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Commodities accumulators panic – from Vienna to Zurich

Posted on 26 November 2014 by VRS  |  Email |Print

The fact that the accumulators of the world’s key commodities are gathering this week in Austria (OPEC on oil) and Switzerland (Swiss vote on gold reserves) to rein in a sharp decline in their valued resources is a manifestation of rising deflation risks emerging from a strengthening US dollar and a slowing Chinese economy.
Year-to-date, the Reuters/Jefferies CRB Commodity Index is down 5%, and as much as 15% from its June highs. Admittedly, the index is more weighed towards energy commodities than to metals and agricultural commodities. But the technical break of the CRB’s 30-month trendline (green support line in chart), portends further declines below the 260 level……………………………Full Article: Source

US energy is growing, and so is US ‘power’

Posted on 26 November 2014 by VRS  |  Email |Print

America’s unexpected transformation into the world’s biggest natural gas producer and one of the globe’s largest oil producers will give the U.S. more geopolitical clout on the world stage—including in key relationships with China, Russia and the Middle East.
By 2020, the U.S. is likely to be energy independent, along with Canada, its biggest import and export partner. Add to that a new boom expected from a reforming energy industry in Mexico, and North America will more than hold its own as a powerhouse in the global energy market……………………………Full Article: Source

Commodities: A slippery year

Posted on 25 November 2014 by VRS  |  Email |Print

Commodities’ performance in 2014 shows how challenging the market can be for multi-asset investors, but don’t let that put you off. For good reasons, commodities have been an unloved asset class this year, significantly underperforming both equity and fixed income markets. While the longer-term fundamentals remain weak across the broad market, the commodity sector still represents an important component of a multi-asset class portfolio, offering investors an alternative return path and the benefits of diversification.
The ‘financialisation’ of commodities over the last 15 years has brought easier access to this market. Institutional and retail investors can now participate in a broad range of product offerings, mostly commonly in Exchange Traded Commodities………………………………….Full Article: Source

Is The Gold Turning The Corner?

Posted on 25 November 2014 by VRS  |  Email |Print

Gold miners’ costs are mostly higher than current spot prices, increasing the likelihood of writedowns next year. Senior gold miner gold cash costs surged 226% to $707 an ounce, according to a study. Shanghai Gold Exchange deliveries last week were up 20% to 54.2 tonnes.
All over the world, gold has emotional, cultural and financial value, which supports demand across generations. Gold is fashioned into jewelry and used to manage risk in financial portfolios and protect the wealth of nations………………………………….Full Article: Source

All eyes on oil: What will OPEC do this week?

Posted on 24 November 2014 by VRS  |  Email |Print

While Americans are chomping down on turkey and pie this week, everyone involved in the energy world will be closely watching the Thanksgiving Day meeting of the OPEC in Vienna, Austria. Oil prices have tumbled dramatically in recent weeks. Oil now trades below $80 a barrel and most Americans can buy gas for their cars for under $3 a gallon.
The question is how OPEC will respond. So far, energy producing nations and companies haven’t scaled back product even though it’s pretty clear there’s an over supply of oil on the world market…………………………………Full Article: Source

Global economy will benefit from oil price decline

Posted on 21 November 2014 by VRS  |  Email |Print

If OPEC fails to take a unified approach on stabilizing oil prices the global economy will be the biggest winner because oil prices will continue to fall, Fred Beach, of the University of Texas at Austin, said.
First of all, Saudi Arabia being an independent producer doesn’t always link its production to supply and demand that other OPEC countries want to do. That is why there is so much focus on the upcoming OPEC meeting to see if the organization as a whole comes to an agreement to either cut production to stabilize prices or if the independent countries want to go their own way………………………………….Full Article: Source

Life after the commodities boom

Posted on 19 November 2014 by VRS  |  Email |Print

Data is one of the world’s most precious commodities. And companies dealing in commodities are facing ever complex data sets, more regulations, tighter trading timelines and depressed markets. Those left in the market need to increase profit margins. Maybe, just maybe, data holds the answer.
Commodities firms need to make rapid changes, create new strategies and new solutions. The challenges are complex and multi-layered. For one disparate systems complicate how trades are captured and transactions are managed. Multiple geographies, different commodities on multiple systems across execution venues add more layers……………………………………Full Article: Source

No easy options for Opec over oil slide

Posted on 19 November 2014 by VRS  |  Email |Print

The tension has been palpable in the lead-up to next week’s Opec gathering in Vienna. As the oil price has languished at four-year lows, a flurry of diplomatic missions between some of the cartel’s members has taken place. Signalling through public statements and unofficial channels has ramped up.
In the past few days, Nigeria has said it will use up half its so-called excess crude account to support current spending, Kuwait’s cabinet has called for action to address the price slide, while Iran and Venezuela have sought support from fellow crude producers to shore up prices……………………………………Full Article: Source

Why Commodity Prices Are Down and May Go Lower

Posted on 18 November 2014 by VRS  |  Email |Print

A multitude of mavens, pundits, sages, wizards, writers, and assorted talking heads with various but vested interests in the hard commodities sector have weighed-in on the supposed demise of the secular bull market in “stuff” over the past few months.
Reactions have been varied but predictable: the usual suspects in the gold- and silver-bug camps have played the market manipulation card to explain the overall weakness in precious metals prices; the China perma-bears have claimed the downtick in industrial commodities to be a foreshadowing of the pending collapse of that country’s decade-long economic growth; ………………………………..Full Article: Source

Mounting Pressure on OPEC Spurs More Wagers on Oil Rally

Posted on 18 November 2014 by VRS  |  Email |Print

Speculators got more bullish on oil for the first time in three weeks, judging that a slump in prices to a four-year low will force OPEC to act. The net-long position in West Texas Intermediate rose 8.7 percent in the week ended Nov. 11, U.S. Commodity Futures Trading Commission data show. Long holdings rebounded from the lowest level in 17 months while short bets contracted.
WTI tumbled 30 percent since June as U.S. output climbed to three-decade high, adding to a global supply glut at a time when the International Energy Agency says demand growth is slowing…………………………………Full Article: Source

Warning Signs From Commodity Prices

Posted on 17 November 2014 by VRS  |  Email |Print

For many consumers and businesses the recent drop in commodity prices has provided a tidy windfall — one analyst estimated that the typical American household would save $400 a year thanks to lower gasoline prices. But the tumbling price of fuels, metals and other commodities is also sending a warning about the global economy.
Over all, commodity prices have fallen nearly 15 percent since late June, according to a Bloomberg index. Last week, the price of crude oil dropped to a four-year low, about $74 a barrel, down from about $107 a barrel in June. The prices of metals like copper, platinum and silver have also fallen sharply since the summer……………………………………Full Article: Source

Oil Slide Prompts Iran’s Oil Minister to Visit U.A.E.

Posted on 17 November 2014 by VRS  |  Email |Print

Iranian oil minister Bijan Namdar Zanganeh is preparing to visit the U.A.E. this week, underscoring the deepening concern among OPEC members over the slump in oil prices.
After trips to Kuwait and Qatar last week to discuss strategies to buoy prices, Zanganeh will meet with officials in the U.A.E. tomorrow, Shana, the Tehran-based oil ministry’s news service, said on its website yesterday. The discussions come before the Organization of Petroleum Exporting Countries’ next scheduled meeting on Nov. 27……………………………………Full Article: Source

ANZ Cuts Commodity Price Forecasts on Slowing Chinese Growth

Posted on 14 November 2014 by VRS  |  Email |Print

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

GE’S Rice Says Commodities Slump Puts Premium on Products

Posted on 14 November 2014 by VRS  |  Email |Print

General Electric Co. (GE), which provides everything from oil drilling systems to vehicles for underground mining, said it expects to benefit from lower commodities prices as producers chase cost cuts to offset declining revenue.
The company can still gain from demand for equipment and services that help trim expenses even as slumping prices for crude and other raw materials makes orders “a little bit bumpier,” GE Vice Chairman John Rice said in an interview in Rio de Janeiro………………………………..Full Article: Source

Why Australia will survive the commodity slump

Posted on 11 November 2014 by VRS  |  Email |Print

It’s not a well-known fact, but a slump in commodity prices has never caused a recession in Australia. With that in mind, we shouldn’t be overly concerned by investment bank analysts who run around saying just this — they are very wrong. Indeed, amid all the wailing and gnashing of teeth, it strikes me that the commodity drop may even be beneficial.
I realise this point may seem counterintuitive, and may even be met with howls of outrage — commodities account for about 73 per cent of our exports. Yet the point is, a drop in commodity prices isn’t all bad. No doubt profits for ‘our’ commodity exporters will plummet — sharply maybe — yet it’s often forgotten that our commodity exporters aren’t really true blue Aussies………………………………………..Full Article: Source

Permanent gold backwardation = global meltdown ahead

Posted on 10 November 2014 by VRS  |  Email |Print

This article discusses the meaning of gold backwardation and its relationship with the global economy. Antal Fekete warned many years ago that a “permanent gold backwardation” would act as a financial black hole that would consume the entire global financial system. Subsequent “scholars” found (minor) flaws in his argument. However (I believe) Fekete was right and that his warning is particularly pertinent today - as gold now enters its fourth year in (or near) backwardation.
First - some definitions. The GOFO (gold forward rate) measures the difference between the spot gold price and the forward (futures) price, measured as a percentage, quoted individually over 1, 2, 3, 6 and 12 months. GOFO is (a swap rate) paid by the gold owner, who puts up his gold as collateral to borrow dollars………………………………………..Full Article: Source

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How Much Of The World’s Commodity Supply Is Exposed To Ebola

Posted on 03 November 2014 by VRS  |  Email |Print

The outbreak of the Ebola virus in West Africa has been tragic and the outlook remains frightening. Because of the region’s importance as a supplier of commodities, investors and economists also worry about what a disruption in production could mean for prices.
“So far the impact on global commodity markets has been relatively contained,” Deutsche Bank’s Anna Mulholland said in October. “This most likely reflects the fact that Liberia, Sierra Leone and Guinea combined represent less than 2% of global production/exports of cocoa, coffee, cotton, rubber and palm oil.”……………………………………….Full Article: Source

Is a secret ‘oil war’ raging?

Posted on 03 November 2014 by VRS  |  Email |Print

Oil prices have been falling for the past two months. The OPEC basket price has ranged between $80 and $90 a barrel compared to the $100-$115 range of the past four years. This recent drop happens at a time when oil-producing countries will draft their 2015 budget and try to adopt an average oil price for the upcoming year.
The drop in oil prices is expected to adversely affect their budgets. Markets usually expect OPEC countries to cut production when prices fall. This time, however, OPEC is looking to US shale oil to contribute to price stability, because the increase in shale oil production has impacted the markets………………………………………..Full Article: Source

Commodity price plunge may benefit China’s slowing economy

Posted on 31 October 2014 by VRS  |  Email |Print

Price slumps in the global commodity market will likely mean good news for China after the country reported slowing growth for the third quarter. Continued weaker commodity prices led by crude oil are expected to save the country on enormous import bills, boost trade surplus and provide more leeway for Chinese policy makers to fine-tune the economy.
Crude prices started a downward streak in the beginning of July and have fallen considerably from their previous peak. Overnight on Monday, light, sweet crude for December delivery dipped below 80 U.S. dollars a barrel on the New York Mercantile Exchange, tumbling from over 107 U.S. dollars on June 20. December Brent crude dropped to less than 86 U.S. dollars on the same day, around 25 percent lower than the peak four months ago………………………………………..Full Article: Source

Gold price could benefit from Swiss vote

Posted on 30 October 2014 by VRS  |  Email |Print

Switzerland enjoys a rather more direct system of democracy than we do. If you want some kind of constitutional change, and you can find 100,000 people prepared to support your proposal with their signature, you can get a referendum called.
If the majority then vote in your favour, the matter is then referred to the 26 cantons – the administrative regions (similar to our counties) – and if the majority too vote yes, you’ll get the change you were agitating for. There’s a referendum coming up next month that could have huge ramifications for gold investors………………………………………..Full Article: Source

Few commodities buck falling trend

Posted on 29 October 2014 by VRS  |  Email |Print

Most everything we consume begins as a commodity, so when commodity prices go up, it transfers wealth and power from consumers to producers, but when commodity prices fall, it’s as close as it gets in economics to getting two meals for the price of one, or double coupons at your favorite grocery store. Such a moment appears to be happening now.
With few exceptions, most commodities have been falling over the past two months, with some falling rather quickly. Commodity prices are being pushed lower by an increased supply of most commodities, a slowing global economy, as well as a slowing China, the world’s largest consumer of most raw materials. Of the 69 commodities we follow weekly, only biofuels, cattle and sugar are in the positive over the past eight weeks………………………………………..Full Article: Source

Why Does Saudi Arabia Seem So Comfortable With Falling Oil Prices?

Posted on 29 October 2014 by VRS  |  Email |Print

Oil prices continue to tumble: down about 25 percent since mid-June to a four-year low, and many analysts believe there is no end in sight. While that’s good for consumers and most businesses in the U.S., the falling price is bad for oil-exporting countries such as Russia, Venezuela, Iran and Iraq.
And blame — or credit — for the plummeting prices is falling squarely on Saudi Arabia. The kingdom, often called the “central banker of oil,” is still the key player in oil prices, says Rachel Bronson, author of Thicker Than Oil: America’s Uneasy Partnership with Saudi Arabia………………………………………..Full Article: Source

Cheaper oil: Many winners, a few bad losers

Posted on 24 October 2014 by VRS  |  Email |Print

The collapse of the Soviet Union in 1991 had many causes. None was as basic as the fall in the price of oil, its main export, by two-thirds in real terms between 1980 and 1986. By the same token, the 14-year rule of Vladimir Putin, heir to what remained, has been bolstered by a threefold rise in the oil price.
Now the oil price is falling again. Since June, it has dropped from about $115 for a barrel of Brent crude to $85 or so—a reduction of roughly a quarter. If prices settle at today’s level, the bill for oil consumers will be about $1 trillion a year lower. That would be a shot in the arm for a stagnating world economy. It would also have big political consequences. For some governments it would be a rare opportunity; for others, a threat………………………………………..Full Article: Source

Dow Chemical Says Lower Oil Price to Boost Global Economy

Posted on 23 October 2014 by VRS  |  Email |Print

Dow Chemical Co. (DOW), the largest U.S. chemical maker by sales, said this year’s plunging oil prices will stimulate national economies and help rather than hurt its plastics business next year. Lower oil prices should help increase gross domestic product in the U.S., the U.K, Japan and China, Howard Ungerleider, chief financial officer of Midland, Michigan-based Dow, said on a conference call with analysts today.
The positive effect will become more visible through 2015, he said. “Low oil price means more demand in the GDP,” Chairman and Chief Executive Officer Andrew Liveris said on the call………………………………………..Full Article: Source

International demand for gold continues surging

Posted on 23 October 2014 by VRS  |  Email |Print

Demand for gold continues to be robust and has indeed increased significantly in recent weeks despite gold’s most recent paper driven gold weakness. Demand in China and India surged again and gold reserve diversification by the central bank of Russia hit a new record high in September as geopolitical tensions rose.
The seemingly insatiable appetite of the growing Indian middle class for gold is causing the government in India to again consider imposing sanctions on the importing of gold. Gold imports into India in September were worth $3.8 billion. This figure is almost double the $2 billion spent by Indians in August as, once again, the Indian middle class, like their Chinese counterparts, used the opportunity of a weakened gold price to increase their holdings………………………………………..Full Article: Source

Factors Affecting Precious Metals

Posted on 23 October 2014 by VRS  |  Email |Print

Since the dawn of civilization, precious metals — especially Gold and Silver — have been recognized as stores of value and have been used as money for transaction purposes. Even today, in the presence of stocks, bonds and a number of alternate investment options, they are a very popular source of investment.
They neither yield dividends nor interest and they don’t convey an ownership interest in a firm or stock — in fact, they actually come with additional storage and safeguarding fees. But still, they are an important component of individual as well as institutional investors’ portfolios. Apart from acting as investment vehicles, gold and silver also have a strong jewelry market and are used for manufacturing purposes in some industries………………………………………..Full Article: Source

Can gold bounce back? Here’s why experts feel that you should give yellow metal a miss this Diwali

Posted on 22 October 2014 by VRS  |  Email |Print

What will you buy on muhurat day? Will you stock up on equities or will you go for gold? To some buyers, gold might appear very attractive right now. The domestic gold price is down more than 18% from its all-time high of Rs 33,265 per 10 gm recorded in August 2013. The past 15 months, in fact, have been devastating for gold investors. The price of the yellow metal has slipped, turning conventional wisdom on its head. Even now, analysts believe that gold faces headwinds that could take prices down in the near to medium term.
This is not good news for buyers getting ready for Dhanteras shopping. After all, their blind faith in gold had delivered handsome returns in the past decade. This changed last year, with gold churning out losses for investors who bought the yellow metal on the muhurat day in 2012 and held it till the 2013 Diwali. ……………………………………….Full Article: Source

Can gold bounce back? Here’s why experts feel that you should give yellow metal a miss this Diwali

Posted on 21 October 2014 by VRS  |  Email |Print

Gold is a good hedge against inflation and global investors get on the gold train only when they fear that inflation will go up. After fears of inflation, the European Union (EU) region is facing the threat of deflation, mainly due to the fall in global commodity prices. The international crude oil (Brent variety) is now trading at $83 per barrel, a two-year low.
Most global agriculture commodities are also at multi-year lows. The inflationary pressure has ebbed significantly in the US as well. Investors deserting gold: Investors have also deserted the gold market. The gold holdings of the SPDR Gold Trust, the largest gold ETF in the world, are down 44% from their peak of 1,353 tonnes in December 2012. They don’t see any upside potential now from the current levels. “Gold is no more in a buy zone………………………………………..Full Article: Source

Supply Deficit Unlikely To Help Copper

Posted on 21 October 2014 by VRS  |  Email |Print

The copper market may end up in deficit this year, but that won’t do much for the metal’s price, analysts said. Instead of an earlier predicted supply glut, the copper market will likely finish 2014 with a deficit of around 150,000 tons, said Edward Meir, an analyst at INTL FC Stone., in a presentation at the LME Metals Seminar in London.
That forecast jibes with the International Copper Study Group’s revised outlook, which foresees demand lagging supply by 270,000 tons. Earlier this year, the ICSG predicted a 400,000 ton surplus………………………………………..Full Article: Source

Falling oil prices put pressure on Russia, Iran and Venezuela

Posted on 20 October 2014 by VRS  |  Email |Print

The silver lining in the recent financial market turbulence has been the continued decline in the price of oil, which is down about 25 percent since June. In addition to creating a windfall for U.S. consumers — one analysis reckoned the savings could amount to $600 per household — the drop, if sustained, will place considerable pressure on three problematic petrostates: Russia, Iran and Venezuela.
The aggressively anti-American foreign policies pursued by all three countries in recent years have been financed in large part by soaring oil revenue. Though separated by culture and continent, the regimes of Vladi­mir Putin, Ali Khamenei and Nicolás Maduro have in common autocratic government and ambitions to dominate their regions………………………………………..Full Article: Source

Russia can withstand lower oil prices but not for very long

Posted on 20 October 2014 by VRS  |  Email |Print

Russia does not face an immediate threat from the sharp fall in oil prices over recent months. While the economy is heavily dependent on oil, the country’s accumulated reserves and the floating rouble will mitigate the shock, and Russia should be able to withstand levels of $80 to $90 a barrel for about two years. But in the longer term, persistently low prices – reinforced by the pressure imposed by western sanctions – could pose an existential challenge to Vladimir Putin’s regime.
The 25 per cent drop in the oil price over the past three months did come as a shock to the Russian government. The latest draft of the 2015-17 budget assumes a price of $100 a barrel (and average annual gross domestic product growth of 2.6 per cent)……………………………………….Full Article: Source

Hedge Funds Say Oil Is Going to $0

Posted on 20 October 2014 by VRS  |  Email |Print

Supply and demand are what typically fuel oil prices . However, market fundamentals aren’t the only factors at play. Speculators, like hedge funds and other big money investors, play a role in the price of oil as well. They can push it up past market fundamentals or, as they have recently, cause it to plunge — the latest dip sent global oil benchmark Brent down 25% to around $85 per barrel, and U.S. oil benchmark WTI even lower.
Energy traders are betting that oil prices will keep falling. In a recent Bloomberg article, Citigroup’s global head of energy strategy, Seth Kleinman, was quoted as saying that, “several big, smart commodity hedge funds said oil is going to zero.” He went on to say, “they are being somewhat dramatic, but they were incredibly bearish.”……………………………………….Full Article: Source

Commodities Extend Decline to Five-Year Low on Oil to Tin

Posted on 17 October 2014 by VRS  |  Email |Print

Commodities extended declines to a five-year low led by industrial metals and oil on speculation supplies are more than sufficient with prices of everything from gasoline to food falling.The Bloomberg Commodity Index (BCOM) fell 0.6 percent at 12:55 p.m. in London after dropping to the lowest since July 2009. Zinc declined 3 percent, nickel retreated 2.5 percent and West Texas Intermediate fell below $80 a barrel for the first time since June 2012.
A Bank of America Corp. survey of fund managers this week showed the lowest optimism in the outlooks for economic growth and inflation in two years, pushing them to increase their cash balances and avoid commodities. An index of food prices compiled by the United Nations dropped to the lowest since August 2010 last month and regular gasoline prices in the U.S. are the lowest since February 2011………………………………………..Full Article: Source

How Has The Federal Reserve Impacted Gold Since 2009?

Posted on 17 October 2014 by VRS  |  Email |Print

The last five years will be forever marked on the history books with some of the most innovative, aggressive and controversial actions by the U.S. Federal Reserve ever. There are critics and there are fans of former Federal Reserve Chairman Ben Bernanke, and perhaps the jury is still out on his overall handling of the 2008-2009 global financial crisis.
After all, the massive programs that he left in place are just now starting to be unwound. There remain many hurdles and uncharted waters for the central bank to navigate through on its unprecedented unwind and exit of the massive and extraordinary monetary policy initiatives of recent years………………………………………..Full Article: Source

Investors cooling towards commodities

Posted on 16 October 2014 by VRS  |  Email |Print

Investors have been showing a more negative sentiment towards commodities in the past few weeks, ETF Securities has found. In its latest 10-page research note, the exchange-traded fund provider also noted that improvement in the US economy and labour market should benefit cyclical assets.
The report also noted that among commodities long gold and silver exchange-traded products saw $88m (£54.7m) and $46m (£28.6m) of outflows respectively because of negative sentiment, despite strong demand for the raw metals. According to the report, in the US, more than 50 per cent of silver demand had come from industrial applications………………………………………..Full Article: Source

Global Oil Glut Sends Prices Plunging

Posted on 16 October 2014 by VRS  |  Email |Print

Oil prices posted their biggest one-day drop in nearly two years Tuesday as a U.S.-led wave of crude has crashed into weak global demand, threatening the stability of some countries and providing an economic lifeline to others.
Tuesday’s slide of 4.5% by U.S. crude oil to $81.84 a barrel on the New York Mercantile Exchange left the price down 20% since the start of June. That was the lowest closing price since June 2012, and some analysts predict the price will fall as much as $10 a barrel lower………………………………………..Full Article: Source

World Economy Gives Investors Growth Scare as They Look to U.S.

Posted on 16 October 2014 by VRS  |  Email |Print

The global economy faces its biggest test of confidence since the European sovereign debt crisis as investors fear it’s running out of engines. Japan and the euro area are throwing up fresh signs of weakness by the day and emerging markets such as China are dragging instead of driving growth.
The sense of tumult is being exacerbated by war in the Middle East, the standoff in Ukraine, street protests in Hong Kong and the spread of Ebola to Dallas. The worry is that five years since the world limped out of recession, central banks have virtually exhausted their stimulus arsenals if activity keeps fading………………………………………..Full Article: Source

How will EMs be affected by commodity price declines?

Posted on 15 October 2014 by VRS  |  Email |Print

Credit Suisse has a new report out on the winners and losers of the recent rout in global natural resource prices. While everyone has been paying attention to the remarkable decline in the value of oil, agricultural commodities and industrial metals have also become a lot cheaper recently:
Unsurprisingly, Credit Suisse thinks Korea, which imports most of its raw materials, should be the biggest beneficiary, while the petro-dependent economies of Venezuela and Russia will feel the most pain. But there are a few surprises worth noting as well………………………………………..Full Article: Source

How To Use a Trend-Following Strategy In Commodities

Posted on 15 October 2014 by VRS  |  Email |Print

A recent article in the Financial Times highlights why, in part, the steam has gone out of the commodity markets. Judging the super cycle to be at and end investors have exited the market en mass in the belief no money is to be made from a falling market. After making 7% returns in the first half of the year from simply tracking the Bloomberg (formerly Dow Jones) Commodity Index, the third quarter has seen prices fall across the board.
According to the FT, figures compiled by Citigroup show net withdrawals from exchange-traded and commodity-linked funds totaled $8.2 billion in the 3 months to the end of September, canceling out inflows of $7.5 billion in the first half of the year………………………………………..Full Article: Source

Oil prices continue to slide on IEA report

Posted on 15 October 2014 by VRS  |  Email |Print

Global oil prices have fallen further after the International Energy Agency (IEA) reported higher output and cut its forecast for demand growth. Brent crude fell $2.72 to $86.17 a barrel before seeing a slight recovery, while US crude dropped $1.75 to $83.99.
The price of Brent has fallen by 20% since the summer on concerns of oversupply, as output increases and demand wanes. “Recent price drops appear both supply and demand driven,” the IEA said……………………………………….Full Article: Source

IEA, OPEC Officials Say Shale Can Cope With $80 a Barrel

Posted on 15 October 2014 by VRS  |  Email |Print

Most U.S. shale production would remain profitable even if oil prices fall to $80 a barrel, energy watchdog the International Energy Agency said Tuesday. Its estimate, which is shared by some OPEC officials, suggests crude prices could fall further before supply starts to come out of the market.
In its monthly report for September the IEA said “further oil price drops would likely be needed for supply to take a hit” because most of shale oil “remains profitable at $80 a barrel.” Its comments came as crude prices sank further Tuesday. At 1545 GMT, Brent crude oil for November delivery was down 2.5% to $86.76 a barrel on ICE Futures Europe, on track to settle at a fresh near four-year low………………………………………..Full Article: Source

OPEC ‘may no longer play swing producer role’

Posted on 15 October 2014 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries may no longer necessarily play a role of a swing producer in the oil market, the chief analyst of the West’s energy watchdog, the International Energy Agency, Antoine Halff said.
Higher cost projects including US shale, Canadian oil sands or deep-water Brazilian oil production may instead be required to cut output to balance the market when prices fall, he said. Two OPEC sources, meanwhile, said OPEC is unlikely to call an emergency meeting as proposed by Venezuela. The next scheduled OPEC meeting is on Nov. 27 at OPEC’s Vienna headquarters………………………………………..Full Article: Source

A Comeback for Platinum and Palladium?

Posted on 15 October 2014 by VRS  |  Email |Print

Platinum and palladium futures rose this past week as traders swooped in to take advantage of prices that have fallen as a result of the strong US dollar. Russian and Swiss central banks looked to take advantage of the lower prices by stockpiling platinum and gold, respectively.
The week’s biggest mover on the weekly Global Precious Metals MMI was the price of Japanese palladium bar, which saw a 4.2% increase to JPY 2,742 ($25.19) per gram. This comes on the heels of a 7.3% decline the week prior. The price of US palladium bar rose 2.6% to $779.00 per ounce after falling 3.4% during the previous week. The price of Chinese palladium bar fell 0.6% to CNY 174.00 ($28.33) per gram after rising 1.7% the week before………………………………………..Full Article: Source

Global Glut Keeps Pressure on Oil Prices

Posted on 14 October 2014 by VRS  |  Email |Print

Traders are becoming increasingly convinced that the world will remain awash in oil. Crude prices have tumbled more than 20% since mid-June. The global benchmark, Brent oil, dropped to a near-four-year low of $88.89 a barrel on Monday, and the U.S. benchmark dropped to $85.74, a 22-month low.
Instead of cutting back on output, to help reduce supplies and increase prices, oil producers—from U.S. corporations to oil-rich nations—are keeping the spigots open. And there is little sign that global demand will rise quickly enough to help erase the glut………………………………………..Full Article: Source

Why the gold rally might not last long

Posted on 14 October 2014 by VRS  |  Email |Print

Gold showed it still has a little more shine left to it. The precious metal bounced back to a three-week high after turning negative for the year. Investors have been flocking to bullion as the European economy and markets shake up. However, the rally in bullion may be short-lived because of strength in another safe haven, the U.S. dollar.
Gina Sanchez, founder of Chantico Global, expects gold prices to trade relatively flat, if not weaken, because investors are also piling into the dollar. “While we are seeing some negative sentiment around economic growth, the fact of the matter is that the U.S. is still growing better relative to the rest of the developed markets,” she said. “That’s causing a lot of money to flow into the U.S. dollar, and as the U.S. dollar continues to strengthen, that is bad for gold.”……………………………………….Full Article: Source

Commodities Drop Near 5-Year Low on Growth, Glut Concerns

Posted on 13 October 2014 by VRS  |  Email |Print

Commodities traded near the lowest since 2009 as oil extended a slide into a bear market amid signs of ample supplies, while industrial metals dropped on concern that slowing growth from Europe to China will sap demand.
The Bloomberg Commodity Index lost as much as 0.8 percent to 117.83, near a five-year low of 117.69 reached Oct. 3. The gauge fell the previous five weeks in the longest run of losses since April last year. It slid 12 percent last quarter, the most since 2008, on rising supplies of everything from oil to corn and as a stronger dollar made raw materials priced in greenbacks more expensive in terms of other monies………………………………………..Full Article: Source

OPEC Members’ Rift Deepens Amid Falling Oil Prices

Posted on 13 October 2014 by VRS  |  Email |Print

A rift between OPEC members deepened over the weekend, as producers in the cartel moved in different directions amid falling oil prices. Venezuela, which has been one of the most outspoken proponents of a production cut by the Organization of the Petroleum Exporting Countries, called over the weekend for an emergency meeting of the group to respond to falling prices. But Kuwait said Sunday that OPEC was unlikely to act to rein in output.
Saudi Arabia, meanwhile, appeared to expand on its recent move to defend its market share at the expense of other members by aggressively courting customers in Europe. Traders said Saudi Arabia is now asking for stronger commitments from some of its buyers in Europe, a move that would lock in those customers, including any new ones it would gain with recent price reductions………………………………………..Full Article: Source

Kuwait says OPEC unlikely to cut output to support prices -KUNA

Posted on 13 October 2014 by VRS  |  Email |Print

OPEC is unlikely to cut oil production in an effort to prop up prices because such a move would not necessarily be effective, Kuwait’s oil minister Ali al-Omair was quoted as saying by state news agency KUNA on Sunday.
Brent crude oil settled at $90.21 a barrel on Friday after earlier falling to $88.11, the lowest since December 2010, as Saudi Arabia said it raised production last month, adding to perceptions that the kingdom is looking to defend market share, rather than prices. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on Nov. 27 to consider whether to adjust their output target of 30 million barrels per day (bpd) for early 2015………………………………………..Full Article: Source

Gold rebounds on reversal of macro dynamics, caution advised: Barclays

Posted on 13 October 2014 by VRS  |  Email |Print

Gold has rebounded on reversal of macro dynamics after witnessing intense downward pressure last week on stronger dollar nd firmer rates. With demand returning to India and China, precious metals seem to be a on a better footing. However, Barclays said it remains cautious on gold prices and continue to see the macro environment preseting headwinds and would look for opportunities to sell into a rally.
Gold prices are trading back above $1200/oz, buoyed by a relatively more supportive external environment w/w,as well as gold-specific factors turning comparatively positive.The FOMC minutes provided a boost to gold as markets concluded that the Fed may remain patient before moving to rate hikes. Meanwhile, physical demand has materialised at lower price levels………………………………………..Full Article: Source

Commodities under pressure as China continues economic realignment

Posted on 10 October 2014 by VRS  |  Email |Print

Commodity prices will continue to face near-term challenges that are linked to the dip in Chinese growth. However, support is likely to come from the country’s new economic agenda, Scotiabank VP and commodity market specialist Patricia Mohr told attendees at the recent Global Chinese Financial Forum.
Gold will come under greater pressure as the US recovery gathers pace, while some opportunities are apparent in base metals, particularly with zinc. “In addition, because of the tremendous expansion in US and Canadian oil and gas production, there are some excellent prospects in the pipeline and railways sectors,” Mohr said………………………………………..Full Article: Source

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