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Commodities Briefing - Archive | June, 2014

More investors plan to overweight commodities -Credit Suisse

Posted on 27 June 2014 by VRS  |  Email |Print

More investors plan to ramp up on commodities over the next 12 months after years of pessimism toward the sector, betting that the Iraq conflict will push oil prices higher while other commodities prices advance in volatile trade, a Credit Suisse poll showed on Thursday.
The Swiss bank said it found a favorable view developing toward commodities at a conference in New York this week, when it surveyed 350 investors, including institutions, hedge funds, family offices, mutual funds and corporate firms. A year ago, the bank said most investors at a similar Credit Suisse conference expressed reservations on commodities………………………………………..Full Article: Source

Commodities Prices: Why Do They Shoot Up And Then Collapse?

Posted on 27 June 2014 by VRS  |  Email |Print

Commodity prices are much more volatile than overall inflation, as I noted in an earlier post, “Commodity Prices: Basics For Businesses That Buy, Sell or Use Basic Materials.” In this article I explain why that is. The “why” will help you figure out other questions, such as “How high?” and “For how long?” and “How deep a collapse?”
Begin with a textbook example, shown on the left panel of the chart. (If you have no recollection of supply and demand charts, scroll down for the “Supply and Demand Chart Explanation.”)……………………………………….Full Article: Source

Commodities bounce back

Posted on 27 June 2014 by VRS  |  Email |Print

Commodity prices have increased 9 per cent on average so far in 2014, beating world equity index and treasury returns of 5 per cent and 3 per cent, respectively, according to data from Citigroup.
Although individual commodity price performance has varied widely, steep rises in energy and grain prices have helped a basket of commodities outperform. The price of gold also snapped back this month as central banks indicated they will persist with loose monetary policy for longer than previously anticipated………………………………………..Full Article: Source

Is Now The Time To Buy Commodities?

Posted on 27 June 2014 by VRS  |  Email |Print

For active traders thinking about investing in commodities now could be the time. As you can see from the chart below, the price of the iPath Dow Jones-UBS Commodity Total Return ETN (DJP) has recently bounced off its 200-day moving average. The bullish long-term buy signal is being confirmed by the MACD indicator crossing above its signal line.
These two technical buy signals along with a rising RSI indicator suggests that commodity prices could be heading higher over the months ahead. Aside from the technical chart patterns, price movements of major underlying commodities are also suggests that a move higher is likely in the cards……………………………………….Full Article: Source

Rising Commodity Prices Could Hit Consumers’ Wallets

Posted on 27 June 2014 by VRS  |  Email |Print

Get ready to pay more for your Independence Day barbecues this year. Both hog and cattle prices were up this month, with hog futures closing in on an all-time high after paring back gains in April and May. Hog prices have skyrocketed more than 30% over the past year due to a virus that trimmed the U.S. herd by roughly 10%.
Cattle futures are set to close the month at an all-time high on reports of tight supplies heading into the Fourth of July holiday, the most popular day for Americans to grill outdoors, according to the Hearth, Patio and Barbecue Association………………………………………..Full Article: Source

When commodity collateral shenanigans go wrong

Posted on 27 June 2014 by VRS  |  Email |Print

We’ve long reported about China’s amazing commodity collateral shenanigans, featuring almost every commodity or physical good under the sun. None of which was a problem for the financing side of the equation as long as the deals could be rolled over and for as long as the collateral did not have to be liquidated.
A few bad loans later, however, and suddenly the need to check in on the underlying collateral has exposed a small problem with relying on commodity collateral to de-risk trade finance. So intense was the demand for cash financing in China that it seems the greatest shenanigan of all was rehypothecation — multiple use of the same collateral many times over for many different loans………………………………………..Full Article: Source

Rising Oil Prices Loom Over World Economic Recovery

Posted on 27 June 2014 by VRS  |  Email |Print

The global economy faces a new threat from an old enemy: oil. A spike in the price of crude foreshadowed economic slumps in each of the last four decades. So economists are worrying because the price of Brent crude, considered the benchmark for the industry, recently reached its highest point in nine months—above $115 a barrel.
The jump in price came amid fresh violence in Iraq, the Organization of the Petroleum Exporting Countries’ second-biggest producer after Saudi Arabia. Brent started the year about $6 cheaper………………………………………..Full Article: Source

What would an oil price shock mean for EM?

Posted on 27 June 2014 by VRS  |  Email |Print

Although the violence in Iraq has so far had a muted impact on global oil markets, if prices continue to rise there could be some nasty consequences in store for the more fragile of emerging market economies. And while a spike would hurt countries that rely on energy imports, it won’t necessarily translate into quick and easy economic gains for EM hydrocarbon exporters, say analysts.
The price of a barrel of Brent crude has risen from $109 to $114 since large swaths of Iraq began falling to extremist militias of the Islamic State of Iraq and the Levant (Isis) two weeks ago………………………………………..Full Article: Source

What is driving fear out of nat gas market?

Posted on 27 June 2014 by VRS  |  Email |Print

Rising U.S. shale gas production is driving fear out of the futures market, says Goldman Sachs Group Inc., and will constrain prices for the next two decades. Gone will be the near tripling of costs to $15.78 as in 2005 as traders remain confident the fuel will be there when needed.
Natural gas will trade “largely” at $4 to $5 per million British thermal units for the next 20 years, says Goldman Sachs. Societe Generale SA sees prices at $5 through 2019. Bank of America Corp. forecasts $5.50 for 2017, while BlackRock Inc. projects $4 to $5 for the next decade………………………………………..Full Article: Source

So, even gold prices are rigged

Posted on 27 June 2014 by VRS  |  Email |Print

Whether it’s Libor or gold, the story is the same, with Barclays once again at the centre of controversy. On June 28, 2012, the day after Barclays was fined £290 million by Britain’s market regulator for manipulating the benchmark lending rate, Libor, a Barclays customer raised concerns with the bank about the afternoon gold fix. This was set during one of the twice daily telephone gold auctions held by five London-based investment banks — Barclays included, which also acts as a benchmark for gold prices.
The ‘fix’ was declared at $1,558.50, and under an options contract the bank had entered into with the customer, the bank would not have to pay that customer the $3.9 million it would have owed him had the fix been above $1,588.96, boosting its own trading book by $1.75 million………………………………………..Full Article: Source

5 Reasons to Buy Gold and Gold Miners Now

Posted on 27 June 2014 by VRS  |  Email |Print

Gold prices have had a nasty few years, as have major gold miners and mining stocks. Gold bullion prices are down significantly from highs around $1,900 an ounce… and even worse, gold investments including Newmont (NEM), Barrick Gold (ABX) and GoldCorp (GG) are all down over 50% in the last three years.
But there are signals that the worst may now be over, and it may be a good sign to start buying gold once more. Since January, gold has crept up steadily; the SPDR Gold Trust (GLD), which tracks physical gold prices, is sitting on a roughly 10% gain – nearly double the return of the S&P 500 in the same period………………………………………..Full Article: Source

Buy gold if it dips to $1,298-1,302/ounce

Posted on 27 June 2014 by VRS  |  Email |Print

Comex gold futures were lower on Thursday, retreating from this week’s two-month high as a firmer tone in equities suggested investors could be switching back into risky assets, abandoning haven gold.
It has struggled to maintain gains, however, as higher prices curbed physical demand and investors stuck to the side lines, awaiting a clearer picture for the US monetary policy. China’s gold imports from Hong Kong dropped in May to the lowest level since January last year as a weaker yuan curbed appetite for the precious metal………………………………………..Full Article: Source

Best Ways To Trade Gold And Silver

Posted on 27 June 2014 by VRS  |  Email |Print

The Reuters/Jefferies CRB Index, which tracks a diverse group of commodities, has been in an uptrend since the start of the year, lead largely by the strong performance in the energy sector. Gold and silver are now following suit, with a sharp rally higher starting in July. Here are four stock and ETF plays you can use to take part.
Relative to the January 2014 low at $114.46, the recent June low was much higher at $119.42 in the SPDR Gold Trust Shares ETF (GLD), indicating accumulation. The subsequent rally through resistance in the $126 to $127 region signals a broader upside move could be underway………………………………………..Full Article: Source

Silver Short Squeeze Presents New Opportunity

Posted on 27 June 2014 by VRS  |  Email |Print

A short squeeze in the silver market is pushing prices profoundly higher, the consequence of which could be felt for years. All told, the month of June has witnessed silver rise by over 12%. But the truly aggressive price action began exactly a week ago – with a single-day move from $19.81 to nearly $21.
Short squeezes occur when short sellers close their positions with a heightened sense of purpose and haste. Such behavior can cause prices to move sharply higher. That is, since closing a short position requires one to buy shares………………………………………..Full Article: Source

Silver: The golden investment?

Posted on 27 June 2014 by VRS  |  Email |Print

Silver has not been on the top of fund managers lists when investing in precious metals. But this unloved metal could be the one to watch out for. The volatile nature of silver could make investing in the companies that extract it remarkably profitable.
One fund manager who has bucked the trend to slant his portfolio towards silver is Ian Williams, CEO at Charteris Treasury Portfolio Managers. The WAY Charteris Gold & Precious Metals fund is the only portfolio in the UK which has the majority of its investments in silver. Around 70 per cent of the portfolio is weighted towards silver, while 30 per cent is in gold………………………………………..Full Article: Source

Zinc Approaches 16-Month High in London as Supples Fall

Posted on 27 June 2014 by VRS  |  Email |Print

Zinc rose, trading near a 16-month high, as inventories in warehouses tracked by the London Metal Exchange declined amid signs of improving demand. Stockpiles fell for a fourth session, extending a slide to the lowest since December 2010. Zinc, used in everything from brass plumbing fixtures to steel car parts, has gained 10 percent this quarter amid signs of recoveries in manufacturing and housing.
U.S. new-home sales posted the biggest one-month gain since 1992 in May, while American factories received more orders for business equipment, government data showed this week………………………………………..Full Article: Source

Why Asset Managers Are Betting On Active ETFs

Posted on 27 June 2014 by VRS  |  Email |Print

The idea of an active exchange-traded fund has been around for no less than six years now, with the first one being launched back in 2008. It is only over recent months, however, that the investment product has attracted significant interest from investors as a cheaper alternative to actively-managed mutual funds.
After all, it combines the flexibility and cost-effectiveness of an ETF with the higher returns that you would normally associate with a fund that has a good manager………………………………………..Full Article: Source

ETFs in Excess? Not True, Say Investors

Posted on 27 June 2014 by VRS  |  Email |Print

Even with a perceived proliferation of ETFs on the market today, two-thirds (66 percent) of investors say there is room for more, according to a new study by Charles Schwab. Among them, nearly 60 percent say more ETFs will lead to increased competition and lower prices, and that continued product innovation is necessary to keep up with a changing market and economy. More than a quarter (28 percent) say that more product choice is the industry trend that has most benefited investors in the past few years.
The 2014 ETF Investor Study by Charles Schwab is the fourth installment of an annual online survey of more than 1,000 individual investors between the ages of 25-75 with at least $25,000 in investable assets who have purchased ETFs in the past two years or are considering doing so in the near term. (Press Release)

China Expands Trial to Liberalize Foreign-Currency Deposit Rates

Posted on 27 June 2014 by VRS  |  Email |Print

China’s central bank took a small step toward its long-promised liberalization of interest rates by partially removing a cap on foreign-currency deposit rates in Shanghai. The incremental move is part of a longer-term bid to introduce more competition within China’s banking system.
The People’s Bank of China said Thursday it would expand a pilot program to all of Shanghai involving small-account foreign-currency deposit rates that was previously confined to Shanghai’s free-trade zone………………………………………..Full Article: Source

Czechs to Keep Currency Cap for Longer on Low Inflation

Posted on 27 June 2014 by VRS  |  Email |Print

Czech policy makers kept their koruna ceiling in place for a fifth meeting and said they won’t scrap the limit on the currency’s gains before the second quarter of 2015 due to slower inflation (CZCPYOY) at home and abroad.
The central bank kept the benchmark interest rate at 0.05 percent for a 13th meeting, matching the estimates of all 18 analysts in a Bloomberg survey. Policy makers also reaffirmed a commitment not to let the koruna “strengthen too much” beyond 27 per euro, the limit on the currency pair set on Nov. 7………………………………………..Full Article: Source

U.S. Corn Reserves Expanding Most Since 2005: Commodities

Posted on 27 June 2014 by VRS  |  Email |Print

A bumper harvest in 2013 means stockpiles in the U.S., the world’s biggest grower, are rising at the fastest pace in nine years, according to traders and analysts surveyed by Bloomberg.
Ample rains and warm weather boosted early crop development for this season and allowed farmers to plant more than the government estimated in March, a separate survey showed. Prices will fall about 9.5 percent in six months, Goldman Sachs Group Inc. forecasts………………………………………..Full Article: Source

Carbon price debate set to continue

Posted on 27 June 2014 by VRS  |  Email |Print

The carbon tax has a ticket to the scrap heap, but debate will continue about a future pricing mechanism and when it should come into force. The tax’s repeal legislation passed the lower house on Thursday and, with a helping hand from Palmer United Party senators, is set to pass the upper house in July.
But Prime Minister Tony Abbott will need to juggle the policy victory with Clive Palmer’s plan for an emissions trading scheme drafted with a zero-dollar starting price, to be activated when Australia’s trading partners set a price. ……………………………………….Full Article: Source

Korean firms should stop complaining about carbon-trading scheme

Posted on 27 June 2014 by VRS  |  Email |Print

The new director general of the Global Green Growth Institute (GGGI) urged the automobile and energy industries Tuesday to stop complaining about the carbon-trading scheme and imposing heavy taxes on polluting cars.
The two measures are expected to be implemented in January 2015. Firms that generate massive amounts of greenhouse gases, in particular, have strongly opposed the measures, saying they will reduce their competitiveness………………………………………..Full Article: Source

China’s small commodity traders at risk if banks tighten financing

Posted on 26 June 2014 by VRS  |  Email |Print

A warehouse fraud at China’s third-largest port has forced banks and trading houses to consider new controls in the country’s massive commodity financing business, which traders say could lead to drying up of credit for all but large firms and state-owned companies.
China’s commodities trading is dominated by the large and state-owned companies but there are thousands of small firms in the market. Faced with tougher bank requirements for financing, they could sell down stockpiles, squeezing demand for metals and other raw materials such as rubber in the world’s biggest consumer of commodities………………………………………..Full Article: Source

Everybody Loves Hedge Funds, Assets Hit Record $3 Trillion

Posted on 26 June 2014 by VRS  |  Email |Print

Love ‘em or hate ‘em, the world of hedge funds is only getting bigger. The industry saw assets surpass $3 trillion in May for the first time ever. That’s according to hedge fund database, eVestment, which notes the new record exceeds the asset peak from 2008.
It’s been a particularly strong year for hedge funds. In May alone, $22 billion of new capital was added bringing year-to-date flows to $93.3 billion. That’s the strongest start to a year since 2007………………………………………..Full Article: Source

Oil markets poised for record as Iraq crisis deepens

Posted on 26 June 2014 by VRS  |  Email |Print

Oil markets have staged only a muted reaction to the bloody insurgency gripping OPEC’s number two producer Iraq, but analysts warn any disruption to supplies could push prices to record peaks. The offensive led by extremists that has swept through the north of the country and is now threatening to rip Iraq apart has sent prices to nine-month highs but they remain $30 below the peaks hit in 2008.
“This contrasts with the period of civil war in Libya in early 2011 that halted production. Back then, oil prices, volatility and skew all reacted far more aggressively,” said BNP Paribas analysts Harry Tchilinguirian and Gareth Lewis-Davies………………………………………..Full Article: Source

Two Key Issues That Will Determine Next Year’s Oil Prices

Posted on 26 June 2014 by VRS  |  Email |Print

Rising oil production in the US and slowing oil demand growth in the rest of the world were expected to bring Brent oil prices below $100 a barrel, but supply disruptions in the Middle East and North Africa have kept them from happening.
Now that ISIS is holding substantial territory in Iraq, Raymond James analysts have increased their estimates for 2014 and 2015, but they also warn that there is a huge range of possible prices depending on how Mideast conflicts and US politics play out………………………………………..Full Article: Source

The US To Allow Crude Oil Exports; Not That It Will Make Much Difference

Posted on 26 June 2014 by VRS  |  Email |Print

We’ve the news that the US is to allow some crude oil exports for the first time since the ban on them was set in place in the 1970s. This is good news as it removes an economic inefficiency (and removing economic inefficiencies is always good news) but it’s not going to make all that much difference to the nation as a whole.
It’s really all a fight between the independent crude producers and the independent refiners. They, obviously, care about how this goes, crude exports or no crude exports, but it makes very little difference to the rest of us………………………………………..Full Article: Source

What If the U.S. Set Oil Prices?

Posted on 26 June 2014 by VRS  |  Email |Print

For decades now, the U.S. has essentially had to accept the oil prices set by world markets. Starting in 1973 with the OPEC-driven oil shock, the major producers have been foreign countries. If the U.S. wanted the oil, we had to pay the price. But are things starting to change?
U.S. moves toward allowing exports: Federal policy currently prohibits the export of oil, but today we saw the first crack in that wall: two companies have reportedly received permission to export a specific type of unrefined oil. Although the rulings haven’t been officially announced, and the Commerce Department says there’s been “no change in policy on crude oil exports,” the implications are clear………………………………………..Full Article: Source

World saved $3.5 trillion from emergency oil stocks: IEA

Posted on 26 June 2014 by VRS  |  Email |Print

The world has saved $3.5 trillion over the last 30 years by maintaining emergency oil stocks to offset supply shocks and curb price surges, the West’s energy watchdog said on Wednesday. The International Energy Agency (IEA) said in a report that emergency oil stocks held by member and non-member states have acted as an ” insurance” against oil supply disruptions.
Spiralling violence in key oil producer Iraq in recent weeks has pushed global oil prices to nine-month highs, reviving speculation of a release of strategic stocks in case of severe supply disruptions………………………………………..Full Article: Source

China, Singapore vie for Asia gold pricing alternative to London

Posted on 26 June 2014 by VRS  |  Email |Print

China and Singapore are vying to provide feasible gold price benchmarks in Asia, as calls grow in the top consuming region for more localized pricing of the precious metal at a time when the global benchmark is under regulatory scrutiny.
Singapore said at an industry conference on Wednesday it would launch a physical gold contract on an exchange to create a transparent form of pricing. China, at the same conference, said it wanted to have a bigger influence on the global gold market and would like to have its own price ‘fix’………………………………………..Full Article: Source

Is this the start of a new bull market for gold?

Posted on 26 June 2014 by VRS  |  Email |Print

I’m afraid ten years of gold investing has given me a bit of a personality disorder. On the one hand I’m a gold bug loon – one of those nutcases you hide from at parties when they collar you and say: “buy gold, buy gold, our monetary system is doomed!”, and then harangue you with a load of statistics about US national debt.
But on the other, I’m a total cynic. Every time gold rallies, I just don’t believe it. False golden dawn after false golden dawn has turned me into a total non-believer. But you’d have to be living a rather secluded existence not to have heard that gold has had quite a run this month………………………………………..Full Article: Source

HSBC cuts avg Silver price forecast for 2014 from $20.80 to $19.50/Oz

Posted on 26 June 2014 by VRS  |  Email |Print

British bank HSBC has cut its average silver price forecast for 2014 from $20.80 an ounce to $19.50 an ounce, saying a rise in supply will cap rallies. HSBC forecasts silver prices to trade in a $17 to $22 range this year.
In addition to lowering its 2014 average price forecast to $19.50, it also reduced its 2015 price forecast to $19.25 from $20.25, but left its 2016 forecast at $21.50 and its longer-term forecasts unchanged at $25………………………………………..Full Article: Source

A New Way to Buy Gold

Posted on 26 June 2014 by VRS  |  Email |Print

Despite some truly frightening conflicts in the Middle East and Ukraine, despite signs of inflation in the United States, and despite promises to “print” from both the Japanese and European central banks, the price of gold has barely managed to climb above $1,300 an ounce.
In fact, gold was the worst-performing asset class in 2013 — down 24.8 percent. Yet gold is still the best-performing asset of this century!……………………………………….Full Article: Source

Rising solar demand to drive silver’s revival

Posted on 26 June 2014 by VRS  |  Email |Print

According to research released Tuesday by UBS, the silver demand for solar sector has started showing early signs of recovery. The trend is likely to continue in the future. The rising demand from the solar sector will drive silver’s growth over the next five years, noted Edel Tully, a strategist for the leading Swiss financial services company.
UBS forecasts the global solar demand to double over the next five year period. The solar demand is expected to grow by 22% during this year to 45 GW of new installed solar capacity. The solar demand is expected to grow to 84 GW of new installed capacity by 2018………………………………………..Full Article: Source

Copper Posts Longest Rally Since 2005 on Tighter Supply

Posted on 26 June 2014 by VRS  |  Email |Print

Copper advanced for a ninth straight session in New York, capping the longest rally since 2005, amid signs of tightening supply. Inventories monitored by exchanges in London, Shanghai and New York fell for the 10th trading day in a row, and are at the lowest since October 2008.
Copper also rose after the dollar slid, as a report showing the U.S. economy shrank more in the first quarter than economists estimated boosted demand for alternative assets………………………………………..Full Article: Source

Avoid These Types of ETFs Like The Plague

Posted on 26 June 2014 by VRS  |  Email |Print

Exchange-traded funds (ETFs) have become extremely popular with investors and with good reason – they track a wide range of assets, generally have lower management fees than do mutual funds, and are usually very liquid.
But all ETFs are not created equal, and deciding which ones to avoid in an extremely crowded field can be as important an investment decision as deciding in which ones to invest. Here are six attributes that reduce the investment appeal of ETFs:……………………………………….Full Article: Source

Why Asset Managers Are Betting On Active ETFs

Posted on 26 June 2014 by VRS  |  Email |Print

The idea of an active exchange-traded fund (ETF) has been around for no less than six years now, with the first one being launched back in 2008. It is only over recent months, however, that the investment product has attracted significant interest from investors as a cheaper alternative to actively-managed mutual funds. After all, it combines the flexibility and cost-effectiveness of an ETF with the higher returns that you would normally associate with a fund that has a good manager.
Active ETFs form a negligible part of the country’s mutual fund and ETF industry – less than 0.1% of the $13.9 trillion market at the end of 2013. But the steadily increasing demand for them has prompted the world’s largest asset managers to explore the offering seriously………………………………………..Full Article: Source

Brazil Real Leads Global Gains as Support for Currency Extended

Posted on 26 June 2014 by VRS  |  Email |Print

Brazil’s real climbed to a one-month high and led gains among major currencies after the central bank said it will extend daily intervention for at least another six months as part of an effort to curb inflation.
The real rose 0.8 percent to 2.2078 per U.S. dollar at the close of trade in Sao Paulo, the strongest since May 21. The rally was the biggest among the 31 most-traded currencies tracked by Bloomberg………………………………………..Full Article: Source

Is Indonesia Facing a Currency Crisis?

Posted on 26 June 2014 by VRS  |  Email |Print

Indonesia’s rupiah is headed south, fuelled by rising oil prices, and is nearing the 2008 lows once again. The USD/IDR is currently trading a little below the record 12,500 mark touched in 2008, but the currency situation now is not as grave as it was during the 2008 crisis, at least for corporate investors.
At the 2008 trough of 12,503, the rupiah was about 25% weaker from its end-2007 level. And the JSE composite, Indonesia’s benchmark stock index, had fallen nearly 35% during the same period………………………………………..Full Article: Source

Al Gore joins Clive Palmer to back emissions trading scheme for Australia

Posted on 26 June 2014 by VRS  |  Email |Print

Clive Palmer has said his party will support the abolition of the carbon tax but not that of the renewable energy target and the Clean Energy Finance Corporation, and he wants an emissions trading scheme, which he announced with former US Vice President Al Gore by his side.
Australian politics has witnessed many strange events, but fewer as gob-smacking as the alliance revealed late this afternoon between maverick politician Clive Palmer and former United States Vice President Al Gore. The billionaire MP and the world’s most famous campaigner against global warming have joined forces to turn Tony Abbott’s climate policy upside down. ……………………………………….Full Article: Source

Carbon tax versus emissions trading scheme: What’s the difference?

Posted on 26 June 2014 by VRS  |  Email |Print

The federal government has plans to abolish the carbon tax from July first onward and replace it with an emissions trading scheme (ETS). Both programs are aimed at tackling pollution by putting the onus on companies that produce carbon dioxide, but they go about it in very different ways. So what’s the difference between the carbon tax and ETS?
The carbon tax was launched on July 1, 2012 by the Labor government to tackle the problem of pollution. Companies in Australia that emit over 25,000 tonnes of carbon dioxide are currently charged $25.40 per tonne emitted, payable to the Australian government………………………………………..Full Article: Source

Goldman Sees Commodities Dropping 5.5% After Iraq-Driven Rally

Posted on 25 June 2014 by VRS  |  Email |Print

Commodities are poised to decline 5.5 percent over the next 12 months after climbing amid tensions in Iraq, Goldman Sachs Group Inc. said. Energy prices will be 5 percent lower a year from now, precious metals will drop 15 percent and agricultural products will retreat 10 percent, the bank said in an asset-allocation report dated yesterday. Commodities will decline 4 percent in the next three months, according to the report.
“Despite the negative return we forecast after the recent rally driven by events in Iraq, we stay neutral commodities due to the hedging benefits they offer against these risks,” Goldman analyst Jeffrey Currie in New York said in the report………………………………………..Full Article: Source

Commodity hedge funds out of favor, launches head for 8-year low

Posted on 25 June 2014 by VRS  |  Email |Print

Commodity fund launches have slowed dramatically, heading for an eight-year low, data from industry tracker Preqin showed, after years of weak returns and some high-profile fund failures in the commodities sector.
In the year through May, some 34 commodity funds were launched, the fewest since the first half of 2006. Last year, there were 89 commodity funds launched worldwide in the first half, Preqin’s data showed………………………………………..Full Article: Source

Oil price hike about fear, not Iraq output: OPEC chief

Posted on 25 June 2014 by VRS  |  Email |Print

The head of OPEC, the group of major oil exporters, says recent crude price increases are to blame on market fears caused by the crisis in Iraq but not on a drop in output. OPEC Secretary General Abdullah Al-Badry said Tuesday that Iraq is “still producing as normal,” with 95 per cent of its capacity in the country’s south being unaffected by the violence.
The price for a barrel of Brent crude, the key international benchmark, has risen from a stable level of $110 held over the past four years to about $115 following the takeover of some parts of Iraq by Sunni insurgents………………………………………..Full Article: Source

OPEC secretary general says no shortage of oil

Posted on 25 June 2014 by VRS  |  Email |Print

OPEC is ready to pump extra oil in the event of any supply disruptions caused by Iraq and its biggest producer, Saudi Arabia, can ramp up to capacity if needed, oil officials said on Tuesday.
For now the market is well-supplied and prices above $114 a barrel are the result of market nervousness, OPEC Secretary General Abdullah al-Badri said. An official from Saudi Arabia, the only OPEC member with significant spare capacity, said it was committed to supplying the market if needed………………………………………..Full Article: Source

Major Global Oil Price Shock Unlikely Despite Iraq Violence, says Standard Life

Posted on 25 June 2014 by VRS  |  Email |Print

Global oil prices are unlikely to experience a major shock in the near future despite continuing violence in Iraq, says Standard Life. In a market briefing report for investors, the financial firm said that even if the political situation continues to diminish Iraqi oil production is unlikely to be damaged further.
“After a period of unusual calm in global oil markets, the benchmark ICE Brent oil spot price spiked to just under $116 per barrel (bbl) late last week, its highest level since September last year,” said analysts in a statement………………………………………..Full Article: Source

Decline In Oil Echoed In Other Commodities

Posted on 25 June 2014 by VRS  |  Email |Print

Oil was the major loser overnight on speculation that Iraqi oil production won’t be disrupted by escalating violence in the country. Although the Iraqi army yesterday ceded control of the Baiji refinery in the north, they also recaptured some territory along the border with Jordan and Syria, according to Iraqi state TV.
Moreover, the fighting has remained concentrated in the north and center of the country, while the oil industry is concentrated in the south, so there has not been that much disruption to oil exports. The movement in the markets is largely a risk premium that rises and falls with the insurgents’ progress. The change in Brent futures over the last month suggests that the market is most concerned about what will happen this year and not as concerned about the longer-term future of oil prices………………………………………..Full Article: Source

Rising Oil Price Hits Fragile Importers

Posted on 25 June 2014 by VRS  |  Email |Print

High oil prices are starting to burden emerging economies, sparking concerns that tensions in the Middle East may derail fragile recoveries.
The price of a barrel of Brent crude has risen by more than 5% since June 12, when militants attacked and then overran several cities in major oil producer Iraq, and speculative money is firmly backing yet-higher prices. For economies including India, Turkey and Indonesia, a higher oil price is particularly onerous because they have to import most of the oil used to fuel their economies………………………………………..Full Article: Source

Singapore to launch gold contract as Asia eyes price alternatives

Posted on 25 June 2014 by VRS  |  Email |Print

Singapore is set to announce the launch of a gold futures contract on Wednesday, two sources familiar with the matter said, joining a race in Asia to provide a viable alternative to the metal’s global benchmark which is under regulatory scrutiny.
The physically settled contract will trade on the Singapore Exchange. This and other planned contracts in Hong Kong and China could cut Asian reliance on gold’s spot price benchmark in London and futures bellwether in New York………………………………………..Full Article: Source

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