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Commodities Briefing - Archive | May, 2015

India: RBI asks banks to create awareness on hedging agri-commodities

Posted on 29 May 2015 by VRS  |  Email |Print

The Reserve Bank of India (RBI) on Thursday advised banks to create awareness among their borrowers for hedging agricultural commodity price risk. “Banks should encourage hedging by the agri-borrowers by creating awareness amongst them regarding the utility and benefits of hedging through agri-commodity derivatives,” RBI said in a notification to all banks. “This would help to develop strong risk management capabilities to manage agri-commodity price risk,” it added.
At the same time, said RBI, “banks must keep the sophistication, understanding, scale of operation and requirements of their agri-borrowers in mind while advising on the availability and use of these instruments.” To begin with, banks were asked to encourage large agricultural borrowers such as agricultural commodity processors, traders, millers and aggregators to hedge their commodity price risk…………………………………Full Article: Source

Oil price: Why further falls may be on the way

Posted on 29 May 2015 by VRS  |  Email |Print

Those hoping for a bit of oil price stability after the past few months’ volatility may be disappointed. Next week’s Organisation of Petroleum Exporting Countries (OPEC) meeting is widely expected to be another case of the cartel sitting on its hands, and maintaining levels of oil production despite historically low oil prices.
This shouldn’t be any surprise to markets – yet there are other warning signs ahead. After the last meeting in January, crude prices (WTI crude) fell to a six-year low of less than $45 a barrel, then recovered to around $65 a barrel, as the growth in U.S. supply – the main reason why OPEC has been so stubborn about cutting output — slowed in response to lower prices…………………………………Full Article: Source

OPEC says global oil glut to persist till 2017

Posted on 29 May 2015 by VRS  |  Email |Print

Crude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said.
“Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-OPEC supply is still showing some growth,” OPEC’s long-term strategy report says, Reuters reported on Thursday. Supply from rival non-OPEC producers will grow at least till 2017, the document said. The OPEC report comes ahead of the group’s landmark meeting in Vienna on June 5 where it’s expected to make a decision on production quotas…………………………………Full Article: Source

OPEC sees rivals boosting oil output despite weak prices

Posted on 29 May 2015 by VRS  |  Email |Print

The North American oil boom is proving resilient despite low oil prices, producer group OPEC said in its biggest and most detailed report this year, suggesting the global oil glut could persist for another two years. A draft report of OPEC’s long-term strategy, seen by Reuters ahead of the cartel’s policy meeting in Vienna next week, forecast crude supply from rival non-OPEC producers would grow at least until 2017.
Sluggish global demand for oil means the call on OPEC’s crude will fall from 30 million barrels per day (bpd) in 2014 to 28.2 million in 2017, effectively leaving the group with two options - cut output from current levels of 31 million bpd or be prepared to tolerate depressed oil prices for much longer…………………………………Full Article: Source

Oil price slump will not stem flow of US oil, says Opec

Posted on 29 May 2015 by VRS  |  Email |Print

Despite almost a year of low oil prices, the world’s biggest producers say that the North American oil boom shows no signs of abating, leading analysts to suggest that the global oversupply of oil could continue for at least another two years.
The Organisation of Petroleum Exporting Countries (Opec) will meet in Vienna next week to discuss its long-term strategy. A draft report seen by Reuters predicts that rather than contracting, oil production will continue to increase over the next two years as rival non-Opec producers – especially those in the US – expand their operations…………………………………Full Article: Source

US oil production at 43-year high as OPEC prepares to meet

Posted on 29 May 2015 by VRS  |  Email |Print

U.S. oil production surged to a 43-year high, despite a price war that resulted in a more than 50 percent reduction in active U.S. oil wells. Oil prices saw downward pressure in volatile trade Thursday morning, after the Department of Energy reported a draw down in crude inventories of 2.8 million barrels for the week ended May 22.
The DOE also reported that U.S. production rose to 9.566 million barrels per day, surpassing the previous peak of 9.422 million set in March. While no weekly data is available beyond 1983, the production number is the highest, if translated to a monthly basis, since May 1972…………………………………Full Article: Source

Gold price to test $1,100/oz imminently – ANZ

Posted on 29 May 2015 by VRS  |  Email |Print

Gold lacks direction at present but could break lower to test $1,100 in the very near term, ANZ said. “The right signals might be just around the corner,” the bank said in a note on Thursday. “To us, a downside break of the $1,180-1,220 per ounce range looks imminent.”
Gold has predominantly traded in a $1,175-1,225 range this year and was last little changed from the start of 2015 at $1,189 per ounce. But the US Federal Reserve is on course to raise interest rates this year or early in 2016, which would raise the opportunity cost of holding gold and push investors into more yield-bearing assets…………………………………Full Article: Source

The Fix Is In: Gold Price Manipulation is a Global Effort

Posted on 29 May 2015 by VRS  |  Email |Print

Many people think about gold as a percentage of a country’s total reserves. They are surprised to learn that the United States has 70% of its reserves in gold. Meanwhile, China only has about 1% of its reserves in gold. People look at that and think it shows an imbalance. But the way I see it, those are not very meaningful figures.
The figures are not meaningful because all countries’ reserves are a mixture of gold and hard currencies. The currencies can be in bonds or other assets. The US doesn’t need other currencies. We print dollars, so why would we hold euros and yen?………………………………..Full Article: Source

Gold price consolidate as safe haven status wanes

Posted on 29 May 2015 by VRS  |  Email |Print

The gold price was steady on Thursday, as dollar strength continued to cap gains and the yellow metal remained under the psychologically important $1,200 level. Spot gold was last at $1,188.80/1,189.50 per ounce, a $1.10 increase on the previous day’s close, as the metal was content to tread in well-worn ranges.
“Overall, we feel that a long-term base is being formed here, paving the way for the next bull leg in the super-cycle; but current conditions favour a slip to the lower end of the range,” Triland said in a note. Meanwhile, the metal’s status as a safe haven asset waned today amid renewed optimism over Greece staying in the eurozone…………………………………Full Article: Source

NCDEX launches “Gold Now”- the new national market for Gold

Posted on 29 May 2015 by VRS  |  Email |Print

NCDEX, the leading national commodity exchange, today announced the launch of a new national market for gold. The “Gold Now” platform is the first transparent and convenient online market for buying and selling gold. Aligned with the “Make in India” campaign of the government, the platform will accept gold recycled in exchange-approved refineries as Good Delivery. This is intended to reduce the dependence on imports.
Samir Shah, MD & CEO, NCDEX, said, “With the launch of the Gold Now national marketplace, we are creating an ecosystem that is at par with international standards and which will help the bullion and jewellery industry improve its efficiencies.”………………………………..Full Article: Source

Is cobalt the commodity of the future?

Posted on 29 May 2015 by VRS  |  Email |Print

If the vision of Elon Musk comes to fruition, cobalt will become an important commodity for the mining industry in the future. The billionaire genius recently unveiled Powerwall, a home battery that give homeowners the ability to get off the commercial power grid entirely by storing surplus electricity generated from solar panels during the day or from the utility grid when rates are low.
Unlike Tesla’s electric cars, Musk has stated Powerwall will use a more powerful battery consisting of nickel, manganese and cobalt. If the home battery takes off like many people expect it to (there are 38,000 reservations for the home battery pack so far), Tesla may require up to 10,000 tons per year of cobalt………………………………..Full Article: Source

Copper, aluminium recover from losses on dollar

Posted on 29 May 2015 by VRS  |  Email |Print

Copper and aluminium recovered from recent losses on Thursday as the dollar weakened against the euro and optimism grew over a Greek debt deal, but some analysts were cautious over whether gains could be sustained due to plentiful supplies. Most other base metals also rebounded from a recent downturn that had been partly due to a stronger dollar, which makes commodities priced in the U.S. currency more expensive to buyers using other currencies.
The euro has gained against the dollar after Greece expressed confidence this week it will soon seal a cash-for-reforms deal. “We’ve had a bit of a bounce this morning. One of the reasons is because the dollar has stopped appreciating, in the short term at least,” said Stephen Briggs, metals strategist at BNP Paribas in London…………………………………Full Article: Source

Iron Ore Surges on Declining Stockpiles in China

Posted on 29 May 2015 by VRS  |  Email |Print

The price of iron ore rose to its highest level in nearly three months, as declining stockpiles at China’s major ports sparked concerns about a temporary shortage of the raw material. A benchmark price for iron ore, published by The Steel Index, rose to US$62.60 a metric ton on Wednesday, up 0.8% from Tuesday and its highest level since March 2. The price is up 9% from a week earlier.
Iron-ore stockpiles in China have been dwindling as steelmakers build up their stores of the raw material, resulting in limited availability for some types of ore, analysts say. Inventories at the country’s port facilities last week declined to 84.9 million tons, from 86.6 million tons the week earlier, according to data provider Mysteel. Port stocks were roughly 100 million tons at the start of 2015…………………………………Full Article: Source

Mining Sector Still Sluggish

Posted on 29 May 2015 by VRS  |  Email |Print

EY’s Canadian Mining Eye index fell 1% in Q1 2015, compared to a 12% decline in Q4 2014. With a weak global macroeconomic backdrop, most players are working on controlling expenses, as declining grades will put continued pressure on costs.
The Canadian Mining Eye tracks Canadian mining sector performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations at the end, broadly falling between CDN$2.1 billion and CDN$160 million…………………………………Full Article: Source

Energy ETF investors are betting oil’s rally is already over

Posted on 29 May 2015 by VRS  |  Email |Print

Investors are cautiously pulling money out of energy producers for the first time in eight months, taking short-term gains after oil rebounded from a six-year low. More than $1.55 billion has been withdrawn this month from exchange-traded funds concentrated on energy stocks such as Exxon Mobil Corp. and Chevron Corp. It’s on pace for the first monthly setback for the group since investors began pouring into the sector in October with an eye toward profiting from an eventual recovery in prices.
“The thesis that oil is too cheap and it has to go higher maybe is not as compelling a case with oil at $60 as it was when it was at $42,”said Ryan Issakainen, a strategist at First Trust Advisors LP in Wheaton, Illinois…………………………………Full Article: Source

Energy ETF Investors Grow Wary of Oil Outlook

Posted on 29 May 2015 by VRS  |  Email |Print

Exchange traded fund investors are exiting energy sector bets for the first time in eight months after oil prices rebounded off a six-year low. Investors have yanked over $1.55 billion from energy stocks exchange traded funds, setting up the first monthly outflows from the sector since October, reports Jim Polson for Bloomberg.
Month-to-date, the Energy Select Sector SPDR experienced $628.6 million in net outflows, Vanguard Energy ETF lost $9.5 million and iShares U.S. Energy ETF saw $533.2 million in outflows, according to ETF.com…………………………………Full Article: Source

Hedge Funds Have Taken a Shine to Silver

Posted on 29 May 2015 by VRS  |  Email |Print

Silver prices have remained stuck at historical lows for the past three years, but hedge funds have decided now is the time to pile in. Last week, hedge funds snapped up silver at the fastest pace since 1997, increasing their net long position to a three-month high according to data from Bank of America Merrill Lynch.
Large speculators increased their net long position to $4.4 billion as of May 19, up from $2.4 billion in the previous week, according to the bank’s research. The data, gathered from the U.S. Commodity Futures Trading Commission, is released every Friday, but reflects positions as of Tuesday’s close. The regulator requires traders to hand over data on their significant positions in major markets. Bank of America Merrill Lynch looks at a section of this data, which includes trading by speculative investors………………………………..Full Article: Source

Stop Calling China a Currency Manipulator

Posted on 29 May 2015 by VRS  |  Email |Print

Christine Lagarde’s people say China’s currency is no longer undervalued. Jacob Lew’s argue it still is. There’s a lot at stake in the debate: The yuan can’t gain status as a global currency reserve if China is thought to be manipulating its value. So who should we believe, the head of the International Monetary Fund or the U.S. Treasury Secretary?
It’s worth asking Ben Bernanke. Now that the former Federal Reserve chairman is in the private sector, he can say what he really thinks — and, as he pointed out in a recent speech in Seoul, it’s not wise to ignore political factors when managing the rise of the Chinese economy…………………………………Full Article: Source

Citi Urges UK Government to Create its Own Digital Currency

Posted on 29 May 2015 by VRS  |  Email |Print

Around the same time as Accenture’s call for the UK government to regulate bitcoin wallets, Citi suggested that officials should look into creating their own digital currency. This has been revealed in the Treasury’s release of a document entitled “Digital Currencies: Response to the Call for Information”.
This report summarizes all the submissions received by the government after it urged the public to assist them in understanding the workings of the digital currency industry. The Treasury received more than 120 responses and has outlined the proposals and the government’s next steps…………………………………Full Article: Source

California carbon permits fetch $12.29/tonne at auction - state

Posted on 29 May 2015 by VRS  |  Email |Print

California carbon permits covering emissions this year sold for$12.29 a tonne at the cap-and-trade program’s May auction, up 8 cents from what they fetched at the previous auction in February, the program’s regulators said on Thursday.
The auction, the state’s third held in conjunction with its trading partner the Canadian province of Quebec, saw the partners sell all 77 million 2013 and 2015 permits put on the block. They also sold 9.8 million permits covering 2018 emissions for the minimum price of $12.10 a tonne, regulators said. Over 90 percent of all the permits sold at the auction were purchased by large-emitting companies required to participate in the program, the regulators said…………………………………Full Article: Source

Turn out the lights as commodity spending boom ends

Posted on 28 May 2015 by VRS  |  Email |Print

Australia, one of the engine rooms of the decade-long global commodity boom, is forecasting a staggering 90 per cent plunge in spending on projects, calling time on its biggest resources bonanza since the 1850s gold rush. After a collapse in prices from oil to iron ore, the value of the nation’s approved and financed mining and energy projects is forecast fall to about $15 billion in 2017, from $226 billion at the end of April.
Planned iron ore projects worth at least $10 billion have been canceled since October, according to the Department of Industry and Science. Billionaire Gina Rinehart’s Roy Hill — due to ship later this year — is Australia’s last remaining mining project being developed worth $5 billion or more…………………………………….Full Article: Source

SocGen Deal Reflects Commodity Troubles

Posted on 28 May 2015 by VRS  |  Email |Print

Société Générale SA told Jefferies LLC that it’s interested in buying its Bache commodities-trading unit — but only parts of it, Christian Berthelsen and Tatyana Shumsky report. It’s an indication of how unattractive raw-materials trading is amid fewer profits and more regulation. SocGen expects to take more than 300 of Bache’s top clients by revenue, including producers and end users of materials ranging from crude oil to aluminum.
But many brokers on Jefferies Bache’s energy team are moving to U.K. brokerage ED&F Man Capital Markets after SocGen decided to absorb just a third of client assets. “This year has been a reality check for the industry,” said Matt Simon, head of futures research at consulting firm TABB Group LLC. “It’s a simple case of what the profitability is going to be. There’s lower commissions, fewer instruments you can profit on, stronger capital commitments and growing pressure on the business.”……………………………………Full Article: Source

Where next for the oil industry?

Posted on 28 May 2015 by VRS  |  Email |Print

Oil companies have had to make dramatic changes to their view of the future following the collapse in the oil price at the end of last year. The surge in US shale oil production and Saudi Arabia’s reluctance to step aside and make room for the extra oil have forced the industry to reassess the viability of their exploration and development efforts.
Cuts to capital expenditure have been made and then redoubled. Even so, profits have fallen sharply for the big oil companies in the first months of 2015, whilst some exploration and production companies have been forced to reclassify their higher cost reserves as uneconomic at current prices…………………………………….Full Article: Source

Opec backing Saudi Arabia’s plan to keep supplies elevated

Posted on 28 May 2015 by VRS  |  Email |Print

When Saudi Arabia argues next week that Organisation of Petroleum Exporting Countries (Opec) should keep up production to fight the rise in US shale oil levels, prices will be on its side.
Crude plunged for eight of nine weeks prior to group’s November gathering, when the kingdom faced down opposition from the majority of fellow members, who advocated output reductions to tackle a global glut. With oil companies around the world cutting investment, US output peaking and prices up, Saudi Arabia’s strategy will be extended at Opec’s semiannual meeting on June 5, say Societe Generale and Bank of America…………………………………….Full Article: Source

OPEC not finished securing market share yet

Posted on 28 May 2015 by VRS  |  Email |Print

Analysts are making their predictions for what OPEC members will do at their semi-annual meeting on June 5 and none of it looks good for U.S. oil companies. OPEC is not exactly a transparent institution and members engage in all kinds of psychological warfare before they meet behind closed doors. But the one thing everyone seems to agree on is that the 12-nation cartel is not going to reduce output.
Cutting back on oil production now would eliminate all the gains the cartel has made in the past year. Maintaining output of about 30 million barrels a day in light of new supply coming from higher-cost producers has sent price dramatically lower…………………………………….Full Article: Source

Gold Price Has Bottomed – More Evidence

Posted on 28 May 2015 by VRS  |  Email |Print

Prominent analysts have announced often and persistently that gold will drop to $1,000, $850, and even below $500. Mainstream media, “gold-bashers,” and banks encourage the “gold is going lower” meme. But gold is real money, in contrast to the paper stuff that is valuable only as long as people, businesses, and countries retain confidence that it will devalue, but only slowly.
The world runs on paper and digital fiat currencies so don’t expect banks, central banks, or western governments to encourage or support gold. However, with the constant barrage of anti-gold, anti-silver, pro-dollar and pro-paper media stories, it is not surprising that people are confused, worried, and scared regarding gold prices, the value of real money, and the inevitable demise of paper currencies…………………………………….Full Article: Source

Bullish And Bearish Forces In The Gold Market

Posted on 28 May 2015 by VRS  |  Email |Print

The price of gold has gone nowhere in the last two years and has created a 2-year basing pattern. That is constructive for gold prices as the stronger the base, the stronger the next trend. But a trendless market also indicates a battle between bullish and bearish forces.
The strong U.S. dollar has pressured precious metals since last summer. Also, the talk of interest rate hikes by the Fed is said to have negatively influenced gold. We have explained previously that we hold an alternate view on the relationship between interest rates and gold, as detailed in “What Is Really Driving Gold.”……………………………………Full Article: Source

Gold Has Two Major Hurdles to Overcome

Posted on 28 May 2015 by VRS  |  Email |Print

Gold has 2 major hurdles to overcome and they are as follows: 1. Interest rate rises in the US. 2. Money printing by other nations, Japan, UK, Europe, etc. Both support the US$ and put downward pressure on gold. The specter of interest rate increases in the US hangs over the precious metals sector like the Sword of Damocles.
The Federal Reserve has stated that they want to ‘normalize’ rates now that the period of Quantitative Easing is over. Employment figures published by the Department of Labour have shown a steady increase in the number of jobs created over the last twelve months or so. On the inflation front; core prices, which exclude food and energy rose at a yearly pace of 1.8% for the month of April, which is the fastest monthly rise for almost a year……………………………………Full Article: Source

Gold is Poised to Move Lower Than Its $1,200 level

Posted on 28 May 2015 by VRS  |  Email |Print

Gold had a rough start to the week as the yellow metal dulled when it fell below the key $1,200 level, due to the strength of the U.S. dollar. For most of 2015, gold has been trading around $1,200 as it struggles to find its footing amid speculation over interest rate hikes that is causing gyrations in the markets.
Gold has mostly been more of a technical trade. Commodities are priced in U.S. dollars, so as the greenback moves higher, instruments like oil and gold generally move lower. And, of course, the reverse of this strong correlation also applies…………………………………….Full Article: Source

Copper hits month low on China, supply rise hits aluminium

Posted on 28 May 2015 by VRS  |  Email |Print

Copper hit a one-month low on Wednesday due to concerns about the economic outlook for big metals consumer China, while aluminium fell to its lowest in a year on rising production. Aluminium is in oversupply with a huge stock overhang, and output has continued to rise this year, with the latest industry figures showing daily average production rising to 68,500 tonnes in April.
Norwegian producer Norsk Hydro said it would increase aluminium output by 35,000 tonnes per year. “Although LME stocks are falling there’s (still) a lot of aluminium around and (then) we see large increases in production. Aluminium needs a deficit to erode overhead stocks,” Fastmarkets head of research William Adams said…………………………………….Full Article: Source

World Steel Demand to continue expansion

Posted on 28 May 2015 by VRS  |  Email |Print

After five years of strong growth in demand, 2014 saw the world steel sector enter turbulent times. What can we expect in the next five years…? MEPS expects that 2015 will be a year in which global steel supply and demand turn negative. This situation is likely to develop as a result of weakening steel requirements and oversupply in some of the main consuming markets around the world - including, China, United States, Japan, Russia and Brazil.
Despite the anticipated modest decline in global steel demand, this year, MEPS predicts that annual average steel consumption, in most regions of the world, will increase steadily in the future. However, the gains will be much more sober than those recorded in the first half of the current decade…………………………………….Full Article: Source

Iron ore forecast cut 32% by Citigroup as demand to drop

Posted on 28 May 2015 by VRS  |  Email |Print

Global iron ore demand will contract over the 2020s as steel consumption growth in China peaks, according to Citigroup, which reduced its long-run price forecast for the raw material by 32 percent. The long-run estimate was cut to $55 a metric ton from $81 as the world’s major mining companies added more cheap supply, analysts including Ivan Szpakowski wrote in a report on Wednesday. From 2016 to 2018, prices may average $40, it said.
“The next decade is shaping up to be a complete reversal of the past decade,” Citigroup said. After a period of rapid demand growth, the entry of new miners and rising costs, the years ahead will see lower demand, marginal producers forced out and major miners dominating supply growth, it said…………………………………….Full Article: Source

No point in top iron ore miners cutting supply: Goldman

Posted on 28 May 2015 by VRS  |  Email |Print

The world’s largest iron ore producers are moving in the right direction by continuing to increase output even as demand cooled in top consumer China, sending prices tumbling and leaving smaller, high-cost producers struggling to survive. That seems to be the main conclusion of experts from Goldman Sachs Group, which wrote in a report Wednesday that “efforts to support prices via voluntary production cuts would be counter-productive,” as quoted by Bloomberg.
While such cutbacks are appealing in theory, any such proposal is misguided, according to Goldman’s analyst Christian Lelong. Brazil’s Vale, BHP Billiton and Rio Tinto, the report argues, are unlikely to create a cartel and agree on output cuts to stabilize prices, with waning demand expected to increase competition…………………………………….Full Article: Source

Iron ore rebounds but outlook remains grim

Posted on 28 May 2015 by VRS  |  Email |Print

A recent rebound in iron ore prices has done nothing to sway the downbeat outlook from forecasters, with Atlas Iron declaring lower price assumptions will see it write $130 million to $160 million off the value of development assets, and Citi slashing its long-term forecast to $US55 a tonne.
The Atlas writedowns come after the company this month survived the dual pressure of low prices and a highly geared balance sheet by striking plans to raise $180m of equity and agreements with contractors to lower operating costs to let it restart its suspended West Australian mines…………………………………….Full Article: Source

Chinese Hedge Funds Turn Bearish on Copper

Posted on 28 May 2015 by VRS  |  Email |Print

Gains of as much as 20 percent since January haven’t convinced Chinese hedge funds that demand for copper is improving in the world’s biggest-consuming country. “The outlook for China’s demand will be worse, not better,” said Shen Haihua, a senior portfolio manager at Hong Kong-based HFZ Capital Management, a joint venture of U.K. hedge fund Red Kite Management Ltd. and Maike Metals International, a Chinese metals trader. HFZ Capital says demand will weaken in the second half of the year.
Because China uses half of the world’s copper to build new power lines, cars and appliances, investors piled into the metal this year as the government took steps to revive the economy. Some of that cash is flowing into Chinese hedge funds that have expanded after regulatory changes in 2013, helping to fuel domestic trading of commodity derivatives that now outpaces the growth of legacy markets like the London Metal Exchange…………………………………….Full Article: Source

Energy ETFs a Riskier Bet Last Week Than Commodity ETFs

Posted on 28 May 2015 by VRS  |  Email |Print

As we saw in the previous part, WTI (West Texas Intermediate) oil futures gained 0.05% last week. While retail investors don’t have easy access to the futures market, they can benefit from access to safer, low-cost avenues to bet on WTI crude prices. The first avenue is energy ETFs such as the United States Oil Fund (USO), an ETF that tracks prompt WTI crude oil futures. Shares of USO trade on the NYSE (New York Stock Exchange) like company stock. The fund lost 1.3% last week.
The second avenue is commodity ETFs such as the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). It holds many American energy companies that have exposure to oil prices due to their upstream oil production operations…………………………………….Full Article: Source

5 Factors to Consider Before Investing in an ETF

Posted on 28 May 2015 by VRS  |  Email |Print

There are now over 1,600 exchange-traded products available to investors, and total assets are quickly approaching $2 trillion. Traditionally, the primary way an investor could get access to a diversified portfolio of stocks was through a mutual fund. But today, many of these investment products mirror the overall market, providing very little differentiation. Good managers are hard to come by.
This, coupled with sometimes high expenses, has resulted in subpar performance for much of the mutual fund industry. If an investor’s goal is to replicate the holdings of an index, another investment option is the often low-priced exchange-traded fund. However, there are complexities in this emerging investment class. With the continued interest in utilizing exchange-traded products for investors’ portfolios, it’s crucial to consider a number of things before you invest in an ETF…………………………………….Full Article: Source

Currency hedging: Does it still work?

Posted on 28 May 2015 by VRS  |  Email |Print

Hedging the euro and the yen has amplified returns for Japan and Europe investors in recent years, but will the trend continue? Over most timeframes, UK investors in Japan and Europe who have hedged the yen and euro have reaped stronger returns.
In the last year, three years and five years, the picture has been the same: of the pound strengthening against those currencies, and chipping away at the returns of those with unhedged exposure. With central banks in both Japan and Europe printing more money to buy bonds to boost their economies - known as ‘quantitative easing’ - many investors are betting that trend will continue…………………………………….Full Article: Source

Russia’s Currency Splash Has Economists Saying Ruble Rally Tamed

Posted on 28 May 2015 by VRS  |  Email |Print

Foreign-currency purchases by Russia’s central bank will put a stop to the ruble’s world-beating rally, according to a Bloomberg survey of economists. Buying as much as $200 million a day to replenish reserves will halt gains in the ruble, 19 of 28 economists said. While reserves may swell to $380 billion this year, they’ll stay below the level they were when Russia annexed Crimea last March, a median of 25 estimates showed.
“The central bank has been putting the brakes on the ruble,” said Gunter Deuber, an analyst at Raiffeisen Bank International AG in Vienna. “The plan isn’t enough in volume terms to turn around the ruble FX market. However, it’s a strong signal to FX market participants that the central bank sees enough ruble appreciation for the time being.”……………………………………Full Article: Source

Renminbi tops currency usage table for China’s trade with Asia

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China’s renminbi has become the main currency for payments between China and the rest of the Asia-Pacific region, more than tripling in use over the past three years and outstripping the Japanese yen, the US dollar and the Hong Kong dollar in the process, according to data from the clearing system, Swift.
The shift demonstrates that the Asia-Pacific region is at the forefront of the renminbi’s gathering acceptance as a currency for international trade settlement and investment. The Chinese currency was used in January-April for 31 per cent of payments between China (including Hong Kong) and the rest of the Asia-Pacific region, up from 7 per cent back in April 2012, Swift said…………………………………….Full Article: Source

Carbon tax or trade? Debate loses steam as world embraces both

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Tax versus trade is an issue that has stalked the EU Emissions Trading System (ETS) over its 10 years of existence, but is fading in importance as the world moves towards increased use of both methods of cutting greenhouse gas pollution.
The European Union set up the ETS in 2005 as a way of getting round policy-making rules that require the unanimity of member states to decide on a tax. Following years of legislative fine-tuning to overcome problems such as a glut of carbon allowances, they say it is on track and has advantages over a tax because it can be linked to a political target to cut emissions…………………………………….Full Article: Source

China readies carbon markets in climate struggle

Posted on 28 May 2015 by VRS  |  Email |Print

At first, the numbers and company names flashing on a big board in Beijing’s financial district suggest a booming market. A closer look indicates otherwise: The scrolling list rotates the same dozen or so trades, all from last year.
The lights from the Beijing Environment Exchange — one of seven pilot markets in China for trading carbon — raises questions for the country as it prepares for next year’s roll-out of a nationwide system that could help the world’s biggest emitter of heat-trapping carbon dioxide rein in its emissions…………………………………….Full Article: Source

Carbon pricing schemes climb to $50bn, despite Australian backtracking

Posted on 28 May 2015 by VRS  |  Email |Print

The value of carbon pricing schemes rose to $50 billion in 2015, according to a new assessment by the World Bank. It outlines its findings in the latest edition of Carbon Pricing Watch, which examines the state of the world’s carbon markets in advance of its more detailed report due later this year.
As of 1 April 2015, emissions trading schemes were valued at $34 billion, up from $32 billion the previous year. This was despite the repeal of Australia’s carbon pricing mechanism in July 2014 at the hands of prime minister Tony Abbott. Emissions trading schemes are not the only way to put a price on carbon. For the first time, the World Bank has also valued carbon taxes across the world, which it finds amount to $14 billion…………………………………….Full Article: Source

Commodities’ Biggest Drop of 2015 Underscores Goldman Bear View

Posted on 27 May 2015 by VRS  |  Email |Print

Commodities fell, heading for the biggest two-day selloff since November, as speculation over rising U.S. interest rates fueled a rally in the dollar. The Bloomberg Commodity Index slid 1.9 percent as of 1:20 p.m. in New York, led by losses in wheat, natural gas and crude oil. The U.S. currency strengthened versus all 16 of its major peers.
Goldman Sachs Group Inc. said on Monday that a rising U.S. dollar, cheaper oil and weaker Chinese growth will drive raw materials to reverse gains that started in March. “An increase in the dollar’s value is typically associated with lower commodity prices,” Paul Christopher, the St. Louis-based co-head of real-asset strategy for the Wells Fargo Investment Institute, which oversees $1.6 trillion, said by phone. “We will see some periods of volatility.”………………………………….Full Article: Source

Dollar rise hits commodity prices

Posted on 27 May 2015 by VRS  |  Email |Print

Commodity prices felt the impact of a jump in the dollar to a four-week high, with oil, gold and wheat prices leading the decline. ICE July Brent, the international oil marker, fell more than 2.5 per cent to a low for the month below $64 a barrel. Gold fell almost 2 per cent to a two-week low of $1,185.35 a troy ounce, while CBOT July wheat fell more than 3 per cent.
The US currency has strengthened since comments by Janet Yellen, Federal Reserve chairwoman, on economic growth last week. The dollar index rose more than 1 per cent on Tuesday, with further support coming from better than forecast US consumer confidence data…………………………………..Full Article: Source

Financial markets undercut commodities

Posted on 27 May 2015 by VRS  |  Email |Print

Financial markets are undercutting commodities. Renewed concerns about European Monetary Union and the euro have surged again this week, thereby spurring big U.S. dollar gains and sending stock indexes lower. Both of those reactions are seen as negative for commodity demand, which is probably a big reason corn futures fell this morning.
The outsized wheat breakdown apparently weighed on corn as well. July corn futures slumped 5.0 cents to $3.55/bushel just before lunchtime Tuesday, while December lost 5.0 to $3.7275. Argentina’s labor situation may be supporting the soy complex. The recent rebound in palm oil prices is probably boosting the U.S. soyoil market as well, but one has to wonder if the worsening Argentine labor situation is supporting the whole soy complex…………………………………..Full Article: Source

Oil Price Hurt by Dollar Strength

Posted on 27 May 2015 by VRS  |  Email |Print

Oil prices slipped Tuesday on a stronger dollar and concerns that the recent rally in oil prices could spark an increase in production. Oil prices have climbed sharply since hitting six-year lows in March on expectations that cutbacks in oil drilling would lead to a decline in U.S. production, shrinking the global glut of oil. However, the market remains oversupplied, and some analysts warn that at these price levels, U.S. producers can profitably keep drilling.
Many market watchers were caught off guard by the recent price rally, and analysts and investors remain split on where oil prices are headed. A continuation of the strong rally could hurt consumers, who have benefited from unusually cheap gasoline, while another drop in oil prices could destabilize oil-producing nations and roil global markets…………………………………..Full Article: Source

Iraq About to Flood Oil Market in New Front of OPEC Price War

Posted on 27 May 2015 by VRS  |  Email |Print

Iraq is taking OPEC’s strategy to defend its share of the global oil market to a new level. The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout.
The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5. While shipping schedules aren’t a promise of future production, they are indicative of what may come. The following chart graphs planned tanker loadings (in red) against exports…………………………………..Full Article: Source

Saudi Arabia rewrites its oil game with refining might

Posted on 27 May 2015 by VRS  |  Email |Print

Saudi Arabia’s rapid transition into one of the world’s largest oil refiners adds an extra dimension to the oil exporter’s role as the driver of OPEC policy. When it attends OPEC’s next meeting in two weeks, it does so with major new state-of-the-art oil refineries that can profit from cheaper crude and reviving world fuel demand - exactly as international oil firms have over the past six months.
The kingdom now has stakes in more than 5 million barrels per day (bpd) of refining capacity, at home and abroard, landing it a place among the global leaders in making oil products. Its own target of 8-10 million bpd of refining firepower would eclipse even ExxonMobil…………………………………..Full Article: Source

Non-OPEC production growth reduced by over 2 MMbopd towards 2020

Posted on 27 May 2015 by VRS  |  Email |Print

Non-OPEC liquids growth potential of 5.5 MMbopd over the next five years has been reduced by over 2 MMbopd to 3.3 MMbopd, according to Rystad Energy’s most recent forecasts. Latest oil field research shows investments in oil and gas production are estimated to drop 20% in 2015 compared to 2014. Outside OPEC, $200 billion in yearly capex is considered to be axed over a two-year period.
Ultimately, for every billion dollars being cut in development capex on marginal projects, the production shortfall would amount to 10 Mbopd. Only U.S. production has been visibly impacted with the trend turning from 20% annual growth during the first quarter of the year to a flat trend in the second quarter. The shortfall of global offshore production may be steeper if oil prices stay low throughout the year…………………………………..Full Article: Source

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