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Commodities Briefing 18.Jul 2014

Posted on 18 July 2014 by VRS |  Email |Print

The Oil market backwardation has narrowed significantly over the past month and the forward discount on oil is now at the lowest level since 2012. Libya’s imminent return to the market as well as the insurgence in Iraq have been key forces stirring up the market. The move has been passed on to oil product curves as well as base metal curves.
For some time now the oil market forward curve has mainly been driven by movements in the front end of the curve. Most recently the Iraqi insurgence pushed the oil price to the highest level in nine months. However, concerns over the unrest quickly eased and the price fell back again. The drop was further exacerbated by the news that Libya after a year of shutdown looks ready to restart exports………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Commodities from iron ore to copper and Brent crude will drop over the next five years as global supplies climb, according to Goldman Sachs Group, which highlighted oil’s recent losses as a sign of increased output. There will be substantial declines in some metals, energy and bulk commodities, analysts including Chief Currency Strategist Robin Brooks wrote in a report.
The period of continued year-on-year price rises for most commodities is over, they said in the report, which was dated July 15. Banks from Citigroup to Deutsche Bank AG have called an end to the commodities super-cycle, when China’s surging demand combined with supply constraints to more than double prices in the 12 years through 2010………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

When asked what the world’s most precious commodity is, most people would rattle off guesses from a list of the usual suspects — things like gold, platinum, oil or diamonds. However, there is a commodity more precious than any of those, one that has the potential to rise in value dramatically over the next decade, and one that you can easily invest in.
If you want to know what it is, just watch any episode of a survival reality show. Whether it’s “Man vs. Wild,” “Survivorman” or even “Naked and Afraid,” the first thing the TV survivalists do after assessing their situation is to look for this precious commodity — clean, drinkable water………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

A possible resumption of oil exports from Libya, as yet unhindered production in Iraq, and hopes of a nuclear deal with Iran, have caught the oil market on the hop. It was only a month ago that Brent, the international crude oil marker, rose to more than $115 a barrel amid fears of a disruption to oil supplies as insurgents swept across northern Iraq. But these anxieties soon dissipated and oil has been in freefall.
This week Brent suffered its biggest one day percentage drop since January, triggering a scramble to unwind positions that took the price to a low of $104 a barrel. Traders are now asking whether the rapid sell-off is over or has further to run………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

1. Charles and David Koch ($68 billion jointly): The bogeymen of the Democratic Party inherited their fortunes, along with the family business, from their father, Fred. But they’ve since shown a keen entrepreneurial spirit. Koch Industries’ claim to fame initially was a proprietary oil refining technique, but the brothers soon diversified the product portfolio to encompass refineries, pipelines, and the manufacturing of chemicals, polymers and fibers.
2. Mukesh Ambani ($21.5 billion): Barons who obtained their fortunes from dearest dad occupy the top two spots on the list. Mukesh Ambani currently oversees India’s Reliance Industries. Having begun as a textiles maker, Reliance Industries created a dedicated subsidiary, Reliance Industries, which has had a spectacular run since it burst onto the world scene in 2008. It owns the world’s biggest refinery at Jamnagar in Gujarat, with a capacity of 1.24 million barrels per day………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

The Energy Information Administration (EIA) has explained that crude oil and natural gas resources are the estimated oil and natural gas volumes that might be produced at some time in the future. The volumes of oil and natural gas that will ultimately be produced cannot be know ahead of time. Resource estimates change as extraction technologies improve, markets evolve and oil and natural gas are produced.
According to the EIA, the uncertainty in estimated volumes declines across the resource categories based on the relative mix of facts and assumptions used to create the estimates. Oil and gas in-place estimates are based on fewer facts and more assumptions, while proved reserves are based mostly on facts and fewer assumptions………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

While the President of the United States calls for an ‘all of the above’ energy policy, the Environmental Protection Agency’s rules appear to suggest that coal isn’t invited. However, International Energy Agency (IEA) chief Maria van der Hoeven says that every fuel option is important.
Can’t do it alone: Speaking at an energy conference, van der Hoeven explained that, “You don’t want too many eggs in one basket … Coal, nuclear and wind are all essential for keeping the lights on.” While that statement is very specific, the intent is broader. She is explaining that every energy option needs to be on the table………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

The price of the safe haven metal surged amid market nervousness over the crash in Ukraine. Safe-haven gold spiked and stocks fell as investors took fright at the loss of a passenger jet in Ukraine near the border with Russia.
Gold, a shelter for investors in times of uncertainty, surged as much as 1.9pc on reports the Malaysia Airlines aircraft, which was carrying 295 people, had been shot down………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Gold rose on Thursday, extending the previous day’s recovery from four-week lows as investors took advantage of lower prices to buy and as a fresh round of U.S. sanctions on Russia weighed on stock markets. The sanctions, the toughest yet imposed by the United States, also helped send palladium to 13-1/2-year highs. The metal is chiefly sourced from Russia.
Spot gold was up 0.4 percent at $1,303.60 an ounce at 1340 GMT, while U.S. gold futures for August delivery were up $4.90 an ounce at $1,304.70. Spot prices fell more than 3 percent over the first two days of this week to their lowest since mid-June, at $1,291.70………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

It’s baaack… That’s right, I’m talking about gold hedging, the gold stock investor’s bane. You see, gold miners “hedge” by agreeing to sell a portion of their future gold production at a fixed price. That way, if prices fall, they’re guaranteed a better profit.
Hedging was all the rage during the late 1990s and early 2000s, a period in which gold lost more than half its value. At the time, even mining company executives didn’t think gold prices would move up. But with most of their production hedged at relatively low prices, many miners missed out on the gold price boom of the last decade………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Gold tender process follows silver fix mandate won by CME and Reuters.The world’s top commodities exchanges are already circling in the hope of securing a potentially lucrative new mandate to run the gold price fixing process.
The London Gold Market Fixing (LGMF) said on Wednesday it wanted to appoint a third party administrator to assume responsibility for the administration of the gold price discovery process. ……………………………………….Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Precious metals characteristically start going up after a prolonged decline, yet early in the reversal they rarely inspire any confidence because the last dozen or so similar moves fizzled after a 10–20% move. This could be one of those. Silver is at $21 per ounce ($21/oz) now, maybe next week it will test $18/oz again. It’s anybody’s guess but I believe that toward the end of the year we’ll probably see higher numbers—maybe substantially higher.
This new replacement for the silver fix would, at least for the next year or two, have less tinkering with it than had historically been going on with the fix. On that basis, the price should become more volatile. On balance it’s probably going to be positive for the silver price………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Zinc futures prices and open interest have climbed up in London Metal Exchange (LME), Shaghai Futures Exchange (SHFE) and India’s Multi Commodity Exchange (MCX) as global market for refined zince has fallen into deficit by 107 kt over the four months from January to April 2014. This scenario has emerged amidst weakness in copper market, Standard Bank said in a report.
Standard Bank notes that open interest in SHFE zinc contract has risen 60% since the start of July while prices have risen 10% since June indicating build up of large long position. Zinc open interest is now at the highest point since November 2010………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Issuing a bad omen for commodity-related exchange traded funds, the World Bank believes precious metals, oil and soft commodity prices are set to drop. Broad commodity ETFs have underperformed the broader market this year, with the PowerShares DB Commodity Index Tracking Fund flat, the iPath Dow Jones-UBS Commodity Index Total Return ETN up 3.1% and the iShares GSCI Commodity-Indexed Trust 0.9% higher.
Now, the World Bank expects precious metals prices to fall as investors shift away from safe-haven assets and into riskier plays on the expanding U.S. economic outlook and higher borrowing, reports Millie Munshi for Bloomberg………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Our Best ETFs for Traders scorecard ranks the most cost-efficient exchange-traded funds for investors holding a position for three months. This portion of it displays the winners among funds holding foreign currencies and commodities.
It’s a short list. There aren’t many commodity funds that come in under the 0.4% expense ratio ceiling in our Best ETF survey. The rules and methods for the Best ETFs for Traders rankings are set forth in this summary. That file also has links to all the tables………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Do you want to go in and out of the market with a short-swing trade? If you plan on staying put for three months, Vanguard has the most efficient exchange-traded fund. Its S&P 500 portfolio would cost you a bit more than $2 per $10,000 invested. It beats the much bigger SPDR S&P 500 fund (SPY) on that cost score.
For a three-month bet on the bond market, the cost winner is from BlackRock. Its iShares Core Total U.S. Bond Market ETF (AGG) would run you less than $3. Vanguard’s competing product, the Total Bond Market ETF (BND), is 10% more expensive………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

The quarterly earnings of Wall Street’s biggest banks offer a glimpse into the scale of their commodity trading activity through a measure of trading risk called VaR.
On Thursday, Morgan Stanley reported its commodity Value-at-Risk (VaR) fell to $19 million in the second quarter from $20 million in the first quarter and $24 million in the second quarter of 2013. VaR is the largest amount of money that the bank could lose on 95 percent of the trading days during the period………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

New York became the first U.S. state on Thursday proposed establishing rules for firms involved in receiving, transmitting and storing virtual currency. The proposal by the Department of Financial Services would establish a so-called BitLicense.
Merchants and consumers who use the virtual currency such as Bitcoin solely to buy and sell goods and services wouldn’t need a license. However, those buying and selling virtual currency as a business would………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Czechs will be the latest group of European consumers with a digital alternative to the local hard currency if a newly launched virtual currency takes root. A group of Czech individuals with broadcast and media backgrounds Thursday unveiled Czech Crown Coin, or CZC, a digital, cryptocurrency akin to globally known Bitcoin, with the goal of supporting Internet businesses in the Czech Republic.
Ladislav Faith, who is leading the project and by day is a television cameraman based in Prague, said the goal is to create a Czech alternative to both cash transactions and to other global virtual currencies………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

The prospect of a huge U.S. crop harvest has hammered crop prices down to multi-year lows. Rising supply is the main factor in grain price weakness, but commodities in general are also declining in value.
After rising to a two-year high in June and out performing the S&P 500 stock index in the first six months of the year, the Thomson Reuters/Core Commodity CRB Index, a measure of prices for 19 commodities, had declined for 11 straight trading sessions as of July 11, the longest decline in records going back to 1994………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

The goal of a global carbon market to tackle climate change hit turbulence on Thursday when Australia scrapped its planned carbon trading scheme. Such schemes have been emerging all over the world as governments try to meet greenhouse gas emission reduction targets.
Around 40 countries and over 20 states, regions or cities have started or plan to begin emissions trading schemes or carbon taxes to put a price on emissions. Under cap-and-trade schemes, companies or countries face a carbon limit. If they exceed the limit they can buy allowances from others. They can also purchase carbon offsets from outside projects that avoid emissions, often from developing countries………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

The goal of a global carbon market to tackle climate change, once touted to reach US$2-trillion by 2020, received a major setback when Australia on Thursday scrapped its planned carbon trading scheme, which would have been the world’s third biggest.
Australia’s Emissions Trading Scheme (ETS) was to have started in 2015 and linked with the world’s biggest market in Europe — the first direct connection between major emissions trading schemes and a test case for possible links between schemes emerging in China and planned in Japan and the United States………………………………………..Full Article: Source

Posted on 18 July 2014 by VRS |  Email |Print

Australia’s Parliament on Thursday repealed the country’s controversial carbon tax and the emissions trading scheme that was to succeed it in 2015, signalling an end to what would have been the second largest such system after the European Union’s.
The schemes were part of a larger package of legislation to combat climate change passed in 2011, elements of which were preserved to win the support of Clive Palmer, whose Palmer United Party holds the balance of power in the Senate………………………………………..Full Article: Source

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