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Commodities Briefing 07.Apr 2014

Posted on 07 April 2014 by VRS |  Email |Print

After four consecutive years of apparent deficit, the world copper market could witness a production surplus relative to demand in 2014, according to projections made by International Copper Study Group (ICSG). Demand this year is expected to lag production. So, world production of refined copper is expected to exceed demand for refined by about 400,000 tonnes.
Interestingly, another surplus year could occur in 2015. Although growth in usage is expected to continue, owing to an increase in refined output that exceeds the expected growth in usage, a surplus is likely again………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Happy news! Investors are coming back to commodities. Barclays pointed out that there has been a huge increase in hedge funds length across commodity markets in 2014 with more investors likely to raise their commodity exposure in the next twelve months.
Volatility is back, returns are strong and declining correlations with other asset classes- the mood is improving. Barclays survey showed that financial investors are optimistic and raised their exposure to US commodities futures to a post financial crisis peak in recent weeks………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Fewer than three weeks into spring, oil speculators are already thinking about the summer. Hedge funds and other money managers boosted bullish wagers the most since February, betting that refineries will need to buy more crude to accelerate gasoline output before the peak U.S summer driving season.
Fuel supply is already tight, with consumers paying the most at the pump in seven months. U.S. refineries are processing the most oil since January as plants come out of seasonal maintenance, squeezing crude stockpiles for the first time in 11 weeks………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

For years, China’s oil companies PetroChina , Sinopec , and CNOOC have had a major advantage over their integrated major peers, which flummoxed competing oil companies. This advantage has allowed them to gobble up oil and gas assets around the world at premiums well above market price.
Unfortunately for these Chinese companies, it looks like this advantage is ending, and they will need to compete with the rest of the world’s oil and gas producers for assets. Let’s look at what this advantage was, why it may no longer be there, and what this could mean for the energy markets………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Libyan rebels occupying four eastern oil ports agreed with the government on Sunday to gradually end their eight-month petroleum blockade, which has cost the North African state billions in lost revenues.
Zueitina and Hariga ports, held by federalist rebels demanding more autonomy from Tripoli, will open immediately while the larger ports, Ras Lanuf and Es Sider, will be freed in two to four weeks after more talks, the government said………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

US Energy Information Administration (EIA) announced that Iran produced 3.2 million barrels per day (mbpd) of oil in 2013 maintaining its 2nd rank in the Organization of Petroleum Exporting Countries (OPEC).
According to EIA’s latest Monthly Energy Review, Iran’s oil output shrank by 167,000 bpd in 2013, compared with that of last year, Tasnim News Agency reported. Iran’s crude oil production dropped by 687,000 bpd in 2012, which was the first year in which Western sanctions against Iran were enforced………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Natural gas production in 2014 is expected to witness continued growth and the pace of growth will accelerate compared with last year, according to Barclays. This week the Energy Information Administration (EIA) reported that January Lower-48 natural gas production growth was significantly above expectations.
January gross withdrawals in the Lower-48 increased 0.35 Bcf/d, to 75.29 Bcf/d, in January 2014, according to the latest EIA Monthly Natural Gas Gross Production Report………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

High-yielding energy partnerships have lured billions in capital from investors in the past few years and the returns have often matched or beaten expectations.
But as riskier kinds of businesses adopt the Master Limited Partnership (MLP) structure, and as interest rates rise, investors are getting a wake-up call about some of the scary stuff lurking in the sector………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Hedge funds and other speculators misjudged gold prices for a second time in three weeks. Just after the investors sold bullion holdings for a second consecutive week, a disappointing U.S. jobs report sparked the biggest rally in prices since mid-March. Their funds fared better in the five preceding weeks, correctly adjusting wagers 80 percent of the time.
Investors who were anticipating gold’s 2014 rebound would fizzle had reason to be confident at the start of last week. As U.S. equities surged to a record, bullion slid to a seven-week low on April 1 as fewer traders saw the appeal of the haven asset………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Commodity analysts are expecting gold to remain weak in the next three months as seasonal factors, an improving U.S. economy and lack of bullish momentum drag prices down.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that the second quarter is usually a quiet time for gold, but this year traders could be more sensitive to increased weakness in the next three months, especially after a strong first quarter………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

China Gold International Resources, the sole overseas listed arm of the nation’s largest gold miner, China National Gold Group, will raise output, cut production costs and scout for acquisition opportunities amid lower bullion prices.
The Hong Kong and Toronto-listed state-backed company would lower costs by improving metals recovery ratios, material procurement cost and advanced production techniques, said Song Xin, who was promoted from chief executive to chairman of China Gold in February………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

The gold price is driven by global liquidity, fed by international balance-sheet expansions, impacted by trade deficits built up in countries like China. Over the last 40 years, one ounce of gold typically bought 15 barrels of West Texas Intermediate oil. That ratio has been knocked down to about 13:1.
Any significant catalyst that will erode fiat money purchasing power, such as falling industrial production, more unemployment or broader trade deficits, could take gold much higher………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Gold bullion prices have had a spectacular run in the past few years but the party’s over, at least for the time being. The year 2013 saw the precious metal record its biggest annual loss in decades. For the record: Gold hit an all time high on September 6, 2011 when it touched $1,921.50 an ounce. Last week it was at $1,293.80.
So is that it then? Is there now no point in digging out old, unfashionable, unworn or simply broken jewellery to raise a bit of cash? Should we leave it in the box where great-grandma stored it in the last century?……………………………………….Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Gold prices witnessed a recovery towards weekend as US job growth data was less than expected and boosting safe haven demand for gold. US gold futures for June delivery rose 1.5% to settle at $1303.50 an ounce. Payrolls rose 192,000 in March which was below market expectations. With Fed Reserve indicating continuation of stimulus measures, gold stands supported at current levels.
Gold prices are unlikely to see any upside above $1320 an ounce in the near future due to lack of bullish news to drive the markets, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

All I have been hearing of late is how gold will never see lower than the 2013 lows. People say it is simply not possible since it would be lower than its production cost. And, my answer to them is “so what?” Yes . . . so what?
Are you going to tell me that producers will not stop mining gold? And, again, if so, so what? Won’t that then make gold more scarce since less of it will be available, as mining will significantly slow, and then maybe we see a long term bottom?……………………………………….Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

People love to debate, but sadly sometimes it crosses a line and turns argumentative. That’s what is happening right now with the debate over gold.
There have been several high-profile articles, most recently in the Wall Street Journal, saying you should eliminate gold as a worthwhile part of your portfolio. Primarily because of this year’s lower price………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

High-cost copper miners face a stark choice between cutting production and sustaining losses for the first time in a decade following last month’s sharp fall in prices. The red metal, which is used extensively in construction and electrical goods, fell to a three-year low in March amid concerns about global oversupply and slowing Chinese demand.
At current prices analysts estimate that miners responsible for 10 per cent of global production are losing money………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

It’s the hottest club, so exclusive no one can seem to get in. Asset managers of all stripes are lining up to offer actively managed exchange-traded funds—so long as they can do it on their terms.
On the surface, active ETFs are exactly what their name implies: ETFs with all the transparency and trading advantages they’re known for, but instead of hewing to an index or adhering to a rules-based approach, they’re run by managers deciding what and when to buy and sell………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Looking into the trend lines, the story is really one of growth in the long term. While we saw a slight dip in the growth rate in 2013 — 7% compared to 18% growth in the mutual-fund category — it was still a strong year for ETFs. This was really a result of market sentiment, as Canadian equity was out of favour.
The Canadian ETF market reflected this, as ETFs are often the first point of access, and exit, when investors temporarily shift their tastes away from a sector. The dampening of the flows was ultimately a reflection of market and investment demand, not a reflection of the industry………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

Hedge funds and other speculators misjudged gold prices for a second time in three weeks. Just after the investors sold bullion holdings for a second consecutive week, a disappointing U.S. jobs report sparked the biggest rally in prices since mid-March.
Their funds fared better in the five preceding weeks, correctly adjusting wagers 80 percent of the time. Investors who were anticipating gold’s 2014 rebound would fizzle had reason to be confident at the start of last week. As U.S. equities surged to a record, bullion slid to a seven-week low on April 1 as fewer traders saw the appeal of the haven asset………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

At least 40 central banks have invested in the yuan and several others are preparing to do so, putting the mainland currency on the path to reserve status even before full convertibility, Standard Chartered said.
Twenty-three countries have publicly declared their holdings in yuan, in either the onshore or offshore markets, yet the real number of participating central banks could be far more than that, said Jukka Pihlman, Standard Chartered’s Singapore-based global head of central banks and sovereign wealth funds………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

World powers are running out of time to slash their use of high-polluting fossil fuels and stay below agreed limits on global warming, a draft UN study to be approved this week shows.
Government officials and top climate scientists will meet in Berlin from April 7-12 to review the 29-page draft that also estimates the needed shift to low-carbon energies would cost between two and six per cent of world output by 2050………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

The European Union’s move to prop up the price of carbon pollution in its greenhouse gas trading market could result in significant increases in carbon prices. The EU slashed in half the amount of carbon permits it will auction off this year, and the smaller supply could force prices up by 34% this year, according to a median survey of analysts put together by Bloomberg.
The EU will take the extra permits and “backload” them, or reintroduce them into the carbon market at the end of the decade. The EU carbon market, the world’s largest, is valued at about $47 billion. Around 13,000 factories and utilities are required to participate. They must obtain enough permits – each equivalent to the right to emit one metric ton of carbon pollution – to offset their annual emissions………………………………………..Full Article: Source

Posted on 07 April 2014 by VRS |  Email |Print

The global economy seemed to be on the mend when the International Monetary Fund met for its spring meeting in Washington 10 years ago. Alan Greenspan had cut official interest rates in the US to 1% after the collapse of the dotcom boom and the world’s biggest economy had responded to the treatment. Gordon Brown was chancellor of the exchequer and the UK was in its 12th year of uninterrupted growth.
Companies in the west were flocking to China now that it was part of the World Trade Organisation. The talk was of offshoring, just-in-time global supply chains and integrated capital markets. The expectation was that the good times would last for ever………………………………………..Full Article: Source

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