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Commodities Briefing 30.Jan 2013

Posted on 30 January 2013 by VRS |  Email |Print

For the second time in less than two years, the United States is facing a debt-ceiling calamity. In this installment of The Commodity Investor, we will discuss the debt ceiling and then examine what impact, if any, it will have on commodity markets.
The US, just like any other country in the world, issues debt in order to finance its existing operations and meet its current legal obligations. These legal obligations include paying back holders of its debt (in the form of bonds issued by the treasury department), paying for services such as Social Security and Medicaid, issuing tax refunds, paying government employee salaries and more………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Commodities rose a second day, while bonds declined, after reports from Germany to Australia signaled improved confidence. European equity futures were little changed after Asian shares gained the most in a week.
The S&P GSCI Index of raw materials rose 0.2 percent as of of 7:26 a.m. in London, as oil and copper climbed. Euro Stoxx 50 Index futures added 0.1 percent, while contracts on the Standard & Poor’s 500 Index were little changed after the gauge yesterday dropped for the first time in nine days. The MSCI Asia Pacific Index added 0.9 percent. U.S. Treasuries remained lower and bonds across the Asia declined. South Korea’s won snapped a four-day slide………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

The Scotiabank Commodity Price Index declined by 4.6% month-over-month (m/m) in December, reflecting a sharp drop in the Oil and Gas Index (-14.6% m/m).
“Western Canadian Select (WCS) heavy crude oil led the decline, plunging from US$72.47 to a mere US$57.84 per barrel in December,” said Patricia Mohr, Vice President, Economics and Commodity Market Specialist at Scotiabank. “While West Texas Intermediate (WTI) oil prices edged up to US$88.25 last month, the WCS discount off WTI ballooned to US$30.41 and will climb further to US$32.84 in January and US$36.94 in February.” (Press Release)

Posted on 30 January 2013 by VRS |  Email |Print

Oil and gas majors, including, BP, Shell, and Statoil, could face a loss in market value of up to 60 per cent should the international community stick to its agreed emission reduction targets, analysts at HSBC have warned.
A new report from the banking giant finds that 17 per cent of Norwegian company Statoil’s reserves would become “unburnable” in a world where oil and gas use falls as countries seek to keep carbon concentrations in the atmosphere to 450 parts per million (ppm), the level the International Energy Agency (IEA) estimates is necessary to deliver a 50 per cent chance of limiting long-term temperature rises to 2°C………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Last year was a good year for oil. The price of Brent crude, the global benchmark for oil, remained above $100 per barrel for most of the year. But now, as a new year kicks off, people want to know whether oil prices are headed higher or lower.
It’s certainly an important question. Not just for oil companies, but for consumers and other businesses as well. While it’s true that commodity prices are virtually impossible to predict with a high degree of accuracy, there is compelling evidence that oil prices should remain high………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

The price of Organisation of Petroleum Exporting Countries, OPEC basket of 12 has risen from $109.88 to $110.20 barrel, according to OPEC Secretariat calculations.
The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela)………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Crude oil has been trading sideways for the past year between the 2011 high and low. The trading range through 2012 has been contracting with a series of lower-highs and higher-lows. Because this pennant formation is taking place after an uptrend is a bullish pattern with $110 and possibly even $140+ per barrel in the next 6-18 months.
If you look at the weekly investing chart of crude oil the key support and resistance levels area clearly marked. A breakout of the white pennant will trigger a move to the next support or resistance level. And judging from the positive economic numbers not only form the United States but globally the odds are increased for the $110+ price target to be reached sooner than later………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

OPEC’s deepest output cut since the global recession in 2008 is creating the biggest surplus of oil tankers in the Persian Gulf in at least three years and lowering earnings for Frontline Ltd. and other ship owners.
The Organization of Petroleum Exporting Countries reduced daily supply by almost 1 million barrels in the four months through December, equal to one fully loaded supertanker every two days, data compiled by Bloomberg show. Saudi Arabia, Iran and Iraq led the retreat, leaving 24 percent more ships than cargoes in the world’s largest oil-producing region, the most for the time of year since at least 2010, according to weekly surveys of shipbrokers and owners by Bloomberg………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Reports about the US shale oil boom being a game changer have proliferated after the November 2012’s prediction by the Paris-based International Energy Agency (IEA) that the United States will overtake Saudi Arabia and Russia to become the world’s biggest oil producer by 2020 and energy self-sufficient by 2030.
While such rosy predictions play well to the IEA’s audience, which is largely American, they don’t stand up to scrutiny………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

China’s coal use grew 9 percent in 2011, rising to 3.8 billion tons. At this point, the country is burning nearly as much coal as the rest of the world combined.
Coal, of course, is the world’s premier fossil fuel, a low-cost source of electricity that kicks a lot of carbon-dioxide up into the atmosphere. And China’s growing appetite is a big reason why global greenhouse-gas emissions have soared in recent years, even as the United States and Europe have managed to curtail their coal use and cut their carbon pollution………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Many investors in gold bullion have become increasingly worried due to the lack of price appreciation lately. Even though there has been an aggressive monetary policy initiative by the Federal Reserve, gold bullion and mining stocks in the sector have declined.
Obviously, no one can predict the future; it’s impossible to know for sure where gold bullion, or mining stocks in general, will be in the future………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Gold has been coveted for millennia because of its beauty, rarity and virtual indestructibility. In the current economic climate gold continues to have merit as a store of wealth.
Gold as an investment has grown in popularity in recent years, partly because of the risks posed to our modern global financial and economic systems – it is often seen as a safe-haven in times of crisis. The price of gold bullion fluctuated between $1,500 and $1,800 during 2012………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

The wealthy have for centuries turned to Switzerland as a safe and convenient place to stash their gold. But Swiss banks are now demanding higher fees to accept the world’s bullion, as they seek to reduce the size of their balance sheets.
UBS and Credit Suisse, which dominate the powerful Zurich-based physical gold market, have hiked their charges for holding the metal, according to clients and people familiar with the banks………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Silver is finally looking ready for action. And this is as much to do with what my mate and regular Money Morning editor, Kris Sayce, now calls ‘The Doc’s war against the China Bears’. In case you missed it, I’ve kicked off the year by saying the China bears are about to get smoked.
But sounding my China-Bull ‘battle-cry’ doesn’t just mean that industrial metals are on the menu. Because a resurgent Chinese economy is also good for precious metals, including a long-time favourite of mine: silver………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Indonesia, the biggest tin supplier, is poised to ship the least metal in a decade, extending shortages into a fourth year at a time when surpluses are emerging for most other industrial metals.
Sales will drop 24 percent to 75,000 metric tons because most smelters won’t meet a higher purity standard that starts in July and ore reserves are diminishing, according to the median of 13 exporter and analyst estimates compiled by Bloomberg. Prices will rise 17 percent to $28,750 a ton on the London Metal Exchange this year, the median of 14 forecasts shows………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

HSBC has lifted its forecast for copper prices in 2013 due to expectations of a more structurally balanced market and positive sentiment. Analyst Andrew Keen said in a note to client that the “market remains balanced in our view, and this is enough to keep prices high when sentiment is good.”
The new forecast raises the average cash copper price in 2013 to $8,000 per ton from $7,500. Benchmark three month copper futures on the London Metal Exchange recently breached the $8,000 to hit $8,066 in Monday morning trading………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Senior geologist and co-editor of the Exploration Insights newsletter, Brent Cook, said 2013 will be the year in which a third of the juniors miners currently active will fade, as they simply don’t have viable properties.
Speaking to Cambridge House Live at the International’s Vancouver Resource Investment Conference held last week, Cook said this is really “good news” for investors because it leaves only the quality projects out there “and there is where you want your money to be.”……………………………………….Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

Gold holdings in exchange-traded products are poised for the biggest monthly decline in more than a year as global economic recovery curbed demand for the metal.
Assets contracted 0.8 percent so far in January, the largest decrease since December 2011, according to data compiled by Bloomberg. The holdings, which reached a record in December, dropped to a two-month low of 2,610.272 metric tons………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

On a cold January day 20 years ago, with the Dow Jones Industrial Average hovering at about 3,300, a team of investors from State Street Bank (STT) unveiled their new creation to the denizens of Wall Street: the SPDR S&P 500 ETF (SPY).
They now describe the launch of the first exchange-traded fund (ETF) on this day in 1993 as “the one that started it all,” calling the debut of the Spider (short for S&P Depositary Receipt) “an investment product that gave people a more precise way to buy and sell an entire index, but could be traded like a stock.”……………………………………….Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

The exchange-traded fund (ETF) industry has grown into a trillion dollar business since the first ETF was launched 20 years ago. Today’s traders and investors have access to a growing number of ETFs, offering exposure to a wide variety of popular and niche markets.
One of these is the currency ETF market, providing exposure to both individual as well as baskets of currencies. Here we will take a look at some of the more popular currency ETFs on the market today……………………………………….Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

If you look hard enough, you can find a whole lot of things that are wrong with the “B” in BRIC. The country’s GDP growth is virtually non-existent. Government regulatory intervention in both the energy sector as well as the financials segment has been increasing. And Brazil’s currency lost approximately 7% against the dollar on a year-over-year basis, hurting unhedged investment in the nation.
On the other hand, if India, China and Russia can find their way out of the emerging market bear cave, wouldn’t there be reason for some optimism on Brazil?……………………………………….Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

The Canadian dollar ended higher Tuesday, carried aloft by a general rebound in commodity currencies. The U.S. dollar was at C$1.0024 late Tuesday from C$1.0061 late Monday, according to data provider CQG.
The U.S. dollar had push persistently higher against the loonie in recent sessions after the Bank of Canada said last Wednesday that the prospect of monetary tightening had become less imminent, but stalled around the C$1.0100 mark………………………………………..Full Article: Source

Posted on 30 January 2013 by VRS |  Email |Print

The Coalition’s plans to scrap the carbon price and the lack of detail provided by the government on how Australian and European carbon markets will be linked are discouraging CFOs and treasurers from capitalising on cheap carbon permits in Europe to hedge their liability when carbon trading starts here.
Last week, carbon permits on the seven-year-old EU market plummeted to a new low of around €2.80, before recovering to just below €5………………………………………..Full Article: Source

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