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Commodities Briefing 11.Oct 2013

Posted on 11 October 2013 by VRS |  Email |Print

Base metals are back in favour with commodity managers after a long period in the dog house, reflecting a new enthusiasm for growth-oriented assets as the global economy picks up.
“The key economic regions of the world have either resumed a slight upward trend or have at least put the worst behind them,” said Ronald Wildmann, an adviser to the GFP Long Mining Fund , which returned almost 15 percent in the third quarter. “In China, the hard landing feared by many has not come to pass.”……………………………………….Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Commodities were lower in September as decreased geopolitical risk and commodity-specific fundamentals weighed on the market. Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management business, said, “As of month end, headlines were focused on the US government shutdown which began on October 1st. There is also heightened concern over a potential failure to raise the debt ceiling on time, as well as unease surrounding the ability of policymakers to reach a lasting solution when these issues arise again towards the end of the year.
Uncertainty on the fiscal front may have been one obstacle standing in the way of the Federal Reserve tapering its quantitative easing program at the September FOMC meeting. It is possible that fiscal risks that are not fully resolved may lessen the chances that the Federal Reserve tapers at either the October or the December FOMC meeting.” (Press Release)

Posted on 11 October 2013 by VRS |  Email |Print

Opec pumped crude at the lowest rate in almost two years in September, according to the oil producing cartel’s own analysis, as disruptions to supplies from several members continued to support oil prices.
Brent crude oil has traded near the $110-a-barrel mark since mid-August, as theft has pushed Nigerian production below 2m barrels a day, and much of Libya’s oil industry has been closed by a wave of militia activity. Saudi Arabia has responded by pumping crude at an unprecedented rate………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Forty years ago this month, the Organization of the Petroleum Exporting Countries proclaimed an embargo on oil exports to the U.S. as retaliation for its support of Israel in the Yom Kippur War. It would last only five months, but it haunts U.S. energy policy to this day.
The modern global energy market bears scant resemblance to what existed 40 years ago. Today’s market is far more diversified and resilient. Thanks to the shale gas revolution and soaring domestic oil and gas production, the U.S. has reduced the cost of its energy and become a major exporter of refined products………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

The International Monetary Fund has warned that a sustained drop in oil prices could leave many Middle Eastern and North African exporters in the red because of surging spending, a report said.
The warning came in the IMF’s new World Economic Outlook report, which expected growth in Mena oil-exporting economies to drop to 1.9 percent this year from 5.4 percent in 2012 before gathering pace next year to 3.8 percent, the AFP report said………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

A funny thing happened on the way to the euro. When first introduced to the global financial markets in 1999, it began to appreciate in value compared to the U.S. dollar (USD). Around this time, West Texas Intermediate crude oil was trading below $20 a barrel. As the dollar lost value, oil began to rise. Is this a coincidence?
The dollar began to devalue against the euro and other major global currencies in 2003, primarily as a result of the Iraq War costs. By year-end 2002, the dollar had weakened by nearly 20 percent and the price of crude had jumped more than 30 percent………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

In a previous Oil-Price.net articles published in 2010 and 2011 , I discussed predictive relationships that appear to occur between large, rapid swings in oil price and recessions, stock market crashes and shifts in political polls. Given the economic disruptions that nearly always happen in the aftermath of oil shocks, it seems important to understand what is behind the timing of transient instabilities in the oil markets.
Last time I examined whether repetitive patterns could be found in the ebb and flow of oil price changeability (volatility) between 2000 and 2010. To do this, rolling standard deviations were calculated through a 120-month series of monthly oil prices starting from January 2000………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Governments are failing to deal with rising fossil fuel prices, preferring price caps to win votes and shield industry over efficiency measures which energy agencies say are better value for money.
Energy subsidies have risen year on year since 2008, to $480 billion annually in 2011, according to International Monetary Fund (IMF) figures. That trend will probably continue so long as energy prices continue to rise, and in particular oil………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Morgan Stanley has forecast a continues further fall in the price of gold into 2014 as the Federal Reserve begins the process of tapering its bond buying programme. Morgan Stanley analyst, Joel Crane, speaking in a video report said: “We recommend staying away from gold at this point in the cycle. Our forecast profile heading into next year is relatively flat against our expectations of rising real interest rates and the U.S. dollar.”
In its quarterly metals report published on October 7, the corporation expected bullion to average $1,313 a ounce in 2014 down from the 2013 average of $1,423. Bullion is set to face its sixth weekly loss in seven, despite the US government shutdown. Indeed bullion may be heading for its first annual loss in 13 years falling by 22 per cent in 2013………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Gold will extend losses into 2014 amid expectations the Federal Reserve will pare stimulus as the U.S. recovers, according to Morgan Stanley, adding to bearish calls from Goldman Sachs Group Inc. and Credit Suisse Group AG.
“We recommend staying away from gold at this point in the cycle,” Melbourne-based analyst Joel Crane said in a video report received today. Bullion will average $1,313 an ounce in 2014, down from the $1,420 forecast for this year, Morgan Stanley said in its quarterly metals report on Oct. 7………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Gold analysts have turned the most bearish in a month on increased confidence that U.S. lawmakers will reach a deal to avoid default and evidence that Asian demand for physical bullion is weakening.
Fifteen analysts surveyed by Bloomberg News expect prices to decline next week, eight are bullish and four neutral, the highest proportion of bears since Sept. 13. Prices rose since the first partial U.S. government shutdown in 17 years began Oct. 1, as investors sought a haven. President Barack Obama didn’t accept or reject House Republicans’ plan to increase the debt limit and end the government shutdown as the two sides entered further talks………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Tocqueville Gold Fund Portfolio Manager and Senior Managing Director, John Hathaway, suggests “a gathering loss of investor credibility” exists in the traditional intermediaries between financial markets and bullion, such as Comex and LBMA.
Hathaway asserts, “These intermediaries in reality offer only a very indirect connection to physical metal and depend on a highly levered structure of collateral re-hypothecation, and in our opinion, market ignorance, in order to operate.”……………………………………….Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Western Australia’s nickel miners believe the industry has hit rock bottom, and will be buoyed by a surge in demand by the end of the decade. But as weakness in the nickel price persists, producers and mine developers might be in for some more pain until a full recovery gets underway.
The heads of three major nickel companies told a conference in Perth this week that nickel shortages were expected to boost the metal’s price between 2015 and 2019, as production dries up and Chinese demand increases………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

After a strong summer, oil prices have been under a lot more pressure lately. Prices for the important commodity have retreated in weeks past, and now WTI crude is barely hanging on to the $101/bbl. mark, after hitting as high as $111 in August.
The reasons for this slide come down to the sluggish trading in oil following the declining worries over a Syrian conflict, and a huge supply of the commodity in the U.S. In fact, over the past few weeks, crude oil inventories have been on the upswing, putting extra pressure on prices for oil……………………………………….Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Combined turnover of commodity exchanges fell by 25 per cent to Rs 65.68 lakh crore in the first six months of 2013-14 due to a sharp decline in trading volumes in most commodities, according to the Forward Markets Commission (FMC).
These exchanges had done business of Rs 87.62 lakh crore in the April-September period of the 2012-13 fiscal, FMC said in a statement. Maximum fall in business was seen in agricultural items, followed by bullion, metals and energy commodities, commodity markets regulator FMC noted………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

JP Morgan Chase’s physical commodities business is at the centre of a frenzied bid battle. According to the Financial Times the unit - which has commodities valued at around $3.3 billion and delivers an annual income of $750 million – has won the bid interest of more than a dozen firms.
The paper indicates potential suitors include pension funds and trading houses, with the first round of bids due before the end of the month. JP Morgan Chase announced its plan to exit physical commodities in the summer in a move which surprised markets, as the firm had forked out billions growing the business during the previous 10 years in a bid to become the biggest player in the market………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

The European Central Bank said Thursday it has signed a three-year, bilateral agreement with China’s central bank, which will be able to tap €45 billion ($60.9 billion) from the ECB in a move that will allow it to meet unexpected needs for foreign-denominated funds.
“The swap arrangement is intended to serve as a backstop liquidity facility and to reassure euro area banks of the continuous provision of Chinese yuan,” the ECB said. The ECB joins a number of central banks that have already signed similar agreements with China in a move aimed at promoting bilateral trades between the regions as well as ensuring stability of the markets………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

Not all government debt is created equal. Some governments get a much better deal than others, and no one gets a better deal than the United States. The United States borrows in its own currency, and it borrows at extremely low interest rates. It also borrows under its own laws, an often overlooked advantage. Such a situation makes default — or at least involuntary default — impossible because the government can print dollars if need be.
The value of the dollars it repays may be less than the value of the dollars it borrows, but that is a risk the lenders accept. The United States could change its laws, but it is trusted not to abuse that right………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

The European Central Bank and the People’s Bank of China have established a currency swap agreement, the latest in a string of moves to help encourage global use of the renminbi.
The swap line, at Rmb350bn ($57bn), will be China’s third largest after its facilities with Hong Kong and South Korea, and follows similar agreements with the UK, Australia and Brazil………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

A proposed national Chinese carbon trading scheme is likely to see carbon prices trade at a level that helps to cut emissions slightly but is not high enough to yield dramatic reductions, according to a survey of the potential price for carbon in the world’s largest polluter.
A national scheme is still far off but experimental trading has begun on China’s only existing carbon market – a pilot project in the southern boomtown of Shenzhen, on the border with Hong Kong. Several other pilots are due to open in the next two years as China tests the water for a market-based system to discourage polluting emissions………………………………………..Full Article: Source

Posted on 11 October 2013 by VRS |  Email |Print

What a difference a year makes. In the aftermath of Hurricane Sandy, which blew ashore last Oct. 29, New Jersey residents have warmed up to the threat that climate change poses to their beach-loving state and want politicians to address it more boldly.
That’s one reason state lawmakers are holding a hearing today about rejoining Regional Greenhouse Gas Initiative Inc.’s carbon-trading program, according to Upendra Chivukula, the Democratic chairman of the State Assembly’s Telecommunications and Utilities Committee. His panel is evaluating a bill that would require the state to return to the system that New Jersey helped create in 2005………………………………………..Full Article: Source

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