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Commodities Briefing - Category | Trading more

CTAs lead hedge fund recovery as commodities slump

Posted on 29 July 2015 by VRS  |  Email |Print

Hedge funds are on track to deliver solid returns in July, up 1.4% month to date (0.4% of as end July 21). CTAs and global macro managers outperformed other hedge fund strategies, said Lyxor Asset Management.
In its Weekly Briefing, Lyxor said that CTAs bounced back last week, recouping part of the losses generated earlier this year. They benefited from their sizeable short positions in precious metals and energy as gold and energy prices dropped. Fixed income and equity buckets added to the gains, albeit to a lesser extent as CTA managers recently cut the risk on both asset classes………………………………………..Full Article: Source

Six collapsing commodities

Posted on 28 July 2015 by VRS  |  Email |Print

Commodity prices from gold to oil and aluminium to iron ore are tumbling – here are the big fallers. Just when investors thought it might be time for a summer lull, financial markets have shifted their focus from the eurozone and its Greek woes to tumbling commodity prices.
A combination of factors have knocked gold, crude oil and industrial metals such as copper in recent days. What commodities are on the move and what are they used for? Primarily used in jewellery and as a financial instrument, such as in the form of bars in central bank vaults, gold is also in demand from electronics companies and for medical uses such as dentistry………………………………………..Full Article: Source

Currency Trade Drops From Tokyo to New York on Fed’s Reserve

Posted on 28 July 2015 by VRS  |  Email |Print

Foreign-exchange trading declined around the world in April amid speculation the Federal Reserve will raise interest rates only gradually. Daily trading in the U.K., the largest currency market, fell 8 percent to average $2.5 trillion, down from October’s record of $2.7 trillion, according to a Monday statement from the Bank of England’s Foreign Exchange Joint Standing Committee.
In the U.S., volumes dropped about 20 percent from last October to $881 billion, the Foreign Exchange Committee, which is sponsored by the Federal Reserve Bank of New York, said on its website. “You saw monetary policy stagnation in all the major central banks at that period in time,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company………………………………………..Full Article: Source

The negative feedback loop broadens the commodities sell-­off

Posted on 27 July 2015 by VRS  |  Email |Print

Goldman Sachs have been arguing since 2013 that commodities are caught in a “negative feedback loop between excess production capacity, US dollar appreciation and weaker EM economic growth”. They recently termed these three key themes the 3D’s of macro – deflation (excess production capacity and rising productivity), divergence (stronger US dollar and weaker EM currencies) and deleveraging (significant EM credit and macro imbalances).
“They are not only at the center of all of our views but have been a decade in the making and hence will likely take years to play out. Further, they are mutually self­-reinforcing. Lower commodity prices reinforce the US recovery and dollar appreciation; while weaker commodity currencies keep downward pressure on commodity cost curves (mainly through lower wage and energy costs),” say Goldman………………………………………..Full Article: Source

Commodities in a meltdown, but coal, uranium offer some hope

Posted on 27 July 2015 by VRS  |  Email |Print

From super-cycle to commodity meltdown was the way one group of analysts titled a report last week. “Sentiment toward commodities as an asset class has rarely, if ever, been more negative,” added Capital Economics.
Copper has hit a six-year low and closed on Friday at a dispiriting $US5238 a tonne, down 6 per cent on the week and with Goldman Sachs forecasting the red metal reaching $US4500/tonne by the end of 2016. Nickel took another hit, ending at $US11,255/tonne while lead shed more value to close at $US1716/tonne………………………………………..Full Article: Source

China’s rising commodity exports changing nature of trade: Russell

Posted on 24 July 2015 by VRS  |  Email |Print

The world is used to seeing China as an importer of raw materials and an exporter of manufactured goods, but a change is occurring that has global implications for commodities. While China is still the world’s biggest importer of commodities, the nature of its exports are changing.
The big growth in exports this year has been in semi-finished products, most of which fit into the broad definition of commodities. While not raw materials, these include steel, aluminium products and refined fuels. What is happening in China is that as the country has overbuilt capacity in heavy industries, it is now being forced by economics to seek export markets for intermediate commodities that had previously been consumed at home………………………………………..Full Article: Source

Gold Speculators Least Bullish on Record as Rate Rise Approaches

Posted on 20 July 2015 by VRS  |  Email |Print

Janet Yellen’s optimism about the U.S. economy is making gold speculators the least bullish on record. Money managers are holding the smallest net-bullish bet on gold since the U.S. government data begins in 2006. They’re also dumping silver, platinum and palladium, and combined net-long wagers across the metals are the lowest ever.
About $2.1 billion was erased from the value of exchange-traded products tracking the commodities last week, the most since March. Gold futures dropped to the lowest level since 2010 on Monday, and Barclays Plc recommends that investors short the metal and go long on the dollar. With Federal Reserve Chair Yellen repeating that she’s ready to raise U.S. interest rates this year, investors are dumping precious metals that don’t pay interest or offer returns like competing assets………………………………………..Full Article: Source

Which regulations are commodity traders happy with?

Posted on 20 July 2015 by VRS  |  Email |Print

As home to some of the largest commodities trading companies in the world, Switzerland is taking steps to bring legislation more in line with major business partners. While recently adopted measures are seemingly welcomed by the industry, other more stringent steps are being considered with slightly more trepidation.
For Stéphane Graber, secretary general of the STSA (Swiss Trading and Shipping Association), Parliament’s adoption of the Financial Market Infrastructure Act was essential for the industry he represents. The legislation, which governs the organisation and operation of financial markets, aims to align Switzerland to regulations, particularly in the United States and the European Union, to control manipulations of large trades………………………………………..Full Article: Source

Currency-trading boost helps Icap

Posted on 16 July 2015 by VRS  |  Email |Print

The end of a dull spell in currencies is helping broker Icap, but the company is still holding out for more clarity on the path of US interest rates. In a trading statement covering April to June released on Wednesday, the London-based broker said its average daily volumes in currencies trading, through its EBS system, were up by 34 per cent to $98bn.
That’s still far behind EBS’s heyday, but still marks a recovery from historic lows. Non-deliverable currencies forwards and the offshore-traded renminbi showed particularly strong growth, it said………………………………………..Full Article: Source

Currency Trading Shifts to Multi-Dealer Systems, Greenwich Says

Posted on 15 July 2015 by VRS  |  Email |Print

Currency investors are increasingly using electronic systems connected to multiple dealers as the market comes under greater scrutiny by regulators, according to Greenwich Associates.
Institutional investors and large corporations executed 49 percent of their foreign-exchange trading volumes on multi-dealer platforms last year, up from 45 percent in 2013 and 38 percent in 2008, the Stamford, Connecticut-based consultant said in a report. The increase comes as trading by traditional methods, such as phone, instant messaging and single-dealer platforms, has fallen………………………………………..Full Article: Source

Commodity market rout shows how Chinese growth determines prices

Posted on 14 July 2015 by VRS  |  Email |Print

The recent global rout in commodity markets re-emphasised the relationship between Chinese growth and commodity prices. It is a well-known fact that China is the largest importer and consumer of many commodities, but its commodity traders are also among the most leveraged.
The Chinese manufacturing boom started a couple of decades ago serving the needs of the western world for cheaper manufacturing. But over the last decade much of its growth has been supported by the rise in domestic consumption driven by the vast middle-class on the back of rising incomes and asset prices………………………………………..Full Article: Source

Low prices to boost some China commodities imports

Posted on 14 July 2015 by VRS  |  Email |Print

Prices near multi-year lows could support some Chinese commodity imports in coming months, giving a boost to crude oil, iron ore and soybean shipments, but weak domestic demand is expected to keep other commodities in check. China’s crude oil imports surged 27 percent in June on a year earlier to the second highest level on record.
Soybeans imports had a similar jump as buyers took advantage of cheap and plentiful overseas supplies. “Given the very low commodity prices, I think there will be some restocking demand and that will support the import of commodities,” said Helen Lau, analyst at Argonaut Securities in Hong Kong………………………………………..Full Article: Source

Commodities continue to see volatility, China scare persists

Posted on 09 July 2015 by VRS  |  Email |Print

The global commodity market witnessed sharp volatility on Wednesday after tumbling in early trade due to concerns that a persistent slide in China’s stock market may have broader damaging impact on other markets as well.
Earlier in the day, the Bloomberg Commodity Index, which tracks the prices of 22 commodities (from oil to natural gas), dropped as much as 0.8% to 96.8069, its lowest level on a closing basis since late 2001 and slightly over an intraday low of 96.258 on March 18………………………………………..Full Article: Source

China sees surge in precious metal trading

Posted on 08 July 2015 by VRS  |  Email |Print

China recently saw trades of precious metals hit new highs and several companies introduced new investment products that are more accessible to average investors, according to the Guangzhou Daily. The Shanghai Gold Exchange (SGE) posted a record trading volume of 48.33 million grams in a single day in late June, even though global gold prices remain bearish, the paper said.
In early July, gold was still hovering around the three and a half month low of US$1,168 per ounce on uncertainty created by the Greek debt crisis. Several precious metals trading platforms in China have also witnessed a rebound and record trading volumes since mid-May, the newspaper reported. The Guangdong Precious Metals Exchange said the number of institutional investors more than tripled from a year earlier, while trading volume in June nearly doubled from last year………………………………………..Full Article: Source

Commodities Skid on China’s Stock Rout

Posted on 07 July 2015 by VRS  |  Email |Print

Commodities suffered their worst rout in seven months as a steep selloff in China’s stock market magnified investor fears about weaker demand from one of the world’s largest consumers of raw materials.
The S&P GSCI, an index that tracks a diversified basket of commodities, fell 4.9% to 412.51 Monday. This was its steepest drop since November and its lowest level since April. The losses come amid a swift downdraft in Chinese stocks, which have lost more than one-quarter of their value since touching a record high in June and gave up 72% of all their gains made this year………………………………………..Full Article: Source

Iran Wants to Double Oil Exports After Sanctions Lifted

Posted on 06 July 2015 by VRS  |  Email |Print

Iran wants to double its crude exports soon after sanctions are lifted and is pushing other members of the Organization of the Petroleum Exporting Countries to renew the cartel’s quota system, a top Iranian official said. Both developments could set up a clash with Saudi Arabia, which is scrambling to raise its own export numbers and has opposed the return of production limits on individual OPEC members.
Iran’s efforts underscore how the country’s full return to the export market would upend the status quo among leading producers if Tehran clinches a deal with six world powers that would lift sanctions in exchange for curbs on its nuclear activities………………………………………..Full Article: Source

Commodities Break Their Ties

Posted on 02 July 2015 by VRS  |  Email |Print

Tumbling oil prices and a historic rally in the U.S. dollar had commodity markets marching in lock step for months, but they broke ranks in the second quarter. Oil prices, which touched six-year lows in March, gained 24.9% in the second quarter on expectations of slowing supplies and higher demand.
Meanwhile, the dollar pulled back from 12-year highs as investors pushed back their forecasts for higher interest rates in the U.S. “This has helped commodities become independent and dispersed once again,” said Michael Haigh, global head of commodities research at Société Générale………………………………………..Full Article: Source

OPEC oil output hits three-year high in June on Iraq: Reuters survey

Posted on 02 July 2015 by VRS  |  Email |Print

OPEC oil supply in June has climbed to a three-year high due to record or near-record output from Iraq and Saudi Arabia, a Reuters survey found, underlining the focus of the group’s top exporters on market share.
The boost from the Organization of the Petroleum Exporting Countries puts output further above its target of 30 million barrels per day (bpd) and comes despite outages in Libya and Nigeria that curbed supplies. OPEC supply has risen in June to 31.60 million bpd from a revised 31.30 million bpd in May, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants………………………………………..Full Article: Source

India: Algorithmic trading in domestic commodities sees sharp spike

Posted on 02 July 2015 by VRS  |  Email |Print

The share of trading based on algorithms, or algo trading in popular parlance, has seen a sharp rise in domestic commodity markets, amid regulatory concerns on the volatility that such trading can bring to the markets.
Software codes or algorithms are frequently used to automate and enhance order-matching processes. While such trading has been popular in the equities segment for some time now, it has picked up relatively recently in the commodities market………………………………………..Full Article: Source

Commodities Jump Most Since February as Corn, Soybeans Rally

Posted on 01 July 2015 by VRS  |  Email |Print

The outlook for smaller crop supplies sent corn and soybean prices surging, spurring the biggest gain for raw-material prices since February. The Bloomberg Commodity Index of 22 components rose 1.9 percent to 102.69 as of 3:30 p.m. in New York, on pace for the largest advance since Feb. 3. Corn soared the most since 2010, climbing 7.7 percent, the biggest gain among the asset class on Tuesday.
Heavy rains have slowed crop planting across the U.S. Midwest, while expanding livestock herds mean that there’s more grain being used in feed supplies. American farmers planted fewer corn acres than estimated three months ago, and domestic inventories as of June 1 were smaller than analysts were forecasting, a report from the U.S. Department of Agriculture showed Tuesday………………………………………..Full Article: Source

Commodities Green Shoots Suggest Better H2 - Analysts

Posted on 01 July 2015 by VRS  |  Email |Print

Commodity prices have been largely flatlined in the past few months, and even on the year, would appear to be on life-support. Nevertheless, analysts see scope for commodity recovery in the second half of 2015 and point to several factors that could revive global investor interest.
The Thomson Reuters Jefferies CRB index stands at 227.2176 Tuesday afternoon, on the high side of a 223.1627 to 226.4730 range. The TRJCRB closed at 229.9579 December 31, and fell to 211.2690 January 29, covered to 229.5511 in mid February and then put in a 2015 trough of 206.8126 on March 18, the day the Fed took the word “patient” from the accompanying statement………………………………………..Full Article: Source

Oil uptrend breakout

Posted on 01 July 2015 by VRS  |  Email |Print

The NYMEX oil price remains bullish and could be headed for $63, technical analysis shows. It’s developed a double bottom pattern near $45 as the downtrend consolidation developed. When the height of the double bottom is measured, this value is projected above the peak of the double bottom pattern near $53. This pattern is also called a W trend reversal pattern.
The upside target for the double bottom rebound is near $63. This target has not been achieved as the price has consolidated between $58 and $61. But this remains a bullish chart pattern because support at $58 is consistent. The consolidation behavior is a pause in the full development of the double bottom pattern so the $63 target remains achievable………………………………………..Full Article: Source

Commodities Drop as Greek Turmoil Spurs Concern Demand Will Wane

Posted on 30 June 2015 by VRS  |  Email |Print

Commodities fell the most in a week on concern that Greece’s deepening financial crisis will threaten global economic growth and demand for energy and metals. The Bloomberg Commodity Index of 22 raw materials lost as much as 0.9 percent, the most since June 19. Energy products and industrial metals led declines, with crude oil dropping to a three-week low and nickel slumping to the lowest since 2009.
Greece shut its banks and imposed capital controls in a bid to avert the collapse of its financial system, increasing the risk that it will be forced out of the euro. After failing to reach a deal with creditors, the country will vote in a July 5 referendum on proposals needed to restore bailout aid………………………………………..Full Article: Source

Greece and China weigh on commodities

Posted on 30 June 2015 by VRS  |  Email |Print

Commodities did not escape the market turmoil caused by Greece’s capital controls and a hefty drop in Chinese equities, with the stronger dollar and risk aversion hitting raw materials led by oil and metals. ICE August Brent, the international benchmark that has traded within a tight range of $61-$66 a barrel for several weeks, fell $1.41 a barrel to $61.86. In the US, Nymex August West Texas Intermediate fell $1.23 a barrel to $58.40.
On the London Metal Exchange, amid a sea of red for industrial metals prices, nickel plumbed a six-year low. The metal, an ingredient for stainless steel, fell 4.6 per cent to $11,855 a tonne, while aluminium was off 1.5 per cent, copper fell 0.5 per cent, and tin dropped 2.5 per cent………………………………………..Full Article: Source

Baltic Exchange ship futures platform examines move into commodities

Posted on 30 June 2015 by VRS  |  Email |Print

London’s Baltic Exchange is studying a potential foray into commodities and is open to proposals on tie-ups as other exchanges attempt to boost volumes, its chief executive said. Baltex, the Baltic’s digital shipping platform, was launched in 2011 as the first central electronic marketplace for freight forward agreements (FFAs), which allow investors to take positions on freight rates at a point in the future.
Since the beginning of this year, the previously loss making platform, has reached break even levels after Baltex became a venue for presenting block futures at the start of December………………………………………..Full Article: Source

Water: The Next Tradable Commodity?

Posted on 30 June 2015 by VRS  |  Email |Print

Water will one day be soon traded as a commodity. Setup in 2003 as an unmanaged benchmark, the Palisades Water Index is tracked by many water indexes and ETFs. As the popular rhyme goes: “Water, water everywhere, but not a drop to drink” tweet.
Public perception has begun to change regarding water no longer being an infinite resource as we previously thought. Despite it covering 68% of the surface of the planet, the amount that actually serves a purpose for humans is only a mere 0.3%. With what some perceive as an “epidemic” expanding globally, experts predict that the only sustainable way in managing water is to trade it on a futures exchange, similar to other natural commodities such as oil and gold………………………………………..Full Article: Source

Saudi Kingdom, Russia vie for global oil market foothold

Posted on 29 June 2015 by VRS  |  Email |Print

In the rapidly changing geopolitical environment, Saudi Arabia and Russia are forging ahead - fostering a closer relationship - in major sectors including the all important energy sector. When the Saudi Deputy Crown prince Mohammad bin Salman, accompanied not only by the Foreign Minister Adel bin Jubeir but also the Petroleum Minister Ali Al-Naimi called on Russian President Vladimir Putin in St. Petersburg on June 18, six major deals were signed between the world’s two top crude producers.
The deals ranged from agreement in defense sector to enhanced cooperation in energy development. It also covered greater cooperation on nuclear energy development. Citing unnamed sources, Al-Arabiya reported the kingdom planned to build 16 nuclear reactors and Russia has agreed to play a significant role in operating them………………………………………..Full Article: Source

Commodities Drop With a Dull Thud

Posted on 26 June 2015 by VRS  |  Email |Print

July looms but the dog days for commodities markets have arrived already. Investors in the likes of copper, oil, and grains are used to having a little action in their lives: a war here, a hurricane there. But while the world remains a dangerous place, commodities markets aren’t really feeling it.
Of the major raw materials, only crude oil and gasoline have registered gains so far this year. Everything else is down, underperforming the S&P 500. Even oil’s rally has lost momentum since April and merely reflects a little recovery from last year’s washout: Look back over one year and, like all major commodities, it is in negative territory………………………………………..Full Article: Source

OPEC petroleum exports fall below $1 trillion in 2014 on oil slump

Posted on 26 June 2015 by VRS  |  Email |Print

The value of OPEC members’ petroleum exports fell below $1 trillion in 2014 for the first time since 2010, according to its annual statistical report, illustrating the impact of last year’s slump in oil prices on the producer group.
The data includes some refined fuel and light oil condensate as well as crude oil. Exports from the Organization of the Petroleum Exporting Countries fell in value to $964.6 billion last year from $1.10 trillion in 2013, according to OPEC’s Annual Statistical Bulletin 2015 issued on Wednesday………………………………………..Full Article: Source

Oil Tankers Are Filling Up and Raking It In

Posted on 26 June 2015 by VRS  |  Email |Print

The oil-tanker market is heating up, a development some analysts say is a warning flare that signals further price declines for crude. The Baltic Dirty Tanker Index, which tracks the rates to hire oil tankers plying 16 routes, has shot up 25% this month, as global oil output continues to grow. The index is now at its highest level since January 2014.
But an increasing number of these oil cargoes have nowhere to go. Oil producers and traders are rushing to lease tankers while they scramble to find buyers, effectively turning these ships into floating storage facilities. The oil-supply glut has worsened since the Organization of the Petroleum Exporting Countries earlier this month decided to maintain crude-output levels………………………………………..Full Article: Source

Sugar Exports From India Seen Doubling as Bumper Crop Looms

Posted on 26 June 2015 by VRS  |  Email |Print

Sugar exports from India may double as farmers prepare to harvest the third-biggest crop ever, extending the country’s surplus for a sixth year. Shipments will be 2 million metric tons in the 12 months starting Oct. 1, according to the median of six estimates from refiners, brokers and analysts compiled by Bloomberg. That compares with 700,000 tons to 800,000 tons this year, the Indian Sugar Mills Association says.
Production will be 27.25 million tons from a record 28.4 million tons this year, estimates from eight survey participants show. The glut in the world’s second-largest producer threatens to extend a 35 percent slump in New York futures in the past year. The decline in prices to the lowest since 2009 has forced the government to subsidize exports and waive interest on bank loans to processors. Stockpiles of 10 million tons will add to supplies and exceed demand of 25.5 million tons, the mills say. That may force producers to ship as much as possible………………………………………..Full Article: Source

Are gold imports really the bugbear they’re made out to be?

Posted on 25 June 2015 by VRS  |  Email |Print

Gold imports are looked upon by the authorities with fear and loathing. The insatiable appetite of the Indian buyer for the yellow metal has long been talked about, but is it really a very big problem at this point in time? Indian gold imports (in tonnes) increased at a compound annual growth rate (CAGR) of 1.3% between 2004-05 and 2014-15—from 770.5 tonnes in 2004-05 to 879 tonnes in 2014-15.
True, measures have been put in place to reduce imports, but a CAGR of 1.3% is hardly worth worrying about, is it? What, then was the problem? Gold imports were higher in 2011-12, bloating the country’s current account deficit, but circumstances were different at the time—gold had been enjoying a bull run, while inflation had spooked Indian savers, leading them to view the metal as a safe refuge………………………………………..Full Article: Source

Bank of China Joins London Gold Auction, Promises Boon for Domestic Market

Posted on 25 June 2015 by VRS  |  Email |Print

The Bank of China’s inclusion in the ICE Benchmark Administration (IBA) London Bullion Market Association (LBMA) Gold Price this week will positively, albeit gradually, affect the Chinese gold market, experts told Sputnik on Wednesday.
“The market participants’ diversification and internationalization will rationalize the gold costs. This will also promote the development of China’s gold market,” Beijing Gold Exchange Center chief gold analyst Zhang Lei said. ……………………………………….Full Article: Source

LBMA to start reporting OTC gold trade soon

Posted on 25 June 2015 by VRS  |  Email |Print

The London Bullion Market Association (LBMA) could soon take steps to report trades of the over-the-counter gold market, but the prospect of higher costs makes an exchange-traded model unattractive to participants for now, its chief executive said.
The LBMA had commissioned consultancy EY, formerly known as Ernst & Young, to review the London gold market and recommend further developments including the possibility of creating an exchange for gold trading in the city………………………………………..Full Article: Source

Iran has better chance to be a global supplier of gas than oil: expert

Posted on 23 June 2015 by VRS  |  Email |Print

Sara Bazoobandi, a lecturer in international political economy at Regent’s University London, says Iran has a better chance to become a “global gas supplier than oil” by developing its infrastructure. “With developing the infrastructure the country will stand a much better chance to be a global supplier of gas than oil,” Bazoobandi said.
Bazoobandi also says as many other goods the price of oil is “determined by the supply and demand” and “as long as the global production remains unchanged at the current level, the prices will not have dramatic changes.”……………………………………….Full Article: Source

Will Chinese Investors Rotate to Gold?

Posted on 23 June 2015 by VRS  |  Email |Print

Gold traders are the most bullish in a month on the prospect of slower U.S. interest rate increases. Gold saw a second weekly advance after efforts to secure a Greek bailout faltered and the Federal Reserve signaled a more dovish stance on interest rate increases. Shanghai Gold Exchange withdrawal volume in the week to June 12 came in at a strong 46.2 metric tonnes.
The Bank of China will become the first Chinese bank to join the auction process that sets gold prices in the London market. The bank, along with seven other lenders, will start participating in the twice-daily electronic auction. The addition of a Chinese bank is another sign that China is increasing its influence in gold and currency markets worldwide………………………………………..Full Article: Source

Japan: Traders boost ‘nonresources’ businesses as commodities businesses falter

Posted on 22 June 2015 by VRS  |  Email |Print

Major Japanese trading houses are beefing up “nonresources” operations, such as food, to make up for falling profitability at mainstay operations caused by the plunge in crude oil prices, iron ore and other commodities.
“We will unite” to enhance nonresources operations, Mitsui & Co. President Tatsuo Yasunaga said at a general shareholders meeting Friday. Earlier this month, Mitsui said that it had established a joint venture in Tokyo with major Italian food retailer Eataly Distribuzione SRL and Japanese restaurant operator Kichiri & Co………………………………………..Full Article: Source

Oil market buzzes in the wake of big options trades

Posted on 22 June 2015 by VRS  |  Email |Print

The oil market is buzzing with intrigue over two derivatives deals last week that bore the signature of a large producer guarding against a price collapse. A public database showed purchases of put options that pay out if crude falls below $53 a barrel in 2016. “Everybody was talking about it,” said Sean Ryan, co-head of oil options at ICAP, the broker.
Put options, common in commodity markets, give their owners the right to sell something at a given price by a future date. These two deals raised eyebrows because they were consistent with past transactions associated with Mexico’s programme for hedging its oil exports, the largest of its kind in commodity markets………………………………………..Full Article: Source

Where The Price Of Oil Is Heading Next

Posted on 22 June 2015 by VRS  |  Email |Print

Last month, OPEC held its 167th meeting in Vienna, Austria. The two main takeaways? One: The oil cartel will maintain production at 30 million barrels per day (bpd), with unofficial numbers above that.
Two: Saudi Arabia’s price war against U.S. shale producers will continue. By resolving to preserve its already high production ceiling, OPEC is keeping prices low and putting the squeeze on all non-OPEC output… Especially companies working in shale, where costs are significantly higher………………………………………..Full Article: Source

Commodities delivering, more or less, as advertised

Posted on 19 June 2015 by VRS  |  Email |Print

The great commodities gold rush of the last decade may not have paid off exactly as investors hoped, but some evidence indicates the asset class is performing more or less as advertised. Commodities, commonly accessed by investing in exchange-traded commodities futures contracts, gained hugely in popularity in the first part of the last decade, as investors sought access to an asset class they thought would give them equity-like returns, diversification and a decent risk profile.
Many investors also bet that the rise in living standard in China and other rapidly developing countries would drive demand and help returns. But a disappointing run of results, especially during and after the financial crisis let some of the air out of the balloon………………………………………..Full Article: Source

Spot Gold Rising but Safe-Haven Buying is Absent

Posted on 19 June 2015 by VRS  |  Email |Print

Spot gold prices are moving higher, trading up 1.4% at $1,202.43/oz, as news the Fed will not raise interests rates this month continues to weigh on the U.S. dollar. However, the market has yet to get into the mood for safe-haven buying, despite further difficulties in talks between Greece and its eurozone creditors.
“We haven’t seen a great deal [of safe-haven buying] so far,” says Jonathan Butler, a precious metals strategist at Mitsubishi. The fact that on a number of occasions the European Central Bank and the troika “have simply kicked the can down the road regarding Greece’s debt” has made traders cautious as “it could well happen again,” he says………………………………………..Full Article: Source

Asian ferrosilicon spot prices steady amid thin trade

Posted on 19 June 2015 by VRS  |  Email |Print

Spot prices of 75%-Si ferrosilicon in Asia held steady this week amid thin trade, industry sources said Thursday. Platts assessed the Chinese spot price for 75%-Si ferrosilicon at $1,210-$1,250/mt FOB China Thursday, unchanged from the previous week, while the Japanese spot import price was kept steady at $1,160-$1,220/mt CIF Japan Thursday.
Chinese producers said supply in the domestic market remained tight on production stoppages in the country, providing some support to the domestic price, while overseas buying interest stayed weak, exerting pressure on export offers………………………………………..Full Article: Source

The commodities supercycle’s not dead, it has evolved - Barings

Posted on 18 June 2015 by VRS  |  Email |Print

With Chinese GDP growth moderating and demand for many commodities still lacklustre, it is understandable that the commodities supercyle’s obituary continues to be written. But, there are those that see it less as a death and more like a pupation, with the commodities complex in the midst of a transformation from a coal and iron ore driven caterpillar to a zinc and aluminium winged butterfly.
The Barings commodities team is one of those, pointing out in a note yesterday that the sharp falls in the prices of commodities like iron ore, thermal coal and oil, have prompted many observers to conclude that the cause for the falls (and, indeed the death of the supercycle) lies with China’s faltering economic activity………………………………………..Full Article: Source

OPEC Export Revenue Below $1 Trillion Lowest Since 2010

Posted on 18 June 2015 by VRS  |  Email |Print

According to the report, released on Tuesday, the value of the 12-member organization’s combined petroleum exports dropped from $1.1 trillion in 2013 to $993.3 billion in 2014, the year when oil prices plummeted to less half their prior value.
OPEC upheld its production quota of 30 million barrels per day at its meeting in Vienna on June 5. The group surpassed its self-imposed limits for the past 11 months, according to analysis conducted by Bloomberg………………………………………..Full Article: Source

El Niño’s Pacific typhoon link threatens energy and shipping

Posted on 17 June 2015 by VRS  |  Email |Print

A strong El Niño phenomenon this year is expected to increase the number of cyclones and typhoons in the Pacific and Indian oceans, leading to disruptions in energy and shipping markets.
The climatic event tends to dampen hurricane activity in the Atlantic, reducing the risk to US oil markets serviced by refineries in the Gulf of Mexico. However, the hurricane season in the Pacific is likely to affect crude oil and product supply chains, according to commodity brokers Marex Spectron………………………………………..Full Article: Source

OPEC 2014 Exports Below $1 Trillion; First Time Since 2010

Posted on 17 June 2015 by VRS  |  Email |Print

The value of OPEC members’ petroleum exports fell below $1 trillion in 2014 for the first time since 2010, according to its annual report, demonstrating the toll last year’s oil-price collapse took on the group.
Exports from the Organization of the Petroleum Exporting Countries fell in value to $993.3 billion last year, from $1.112 trillion in 2013, the report said, as oil prices fell below $60 a barrel at the end of 2014 from highs above $114 last summer………………………………………..Full Article: Source

Iran’s 40 million barrels stored at sea hangs over oil market

Posted on 17 June 2015 by VRS  |  Email |Print

Iran is storing as much as 40 million barrels of oil on supertankers at sea as it prepares for a sales drive if a nuclear deal can be sealed. Iran and six world powers are seeking to overcome remaining differences with a looming self-imposed June 30 deadline to reach a deal over Tehran’s disputed nuclear programme.
In the meantime, Iran has been parking oil off its coast, mainly on tankers belonging to its national carrier NITC. “The first thing they will try and do is offload quite a lot of that storage. (Oil Minister Bijan) Zanganeh has already warned Opec: make room for us. In other words, we are going to sell this oil at any price,” said Mehdi Varzi, a former official at the state-run National Iranian Oil Co………………………………………..Full Article: Source

China Joins Century-Old Gold Fix as Sway in Commodities Spreads

Posted on 17 June 2015 by VRS  |  Email |Print

A Chinese bank will help set prices in London’s $20 billion gold market for the first time ever as the nation strengthens its influence in the world’s financial system. Bank of China Ltd. will join lenders including Goldman Sachs Group, Inc. and Barclays Plc. that run the twice-daily auction system for pricing gold, according to a statement from the London Bullion Market Association on Tuesday.
The process, which dates back to 1919, sets a benchmark level for gold that’s used by mining companies, refiners and hedge funds. China, the world’s second-largest economy, is expanding its presence in gold and currency markets worldwide as the country seeks to make the yuan a viable competitor to the dollar………………………………………..Full Article: Source

Platts Survey: OPEC Pumps 31.11 Million Barrels of Crude Oil Per Day in May

Posted on 16 June 2015 by VRS  |  Email |Print

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) totaled 31.11 million barrels per day (b/d) in May, up 180,000 b/d from April and the group’s highest monthly volume since October 2012, according to the latest Platts survey of OPEC and oil industry officials and analysts. “OPEC’s communique after the June 5 meeting mentioned that members had been urged to adhere to its production ceiling,” said Margaret McQuaile, senior correspondent for Platts, a leading global provider of energy and commodities information.
“That’s something of a tall order, given that there are no quotas and that the 30 million b/d ceiling is supposed to cover production from Iraq, which hasn’t been part of OPEC’s production management system for years. With market share now pretty much the main theme – for the bigger players, at least – it seems likely that, for the time being, the only cuts in output will be involuntary ones.” (Press Release)

Gold Trades Little Changed as Platinum Sags to 6-Year Low

Posted on 16 June 2015 by VRS  |  Email |Print

The platinum market is the latest victim in the Greece debt turmoil. Prices tumbled to a six-year low on Monday. The white metal is mainly used in pollution-control devices for cars, and Europe accounts for about a quarter of global demand. With talks on securing a bailout deal for Greece in deadlock, it’s increasing concern that auto demand in the region will drop.
Platinum has slumped 10 percent this year, the biggest loss among the major precious metals. Investors cut holdings in exchange-traded funds backed by the metal in three of the past four weeks. Vehicle sales in Europe declined 24 percent in April, the third decline in 2015, the latest figures show………………………………………..Full Article: Source

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