Tue, Sep 2, 2014
A A A
Welcome kbr175@gmail.com
RSS

Commodities Briefing - Archive | April, 2014

Commodities favoured in portfolio rotation

Posted on 30 April 2014 by VRS  |  Email |Print

After several years of poor performance investors are warming to commodities. Helped by the return of volatility, strong returns and declining correlations with other asset classes, money has started to trickle back into the sector.
After a record $50bn of net redemptions in 2013, total inflows into passive index tracking and commodity-linked exchange traded funds this year have so far totalled just over $6bn, according to research by Citigroup. Agriculture, energy and bullion funds have led the way………………………………………..Full Article: Source

Some banks haven’t given up on trading commodities. And that’s a good thing.

Posted on 30 April 2014 by VRS  |  Email |Print

As expected, the recent by some of the largest energy trading banks has created a temporary dearth of capability, and sometimes liquidity, in the international commodity markets. Born a child of the Financial Crisis and the BP Deepwater Horizon oil spill, and later ensconced into law through Dodd-Frank, the Volker Rule and other international regulations, the anti-bank sentiment amongst policymakers has driven many of the largest players into various stages of transition toward smaller footprints.
The likes of JP Morgan, Morgan Stanley, Barclays, Deutsche Bank and Bank America – to name a few – are staring at the exit signs for some or all of their business. This is not good………………………………………..Full Article: Source

U.S. commodity regulators looking into banks’ swaps move

Posted on 30 April 2014 by VRS  |  Email |Print

U.S. commodity regulators are inquiring about Wall Street banks’ recent push to remove parent-company backing of some overseas swaps. Scott O’Malia, a Republican commissioner at the Commodity Futures Trading Commission, said in an interview he has asked the agency’s acting chairman, Mark Wetjen, a Democrat, to issue a legal opinion as to whether any of the banks’ exercises have run afoul of the agency’s rules.
On Sunday, The Wall Street Journal reported that banks, including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley, were changing the terms of some swaps made by their offshore units so they could avoid U.S. regulations, according to people familiar with the situation………………………………………..Full Article: Source

China economic slump could slash oil price ‘by half’

Posted on 30 April 2014 by VRS  |  Email |Print

A ‘hard landing’ of the Chinese economy could see the oil price plummet to as low as $50, information firm IHS has warned. Growth in the world’s second-largest economic is stumbling, and if the rate of expansion continues to fall the repercussions would be felt globally, IHS said. Such a scenario could see the gross domestic product of Middle East countries drop by up to 1 percent, IHS said.
“A China hard landing would mean the Middle East would experience weaker exports, lower tourism and business activity, and probably a resurgence of risk aversion by global companies due to this new deterioration of the global economic situation, just at the moment when they thought the situation was finally improving,” said IHS Chief Economist Nariman Behravesh………………………………………..Full Article: Source

U.S. sanctions on Russia put western oil companies in tricky position

Posted on 30 April 2014 by VRS  |  Email |Print

New U.S. sanctions on Russia that include asset freezes and travel bans on several top Russian officials, including Rosneft’s Igor Sechin, are raising the likelihood that Western companies with investments in Russia will be caught up in the economic feud.
BP, in particular, is significantly exposed. It used to be a major owner of TNK-BP, a joint oil venture in Russia, but agreed in 2013 to sell its holdings to Rosneft in exchange for a 19.75 percent stake in Rosneft itself………………………………………..Full Article: Source

Fossil fuel subsidies growing despite concerns

Posted on 30 April 2014 by VRS  |  Email |Print

Government subsidies for renewable energy cause great consternation to those who believe in the sanctity of free markets. “If they can’t stand on their own feet, then why support them?” the argument goes.
But in actual fact, most energy sources are subsidised, and none more so than fossil fuels. Indeed in straight numerical terms, subsidies for oil, coal and gas far outweigh those for renewables………………………………………..Full Article: Source

What America’s energy blunder means for oil

Posted on 30 April 2014 by VRS  |  Email |Print

Here’s a quiz for you. Can you name the top three countries by proven oil reserves? The top spot may surprise you. It’s Venezuela. The number two spot is more obvious. It’s Saudi Arabia. What about number three?
You won’t get this one. But don’t feel bad about it. The energy industry has gone through big changes in recent years, and even bigger changes are on the way… It may surprise you to know that the country with the third largest proven oil reserves is Canada. That’s an impressive feat for a country often disparaged as being the 51st US state, and for its people’s fondness for putting bacon on pancakes………………………………………..Full Article: Source

Deutsche Bank resigns from gold price-setting panel

Posted on 30 April 2014 by VRS  |  Email |Print

Deutsche Bank AG has failed to sell its seat on the London gold-fixing panel following a three-month search for potential buyers, raising fresh concerns about the credibility of the historic benchmark.
The German lender is one of five banks that set the twice-daily gold “fix”—a snapshot of the market price—in a process that has operated more or less unchanged since 1919. The bank had been looking for someone to buy its seat after announcing in January it was exiting the fixing panel as part of a wider scaling back of its commodities business……………………………………….Full Article: Source

Morgan Stanley: Gold price won’t see $1,300 again

Posted on 30 April 2014 by VRS  |  Email |Print

The gold price on Tuesday continued to hover below the $1,300 an ounce level, down more than $80 an ounce from 2014 highs reached mid-March. US investment bank Morgan Stanley added to the negative sentiment, forecasting the gold price to average $1,250 this quarter, decline to an average $1,168 in the second half of 2014 and weaken further to $1,138 next year.
The commodity analysts at Morgan Stanley are quoted in Barron’s blog that record demand from China “won’t be enough to keep gold’s price above $1,200 per ounce in the coming year, much less help it rise”………………………………………..Full Article: Source

China has control of the gold price

Posted on 30 April 2014 by VRS  |  Email |Print

In addition to the latest excellent study of the Chinese gold market by the World Gold Council, we have received other reports on the Chinese gold market that differ with the conclusions drawn by the World Gold Council.
But we shouldn’t be surprised by this, not only because of the opaque nature of the Chinese gold market and the dearth of accurate statistics that are accessible. Which ones are right is critical for the conclusions each draw paint very different pictures of the future of the gold price………………………………………..Full Article: Source

Silver price to consolidate on rising supply, weaker investment demand: CPM

Posted on 30 April 2014 by VRS  |  Email |Print

Average silver prices in 2014 are expected to slip to around $20.440/oz from the 2013 average of $23.750/oz because of rising supply and weaker investment demand, analysts with the New York-based CPM Group said Tuesday.
“Silver prices are expected to consolidate this year, with limited downside potential,” CPM analysts said in their annual Silver Yearbook 2014 report. “The sharp decline in silver prices during 2013 was one of the primary factors that helped drive demand in the price-sensitive jewelry sector higher………………………………………..Full Article: Source

Investing in South America – Watch out for falling copper prices

Posted on 30 April 2014 by VRS  |  Email |Print

To say the least, 2014 has proven to be a difficult year for copper bulls. The metal has been drastically underperforming the major indexes such as the Dow Jones Industrial Average and the S&P 500. In addition the performance has also been lagging gold and silver.
Unfortunately, news from this past week isn’t providing much comfort and it appears that the pressure will continue to be to the downside over the short-term. From a trader’s perspective, the strategic move will be to take this underperformance and examine the influence that it is having on copper exporting nations such as Peru and Chile………………………………………..Full Article: Source

ETF liquidity tips and trading best practices

Posted on 30 April 2014 by VRS  |  Email |Print

One of the biggest advantages of an ETF over a mutual fund is the ability to trade intra-day without being held hostage to a single price. This makes ETFs a flexible tool for both long-term investors and short-term traders alike. However, with that flexibility comes an additional layer of risk that involves understanding the liquidity and execution elements that are critical to a successful entry or exit.
With an ETF, liquidity is provided by the underlying securities, market makers, associated participants, and investors that are purchasing or selling these funds………………………………………..Full Article: Source

Canadian dollar ETF losing its commodity currency status

Posted on 30 April 2014 by VRS  |  Email |Print

The Canadian dollar, along with the related exchange traded fund, has lagged behind other developed market currencies this year, as the U.S. becomes more energy independent and winter demand for Canadian exports falters.
The CurrencyShares Canadian Dollar Trust is down 3.6% year-to-date, more than twice the loss suffered by the PowerShares DB US Dollar Index Bullish Fund. The Canadian currency has depreciated 4.2% against a basket of 10 developed country currencies this year – it is the worst performer of the group, reports Ari Altstedter for Bloomberg………………………………………..Full Article: Source

You’ve got to hedge your bets

Posted on 30 April 2014 by VRS  |  Email |Print

In the last six years there has been a very major secular shift—from which we are all suffering. We, the World Gold Council, the association of large mining companies, felt we had to increase the use of gold by securitising gold. So we introduced to the global securities markets the ability to buy gold as a trading stock called ETF, exchange-traded fund. That was previously unheard of.
Before ETFs, if you wanted to buy gold, you went to a bank and bought gold coins or a gold bar. But if you were an insurance company, and say your assets were $100 billion and you had to invest 5% of your assets in gold, you had to buy gold shares………………………………………..Full Article: Source

U.S. state regulators issue warnings on virtual currency

Posted on 30 April 2014 by VRS  |  Email |Print

Investors should consider risks associated with virtual currencies, including bitcoin, before trading in them, two U.S. regulators warned on Tuesday. The warnings are the latest in a string of advisories from U.S. state regulators, including Nevada and Maryland, as they look to toughen rules on the use of the controversial crypto currency.
“The value of virtual currencies is highly volatile and the concept behind the currency is difficult to understand even for sophisticated financial experts,” Andrea Seidt, president of the North American Securities Administrators Association (NASAA) president, said in a statement on Tuesday………………………………………..Full Article: Source

Are crypto-currencies the future of money?

Posted on 30 April 2014 by VRS  |  Email |Print

The creditors of the collapsed Mt Gox have agreed to support a group of US investors who are trying to re-establish the Bitcoin exchange. Despite these problems, can crypto-currencies, such as Bitcoin revolutionise the way we pay for goods and services in the digital age?
After all, money is anything that can perform three basic functions: a medium of exchange to be used in the purchase and sale of goods and services; a unit of account to measure the value of goods and services; and a store of value that can be saved and spent at a future point in time………………………………………..Full Article: Source

Carbon emissions trading spreads across the globe

Posted on 30 April 2014 by VRS  |  Email |Print

Traders’ enthusiasm for the European Union Emissions Trading System has slumped during recent years. But at the same time, there have been a variety of significant developments in carbon markets elsewhere around the globe.
The 1997 Kyoto Protocol cemented the status of cap-and-trade schemes as an internationally agreed method of cutting emissions of carbon dioxide (CO2) and other greenhouse gases. Since then, the European Union Emissions Trading System (EU ETS) – the world’s biggest carbon market by far, which was set up in 2005 – has undergone a rollercoaster ride………………………………………..Full Article: Source

Poland says EU 2030 carbon goal compromise viable in October

Posted on 30 April 2014 by VRS  |  Email |Print

The European Union can set its 2030 carbon goals as soon as October if the region’s governments agree to ease the cost for poorer countries to implement the policies, according to Poland’s climate negotiator.
The 28-nation bloc needs a “coherent” environment strategy for the next decade while ensuring its industry stays competitive worldwide, Marcin Korolec said in an interview. Poland in the past three years has twice vetoed EU ministerial statements on emissions goals that could lead to tighter greenhouse-gas reduction policies. A climate target decision by EU leaders requires unanimity………………………………………..Full Article: Source

Financial intermediation and shadow banking through commodities

Posted on 29 April 2014 by VRS  |  Email |Print

Commodity trading firms are not systemically risky because they do not engage in the sort of maturity transformation that banks do. They also tend mostly to operate on a hedged basis, via “basis trade” exposure.
Short-term assets meanwhile are funded with short-term debt while long-term assets are funded with long-term debt, meaning the institutions are not heavily leveraged at all, though balance sheets are exposed to liquidity or rollover risk………………………………………..Full Article: Source

Here’s why some of the world’s big banks are dumping their commodities desks

Posted on 29 April 2014 by VRS  |  Email |Print

A number of the world’s big banks have either dumped or downsized their commodities trading businesses because of falling returns. The latest, Barclays, announced last week it will stop the majority of its commodities activities as it ups its focus on electronic trading. The UK bank will continue to trade precious metals.
In March JPMorgan Chase sold off its commodities division to Swiss trading company Mercuria for $3.5 billion and has also retained precious metal trading activities………………………………………..Full Article: Source

Emerging economies lead to commodity markets reshuffle

Posted on 29 April 2014 by VRS  |  Email |Print

Barclays Bank, one of the world’s largest commodities trader, plans to pull out of trading in base metals, energy and agricultural products, and fold its precious-metals business into its currency-trading unit, as part of an effort to shrink its investment bank and improve returns.
Morgan Stanley, Deutsche Bank, UBS and Royal Bank of Scotland have already reduced or halted their commodities business. The above five dealers once controlled about 70 percent of global commodities trading volume………………………………………..Full Article: Source

On the intriguing drop in commodity correlation

Posted on 29 April 2014 by VRS  |  Email |Print

Banks are selling off their commodity divisions for regulatory reasons but also because commodities are turning out to be less profitable for them than they used to be.
On which note, an interesting development has emerged since banks started winding down their commodity divisions in 2013. According to David Bicchetti and Nicolas Maystre, who wrote a paper in 2012 highlighting increasing correlations between a number of major commodities and indices from 2008 onward, these correlations have now begun to dissipate………………………………………..Full Article: Source

The case for commodities

Posted on 29 April 2014 by VRS  |  Email |Print

The song “Physical” was a 1981 hit by Olivia Newton-John and it conjures up the yearning that some investors have for hard or physical assets. Aside from other tangible property like real estate or collectibles, commodities play an important role in a diversified portfolio.
Unfortunately, most people aren’t farmers and don’t have adequate storage space for 300 bushels of corn or a herd of cattle. Perhaps, that’s why so many individual investors own little to no commodities inside their portfolios. And that’s really the value proposition of commodity-based ETPs: to deliver affordable market exposure to an important asset class that investors would otherwise miss………………………………………..Full Article: Source

Russia and Ukraine: Commodity exports and production

Posted on 29 April 2014 by VRS  |  Email |Print

The United States announced additional sanctions on Russian individuals and businesses on Monday over the crisis in Ukraine, leading to growing fears in commodity markets of possible supply disruptions.
While the sanctions from the United States - expected to be followed by additional sanctions from the European Union this week - have not directly targeted Russia’s commodity exports, Washington on Monday added Igor Sechin, head of Russia state energy champion Rosneft to the list. Russia is the world’s second-largest oil exporter and supplies 30 percent of Europe’s natural gas………………………………………..Full Article: Source

Oil prices: Just keeping up

Posted on 29 April 2014 by VRS  |  Email |Print

Petrol prices have been ticking up in recent weeks, mostly for seasonal reasons. But the broader picture, Mr Hamilton points out, is one of surprising stability in prices. For most of the last three years oil has hovered around $100 a barrel, and the price of petrol has been correspondingly flat.
But there is another way of looking at this stability; prices have remained relatively high in order to temper demand growth and keep it in line with available supply growth. But for the North American oil bonanza, global demand would have to have been considerably more muted; indeed, it may have needed to decline (at a time while the world economy was growing steadily). That would presumably have taken a far higher price of oil………………………………………..Full Article: Source

Morgan Stanley on gold: Still dour after a nasty year

Posted on 29 April 2014 by VRS  |  Email |Print

The commodity strategists at Morgan Stanley write that record demand from China won’t be enough to keep gold’s price above $1,200 per ounce in the coming year, much less help it rise. On the contrary, the firm’s Joel Crane and six co-authors argue instance that weaker Chinese demand could the thing that causes prices to erode even more.
Here’s how that could happen: The weakening yuan. The Chinese currency’s downswing reduces the purchasing power of Chinese consumers, cutting down the amount of gold each yuan can buy………………………………………..Full Article: Source

China gold imports drop as local discount curbs shipments

Posted on 29 April 2014 by VRS  |  Email |Print

China’s gold imports from Hong Kong dropped in March as local prices fell below the international benchmark in London for the first time in more than a year.
Net imports totaled 80.6 metric tons last month, compared with 111.4 tons in February and a record 130 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department……………………………………….Full Article: Source

Silver: ‘The worst story of all the metals’

Posted on 29 April 2014 by VRS  |  Email |Print

“Silver has the worst story of all the metals,” says Adam Klopfenstein, a senior market strategist with Archer Financial Services, citing the bountiful supplies and silver’s tendency to move in tandem with gold.
On top of the potential for higher interest rates, the silver market has been inundated with supplies of the metal. HSBC expects a 3.4% increase in the silver supply to 1.09 billion troy ounces in 2014, while demand will remain nearly unchanged at some 938 million ounces………………………………………..Full Article: Source

Platinum jumps on strike anxiety

Posted on 29 April 2014 by VRS  |  Email |Print

Talks between South Africa’s biggest three Platinum producers and their unions collapsed Thursday and the companies said they would take their latest wage offer directly to employees. South Africa’s longest and most damaging mining strike in living memory is not about to come to an abrupt end as both sides strive to win rank and file hearts and minds in a high stakes war of attrition on the platinum belt, Reuters reported.
Leaders of the Association of Mineworkers and Construction Union (AMCU) have signalled their displeasure with the offer from the world’s top three producers, Anglo American Platinum, Impala Platinum and Lonmin………………………………………..Full Article: Source

Why doctor copper is on course to hit $6,000/t

Posted on 29 April 2014 by VRS  |  Email |Print

Copper prices have been beset by constant pressure since striking all-time highs of $10,100 per tonne back in February 2011. Fresh concerns over Chinese demand pushed prices to their cheapest for almost four years last month around $6,420, and with a backdrop of surging supply and demand doubts striking investor appetite for the bellwether metal, the stage appears set for copper to endure fresh waves of heavy price weakness.
Metals consultancy Thomson Reuters GFMS says in its Copper Survey 2014 that it expects the red metal to average $6,790 per tonne in 2014, down from an average of $7,346 last year………………………………………..Full Article: Source

Global metals M&A drops to lowest level since 2008 - Study

Posted on 29 April 2014 by VRS  |  Email |Print

Quarterly mergers-and-acquisition activity in the global metals market dropped to its lowest level since 2008 as over-capacity and weak pricing, particularly in the steel segment, remains a concern among buyers, consultancy and accountancy firm PriceWaterHouseCoopers said Monday.
During the first quarter of 2014, there were 13 transactions valued at $50 million or more, totaling $3.3 billion–a 78% decline in deal value from the fourth quarter of 2013, which registered 20 deals worth $15.1 billion, PwC said in its quarterly report. PwC’s M&A metals analysis comprises deals announced in the steel, iron ore, aluminum, copper, nickel and other-non precious metal sectors………………………………………..Full Article: Source

When ETFs make things more volatile

Posted on 29 April 2014 by VRS  |  Email |Print

Do ETFs impact the volatility of the underlying stocks they are based on? We study whether exchange traded funds (ETFs)—an asset of increasing importance—impact the volatility of their underlying stocks. Using identification strategies based on the mechanical variation in ETF ownership, we present evidence that stocks owned by ETFs exhibit significantly higher intraday and daily volatility.
We estimate that an increase of one standard deviation in ETF ownership is associated with an increase of 16% in daily stock volatility. The driving channel appears to be arbitrage activity between ETFs and the underlying stocks………………………………………..Full Article: Source

Time for top ranked sugar ETF: SGG

Posted on 29 April 2014 by VRS  |  Email |Print

Thanks to the ongoing geopolitical tensions in Russia, the energy commodity world has been in the limelight this year and has been performing quite well. Though that’s the case, there have been several winners in the soft commodity space too. Some commodities, such as sugar, have made fresh highs and are continuing with their uptrend.
A global supply glut for the past four years had led to huge stockpiles leading to a slump in sugar prices. However, things are expected to look up this year and prices likely to take a U-turn. Extreme weather conditions in Brazil – the world’s biggest producer and exporter of sugar – are expected to adversely hit sugar supply………………………………………..Full Article: Source

Gold ETFs in tug of war between Ukraine fears and US growth

Posted on 29 April 2014 by VRS  |  Email |Print

There has been mixed research on gold. According to Saxo Bank, gold saw a sixth consecutive week of outflows in exchange traded products last week.
Investors traditionally buy gold as a safe-haven asset at times of uncertainty, but ongoing fears about the political crisis in Ukraine have been offset by confidence in the US economy, the research says. The EU and the US have imposed sanctions on Russian officials linked to president Vladimir Putin, in response to Moscow’s annexing of Crimea………………………………………..Full Article: Source

Hedge funds wrong-footed by grain price recovery

Posted on 29 April 2014 by VRS  |  Email |Print

Hedge funds appear to have been wrong-footed by the rebound in US grain and soybean prices last week on weather and Ukraine fears, cutting their bullish bets on corn and wheat in the run-up to the recovery.
Managed money, a proxy for speculators, cut its net long in future and options in the top 13 US-traded agricultural commodities by more than 40,000 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission regulator………………………………………..Full Article: Source

Are you bitcoin savvy? Things you should know about the digital currency

Posted on 29 April 2014 by VRS  |  Email |Print

Bitcoin is a decentralised, peer-to-peer, electronic payment system. This basically means that there is no central body controlling the Bitcoin network, and it’s managed and regulated by its users. Unlike other electronic payment systems, it also has its own virtual currency, bitcoin. The network has a finite supply of 21 million bitcoins.
Where can you use bitcoins? Make donations: If you’re a user of Wordpress or popular websites like Reddit, 4Chan, The Pirate Bay, EZTV and The Internet Archive, you can use bitcoins to make donations……………………………………….Full Article: Source

China’s currency conundrum

Posted on 29 April 2014 by VRS  |  Email |Print

It seems the People’s Bank of China (PBOC) cannot win. In late February, the gradual appreciation of the renminbi was interrupted by a 1 per cent depreciation (to $1:¥6.12). Though insignificant in overall trade terms, especially when compared with the volatility of floating exchange-rate regimes, the renminbi’s unexpected weakening sparked a global furor.
This is hardly surprising. After all, China has been under constant pressure from foreign governments to revalue, in the mistaken belief that a stronger currency would reduce China’s large trade surplus. And, since July 2005, when the exchange rate was $1:¥8.28 (and had been held constant for 10 years), the PBOC has implemented more or less steady appreciations of about 3 per cent per year through 2013………………………………………..Full Article: Source

A carbon commodity

Posted on 29 April 2014 by VRS  |  Email |Print

At first glance, using a greenhouse gas to produce more fossil fuel appears to offer a futile and counterproductive solution to today’s climate-change crisis. But that is exactly what the Department of Energy, the oil industry, and some environmental groups are advocating.
They are touting enhanced oil recovery (EOR) as a pathway to reduce atmospheric CO2 emissions. EOR is a method used by the oil industry to produce more oil by injecting highly pressurized supercritical CO2 into partially depleted oil fields to recover oil left behind from previous drilling operations………………………………………..Full Article: Source

EU ETS decision leaves airlines playing cameo role

Posted on 29 April 2014 by VRS  |  Email |Print

Airlines set to remain on the fringes of the EU ETS until at least 2016, disappointing environmentalists and market observers hoping for better liquidity A decision to exempt most of the global airline industry from the European Union Emissions Trading System (EU ETS) means that aviation is unlikely to play a role in boosting the fortunes of the flagging scheme in the near future, say market participants.
Since the EU ETS was launched in 2005, the continent’s economic malaise has created an oversupply of European Union Allowances (EUAs), leading to rock-bottom prices………………………………………..Full Article: Source

Is enough being done to regulate global commodity markets?

Posted on 28 April 2014 by VRS  |  Email |Print

Commodity markets are becoming interconnected, with large global financial investors choosing to invest directly in these markets. With this comes the question of how one is to regulate markets which are truly global, with investors many a time being from outside national regulatory jurisdictions.
All these issues have been acknowledged by the G-20 and governments, and regulations will have to be made keeping in mind the constantly changing trading strategies in commodity markets that are increasingly becoming systemically important………………………………………..Full Article: Source

Commodities: To buy or not to buy?

Posted on 28 April 2014 by VRS  |  Email |Print

Commodity prices are on the rise, as gold, corn and other basic materials climb back from steep declines—and outpace U.S. stocks. The rebound may stir hopes that a longer-term boom has resumed after three rough years for natural resources, and a measured bet could pay off.
But for ordinary investors, commodities often are a raw deal. They should take a hard look before loading up. First, weigh whether you need the exposure. Perhaps the main reason investors hold commodities is to hedge against inflation. But inflation remains muted in the U.S………………………………………..Full Article: Source

Commodities: A better long-term bet?

Posted on 28 April 2014 by VRS  |  Email |Print

For longer-term investors, equity markets have generally remained the risk asset class of choice. However, with equities around the world now finding it hard to continue the bullish momentum of the last few years, investors are now looking to alternative markets to diversify risk, and for potentially better returns.
One such is commodities, which has performed well since the start of the year, with the Dow Jones Commodity index currently up 10%, compared with to just 2% for the S&P 500. In addition, and perhaps more significantly, many of the traditional correlations between equities, bonds, commodities and currencies, and in particular the risk-on-risk-off relationships, have all broken down as the financial markets continue to be distorted by quantitative easing………………………………………..Full Article: Source

El Niño could impact wide range of commodities

Posted on 28 April 2014 by VRS  |  Email |Print

Global farmers, fishermen, meteorologists and commodities traders are closely watching water temperatures in the South Pacific, waiting to see if the water will warm up this summer, a telltale sign of the El Niño phenomenon. According to the U.S. Climate Prediction Center, there is a roughly 65 percent chance that the climate pattern will develop, which could bring extreme weather conditions around the world. The last major El Niño event was in 1998.
Typically, El Niño brings drought to Australia, Asia and West Africa, which can wreak havoc on their commodity production, hurting those regions’ output of a wide range of commodities, including wheat, rice, coffee and cocoa………………………………………..Full Article: Source

Oil: Return of the blob

Posted on 28 April 2014 by VRS  |  Email |Print

The blob, yearning for the sea, has oozed south. And now it is stuck there. Or, put a tad more prosaically, the spread between the prices of Brent and West Texas Intermediate crude oils has rebounded to about $9 a barrel two weeks after hitting a low for the year of less than $3.70.
The blob is the Midwestern glut of crude oil resulting from production arising from the shale boom running into logistical bottlenecks. These have eased somewhat, allowing that oil to migrate south from the storage tanks at Cushing, Okla., toward the Gulf Coast. However, because there is a ban on exporting U.S. crude oil, the barrels’ journey ends there………………………………………..Full Article: Source

The largest supply side shock since the OPEC crisis of the 1970s

Posted on 28 April 2014 by VRS  |  Email |Print

A future filled with inflation, creative government expropriations and changing borders in Eastern Europe. The Ukraine was not a local, spontaneous, organic event, but part of a larger pattern of social unrest in Brazil, Argentina, Thailand, South Africa, and across the Arab world, which share a common thread: A rising cost of living for at least two years before all hell breaks out.
When food costs rise dramatically, people ask, “Why is the wealth in my society being distributed to some other guy and not to me?” The question led to the overthrow of dictatorships in the Middle East and, in Ukraine, the answer was to join the EU. The Russians said, “No way.” If Ukraine joined the EU, it would mean NATO right on Russia’s border, which would be like a Cuban Missile Crisis for them………………………………………..Full Article: Source

Are you ready for the global oil surplus?

Posted on 28 April 2014 by VRS  |  Email |Print

From the macro standpoint, we at Raymond James have been asking ourselves, “How and when will gas storage begin to replenish?” The answer to that question will dictate how the gas market reacts during the next three to six months. Clearly, the strength of the winter weather sales and the reduction in storage levels make us much more positive on 2014 gas prices than on 2015 gas prices.
We think there will be enough coal switching to keep gas prices from getting too frothy. We also believe the E&P industry’s ability to bring new supply to the system will help close the storage gap. So, while we recently increased our 2014 gas price deck, we left 2015 unchanged………………………………………..Full Article: Source

Petrochemical industry in a state of high flux

Posted on 28 April 2014 by VRS  |  Email |Print

In the 19th century, chemicals production depended largely on coal processing. But the increasing availability of petroleum and gas drove the industry into “petrochemicals”, a term that was first used in 1942 to distinguish its products from those obtained from coal.
The need for materials to conduct the Second World War drove Germany in 1940, followed by others, to produce synthetic rubber from petroleum fractions. The simpler and less expensive processes made manufacturers shift from coal to the new, flexible and inexpensive oil or gas feedstock………………………………………..Full Article: Source

Eight energy myths explained

Posted on 28 April 2014 by VRS  |  Email |Print

Republicans, Democrats, and environmentalists all have favorite energy myths. Even Peak Oil believers have favorite energy myths. The following are a few common mis-beliefs, coming from a variety of energy perspectives. I will start with a recent myth, and then discuss some longer-standing ones.
Myth 1. The fact that oil producers are talking about wanting to export crude oil means that the US has more than enough crude oil for its own needs. The real story is that producers want to sell their crude oil at as high a price as possible. If they have a choice of refineries A, B, and C in this country to sell their crude oil to, the maximum amount they can receive for their oil is limited by the price the price these refineries are paying, less the cost of shipping the oil to these refineries………………………………………..Full Article: Source

Gold bulls return in time for rally on Ukraine tensions

Posted on 28 April 2014 by VRS  |  Email |Print

Investors returned to gold just in time for the longest price rally in a month amid mounting tension over Ukraine.
Money managers increased their net-long position in gold in the week ended April 22, snapping a four-week retreat that was the longest this year. The metal climbed in the next three days, sending futures to the best start to a year since 2006………………………………………..Full Article: Source

April 2014
S M T W T F S
« Mar   May »
 12345
6789101112
13141516171819
20212223242526
27282930