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Commodities Briefing 19.Aug 2014

Posted on 19 August 2014 by VRS |  Email |Print

Investors are scrambling to reduce their exposure to the potential economic fallout from continuing fighting in Ukraine, unsettling already-fragile markets. Currencies in Central and Eastern Europe, including the Hungarian forint and Polish zloty, have plunged to at least one-year lows against the dollar as investors pull back from the economies most vulnerable to blowback from sanctions against Russia. European stocks also have sagged.
Investors are responding to escalating violence and tit-for-tat sanctions that are reverberating throughout the region’s financial markets and exposing new vulnerabilities in Europe’s struggling economy………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The global oil demand growth forecast for 2014 has been curtailed since last month’s report to a more modest 1 million b/d, according to the International Energy Agency’s most recent Oil Market Report.
The revision was primarily due to lower-than-expected second-quarter deliveries and downgraded macroeconomic outlook from the International Monetary Fund (IMF). Demand growth is forecast to accelerate in 2015 to 1.3 million b/d as the economy improves. Global oil supply in July averaged 93 million b/d, up 230,000 b/d from a month ago and 840,000 b/d from a year ago………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Russian Urals crude weakened for an eight straight trading day on Monday due to weak European refining demand, falling well below $100 a barrel for the first time in a year in a move to increase the pain for Russian state finances amid Western sanctions.
Russia has balanced its budget at $114 a barrel this year as President Vladimir Putin is ramping up social military spending amid a conflict in Ukraine, which sent relations between Moscow and the West to their worst since the end of the Cold War………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The price of oil has fallen to its lowest in more than a year as a supply glut allows markets to shrug off concerns over the crisis in Ukraine and the impact of Islamist rebels in Iraq.
Brent crude fell in London by more than 2 per cent yesterday to $101.30, taking the price to its lowest level since June 2013, days after it had jumped amid fears of an escalation in the conflict between Ukraine and Russia………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Project finance has been less widely used in the oil and gas sector than in other sectors such as power and utilities. Future revenue streams are typically less stable in oil and gas. The logistics, infrastructure and social issues caused by the increased size of projects have made achieving time, cost and quality targets more challenging than ever.
According to EY, the industry’s relatively poor track record of completing projects on time and on budget will test banking sector appetite for lending to the oil and gas sector. Project financing has typically been more prevalent in the downstream sector than in the more capital intensive upstream sector. In 2013, the Sadara Chemical Company JV successfully completed the project financing for the Sadara chemical complex in Saudi Arabia………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Crude oil production from the Organisation of Petroleum Exporting Countries (OPEC) dipped by 30,000 barrels per day (bpd) in June to 29.94 million bdp, according to the latest Platts survey of OPEC and oil industry officials and analysts.
Meanwhile, Nigeria’s oil production rose to 1.98 million barrels per day in July, the highest since March this year. The country’s production stood at 1.87mb/d in March. The survey showed Iraq’s output plunge of 160,000 b/d was largely offset by production increases from several other OPEC member countries………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Indians love gold, they cover their brides and shower their temples with the precious metal, traditionally used as a sparkling insurance policy and inflation hedge to be cashed in when needed. While the South Asian nation is the world’s second largest consumer of gold after China, it seems to be losing some of its appetite for the precious metal as an investment.
Demand for gold in India fell 39% from a year earlier in the quarter ended June to 204.1 tons, the World Gold Council said last week. Investment demand — buying of gold in the form of coins or bars rather than jewelry — plummeted even further, losing 67%………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The US$ price of gold has soared +377% from 2001 to date. That’s a compound annual growth rate (CAGR) equal to 13.4%. Contrast gold’s monumental appreciation with the pathetic performance of the Shanghai Stock Exchange Index and the miserly return of US Treasuries.
“A major report published recently by the World Gold Council, “China’s Gold Market: Progress And Prospects” suggests that private sector demand for gold in China is set to increase from the current level of 1,132 tonnes per year to at least 1,350 tonnes by 2017. Following the record level of Chinese demand in 2013, which saw the country become the world’s largest gold market, the report suggests that while 2014 is likely to see consolidation, the succeeding years are likely to see sustained growth………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Despite gold coming close to dropping below the psychologically important $1,300 an ounce level at the end of the week and silver drifting away from $20 an ounce, precious metals investors added to their holdings. Total holdings in exchange traded products backed by physical gold and silver rose last week, albeit modestly, with two tonnes of gold bringing total holdings to 1,728.7 tonnes. More than 19 tonnes of silver trickled back into ETFs for a total of 19,616 tonnes.
Retail investor sentiment in precious metals were buoyed on Friday when second quarter filings by hedge fund gurus John Paulson and George Soros indicated continuing belief in good prospects for the sector………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Gold bulls are the economic market equivalent of the apocalypse-fearing survivalists portrayed in the common television show Doomsday Preppers. They buy the yellow metal mainly because of concern that monetary authorities, primarily in the created world, will lose control of inflation and their currencies’ worth through maintaining low interest rates and quantitative easing too lengthy. If the gold bugs are established right, they will prosper though investors in equities and other assets suffer from rampant inflation and serious financial recession.
Possibly a kinder way of searching at gold investment is to say it tends to make sense as lengthy as actual interest prices stay damaging, as is currently the case in much of the Western planet………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Global stock markets continued to be wracked by rising volatility because of a range of economic and geopolitical events that are fueling greater concern among investors. This is generating renewed interest in precious metals, including gold, silver, and platinum, as investors seek safe-haven investments to avoid this volatility.
Economic and geopolitical crises are gripping the globe. Earlier this year, emerging markets plunged as the Argentine peso was sold off; now Argentina has defaulted yet again on its debt, and there is growing concern that Portugal’s banking system is nearing collapse………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

When considering the catalysts for silver, let’s first ignore short-term factors such as net short/long positions, fluctuations in weekly ETF holdings, or the latest open interest. Data like these fluctuate regularly and rarely have long-term bearing on the price of silver.
I’m more interested in the big-picture forces that could impact silver over the next several years. The most significant force, of course, is what I stated above: governments’ abuse of “financial heroin” that will inevitably lead to a currency crisis in many countries around the world, pushing silver and gold to record levels………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Palladium touched $900 a troy ounce on Monday for the first time since 2001, taking this year’s price gain to 25 per cent. The precious metal, which is used mainly in catalytic converters in petrol-powered cars, has benefited from real and potential supply disruptions in the two main producing countries.
In South Africa, a five-month miners’ strike crippled output of the metal, pushing the global market further into deficit. Though work resumed in June, its output there has yet to recover to previous levels………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

Palladium futures climbed to a 13-year high on concern that global supplies will trail demand for the metal used in pollution-control devices in cars, exacerbating a deficit. Gold fell. Through August 15, palladium jumped 25 percent this year following a five-month mine strike that ended in June in South Africa, the world’s second-biggest producer.
The conflict in Ukraine spurred the US and European Union to impose sanctions on Russia, the top supplier. Production will trail demand this year by the most ever after the strike, according to London-based Johnson Matthey Plc, which makes a third of the world’s catalytic converters………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The ratio of platinum to palladium prices are at their lowest since 2002, falling to 1.63, says Jonathan Butler, precious metals strategist at Mitsubishi. This comes as palladium notched a new 13-year high and outperformed other precious metals.
“We remain of the view that investor interest stemming from the positive underlying fundamentals could see $900 challenged in the near term. According to Statistics South Africa, the country’s PGM mining output fell 37.2% in June, an ‘improvement’ on the 48.5% fall in May but a figure that reflected the severe impact of the five-month AMCU strike………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

With the launch of their ‘international’ range of ETFs, iShares and Euroclear are creating a new type of ETF issuance inside an established structure. If their hopes pan out, all ETFs will look like this three to five years from now.
Squint at the factsheet for the iShares MSCI USA Dividend IQ Ucits ETF (QDIV), an exchange-traded fund (ETF) sold in Europe, and you will probably find nothing that strikes you as especially peculiar. But in one important respect, QDIV is not a typical ETF. The settlement process for ETFs has been the same for almost two decades, but QDIV ignores this and settles in a way that is different from any other ETF that has come before………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The PowerShares DB Commodity Index has been a little soft over the past seven weeks, losing around 7% in price (-2% YTD) while the S&P 500 has been flat. The top chart is the TR Continuous Index, which finds itself testing dual support — one of which is a 14-year rising support line.
This index has been soft for the past four years while the stock market has continued to rally. In the big picture, what happens here could be very important for commodities’ overall direction in the months to come………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The leaders of the No campaign warned of the dangers of independence as they took to the streets of Scotland yesterday to mark the final month of the campaign. Labour shadow foreign secretary Douglas Alexander accused Alex Salmond during a campaign event in Glasgow of “burying his head in the sand” on critical issues such as the SNP’s plan to share the pound in a formal currency union with the remainder of the UK, EU membership and funding for public services.
Chief Secretary to the Treasury Danny Alexander pledged UK government funds for key industries if Scots vote No………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The Consumer Financial Protection Bureau (CFPB) has unparalleled powers over nearly every consumer financial product and service. Given that virtual currencies can serve as a form of electronic money, the CFPB has, predictably, decided to weigh in on this topic.
A CFPB statement this week warned people about the dangers of private digital currencies such as Bitcoin, XRP, and Dogecoin. It started perfectly reasonably, noting that: “In a nutshell, while virtual currencies offer the potential for innovation, a lot of big issues have yet to be resolved – some of which are critical. If you are interested in using or buying virtual currencies, you should be aware of the associated risks.”……………………………………….Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

The Prime Minister’s key business adviser, Maurice Newman, has two preoccupations, perennially aired in these pages. He believes global warming is a hoax and, by extension, initiatives such as Australia’s now-defunct emissions trading scheme are unnecessary. And he thinks inequality doesn’t matter - or if it does, then the solution is weakening labour laws and cutting the top tax rates.
He could not be more wrong. Climate change and inequality represent major threats to our quality of life, which is why many developed nations believe they should be central to the G20 meetings in Brisbane………………………………………..Full Article: Source

Posted on 19 August 2014 by VRS |  Email |Print

President Obama has put energy and the environment at the top of his second-term agenda. The focus has been on climate change, and on exploiting the unexpected plenty of North American oil, gas and energy technology. The administration’s progress has been notable—especially in comparison with health care, immigration and foreign affairs.
The president’s highest priority is to reduce the carbon-dioxide emissions of existing electricity generating power plants. In June the Environmental Protection Agency released an unexpectedly thoughtful and well-supported plan setting specific goals for reducing emissions chosen from a menu of measures such as increased efficiency, emissions trading and fuel switching, mainly from coal to natural gas for electricity generation. The projected CO2 reductions—about 30% below 2005 levels by 2030—are reasonable and shouldn’t significantly increase industry or consumer costs………………………………………..Full Article: Source

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