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Commodities Briefing 16.Jul 2013

Posted on 16 July 2013 by VRS |  Email |Print

The second quarter’s falloff in commodity prices has led some investors to turn bullish on the asset class, and search for cheap buying opportunities. However, investment bank analysts warned that now is not the time to go bargain-hunting.
Barclays cuts its stance on commodities to “underweight” on Friday, citing threats from monetary policy normalization and rising supply of gold and other metals, while Citi analysts said for most commodities it is still not time for “bottom-fishing.”……………………………………….Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

It was a challenging first half of the year for most commodities, with only two resources we track on our Periodic Table of Commodities Returns rising in value. Natural gas and oil rose 6.5 percent and 5 percent, respectively, while silver lost a third of its value and gold lost a quarter of its price from the beginning of the year.
At first glance, this correction seems to support naysayers who believe the supercycle in commodities has ended, such as Credit Suisse analysts, who had declared that the “era is over,” in its digital magazine, The Financialist. We disagree. Instead, we see severe price declines as possible buying opportunities during this ongoing commodity supercycle………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

OPEC could be forced to reduce its oil production by half a million barrels a day when it meets in December, the first cut in five years, as the latest forecasts show the U.S. shale boom will dent demand for its crude next year, Gulf delegates within the group said.
Oil markets are brimming with new barrels coming out of U.S. shale reservoirs, and separate forecasts from the Organization of the Petroleum Exporting Countries and the International Energy Agency last week showed demand for OPEC oil next year will fall well below its current production of around 30 million barrels a day………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Last week the AA motoring organisation warned that the weak outlook for sterling could result in soaring petrol prices. However, it’s not time to panic just yet.
Oil is priced in dollars and prices globally have been on the rise. US crude prices, as measured by West Texas Intermediate (WTI) hit a 15-month high last week as US oil inventories fell and after Ben Bernanke, chairman of the Federal Reserve, indicated to the markets that the tapering of stimulus measures would take longer than expected………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Goldman Sachs Group Inc. (GS) said price risks for Brent crude in the second half of the year have changed “to the upside” amid production losses in some OPEC nations and political threats to supply.
Reductions in output from Libya, Iraq and Nigeria have the potential to limit availability, the bank said today in an e-mailed report. Even so, increased production outside the Organization of Petroleum Exporting Countries will probably keep global markets adequately supplied this year, said Goldman, which forecasts Brent crude to average $105 a barrel in the second half………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

PLS Inc., a Houston-based research, transaction and advisory firm, in conjunction with its international partner, Derrick Petroleum Services, announced that global M&A oil and gas upstream deal activity for Q2 2013 totaled $24.9 billion in 141 separate transactions with deal values disclosed.
This is up 19% from Q1 totals of $20.9 billion in 117 deals and down 12% from Q2 2012 totals of $28.4 billion in 173 deals. After a torrid deal pace in Q4 2012 of $138 billion in 223 deals, the first-half 2013 deal value ($45.8 billion) represents the lowest six-month period since at least 2007 while the first-half 2013 deal count (258 deals) is second only to the first half of 2009 (184 deals for $65 billion)………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

The U.K. antitrust regulator is considering a criminal probe into oil-price manipulation as European Union officials conduct a civil investigation. The Office of Fair Trading is liaising with U.K. agencies including the Serious Fraud Office and Financial Conduct Authority “to establish whether there is sufficient available evidence to warrant a criminal investigation, and if so who is best placed to take action,” it said.
Prosecutors at the SFO said in May that they were “urgently reviewing,” whether to start a criminal inquiry………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Please repeat the words “more oil, higher prices” as you stand at the gasoline pump. These four words are key to solving your pain at the pump because they underlie oil price reality. “Drill, baby, drill” through hydraulic fracturing is pumping out more oil. It will not deliver sustained lower pump prices.
There are two reasons why more oil does not mean lower pump prices. The first reason is that oil is a global commodity and its prices are a result of global supply and demand. Oil prices are higher because the incremental growth of global demand continues to exceed the incremental growth of global supply. More oil production does not lower prices if the rate of demand for oil rises faster than the rate of new supply………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Demand for oil will reach its own peak and decline before humans deplete the Earth’s supply of oil, experts say. “Peak oil” prognosticators have painted pictures of everything from a calm development of alternatives to calamitous shortages, panic, and even social collapse as the world reaches its peak of oil production—and then supplies fall.
But according to the study by researchers at Stanford University and the University of California-Santa Cruz, those scenarios assume that an increasingly wealthy world will use all of the oil pumped out of the ground………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

The price of oil is subjective. It depends on viscosity, sulphur content, location and many other factors like Middle Eastern politics. The price of West Texas Intermediate crude is pushing over $100 a barrel again. The price of Brent crude is a few dollars higher than that.
But then there is the price of oil in Lac Megantic, Quebec. That price is many lives lost. After the tragedy of the runaway oil train, the price of oil in that town is immense. And it’s another factor that will affect the equation for oil transportation, insurance, and other costs in the oil industry………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

During the recent weeks we have seen commodities especially precious metals continue to drop in value. Market participant sentiment has become more bearish on commodities and couple that with a rising dollar it’s no wonder why we continue to see commodities as a whole fall in value.
Money has been flowing out of bonds at record levels this summer telling us most of market participants are feeling bullish on the stock market. This shift in sentiment of the masses are typical as they move their money from the risk on safer assets (bonds & commodities) and rotate into risk-on assets like stocks………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

From net gold demand of around 1,300 tonnes in 2012, investment demand has turned into a source of net supply this year and could reach as much as 400 tonnes or more as ETP sales far outweigh new investment in gold bars, Natixis Economic Research suggests.
“Even if ETP investors stop selling, it will be difficult to see net demand turning positive for the year as a whole,” said precious metals analysts………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Gold had a strong week last week, up by more than 5%, its biggest weekly advance in nearly two years. This was despite the gold price falling back slightly on Friday. Silver gained 5.8%, its biggest weekly increase since September last year.
Both the gold price and price of silver have rallied this morning on the back of China data. Gold has recovered most of the losses made on June 19 when Bernanke said the Fed may slowdown bond buying by the end of the year………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Don’t let depressed commodity prices fool you. They won’t stay depressed too long. The single most important global economic reality remains resource scarcity.
At last, I see short-term commodity price depressants starting to dissipate. Very shortly, the overwhelming consensus against commodities will start to shift, possibly as early as yearend. Then the long-term upward climb of commodities will resume………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Last week’s remarks by Fed Chairman Ben Bernanke gave a big boost to the price of gold. And some see that rebound continuing. In the recent edition of Barron’s Magazine, Commodities Corner columnist Matt Day argues that the worse may be over for gold. Though up over the last two week, the three-month period that ended in June saw the biggest decline in gold prices since futures trading began in 1974.
Sterne Agree & Leach analysts Michael Dudas and Satyadeep Jain also see better times ahead for gold prices………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

While prices of base metals such as copper wallow and as gold and silver stand on shaky ground, precious metals with industrial uses are rising as their supply outlook tightens, subsequently upping their investment appeal.
“The precious metals were the big winners last week, but with some noticeable twists,” said Marshall Gittler, Head of Global FX Strategy at IronFX Monday. The twists he refers to? That the precious metals with industrial uses, platinum and palladium, rose more than gold………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

The slump in the price of some of Australia’s best known mining stocks caused by lower prices and expectations of iron ore have led some to believe that now is the time to buy.
Justin Smirk, a senior analyst at Westpac says “it is a longer-term development story unfolding” and believes mining stocks are relatively cheap to buy. Since the New Year, shares in Rio Tinto (ASX: RIO), BHP (ASX: BHP) and Fortescue (ASX: FMG) have dropped 17%, 11% and 25.5% respectively………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

The Winklevoss twins of Facebook (FB) fame intend to launch a new ETF to track the price of Bitcoins, an online cryptocurrency that enjoyed a meteoric rise during bank crises in Europe. Bitcoin is an anonymous, peer-to-peer currency that is used for everything from purchasing electronics to money laundering and drug purchases. One of the biggest marketplaces for Bitcoin is a site called Silkroad, where users spend Bitcoin on everything from cocaine to ecstasy.
Said another way, Bitcoin is a currency that is “backed” by illegal activity – that’s what keeps it so popular………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Most mutual funds that bet on the strength or weakness of currencies suffered in recent months, including some stung by swings in the U.S. dollar, but many advisers still see them as a valuable alternative to stocks and bonds.
In May and June combined, investors pulled $34.9 million more out of the 42 currency funds tracked by Lipper Inc. than they pulled in. Those two months saw the dollar’s price waver amid heightened fears the Federal Reserve would soon cut back on its bond-buying program………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

There is still an emerging-market currency holding on to year-to-date gains against the U.S. dollar, and it’s on track to break through a key level soon.
That currency is the Mexican peso , the only floating emerging-market currency that has gained against the dollar in 2013 to date, said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman. The dollar is down 1.2% against the Mexican peso in 2013, according to FactSet data………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

The Indian currency market accounts for around 1% of the total world forex transactions, which stand at about $4 trillion on a daily basis. With the introduction of currency derivatives in 2008, the Indian market is poised for further growth by increasing its share in the world forex trade.
The spot transactions involving the rupee totalled around $30 billion in 2010, with the segment accounting for a share of 40% in the total forex turnover in India. This is followed by another 40% in forex swaps, and the rest in the form of outright forward transactions………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Minister calls opposition leader ‘an economic illiterate and a climate change denier’ after he attacks emissions schemes. Tony Abbott has branded emissions trading a “so-called market” that deals in an “invisible substance”, carbon dioxide, as the Coalition digs in politically ahead of Labor’s looming overhaul of its clean energy package.
Emissions trading is an internationally recognised market-based mechanism for reducing carbon pollution, and was the policy of the previous Howard government before it lost the election in 2007, but the opposition leader declared on Monday that carbon markets were not true markets because they traded an “invisible substance”………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

Australia’s Opposition says the government will have a $6 billion budget shortfall in just one year because of its decision to scrap the carbon tax sooner than originally planned.
Prime Minister Kevin Rudd will this week announce the carbon tax will end, and an Emissions Trading Scheme will begin in July next year, 12 months earlier than planned………………………………………..Full Article: Source

Posted on 16 July 2013 by VRS |  Email |Print

As the numbers pile up showing China’s sizzling growth cooling down, industries world-wide—from German paper-cutter makers to Indonesian palm-oil exporters—are confronting an altered landscape of winners and losers.
The ones that benefited the most from China’s rise are now being hurt. Others, aiming at China’s 1.3 billion consumers, are faring better. Growth in China, the world’s second-biggest economy after the U.S., has been slowing since 2007’s peak, but that slowdown has accelerated recently………………………………………..Full Article: Source

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