant change in OPEC’s policy stance, and weak global demand are driving the recent plunge in oil prices, according to a new paper by the World Bank. These underlying forces are buoyed by a strengthening U.S. dollar and the fact that oil production in the Middle East has not been severely disrupted by ongoing conflict, says the paper, titled “The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses”.
The paper, authored by John Baffes, Ayhan Kose, Franziska Ohnsorge, and Marc Stocker, presents a comprehensive analysis of the causes and economic and financial consequences of the oil price decline………………………………………..Full Article: Source

Global Iron Ore Surplus Seen by World Bank Lasting Two Years

Posted on 04 March 2015 by VRS  |  Email |Print

If history is any guide the global glut in iron ore may persist for as long as two years, according to the World Bank, which forecasts that the steel-making raw material will average $75 a metric ton this year.
“From experience from earlier iron ore episodes as well as other metal markets, it takes about one to two years for either excess supplies to get back to normal levels or excess demand to be met by larger supplies,” John Baffes, a senior economist at the lender, said in an e-mail response to questions……………………………………….Full Article: Source

Why Commodities Are More Than Economic Indicators

Posted on 03 March 2015 by VRS  |  Email |Print

We track the prices of everything from crude oil to milk for clues about the state of the economy. But what could they tell us about the environment? Tune in to any television or radio newscast, and you’ll hear how the stock market is performing today. The New York Times puts market indicators alongside the current temperature at the top of their website. Changes in unemployment or the prices of commodities like oil and milk regularly make headlines.
Environmental historian Dr. Ted Melillo, associate professor at Amherst College, says we need to re-envision what something like the price of oil really means - what it can reveal about not only our economic systems, but also our social, political, and environmental attitudes and practices………………………………………..Full Article: Source

Commodities Bust Leaves Latin America with a Hangover

Posted on 27 February 2015 by VRS  |  Email |Print

Five years ago spirits were soaring across Latin America. The region’s economies were bouncing back with startling speed from the global financial crisis to post their strongest growth rates in more than a decade. Robust Chinese demand for copper, iron ore, oil, soybeans and other commodities was filling government and private sector coffers and lifting millions of people into the ranks of the middle class.
Companies like Brazilian aircraft maker Embraer, Chilean fashion retailer Falabella and Mexican bakery goods manufacturer Grupo Bimbo were extending their reach across the region and around the world. The Economist boldly proclaimed the region to be on the verge of a Latin American decade………………………………………..Full Article: Source

Noble overstated commodity values by at least US$3.8 bln: Iceberg Research

Posted on 27 February 2015 by VRS  |  Email |Print

Singapore-listed Noble Group overstated the value of commodities it holds by at least US$3.8 billion, Iceberg Research said in a report on the Asian commodity trading firm’s accounting practices. “Impairing these fair values dramatically impacts Noble’s performance indicators,” the little-known research firm said on its website on Wednesday, its second report this month raising questions about Noble’s books.
Iceberg released its first analysis on Feb 15, to which Noble issued a detailed rebuttal. The company’s shares fell a combined 13 percent in the two trading sessions following the initial report. It has recovered about 1 percent since then………………………………………..Full Article: Source

Commodity crash reflects global economic slump

Posted on 25 February 2015 by VRS  |  Email |Print

Global commodity prices have tumbled to levels below the depths of the Great Recession, underscoring the widespread difficulties facing the global economy. While crude oil’s price collapse has been in the spotlight, a wide range of other commodities are suffering as well, including natural gas, coal, iron ore, copper, grain and pulp and paper.
The commodity crash is the result of too little demand for raw goods now in plentiful supply after producers ramped up capacity in recent years in anticipation of steady global growth. But trouble spots are everywhere. Commodity markets have declined during worldwide turbulence as the pace of growth in China continues to slow, Russia grapples with an imploding economy and ruble and Greece struggles through an economic crisis that Europe must solve. ……………………………………….Full Article: Source

The Streets of China Commodity City

Posted on 19 February 2015 by VRS  |  Email |Print

Yiwu International Trade City, also known as China Commodity City, claims to be the world’s largest wholesale market for small commodities. It is located in a vast warehouse in the province of Zhejiang, where tens of thousands of stalls sell everything from artificial flowers to inflatable pools.
In 2014, the photographer Richard John Seymour captured the “streets” of China Commodity City as part of a project with the design studio Unknown Fields Division. Seymour told me that, despite the disorienting aspects of the market, the familiarity of certain items on sale there—a kitchen sponge, a Christmas decoration—served as a reminder that he “had an intimate connection with this place on the other side of the globe.”……………………………………….Full Article: Source

Commodities explained: Oil data watch

Posted on 18 February 2015 by VRS  |  Email |Print

Concerns about a growing oil supply surplus last year prompted Saudi Arabia, the world’s largest exporter, in November to persuade fellow Opec members that cutting production to support oil prices was not in their interest. The Kingdom said a period of lower prices would shave off some US shale production and other high-cost output and protect Saudi Arabia’s (and in theory the cartel’s) market share.
With the oil market focused on the impact of the plunge in oil prices on supply as well as demand, traders are on tenterhooks. Some are even grumbling that they have to hang around on Fridays for the weekly US rig count announcement — a data point that could provide hints about where oil output is heading particularly in a volatile oil market. But what else is on the list of potentially market moving data?……………………………………….Full Article: Source

Did OPEC engineer the oil crisis?

Posted on 17 February 2015 by VRS  |  Email |Print

Richard Fischer, President, Dallas Federal Reserve, on February 11 said that OPEC engineered the drop in oil prices to put US oil producers out of business. However, Fisher is not the only one calling out OPEC for taking aim at US shale. Dan K. Eberhart, CEO of Canary LLC, picked up on this proactive action months ago.
During an interview on CNBC in early December last year, Eberhart said, “what’s shaping up is a battle royale between the US shale producers and OPEC. It’s a case of who’s going to blink first. I think OPEC, by deciding not to change their production quota, is betting on the US.”Eberhart explained that OPEC is applying downward pressure on oil prices by significantly contributing to excess oil supplies during a period of lessened demand………………………………………..Full Article: Source

Gold demand sinks to five-year low in 2014

Posted on 13 February 2015 by VRS  |  Email |Print

Global gold demand slumped to its lowest level in five years in 2014 as bar and coin buying plunged and jewelry purchases cooled, according to the World Gold Council (WGC). Overall demand totaled 3,924 tonnes, down 4 percent on year at its lowest level since 2009, the WGC’s quarterly demand trends report, published on Thursday, showed.
Total bar and coin investment fell 40 percent to 1,064 tonnes as investors, who had made major purchases in 2013 amid a sharp fall in prices, held back from further purchases, the industry group said………………………………………..Full Article: Source

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