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Hedge Funds Are Back to Bearish on Gold as Price Slump Deepens

Posted on 23 November 2015 by VRS  |  Email |Print

Hedge funds are betting gold’s decline is far from over, as the metal’s month-long slide deepened on expectations for higher U.S. interest rates. Prices are trapped in their worst rout since July as Federal Reserve officials talk up improvements for the U.S. economy and reinforce signs that they’re ready to raise borrowing costs for the first time since 2006.
That prospect has sent investors fleeing. Assets in exchange-traded products backed by gold have fallen to the lowest since 2009. Money managers are holding a net-short position in the metal for first time since August as their long wagers shrunk to the smallest in seven years………………………………………..Full Article: Source

Gold demand low despite price fall

Posted on 23 November 2015 by VRS  |  Email |Print

There are hardly any takers for gold or its jewellery in the local market even though their prices remain low for almost a month now. Bullion traders and gold jewellers say they don’t know the reason for dampened demand, but the fact remains that the market is dull, particularly after Eid Al Adha.
Gold prices have been moving within the band of QR3,823.57 and QR4,005.65 per ounce (28.3495 grammes) for the past few weeks, traders said. Yesterday, for example, the rates ranged between QR127.5 and QR133 for a gramme of pure, or 24-carat gold, and the prices for 22, 21 and 18-carats were lower………………………………………..Full Article: Source

Commodity rout to continue until at least next month, say analysts

Posted on 19 November 2015 by VRS  |  Email |Print

The current commodities rout – in which iron ore has plunged to within a whisker of July’s lows – will continue at least until the US Federal Reserve’s decision on interest rates is fully priced in, according to resources analysts. And while unwilling to call a bottom to the current cycle, most analysts believe that more downside than upside risk remains for the world’s resources.
Ore with 62 per cent content delivered to Qingdao sank 4.5 per cent to $US45.58 a dry metric tonne on Tuesday night, the lowest since July 8 when it bottomed at $US44.59. Copper, oil, gold and other metals also sank overnight. UBS commodities analyst Daniel Morgan said the biggest factor weighing on commodities was the US Federal Reserve’s interest rate decision in December………………………………………Full Article: Source

China’s cooling demand, excess supply sink prices

Posted on 19 November 2015 by VRS  |  Email |Print

China’s economic slowdown has accelerated a global slide in resource and materials prices as declining demand shrinks the nation’s imports and leaves other markets swamped with Chinese products. The Thomson Reuters/CoreCommodity CRB Index has plummeted in November, reaching a 13-year low of 183.71 Tuesday. Copper prices have fallen 5% so far this week to their lowest in six and a half years, while steel product prices are down 35% this year.
Nonferrous metals are among the goods used heavily in China that now face an import slump. China accounts for roughly half of global copper demand, but a deteriorating property market has cut into its use for construction. Copper prices dropped below $5,000 per ton in London this month and kept going, touching the $4,500 range at one point Wednesday………………………………………Full Article: Source

How a global solar drive will boost silver prices

Posted on 19 November 2015 by VRS  |  Email |Print

Silver prices are likely to gain in the next five years as demand for solar panels grows on a concerted drive by governments to reduce global carbon dioxide emissions, an analyst said.
Silver, a key component of solar cells as it is the best metallic conductor of heat and electricity, has seen a slump in prices to a three-month low this week in line with a broad-based decline in gold prices. At about $14 an ounce currently, prices are 10 percent lower year-to-date………………………………………Full Article: Source

Commodity prices won’t fall to pre-boom low, says RBA

Posted on 18 November 2015 by VRS  |  Email |Print

The Reserve Bank believes Australia’s export commodity prices are on a permanent high and in ­little danger of dropping back to pre-resource boom lows. The head of the bank’s economic division, Christopher Kent, says world demand for resources has expanded so much that it can no longer be satisfied just by low-cost producers.
The bank’s index of commodity prices has fallen by about 50 per cent from its peak, but is still almost 80 per cent above early 2000 levels. “Commodity prices remain relatively high,” he told a conference in Sydney yesterday. The immediate future for commodity prices would be dictated by conditions in industry in China and across Asia. The shift in China’s economy from investment to consumption-led growth made it unlikely prices would rise from current levels………………………………………..Full Article: Source

Currencies, Commodities and Slow Global Growth (Video)

Posted on 18 November 2015 by VRS  |  Email |Print

Geoffrey Yu, senior FX strategist at UBS, and Charles Lichfield, research associate at Eurasia Group, examine global economic growth and the impact of geopolitical risks on currencies and commodities. They speak on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Gold slides to five-year low

Posted on 18 November 2015 by VRS  |  Email |Print

Gold has dropped to its lowest level in five years, weighed down by a rising US dollar and profit taking. Bullion rallied to almost $1,100 an ounce on Monday after the terrorist attacks on Paris triggered some buying by nervous investors. However, those gains quickly faded, writes Neil Hume.
As the US currency strengthened, spot gold was down $13 to $1,068 on Tuesday, its lowest level since February 2010. It has fallen 10 per cent this year. Gold is struggling to hold gains because of expectations that the US Federal Reserve will raise interest rates before the end of the year. Those expectations in turn are pushing up the US dollar………………………………………..Full Article: Source

Despite slowing growth, China to remain key growth market for metals

Posted on 18 November 2015 by VRS  |  Email |Print

As commodity prices touched fresh decade-lows in recent months, a look at the global macro-economic situation reveals that despite China being a significant part of the commodity price slump, it will remain a critically important growth market for metals for decades to come.
Addressing an audience at the third annual mineLatinAmerica forum, Scotiabank VP for economics and commodity market specialist Patricia Mohr noted that commodity prices fell to near decade lows from August, under pressure from concerns over a possible ‘hard landing’ in the rate of China’s gross domestic product (GDP) growth, which was linked to a sharp equity correction and the depreciating yuan, and “consternation” caused over the possible US Federal Reserve’s mooted monetary tightening in September, which was delayed………………………………………..Full Article: Source

In the oil price war, it’s hard to tell who’s losing—OPEC or US shale

Posted on 17 November 2015 by VRS  |  Email |Print

By appearances, OPEC has the tell-tale signs of an aging prizefighter. It still technically possesses a knockout punch, but it’s unable to land one against younger, more agile opponents, amid doubts as to whether it has the legs to go the distance.
The last few days have bolstered this view. As OPEC continues its now-17-month price war against upstart US shale oil, global oil prices fell under $45 a barrel last week, breaking through a threshold that had held for months. Alarmingly if you happen to be an OPEC member, that’s far below the price needed by almost all of them to balance their state budgets ……………………………………….Full Article: Source

Trouble is brewing for commodities

Posted on 16 November 2015 by VRS  |  Email |Print

A perfect storm is gathering over commodity markets as the end of year approaches, with rising supplies hitting an increasingly steep Chinese downturn while the US Federal Reserve prepares to lift rates. The combination of fundamental and monetary forces is depressing the entire range of resource commodities and is likely to lead markets to overshoot. Iron ore prices, which have dropped 15 per cent over the past month to $US47.50 per tonne, could easily drop below $US40 before the year is out.
The International Monetary Fund warned G20 leaders over the weekend they should brace for a “bumpy” ride as the world economy dealt with the normalisation of US monetary policy, the slowing of China’s economy and end of the decade-long commodities super cycle. “In an environment of declining commodity prices, reduced capital flows to emerging markets and higher financial market volatility, downside risks to the outlook remain elevated,” its report to G20 leaders said………………………………………..Full Article: Source

Why Gold and Other Commodities Are Getting Killed

Posted on 16 November 2015 by VRS  |  Email |Print

Commodities like gold, iron ore, and copper have been taking it on the chin of late as the globe prepares for higher interest rates in the U.S. and an even stronger dollar. The spot price for gold bounced around 5 1/2-year lows Friday morning with a troy ounce going for $1,083.44 in European trade, according to the Wall Street Journal.
Copper prices, often seen as a gauge of global economic health because of the metal’s widespread industrial use, also touched a six-year low of $4,787.50 per tonne, according to Reuters. Other commodities like iron ore and oil remain cheap too, with the latter falling as much as 2.7% on Thursday………………………………………..Full Article: Source

Gold Set to Rebound as Paris Terrorist Attacks Spur Haven Demand

Posted on 16 November 2015 by VRS  |  Email |Print

Gold is set to rebound from a five-year low on Monday while other commodities keep trading on their own fundamentals as the terrorist attacks in Paris won’t change much for global supply and demand of raw materials from copper to coffee.
That’s the outlook from Eugen Weinberg of Commerzbank AG, Fabio Scacciavillani of Oman Investment Fund, and Edward Bell of Dubai-based bank Emirates NBD PJSC for commodities Monday after terrorist attacks in Paris on Friday. “The implication for the oil market is limited, with the possibility of lower demand at least outweighed by higher geopolitical tensions,” Weinberg, head of commodities research at Commerzbank, said………………………………………..Full Article: Source

Commodity slump likely to last a while: BMO

Posted on 12 November 2015 by VRS  |  Email |Print

As the metal price slump drags on, hopes for a near-term recovery are getting dimmer and dimmer. Jessica Fung, a commodity analyst at BMO Capital Markets, agrees with the growing feeling that it will be a prolonged bear market. Instead of a V-shaped recovery, she expects “a grin like a Cheshire cat.” Or, put another way, a drawn-out period of low prices before any recovery.
When will we actually hit the bottom? Fung said it’s difficult to say, because expectations of slowing global demand continue to weigh on metal prices. There have been plenty of supply cuts across the commodity space, which should be bullish for prices. But Fung said they may be less helpful than people think, because they are not permanent closures of capacity………………………………………..Full Article: Source

How OPEC has earned itself a permanent pay cut in its self-launched oil price war

Posted on 12 November 2015 by VRS  |  Email |Print

A year after instigating a market share war that crushed oil prices and devastated the oil business the world over, the oil cartel that is the Organization of the Petroleum Exporting Countries is meeting again on Dec. 4 in Vienna to assess the situation. Saudi Arabia and its rich Gulf allies, which control the cartel, could back off their strategy of increasing market share at the expense of prices and give oil a lift. But don’t count on it.
Based on public statements thus far, the Saudis and their octogenarian oil minister, Ali al-Naimi, will likely press on with the market grab. “Naimi will still argue probably that the strategy is producing the re-balancing,” noted Helima Croft, global head of commodity strategy at RBC Capital Markets. And that “it’s been slower, but it’s working, don’t pull out now.”……………………………………….Full Article: Source

How OPEC has earned itself a permanent pay cut in its self-launched oil price war

Posted on 12 November 2015 by VRS  |  Email |Print

A year after instigating a market share war that crushed oil prices and devastated the oil business the world over, the oil cartel that is the Organization of the Petroleum Exporting Countries is meeting again on Dec. 4 in Vienna to assess the situation. Saudi Arabia and its rich Gulf allies, which control the cartel, could back off their strategy of increasing market share at the expense of prices and give oil a lift. But don’t count on it.
Based on public statements thus far, the Saudis and their octogenarian oil minister, Ali al-Naimi, will likely press on with the market grab. “Naimi will still argue probably that the strategy is producing the re-balancing,” noted Helima Croft, global head of commodity strategy at RBC Capital Markets. And that “it’s been slower, but it’s working, don’t pull out now.”……………………………………….Full Article: Source

Forget China, the US offers commodities upside

Posted on 11 November 2015 by VRS  |  Email |Print

Commodity price swings aren’t all about China’s weaker demand; the U.S. could move the market upwards as its taste for commodities returns, one expert predicts. Upbeat data from the US suggest the possibility of an Federal Reserve interest rate hike soon, which would be a boon for commodities, Invast Australia’s director of research, Peter Fay, said.
“There are other countries that can come out and add to demand, it’s not just China,” Fay told CNBC’s Squawk Box on Tuesday. The U.S. Bureau of Labor Statistics reported Friday that nonfarm payrolls grew 271,000 for October, a sharp jump from weak August and September numbers…………………………………………Full Article: Source

Oil edges up as OPEC sees strong demand next year

Posted on 10 November 2015 by VRS  |  Email |Print

Oil futures rose above $47.50 a barrel on Monday as OPEC said it expected global demand to remain strong next year, while weak Chinese trade data and concerns over rising supplies weighed. A weaker dollar further supported oil, with Brent crude for December delivery up 22 cents at $47.64 a barrel by 0905 GMT, after falling more than 4 per cent last week.
December US crude gained 12 cents to $44.41 a barrel after falling nearly five per cent last week. Abdullah al-Badri, Secretary-General of the Organization of the Petroleum Exporting Countries, said he expects that the oil market will become more balanced in 2016 as demand continues to grow……………………………………….Full Article: Source

Has ‘Commodities’ Slump Undercut Emerging Nations?

Posted on 06 November 2015 by VRS  |  Email |Print

While the 60% oil price crash from September 2014 to current levels has largely impacted the major producers (Russia, U.S., Saudi Arabia), a much wider range of commodity price depression is raising havoc with previously fast-growing emerging economies (Brazil, South Africa, Australia, Indonesia, etc.).
The latter, whose economic dynamics were heavily predicated on a large proportion of commodity reserves are now undergoing a serious deflation in economic growth, voiding any chance of expansion, while this deep commodity price depression persists. With the major segment of these nations’ gross domestic product based on commodity exports, forward growth has become impossible until commodities, in general, return to previous price levels………………………………………..Full Article: Source

Inside Ethiopia’s Commodities Pit

Posted on 06 November 2015 by VRS  |  Email |Print

In a small, tidy office on the top floor of the Ethiopian Commodity Exchange building in Addis Ababa, communications manager Tewodros Assefa draws two diagrams on a large glass window pane. The window overlooks the capital city’s new light rail line, a raised concrete snake that bisects the city.
This scene is unexpectedly sophisticated: a modern, first-world pastiche in a country better known, not always fairly, for poverty and chaos. Like the new metro, the Ethiopian Commodity Exchange — better known as ECX — is a physical expression of the Ethiopian government’s massive drive to change this image………………………………………..Full Article: Source

OPEC unlikely to cut in December without non-OPEC - Gulf delegate

Posted on 06 November 2015 by VRS  |  Email |Print

OPEC is likely to stick to its no-cut oil output policy when it meets in December if major producers from outside the group are not willing to help in reducing supplies, a senior Gulf OPEC delegate said on Thursday.
Oil prices are under pressure as crude and refined products inventories are higher than the five-year average, but that is likely to improve next year, the Gulf delegate told Reuters. Demand for crude is healthy and it expected to remain strong next year despite concern over China’s economy, the delegate said………………………………………..Full Article: Source

UBS: iron ore hanging tough, other commodities headed south

Posted on 05 November 2015 by VRS  |  Email |Print

There’s more grim news ahead for Australia’s commodities, with all minerals bar iron ore expected to head south. UBS has updated its commodity forecasts offering a mixed outlook, with iron ore expected to do a little better, coal to do worse, and base metals, including copper, expected to plunge.
For iron ore prices at the end of this year, UBS has upgraded forecasts slightly from $US56 to $US57. For the end of 2016 UBS has updated their iron ore price forecast to $US52 per tonne from $US50. The commodity dropped below $US50 last week for the first time since July as the fourth quarter tends to be a weak quarter for Chinese steel production. Steel production in China peaked last year at about 830 million tonnes, according to UBS……………………………………….Full Article: Source

China commodity outlook brightens, but beware caveats

Posted on 04 November 2015 by VRS  |  Email |Print

Lost amid the headlines about China’s decision to end its one-child policy was news that points to a brighter medium-term outlook for commodity demand in the world’s biggest consumer of natural resources. While all the nitty-gritty details of the ruling Communist Party’s fifth plenary have yet to be published, the world of commodities should note the commitment to double gross domestic product (GDP) and per capita income by 2020 from 2010 levels.
This should go some way towards alleviating fears that China’s economy is in structural decline, as achieving those goals will require ongoing urbanisation to boost earnings to a level where China could be considered a middle income country………………………………………..Full Article: Source

OPEC squabbles over oil price, maximizing revenue in strategy report

Posted on 03 November 2015 by VRS  |  Email |Print

Internal OPEC squabbles are on the rise as members argue about the need to support a fair oil price and boost revenues just as they feel more pain from low crude prices, an internal OPEC report seen by Reuters this week showed.
A draft report of OPEC’s long-term strategy (LTS) carries annotations by Iran, Algeria and Iraq, and suggestions from Iran and Algeria for measures to support prices such as a price target or floor and a return to OPEC’s quota system………………………………………..Full Article: Source

Gold demand up by 7% in Q3 of 2015

Posted on 03 November 2015 by VRS  |  Email |Print

Demand on gold has risen by 7% during the third quarter (Q3) of 2015 compared to the same period last year, Thomson Reuters reported in its GFMS Gold survey. The survey attributed this surge to “the net official sector buying and a stellar level of retail purchases of bars and coins”.
The top consumer of gold during Q3 was India with 193 tonnes, marking a 5% year-on-year (YoY) increase. Thomson Reuters’ report stated that this was “the highest quarterly consumption since Q1 2011 and the highest third quarter demand since 2008”………………………………………..Full Article: Source

Focus on Africa for next commodities ‘supercycle’

Posted on 02 November 2015 by VRS  |  Email |Print

There was a frenetic air to trading in London’s listed miners this week — things were faster, wilder and even more uncontrolled to the downside than battered sector players have come to expect. No one mentions the concept of a commodities “supercycle” these days, not after four years of a downturn with no end in sight.
The themes of oversupply and faltering Chinese demand are well-worn, but the focus recently has moved to corporate debt levels and dividends. Or rather debt and the non-deliverable nature of those dividends. There is also the slightly unintuitive issue of rapidly falling production costs in the mining industry, noted by Investec’s sector specialist Marc Elliott this week as he and his research team again chopped their commodity price forecasts across the board………………………………………..Full Article: Source

Russia set to continue gold grab

Posted on 02 November 2015 by VRS  |  Email |Print

According to data from the GFMS gold survey covering the third quarter, there are a number of factors driving the gold price. Retail investment in top gold consuming countries India, China and Germany saw buying increase 30%, 26% and 19% respectively from a year earlier.
These three markets alone accounted for an extra 26t of retail buying in the third quarter. This was balanced by slightly weaker jewellery demand, the largest consuming sector according to the survey, which was marginally lower. Meanwhile, supply was also slightly higher, and remained at a 51 ton surplus………………………………………..Full Article: Source

The global commodities slump is hitting Africa hard

Posted on 30 October 2015 by VRS  |  Email |Print

If you live by commodities, you will die by commodities. In Africa, this aphorism is becoming true in a devastating fashion. The continent’s economies rode the global demand for commodities in the early part of this century to create some of the fastest economic growth in the world.
In fact, in the first 10 years of this century, six of the 10 fastest growing economies came from Africa. But those good times have come to an end. Demand for commodities has slowed down considerably, representing a “formidable shock for many of the sub-Saharan African countries that are still substantial commodity exporters,” a recent report by the IMF says………………………………………..Full Article: Source

Commodity prices wil continue to pressure Malaysia

Posted on 29 October 2015 by VRS  |  Email |Print

Weak commodity prices will continue to put pressure on Malaysia’s fiscal and broader economic outlook next year, said Fitch Ratings. According to the international rating agency, some of the detailed assumptions for the country’s Budget 2016 looked optimistic, hence, could potentially pose some downside risk to the Government’s projections.
It added that Malaysia’s fiscal and broader economic outlook would remain under pressure from weaker commodity prices into 2016. Fitch noted that there could be a risk of Malaysia missing its 2016 fiscal deficit target of 3.1% of gross domestic product (GDP), even though the Government’s debt level would likely remain stable………………………………………..Full Article: Source

Oil Price Not Done Crashing, Saudi Arabia Could Be Broke In Five Years: Reports

Posted on 28 October 2015 by VRS  |  Email |Print

The bad news keeps piling on for the oil industry and the countries that rely on it. Despite oil prices having already fallen 60 per cent from their highs last year, investment bank Goldman Sachs says they could suffer another major decline as storage space for refined fuel gets closer to full capacity.
Meanwhile, a report from the IMF warns that Middle Eastern oil-exporting countries, particularly Saudi Arabia, could go broke within five years if oil prices stay at current low levels. Storage of refined fuels in the U.S. and Europe is “nearing historically high levels,” Goldman Sachs said in a report issued Monday and obtained by Reuters………………………………………..Full Article: Source

Cheap Oil May Force Exporters to Sell Assets, Fueling Market Volatility

Posted on 27 October 2015 by VRS  |  Email |Print

Add one more thing likely to fuel market paroxysms in the months and years ahead: Oil exporters liquidating their rainy-day funds to buffer their economies against anemic crude prices. The International Monetary Fund estimates oil exporters holding $4.2 trillion in global equities, bonds and currencies maybe forced to shed nearly $1 trillion of their assets over the next five years to fill emptying government coffers.
Given weak global growth, gains in energy efficiency and a massive gap between the available supply of oil and demand, economists are predicting a long period of soft oil prices. Although some of those oil-fund sales will likely be offset by oil-importing countries buying assets, those mass liquidations could foment turbulence in markets across the globe………………………………………..Full Article: Source

A Global Chill in Commodity Demand Hits America’s Heartland

Posted on 26 October 2015 by VRS  |  Email |Print

A thousand miles south of this gritty steel town on the Mississippi River, West Texas oil rigs have shuddered to a halt. Seven hundred miles north, mines in the Iron Range of Minnesota have been stilled. The drilling rigs, with their deep underground pipes, once consumed much of the steel that Granite City’s blast furnaces could produce, while the mines supplied the raw material.
So now, more than 2,000 workers at the mammoth United States Steel plant not far from St. Louis are waiting to see if they will be next. This month, the company warned them it might be forced to idle the plant. Layoffs could begin around Christmas………………………………………..Full Article: Source

The Commodities Boom Is Dead. Long Live the Commodities Boom.

Posted on 26 October 2015 by VRS  |  Email |Print

What’s going on with BHP Billiton? The world’s biggest miner bid for a share in a Chilean copper mine this year and is exploring for offshore petroleum in Australia and the Gulf of Mexico. Isn’t the commodities super-cycle meant to be over?
One way of thinking about it is to take a trip to your local supermarket. Its owners probably purchased a lot of steel, concrete and bricks while it was being built. Now the doors are open, they’re buying stuff that shoppers use every day: Food to fill their bellies, gasoline to fuel their cars, aluminum foil to wrap their lunch, electronic goods wired with copper, and stainless steel cutlery alloyed with nickel………………………………………..Full Article: Source

What Iron Ore Reveals About China’s Growth

Posted on 26 October 2015 by VRS  |  Email |Print

Between its peak in February 2011 and low of April 2015, the price of iron ore has plunged by approximately 75%, far outpacing declines in other industrial metals. Copper prices, for instance, are down “only” by about 52% the past year, while aluminum and lead prices are down by 40%-45% from their highs. Prices for steel, of which iron is the primary component, are down by 52% from their recent highs.
Furthermore, iron ore has a low correlation to other metals, including copper and hot rolled steel, making iron ore a potentially interesting portfolio diversifier for those who have exposure to other metals. Although iron and copper are both used as industrial metals, they have very different supply and demand dynamics. First, the geographic locations of iron and copper vary greatly………………………………………..Full Article: Source

Commodities offer diversification: Analyst

Posted on 23 October 2015 by VRS  |  Email |Print

While the commodities market is prone to ups and downs, one analyst says investing in this sector can pay off..”In reality, [the commodity sector] is a part of an investor’s asset allocation that can achieve diversification,” said Jeff Sherman, a portfolio manager at DoubleLine. Sherman told CNBC that agricultural stocks are attractive right now in this space.
“The reason for that is the pressure we’ve seen from the El Nino system and kind of forecasting a tougher winter — that tougher winter being from the standpoint of it’s going to be a lot warmer, according to all the weather forecasts,” Sherman said. “That puts pressure on the field and the fertility and ultimately it could have some disappointing crops in the next year.”……………………………………….Full Article: Source

China’s Growth Threatens Commodities Rebound

Posted on 23 October 2015 by VRS  |  Email |Print

Despite Q3 GDP beating expectations, Chinese domestic activity indicators contained worrying signs for commodities. Industrial production, fixed asset investment and electricity production all fell (year-on-year) in September.
This threatens to overwhelm the positive impact the recent supply cuts have had on the sector. Industrial metals will be most impacted, with oil demand the one bright spot. As such, we remain cautious on commodity prices into year-end………………………………………..Full Article: Source

Russia and the new geopolitics of oil

Posted on 23 October 2015 by VRS  |  Email |Print

The changing structure of the global oil trade – which includes new roles for Russia and Saudi Arabia and the rise of non-state actors such as ISIS – has important implications for Russia’s energy industry. Russia’s top energy companies, already grappling with the consequences of lower global oil prices over the past 18 months, now face additional challenges brought on by the shifting structure of the global oil trade. Most importantly, the rise of Saudi Arabia as a crude oil supplier to Europe is forcing Russia to accelerate its energy pivot to Asia.
As a result of increased tensions over Ukraine, European reprocessing plants have cut their purchases of Russian crude and started to replace it with oil from Saudi Arabia, setting the stage for increased competition between oil suppliers in their struggle for global market share………………………………………..Full Article: Source

OPEC Is About to Crush the U.S. Oil Boom

Posted on 22 October 2015 by VRS  |  Email |Print

After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in US crude output. The nation’s production is almost back down to the level pumped in November 2014, when the Organisation of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share.
As the US wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates. While cratering prices and historic cutbacks in drilling have taken their toll on the US, OPEC members have also paid a heavy price………………………………………..Full Article: Source

US and European stocks ease as commodities slip

Posted on 21 October 2015 by VRS  |  Email |Print

Stocks were slightly softer as the euro and Bund yields rose after improving bank lending in the eurozone reduced expectations for more stimulus from the European Central Bank. The FTSE Eurofirst 300, a pan-European equity gauge, fell 0.5 per cent, also dragged lower by resources groups as the prices of base metals and oil relapse. The FTSE Asia Pacific index shed just 0.1 per cent.
Both regions have received little impetus from the US, where the S&P 500 was flat overnight and briefly flirted with two-month highs before slipping 2.89 points to 2,030.77 by the close. That leaves the Wall Street benchmark, which tends to determine the global mood, only about 5 per cent below its record hit in May, having bounced 8.7 per cent from its August lows………………………………………..Full Article: Source

Commodity Price Drop Puts Pressure on Monetary Policy in Low-Income Countries

Posted on 21 October 2015 by VRS  |  Email |Print

While much attention has been paid to monetary policy reforms in advanced economies in recent years, problems facing low- and lower-middle income countries seeking to stabilize their economies remain largely under researched, said Maurice Obstfeld, the IMF’s chief economist. Obstfeld’s comments came while moderating a panel discussion entitled, Monetary Policy Frameworks in Low-Income and Developing Countries, during the IMF-World Bank Annual Meetings.
“Many low and lower-middle income countries have made progress on a number of fronts including stabilizing inflation rates,” Obstfeld said, but added that good monetary policy will be necessary if this group of countries is to achieve rapid, stable, sustainable, and inclusive growth………………………………………..Full Article: Source

OPEC’s Fight Club

Posted on 21 October 2015 by VRS  |  Email |Print

Groucho Marx didn’t want to belong to any club that would accept him as a member. Do OPEC countries ever feel the same? The cartel meets on Wednesday for a special session, mostly so Venezuela can present its plan to establish and enforce a price band for oil of $70 to $100 a barrel. Venezuela is a founding member of OPEC, so certain courtesies must be extended for appearances’ sake.
Yet one member in particular, which holds a certain level of influence, would be mad to actually embrace the plan. Venezuela is a mess, “the weakest link in the oil supply chain” as energy economist Phil Verleger puts it. Foreign exchange reserves just hit a 12-year low of $15.3 billion, and the country has $4.5 billion of debt payments this month and next………………………………………..Full Article: Source

Commodity prices slide on China weakness

Posted on 20 October 2015 by VRS  |  Email |Print

Commodity markets were dragged lower on Monday by data showing the weakest growth in China’s economy since the financial crisis, sparking fears of a deepening slowdown in the world’s largest consumer of raw materials.
Oil and base metals prices were the among the biggest fallers, with Brent, the international crude benchmark, falling amuch as 3 per cent back below $50 a barrel, while copper and aluminium lost 1 per cent and 1.5 per cent to $5,201 a tonne and $1,554 a tonne respectively. The Bloomberg commodity index, a broad basket of 22 commodity futures, fell 0.7 per cent………………………………………..Full Article: Source

Gold Shines Again - How High Can It Go?

Posted on 20 October 2015 by VRS  |  Email |Print

A spectacular two-week rally. $1234 is the key technical level. Divergences and shifting momentum. Dollar weakness and higher gold. Will the Fed stop the precious rally? Gold had the worst quarter of the year during the three months that ended on September 30. The yellow metal dropped by 4.83% and was down 5.82% for the year.
Gold had many things going against it. A stronger dollar and the general environment of falling commodity prices drove the precious metal lower. However, while gold moved lower, other precious metals did far worse. Silver lost 6.8% of value, and platinum dropped by a whopping 24.8% in 2015. Even palladium was down by 18.47% as of September 30. This meant that gold was the strongest metal in the sector, and when it comes to precious metals, gold continues to shine, on a relative basis………………………………………..Full Article: Source

Lower commodity prices indicate a slowdown

Posted on 19 October 2015 by VRS  |  Email |Print

The International Monetary Fund (IMF) has just released its bi-annual update to its flagship publication the World Economic Outlook (WEO). Having the sub-title “Adjusting to Lower Commodity Prices” the report is both provocative as well as portentous. Provocative because it raises some fundamental questions on the assumptions that have guided policy makers around the world recently.
It is portentous because the scepticism over recent policy assumptions will lead to a different way of looking at the global economy, its strength and weaknesses. The key question is whether the steady decline in commodity prices around the world has been an unmixed blessing it has been claimed to be? For us In India,that question would appear most inappropriate,After all ,one of the tangible benefits of the global decline in oil prices has had a visible impact on day to day living ……………………………………….Full Article: Source

China could be what determines whether the bottom is in for commodities

Posted on 19 October 2015 by VRS  |  Email |Print

The painful sell-off in some commodities may be over for now, but a blast of major Chinese economic reports early next week could put any recent rallies to the test. While many Wall Street strategists see signs of a broader bottoming process, there is no consensus that the commodities crash is actually over, particularly for copper.
Nonetheless, a bundle of Chinese data Monday, including GDP, retail sales and industrial output, could set the course for these markets next week. Analysts believe China’s economy must show improvement, or at least stop declining, before some base metals and other commodities see a real rebound. The concern is that any unexpected weakness in the data could mean a hard landing is ahead………………………………………..Full Article: Source

Commodity bubble pops as China model changes

Posted on 19 October 2015 by VRS  |  Email |Print

China’s adoption of its New Normal policies is bursting the bubble. Prices for most commodities are returning to historical, much lower, levels. Chemical companies face a major challenge now that China’s business model has changed. The country is no longer aiming to achieve high levels of economic growth by operating an export-focused development model, supported by vast infrastructure spending.
Instead, its New Normal policies are focused on boosting domestic consumption by creating a services-led model based on exploiting the opportunities created by the power of the internet. This “China Chill” highlights the chaos now having an impact on petrochemical feedstock and product markets………………………………………..Full Article: Source

Is it time to pile back into gold?

Posted on 19 October 2015 by VRS  |  Email |Print

A recent rally in gold prices has refuelled debate if the precious metal is poised for a recovery after slumping this summer to its lowest in five years. Analysts still vary on their prices, but it seems the overall bearish drag on gold is behind us. The yellow metal has staged a decent rally, gaining roughly 6 per cent during the first half of October and adding 8 per cent since reaching a five-year trough of US$1,084.65 per ounce in early August.
Gold prices are turning a corner, according to Canadian lender Scotiabank, citing increases in gold exchange-traded fund holdings and net long fund positions. The net long fund position in gold in US Commodity Futures Trading Commission data have risen to over 76,000 contracts recently from a half-year low of 24,465 contracts in July, a sign short positions were covered and reflecting a less downbeat outlook in the market………………………………………..Full Article: Source

The tide has turned for commodities: Expert

Posted on 16 October 2015 by VRS  |  Email |Print

As commodities continue their recent rally, one analyst says that the group may have already found a bottom this year. Andrew Hecht of Commodix.com said the last few months have been exceptionally weak for commodities, which could be a good signal for the fourth quarter.
According to data from S&P Dow Jones Indices, the past quarter was the third worst Q3 returns for commodities since 1970. Although Hecht expects to see more volatility in Q4 this year, he said there are several catalysts that could push commodities higher. “While we have to keep our eyes on China, and that’s going to move commodities prices, we might have seen a bottom for the year during Q3,” Hecht said……………………………………….Full Article: Source

Why There’s No Better Time to Buy Commodities

Posted on 14 October 2015 by VRS  |  Email |Print

Commodities haven’t just had a rough year. It’s been more like a rough half-decade, in which prices of raw materials and foodstuffs were halved. Once a mainstay ingredient in the investing soup, this asset class is now being shunned, and some people are making ever more bearish price forecasts. So is it time to jump back in and gain the well-documented investing benefits of adding metals, grains and energy into your investment pot?
Maybe so, and there are good reasons to consider it (plus some pitfalls to avoid). First, there is the broad reason to own commodities, which is to reduce risk. Because the prices of commodities tend to be uncorrelated with the prices of other assets such as stocks and bonds, the overall volatility of a portfolio tends to be lower. And because most investors define risk as volatility, when it is lower there is less risk………………………………………..Full Article: Source

Sluggish growth good for gold investors

Posted on 14 October 2015 by VRS  |  Email |Print

Money managers increased their net-long position in gold, silver, platinum and palladium for a third straight week, helping to fuel rallies for the metals amid signs of a flagging US labour market, a drop in German factory orders and a forecast by the International Monetary Fund for slower global expansion.
The price gains last week pared losses for 2015 on mounting expectations that sluggish growth will force the Federal Reserve to hold off on raising interest rates, which can curb the appeal of assets like commodities that don’t pay interest. More than $8 billion was wiped from the value of exchange-traded funds backed by precious metals this year through September, and prices as recently as this month were at six-year lows, partly because the Fed was indicating higher borrowing costs were imminent………………………………………..Full Article: Source

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