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Commodities Briefing - Archive | March, 2015

Commodity Prices Receive Boost From Fed Uncertainty

Posted on 31 March 2015 by VRS  |  Email |Print

A pause in the dollar’s ascent has bolstered many commodities markets, lifting prices on raw materials ranging from copper to orange juice. An eight-month rally in the greenback stalled earlier this month after the Federal Reserve signaled it wasn’t in any hurry to raise interest rates.
Many short-term commodity traders read that as a buy signal. Their logic: A weaker dollar makes dollar-denominated commodities less expensive for consumers outside the U.S. A sustained fall in the dollar could stoke global demand, keeping prices buoyant………………………………………..Full Article: Source

Commodity investors are bailing at the fastest pace on record

Posted on 31 March 2015 by VRS  |  Email |Print

Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. U.S. exchange-traded funds linked to broad baskets of raw materials saw a net outflow of $919 million over the first three months of the year, the most of any quarter since the securities were created in 2006, data compiled by Bloomberg show.
Bank of America Corp. says ample supplies have unleashed price wars, and Goldman Sachs Group Inc. predicts a 20% drop for commodities already near a 13-year low. Morgan Stanley and Societe Generale SA also have cut forecasts for a whole range of items. Rising supplies created bear markets over the past year as drillers unlocked more oil and natural gas, copper mines expanded and farmers harvested record corn and soybean crops………………………………………..Full Article: Source

What Happens to Global Commodities Once China is No Longer the World’s Factory?

Posted on 31 March 2015 by VRS  |  Email |Print

For many decades, China was the world’s default factory. It sucked up commodities from all four corners of the globe to power its factories. These factories then go on to crank out products that developed economies far and wide loved to consume. That was the old arrangement, and that’s why China’s annual GDP growth rate was nothing short of phenomenal.
Now, the official growth rate of China has come down to earth. Of course, it hasn’t crashed or led to a shrinkage of the Chinese economy. Instead, China is now growing at a normal rate. It’s still quite impressive and definitely enviable but considering the fact that China is still a relatively less developed country compared to the United States or the United Kingdom, it’s understandable why China’s growth rate is impressive compared to these more mature economies. Expect that to continue for quite sometime………………………………………..Full Article: Source

Why This Commodities Bust Could Test Investor Patience

Posted on 31 March 2015 by VRS  |  Email |Print

Commodities sure have a way of touching all of the major asset classes. With that said, let’s take a look at one of the benchmark commodity indices, the Reuters/Jefferies CRB Index, to see where we stand and if the pain of the 34% decline since June 2014 is behind us. All of course, from a technical perspective.
Why the CRB Commodities Index? In short, following the CRB Index can give investors a sense of the broad spectrum of the commodities market as it is composed of Agricultural (41%), Energy (39%), Base/Industrial Metals (13%), and Precious Metals (7%) commodities. To begin with, let’s take a look at the long-term monthly chart to see if we have hit bottom or if we still have to leave the question “How low is low?” open………………………………………..Full Article: Source

The global oil price drop may last for the next couple decades, Stanford economist says

Posted on 31 March 2015 by VRS  |  Email |Print

Global oil prices may stay low for the next 10 or 20 years, according to Stanford economist Frank Wolak. The most likely medium-term outcome is $50 to $70 per barrel, according to Wolak. He is the Holbrook Working Professor of Commodity Price Studies in the Department of Economics at Stanford University.

And while geopolitical and environmental issues may unexpectedly arise that turn oil prices upward, Wolak said many factors point to lower oil prices for the foreseeable future. Crude oil prices fell from a high of $115 a barrel in June 2014 to a low of $45 in January of this year. The lower prices have generated ripple effects throughout the global economy………………………………………..Full Article: Source

US battles Opec as oil output growth beats 100 year record

Posted on 31 March 2015 by VRS  |  Email |Print

American drillers increased oil production at the highest rate in a Century in 2014 despite falling prices . Opec’s efforts to slow down the pace of growth of America’s oil industry last year have failed, according to new data which revealed that drillers in the US increased production at the highest rate in more than 100 years.
The US government’s Energy Information Administration (EIA) has said that output increased by 1.2m barrels per day (bpd) last year to reach 8.7m bpd. This is the largest single increase since records began in the early 1900s………………………………………..Full Article: Source

Riyadh dancing in new oil market

Posted on 31 March 2015 by VRS  |  Email |Print

Saudi Arabia is forced to react to changing crude oil market dynamics by offering discounts to its potential clients in Asia, Wood Mackenzie said Monday.
“Saudi Arabia had to cut its price in Asia to ensure its crude oil remained attractive to the region’s refiners,” Wood Mackenzie market analyst Sushant Gupta said in a statement Monday. “Hence, having competitive prices will be an important mechanism that Saudi Arabia would be adopting to secure its market share.”……………………………………….Full Article: Source

How the conflict in Yemen is impacting the oil market

Posted on 31 March 2015 by VRS  |  Email |Print

The worsening conflict in Yemen – which pits rival internal groups backed by Iran against those backed by a Saudi Arabia-led coalition of countries – brings to the fore again the potential such regional flash points have to disrupt world oil trade.
Even before the coalition, which includes the UAE, took direct military action midweek, bombing Iranian-backed Houthi rebel positions, the risks of Yemen’s civil war spreading had been filtering through to the oil market. World benchmark North Sea Brent crude oil had one of its strongest gains this year, rising by more than 7 per cent last Wednesday and Thursday, to US$59.19, before bearish sentiment reasserted itself and Brent plunged $2.78 on Friday to end at $56.41………………………………………..Full Article: Source

Crude pares losses on Iran talks, ends at $48.68 a barrel

Posted on 31 March 2015 by VRS  |  Email |Print

Oil prices fell for the second straight session on Monday as Iran and six world powers negotiated a deal for Tehran’s nuclear program that could end Western sanctions, allowing the OPEC member to ship more crude into an already flooded market.
Officials close to the talks have said progress has been made and many investors believe a deal is in the making. Few expect the talks to end without some sort of agreement. U.S. crude closed down 19 cents at $48.68 a barrel, off an earlier low of $47.61. Brent crude was down 10 cents at $56.31 a barrel after State Department officials said there is a 50/50 chance of a framework agreement with Iran………………………………………..Full Article: Source

Iran nuclear crisis: Six key points

Posted on 31 March 2015 by VRS  |  Email |Print

Over a decade of negotiations over Iran’s nuclear programme come to a head on Tuesday, the deadline for a deal. Here are some of the key points to understanding what the nuclear crisis is all about.
What happens next could have major consequences for the international community and Iran. A long-running dispute over Iran’s nuclear programme has heightened tensions between Tehran and the West, but a deal on Tuesday could bring down diplomatic barriers. Failure, though, could see the crisis turn much worse………………………………………..Full Article: Source

Natixis forecast sees gold price averaging $1,150/oz in 2015

Posted on 31 March 2015 by VRS  |  Email |Print

The gold price could average $1,150 and $1,055 per ounce in 2015 and 2016 respectively as the normalisation of Federal Reserve monetary policy and further currency weakness in Europe and Japan drive the dollar higher, Natixis said in a report released on Monday.
The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first increase will happen in the second half of this year. ……………………………………….Full Article: Source

In 20 years, the world may run out of minable gold

Posted on 31 March 2015 by VRS  |  Email |Print

In another two decades rare commodities may become seriously scarce. According to Goldman Sachs, the world has about 20 years each of known minable reserves of gold diamonds and zinc. Platinum copper and nickel reserves only have about 40 years or less left.
“The combination of very low concentrations of metals in the Earth’s crust, and very few high-quality deposits, means some things are truly scarce,” Eugene King, European metals and mining analyst at Goldman Sachs, wrote in a recent research note. “Gold has been used as a measure of wealth for more than 4,000 years, as the ancient Egyptians soon worked out that gold was not only shiny and heavy, but rare,” he said………………………………………..Full Article: Source

Silver’s outperformance versus gold to stay: Capital Economics

Posted on 31 March 2015 by VRS  |  Email |Print

According to senior analysts at Capital Economics, Silver has risen 8% in dollar terms year-to-date in 2015. During the same period, gold has appreciated only by 1%. This outperformance by silver is expected to continue in 2015 and 2016, noted Julian Jessop, Head of Commodities Research at the London-based economic research consultancy.
Gold had witnessed continuous upward journey for seven days in a row. However, the geopolitical tensions surrounding Saudi attack on Yemen, worries over Greece debt situation and the shaky US dollar had resulted in sharp rise in gold prices. However, the prices of the yellow metals settled under the $1,200 per Oz on account of strong profit booking. Overall, gold prices ended higher during the week……………………………………….Full Article: Source

Natixis forecasts LME aluminium to average $1,840/mt in 2015

Posted on 31 March 2015 by VRS  |  Email |Print

French bank Natixis said Monday that it expects the LME aluminium price to average around $1,840/mt in 2015, moving up to trade higher in 2016 and average around $2,000/mt. “Our analysis of the aluminium market suggests a tug of war over the coming years between positive and negative factors,” the bank said in its metals review for the first half of 2015.
Bullish factors include: strong demand driven by rapid growth of the automotive sector, a shortage of bauxite that is expected to raise the cost of alumina, limited excess supply from China, and a shift away by producers from the expansion of primary aluminium supply to focus instead on captive power, bauxite/alumina and value-added products………………………………………..Full Article: Source

Iron Ore Hovers Close to $US50, Hits Six-Year Low

Posted on 31 March 2015 by VRS  |  Email |Print

Iron ore just can’t stay out of the news. The commodity has hit another post-financial crisis low—and a record low—when it hit $US52.90 overnight. This was down 2.2 percent from its prior close of $US54.10 a tonne.
Although analysts believe the commodity is reaching the bottom of its trading, and boy, do the rest of us hope so too, investors continue to worry about the oversupply in the market, which shows no sign of lessening. The fall is the second straight six-year trough for the commodity………………………………………..Full Article: Source

Silver ETFs Outshining Peers

Posted on 31 March 2015 by VRS  |  Email |Print

While the Fed’s March meet led to a stall in the greenback’s north-bound march, it spread joy within broad-based commodity investing. Most investors focused in on gold taking cues from the Fed’s dovish comments over rate rising issues. Another corner of the precious metal world -silver - has also done quite well lately.
The white metal has seen extremely solid trading post Fed meet, and has actually breezed past not only the yellow metal, but also the entire precious metal space. The Fed slashed the U.S. economic growth projection (considering the central tendency method) for 2015 from 2.6−3% (guided in December) to 2.3−2.7%. The growth projections for 2016 and 2017 were also narrowed to 2.3−2.7% and 2.0−2.4%, respectively, from 2.5−3% and 2.3−2.5%……………………………………….Full Article: Source

Oil ETFs: Look Before Leaping

Posted on 31 March 2015 by VRS  |  Email |Print

The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil, and the United States Brent Oil Fund (NYSEArca: BNO) are down 15.8% and 8.1%, respectively, year-to-date after falling an average of 45.5% last year.
However, USO and some other futures-based oil exchange traded products present problems to buy-and-hold investors beyond falling oil prices. Structural issues, including the need for USO to constantly roll into new futures contracts has consistently hampered returns for investors opting to hold these products for long time frames………………………………………..Full Article: Source

Cotton, the other globally glutted commodity

Posted on 31 March 2015 by VRS  |  Email |Print

The price of a given commodity is falling, rapidly. A key market has way more of the stuff than it used to. Producers are panicking and trying to shift resources to avoid selling into the glut—not to mention the strong US dollar is making it harder for manufacturers around the world to import what they need.
That’s a scenario that has been playing out a lot recently, as a global economic slowdown (paywall) makes it harder for countries around the world absorb all the natural resources getting plucked and mined from the earth. One of the latest examples: cotton. And the key market stuffed to the brim with it? China………………………………………..Full Article: Source

Hedge funds reduce bearish stance on ags - a little

Posted on 31 March 2015 by VRS  |  Email |Print

Hedge funds reduced, a little, their bearish bets on agricultural commodities, but remained unusually downbeat on price prospects, particularly for the likes of sugar and arabica coffee. Managed money, a proxy for speculators, cut its net short position in futures and options in the top 13 US-traded agricultural commodities, from cotton to cattle, by nearly 24,000 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission regulator.
It was only the second week of 2015 in which hedge funds’ bets on rising crop prices had exceeded those on price falls. Nonetheless, hedge funds remained, overall, net short - meaning that short bets, which benefit when prices fall, exceeded long positions, which profit when values rise………………………………………..Full Article: Source

Use of China’s Yuan as Global Payment Currency Falls

Posted on 31 March 2015 by VRS  |  Email |Print

China suffered a second setback in as many weeks in its drive to boost the use of its currency abroad, even as the country steps up efforts to open up its capital account. The use of the Chinese yuan as a currency for world payments fell two places to seventh in February, with a share of 1.81%, according to the Society for Worldwide Interbank Financial Telecommunication, or Swift, in a report Monday.
That compares with a record-high 2.17% in December, according to the organization that is used by banks to coordinate international transactions. The 20.4% drop compared with January is a reversal from November when the yuan broke into the top five of world payment currencies last year, overtaking the Canadian dollar and Australian dollar by value………………………………………..Full Article: Source

Currency Wars: The Swiss Case

Posted on 31 March 2015 by VRS  |  Email |Print

This past January, the Swiss National Bank caused panic in the world of central banking when it announced that it would no longer hold the euro at a fixed exchange rate with the Swiss franc. On January 14, one euro was equivalent to 1.2 Swiss francs; after the statement was made the following day, the euro drastically dropped to just 0.85 to the franc.
Switzerland’s economy is highly reliant on its exports, meaning that a higher value of the franc over foreign currency means losses for the country and its industries. The removal of the peg did indeed cause huge losses for hedge fund holders across the world, and it also triggered the start of the collapse of the Swiss stock market………………………………………..Full Article: Source

South Korea’s green initiative meets resistance

Posted on 31 March 2015 by VRS  |  Email |Print

South Korea launched Asia’s first nationwide carbon emissions trading scheme in January. It is part of the government’s efforts to reduce greenhouse gas emissions 30 per cent by 2020.
The creation of the world’s second-largest cap-and-trade system, after the European Union Emissions Trading Scheme, created a lot of excitement around the world. Locally, concerns about the lack of trading and the government’s top-down approach are mounting. Critics question whether the country can possibly meet its ambitious emissions reduction target………………………………………..Full Article: Source

The Carbon Brief Interview: Tim Yeo

Posted on 31 March 2015 by VRS  |  Email |Print

Tim Yeo has been the Conservative MP for South Suffolk since 1983 and is the current chair of the Commons’ Energy and Climate Change (ECC) committee. Yeo served as the minister for environment and countryside from 1992-3. Yeo is standing down as an MP at the general election in May after being deselected by his local party members in 2013.
In his final in-depth interview before stepping down as the chair of the ECC select committee, Yeo discusses… Fracking: “By the late 2030s we won’t need to be fracking in this country, but for the time being, I think it’s better than not doing so.”……………………………………….Full Article: Source

Goldman slaps JPMorgan in commodities as rivals retreat

Posted on 30 March 2015 by VRS  |  Email |Print

Goldman Sachs earned back its place as the largest bank by commodities revenue as competitors including JPMorgan Chase scaled down or abandoned the raw materials business. JPMorgan, which made the most money from commodities among the top 10 investment banks in 2013, ranked second last year and Morgan Stanley was third, according to a report published Friday from Coalition, a London-based business analytics firm.
JPMorgan sold part of its physical commodities business to trading house Mercuria Energy Group last year, while Barclays, Deutsche Bank and Credit Suisse retreated amid regulatory scrutiny and pressure from lawmakers. The Bloomberg Commodity Index of 22 raw materials slumped 17 per cent in 2014, a fourth annual drop, as energy prices plunged………………………………………..Full Article: Source

Oil price in 2015 not to exceed $60 per barrel – EBRD

Posted on 30 March 2015 by VRS  |  Email |Print

In 2015, world oil prices will range within $50-$60 per barrel, a leading economist of the European Bank for Reconstruction and Development (EBRD), Dmitry Gvindadze said. “In my opinion, this year, oil prices will remain at the same level, i.e. within the range of $50-$60 per barrel,” Gvindadze said.
“But it is very difficult to talk about what will happen next year or in two or three years, as there are many factors that affect the price of oil. I mean such fundamental reasons as the volumes of oil consumption, new technologies, which are used in oil production, shale gas, and so on.” Oil prices have started to drop since July 2014 when they fell from $105 to $100 and then to $80 per barrel. After OPEC member states refused to reduce the quota for oil production in November, the decrease in oil prices accelerated. The average price for oil has varied within $50 per barrel since early 2015………………………………………..Full Article: Source

Once-bullish fund managers start to capitulate on oil prices

Posted on 30 March 2015 by VRS  |  Email |Print

Last fall, when the price of oil started dropping, fund manager Craig Hodges figured crude would rebound in 2015 and began buying shares of companies he thought would be unfairly hit, including construction company Primoris Services Corp and Eagle Materials Inc, which produces sand used in fracked wells.
Hodges, who runs the $2.1 billion Hodges Small Cap fund, is now starting to concede that oil prices will stay low for as long as a year or more because of a global glut. Even the air strikes Thursday in Yemen by Saudi Arabia and its Gulf Arab allies, which prompted a one-day 5 percent boost to the price of oil, presented “a traders move” and doesn’t signal a sustained move up, Hodges said. Oil fell 6 percent today to about $48 a barrel………………………………………..Full Article: Source

Iran nuclear deal to see $20 oil if Tehran floods crude market

Posted on 30 March 2015 by VRS  |  Email |Print

Ending economic sanctions against Tehran could be a game changer for the oil markets. Flights to Tehran from Dubai have been crammed in recent months with Western executives flooding into the Iranian capital ahead of a potential lifting of economic sanctions.
Potentially one of the Middle East’s biggest economies, Iran has been frozen out by the West over its refusal to give up its aspirations to become a nuclear power. But a binding deal that would bring the Islamic state in from the cold appears tantalisingly close as negotiators thrash out terms in talks being held in Lausanne, Switzerland, over the weekend………………………………………..Full Article: Source

Angola joins Venezuela among biggest losers of oil’s tumble

Posted on 30 March 2015 by VRS  |  Email |Print

Plunging oil prices have been an economic windfall for U.S. consumers, primarily through greater savings at the pump. In energy-reliant countries around the world like Angola, however, the effect has been far less beneficial.
Social and economic turmoil in countries like Venezuela and Russia—largely because of the swoon in global oil prices—has drawn attention away from Angola, an OPEC member that is Africa’s second-largest oil producer. The country churns out 1.75 million barrels of oil per day, according to the Energy Information Agency (EIA)………………………………………..Full Article: Source

U.S. oil drillers scrambling to thwart OPEC threat

Posted on 30 March 2015 by VRS  |  Email |Print

OPEC and lower global oil prices delivered a one-two punch to the drillers in North Dakota and Texas who brought the U.S. one of the biggest booms in the history of the global oil industry. Now they are fighting back.
Companies are leaning on new techniques and technology to get more oil out of every well they drill, and furiously cutting costs in an effort to keep U.S. oil competitive with much lower-cost oil flowing out of the Middle East, Russia and elsewhere. “Everybody gets a little more imaginative, because they need to,” says Hans-Christian Freitag, vice president of technology for the drilling services company Baker Hughes………………………………………..Full Article: Source

Silver’s outperformance versus gold set to continue suggests economist

Posted on 30 March 2015 by VRS  |  Email |Print

Gold eased back after a strong run that had seen the spot price rise for seven straight days. Uncertainty over the situation in Yemen, Greece and a rare bout of the wobbles for the dollar spurred the rise, but some profit taking saw spot gold ease US$5 to just under US$1,200.
Even so, it was a good week for the metal, but even more so for near neighbour silver. It has risen by 8% in dollar terms in 2015 to date, whereas gold is up barely 1% said Capital Economics. Julian Jessop, Head of Commodities Research, said silver normally does better when prices of both metals are rising, but this time it has also proved more resilient in bouts of weakness………………………………………..Full Article: Source

Hedge funds bet gold gain to fizzle

Posted on 30 March 2015 by VRS  |  Email |Print

Hedge funds are betting that gold’s recent rally won’t last and are holding the biggest wager ever that prices will decline. The net-long position in gold dropped by 9.9 per cent to 31,653 futures and options in the week ended March 24, according to U.S. Commodity Futures Trading Commission data published three days later.
That was the lowest since Dec 2013. Short holdings rose for a seventh straight week to 84,022 contracts, the highest since the data begins in 2006. Even as futures climbed for two straight weeks, some investors have shied away from the metal. Global holdings in exchange-traded products backed by bullion declined every week in March………………………………………..Full Article: Source

Iron ore drops to fresh six-year low

Posted on 30 March 2015 by VRS  |  Email |Print

Iron ore hit a six-year low on oversupply and a slowdown in China’s property sector. The price of iron ore, for immediate delivery at the port of Qingdao in China, dropped 4 per cent on Friday, the biggest drop since late January, to $US53.14 per tonne, according to Metal Bulletin – the lowest level since the daily pricing index began in 2009.
Since its 2014 high of $US135.27 per tonne, the price of the steel making ingredient has dropped more than 60 per cent. Since its record high of $US191.70 per tonne it was fallen more than 70 per cent………………………………………..Full Article: Source

India: Commexes’ turnover drops 41% till March 15 of FY15

Posted on 30 March 2015 by VRS  |  Email |Print

The turnover of commodity exchanges fell by 41 per cent to Rs 58.68 lakh crore till March 15 of 2014-15 on sharp fall in trading volumes in bullion and other commodities, according to Forward Markets Commission (FMC).
Their business stood at Rs 98.57 lakh crore in the same period of the corresponding year. Much of the fall in turnover was seen in bullion, followed by energy, farm and metals items in the said period, as per commodity markets regulator FMC………………………………………..Full Article: Source

Several ETFs set to hit market soon

Posted on 30 March 2015 by VRS  |  Email |Print

It could rain Exchange traded funds (ETFs) in the market soon as different fund houses line up innovative variants to this instrument that is gaining popularity in India. ETFs have been a big draw among retail investors in the last one year as they understood the primary benefits of diversification, risk control and lower transaction costs provided by this financial instrument.
At least four-to-five ETFs could hit the market in next few months including some interesting ones that are intended to tap inflows from foreign portfolio investors (FPI), say market watchers. On the anvil are ETFs based on the MSCI India Domestic index and two fund houses — Edelweiss Mutual Fund and Reliance Mutual Fund — have filed offer documents for launching such product………………………………………..Full Article: Source

Dividend ETFs: Yield, Quality Or A Blend?

Posted on 30 March 2015 by VRS  |  Email |Print

In the income investing universe, participants have a predisposition to focusing on ETFs with the highest headline yields. After all, income investors have a way of keying in on a yield that matches up with their spendable cash flow needs.
Yet more recently, there are a myriad of so-called “dividend growth ETFs” that sport yields just slightly higher than blended indexes, such as the S&P 500. So what gives and how can these two income styles be commingled? In my opinion, dividend investors have realized that it’s not all about the yield and to fashion a well-diversified portfolio they are going to need to straddle the lines a bit. ……………………………………….Full Article: Source

Why Brazil’s currency is having a real tough time

Posted on 30 March 2015 by VRS  |  Email |Print

The Brazilian real moved sharply lower Friday after a gross domestic product report showed Brazil’s economy contracted in the fourth quarter compared with the same period a year earlier. The real traded at 3.23 to the U.S. dollar, compared with 3.19 Thursday.
The plight of the real, which has lost 18% of its value against the dollar since the beginning of the year, shows how important policy makers’ credibility can be to sustaining foreign investment and economic growth in an emerging market. A recent scandal involving kickbacks at its state-controlled energy company Petrobras, hasn’t helped restore investors’ faith in its economy………………………………………..Full Article: Source

Currency derivatives trading gains momentum

Posted on 30 March 2015 by VRS  |  Email |Print

Volumes in the currency derivatives space are up 80 per cent, compared with that at the start of the financial year. So far in March, the average daily volume for all exchanges combined stood at Rs 32,611 crore, compared with Rs 17,012 crore in April 2014. During this period, the open interest, too, has increased four-fold.
Market players attribute the lifting of trading curbs and stability in the currency as reasons for the gradual uptick in volumes seen in 2014-15. “We have seen a huge build-up of option positions. Regular trading interest in the currency derivatives has improved because of the expansion in the positional limits by the RBI (Reserve Bank of India). Volatility in the currency market has also been low,” said Kishore Narne, associate director and head (commodity and currency) at Motilal Oswal Commodity Broker………………………………………..Full Article: Source

How will energy trading respond to climate change targets?

Posted on 30 March 2015 by VRS  |  Email |Print

As other countries follow Switzerland’s lead in setting targets for greenhouse gas cuts, questions arise as to how industry will respond. swissinfo.ch looks at what these moves globally may mean for the energy trading sector.
Switzerland became the first country last month to announce how it would contribute to a global climate treaty that the United Nations hopes to clinch next December in Paris. It set targets of 50% reductions in carbon dioxide and other warming gases from 1990 levels by 2030, with 30% coming from within the country and 20% achieved by market trading or offsets………………………………………..Full Article: Source

The World Bank’s Carbon Fund: Undermining indigenous rights or saving the planet?

Posted on 30 March 2015 by VRS  |  Email |Print

The World Bank’s emerging Carbon Fund, which provides payments to participating countries that are taking measures to reduce deforestation and carbon emissions, is under scrutiny from civil society leaders and indigenous rights groups, citing its insufficient safeguards to uphold land rights of local and indigenous peoples.
But as industry insiders told Devex, in order to develop a market for carbon that incentivizes the maintenance of forests and achieves results in the face of looming climate change, the World Bank and Carbon Fund donors may need to look beyond a cookie-cutter approach to land rights and remain open to to the political contexts and policies of participating Carbon Fund countries………………………………………..Full Article: Source

Global economic development: Unsustainable goals

Posted on 27 March 2015 by VRS  |  Email |Print

Mary Robinson, a former president of Ireland, calls 2015 “the Bretton Woods moment for our generation”. In 1944 the small town in New Hampshire of that name hosted a conference which was to shape the post-war economic order. The open trading rules it established laid the foundation for decades of post-war growth and the “Bretton Woods twins” that it founded, the IMF and World Bank, still influence global financial governance.
Four UN conferences comprise the new Bretton Woods. Though they are unlikely to produce institutions that will matter in 50 years, if they go well they could boost growth and development in poor countries. If they do not, the only outcome will be windy and pointless political rhetoric………………………………………..Full Article: Source

Oil prices rise after fears of more violence in Gulf

Posted on 27 March 2015 by VRS  |  Email |Print

Bombing of Yemen spooks investors into believing supply lines could be affected and causing crude to jump 4% on global markets. Oil prices surged on global markets as jumpy investors weighed the risk that tensions in Yemen could spiral into a wider Middle East conflict, choking off crude supplies.
The cost of a barrel of benchmark Brent crude rose more than 4% on Thursday, to $58.93 (£39.55), after reports emerged about Saudi-led air strikes on the Yemeni capital, Sana’a, and the southern port city of Aden – close to the key oil supply route through the Gulf of Aden and the Suez canal. A barrel of US West Texas intermediate jumped $2.17, to $51.37………………………………………..Full Article: Source

Oil market’s small fry become big fish

Posted on 27 March 2015 by VRS  |  Email |Print

Like the old cartoon showing a school of small fish organised to form a big one, retail investors have become a whale in the oil market. Uniting as buyers of exchange traded funds, these investors held 180m barrels equivalent of West Texas Intermediate crude futures last week — 30 per cent of the most active futures market.
The resurfacing of oil ETFs is a sign some investors are again warming to commodities as an asset class after years of poor performance. But analysts and some fund managers warn that the fat returns of the previous decade are over and the “supercycle”, the long period of tightness in markets from oil to copper that drove these returns, has rumbled to a halt………………………………………..Full Article: Source

The oil price has bottomed out – here’s why

Posted on 27 March 2015 by VRS  |  Email |Print

The oil price has been crushed since last summer. It’s gone from over $100 a barrel (both Brent and WTI, the main benchmarks) to as low as below $50. Two main factors have driven this: a healthy supply of oil, and strong demand for US dollars. But both those trends look at risk of reversing. And that could mean a rebound for oil.
Oil prices spiked higher yesterday, as Saudi Arabia launched air strikes on Yemen. The price of Brent went up to nearly $60 a barrel, while WTI (the US benchmark) rose to around $52. As ever in the Middle East, the details are complicated (we’ll look into it in more detail in the next issue of MoneyWeek magazine). But keeping things simple, the Saudis and other Gulf Arab states are fighting Iran-backed rebels in Yemen, in an attempt to defend the Yemeni government………………………………………..Full Article: Source

Iraq oil minister sees $70 crude by end 2015

Posted on 27 March 2015 by VRS  |  Email |Print

Iraq’s Oil Minister Adel Abdel Mehdi predicted world oil prices could reach $70 a barrel by the end of 2015 and played down the impact of the emerging conflict in Yemen on prices. A global slump in oil prices has slashed government revenue in Iraq, prompting the OPEC producer to renegotiate contracts with oil majors as it faces a costly military campaign against Islamic State militants.
“In January prices reached the bottom and they can’t go any lower than that,” Abdel Mehdi told Reuters in an interview on Thursday. “Now they’re going up, slowly but steadily. They will go up and maybe reach $70 by the end of the year”. Brent oil rallied for a second straight day on Thursday to more than $59 a barrel after Saudi Arabia and its Gulf Arab allies launched air strikes in Yemen, sparking fears of a wider regional confrontation that could disrupt world crude supplies………………………………………..Full Article: Source

Iraq supports Opec policy to defend market share

Posted on 27 March 2015 by VRS  |  Email |Print

Iraq supports the Organization of the Petroleum Exporting Countries (Opec’s) policy of defending the group’s market share by keeping oil production steady, an Iraqi parliamentary oil official said, despite pressure on the Arab state’s budget.
The Opec holds its next meeting in June and so far looks set to keep policy unchanged. Adanan Al Janabi, Iraq’s chairman of oil and energy parliamentary committee, said this would be a move he agreed with. “Iraq is with the general consensus of Opec that we should not be fighting for the price but rather for market share,” he told reporters on the sidelines of an industry event in Doha………………………………………..Full Article: Source

World Gold Council Tells China to Increase Gold Reserves

Posted on 27 March 2015 by VRS  |  Email |Print

China should increase its gold holdings to around 5 percent of its total foreign exchange reserves to help diversify currency risks, the World Gold Council (WGC) said. China currently holds about 1.6 percent of its foreign exchange reserves in gold, which is relatively low compared with developed countries and some developing countries, WGC China managing director Roland Wang said.
“The ideal amount should be at least 5 percent of its total forex reserves,” Wang told Reuters in an interview in Hong Kong. China last raised its gold holdings in April 2009, when reserves rose to 33,890,000 troy ounces (about 1,054 tonnes), from 19,290,000 troy ounces, according to central bank data. The holding was unchanged as of December 2014………………………………………..Full Article: Source

Yuan and Gold: Old Enemies Should Finally Become Friends

Posted on 27 March 2015 by VRS  |  Email |Print

The Communist Party had good reason to avoid the use of gold when it set up China’s financial system, but having a reserve of the metal offers a range of benefits. We’ll never know if there really were 200 chests of gold on the steamer Taiping, as depicted in John Woo’s recent movie The Crossing, but we can verify that 1,317 cases of central bank records were sunk with the ship in 1949.
These documents, including the Draft Agreement on Gold, were the only legal basis the government of the Republic of China had to move the former central bank’s gold reserves to Taiwan so they could be used to “pre-pay military expenses.” With the situation on the mainland growing dire at the end of 1948, Chiang Kai-shek began planning to move all treasury assets to Taiwan, including gold reserves intended to back “jinyuanquan,” the paper money issued by the ROC government in 1948………………………………………..Full Article: Source

Further downside on gold prices limited – CPM

Posted on 27 March 2015 by VRS  |  Email |Print

This time of year usually sees the release of three major analytical reports on the gold market – from CPM in the USA and from Metals Focus and GFMS in the UK – and CPM’s Jeff Christian kindly let me have a copy of the former’s analysis which was released earlier this week.
The CPM Gold Yearbook comprises over 250 pages, mostly of statistics and comment, some of which most will agree with whether from the bullish or bearish factor of gold followers, whereas other elements may raise the hackles, particularly of the gold ultra bulls for whom Christian and his team are bêtes noires – primarily because Christian is an adamant anti-gold price manipulation standard bearer, and is prepared to defend his position right in the lion’s den on occasions………………………………………..Full Article: Source

Gold price leaps past $1,200 on safe haven buying

Posted on 27 March 2015 by VRS  |  Email |Print

Amid nervousness on US bond and equity markets which are back in negative territory for the year and a spike in oil prices sparked by chaos in the Middle East gold leaped past the psychologically important $1,200 an ounce level on Thursday.
Gold for delivery in June – the most active futures contract – gained $21.76 or 1.8% hitting a high of $1,219.76 early on, before pulling back in early afternoon trade in New York to around $1,206 an ounce, still a three-week high. The gold price is up more than 6% after dropping to a 2015 low of $1,148.20 an ounce last week and has now retraced almost 40% of its losses since the 2015 high above $1,300 reached in January………………………………………..Full Article: Source

Copper rebounds as Chile closes mines

Posted on 27 March 2015 by VRS  |  Email |Print

Copper rebounded as torrential rain in Chile closed some of the biggest mines in the world’s largest producer of the metal. Copper rose as much as 0.5 percent after snapping the longest rally in six weeks on Wednesday. Some of the world’s largest copper mines were forced to shut down as torrential rain in the Atacama Desert of northern Chile closed roads and flooded towns.
Codelco, the world’s biggest copper producer, shut all of its Atacama mines including Chuquicamata and Radomiro Tomic, according to the state-owned company. “Copper supply expectations have been revised again after news that rains in Chile forced mines shut,” said Fang Junfeng, an analyst at Shanghai Cifco Futures Company. “The market is entering a peak consumption season in the northern hemisphere.”……………………………………….Full Article: Source

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