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Commodities Briefing 16.Oct 2013

Posted on 16 October 2013 by VRS |  Email |Print

This year is likely to be make or break for commodity funds as supply and demand fundamentals gain the upper hand in driving prices following five years of dismal performance determined mainly by economic factors.
The resurgence of fundamentals should, in theory, make it easier for active managers with specialist knowledge and skills to deliver decent returns, but this change may not turn out to be the panacea that they had hoped for………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

China has been the world’s most exciting investment destination as far as commodities are concerned in the last few years. Global commodities investment guru Jim Rogers was lured by the Chinese boom in agriculture and especially in farm assets. This prompted him to shift his residential base from the United States to Singapore, so that Rogers could be close to the commodities boom in China.
Jim Rogers’ assessment on Chinese commodities boom is proving to be true. China is the epicenter of a global commodity boom these days. At the same time, China is also investing in commodities assets across several countries in the world………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Algeria’s energy minister said yesterday that current oil prices were “reasonable” and it was too soon to predict whether Opec might change its output target at its meeting in December. Opec, which pumps more than a third of the world’s oil, meets on December 4 in Vienna to decide whether to adjust its output target.
“We will see when we meet early December. We will study the market and we will decide,” Youcef Yousfi said on the sidelines of the World Energy Congress, when asked about next year’s Opec production. Brent crude prices have traded in a range of between US$107 and $112 a barrel in the past four weeks after spiking above $117 in August on disruption of Libyan supply and the prospect of western military action against Syria………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Oil prices are likely to rise in the long-term as production costs escalate and a “good value” for oil is at around $100 a barrel, Peter Voser, Chief Executive of Royal Dutch Shell PLC, said Tuesday at an industry conference.
“If you look long term, the oil price in our opinion will rise because it will be technically speaking more complex to develop the resources,” Mr. Voser said, adding that non-technical costs of engaging with communities and governments will also increase………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Every week, the US Department of Energy (the DOE) reports figures on crude inventories, or the amount of crude oil stored in facilities across the US. Market participants pay attention to these figures, as they can indicate supply and demand trends.
If the increase in crude inventories is more than expected, it implies either greater supply or weaker demand and is bearish for crude oil prices. If the increase in crude inventories is less than expected, it implies either weaker supply or greater demand and is bullish for crude oil prices………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Last month the world witnessed a paradigm shift: China surpassed the United States as the world’s largest consumer of foreign oil, importing 6.3 million barrels per day compared to the United States’ 6.24 million. This trend is likely to continue and this gap is likely to grow, according to the EIA’s October short-term energy outlook.
Wood Mackenzie, a leading global energy consultancy, echoed this prediction, estimating Chinese oil imports will rise to 9.2 million barrels per day (70% of total demand) by 2020………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Angola has 13 billion barrels of proven oil reserves, a top oil official from the African nation said, nearly 4 billion barrels more than an OPEC estimate for late 2012.
The Organization of the Petroleum Exporting Countries, whose estimates on the oil reserves of its members often differ from the countries’ own numbers, has said Angola had 9.1 billion barrels of oil reserves at the end of last year. ……………………………………….Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Forty years ago, America fell victim to an oil embargo launched by the Organization of Petroleum Exporting Countries (OPEC) amidst a thorny political situation gripping the Middle East. At the time, the United States was importing just over a third of its oil —remarkably similar to today’s level.
As oil supplies from key Middle East producers fell precipitously, oil prices quadrupled. America suffered a plummeting stock market, multi-hour gas station waiting times, and descent into the worst economic recession since the Great Depression………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

A boom in US energy production has mades shale natural gas and tight oil the talk of the energy industry. But coal is still the fastest-growing source of energy in the world and is the primary source of fuel for electricity, according to the International Energy Agency.
Two years ago, Saudi Arabia started mulling the prospects of shale natural gas as it faced the possibility of running short on energy supplies. The largest oil exporter in the world said it’s now ready to replicate the shale gas success in the United States and use its own unconventional reserves to keep the lights on………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Coal will surpass oil as the key fuel for the global economy by 2020 despite government efforts to reduce carbon emissions, energy consultancy firm Wood Mackenzie said on Monday.
Rising demand in China and India will push coal past oil as the two Asian powerhouses will need to rely on the comparatively cheaper fuel to power their economies. Coal demand in the United States, Europe and the rest of Asia will hold steady………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Gold premiums in India, the world’s biggest buyer of the precious metal, hit a record $100 an ounce, about 8 per cent over London prices, on a shortage of supplies to meet festival demand, traders said on Tuesday.
Banks, the primary dealers of bullion, are currently importing the yellow metal chiefly for exporters, as under the so-called 80/20 principle, jewellery exporters get priority for supplies over domestic manufacturers………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

The bull camp sees a higher low and the bear camp sees a lower high from the Monday gold trade. Granted gold managed to bounce off the lows posted last week but the source of the rally was in question. Some bulls claim the recovery was revived safe haven buying interest in the wake of a failure to move closer to a US debt ceiling deal from over the last weekend.
Others suggest that the gains Monday were the result of developing weakness in the Dollar, which in turn can lend support to physical commodity markets. While the safe haven or flight to safety argument haven’t played loudly with the gold market over the last two months, the approach of the October 17th default deadline combined with warnings from the head of the IMF and JP Morgan regarding the consequences of an actual default might have rekindled financial market anxiety………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Silver prices have been volatile ever since the debt ceiling debate started, and investors have mixed feelings about the metal. Should they move towards silver as a safe haven investment or move away from it as the U.S. economy narrowly avoids ruin?
How the U.S. Economy Affects Silver ? Silver is much like gold in that it seems to do best when the dollar is at its worst. It’s why many investors choose these precious metals when times are rough in the United States. The only problem is when times are uncertain, like now, it’s difficult to determine where these precious metals will go………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Tin prices are being held at seven-month highs by a Jakarta market rule change that has all-but blocked exports from Indonesia, the world’s largest finished tin producer.
The price squeeze makes tin the best performer on the London Metals Exchange this year, helping to displace copper as the metal market darling and winning increased investor attention to the tin mining sector………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

As goes Chinese copper demand, so goes the price of copper–and Chinese copper demand is looking a bit peakish. In the latest sign of slowing demand growth, Barclays analysts said Tuesday that Chinese investment in power grids fell 15% in September to 31 billion yuan ($5.1 billion), marking the first year-on-year fall in 2013.
“While the figure may not have included robust tenders in late September, investment growth and related copper demand could continue to trend lower,” the analysts said in a report………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Commodity markets were relatively well behaved on the first day of the week, as investors continued to track events in Washington D.C. Significantly, the US government is discussing a plan that would end the shutdown and increase the debt ceiling by enough to cover the nation’s borrowing needs at least through mid-February 2014, sources told Reuters.
The agreement would also see the government re-open until January and include a mechanism to force lawmakers into longer-term budget discussions, the Financial Times reported. Oil futures finished the day down by 0.13% at $102.28 on the NYMEX despite those signs of progress………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

China’s Dalian Commodity Exchange will start trading the country’s first iron ore futures for physical delivery this week, challenging index-backed contracts by CME Group Inc. and Singapore Exchange Ltd. Trading will begin Friday after the securities regulator approved the plan last week, the bourse in the northeastern port city said.
Chinese steelmakers, the world’s biggest iron ore buyers, earlier this year questioned the reliability of a price index provided by Platts that became a benchmark after producers including Vale SA and Rio Tinto Group scrapped annual contract price talks in 2010. China started its own spot trading platform last year, introducing a weighted average daily price in March………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Britain’s financial watchdog said officials are visiting commodity warehouses in Europe to see how they operate, in preparation for tough new EU market abuse rules as regulators focus unprecedented scrutiny on physical trading practices.
For decades, traders have made money from their knowledge of shortages and surpluses of physical commodities, which they say enables them to play a vital role in balancing global markets………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

But the chancellor, George Osborne, sees London winning the race to be the global hub for the Chinese currency - known as the yuan or renminbi (RMB) - and says that win will be important for “generations of Britons” to come.
Speaking to the BBC, the chancellor has admitted that the UK has been slow when it comes to China. He blames his predecessors over the past 10-15 years for not doing enough and relying too much on Europe. But he says that he has made it his personal mission since coming to office to rebalance the economy………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

It was September 3, 2013. The Reserve Bank of India was getting a new Governor, on whom much hopes were pinned to get back on track an economy fast going downhill and a rupee that was failing to find a bottom.
Though Rajan cautioned he had no magic wand to set right all issues in quick time, the rupee’s fortunes began changing almost overnight. And within the space of a month-and-a-half, the Indian currency vaulted from being the worst performer globally in 2013, to the best performer. The Federal Reserve deciding to put off the tapering of its quantitative easing (QE) programme also aided this reversal………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

Tony Abbott has flagged retrospective legislation to backdate the abolition of the carbon tax to July 1 next year if parliament delays his repeal bills and threatened businesses with fines of up to $1.1 million if they fail to pass on price cuts flowing through from scrapping the tax.
The Prime Minister and Environment Minister Greg Hunt yesterday released draft legislation detailing the abolition of the carbon tax, which will be the first order of business when parliament resumes on November 12………………………………………..Full Article: Source

Posted on 16 October 2013 by VRS |  Email |Print

China’s expert community expects that the country will have a national emissions trading scheme and possibly a carbon tax by the end of the decade, and that the pilot schemes will all go ahead in the near future.
Environment Minister Greg Hunt recently said “… the Chinese and the Americans who are the central part of any agreement both have a very strong view. The most heartening development in the past two years has been China’s growing commitment to action from its paramount leadership.”……………………………………….Full Article: Source

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