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Commodities and Brexit — 5 things to watch

Posted on 24 June 2016 by VRS  |  Email |Print

As the UK begins voting in the EU referendum here are five things to watch in the commodities world. It’s a widely-held view among investors that gold would be among the big beneficiaries of a Brexit. Some analysts reckon the price could rise by as much as 10 per cent to $1,400 after a vote to leave as nervous investors pile in looking for safe places to park cash.
But there are also reasons for thinking gold, a good barometer of risk, could suffer, at least in the near-term. How markets react to Thursday’s vote is a huge unknown but one thing investors have learnt since the financial crisis is how quickly liquidity can dry up and impact markets………………………………………..Full Article: Source

China Plans to Boost Metals Reserves Amid Commodities Glut

Posted on 17 June 2016 by VRS  |  Email |Print

China, the world’s top consumer of base metals, will boost stockpiles, accelerate the closure of excess capacity and provide tax breaks for producers as the country grapples with a raw-materials glut amid the slowest growth in decades.
The nation will increase reserves of some metals and study a trial program for companies to build stockpiles in addition to their inventories, according to State Council guidelines posted on its website Thursday. China already holds stockpiles of metals though the State Reserve Bureau. The statement from China’s cabinet didn’t specify a timeline or say how the plan would be financed………………………………………..Full Article: Source

Rare-earth metal prices climb as China builds reserves

Posted on 16 June 2016 by VRS  |  Email |Print

International spot prices for rare-earth metals are rising amid moves by China to stockpile those key materials for high-tech consumer electronics and hybrid vehicles.
Neodymium, which is used in high-performance magnets, is selling for around $56 per kilogram — up 10% from a month ago and the highest since July 2015. Dysprosium prices have climbed 3% from the previous month to $265 per kilogram, while prices of terbium, a phosphor raw material, have increased 11% to around $570 per kilogram………………………………………..Full Article: Source

Non-Opec oil supply to grow again next year – IEA

Posted on 15 June 2016 by VRS  |  Email |Print

Strong demand growth and production disruptions are easing the oil glut quicker than anticipated, but supply rises outside of the Opec group will return next year, according to the world’s leading energy body.
“Less oil has been stock-piled than we originally expected,” said the International Energy Agency in its closely watched monthly oil market report. The agency initially estimated the surplus of supply over demand in the first half of 2016 would be 1.5m barrels a day, but this has fallen to 800,000 b/d. It expects the oil market to reach a balance by the end of the year………………………………………..Full Article: Source

America Sitting on $50 Trillion in Oil and Gas?

Posted on 09 June 2016 by VRS  |  Email |Print

‘Fueling Freedom’ author Kathleen Hartnett White says the U.S. is sitting on $50 trillion in oil and gas, but the government is stopping us from getting at it. Why is the government blocking access to America’s abundant resources and preventing the country from becoming energy independent?
“Yes, it’s quite a big number and it’s the government’s number if you combine all of the Department of Energy’s estimates and I might add it also includes coal,” White said. White said the shale revolution is a key factor in improving access to those energy resources………………………………………..Full Article: Source

US forecasts decline in non-OPEC oil supplies

Posted on 09 June 2016 by VRS  |  Email |Print

The US Energy Information Administration (EIA) forecasts non-OPEC countries oil supplies to decline to 57.04 million barrels per day in 2016 and to 56.8 million barrels per day in 2017. Non-OPEC supply of oil and other liquid hydrocarbons was 57.64 million barrels per day in 2015, according to the EIA’s June Short-Term Energy Outlook (STEO).
In its May STEO the EIA forecasted non-OPEC liquid supplies at the level of 56.9 million barrels per day in 2016 and 56.69 million barrels per day - in 2017. The US and Russia are the largest non-OPEC oil producing countries. The US and Russia supplied 15.04 million and 11.03 million barrels of oil and other liquid hydrocarbons per day respectively in 2015, according to EIA………………………………………..Full Article: Source

Nigeria’s Tumbling Oil Production Drags Total OPEC Supply Lower

Posted on 09 June 2016 by VRS  |  Email |Print

Rebel attacks on oil installations cut Nigeria’s production by 10 percent in May, contributing to a drop in monthly output from the Organization of Petroleum Exporting Countries, a Bloomberg News survey showed.
Nigerian production declined by 160,000 barrels a day to 1.45 million, according to the survey. OPEC’s total crude output fell to 32.71 million barrels a day last month, from a revised 32.83 million in April………………………………………..Full Article: Source

Ghana sees slight dip in gold production this year

Posted on 02 June 2016 by VRS  |  Email |Print

Ghana expects to produce 2.7 million ounces of gold in 2016, down only marginally from last year as new production offsets a decline in output due to lower global prices and ageing mines, the Chamber of Mines said on Wednesday.
Gold is the single biggest revenue earner for Ghana, which is following a three-year aid deal with the International Monetary Fund. The West African country produced 2.8 million ounces of gold last year, the Chamber’s Chief Executive Sulemanu Koney said, down 10 percent from 2014 when AngloGold Ashanti’s Obuasi mine laid off workers and all but stopped production………………………………………..Full Article: Source

Top 10 Countries With The Largest Gold Reserves

Posted on 27 May 2016 by VRS  |  Email |Print

Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year they collectively added 483 tonnes—the second largest annual total since the end of the gold standard—with Russia and China accounting for most of the activity. The second half of 2015 saw the most robust purchasing on record, according to the World Gold Council (WGC).
Not every top bank is a net buyer. The Bank of Canada has liquidated close to all of its gold, mainly in coin sales, while Venezuela is in the process of doing the same to pay off its debts, but most of the world’s central banks right now are accumulating, holding and/or repatriating the precious metal………………………………………..Full Article: Source

The top 10 countries with the largest gold holdings

Posted on 26 May 2016 by VRS  |  Email |Print

Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year they collectively added 483 tonnes—the second largest annual total since the end of the gold standard—with Russia and China accounting for most of the activity. The second half of 2015 saw the most robust purchasing on record, according to the World Gold Council (WGC).
Not every top bank is a net buyer. The Bank of Canada has liquidated close to all of its gold, mainly in coin sales, while Venezuela is in the process of doing the same to pay off its debts………………………………………..Full Article: Source

Where Oil Production Is Set To Soar… And It’s Not OPEC

Posted on 19 May 2016 by VRS  |  Email |Print

Oil prices have been on the rise lately and the market appears to be heading very quickly toward rebalancing, which is very positive for long-oriented investors in this space. While this is all true, however, one area will make any such oil recovery harder than it otherwise would be.
This is the Gulf of Mexico, which is the one place for U.S. production where low prices have not caused output to crash………………………………………..Full Article: Source

How much gold is there in London - and where is it?

Posted on 18 May 2016 by VRS  |  Email |Print

The world’s biggest bank has agreed to buy a vault for gold and precious metals in London. But how many of these vaults are there, and how much gold do they hold? The streets of London may not be paved with gold, but there is certainly a huge amount stored underneath them. About 6,500 tonnes is stored in seven vault-systems under the city.
The largest by far lies in the Bank of England. It holds three-quarters of the gold in London, or 5,134 tonnes. Most of the gold is stored as standard bars weighing 400 troy ounces (12.4 kg or 438.9 ounces) - there are about 500,000 of them, each worth in the region of £350,000………………………………………..Full Article: Source

Non-OPEC countries expected to reduce oil supply

Posted on 16 May 2016 by VRS  |  Email |Print

Non-OPEC countries are expected to reduce oil supply by 0.74 million barrels per day and bring it to 56.4 million barrels per day in 2016 as compared to 57.14 million barrels a day in 2015, according to OPEC’s monthly report on the oil market.
The oil supply by those countries will reach 56.06 million barrels per day in the second quarter of 2016, 56.04 million barrels per day in the third quarter, and 56.55 million barrels per day in the fourth quarter of 2016. The world oil supply rose by 0.02 million barrels per day in April and stood at 95.34 million barrels per day, according to the OPEC report………………………………………..Full Article: Source

Oil discoveries slump to 60-year low

Posted on 09 May 2016 by VRS  |  Email |Print

Slowdown in exploration activity as energy companies seek to conserve cash. Discoveries of new oil reserves have dropped to their lowest level for more than 60 years, pointing to potential supply shortages in the next decade.
Oil explorers found 2.8bn barrels of crude and related liquids last year, according to IHS, a consultancy. This is the lowest annual volume recorded since 1954, reflecting a slowdown in exploration activity as hard-pressed oil companies seek to conserve cash………………………………………..Full Article: Source

OPEC’s Iran Eyes Crude Oil Production at 3.8 Mil Bpd and No Signs of Slowing Down

Posted on 05 May 2016 by VRS  |  Email |Print

It’s been less than half a year after the sanctions were lifted and Iran has already recovered its pre-sanction output volume of 3.8 million barrels per day. According to data out of the International Energy Agency (IEA), Iran produced 3.5-3.7 million bpd in 2011 and was the second largest producer within OPEC. Daily oil exports equaled 2.5 million barrels.
Nonetheless, Iranian authorities are looking to go even further and ramp up production to 4 million bpd………………………………………..Full Article: Source

OPEC oil output near record high in April

Posted on 02 May 2016 by VRS  |  Email |Print

OPEC’s oil output rose in April to close to the highest level in recent history, a Reuters survey found on Friday, as production increases led by Iran and Iraq more than offset a strike in Kuwait and other outages.
Top exporter Saudi Arabia, however, made no major change to output, the survey found, despite the kingdom hinting it could boost supply after OPEC and non-member nations failed to agree to freeze output at a meeting on April 17………………………………………..Full Article: Source

Oil producers fail to agree output freeze

Posted on 18 April 2016 by VRS  |  Email |Print

The world’s top oil producers failed to reach agreement on capping output in Doha Sunday amid a standoff between Saudi Arabia and Iran and raising fears about how markets will react.
Qatari energy minister Mohammed bin Saleh al-Sada said oil producers concluded after six hours of negotiations that they needed “more time”. “The general conclusion was that we need more time to consult among ourselves in Opec and non-Opec producers,” Mr Sada said………………………………………..Full Article: Source

OPEC oil output climbs 40,000 barrels a day in March: Platts

Posted on 12 April 2016 by VRS  |  Email |Print

Oil production from members of the Organization of the Petroleum Exporting Countries rose by 40,000 barrels a day in March from a month earlier, to 32.38 million barrels a day, according to a Platts survey released late Monday.
Platts attributed the increase to higher output from Iran, which climbed by 110,000 barrels a day to 3.23 million barrels a day. Iraqi output also rose by 30,000 barrels a day to 4.16 million barrels a day, according to the survey of OPEC and oil industry officials and analysts conducted by Platts………………………………………..Full Article: Source

Cheap Oil Means Record U.S. Trade Surplus With OPEC

Posted on 06 April 2016 by VRS  |  Email |Print

The U.S. has posted a surplus with the oil-producing bloc in 10 of the past 12 months, hitting a record $1.8 billion for February. Cheap oil, a strong dollar and slow growth abroad continue to break historical U.S. trade patterns.
In February, the average price per barrel of imported crude slipped to $27.48, the lowest mark since December 2003. Petroleum imports fell to the lowest level since September 2002. And the U.S. registered a trade surplus with Organization of the Petroleum Exporting Countries nations–the highest on record–according to Census Bureau data………………………………………..Full Article: Source

Iran expects 4 mbpd oil output by March 2017

Posted on 06 April 2016 by VRS  |  Email |Print

Iranian Oil Minister Bijan Namdar Zanganeh said the country’s crude output would reach four million barrels per day (bpd) by March 2017. “In the annual budget, the amount of oil export has been predicted around 2,250,000 bpd. This means our production this (Iranian) year will reach four mbpd,” Zanganeh said.
Zanganeh said Iran’s oil output has increased after the lifting of international sanctions in January under a nuclear deal with six major powers………………………………………..Full Article: Source

Iran oil exports surpass 2m barrels per day: minister

Posted on 04 April 2016 by VRS  |  Email |Print

Iran’s oil exports have surpassed 2 million barrels per day following the lifting of sanctions under its nuclear deal with world powers, Oil Minister Bijan Zanganeh said on Sunday.
“Iran’s oil and gas condensate exports are now at more than 2 million barrels per day” after rising by 250,000 bpd since March 1, the ministry’s Shana news service quoted Zanganeh as saying. Iran has doubled exports since its nuclear accord took effect on January 16………………………………………..Full Article: Source

No One Knows Where These 800,000 Barrels of Oil Have Gone

Posted on 18 March 2016 by VRS  |  Email |Print

The status of this missing crude could mean a lot for the global oil market. Just two months ago, the International Energy Agency warned that the global oil market could “drown in oversupply.” But according to a Wall Street Journal report, a large portion of the problematic oversupply that is worrying traders and potentially holding down oil prices is also nowhere to be found.
The IEA was unable to account for 800,000 barrels of crude per day last year—the highest level of missing crude in 17 years. The missing crude could simply be a figment of statistics, showing up in the agency’s data due to flawed accounting………………………………………..Full Article: Source

India wants to unlock $40bn in oil and gas through reforms to encourage investment

Posted on 16 March 2016 by VRS  |  Email |Print

Global oil inventories continue to rise, ships are being lined up to hold oil, while agencies warn the world is “drowning” in the black stuff.
But now India wants to unlock oil and gas resources worth almost $40bn (£28.2bn) by simplifying licensing rules and offering price incentives to recover gas from difficult offshore fields. It currently imports about two-thirds of its oil needs, with bulk of that supplied from the Middle East………………………………………..Full Article: Source

EIA sees further rise in OPEC production

Posted on 10 March 2016 by VRS  |  Email |Print

OPEC oil production will further rise reaching 32.35 million barrels per day in 2016 and 32.8 million barrels per day in 2017, according to the US Energy Information Administration’s (EIA) forecasts published in its Short-Term Energy Outlook (STEO).
OPEC oil production amounted to 31.6 million barrels per day in 2015, according to the EIA estimates. EIA expects the highest OPEC oil production in the third and fourth quarters of 2017 – at 32.9 million barrels per day………………………………………..Full Article: Source

Where has the oil gone? Missing barrels and market rebalancing

Posted on 09 March 2016 by VRS  |  Email |Print

Global oil production exceeded consumption by just over 1 billion barrels in 2014/15, according to the International Energy Agency (IEA). Production exceeded consumption by an average of 0.9 million barrels per day in 2014 and 2.0 million bpd in 2015.
Of the 1 billion barrels reportedly produced but not consumed, roughly 420 million are being stored on land in member countries of the Organisation for Economic Cooperation and Development (OECD). Another 75 million barrels are thought to be stored at sea or in transit by tanker somewhere from the oil fields to the refineries………………………………………..Full Article: Source

Will Russia End Up Controlling 73% of Global Oil Supply?

Posted on 07 March 2016 by VRS  |  Email |Print

Russia has played a master stroke in the current oil crisis by taking the lead in forming a new cartel, but it’s a move that could spell geopolitical disaster. The meeting between Russia, Qatar, Saudi Arabia and Venezuela on 16 February 2016 was the first step. During the next meeting in mid-March, which is with a larger group of participants, if Russia manages to build a consensus—however small—it will further strengthen its leadership position.
Until the current oil crisis, Saudi Arabia called the crude oil price shots; however, its clout has been weakening in the aftermath of the massive price drop with the emergence of US shale. The smaller OPEC nations have been calling for a production cut to support prices, but the last OPEC meeting in December 2015 ended without any agreement………………………………………..Full Article: Source

OPEC is no longer a cartel - it’s become ‘the central bank of oil’

Posted on 03 March 2016 by VRS  |  Email |Print

OPEC, the intergovernmental organization made up of 13-oil producing members, is technically a cartel. But given some of its recent actions, one economist argues that that label may no longer be applicable.
“I don’t think they’re really a cartel in the true sense of the word anymore,” said Jason Schneker, president and chief economist at Prestige Economics. “A more accurate description, and my vision of it now, is that OPEC is the central bank of oil.”……………………………………….Full Article: Source

Why OPEC will never cut production again

Posted on 03 March 2016 by VRS  |  Email |Print

Since the December OPEC meeting, I have come to one inescapable conclusion: that OPEC will never cut production again at the expense of its own market share. Based on that idea, in the past couple of months, my clients, subscribers and I have done well to trade around oil’s further decline, the slow bleed out of indebted oil stocks and even bet against a few banks.
In the past week, however, oil has shown some strength on the back of young traders and short covering. With huge resistance around $37 per barrel of oil, I don’t see that strength lasting long………………………………………..Full Article: Source

OPEC watching Iran, Russia, unlikely to cut output in June

Posted on 02 March 2016 by VRS  |  Email |Print

OPEC is very unlikely to cut output at its next meeting in June, even if prices remain extremely low, according to OPEC sources and delegates, as it will be too early to say how fast Iranian output is rising. The sources, which include officials from the Middle East, say OPEC countries such as Saudi Arabia also want to test Russia’s commitment to freezing output before taking any further steps to stablize prices.
More than 18 months after oil prices began a steep slide due to excess supply, Saudi Arabia, Qatar, Venezuela and non-OPEC Russia agreed last month to freeze output at January levels in the first global oil pact in 15 years………………………………………..Full Article: Source

Russia Sees Oil Output Slump in Worst Case Amid OPEC Talks

Posted on 19 February 2016 by VRS  |  Email |Print

Russian oil production may slump 14 percent in the next five to 10 years under a worst-case scenario prepared by the Energy Ministry. Crude output may drop to 460 million metric tons (9.2 million barrels a day) by 2020-2025 from 534 million tons last year, before starting to show slight growth, the Energy Ministry’s press service said.
The worst case, prepared for the nation’s long-term energy strategy, envisages oil prices remaining at about $31 to $33 a barrel in 2016-2017 with a rebound to $42 in 2020, it said………………………………………..Full Article: Source

Commodity prices won’t recover on supply cuts alone

Posted on 17 February 2016 by VRS  |  Email |Print

For the first time since 2009, supply growth for the majority of major metals and bulk commodities is expected to be negative year-on-year. Global mining capex peaked in 2012, and we are now experiencing a lag effect of fewer new projects. Existing operations are facing more aggressive cuts amid weaker prices, so production growth has been curtailed.
In more familiar times, this might be considered a buy signal for nickel, palladium and iron ore, or their sharemarket proxies? In this case though, many markets enter the year from an oversupplied situation, so even a drop in mine supply won’t be enough to fully bring things back to balance………………………………………..Full Article: Source

China Commodity Deluge Eases in Relief for Global Producers

Posted on 16 February 2016 by VRS  |  Email |Print

Steel bosses in the U.S. to oil refinery officials in Asia facing increased competition from Chinese commodity exports may be seeing a glimmer of relief. China’s overseas shipments of steel, aluminum and fuels all dropped in January from a month earlier, data from the nation’s customs administration showed on Monday.
That represents an easing in the deluge of manufactured products from the country, where slowing domestic demand amid economic malaise has sent record volumes abroad and compounded a worldwide surplus of commodities………………………………………..Full Article: Source

Was Resource Boom A Boom For Commodities Exporters?

Posted on 12 February 2016 by VRS  |  Email |Print

While everyone is running around with the collapsed oil prices, economists with an eye for cycles and history are starting to digest the aftermath of the passed commodities price boom that started around the beginning of the century and lasted until 2011-2012.
The issues relating to that boom are non-trivial. Commodities prices are cyclical and just as the boom turns to bust, so will the bust turn to boom. Therefore, one should really try to understand what exactly happens in both………………………………………..Full Article: Source

Iran prices oil lower than Saudi for Europe

Posted on 12 February 2016 by VRS  |  Email |Print

Iran has revealed its oil prices to European buyers for the first time since sanctions were lifted against the Middle Eastern country. The most competitive pricing compared with Saudi Arabian supply in 21 months underscores its intention to win back market share.
Iran Heavy, one of the country’s main export grades, will cost $1.25 a barrel less than Saudi Arabia’s most similar crude in March, notices from both nations’ state oil companies show………………………………………..Full Article: Source

OPEC expects rivals to pump out less oil in 2016

Posted on 11 February 2016 by VRS  |  Email |Print

Oil cartel OPEC has cut its forecasts for how much its rival producers will produce in in 2016, while the 12-member group continues to ramp up its own production levels.
According to the latest monthly report from the group, whose de facto leader is Saudi Arabia, non-OPEC oil supply is forecast to decline by 700,000 barrels a day (b/d) in 2016 — 40,000 b/d less than the cartel’s January report………………………………………..Full Article: Source

Russia is now China’s biggest oil partner — and it’s a huge problem for Saudi Arabia

Posted on 03 February 2016 by VRS  |  Email |Print

Saudi Arabia has long trumped Russia in the Chinese oil market. The Saudi share of Chinese crude imports at the beginning of the decade was about 20%, while Russia’s was below 7%, according to data cited by RBC Capital Markets.
But now the Russians are creeping in — and the Saudis are getting nervous. “Russia is the biggest rival to the Saudis in the single-largest oil demand growth country in the world,” RBC Capital Markets’ commodity strategist Michael Tran wrote………………………………………..Full Article: Source

Commodity producers face tough times on bearish market

Posted on 27 January 2016 by VRS  |  Email |Print

Commodity bears are testing nerves of producers. Several commodity producers, especially those related to metals and US shale, have blinked and cut production. However, there is always a limit to the extent they can cut production. Prices are at multi-year lows — metals around 7-8 year lows, oil at 12-year lows. Gold and silver are no exceptions and so are other commodities like iron ore, steel and coal.
Most resource commodities are in a bear market, down significantly from their peaks, largely due to lower demand. The criteria to indicate whether commodities are in a bear market is when a commodity is down 50% or more from its peak or is around its long term low levels………………………………………..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

Non-OPEC crude production projected to drop in 2016

Posted on 20 January 2016 by VRS  |  Email |Print

Crude oil production in 2016 outside the Organization of Petroleum Exporting Countries (OPEC) will plunge by 660,000 barrels a day (BPD), the group said Monday in its monthly market report, a 270,000 BPD drop from its December estimate. The bulk of the production drop outside OPEC this year will come from the U.S., 380,000 BPD, OPEC projected in its January report, averaging 13.5 million barrels per day (MMBPD), Kallanish Energy finds.
The drop was revised down by 210,000 BPD compared to December’s projection due to the steep drop in global oil prices which could endanger output of marginal barrels from unconventional sources (tight crude and unconventional natural gas liquids)………………………………………..Full Article: Source

The Case for Raw Commodity Sector Bottoming in 2016

Posted on 19 January 2016 by VRS  |  Email |Print

Let’s take a look at a few longer-term charts of key markets and indexes, which are presently providing some technical clues the major “bust” cycle in the raw commodity sector will likely run its course in 2016.
Goldman Sachs Commodity Index: The GSCI monthly chart shows the index price this month dropped below the 2009 low and hit a 12-year low. The raw commodity sector is presently experiencing its second-largest bust cycle dating back at least 40 years—second only to the big downdraft seen in 2008 and 2009………………………………………..Full Article: Source

Iran to boost oil exports by 500,000 bpd after sanctions

Posted on 18 January 2016 by VRS  |  Email |Print

Iran is ready to increase its crude oil exports by 500,000 barrels a day, the deputy oil minister said on Sunday, hours after international sanctions on Tehran were lifted, removing an obstacle to exports.
The Islamic Republic emerged from years of economic isolation on Saturday when world powers lifted sanctions after confirming that Tehran had curbed its nuclear programme. “With consideration to global market conditions and the surplus that exists, Iran is ready to raise its crude oil exports by 500,000 barrels a day,” Deputy Oil Minister Amir Hossein Zamaninia was quoted as saying by the Shana news agency………………………………………..Full Article: Source

The Commodities Crash: A Supply-Side Perspective

Posted on 14 January 2016 by VRS  |  Email |Print

2015 was brutal for commodities. Even worse, they took another plunge at the start of 2016. The Bloomberg Commodity Index, which covers a wide range of natural resources, dropped to its lowest level since June 1999. The collapse in commodity prices happened across the board, from crude oil to iron ore, coal, and industrial metals.
Unfortunately, there is little sign of stability or recovery: Oil and iron ore prices dipped even further in December. As a result, mining stocks took a beating, and ratings on mining bonds were downgraded. Weakening demand from China receives most of the blame for the tumbling prices. China was the main driving force behind the rising commodity prices, its fixed-asset investment growing at an average of 25% from 2003 to 2011………………………………………..Full Article: Source

Russia plans for seven more years of $40 oil in message to Opec

Posted on 14 December 2015 by VRS  |  Email |Print

Russia is battening down the hatches for a Biblical collapse in oil revenues, warning that crude prices could stay as low as $40 (Dh147) a barrel for another seven years. Maxim Oreshkin, the deputy finance minister, said the country is drawing up plans based on a price band fluctuating between $40 and $60 a barrel as far out as 2022, a scenario that would have devastating implications for Opec, the Organisation of Petroleum Exporting Countries.
It would also spell disaster for North Sea producers, Brazil’s offshore projects and heavily indebted Western producers. “We will live in a different reality,” Oreshkin told a forum in Moscow. The cold blast from Russia came as US crude slipped to $36.14, pummelled by the continuing fallout from the acrimonious Opec meeting last week. Record short positions by hedge funds have amplified the effect………………………………………..Full Article: Source

OPEC Says Crude Production Rose to 3-Year High in November

Posted on 11 December 2015 by VRS  |  Email |Print

OPEC raised crude output to the highest in more than three years as it pressed on with a strategy to protect market share and pressure competing producers.Output from the Organization of Petroleum Exporting Countries rose by 230,100 barrels a day in November to 31.695 million a day, the highest since April 2012, as surging Iraqi volumes more than offset a slight pullback in Saudi Arabia.
The organization is pumping about 900,000 barrels a day more than it anticipates will be needed next year. Benchmark Brent crude dropped to a six-year low in London this week after OPEC effectively scrapped its output ceiling at a Dec. 4 meeting as de facto leader Saudi Arabia stuck to a policy of squeezing out rival producers………………………………………..Full Article: Source

OPEC predicts rivals’ supply to contract in 2016

Posted on 11 December 2015 by VRS  |  Email |Print

The supply of oil from countries outside of the OPEC will contract next year as world oil demand rises, the production cartel said in its latest monthly report. Indicating that the 12-country oil producing group led by Saudi Arabia could be winning the fight to retain market share in the face of its rivals outside the organization, the group said that non-OPEC oil supply growth was expected to be “much lower” in 2015 and 2016 after “the tremendous growth of 2.23 million barrels a day achieved in 2014.”
While non-OPEC oil supply was estimated to grow by 1.00 mb/d in 2015 to average 57.51 mb/d, it forecast a contraction in non-OPEC oil supply in 2016………………………………………..Full Article: Source

2016 spells more gloom for oil producers

Posted on 10 December 2015 by VRS  |  Email |Print

A year after OPEC sent oil markets spiraling out of control, the group may have sparked another round of bearishness for crude. OPEC failed to agree to a production target on December 4 in Vienna, removing the stated target of 30 million barrels per day (mb/d). It was no secret that member nations collectively produced in excess of 30 mb/d for quite a while, but by removing the target altogether, OPEC sent a signal to oil markets.
The decision, or non-decision as the case may be, kills the notion that OPEC will act decisively to boost oil prices. In response, just as in November 2014, oil prices crashed. On Dec. 7, both WTI and Brent traded down by more than 5%. The markets had been holding out a sliver of hope that OPEC would take action in Vienna, but it wasn’t to be………………………………………..Full Article: Source

Oil producers prepare for prices to halve to $20 a barrel

Posted on 09 December 2015 by VRS  |  Email |Print

The world’s leading oil producers are preparing for the possibility of oil prices halving to $20 a barrel after a second day of financial market turmoil saw a fresh slide in crude, the lowest iron ore prices in a decade, and losses on global stock markets.
Benchmark Brent crude briefly dipped below $40 a barrel for the first time since February 2009 before speculators took profits on the 8% drop in the cost of crude since last week’s abortive attempt by the oil cartel Opec to steady the market. But warnings by commodity analysts that the respite could be shortlived were underlined when Russia said it would need to make additional budget cuts if the oil price halved over the coming months………………………………………..Full Article: Source

Why the Chinese metal production cuts won’t work: Andy Home

Posted on 04 December 2015 by VRS  |  Email |Print

The last few days have brought a string of cutback announcements by Chinese metals producers. A grouping of 10 of the country’s top copper smelters have pledged to reduce output by 350,000 tonnes next year. Not to be outdone, 10 major zinc producers are going to cut their output by 500,000 tonnes next year, while eight of the country’s biggest nickel producers are going to cut by around 20 percent, equivalent to around 80,000 tonnes, of collective capacity.
The statements, coordinated by the China Nonferrous Metals Industry Association and Antaike, both metallic arms of the government, are proof that Chinese metals producers are feeling the same pain as their Western peers after this year’s implosion in metal prices………………………………………..Full Article: Source

Is the market really flooded with surplus oil?

Posted on 24 November 2015 by VRS  |  Email |Print

Nearly three billion barrels of crude petroleum and refined products are being stored by oil firms in the advanced economies according to the International Energy Agency (IEA). Commentators have seized on the three billion figure as a shorthand way to convey how oversupplied the oil market has become.
Large round numbers exert a powerful pull on the imagination but shorn of context they are meaningless and apt to confuse rather than illuminate. The statistic is technically accurate but the way in which it is being employed by analysts and journalists is hugely misleading. It would be more helpful to report the change, which is 240 million barrels, or nine per cent, over the last year………………………………………..Full Article: Source

Commodity producers may be better bet in any demand recovery: Russell

Posted on 19 November 2015 by VRS  |  Email |Print

Let’s assume that you are a somewhat contrarian investor and take the view that the recent slump to fresh lows in commodity prices, and the share prices of producers, is a sign that a turnaround is coming in 2016. If you do take this view, is it better to buy the actual commodities or the shares of the companies that extract them?
Unfortunately there is no clear precedent from recent history to suggest that one will significantly outpace the other, but that doesn’t mean there’s no value in looking in what has happened in prior commodity routs. BHP Billiton, the world’s largest diversified miner, reached its lowest since the 2008 financial crisis in Sydney trading on Nov. 11, hitting an intraday low of A$19.81 ($14.06) a share, before closing at A$20.23. ……………………………………..Full Article: Source

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