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Commodities Briefing 11.Dec 2013

Posted on 11 December 2013 by VRS |  Email |Print

After a tough 2013 for commodities, Deutsche Bank’s Markets Research team gives its 2014 forecast for the asset class. 1. Crude oil supply glut: Rampant US oil supply growth and upside risks to Libyan and Iranian crude oil exports imply a bearish environment for global crude oil markets next year.
How to play lower oil prices: A growth boost from falling oil prices should sustain the improvement in European car sales and hence tighten platinum fundamentals. Falling energy costs will also pressure cost curves lower across the aluminium industry………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Base metals, led by nickel, appear set to trend higher in 2014 due to tighter supplies, while unfavorable economics should keep pressure on gold and oil and prompt investors to avoid much of the commodity complex, Barclays said on Monday.
In another negative outlook on commodities from a major investment bank, London-based Barclays PLC said that outflow of money from the sector will not end soon, at least not in the first quarter………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Commodities prices have been under the cosh this year, as the supercycle ground to a halt and geopolitical and economic uncertainties combined to apply price pressure. Gold, particularly, had a year to forget, losing one quarter of its value as a 12-year bull run comes to an end.
But what about the future? Here’s what money managers and commodities analysts think is in store for European commodity investors over the coming 12 months………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Commodity makers have been able to figure out ways to increase supply cheaply, helping to push commodity prices down this year after a decade of increases. The run-up was sparked largely by China’s torrid economic growth, which led to concern about a vicious cycle of rising commodity prices.
“It’s kind of basic econ 101: scarcity induces some sort of innovation,” David Jacks, an associate professor and commodity expert at Simon Fraser University in Canada, told The Wall Street Journal………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

If one has invested in the Thompson Reuters/Jefferies CRB Commodities index since 2011, its not been a fun ride as the index is down 25% over the past couple of years and has made a series of lower highs. On the opposite side over the past 18 months, the CRB has created a series of lows, creating a descending triangle pattern in the chart above, that is about to end.
Should the CRB break resistance, it has the potential to run to the upside for a while which would surprise many professional managers because exposure to this asset class is at historical lows!……………………………………….Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The demand for crude in the world market due to the winter season in the US caused the hike in oil prices this week, the Department of Energy (DOE) said in a report.
DOE’s Oil Industry Management Bureau director Zenaida Monsada said too in a “24 Oras” report that the hike was also prompted by the tense situation in Yemen, where the Defense Ministry was attacked last Thursday, killing 52 people including seven Filipino medical workers and injuring 11 more Filipinos………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Russia has based its three-year budget forecasts on optimistic oil price expectations that, combined with heavy social spending, may lead to the depletion of its rainy-day savings, the International Monetary Fund warned Tuesday.
The government sees the average price for oil, Russia’s main export, at about $100 per barrel over the next three years. “For 2014 and even more for 2015-16, budgets appear insufficiently ambitious, including due to optimistic revenue projections based on high oil-price assumptions,” the IMF said in a statement after an annual mission to Moscow………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Crude oil prices in the international market are likely to ease in 2014, mainly due to enhanced supply from two oil rich countries. “Demand is reasonably robust, but there are some issues on the supply side and that is why people are little worried about the prices,” said David Bloom, Global Head of Foreign Exchange Strategy of HSBC Bank.
He said additional oil supply would come from Syria and Iran, which will push down prices. “Demand is not picking up at the same pace as supply,” Bloom added, in an exclusive interview with Times of Oman on Tuesday………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The OPEC oil cartel on Tuesday stuck to its forecast that 2014 global oil demand would grow at a faster rate than in 2013 thanks to accelerating world economic growth. The Organization of Petroleum Exporting Countries said in its December monthly report average 2014 demand would be 98.84 million barrels per day, up 1.04 mbpd from 2013.
This compares with an expected rise of 0.87 mbpd for 2013 to 89.79 mbpd. OPEC said the main growth-driver in 2014 would be developing economies, with demand from members of the OECD group of advanced economies set to decline by 0.2 mbpd………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

OPEC reduced crude production in November to the lowest level in more than two years as output dropped below the organization’s 30 million barrel-a-day ceiling for a third month.
The Organization of Petroleum Exporting Countries pumped 29.63 million barrels last month compared with 29.83 million in October, OPEC said in its monthly oil market report today, citing data from secondary sources. That’s the lowest since May 2011. The group decided to maintain its output limit of 30 million at a meeting in Vienna last week because members were “all satisfied,” Ali al-Naimi, Saudi Arabia’s oil minister, told reporters on Dec. 4………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

OPEC has trimmed its crude oil output toward next year’s global requirement, the exporter group said, further whittling away at a supply surplus that could weigh on prices. The monthly report from the Organization of the Petroleum Exporting Countries, which kept its output policy unchanged at a meeting last week, also sounded an upbeat note on the prospects for the world economy in 2014.
“Signs of a recovery are already visible in rising global industrial production,” OPEC said. “The global economy has gained traction again.”……………………………………….Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The U.S. Energy Information Administration Tuesday slightly raised its forecast for 2014 world oil demand growth in this month’s Short-term Energy Outlook, and revised upwards its outlook for supply from non-OPEC producers, as U.S. output continues to accelerate and set new records.
The agency also adjusted its prediction for prices of Brent and West Texas Intermediate crude this year, forecasting higher or unchanged prices given the improved demand outlook. EIA said U.S. crude oil production increased to an average of 8.0 million barrels per day in November, the highest monthly level since November 1988………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The gold price jumped more than $30 or more than 2% an ounce to a near 3-week high on Tuesday as contrarian investors read plummeting net long positions held by hedge funds as a sign that big sellers of the metal have now been flushed out of the market.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at $1,262.20 an ounce during early afternoon dealing, up over $30 from the $1,237.40 low struck shortly after the opening, but off the day’s high of $1267,50………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

In April of 2008, Casey International Speculator published an article called “Gold—Relative Performance to Oil” by Professor Krassimir Petrov, then at the American University in Bulgaria, now a visiting professor at Prince of Songkla University in Thailand. He told us he thought the Mania Phase of the gold market was many years off, which was not a popular thing to say at the time:
“In about 8-10 years from now, we should expect the commodity bull market to reach a mania of historic proportions………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Silver has had a terrible year in 2013, but a new survey by PwC says silver miners are optimistic for 2014. Silver started the year trading at around US$32/oz but had fallen to around US$18/oz by mid-year. “That’s a reversal from 2012 when silver was the best performing metal, ranging in price between US$26/oz and US$37/oz,” PwC said in a gold, silver, copper report.
“Oversupply is partially to blame for the drop in silver prices in 2013,” said PwC. “Its correlation with gold as a store of value for some investors also contributed to its price depreciation in recent months.”……………………………………….Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

We all have our reasons for following Apple. I track it because this tech behemoth is a massive global consumer of metals - base, rare earth, and precious.
And right now, Apple is giving us some surprising indications that the demand for silver is much higher than its current price would have us believe………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Platinum is expected to benefit in 2014 – or at least stabilize — from the combination of steady to higher auto-catalyst demand and expectations that supply issues will persist in South Africa.
The metal was in a supply/demand deficit over the last year, with another expected in 2014. Prices fell in 2013 anyway, with observers citing sympathy selling in response to weaker gold values and apparently adequate industry inventories to supply the market for now………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Improving market fundamentals, such as accelerating demand growth and a slowdown in output, means 2014 could potentially be a positive year for base metals, Barclays Capital said in its quarterly Global Outlook report on December 9.
Next year is likely to mark the end of a cyclical phase of “structural surplus” that has seen most base metals stuck in oversupply since 2007-08, Barclays said. “Markets such as aluminium and lead are expected to move into deficit, while surpluses in nickel and zinc are set to shrink dramatically,” the London-based bank said………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Nickel, the worst performing base metal this year, offers investors the best opportunity for advances in early 2014 as Indonesia is poised to halt the export of mineral ores, according to Barclays Plc.
The prohibition in the largest mined producer, set to take effect after Jan. 12, may curb supplies for makers of nickel pig iron in China, analysts including Kevin Norrish wrote in a report. Even if the ban isn’t implemented as planned, prices are so low other producers will cut output, they wrote………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The big story for 2013 has been the relentless bull market that has pushed markets to continually hit new highs. The positive sentiment on Wall Street bled into the ETF industry, as a number of new funds were able to quickly gain the attention of investors and gather a significant amount of assets.
It seems that as the years go on, the ETF space gets more fleshed out and issuers turn to more unique products to slice-and-dice the universe in new and exciting ways. 2013 has certainly been no exception as there have been a number of ETF firsts throughout the year. But uniqueness does not guarantee the success of a fund, as there are some ideas with a solid investing thesis that simply fail to catch on with investors………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Multi-asset ETFs have seen a great deal of inflows and momentum over the last several years. These ETFs run the gamut from portfolios with a broad mix of underlying securities to “fund of funds” that own a tight group of other diversified ETFs. The asset allocations can include stocks, bonds, commodities, and even alternative investments.
Retail investors and professional portfolio managers use them as core holdings in order to lower risk and achieve their asset allocation targets. This diversification can often times lead to lower volatility than all-stock or -bond portfolios. In addition, they are often used as benchmarks to gauge the success of a balanced mix of securities in relation to an established index………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

In an investment climate that finds investors increasingly focused on generating returns in their portfolios, diversification is becoming an essential strategy. The exponential growth in the number of Exchange Traded Fund (ETF) investment vehicles in recent years has made diversification and risk management considerably easier.
In Canada, investors can now choose from upwards of 300 ETFs to get exposure to a wide range of asset classes, including Canadian and international equities, fixed income, commodities and currencies, and various industry sectors………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

Policymakers in Beijing must be feeling warm and fuzzy these days. For years, they have railed against the dominance of the U.S. dollar in global trade and finance, complaining that it leaves the world at the mercy of erratic Washington politics and questionable economic management.
China’s leaders can only blame themselves for their heavy reliance on the dollar, but still, from Beijing’s perspective, a world in which China’s own currency — the renminbi — is a more potent force would be a more stable one for the country’s development………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

China’s tightly-controlled yuan traded at a record high against the U.S. dollar on Tuesday and unprecedented demand has made it stand out as one of the world’s most attractive currencies, analysts told CNBC.
Following strong trade data published over the weekend, the People’s Bank of China (PBOC) has been aggressively fixing the yuan’s daily mid-point at its highest levels since the 2005 currency revaluation………………………………………..Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The European Parliament on Tuesday approved a rescue plan for the European Union’s system for trading carbon-emission credits. The lawmakers hope to revive prices for carbon credits, which have been so low that the system is creating few incentives for smokestack industries to cut back on their emissions of greenhouse gases.
Although many experts see the plan as little more than a stopgap action, “today was extremely important to get the first emergency measures started,” said Marcus Ferdinand, an analyst at Thomson Reuters Point Carbon, a market research firm in Oslo. “This shows the European Union cares about its emissions trading scheme.”……………………………………….Full Article: Source

Posted on 11 December 2013 by VRS |  Email |Print

The price of carbon allowances in the EU emissions trading scheme should reach its highest level in several years in the coming months, after the European Parliament today finalised its plan to tackle oversupply in the market by delaying the auction of 900 million carbon credits.
As expected the Parliament overwhelmingly backed the so-called “backloading” plan, voting by 385 to 284 in favour of the proposal. The latest vote, which follows a long-running debate this summer over whether or not politicians should intervene in the market to tackle the oversupply that has led to record low prices for EU Allowances (EUAs), confirms that allowances will now be withheld from auction from next year………………………………………..Full Article: Source

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