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Commodities Briefing 06.Feb 2014

Posted on 06 February 2014 by VRS |  Email |Print

It’s all about the dollar. Instead of focusing on supply and demand, UBS global commodities and mining strategist Julien Garran takes a different approach to analysing what is likely to determine resource prices this year.
‘Changes in FX flows have driven every major change in commodity prices for the past 30 years,’ according to Garran. Thus the recent commodity bear market has not simply been coincidental with that in emerging markets, and nor were their synchronous bull markets………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

The decade that went by saw increased interest in commodities as an asset class. Most of these investments were made in liquid exchange-listed derivatives. We witnessed the blossoming of new exchanges and product listings from South Africa to Sao Paulo.
All of these exchanges have vied singularly for a greater transactional flow that has prompted them to launch newer products. The conventional belief is that futures and cash markets converge on expiry of the contract; hence a futures exchange should in theory reflect the cash fundamentals of the listed commodity……………………………………….Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Fast-growing trading house Mercuria, led by two former Goldman Sachs (GS.N) executives, has become the front-runner to buy the physical commodities unit of JPMorgan (JPM.N), one of the most powerful oil and metals desks on Wall Street, two sources told Reuters.
JPMorgan decided to sell its multi-billion dollar physical commodities division last year under rising regulatory and political pressure to retreat to the bank’s core business of lending instead of speculating in raw materials………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Brent crude rose to around $106 a barrel on Wednesday following gains in the US oil benchmark after an industry report showed lower inventories at the US delivery point and robust heating fuel demand from cold weather.
The American Petroleum Institute’s report on Tuesday said crude stocks at Cushing, Oklahoma fell by 1.6 million barrels last week and that distillate inventories, which include heating oil, fell by 1.5 million barrels………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Natural gas prices, long depressed by industry oversupply, are on an upward tear as strong demand brought on by cold weather pushes storage levels to 10-year lows.
The market was especially volatile Wednesday, with some traders paying as much as $38 a gigajoule at the AECO storage hub, the benchmark for gas pricing in southeastern Alberta. Huge spikes such as this are short-lived, but demonstrate how rocky the market has become………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

The price of WTI oil has been trading close to the $100 mark in recent months. But the latest developments in the oil market might cut the price of oil down to the low $90’s in the near future. Let’s examine the recent changes in the oil market and see how they might affect leading refinery companies.
The oil market loosens: According to the U.S. Energy Information Administration, during January refinery inputs declined by 3.2% to reach 15.6 million barrels per day. Conversely, the U.S. oil supply has improved: During the past month, oil imports increased to 7.61 million barrels per day — a 2.8% gain. Further, oil production inched up by 0.1% Thus, the total supply (comprised of imports and production) increased by 1.4%………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Organization of the Petro¬leum Exporting Coun¬tries’ (OPEC) oil output has risen in January from December due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran.
Output from OPEC averaged 29.94 million barrels per day (bpd), up from a revised 29.63 million bpd in Decem¬ber, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Oil traders got a bit of excitement after a report by Reuters that the United States is starting to approve limited crude oil exports. Yet later it became more clear that they were talking about re-exporting foreign oil but none the less this could be the beginning of the movement to start the long road to approving U.S. oil exports.
Reuters reported that, “The U.S. government has authorized limited crude oil exports to Europe, for the first time in years, raising new questions about how companies are testing the limits of a controversial, decades-old exports ban………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

As gold prices continue to hover around the $1240 an ounce level, demand for the physical metal remains extremely robust, especially demand from China. Yet, despite reports of strong demand, prices still seem to be taking the lead from traders reacting to announcements from central banks, particularly the US Federal Reserve and certain non-related economic news.
After gaining for most of the month, the price of gold notched its first weekly drop in six due to further signs of U.S. economic growth, concerns over the U.S. Federal Reserve’s withdrawal of monetary stimulus and a slump in Chinese demand………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Investors in gold miners and bullion are glistening with joy because of their dramatic reversal of fortune this year. After coming in dead last in 2013, gold miners’ shares have floated to the top of performance lists. Some strategists and analysts see signs that 2014 may be the year gold regains its shine.
Market Vectors Junior Gold Miners ETF (GDXJ) has vaulted an eye-popping 16% on the stock market this year, a remarkable comeback from last year’s 61% plunge. By contrast, SPDR S&P 500 (SPY) is down 5% after a historic 32% return in 2013………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Silver prices, which jumped the most in more than four months yesterday, may extend a rally today as as signs that the U.S. economy is slowing boosted the appeal of haven assets.
U.S. companies boosted payrolls by 175,000 last month, trailing the 185,000 projection in a Bloomberg survey, ADP Research Institute said yesterday. The data added to economic concerns after a private report this week showed factories expanded in January at the weakest pace in eight months. Silver and gold are rebounding after declines last year that were the biggest since 1981………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

The World Bank thinks we are in for generally lower metal prices in 2014, continuing the trend of the last two years as slowing growth in the world’s largest metal consumer, China, fuels a negative attitude towards commodities in general as an asset class.
In a recent quarterly report, covered by the Financial Times, the World Bank said prices of the main commodities – energy, metals, agriculture and fertilizers – are expected to decline for the second successive year in 2014………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Mining companies are set to receive a boost when they report figures this month thanks to a fall in “commodity currencies” against the US dollar.
Many of the world’s largest miners have adopted austerity measures as they seek to reduce debts and atone for years of overspending. These efforts have coincided with the depreciation in local currencies, which is helping to lower production costs and boost margins………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

After a disastrous 2013, mining stocks bounced back from their lows at the start of 2014 and are trending higher. Commodity prices, in particular gold and silver, have risen sharply this year, as concerns on global economic growth and Fed tapering plans once again increased the safe haven appeal.
This is especially true given signs of slowdown in China and depressed emerging markets. Trading in emerging markets has been rough of late on growing political and financial instability in many nations as well as sliding currencies. Further, falling equity markets are bolstering the demand for metals………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Chancellor Angela Merkel’s government backed moving currency and precious-metals trading to exchanges, saying Germany will take up overhauling global financial markets with its partners.
As the rigging of the London interbank offered rate spurs scrutiny of trades, German Deputy Finance Minister Michael Meister said stronger financial regulation would counter the manipulation of other benchmarks………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Bitcoin is being forced to grow up fast. The arrest last week on money laundering charges of Charlie Shrem, a leading Bitcoin champion, coincided with a regulatory hearing in New York to consider what on earth it is – a virtual currency, speculative asset or a means of exchange?
The best answer is the last, although most excitement has been generated by its wild swings in value and the libertarian promise of a cryptographic currency replacing fiat currencies such as the dollar or the euro. In the end, the old laws affect everyone, including Mr Shrem, who has resigned as vice-chairman of the Bitcoin Foundation………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Once known for its billion dollar notes and hyper-inflation, Zimbabwe must be the only place in the world to have eight currencies as legal tender - none of them its own.
For the last five years most people have been using US dollars or South African rand, but pula from Botswana and British pound sterling have also been changing hands. Now the central bank is also allowing the use of Australian dollars, Chinese yuan, Indian rupees and Japanese yen………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Greenhouse gas emissions fell 6 percent in 2013 in the nine northeast U.S. states that participate in a trading scheme to cut carbon dioxide from power plants, helped by mild temperatures and some use of cleaner energy sources.
Carbon emissions in the Regional Greenhouse Gas Initiative region were down for a third straight year, to 86 million short tons from 92 million tons. Electricity use declined in four of the nine member states, according to the program’s emission allowances tracking system………………………………………..Full Article: Source

Posted on 06 February 2014 by VRS |  Email |Print

Australia’s 5% emissions reduction target ‘too low and inflexible’ to contribute to 2015 climate talks in Paris. The Coalition’s direct action climate plan is flawed in its design and could undermine international negotiations to reduce greenhouse gas emissions, a Senate committee into the policy has heard.
In a round of submissions to a Senate committee held in Melbourne on Wednesday, business and conservation organisations questioned whether the direct action plan, in its current form, could achieve its aim of a 5% reduction in emissions by 2020, from 2000 levels………………………………………..Full Article: Source

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