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Commodities Briefing 10.Apr 2013

Posted on 10 April 2013 by VRS |  Email |Print

World oil demand will rise in 2013 and 2014, but moderate recovery in economic growth will keep the gains lower than projected a month earlier, U.S. government forecasters said Tuesday. In 2013, rising consumption in China and in other developing nations is expected to offset weakness in European economies, the Energy Information Administration said.
World oil use is expected to rise by 1 million barrels in 2013 to 90 million barrels a day. That’s some 140,000 barrels a day below the forecast made a month earlier. In 2014, global demand is expected to rise to 1.3 million barrels a day, about 200,000 barrels a day less than the EIA’s March forecast………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Crude-oil output from members of the Organization of the Petroleum Exporting Countries fell in March to its lowest monthly level since October 2011, according to data released Tuesday by the U.S. Energy Information Administration.
OPEC members pumped 29.83 million barrels a day last month, down from a revised 29.88 million barrels a day in February, the EIA said in its monthly Short-Term Energy Outlook. Last month, the EIA estimated OPEC’s February crude oil production at 30.01 million barrels a day………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

The first signs are emerging that key Persian Gulf members of the Organization of Petroleum Exporting Countries (OPEC) are adjusting their strategies to cope with the growing threat that North American shale oil is making to their long-term dominance in global energy markets.
The OPEC moves lag behind other international players such as Statoil and Sinochem, who are staking out a major stake in the U.S. shale industry but provide the first insights on how major oil producers might respond over time to the possibility of a future supply glut: Integration through foreign investment………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Europe is falling dangerously far behind the US in productivity growth and is blighted by crippling energy costs, the pan-EU industry federation has warned. “Europe doesn’t have an energy policy. It has a climate policy,” said Markus Beyrer, head of BusinessEurope.
Mr Beyrer said the US is running away with the shale energy revolution, leaving Europe’s companies in the dust. Spot gas prices are now four to five times higher in Europe, with grim implications for the chemical industry………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

UBS on Tuesday lowered its gold price forecasts for 2013, saying that the precious metal has already faced many challenges this year. “Market concerns on the longevity of the Federal Reserve’s quantitative easing, a rotation into equities, benign inflation and the focus on better economic growth are valid threats to gold’s upside potential,” UBS analysts said in a note.
“A stronger dollar also poses a challenge.” The bank reduced its 2013 price forecast for gold to $1,740 per ounce from $1,900, while maintaining its forecast of $1,700 per ounce for 2014………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Deutsche Bank on Tuesday cut its 2013 gold price forecast, saying returns from the metal may be on course for their worst annual performance since 2000.
“The forces which have propelled gold returns higher over the past decade, namely a weakening U.S. dollar, falling real interest rates and a rising U.S. equity risk premium have all moved into reverse since the end of last year,” Deutsche Bank analysts wrote in a note to clients. The bank cut its 2013 gold price forecast by 12 percent to $1,637 an ounce and lowered its silver price outlook for the year by 16.5 percent to $31 an ounce………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

There is still an incredible amount of misunderstanding on Wall Street about the relationship between the price of gold and the true value of the U.S. dollar. Most pundits simply claim that a rising dollar, as measured by the Dollar Index (DXY), causes gold prices to fall…and that is the end of their analysis.
In truth, the dollar’s intrinsic value carries the most weight in determining the price of gold and not simply how the dollar is faring vis a vis a basket of other fiat currencies. According to many market analysts, the 5% rise of the dollar on the DXY since February has been attributed to the return of “king dollar” and that, as they claim, is why gold prices are falling………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Gold is 25% up in the last 3 months, but it’s up in Yen, not dollars. This is where currency wars and gold dynamics come together. When you think about cross rates it’s a zero sum game. Not every currency can go down against every other currency at once. Gold is always rallying somewhere; right now it is rallying in Yen.
It you want to be fancy, you are short Yen and buy gold. When the Yen gets to 110 then, you want to short sterling and buy gold. At the end of the day you will come back to gold in dollars. Gold is not going to do much in [US] dollars this year. I look for a dollar move late this year or in 2014. Meantime you can always make money in gold, as “it is always 5 o’clock somewhere………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

The weak yen has triggered a gold rush, literally, among Japanese households, reflecting how bold new economic policies are shaking up long-entrenched deflationary attitudes, freeing up dormant assets, and sparking new economic activity.
While gold prices have softened globally, the declining value of the yen against the dollar makes the precious metal worth a lot more in Japan. Japanese families are now scrambling to dig out gold objects from closets and jewelry boxes, and selling it to metals dealers, converting their passive assets into cash that some say they plan to put to work on everything from vacations to children’s allowances………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

The recent decline in gold prices and the much larger decline in gold stocks — particularly gold mining stocks — has many people thinking that the decade-long bull market in the yellow metal has ended.
Economist Nouriel Roubini can be included in this group. In fact, he displayed his glee about the drop in prices last night on Twitter. In a back-and-forth with economist and investment banker James Rickards about gold, Roubini said, “Gold-bug suckers found another irrational useless bubble fad, the Bitcoin, the bubble flavor of the day,” referring to the recent run-up in Bitcoin following the Cyprus bailout………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Copper prices will struggle to make headway this year, weighed down by growing inventories due to a cautious view of demand in China, US economic uncertainty and Europe’s debt crisis, metals consultancy Thomson Reuters GFMS said.
In its annual Copper Survey, the consultancy expects prices to average $7,785 a tonne in 2013, down 2.1 percent from the 2012 average. Copper is likely to trade in a broad range between $7,500 and $8,500 this year, with risk weighted on the downside, and $6,500 could be a potential level of support should selling pressure intensify, the consultancy said………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

The U.S. economy is certainly not running at 100% capacity, but one sector that is operating at levels not seen since before the financial crisis is the automotive industry. In March, automotive sales increased substantially to an annualized rate of 15.3 million vehicles per year, compared to 14.1 million vehicles this time last year.
American carmakers contributed with substantial increases, including General Motors Company, reporting a 6.4% year-over-year increase in March, and Ford Motor Company, reporting a 5.7% year-over-year increase in March………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

A stronger US economy is seeing interest rates increase and bullion demand plummet, an ETF analyst has said. “Higher interest rates will rise in North America, which means it is likely that precious metals – gold and silver especially – will lose favour among investors,” said Christopher Vecchio, currency analyst for DailyFX.com.
Overextended monetary policies in North America will be wound down as a result of economic growth and unemployment rates dipping in the US, he added, which will cause interest rates to rise and the demand for gold as a safe haven to decline………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Silver ETFs saw the strongest inflows of any single commodity in the first quarter of 2013, a recently released quarterly commodities report from ETF Securities reveals. Specifically, net new buying of silver products totaled $875 million as investors rotated into cyclical assets.
North Americans were the top investors in silver ETFs in Q1, spending $732 million compared to Europe’s $126 million. However, both regions clearly preferred the white metal over gold………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

If you are a holder of one of the many futures-based commodity broad-basket mutual funds or exchange-traded products like (DBC), (GSG), (DJP) or (GCC), then an understanding of what drives the return on the futures contracts held in these products is critically important.
In connection with this, one needs to understand just how different the return on a commodity future can be from a spot commodity. I say this because I think some of the motivations for investors to have commodities in their portfolios is somewhat compromised by the reality that commodity futures have under-performed spot commodities pretty dramatically over the last 15 years……………………………………….Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

Officials in Guangzhou, the provincial capital of Guangdong, unveiled plans late Monday to re-establish a futures exchange in the city by the end of 2015, an announcement which could pave the way for the opening of the Chinese mainland’s fifth such exchange if central planners give their nod.
According to statements made at a press conference that night by the city’s mayor, Chen Jianhua, the plans are aimed at helping local manufacturers shore up their pricing abilities when it comes to purchasing raw materials. As of yet, Chen and other local officials have not commented on the types of contracts or products which the exchange is expected to host………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

The Australian dollar has become the third currency, along with the US dollar and the Japanese yen, to trade directly with the Chinese yuan. The move is seen as a significant step in China’s push for a more international role for its currency.
Beijing is trying to promote the yuan as an alternative to the US dollar’s role as a global reserve currency. “The yuan is on its way to becoming fully convertible,” said Stuart Oakley, managing director at Nomura………………………………………..Full Article: Source

Posted on 10 April 2013 by VRS |  Email |Print

California carbon futures rose to the highest price in almost three weeks after Governor Jerry Brown approved a proposal to link the state’s greenhouse-gas program with one in Quebec.
The regulation behind carbon markets in Quebec and California are “similar or identical” enough to be linked, Brown said in a letter posted on his website late yesterday. State law requires the governor’s approval before the state Air Resources Board links carbon systems with any jurisdiction. The board is scheduled to consider regulation April 19 to join systems with Quebec beginning Jan. 1, 2014………………………………………..Full Article: Source

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