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Commodities Briefing - Archive | August, 2015

Even a modest slowdown in China sacks the global commodities market

Posted on 31 August 2015 by VRS  |  Email |Print

Until recently, China was a beast whose appetite knew almost no limit. It feasted on the world’s raw materials, buying them in a voracious, globe-spanning spree. Indonesian coal powered villages that morphed into mega-cities. Peruvian copper lined power cables for nearly 100 new mass-transit rail lines. Brazilian and Australian iron ore was turned into steel for skyscrapers rising in Shanghai at a rate of one per week.
So profound was that growth that even the hint of a slowdown is causing convulsions in the many countries that fed China’s rise. The deceleration in Chinese investment and construction, though gradual, has come with a dramatic side effect: a vast lowering in the value of the raw materials that are mined or drilled from the earth. By one major measure, commodity prices across the globe are at their lowest point in a century………………………………………..Full Article: Source

China isn’t the crisis some would have you believe

Posted on 31 August 2015 by VRS  |  Email |Print

Other global economies have plenty to look forward to, despite the blustery conditions in Asia. It is never possible to be sure that we aren’t about to face disaster. Some people seem to have made a living by foreseeing trouble ahead. The American stock market has “forecast” something like 10 of what turned out to be the past two recessions. And there is no reason why the Chinese stock market shouldn’t follow the same pattern.
Stock markets tend to get too much attention in the media. They are exciting, with quite large movements up and down occurring in very short order. By contrast, the processes of the real economy grind away slowly, and often in obscurity, their wonders to perform. But, in the end, it is the real economy that matters………………………………………..Full Article: Source

Hedge, to cope with commodity swings

Posted on 31 August 2015 by VRS  |  Email |Print

Oil, gas and non-ferrous metals are currently undergoing their biggest price correction since the recession of 2008. Economic volatility has shaken up the commodities market. China’s uncertain economic situation is likely to loom large over the metals sector in 2015.Recently, the Thompson Reuters Core Commodity index hit its lowest point since April 2003. Effectively, the market has erased all gains of the decade-long commodities “super-cycle”{+.}
Volatility has not spared the agricultural markets either, with corn showing volatility of over 24 per cent in 2014 and coffee volatility at the end of 2014 increasing to 50 per cent. This is a tectonic shift in the world of commodities — where relying on fundamentals of physical supply, demand and inventory positions alone cannot explain the extent of volatility………………………………………..Full Article: Source

Oil market turmoil generates speculations

Posted on 31 August 2015 by VRS  |  Email |Print

Tumult in oil markets was enough to create speculations about a possible de-pegging of riyal with dollar and possibly of using a mixed basket for oil revenues. Fears about the growth of Chinese economy and equities rout in Beijing sent currency values reeling.
More than $3.3 trillion was erased from the value of global equities after China’s devaluation of yuan. And with this revision, like all other commodities, oil too suffered a major blow. Saudi economy, so intertwined with the oil markets, is also faced with major blowbacks………………………………………..Full Article: Source

Why So Much Oil Price Volatility? Blame The Speculators

Posted on 31 August 2015 by VRS  |  Email |Print

Oil prices crashed last week only to rebound at lightning speed. On August 28, oil prices surged 10 percent, the largest one-day gain in seven years. So, what happens next for oil prices? On the face of it, the crash and massive rebound makes little sense, with many oil market analysts undoubtedly left shaking their heads.
But there is a logic to what unfolded, just not the logic of the physical market for crude. Oil prices, as if we needed a reminder, are largely driven by speculation. Why else would oil prices plummet by five percent, then spike by 10 percent just a few days later? Not much changed in terms of actual supply and demand of oil in the intervening days………………………………………..Full Article: Source

China’s Economic Slowdown Hurts Oil Market

Posted on 31 August 2015 by VRS  |  Email |Print

The 2015 budgets did take account of the near halving in the previous year of oil prices which had remained broadly stable at $110 a barrel between 2010 and 2015. When the oil price halved past year, from $110 to $55 a barrel, the cause was obvious: Saudi Arabia’s decision to increase its share of the global oil market by expanding production.
Reports earlier this week suggested that Venezuela was seeking an emergency OPEC meeting to discuss strategies about overturning the collapse in prices, which has hit the South American country quite hard. The country suffers from “operating difficulties at existing, mature oil fields”, according to the U.S. Energy Information Administration………………………………………..Full Article: Source

Oil price slump hits Islamic financial services

Posted on 31 August 2015 by VRS  |  Email |Print

The decline in global oil prices and the weak oil price outlook for 2015 and 2016 are already seen a taking toll on both Islamic banking and the Islamic financial services sector, according to analysts. Rating agency Fitch has warned that the global Islamic financial services industry could face further pressure in terms of low demand for sukuk issuance due to a combination of factors such as fall in oil prices, potential rise in global interest rates and contraction across global emerging markets.
Fitch Ratings said in a recent report that total new bonds and sukuk (with a maturity of more than 18 months) from the GCC, Malaysia, Indonesia, Turkey, Singapore, Pakistan, Sri Lanka, and Taiwan (GCC+7) declined 27 per cent in the first half of 2015 from a year ago………………………………………..Full Article: Source

Kuwait- Resilience Of Shale And Disappointment Of OPEC

Posted on 31 August 2015 by VRS  |  Email |Print

Almost nine months have passed since the historic OPEC meeting when its swing producer role was abolished and its members were allowed to produce as much oil as they can in order to cause the oil prices to reduce so that US shale oil producers would be forced out of business. However, the opposite happened. Shale oil producers are still in business even though oil prices have dropped below 50 per barrel.
In fact, USA oil production is at its peak with production of more than 9.5 million barrels a day, and is bound to increase further. So where did OPEC go wrong? Despite having all kinds of information regarding energy and being in daily contact with both sides of the market consumers and producers, it still failed to estimate the power of the shale oil producers. In fact, it even failed to know the actual cost for producing one barrel of shale oil………………………………………..Full Article: Source

Gold price likely to average $1,025 an ounce this year

Posted on 31 August 2015 by VRS  |  Email |Print

Gold’s retail prices in Dubai continued to hold steady on Sunday although analysts are expecting the bullion to resume its weakness following the recovery of the global stock markets. Overall, there are still some bargains to be had for gold bugs in Dubai, with Sunday’s retail prices still lower compared to almost a week ago, when the yellow metal was retailing at Dh140 per gram for 24K.
As the US dollar picked up strength on Friday, the UAE dirham continued to rise against other currencies, with the Indian rupee pegged at 18.01 per dirham and Philippine peso at 12.7 on Sunday, slightly higher than Thursday’s exchange rates………………………………………..Full Article: Source

Gold may rise after Fed rate hike

Posted on 31 August 2015 by VRS  |  Email |Print

Gold prices plummeted again this week, closing at $1133.6/ounce, down 2.3 per cent. Data on Thursday showed that the US recorded a robust 3.7 per cent growth in GDP in the second quarter, higher than the estimate of 2.3 per cent. Silver and platinum too closed in the red at $14.5/ounce and $1,018/ounce respectively.
Strong US data has revived expectations among investors that the Federal Reserve may ignore problems in China and go ahead with a rate hike at its upcoming meeting in September. Given that gold is a non-interest bearing asset, the belief is that it will lose out in a rising rate environment, the reason why the metal was beaten down last week. BusinessLine evaluated the behaviour of gold prices after previous Fed rate hikes to find out if it works in practice………………………………………..Full Article: Source

Gold Bulls Pile In Just Before Bullion Loses Its Job as a Haven

Posted on 31 August 2015 by VRS  |  Email |Print

Gold bulls piled into the metal in hopes that the turmoil sweeping financial markets would finally help revive prices. They were wrong. Instead of a rally, futures in New York fell for four straight sessions even as global equities plunged to a two-year low. Rather than providing a refuge from the meltdown, gold’s volatility rose right along with a measure of equity turbulence, diminishing its appeal as a haven.
As stocks started to recover, the metal kept falling because of reports that signaled gains for the U.S. economy. It’s been a tough two years for investors in gold, which first fell into a bear market in April 2013. More than $52 billion has been wiped from the value of physical bullion funds since then. ……………………………………….Full Article: Source

Copper slump continues amid waning Chinese demand

Posted on 31 August 2015 by VRS  |  Email |Print

Copper used to be considered one of the relatively bright spots in the recent downturn of commodity prices. But now it is becoming yet another victim of China’s slowing economy, and the future looks bleak. “There was always this belief that the deceleration in the Chinese manufacturing sector was going to not just stabilize, but there was this hope that we would see a modest reacceleration,” said John Mothersole, a research director with consultancy IHS, who specializes in metal price analysis and forecasting.
“Markets are coming to realize that those expectations were falsely held,” he said. Copper, like other commodities, has been on a decline since 2011. This year, the red metal is down 20 per cent………………………………………..Full Article: Source

HSBC trims metal price forecasts

Posted on 31 August 2015 by VRS  |  Email |Print

HSBC has lowered its silver and platinum group metals price forecasts for this year and next citing a recent drop in prices and weaker Chinese demand. “Even a modest Chinese slowdown has the capacity to drive prices of these metals lower, and we believe those concerns have led to the sharp price falls,” the bank said in a note.
China is a major importer of all three metals for use in the car, industrial and jewellery sectors. Silver prices had fallen to six-year lows, while palladium prices touched a five-year low on August 26. The broad-based commodity declines may be encouraging margin call liquidation and fresh selling in platinum group metals, HSBC said………………………………………..Full Article: Source

Gold Standard Marks Its Unlikeliest Return With Islamic State

Posted on 31 August 2015 by VRS  |  Email |Print

The terrorist group known as ‘Islamic State’ claims to have launched a precious metals-based ‘currency’ and oil-for-gold trading practices in order to undermine the dollar’s dominance in international trade. Kristian Rouz — In yet another attempt to behave as if they were the government of a nation, the notorious terrorist group Islamic State has just reintroduced a warped version of the gold standard the way it existed a century ago.
With the announced ‘return of the gold dinar’, Islamic State seemingly hopes to provide substantial support to their black-market oil-based economy. Whilst the new ‘currency’ will hardy gain international convertibility, the move might have significant consequences for the global economy, one of them being larger and less predictable fluctuations in gold prices, as the scale of black market operations with precious metals is inevitably poised to grow………………………………………..Full Article: Source

ETF providers question US trading limit rules

Posted on 31 August 2015 by VRS  |  Email |Print

Providers of exchange traded funds reeling from the market turmoil this week are calling for a reassessment of stock market risk controls, which they say prevented accurate pricing of ETFs.
The S&P 500 had a string of volatile trading days this week, with investors and analysts pointing to events in China as a driving force. On Monday several individual stocks took longer than usual to open even though the New York Stock Exchange invoked rule 48. This allows it to override delays imposed if a stock is likely to open at a price significantly different from where it stopped trading the previous day……………………………………….Full Article: Source

BNY Mellon ETF Bug Could Still Sting

Posted on 31 August 2015 by VRS  |  Email |Print

The computer glitch at Bank of New York Mellon that obscured the value of holdings in hundreds of mutual funds and exchange-traded funds may finally be close to being resolved. But that might not be an end to trouble for the bank.
The problem arose after the bank and software provider SunGard Data Systems pushed out an upgrade last Monday to computer systems used to determine net asset values of ETFs and mutual funds. As of Friday morning, the bank said it was able to generate these for most ETF clients. But problems persisted for mutual-fund asset valuations and some ETFs………………………………………..Full Article: Source

Why the Islamic State wants to mint its own currency

Posted on 31 August 2015 by VRS  |  Email |Print

The Islamic state wants to mint its own currency for circulation in the areas it controls, as part of its bid to end US supremacy, according a video released this week. The new gold silver, and copper coins will deliver “the second blow to america’s financial system of enslavement casting into ruins their fraudulent dollar note,” according to the hour-long video entitled Return of the Gold Dinar by the group’s media wing al Hayat.
But the currency will have no value outside of the area controlled by group which straddles the Iraqi-Syrian border. And the Islamic State’s status as a terrorist organisation means anyone trading in the coins risks risk money-laundering or terrorism charges………………………………………..Full Article: Source

A Currency Drop is Inflationary, Right?

Posted on 31 August 2015 by VRS  |  Email |Print

The central banker’s task of keeping inflation just right has become a permanent tussle with the global currency markets. Too weak a currency equals too rapid price gains. Too strong, and disinflation looms.
That’s the well-worn argument under the microscope Friday at the Jackson Hole Symposium, the U.S. Federal Reserve’s annual policy getaway. Gita Gopinath, a scholar at Harvard University, says that it just isn’t that simple………………………………………..Full Article: Source

Looking for a commodity that’s rising? Try pollution permits

Posted on 31 August 2015 by VRS  |  Email |Print

There’s one corner of the commodities markets bucking the slump that’s sent raw material prices tumbling: pollution permits. Prices in Europe’s market for carbon emission allowances, where companies trade the right to release the greenhouse gas into the atmosphere, gained 10 percent this year after the European Commission took unprecedented steps to prop up the market, attempting to curb a record glut.
The regulator’s supply squeeze will help carbon gain another 11 percent by the end of December, according to consultants Energy Aspects Ltd. and Vertis Environmental Finance. Compare that with crude’s 30 percent slump since its June peak and Citigroup Inc.’s forecast of a further 30 percent drop. Or ABN Amro Bank NV’s bearish forecast for gold, predicting a 29 percent slump by the end of next year………………………………………..Full Article: Source

Financial incentive needed to reduce carbon emissions, says RepuTex

Posted on 31 August 2015 by VRS  |  Email |Print

Australia needs to shut down old brown-coal power stations, control fugitive carbon emissions and ramp up reforestation programs if it is going to have any chance of achieving new carbon reduction targets by 2030, a RepuTex report finds. With the federal government committing to reducing carbon emissions by 26 to 28 per cent by the end of next decade, there is increasing pressure to outline the domestic policies needed to deliver the target.
Labor has promised an emissions trading scheme if elected at next year’s election, while the Abbott government next month will release details of its “safeguard mechanism” to target industries that are not reducing their emissions………………………………………..Full Article: Source

Commodities strike six-year lows, set to enter new cycle

Posted on 28 August 2015 by VRS  |  Email |Print

Falling demand, rising production and faltering growth in the world’s second-largest economy China have sent many major commodities plummeting to their lowest level since 2009, with some experts predicting the start of a new cycle.
Oil prices this week dived to 6.5-year lows as commodities tumbled over concerns that China’s slowing economy will curb demand for metals and other vital raw materials which have helped feed its astonishing growth over the past three decades………………………………………..Full Article: Source

Could commodities make a real comeback soon?

Posted on 28 August 2015 by VRS  |  Email |Print

With oil prices surging after the global market turmoil of “Black Monday,” could investors regain their faith in commodities? If China fired enough stimulus into its economy, a longer-term bounce back in commodities could be on the horizon.
“We certainly think that the authorities in China have the firepower in terms of monetary and fiscal policy to enact enough stimulus for the economy to at least meet the growth rate they’re targeting,” Caroline Bain, senior commodities economist at Capital Economics, said………………………………………..Full Article: Source

Commodities in Africa: How natural resources breed violence

Posted on 28 August 2015 by VRS  |  Email |Print

Africa is home to a tenth of the planet’s oil, a third of its mineral reserves and produces two-thirds of its diamonds. High prices may pep up the continent’s short-term economic growth, but scholars have long suspected that its plentiful natural resources also breed instability and violence. Politicians and their cronies cannot resist skimming off some of the huge profits, the theory goes, which enrages those who are left out.
Struggles over these wealths have played a part in many African troubles, from militias in the Democratic Republic of Congo to Sudanese civil wars. However, identifying a systematic link between natural resources and violence in Africa has proven tricky for economists, who must usually work with small or insufficiently detailed datasets………………………………………..Full Article: Source

Oil soars over 10 percent, biggest gain in six years as shorts scramble

Posted on 28 August 2015 by VRS  |  Email |Print

Oil rocketed more than 10 percent higher on Thursday, posting its biggest one-day rally in over six years as recovering equity markets and news of diminished crude supplies set off a short-covering scramble by bearish traders.
Snapping back from a deep two-month slump that knocked U.S. crude to 6-1/2 year lows below $40 this week, oil climbed as world stock markets rose on hopes Chinese government measures to stimulate the economy would pay off, while the dollar strengthened as risk aversion eased………………………………………..Full Article: Source

Venezuela Asks OPEC for Emergency Meeting on Oil Prices

Posted on 28 August 2015 by VRS  |  Email |Print

Hard-hit Venezuela has been contacting other OPEC members to push for an emergency meeting in coordination with Russia to come up with a strategy to stop the current oil price rout, people familiar with the matter said.
According to these people, Venezuela has been in touch with some members of the Organization of the Petroleum Exporting Countries, including Qatar’s oil minister and president of the OPEC conference, Mohammed al-Sada, to try again to find common ground to defend crude prices………………………………………..Full Article: Source

Lessons from the oil market’s ‘lost decade’: Kemp

Posted on 28 August 2015 by VRS  |  Email |Print

Saudi Arabia and its OPEC allies are counting on strong growth in demand coupled with slower growth in non-OPEC supply to rebalance the oil market in 2016. But the experience of the “lost decade” after prices slumped in 1986 suggests rebalancing could take longer than some OPEC members and market analysts expect.
Following the price slump in 1985/86, the oil market struggled with persistent surpluses for much of the next 17 years. In real terms, oil prices did not rise above the 1986 crisis level on a sustained basis until 2003……………………………………….Full Article: Source

Iran says some in Opec do not want high oil price

Posted on 28 August 2015 by VRS  |  Email |Print

Iran’s Oil Minister Bijan Zanganeh blamed the latest drop in oil prices on some members of Opec and questioned whether any Opec emergency meeting would reach an agreement, the oil ministry’s news agency Shana reported.
“To balance the oil price… Opec members should balance their production. An emergency meeting has been requested and we don’t have a problem with that,” Shana cited Zanganeh as saying. “But as you know the result of Opec meetings should be approved by all members, I think some members do not want the price of oil to be high and they want to damage other countries by low prices.”……………………………………….Full Article: Source

Is Natural Gas the New Gold?

Posted on 28 August 2015 by VRS  |  Email |Print

When the market is shaky, seek safety in … natural gas. Wait – what? Citigroup Inc. is touting natural gas – a commodity so notorious for volatility that its most renown bet is called the “widow maker” – as a possible haven for investors weary of the market’s wild swings.
A sluggish global economy, a staggering China and plummeting oil prices have sent commodity, currency and stock markets spiraling this summer. But they mean very little for U.S. gas futures, which have been stable for more than two months and even briefly entered a bull market in the late spring………………………………………..Full Article: Source

Gold price: is the rally ‘over and done’?

Posted on 28 August 2015 by VRS  |  Email |Print

Gold has recovered slightly after hitting a one-week low overnight as expectations of a US rate hike in September were lowered – but after a sharp decline some analysts are now saying the recent rally is “over”.
As US stocks surged on the back of a huge injection of stimulus by Chinese authorities to support its ailing markets, the safe haven of gold lost out to a move by investors to take on more risk and touched a low of $1,117 an ounce at one point. This, Reuters notes [1], was its lowest level for a week and marked a 1.3 per cent decline for the day, the steepest fall since 20 July………………………………………..Full Article: Source

Gold Prices Fall on Robust U.S. GDP Data

Posted on 28 August 2015 by VRS  |  Email |Print

Gold prices fell on Thursday as gains in U.S. equities on the back of upbeat economic data and a stronger dollar dulled trader interest in haven assets. Gold for December delivery, the most actively traded contract, fell $2, or 0.2%, to settle at $1,122.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
A rally in U.S. stocks triggered by brighter economic data pushed gold to its fourth straight day of losses as investors revisited their expectations for higher interest rates………………………………………..Full Article: Source

Is gold back to being a safe haven?

Posted on 28 August 2015 by VRS  |  Email |Print

Gold prices have increased in August, recovering from a lacklustre performance over the last few years, after market volatility ramped up. While gold hasn’t been rising in tough periods as many investors would expect, it does appear that investors have been buying into the commodity this month, following a positive 3.35 per cent return from the S&P GSCI Gold Spot index.
The obvious guess as to why this is the case is the global volatility we have experienced in recent months. This came to a head on Monday, when the FTSE 100 had £74bn wiped off its value, the Dow Jones ended the day down 558 points and the Shanghai Composite dropped by 8.5 per cent………………………………………..Full Article: Source

Rusal cites China aluminum semi exports as reason for global surplus

Posted on 28 August 2015 by VRS  |  Email |Print

Russian aluminum producer Rusal said Thursday in its second quarter results that the increase in exports of aluminum semi-finished products from China is the main reason behind a global surplus this year. “The main change to the supply environment resulted from the export of aluminum semis from China. Net exports of semis rose by 47% year on year in H1 2015,” the company said.
The producer noted that overcapacity in the Chinese market continued throughout Q1 with a record supply of 7.45 million mt, up 8.3% year on year. As a result, Rusal believes total aluminum stocks in China grew to 3 million mt in Q1, an increase of 1% year on year………………………………………..Full Article: Source

Base metals post best rally in two years on US economic expansion

Posted on 28 August 2015 by VRS  |  Email |Print

Investors who stayed bullish on industrial metals are finally being rewarded as renewed optimism for the demand outlook pushed prices to their biggest rally in more than two years.
In the US, economic growth last quarter exceeded all forecasts in a Bloomberg survey, while in China stocks rebounded to halt a five-day rout. The countries are the world’s biggest metals consumers. Zinc surged the most since June 2012, copper climbed more than 4 per cent and aluminum and nickel advanced………………………………………..Full Article: Source

Chinese Medicine not Impressing Dr Copper

Posted on 28 August 2015 by VRS  |  Email |Print

Dr. Copper apparently does not approve of the prescription ordered by the Chinese authorities to stem the slowdown in that nation, namely another 25 basis point interest rate reduction and a lowering of bank reserve requirements. The red metal cannot sustain any upside action for long before sellers emerge to whack it again.
No matter how one slices or dices it, this sector is signaling slowing growth due to a combination of excess supply and lagging demand. Remember, back during the hey-day of the commodity sector, prices soared leading to massive ramp ups in production. That new supply came onto the market at the same time that global growth began slowing. The combination was lethal for prices………………………………………..Full Article: Source

Enjoy The Ride: Low Volatility ETFs Deliver In August

Posted on 28 August 2015 by VRS  |  Email |Print

Low volatility ETFs delivered in what has been a decidedly rocky month for global markets. China’s yuan devaluation, intended to shore up its economy, sent U.S. and international stocks into a tailspin in August.
Against that backdrop, smart beta ETF investment strategies that focus on less volatile stocks held up relatively better. Smart beta ETFs screen and select stocks based on alternative weighting methods or specific factors such as volatility………………………………………..Full Article: Source

Alternative investments: Helping investors weather the current market storm

Posted on 28 August 2015 by VRS  |  Email |Print

The recent sharp sell-off in global equity markets has focused investors on the importance of holding diversifying investments that can help mitigate volatility and potentially cushion their portfolios during times of market stress. Given their unique nature, alternative investments are proving to be useful tools to help investors weather the current market storm.
As the chart1 below illustrates, a basket of alternatives — based on Invesco’s alternatives framework as explained in my previous blog post How to approach the alternative investments puzzle — has historically delivered equity-like returns with low levels of volatility (as measured by standard deviation) and lower maximum……………………………………….Full Article: Source

Sound Money To Prevent Currency Wars

Posted on 28 August 2015 by VRS  |  Email |Print

China devalued its currency, the resignation of the Greek prime minister revived doubts about the Euro, and the markets were expecting that in a few weeks the Federal Reserve was going to begin raising the interest rates. These three strikes—connected with monetary manipulations—was followed by a large decline in the stock market.
It is natural that those of us who follow economic policy will try to find connections. Those who champion central banks and government monetary manipulation argue that their goal is to bring stability. Those of us who argue that monetary bureaucrats continue to fail, see the current scene as providing another chance to point at their failures and as another opportunity to call for sound money………………………………………..Full Article: Source

The UK winners from China’s currency devaluation

Posted on 28 August 2015 by VRS  |  Email |Print

After years of pegging its currency to the dollar, China has taken the unexpected step of allowing its currency to depreciate. It is unclear exactly how much the renminbi will be allowed to fall, but there have been tangible consequences on global investments already.
In the UK, many companies banking on strong Chinese sales growth were shunned by investors. Luxury retailer Burberry fell more than 7% on the 3% slide in renminbi that started on 11 August, while consumables giant Unilever lost almost 5%………………………………………..Full Article: Source

On carbon, credit all leaders for failing us

Posted on 28 August 2015 by VRS  |  Email |Print

Regardless of which party wins the Oct. 19 federal election, Canadians can look forward to being ripped off for billions of dollars in the international carbon trading market. Carbon trading is intrinsic to both NDP Leader Tom Mulcair’s and Liberal Leader Justin Trudeau’s carbon pricing plans, since both would use cap-and-trade schemes, supposedly to reduce Canada’s industrial greenhouse gas (GHG) emissions.
But even Prime Minister Stephen Harper’s Conservatives — the least worst of the three major parties on this issue — have proposed buying international carbon credits to meet the government’s emission reduction targets………………………………………..Full Article: Source

Recent Studies Provide Examples of Emissions Trading Successes, Failures

Posted on 28 August 2015 by VRS  |  Email |Print

The emissions trading program in the northeastern United States—the Regional Greenhouse Gas Initiative (RGGI)—is responsible for about half the region’s emissions reductions—an amount far greater than reductions achieved in the rest of the country.
The study in the journal Energy Economics determined that even when controlling for other factors—the natural gas boom, the recession, and environmental regulations—emissions would have been 24 percent higher in participating states without RGGI (subscription)………………………………………..Full Article: Source

Behind the commodities bust

Posted on 27 August 2015 by VRS  |  Email |Print

First was the dot-com bubble, then the housing bubble. Now comes the commodities bubble. We don’t fully understand the stock market’s current turmoil, but we know it’s driven at least in part by a bubble of raw material prices. Their collapse weighs on world stock markets through fears of slower economic growth and large financial losses.
All bubbles share similar characteristics. There’s a strong, enthusiastic demand for some object (whether stocks, homes, oil or tulips). High demand pushes up prices, which inspires more demand. Prices ultimately reach unsustainable levels so that when spending slows, the bubble implodes. Commodities have now traced this familiar path………………………………………..Full Article: Source

Jim Rogers: Don’t rule out a bull run in commodities

Posted on 27 August 2015 by VRS  |  Email |Print

Oil prices are trading near a six-year low, copper futures have shaved off 20% year-to-date and wider panic has grabbed the commodities market in fears over a sharp slowdown in China. There are plenty of reasons to be downbeat on the resources industry at the moment, but don’t count out a comeback for the depressed sector, says commodities veteran investor Jim Rogers.
“As far as commodities are concerned, it’s all about supply and demand, and you’re having huge cutbacks in supply. We’re already having supply problems in some agricultural products and we’re going to have problems with oil products,” he said……………………………………….Full Article: Source

Commodities are ripe for a rebound

Posted on 27 August 2015 by VRS  |  Email |Print

Investors sentiment surrounding commodity prices is at its lowest level in decades — but some analysts believe that a rebound is on tap. “Investor sentiment for commodities has rarely, if ever, been more negative,” said Julian Jessop, an analyst at Capital Economics, in a note Wednesday. But there are “plenty of reasons to take a contrarian” — and more positive view on commodities.
Year to date, prices for Brent crude have suffered from a loss of more than 24% on the ICE Futures exchange, while West Texas Intermediate crude was down roughly 27% on the New York Mercantile Exchange. Metals prices have also seen sizable losses with gold down around 4.9% and copper dropping more than 20% on Comex for the year so far………………………………………..Full Article: Source

Oil Prices Fall on Less Gas Demand, Growing Glut

Posted on 27 August 2015 by VRS  |  Email |Print

Oil prices resumed falling after U.S. stockpile data showed a surprise drop in gasoline demand and record supplies of crude oil and petroleum products. The data reaffirmed growing concerns that the global oil market will remain awash in crude through the end of the year.
Oil prices have plunged in recent weeks on worries that the global glut of crude that halved oil prices in 2014 has yet to shrink. U.S. crude production remains near multidecade highs, despite large spending cuts by producers, and members of the Organization of the Petroleum Exporting Countries continue to pump at high levels………………………………………..Full Article: Source

Why the oil price could be depressed for a generation

Posted on 27 August 2015 by VRS  |  Email |Print

The oil price may have fallen to its lowest level since the financial crisis, but Chris Taylor believes it will get cheaper. The oil price has been one of the major casualties of the downturn in global markets over the last few weeks, tumbling to levels not seen since the depths of the financial crisis.
A barrel of Brent crude oil now costs $43.67, and fell as low as $42.23 during the Black Monday sell-off. It is down 62% since its most recent peak, of nearly $115, set in June last year. Chris Taylor, head of research at fund group Neptune, believes oil has further to fall, and thinks its price could remain in the doldrums for a generation. He argues that investors are still failing to appreciate the implications of fracking, and the shale oil it produces………………………………………..Full Article: Source

OPEC Unable to Control Oil Production in Member States

Posted on 27 August 2015 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (OPEC) is irrelevant because it can’t control oil production volumes within it’s own member-countries, the president of PKVerleger LLC, an US energy consulting firm, told Sputnik. “OPEC is irrelevant today. Producing countries set their levels of production… Prices will probably fluctuate between 30 and 50 [dollars per barrel]. OPEC <…> has no power,” Dr. Philip K. Verleger said.
Global oil prices have significantly dropped compared to summer 2014, falling from $100 to $43 per barrel for Brent crude, primarily a result of worldwide oversupply. According to the International Energy Agency (IEA), global oil prices will fall further in 2016 in response to decreased demand. ……………………………………….Full Article: Source

Ecuador Reveals Pain Inside OPEC: It’s Pumping Oil at a Loss

Posted on 27 August 2015 by VRS  |  Email |Print

Ecuador has revealed the financial stress inside OPEC created by low oil prices, becoming the first member of the group to say it’s pumping at a loss. President Rafael Correa said on Tuesday that the South American nation is receiving as little as $30 a barrel for its crude, while production costs average about $39.
The warning comes after several other members of the Organization of Petroleum Exporting Countries, including Algeria and Libya, said the group should consider holding an emergency meeting to respond to the drop in oil prices. “We are going through a very difficult year economically because the price of oil collapsed,” Correa said in a speech in the central highland province of Cotopaxi………………………………………..Full Article: Source

Difference in London Gold Price AM and spot gold rate costs ‘unhedged’ bullion dealers

Posted on 27 August 2015 by VRS  |  Email |Print

For over a century, gold rates have been set twice daily — at 10:30 am and 3 pm — in London on the basis of which the metal is valued and traded throughout the world. On Tuesday, after the customary morning rate was set eyebrows were raised among a few bullion dealers at home and reportedly by some abroad.
The so-called London Gold Price AM which traders in India get to know at 3 PM, was $4.48 higher than the spot gold rate. This, according to the bullion dealers, resulted in losses for those who without hedging themselves made a delivery commitment to clients based on the lower spot rate, but had to pick up the gold by paying almost $5 more, based on the London Bullion Market Association (LBMA) morning rate………………………………………..Full Article: Source

Why gold was the best buy in 2008-9 crash and will be this time too

Posted on 27 August 2015 by VRS  |  Email |Print

What was the best asset class to buy for the recovery that followed the 2008-9 crash in global financial markets? Step forward gold whose rise was only exceeded by silver. Precious metals not only delivered the fastest recovery from that huge sell-off but offered increases way above the pre-crash levels.
Gold tripled from its low in the crash, while silver went on to record an eight-fold increase, still just shy of its 1980 all-time high. It is not hard to see history repeating itself all over again. Just look at the Chinese central bank this week cutting interest rates, just like the Fed had to do in 2008-9………………………………………..Full Article: Source

Gold Gets Ignored Amid Market Turmoil as Focus Stays on Fed

Posted on 27 August 2015 by VRS  |  Email |Print

This week’s turmoil across global markets did little to bring people back to gold as investors ignored the metal’s haven appeal and focused, instead, on the prospect of higher U.S. interest rates.
Futures in New York fell for a third straight day, the longest stretch this month, even as global growth concerns spurred the biggest global equity rout in four years. Citigroup Inc. cut estimates for gold, silver and other metals, and investors pulled money from exchange-traded products backed by bullion for the first time in five days………………………………………..Full Article: Source

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