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Commodities Briefing 31.Jul 2014

Posted on 31 July 2014 by VRS |  Email |Print

Total global commodity assets under management (AUM) rose to $325 billion in June 2014 from $317 billion in May 2014, Barclays Capital said on Wednesday. “We estimate that there was a small net inflow of around $300 million into commodity investments during June,” the bank said.
The investment bank said in a research note on the sector that investors have continued to withdraw assets from commodity investments on a quarterly basis despite a marked improvement in the health of commodities as an asset class………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

A Barclays report says the current year witnessed an improvement in the health of commodities but investors have continued to withdraw assets from commodity investments on a quarterly basis. The slow pace at which institutional investors are able to take and implement the kind of long-term investment decisions and make allocations to commodities is the major reason for this trend. But the situation is expected to improve gradually, the report said.
The report maintains key recommendations as: long crude oil; short gold (due to weak fundamentals); and long nickel – the base metal with the best short-term fundamentals and a sector likely to benefit from better global growth in this quarter………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

Despite some weakness in the first half of the year, the world economy continues to recover, OPEC Monthly Oil Market Report for July 2014 said. Global GDP growth in 2014 is now forecast at 3.1 percent, slightly higher than the estimated 2.9 percent for 2013. The US experienced a surprisingly large contraction in economic activity in the first quarter due to severe winter weather, leading to a downward revision in US GDP growth to 1.6 percent from 2.4 percent previously.
However, with the US economy expected to rebound and continued large monetary stimulus in the Euro-zone and Japan, the OECD is seen growing by 1.7 percent in 2014 and 2.0 percent in 2015………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

The US oil and gas industry experienced a substantial rise in mergers and acquisitions during the second quarter, according to a quarterly report by PwC US Energy Practice.During the 3-month period ending June 30, 54 oil and gas deals took place with values greater than $50 million, accounting for $42.2 billion, compared with 47 deals worth $30.3 billion during last year’s second quarter.
The upward movement is largely attributed to an increase in megadeals, with 12 occurring worth a combined $30.8 billion—73% of total deal value—due to larger oil and gas companies divesting more valuable assets. There were just five megadeals during the first quarter. “Over the past 3 months, we continued to see companies looking to realign their portfolios and divest noncore assets, which provided opportunities for acquirers with cash and access to capital,” said Doug Meier, PwC’s US energy sector deals leader………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

In its 2014 Annual Energy Outlook (AEO2014), the US Energy Information Administration (EIA) projects that the price of oil will largely determine whether to use carbon dioxide enhanced oil recovery (EOR) technologies to extract additional crude oil from existing producing fields. The OPEC oil output rises in July on fragile Libyan reboundinjection of CO2 gas into oil reservoirs at high pressure forces the CO2 to mix with oil. This reduced the oil’s viscosity and causes the oil to increase in volume.
The result is an increase in the total cumulative volume of oil produced and in the percentage of oil-in-place that is recovered. The decision by a producer whether or not to employ this technique depends on a number of factors, including the geophysical properties of the reservoir, the oil within that reservoir, the cost of applying CO2 EOR and the revenue received from the additional production………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

OPEC’s oil production rose in July from June, a Reuters survey found on Wednesday, as a fragile recovery in Libyan supply outweighed fighting in Iraq and reduced output from Angola.
Despite the increase, unrest in Africa and the Middle East is still weighing on supply. That could hinder OPEC’s ability to boost output later in the year, when the International Energy Agency expects demand for OPEC crude to rise………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

In terms of the oil market, tension and unrest in the Middle East is a driving factor that investors should consider. As Visual Capitalist Notes, Ernst and Young has reported that prices for oil were up in the second quarter, largely as a result of geopolitical tensions.
In the infographic below, Visual Capitalist takes a look at how conflicts in the Middle East are affecting the oil price………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

The Global CBM (Coal Bed Methane) market is expected to reach $17.31 billion by 2020, growing at a CAGR of 5.9% from 2014 to 2020, according to a new report by GrandView Reseach. Asia Pacific region will become most dynamic regional market with China, India and Indonesia are likely to lead the Asian CBM industry, th e report said.
Global CBM production was 2,920.3 Bcf in 2013 and is expected to reach 4,667.4 Bcf by 2020, growing at a CAGR of 7% from 2014 to 2020. US and Canada are the largest CBM producers, accounting for over 70% of global volume in 2013. US CBM market revenues were estimated at USD 7.22 billion in 2013 and are exoected to grow at a CAGR of 5.4% from 2014 to 2020………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

The gold price fell below the psychologically important $1,300 an ounce level on Wednesday after strong economic data outweighed safe haven buying on geopolitical concerns. On the Comex division of the New York Mercantile Exchange, gold futures for August delivery in early morning trade exchanged hands for $1,294.60 an ounce, down $5.60 from Tuesday’s trading session.
US gross domestic product grew at a 4% annual pace in the second quarter, according to government data released Wednesday. First quarter number were also adjusted, showing a smaller contraction………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

The one sided drivel which passes for objective news reporting in the West never ceases to amaze me. On Ukraine, and in particular on the shooting down of Malaysian airlines flight MH17, the western media seem to promote one agenda, and one agenda only, without any recognition at all that there might be an alternative argument viewed from the ‘other side’.
Now whether it is proven that the anti-Russian rhetoric thus encompassed is correct or not surely a wholly impartial news organisation should at least recognise that there could perhaps be another side to the story………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

In New York trade on Wednesday copper rallied after much stronger than anticipated US GDP figures, reaching a high of $3.2625. Defying market expectations, the copper price dug itself out of a near four-year low struck mid-March of $2.92 a pound and has gained more than 7% since early June. The metal is now down only 4% in 2014.
The copper price is highly correlated with economic growth thanks to the widespread use of the metal in the construction, transport and power industries, and the robustness of the red metal is prompting industry to switch to much cheaper aluminum for some applications………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

“A well-established feature of the precious metals market is the apparent inability for producers to raise production levels when demand and prices rise,” said HSBC analysts James Steel and Howard Wen.
“The paucity of trained professionals’ expertise helps explain—along with other factors—the weak supply response by producers to the surge in precious metals prices in 200-2012,” observed HSBC. “This is important to investors because it arguably contributed to the height and longevity of the precious metals rally; it also implies that future rallies are unlikely to be cut short by a rapid increase in mine output.”……………………………………….Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

There was a time when you effectively needed a financial passport to invest in overseas share markets. You had to find a broker who dealt in offshore markets or had a relationship with a foreign broker, research offshore companies and even arrange currency transfers. Now it is as simple as buying an exchange-traded fund that is listed on the Australian market.
There are still some odd wrinkles — you shouldn’t expect much in the way of dividends and what does come through will usually have some withholding tax deducted………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

Europe’s third largest oil company, BP plc, reported second-quarter 2014 results before the opening bell on July 29. The company missed our earnings estimate and warned of potential losses in its Russian business in the wake of tough sanctions imposed by the Western powers.
This is especially true as BP owns a nearly 20% stake in Russian oil giant Rosneft. The threat of more sanctions by the U.S. or European Union against Russia could worsen BP’s relationship with Rosneft and hamper its production, reserves and reputation. Notably, Russian sanctions so far had no impact on the company’s business but new measures could dilute its profits in the upcoming quarters……………………………………….Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

As a less daunting new breed of fund-of-funds comes to the fore, Charles Stanley’s Kris Barclay examines the pros and cons of their underlying strategies. Markets ebb and flow, as do new investment ideas. Sometimes, the setting of a new trend might seem a new precedent but, all too often, it is just an old idea reinvigorated. Hedge funds are of that order.
These abstract vehicles have been around for many a year and, of course, the basic and original premise was to hedge one’s assets against the stock market falling………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

Newedge, a global leader in multi-asset brokerage and clearing, announced the performance for its suite of hedge fund indices for the month of June. Commodity funds, as represented by the Newedge Commodity Trading Index, were the best performers in June, finishing the month up 0.63%. The Newedge Trading Index continues to build on 2014 gains, leading the Newedge Index performance year-to-date with a return of 3.55%.
The Commodity Equity sub-index extends the positive performance achieved in 2013 and is up 4.85% year-to-date with a return of 1.62% for the month of June. James Skeggs, Global Head of Advisory Group Alternative Investment Solutions at Newedge said: “The Newedge Commodity Trading Index has had its best performance since 2012 so far this year and many managers are positive about the opportunities in the near future. As a result, we have seen a pickup of investors reconsidering investing in commodities.”……………………………………….Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

CME Group, the world’s leading and most diverse derivatives marketplace, and GFI Group Inc., a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, today announced that they have entered into definitive agreements to create value for their respective stockholders through a two-step transaction through which:
CME Group will acquire Trayport and FENICS. CME Group will purchase these businesses by first acquiring all of the outstanding shares of GFI Group in exchange for $4.55 per share in CME Group Class A Common Stock which represents a 46% premium above yesterday’s closing price of $3.11 per share of GFI Group common stock………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

Ghana’s cedi, the world’s worst-performing currency this year, weakened as the government ruled out an International Monetary Fund bailout, stoking concern it will miss targets to narrow a budget deficit.
The currency retreated for the first time in five days against the dollar, dropping as much as 6.4 percent, after Deputy Finance Minister Mona Quartey said the government of the world’s second-biggest cocoa producer plans to sell a third Eurobond next month rather than take IMF aid. Returns on Ghana’s dollar debt are the lowest in Africa this year, according to Bloomberg indexes………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

Alex Salmond has been accused of a “huge deception” over his plans for a currency union after a Yes vote. Two leading figures from the banking industry have hit out at Scotland’s First Minister following his insistence that Westminster will agree to a deal to allow an independent Scotland to continue to use the pound.
Chancellor George Osborne and his Labour and Liberal Democrat counterparts have already stated that they would not agree to such an arrangement - but this has been dismissed as “bluff and bluster” by the SNP leader. Now, Sir Martin Jacomb, the former chairman of Prudential, and Sir Andrew Large, a former deputy governor of the Bank of England, have said that a currency union is “not compatible with Scotland being politically independent and is therefore not on offer”………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

California and Mexico have signed a bilateral pact aimed at advancing cross-border investments in clean energy. Signed July 29 by California Gov. Jerry Brown (D) and Mexico’s Secretary of Energy Pedro Joaquin Coldwell during the governor’s trade visit to Mexico City, the agreement calls for the two governments to work together in developing and deploying renewable energy, biofuels and other clean energy technologies.
The agreement also includes a commitment to explore integrating Baja California Norte into the California energy market and to support expanded markets for clean and energy-efficient technologies, including manufacturing and transportation………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

Washington State is poised to join California and several Canadian provinces in a carbon trading system, according to a Monday memoranda from the governor’s office. The Western Climate Initiative (WCI) is an agreement between California, British Columbia, Ontario, Quebec and Manitoba to develop and implement coordinated systems to cut their collective greenhouse gas emissions.
California already has its cap-and-trade plan, for instance, and British Columbia has sported a carbon tax since 2008. Washington had been poised to also join the WCI, but the midterm elections 2010 upended much of the political momentum………………………………………..Full Article: Source

Posted on 31 July 2014 by VRS |  Email |Print

NYC-based PIRA Energy Group believes that the global economy will expand at above trend pace in the second half of 2014. In the U.S., products increased and crude stock declined. In Japan, crude stocks built as imports rebounded from storm impacts. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
World Oil market forecast: After a sub-par first half, the global economy will expand at above trend pace in the second half of 2014, led by manufacturing. First half weakness in the economy undermined global oil balances with inventories building back to year ago levels………………………………………..Full Article: Source

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