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Commodities Briefing - Archive | January, 2015

Commodity prices collapse to lowest in 12 years

Posted on 30 January 2015 by VRS  |  Email |Print

The Bloomberg Commodity index, which tracks the global prices of 22 different commodities such as gold and oil, collapses to lowest level since August 2002. The world’s leading index of commodity prices has slumped to its lowest level in more than 12 years as China slows and America hints at tightening monetary policy.
The Bloomberg Commodity index, which tracks the prices of 22 different commodity prices such as gold, natural gas and oil, fell 0.3pc to 99.84 in early trading, the lowest point since August 2002………………………………………..Full Article: Source

Commodity Shipping Measure Falls to 28-Year Low on China Demand

Posted on 30 January 2015 by VRS  |  Email |Print

A measure of global shipping costs for commodities fell to a 28-year low as slowing growth in China’s demand for cargoes compounds the effect a fleet glut. The Baltic Dry Index plunged 5.1 percent to 632 points, the lowest since Aug. 22, 1986, according to data from the Baltic Exchange in London on Thursday. Freight rates for all the vessel types within the measure declined.
China, the world’s biggest buyer of of coal and iron ore, will increase imports of the two commodities by 6 percent this year, down from a growth rate of 8.7 percent in 2014, according to estimates from Clarkson Plc, the world’s largest shipbroker. The nation’s economic expansion this year will be the slowest since 1990, the average of 67 economists’ forecasts compiled by Bloomberg shows………………………………………..Full Article: Source

Commodities, Geneva and the Swiss franc

Posted on 30 January 2015 by VRS  |  Email |Print

Bunge, the international agricultural trader, is closing its sugar and ethanol operations in London and moving them to Geneva, the home of its grain trading hub. Its decision is counterintuitive, especially at a time when the jump in the currency after the Swiss ditched their franc cap has pushed.
Bunge says the move will “improve efficiency and further integrate with our core trading businesses”, and there are worse places in the world to work. Commodities traders have a long history in Switzerland, especially in Geneva. Easy access to finance, low taxes and relatively light regulation have made it a good place to do business………………………………………..Full Article: Source

Goldman Sachs, Barclays predict oil’s recovery to be a way off

Posted on 30 January 2015 by VRS  |  Email |Print

Those hoping for a quick recovery in the price of oil might end up being disappointed, with Goldman Sachs and Barclays forecasting the slump to continue for much of 2015. Barclays has slashed its forecast average price of Brent crude for this year to $US44 a barrel, down nearly $US30 from its early-December forecast of $US72 a barrel, before recovering to $US60 in 2016.
Goldman Sachs is forecasting WTI oil to trade about $US44 a barrel for the first three-quarters of this year, lifting to $US65 a barrel by the end of the year as sharp cuts in capital spending and rising demand weigh on supply………………………………………..Full Article: Source

Energy Economist: Shale oil’s response to prices may call for industry re-evaluation

Posted on 30 January 2015 by VRS  |  Email |Print

Shale oil’s investment cycle is shorter and its decline profile sharper than conventional oil production. Current indicators suggest legacy declines from shale will catch up fast with the industry. This points to a sharp deceleration in US shale oil output. But, while conventional oil takes time to slow down, it also takes time to speed up.
It will be shale that is best placed to benefit from any oil price recovery, as Ross McCracken, managing editor of Platts Energy Economist, explains in this month’s selection from the publication. The full analysis can be found in the February 2015 issue, which is also issue 400 of Energy Economist. Global crude oil production has only fallen in six years since 1984 and then generally as a result of geopolitical disruptions to supply or restraint by OPEC, rather than as a reaction to price………………………………………..Full Article: Source

Why the OPEC Secretary General Believes Oil Prices Have Bottomed

Posted on 30 January 2015 by VRS  |  Email |Print

Nowadays, you’ll find plenty of predictions about the future direction of oil prices. But some are worth paying particular attention to. On Monday, Abdullah al-Badri, the Secretary-General of OPEC, said that he expects oil prices to bottom out around current levels. He would know as well as anyone. That said, what makes US$45 per barrel such a logical bottom for oil prices? Is there a risk that prices could fall lower? And how should you react as an investor?
There are reasons to believe the Secretary-General. With such low prices, producers have already been cutting back. According to oil services giant Baker Hughes, the number of oil rigs fell for the seventh straight week, and is now at its lowest level since January 2013………………………………………..Full Article: Source

How far will OPEC go?

Posted on 30 January 2015 by VRS  |  Email |Print

If you are a business-news junkie like me, you could hardly miss the trends of the past two months that presumably predict the 2015 economy. Before the holiday season and on into January, retailing was a priority fiscal indicator. Now we have oil production as a runner-up for the most crucial headline of the day.
I already vented my dismay over the emphasis of shopping for deals on Thanksgiving Day and the public’s apparent monthlong need to storm the stores and crowd the Internet right up to Christmas Day in my Jan. 1 column (“Spirit of Christmas centers on malls”). Despite my reaction to commercial exploitation of family traditions, the retailers loved it………………………………………..Full Article: Source

Consensus forecast 2015 gold price average: DOWN

Posted on 30 January 2015 by VRS  |  Email |Print

Gold on Thursday plunged more than $30 an ounce as eurozone troubles fade from headlines and the focus shifts to US fundamentals, the rampant dollar and a likely June rise in interest rates.In heavy trade of more than 22m ounces by lunchtime in New York, gold for delivery in April fell over $35 an ounce or 2.8% from Wednesday’s close hitting a low of $1,251.84 an ounce – the lowest in two weeks and the worst trading day in more than a year.
The metal is still trading up nearly $70 or almost 5.5% in 2015, but is down sharply from an intra-day high of $1,307 hit last week. Gold’s gains this year have been ascribed to safe haven buying amid currency turmoil, a slowing global economy, the continuing fallout of the collapse in oil prices and a crisis in the Eurozone………………………………………..Full Article: Source

Physical gold demand likely positive for price in 2015: GFMS

Posted on 30 January 2015 by VRS  |  Email |Print

Underlying physical demand is starting to pick up in 2015 and will “give the market longer-term ballast” although more headwinds remain before a return to a bull market, analytical company GFMS said Thursday. In conjunction with Thomson Reuters, GFMS said in its Gold Update 2 report that professional investors are absent as the dollar “remains king. Fresh professional investment is unlikely much before there is clarity on the Fed’s timing over rate hikes.”
Continued monetary easing in Europe, Japan and China will support the dollar in the medium term, pointing away from gold investment, “especially as US equities, on an historical multiple at least, are not over-extended.” It also cautioned that recent strength in the gold price, which has been as high as $1,307/oz so far in 2015, has been driven by short-covering, not fresh long positioning………………………………………..Full Article: Source

Russia buys record amounts of gold

Posted on 30 January 2015 by VRS  |  Email |Print

Russia accounted for about one-third of central banks’ gold purchases last year as the country spent more on the metal than at any time since the break-up of the Soviet Union amid escalating tensions with the west and a collapse in the value of the rouble.
Central banks around the world bought a net 461 tonnes of gold in 2014 — 13 per cent higher than the previous year and the second-highest level since the collapse of the gold standard in 1971 — as they continued to diversify their currency reserves following the financial crisis. They have added 1,800 tonnes to their holdings in the past six years………………………………………..Full Article: Source

Gold Caps for Biggest Drop Since 2013 as Silver Plummets

Posted on 30 January 2015 by VRS  |  Email |Print

Gold futures fell the most in 13 months and silver posted the biggest plunge since June 2013 as signs of a robust U.S. labor market cut demand for haven assets. The two most-traded gold options were bets on further declines, and prices for the contracts doubled. Aggregate futures trading was 79 percent above the 100-day average for this time of day, with silver 70 percent higher, data compiled by Bloomberg show.
The fewest Americans in almost 15 years filed applications for unemployment benefits in the week ended Jan. 24. Economic activity “has been expanding at a solid pace,” Federal Reserve officials said in a statement on Wednesday………………………………………..Full Article: Source

Growth in China’s nonferrous metals consumption seen to shrink further

Posted on 30 January 2015 by VRS  |  Email |Print

The growth rate of China’s consumption of nonferrous metals will dip into the single-digit range in 2015 and is expected to fall further in coming years due to the structural challenges facing the sector, Shaanxi Magnesium Industry Group said Thursday, January 29.
The group in a report said surplus supply in the aluminum and copper segments were among the key challenges. The “wave-style” expansion of consumption seen in recent years has ended and traditional markets have become saturated amid the emergence of new technologies, new products and new industry and commercial modes, the group said………………………………………..Full Article: Source

Is Aluminum the New Doctor Copper?

Posted on 30 January 2015 by VRS  |  Email |Print

When you’re ill, it often pays to get a second opinion. For many years now, investors have turned to ‘Doctor Copper’ for an indication as to the health of the global economy. The red metal is used in everything from construction to white goods to kitchenware, and so it’s seen as a pretty accurate indicator of economic health.
But some argue copper’s lost its mojo. According to Eugen Weinberg, head of commodity research at Commerzbank, all the red metal tells us about is the state of some large emerging markets, and, more specifically, China. It may even be in danger of going the way of the Baltic Freight Index – a previous barometer for trade activity based on transportation rates that has fallen out of favor (and was replaced by the Baltic Dry Index)………………………………………..Full Article: Source

Chile trims copper prices expectations for 2015

Posted on 30 January 2015 by VRS  |  Email |Print

The Chilean Copper Commission, known as Cochilco, on Thursday revised downward its expectations for the average copper price in 2015, to $2.85 a pound from the $3.00 a pound it forecast in October. Chilean copper production is expected to be 6 million tons this year, down from the 6.23 million tons Cochilco projected in October.
Chile is the world’s largest copper producer and each one-cent increase in the price of the red metal represents more than $40 million in additional government revenue………………………………………..Full Article: Source

ETF assets tipped to double by 2020: Report

Posted on 30 January 2015 by VRS  |  Email |Print

Exchange-Traded funds (ETFs), already popular among investors big and small, are set to grow dramatically by 2020, a new report has found. Since they emerged as an asset class two decades ago, ETFs, which track stock indices or other baskets of securities and trade like stocks, have been winning investors over.
They offer transparency and lower costs than mutual funds. ETFs hold more than US$2.6 trillion (S$3.5 trillion) of assets globally, and that is set to reach US$5 trillion or more by 2020, the PwC report said………………………………………..Full Article: Source

Commodity ETFs May See More Pain Before Things Get Better

Posted on 30 January 2015 by VRS  |  Email |Print

Commodity exchange traded fund investors may have to hunker down over the short-term, but the commodities market could turn around further out. Over the past year, the GreenHaven Continuous Commodity Index Fund which follows an equal-weight methodology that covers 17 commodity positions, has declined 13.9% while the PowerShares DB Commodity Index Tracking Fund, which tracks a broad basket of the 14 most heavily traded commodities and uses an optimum yield methodology that tries to limit the negative effects of contango, has decreased 30.5%.
Goldman Sachs remains pessimistic over the commodities outlook for the next three months but believes things could turn around over the next 12 months, the Wall Street Journal reports………………………………………..Full Article: Source

Australian dollar tumbles as global currency war expands

Posted on 30 January 2015 by VRS  |  Email |Print

The Australian dollar plunged against the greenback in the early hours of Friday morning, as central banks around the world move to ease monetary policy against the backdrop of potential US interest rate rises. Shortly after 9am the Aussie is fetching US77.67¢, down from US78.75¢ at Thursday’s local close and US78.86¢ on Thursday morning. It fell as low as US77.20c overnight.
The slide in the Australian dollar was accompanied by falls for the New Zealand dollar and Turkish lira as bets increase that the three nations will be next in line to cut interest rates. The US currency gained versus most major counterparts as the fewest Americans in almost 15 years filed applications for unemployment benefits, a day after the Fed raised its assessment of the economy and played down low inflation………………………………………..Full Article: Source

Currency manipulation: not that one again

Posted on 30 January 2015 by VRS  |  Email |Print

It’s been a few years since the guns of the international currency wars fell silent, or at least until the main combatants turned most of their attention to other things. With the strength of the dollar, however, the issue might easily re-emerge. If it does, even if the eurozone and Japan are the main initial targets, emerging markets are unlikely to be able to sit out a renewed burst of hostilities.
Certainly the discontents in the US Congress who want to insert enforceable rules against currency manipulation into the Trans-Pacific Partnership have several emerging markets and particularly China in mind, even though China is not currently a TPP member………………………………………..Full Article: Source

Labor Party has put carbon tax back on the agenda

Posted on 30 January 2015 by VRS  |  Email |Print

Here’s a simple question for Andrew Leigh, Bill Shorten and the ALP: How much will electricity prices rise under your proposed carbon tax? On this page this week, Leigh advocated returning to a carbon tax. Of course it travels under the pseudonym of an emissions trading scheme or a carbon price, but whatever you call it, its purpose is to raise electricity, gas and refrigerant prices, among others.
Call it what you will, Bill, but at its core it’s an electricity tax that hurts business and families. Curiously, neither Bill nor Andrew will tell Australians how much they intend to increase electricity and gas prices, dodging the most important issue for 2015………………………………………..Full Article: Source

Who will clean up global commerce?

Posted on 30 January 2015 by VRS  |  Email |Print

Few play the system better than big business. Whether it’s getting the lowest prices from suppliers, convincing us to buy their stuff or keeping the taxman at bay, corporations reign supreme. But what happens when the system starts playing them? Corporate capitalism is getting closer and closer to finding out.
By putting profits first and the planet second (at best), businesses are helping accelerate many of the most concerning “megatrends” of our age. Corporations might not be overly concerned about climate change, resource scarcity, food insecurity and so on today, but you can bet they will be tomorrow when these planetary problems set their profits plummeting………………………………………..Full Article: Source

Goldman puts end date on commodities slump

Posted on 29 January 2015 by VRS  |  Email |Print

The light at the end of the tunnel for commodities may be but one year away. Goldman Sachs is sceptical that there will be any gains for commodities over the next three months, but is much more optimistic there will be gains over the next 12 months. In the short-term, things could get worse.
“Despite the large declines in commodity prices, we see risks as still skewed to the downside over the near-term,” Goldman Sachs advised. Much is down to oil. The plunge in oil prices will weigh on investment indexes based on commodities in the short-term. Until oil settles or starts to rise, there will be downward pressure in copper and gold markets, according to the bank………………………………………..Full Article: Source

Will commodity continue to slide?

Posted on 29 January 2015 by VRS  |  Email |Print

Bloomberg Commodity Index has declined by 28% from April 2014 till date. Commodities were underperformers last year while the same is expected to continue this year. The Bloomberg commodity index is hit hard by tumbling oil prices followed by metals. The fall in oil started with geo political concerns in Middle East dragging prices from the high of $115 to $70.
With falling oil prices to its lowest level OPEC continues to stand on its production cost which made it eventually weaker, quoting at $45 per barrel, at six year low Metals faltered on the back of slow down in China. China which is Worlds second largest economy and largest consumer of metals was hit hard in manufacturing sector which came below the level 50 separating it from expansion and contraction………………………………………..Full Article: Source

China insolvencies to hit commodities

Posted on 29 January 2015 by VRS  |  Email |Print

Insolvencies are to increase in China, Hong Kong and Taiwan this year, with traders facing greater challenges than ever in accessing finance. Euler Hermes, the Paris-based trade credit insurance provider, warned that it expects the number of Chinese companies filing for bankruptcy to increase by 5% in 2015, with a similar rise predicted in Hong Kong.
“The credit conditions are already tight, especially for any projects financed by non-bank institutions. The regulatory bias is likely to be towards tightening further to contain financing risk,” the company’s senior economist for Asia, Mahamoud Islam, tells GTR………………………………………..Full Article: Source

Barclays, Goldman forecast bearish first half for oil prices

Posted on 29 January 2015 by VRS  |  Email |Print

Barclays Plc and Goldman Sachs Group Inc issued even more bearish forecasts for oil prices on Wednesday, predicting no significant recovery in the first half of 2015.
Barclays slashed its 2015 Brent crude oil price forecast to $44 a barrel from $72, while Goldman said it expected prices for West Texas Intermediate crude to trade close to $40 per barrel for most of the first half of 2015………………………………………..Full Article: Source

Crude oil bottom seen at $40: CNBC Fed survey

Posted on 29 January 2015 by VRS  |  Email |Print

Crude oil’s free fall may be close to bottoming, according to CNBC’s January Fed Survey. Wall Streeters in the survey forecast that the lowest price for WTI crude in the current downturn will be $40 on average per barrel, about $6 below its current price.
Among the 33 economists, money managers and investment strategists surveyed, the range of bottom estimates was $25 to $48. Crude oil futures have tumbled nearly 60 percent from the recent peak of $107 in June………………………………………..Full Article: Source

Former US Official Says OPEC Can No Longer Control Oil Price

Posted on 29 January 2015 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (OPEC) can no longer control the oil price, as there are new independent markets, such as those in Russia and the United States, Charles McConnell, a former Obama administration energy official told RIA Novosti.
“Forty years ago they [Middle Eastern oil producers] formed a cartel. And they controlled the price, and the entire world was dependent. And control from the Middle East is no longer true. The world has changed — Russia has and produces significant volumes of oil, as does the US and Canada,” he stated………………………………………..Full Article: Source

Iraq oil surge to fan OPEC rivalry that triggered slump

Posted on 29 January 2015 by VRS  |  Email |Print

The battle for customers among OPEC members that helped trigger oil’s collapse is about to escalate. Iraqi crude production is climbing from a 35-year high as it adds growing Kurdish supplies to its exports, while southern oilfields remain unscathed by Islamic State militants. Finding buyers for the new output means offering more attractive terms than rivals in the Organization of Petroleum Exporting Countries, say Citigroup, DNB and Barclays.
Oil’s biggest slump in six years gained momentum in October as a wave of discounts by Middle Eastern producers signaled OPEC members were intent on defending market share against booming shale output from the U.S. The price of Saudi crude for Asian buyers was cut to the lowest in at least 14 years last month, a move followed by Iraq, Kuwait and Iran………………………………………..Full Article: Source

Where Is All That Excess Oil Going?

Posted on 29 January 2015 by VRS  |  Email |Print

There’s a term traders use when the price of a commodity like oil has fallen because of oversupply but seems guaranteed to rise again. It’s a market that’s “in contango,” says Brenda Shaffer, an energy specialist at Georgetown University. “It almost sounds like a sort of great oil dance or something.”
And Shaffer says that some oil speculators see an oil market that is in contango in a major way. “Some people out there think that oil is going to get more expensive so it’s worthwhile now to buy oil, lock it in, and have those supplies, have them stored and have them available to sell a few months down the line, if you actually believe it’s going to go up,” she says………………………………………..Full Article: Source

Oil’s price slump may have lasting impact on non-OPEC countries

Posted on 29 January 2015 by VRS  |  Email |Print

Crude prices dropped sharply Wednesday as global producers pump surplus supply into the world’s bulging storage tanks, resulting in record-high inventories in the United States. As the market focuses on the booming U.S. industry for signs of slowdown, analysts say the price slump may have a more pronounced and longer-lasting impact outside of North America, particularly in non-OPEC countries such as Russia, Mexico and Brazil.
Fuelled by $100 (U.S.)-a-barrel prices, crude production has grown sharply in the past two years among countries outside the Organization of the Petroleum Exporting Countries, after being in the doldrums – other than in Canada and the United States – following the price collapse of 2008-09………………………………………..Full Article: Source

LBMA forecasters see gold averaging $1,211/oz this year

Posted on 29 January 2015 by VRS  |  Email |Print

The gold price will remain broadly flat in 2015 after a 28-percent fall last year, according to 35 bullion market analysts polled by the LBMA, but silver, platinum and palladium should rise as much as 5.6 percent. In gold, Ross Norman of Sharps Pixley is the most bullish analyst, forecasting an average price $1,321 per ounce this year, while Adam Myers of Credit Agricole the most bearish with a prediction of $950.
Averaging out the 35 forecasts, gold will trade at a mean of $1,211 per ounce and in a range of $1,085-1,356 this year, the LBMA said in its Forecast 2015 report. “Factors which are likely to restrain gold prices in 2015 include[e] the possible strengthening in the US dollar, interest rate hikes by the Fed in the second half of 2015, QE programmes in Europe and a weak oil price reducing gold’s attraction as a hedge against inflation,” it said……………………………………….Full Article: Source

Spot gold prices lower after verdict

Posted on 29 January 2015 by VRS  |  Email |Print

Spot gold prices were little changed on Wednesday after the Federal Reserve signaled that it would remain patient when it comes raising interest rates.
In a statement after its latest policy meeting, the Fed made clear that no rate increase is imminent. Chair Janet Yellen said after last month’s meeting that by saying it would be “patient,” the Fed was signaling there would be no rate increase for at least two meetings………………………………………..Full Article: Source

Industrially exposed precious metals are looking attractive relative to Gold

Posted on 29 January 2015 by VRS  |  Email |Print

The ECB’s commitment to create inflation, if successful, should benefit gold but it could be more beneficial to the other more industrial cyclical commodities and precious metals , most notably platinum, said ETF Securities.
Despite nearing recession, European auto sales increased 1.4% in 2014 which was the first annual increase since 2011 (see chart on page 2). Pent up demand appears at play as vehicles last only so long. Platinum is the primary catalyst for diesel vehicle emission controls and Europe is the world’s largest diesel market………………………………………..Full Article: Source

Zinc and nickel price upside ‘imminent’: Clarus

Posted on 29 January 2015 by VRS  |  Email |Print

There has been a lot of bullish talk in the metals community about zinc and nickel over the past couple of years, as many insiders believe those commodities are poised for a rally. You can include Clarus Securities analyst Mike Bandrowski in that group. He published a detailed note on Tuesday that suggests zinc and nickel have “imminent” upside and will perform very strongly over the next two years as inventories disappear.
In the case of zinc, Mr. Bandrowski noted the market is already in deficit, and that deficit should get bigger following the closures of the Lisheen and Century mines this year. He said exchange inventories have fallen by more than half over the last two years and should be at “critical” levels later in 2015………………………………………..Full Article: Source

Copper Rises

Posted on 29 January 2015 by VRS  |  Email |Print

Copper rose for the second time in three days amid speculation that the metal’s slump to a five-year low will encourage miners to reduce output, pointing to tighter supplies. Freeport-McMoRan Inc., the world’s largest publicly traded producer, said this week it expects to spend about 20 percent less on mining and energy projects this year than forecast in October.
Rio Tinto Group, the second-biggest global mining company, said Jan. 20 its production of the metal fell in the three months through Dec. 31. Copper prices are trading near the lowest since 2009………………………………………..Full Article: Source

Midas touch as ETF inflows grow

Posted on 29 January 2015 by VRS  |  Email |Print

Exchange-traded products focusing on gold and oil have seen significant inflows as investors shy away from the European equity markets, figures from ETF Securities has shown. According to data from ETF Securities, more than $800m (£527.36m) has flowed into commodity-based ETPs already this year, compared with $1.1bn over the whole of 2014.
Rima Haddad, head of UK institutional sales for ETF Securities, said more investors had been nervous about the macro picture, especially the uncertainty over Europe and a possible tailing off of growth in the UK and US………………………………………..Full Article: Source

India: Commodity Exchange Turnover Declines by 43%

Posted on 29 January 2015 by VRS  |  Email |Print

The turnover of commodity exchanges declined 43 per cent to Rs 48.54 lakh crore till January 15 of the current fiscal year, due to poor participation, according to the Forward Markets Commission (FMC). These exchanges had made a business of Rs 85.28 lakh crore between April and January 15 of the last financial year.
According to the latest data released by commodity markets regulator FMC, there was fall in business in almost all commodities. The maximum decline in turnover was reported in bullion, metals, energy and agricultural commodities………………………………………..Full Article: Source

Commodities collapse could wipe out entire year’s profits at Standard Chartered

Posted on 29 January 2015 by VRS  |  Email |Print

Macquarie analysis predicts that 1980s-style oil price slump and default spike will mean huge losses at under-pressure bank. Standard Chartered faces losing a year’s profits from the recent collapse in commodity prices as loan defaults spike in a repeat of the 1980s crisis, according to the Australian bank Macquarie.
The Asia-focused British bank is believed to be one of the biggest losers from the slump in oil, iron ore and copper prices, with $61bn (£40.2bn) of exposures to producers and traders………………………………………..Full Article: Source

Commodities and currencies: the uneven link

Posted on 29 January 2015 by VRS  |  Email |Print

It’s a common assertion on Wall Street: when the dollar strengthens, commodity prices soften. The logic makes sense. Most internationally traded commodities are priced in US dollars, as are benchmark futures such as Brent crude oil. So, a rise in the dollar increases the value of the same number of tonnes, barrels or bushels, all else equal.
In the real world, it’s not that simple and anyone betting a bullish dollar outlook will uniformly pressure commodities is asking for trouble. Some commodities are more sensitive to the dollar than others. A case in point is gold. Marketed as a hedge against a depreciating dollar, it has gained nearly 3 per cent in the past year, even as the dollar index rose 17 per cent………………………………………..Full Article: Source

China’s yuan breaks into the world’s top five as payment currency

Posted on 29 January 2015 by VRS  |  Email |Print

China’s yuan broke into the top five as a world payment currency in November, overtaking the Canadian dollar and the Australian dollar, global transaction services organisation SWIFT said on Wednesday.
After nearly a year firmly positioned at seventh spot, the yuan reached a record high share of 2.17 percent in global payments by value and is in sight of the Japanese yen, which has a share of 2.69 percent. The U.S. dollar, euro and British pound remain the top three world payment currencies………………………………………..Full Article: Source

The Currency Wars Are Heating Up

Posted on 29 January 2015 by VRS  |  Email |Print

The thing about currency wars is that somebody has to lose them. Singapore’s was merely the latest in a long list of central banks seeking to use the foreign exchange market as a monetary policy lever when overnight it announced it was reducing the pace at which it will allow the Singaporean dollar to appreciate.
Singapore’s move follows on the heels of rate cuts by the Indian, Canadian and Turkish central banks and the European Central Bank’s huge round of bond purchases announced last week. Not to mention the Bank of Japan ’s warning that it could seek to expand its own already vast quantitative easing program………………………………………..Full Article: Source

Climate change: MEPs discuss roadmap to Paris conference

Posted on 29 January 2015 by VRS  |  Email |Print

The roadmap to the 21st UN climate conference, in Paris (France) in December, was debated by MEPs, the Latvian Presidency and Commissioner Arias Cañete on Wednesday. The conference of parties (COP21) to the UN Convention on Climate Change aims to deliver a worldwide climate agreement to replace the Kyoto Protocol.
During the debate, MEPs emphasized the need to step up financing for climate mitigation and adaptation, and also EU diplomatic efforts to persuade the EU’s partners to commit themselves to ambitious climate mitigation efforts………………………………………..Full Article: Source

Goldman Downgrades Commodity Outlook as Energy, Metals Tumble

Posted on 28 January 2015 by VRS  |  Email |Print

Goldman Sachs Group Inc. downgraded its three-month commodity outlook to underweight as mounting global supply gluts sent energy and metals prices tumbling this year. There is a greater risk that raw material prices may drop in the near term than rise, Goldman strategists and analysts including Christian Mueller-Glissmann, Peter Oppenheimer and Jeffrey Currie wrote in a research report.
The Bloomberg Commodity Index of 22 components reached a 12-year low this week, with crude oil, hogs and copper leading losses in 2015. Inventories of grains, metals and energy are rising after a decade-long bull market for commodities spurred miners, drillers and farmers to increase production………………………………………..Full Article: Source

China commodity trade data show winners are scarce: Russell

Posted on 28 January 2015 by VRS  |  Email |Print

China’s detailed commodity trade figures for 2014 do much to confirm that the trend has changed to higher import volumes being dependent on lower commodity prices, but there are a few notable exceptions.
Major commodities such as crude oil, iron ore and copper all showed increased imports on the back of falling prices, illustrating the changed dynamic in commodity markets whereby supply became the dominant driver of prices………………………………………..Full Article: Source

Oil price ‘too low’: Saudi Aramco chief

Posted on 28 January 2015 by VRS  |  Email |Print

World oil prices have fallen too far, the president of state-owned energy giant Saudi Aramco said, insisting that market forces, not deliberate production cuts, must take their course. “It’s too low for everybody,” Khalid al-Falih told a conference. “I think even consumers start to suffer in the long term.”
Falih also said American shale oil production is important for the world’s long-term energy future and Saudi Aramco has marked an additional US$7 billion for its own shale projects. Saudi Aramco is the world’s largest oil company in terms of crude production and exports………………………………………..Full Article: Source

Budget: Iraq lowers oil price forecast to $55

Posted on 28 January 2015 by VRS  |  Email |Print

Falling oil prices forced Iraq’s cabinet to revise its draft 2105 budget, trimming its forecast for oil to $55 a barrel from $60. It trimmed spending to 119 trillion Iraqi dinars ($105 billion) for 2015. Even so, the budget deficit will rise to 25 trillion dinars.
The decision to lower the forecast oil price may satisfy some MPs who saw the previous estimate as unrealistic, but Brent crude is trading still lower at under $50, down from $115 in June. Prime Minister Haider Al-Abadi said last week he feared lower revenues from falling global oil prices could hurt Iraq’s military campaign against Islamic State………………………………………..Full Article: Source

World price of oil - where is OPEC now?

Posted on 28 January 2015 by VRS  |  Email |Print

The world price of crude oil, which has been around 100 dollars a barrel for the past 6 years, has suddenly collapsed and is now tending below 50 dollars. Many are trying to understand this rapid decrease and have proposed various explanations.
Of course, the ready explanation is simply in terms of supply and demand; but this just begs the question. The supply of oil has increased sharply in recent months – mainly because of the prolific production of shale oil in the United States, thanks to the technologies of fracking and horizontal drilling. In fact, the US is now the world’s largest producer of crude oil and US imports of oil have dropped to the lowest level in 10 years………………………………………..Full Article: Source

Why $50 Oil Won’t Last

Posted on 28 January 2015 by VRS  |  Email |Print

In the past few weeks I have received numerous questions about the role of a “drop in demand” in the oil price decline. These questions are driven by many stories in the media that have referenced a drop in demand. There are two primary reasons given for this so-called demand drop. One is that years of high oil prices have resulted in reductions in consumption through conservation and improvements in vehicle fleet efficiency.
The second reason is due to the strengthening dollar, oil has become more expensive for many countries since oil is generally traded in dollars. There are elements of truth behind both reasons. There has indeed been reduced oil consumption in recent years in most developed regions of the world. It is also true that the dollar has strengthened against many currencies………………………………………..Full Article: Source

Hedge funds snap up gold, but where’s it heading?

Posted on 28 January 2015 by VRS  |  Email |Print

Hedge funds are snapping up gold, pushing their net long positions to levels not seen for almost two years. Meanwhile, analysts are split over what 2015 will hold for the precious metal. Speculative investors bought gold for a fourth successive week at a “strong pace” upping long positions. Silver has also been bought for close to 12 weeks, but positioning remains “far from stretched”, according to data from Bank of America Merrill Lynch.
The bank said its indicators suggest investors remain bullish for precious metals, a view which is supported by a number of investment banks and economists, but targets for where the metal will end up by year end differ dramatically………………………………………..Full Article: Source

Turkey is microcosm of int’l gold market: Council

Posted on 28 January 2015 by VRS  |  Email |Print

Gold plays a huge role in Turkish consumers’ lives and the economy, making the country the world’s fourth largest gold consumer, says a new report by the World Gold Council. At an average of 181 tons per annum over the past 10 years, Turkey is the world’s fourth largest consumer of gold, accounting for around 6 percent of global consumer demand.
The “Turkey: Gold in Action” report, published on Jan. 22, described Turkey as a “microcosm of the global gold market” as it is home to the entire gold value chain from mining and refining, to jewelry design and investment………………………………………..Full Article: Source

Russia buys more gold reserves, Netherlands steady

Posted on 28 January 2015 by VRS  |  Email |Print

Russia extended its buying spree of gold to a ninth straight month, and the price of gold rose for the first time in five months, data from the International Monetary Fund showed on Tuesday. The global financial institution later on Tuesday confirmed the Netherlands did not increase its bullion holdings in December, contrary to the IMF’s earlier report that the bank had raised gold holdings for the first time in 16 years.
The Dutch central bank, the world’s ninth-biggest official sector gold holder, has kept its holdings unchanged since late 2008. The bank earlier on Tuesday denied that it bought more gold last year………………………………………..Full Article: Source

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