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Commodities Briefing 18.Dec 2008

Oil prices 'may drop to $25 a barrel next year'
BarCap says neutral strategy best now for commods
Commodities outshine equities in 2008
Global credit crisis and commodities supply
Five ways to profit from the rebound in commodities
Gold declines from 10-week high as oil tumbles to four-year low
Gold losing luster
Investors spur rush at Swiss gold refiners
US rate move sparks gold's surge to $870
Gold and silver stocks in the limelight
BMO copper outlook-‘It's always darkest before the dawn'
January to October 2008 metals balances
Copper hits four-year low
Chinese copper imports may be rising defying market belief
Questions and answers on the revised EU emissions trading system
European parliament gives go ahead to EU climate deal
Australia unveils carbon trading scheme
Energy agency: Oil demand slowing, causes are many
Opec oil cut could push up petrol and energy prices
OPEC makes deepest oil cut ever to rescue prices
Oil trades near four-year low as OPEC cut seen as insufficient
Commodities: OPEC output cut ignored
Opec agrees deep cut in oil production
Fundamental analysis for major currencies
Pound falls on signs of rate cuts
Dollar hits 13-1/2 year low vs yen, plunges vs euro
The commodity ETFs in focus
Precious metals ETFs: Should you follow conventional or contrarian wisdom?
Commodities ETFs vs. ETNs: Which are better?
Ethiopia - Commodity exchange coming to mobile phones
MF global to exit U.S. futures exchange
Dubai’s gold exchange eyes new futures products in ’09
Price bust, credit crunch weaken monoliths

Posted on 18 December 2008 by VRS |  Email |Print

From Gulf-daily-news.com: Crude oil will fall to $25 a barrel next year, Chinese growth will slow to zero, stock markets will continue to fall and the commodities bubble will burst.

Those are some of the prediction made by Saxo Bank for the year ahead in a forecast, which it admits appears outrageous. But it adds that the year will be a turning point, because things can’t get much worse. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Guardian: Commodity investors should adopt neutral strategies that allow them to short sell the market when necessary, Barclays Capital said on Wednesday as oil prices hit four-year lows.

The investment bank, that had been mostly bullish on commodities as energy, metals and grains markets rallied over the last few years, said it was hard to remain optimistic on the sector when prices could fall further….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Ndtv.com: Commodities substantially outperformed equities over 2008 as equity markets fell precipitously in the wake of the credit crisis, according to ETF Securities.

Although down, commodities have generally weathered the financial storm better than their equity counterparts. The DJ All commodities Index remains up 14% and 107% over 5 and 10 year horizons, the firm said its Commodities Review 2008 report. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Commodityonline.com: The global credit crisis is expected to reduce the trend growth rate of supply in many commodities as producers defer or scale back capacity investment. Much of this investment involves large up-front costs and long lead times.

This slower capacity development will reduce the ability of producers to absorb the next upswing in commodities demand as emerging market structural transformation continues….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Stockhouse.com: Between September 2007, and June 2008, oil prices doubled, gold rose 30% and commodities, in general, advanced by a similar percentage.

So why, six months later, when prices have fallen back below last year’s levels, does everybody think they won’t rise again? The difficulties of extraction haven’t gone away, nor have the prospects of increasing consumption in the faster-growing emerging markets such as China. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Bloomberg: Gold fell from a 10-week high, ending an eight-day rally, as crude oil’s slump to the lowest in more than four years reduced the appeal of bullion as a hedge against inflation.

Oil fell as low as $39.19 a barrel, extending yesterday’s 8.1 percent decline, on rising U.S. stockpiles and skepticism the Organization of Petroleum Exporting Countries will achieve a 2.46 million barrel-a-day production cut agreed in Algeria. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Resourceinvestor.com: In times of economic uncertainty gold prices ordinarily take flight; this process has been suspended, at least temporarily, as the recent flashpoint in the credit crisis has been accompanied by a resurgent greenback.

Hedge funds and others are being forced to liquidate dollar denominated assets to meet margin requirements, creating a short squeeze on the dollar. That is offsetting the flood of stimulus and bailout dollars, deferring what ordinarily would be inflationary forces. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Livemint.com: Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.

This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From FT: Gold prices surged yesterday as the dollar fell sharply in response to the Federal Reserve’s decision on Tuesday to cut the main US policy interest rate to a historic low in a range between zero and 0.25 per cent.

Gold rose 1.6 per cent to $870 a troy ounce, moving between a low of $848.50 and a peak of $881.20, the highest level since October 10 when bullion touched $931….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Mineweb.com: Listed gold stocks reaffirmed their status as the leading equities recovery sector in global stock markets after the Federal Reserve, the US central bank, announced an interest rates cut on Tuesday, establishing a target range for the federal funds rate of 0% to 0.25%, the lowest ever known.

The cuts in US interest rates are among the latest further steps taken by governments, and monetary and treasury officials, around the world, to further stem damage from haemorrhaged credit markets and also stimulate economic activity as recessionary conditions increasingly take a grip across the world economy….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Mineweb.com: BMO says “virtually no unfunded project will begin in the next two years, owing to low prices and tight credit markets” while only a few fully-funded copper projects will meet their timetables.

BMO Capital Markets ‘ Bart Melek predicts the recession in the world’s highly industrialized nations is expected to erode copper demand and keep copper prices depressed “over at least the next year.”…. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Commodities-now.com: The calculated market surplus for primary aluminium for January to October 2008 was 1132 kt which compares with a surplus of 44 kt registered in the first ten months of 2007 and a total surplus of 269 kt recorded in 2007.

Demand for primary aluminium was 32.02 million tonnes, 581 kt more then the equivalent total for January to October 2007. Production rose by 1669 kt to 33.15 million tonnes during the same period. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Theglobeandmail.com: Copper lost more than 4 per cent on Wednesday as demand concerns increased because of a worsening economic outlook and outweighed the benefits of a weaker U.S. dollar.

The dollar hit a two-and-a-half-month low against the euro and headed toward a 13-year low versus the yen after the U.S. Federal Reserve on Tuesday slashed interest rates to between zero and 0.25 per cent from 1 per cent….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Mineweb.com: The strength of Chinese copper imports in November seems to have defied market expectations, for the second month running.

However, the arbitrage between Shanghai and London remained positive for imports last month and that is still the case this month….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Mondovisione.com: 1) What is the aim of emissions trading? The aim of the EU Emissions Trading System (EU ETS) is to help EU Member States achieve their commitments to limit or reduce greenhouse gas emissions in a cost-effective way. Allowing participating companies to buy or sell emission allowances means that emission cuts can be achieved at least cost.

The EU ETS is the cornerstone of the EU’s strategy for fighting climate change. It is the first international trading system for CO2 emissions in the world and has been in operation since 2005. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Dw-world.de: European lawmakers have given the final thumbs up to a package of measures to fight climate change. Being hyped as the most ambitious environmental package ever, the next challenge will be implementation.

The legislative package, which easily passed the European Parliament after being put forward by last week’s summit of the EU’s 27 member states, mandates a 20 percent reduction in the EU’s 1990 levels of CO emissions by the year 2020….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Reuters: Australia pledges to cut its greenhouse emissions by 5 to 15 percent by 2020 as it unveils the world’s broadest carbon trading scheme, rebuffing business calls for a delay due to the global slowdown.

Reuters has been providing special coverage of the development of carbon trading in Australia and New Zealand. Double click on the codes in square brackets to see some of the stories….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From AP: The government is predicting virtually no growth in U.S. oil consumption between now and 2030. The Energy Information Administration attributes this trend to increases in conservation, a greater use of renewable fuels and an expected rebound in oil prices.

The agency also said Wednesday that overall energy use will continue to increase, but at a slower rate….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Telegraph: Drivers and gas customers have been warned that they could face higher prices in the New Year, after the oil cartel Opec announced a record cut in production.

The Organization of Petroleum Exporting Countries said it would cut production by 2 million barrels a day at the beginning of next year in an attempt to halt the sliding price of oil, which has fallen by nearly two-thirds in the last year….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Guardian: OPEC oil ministers agreed their deepest output cut ever on Wednesday, cutting 2.2 million barrels per day from oil markets in a race to balance supply with rapidly crumbling demand for fuel.

The 12 members of the Organization of the Petroleum Exporting Countries were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Bloomberg: Crude oil traded near the lowest in more than four years on skepticism that OPEC’s larger-than- expected supply cut will be enough to boost prices as fuel demand drops.

Oil extended yesterday’s 8.1 percent decline after OPEC agreed that the group’s 11 members with quotas will trim current production by 2.46 million barrels a day to 24.845 million barrels a day. U.S. fuel consumption in November declined 7.4 percent from a year earlier to the lowest for the month since 1998, the American Petroleum Institute said yesterday. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Sharecast.com: The widely anticipated production cut by OPEC of 2.2m barrels of oil per day failed to arrest the slide in oil prices Wednesday.

The January futures contract for crude oil slipped $3.54 to $40.06, despite the biggest cut in production ever announced by OPEC….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Guardian: Opec ministers surprised the oil markets yesterday by agreeing to cut production more deeply than expected in a desperate bid to halt a free-falling oil price.

The petroleum exporting cartel, led by Saudi Arabia, promised to take 2.2m barrels a day out of the market in a move heralded by one analyst as “the end of the bear market”….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Forexpros.com: An index that measures the weighted average of prices to a fixed basket of goods and services, such as transportation, medical care, and food; the index is commonly know by its abbreviation, CPI.

The index is referred to as “headline inflation” and for that considered as the cost-of-living index. The CPI is calculated by averaging the change in prices for each item in the predetermined basket, in which the goods are weighted according to their importance….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From BBC: Sterling has hit another record low against the euro following weak jobless figures and signs that the Bank of England is set to cut rates further.

The pound hit a low of 1.0756 euros before recovering to 1.0772 euros. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Guardian: The U.S. dollar tumbled against major currencies on Wednesday, hitting its weakest level in more than 13 years versus the yen, a day after the Federal Reserve cut interest rates to virtually zero.

The euro rallied to its strongest level against the greenback this quarter after the U.S. central bank’s massive rate cut further widened the interest rate differential in favor of the single euro zone currency….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Fool.com: Gold and agriculture stocks have come out strong in the early going, suggesting to me, anyway, that relative opportunities may exist in steel and coal. To the extent that the dollar continues this steep decline, all commodities are likely to rally.

Any forestalling of the present rally will be predicated upon a pause or momentary relief rally in the dollar’s steep decline. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Seekingalpha.com: When central banks in a country or region lower their target interest rates, the respective currencies tend to fall in the near-term. And with the globally coordinated (and non-coordinated) rate cuts happening worldwide, conventional wisdom suggests that all currencies would give way to precious metals.

Indeed, we’ve seen a fair amount of precious metal buying in the ETF world. Although gold via streetTracks Gold Shares (GLD) is still 20% off its high, it is essentially flat on the year. Similarly, the Powershares DB Precious Metals Fund (DBP) is down a mere 10% YTD….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Seekingalpha.com: Commodities have seen there fair share of market volatility for the year, and ETFs and ETNs have gone along for the ride.

At one time this sector was considered a safe haven of sorts, with ETFs and ETNs giving investors a diversified and safe entrance to commodities exposure, at a reasonable price without physical delivery. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Nazret.com: The Ethiopian Commodity Exchange (ECX) is in preparations to launch SMS (Short Message Service) and IBR (Internet Business Resources) services on mobile phones to disseminate trading information by March 2009.

According to Ahadu Wubshet, Chief Marketing Data Officer at ECX, the SMS service will deliver information in two ways. Daily prices will be sent to subscribers while any individual may request information via text messaging….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Welt.de: MF Global Ltd., a leading broker of exchange-listed futures and options, today announced the strategic decision to no longer participate in the U.S. Futures Exchange (USFE), a Chicago-based electronic futures exchange.

The company will take an impairment charge related to its equity investment in USFE. …. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Gulf-times.com: Dubai Gold and Commodities Exchange (DGCX) plans to launch more new products in 2009 as high market volatility boosts the need for risk management products, the chief executive of the Exchange said.

DGCX has a wide variety of commodity derivatives including gold, oil, steel and currency futures and is aiming to become a major commodities centre in the region….. Full Article: Source

Posted on 18 December 2008 by VRS |  Email |Print

From Marketwatch.com: Record volatility in the commodities and credit markets is roiling the energy sector, turning once-stellar but highly-leveraged performers into potential takeover targets in what is poised to become a new wave of consolidation in the industry.

Chesapeake Energy Corp. is a textbook example. At the height of the bull market for commodities over the summer, the Oklahoma City-based natural gas company stood tall among giants in the energy business, with its market cap at $33 billion and the stock nearly $60 a share. …. Full Article: Source

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