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Commodities Briefing - Archive | March, 2016

Another tough year expected for commodities – BofAML Global Research

Posted on 31 March 2016 by VRS  |  Email |Print

In the wake of lacklustre discipline by producers to curtail output in the face of relentless price declines, Bank of America Merrill Lynch (BofAML) Global Research was concerned that another leg of lower prices may be required to incentivise another round of cuts for a range of materials.
In its ‘Metals Strategist’ publication Tuesday entitled ‘Metals sunrise’, analysts warned that an overarching theme for 2016 was going to be that manufacturing activity in China and the rest of the world continued to face headwinds, impacting commodity demand negatively. BofAML stated that China’s economic activity might not improve until the second half of the year………………………………………..Full Article: Source

Commodities price collapse hurting Canadian incomes, BoC official says

Posted on 31 March 2016 by VRS  |  Email |Print

The aftershocks of the commodities price collapse, already plucking $1,800 a year out of Canadians’ pockets, could persist for more than two years and permanently impair the economy. That’s the conclusion of the Bank of Canada, based on the central bank’s latest economic modelling.
The full impact of the hit to Canadian incomes is “gradually building” and will get worse before it gets better, Deputy Governor Lynn Patterson warned in a speech in Edmonton on Wednesday………………………………………..Full Article: Source

Soft Commodities

Posted on 31 March 2016 by VRS  |  Email |Print

Also called softs, the term generally refers to commodities that are grown, rather than mined (hard commodities). For instance, tropical commodities such as coffee, cocoa, sugar, orange juice, lumber. These are assets that have more than one utility - they’re not just instruments to be traded in the market.
The resources are items with characteristics that remain unchanged across the market and can, therefore, be traded on a commodity market in a similar manner as equities and currencies are transacted. While the value of hard commodities can be impacted by climatic occurrences, the soft commodities sustain the biggest fluctuations when agricultural variables shift………………………………………..Full Article: Source

Hedge funds up bullish bets on rising oil prices

Posted on 31 March 2016 by VRS  |  Email |Print

Hedge funds and other money managers have amassed a near-record number of bullish bets on increasing oil prices, helping push the main international benchmark well above $40 per barrel.
By the close of business on March 22, money managers held a net long position equivalent to almost 579 million barrels in the three largest crude oil futures and options contracts. Hedge funds have more than doubled their net long position from just 242 million barrels at the end of last year, according to an analysis of data published by regulators and exchanges………………………………………..Full Article: Source

Oil Prices Give Up Gains

Posted on 31 March 2016 by VRS  |  Email |Print

Oil prices inched higher Wednesday but sold off through most of the afternoon with opinions divided about the latest addition to U.S. stockpiles. The U.S. Energy Information Administration said Wednesday that stockpiles rose, but by less than analysts had expected, initially adding to overnight gains.
But stockpiles are still near record highs and the EIA data show refiners ramping up strongly, suggesting the oil industry is still willing to send more oil and gasoline onto already flooded markets, said Donald Morton, senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk………………………………………..Full Article: Source

The 25 Biggest Oil And Gas Companies In The World

Posted on 31 March 2016 by VRS  |  Email |Print

The past two years have been a wild ride for investors in the world’s biggest publicly traded oil companies. Compared with their high-water marks in mid-2014, Big Oil shares are down about 25% and earnings have collapsed.
The big irony: even as oil prices have halved, Big Oil is still getting bigger. In July 2014 U.S. oil production was 8.75 million barrels per day, according to the Energy Information Administration. Nearly a year (and a 50% price dip) later, U.S. oil output had grown to 9.69 million bpd, its highest level in 45 years………………………………………..Full Article: Source

The Extend-and-Pretend Oil Market

Posted on 31 March 2016 by VRS  |  Email |Print

See, OPEC: Janet Yellen knows how to do a freeze. Or, rather, a very slow thaw.The Federal Reserve Chair’s reassurance of a gradual approach to raising interest rates helped revive an oil market losing its fascination with OPEC’s chatter.
(Good job, too, what with Saudi Arabia and Kuwait announcing on the same day they would actually restart a field shut down in 2014. Clearly, the supply freeze is a complicated affair.)So, too, though, is the Fed’s relationship with oil. And if you want to see how frozen, low rates can wreak havoc, cast your mind back to the housing crisis………………………………………..Full Article: Source

OPEC oil output rises in March as Iran, Iraq growth offsets outages

Posted on 31 March 2016 by VRS  |  Email |Print

OPEC oil output is rising in March, a Reuters survey found, as higher supply from Iran after the lifting of sanctions and near-record exports from southern Iraq offset maintenance and outages in smaller producers.
The survey also found no major change in production in top exporter Saudi Arabia - another sign that Riyadh is serious about freezing output to support prices, which hit a 12-year low near $27 a barrel in January but have since recovered to $40. Producers are meeting on April 17 in Qatar to discuss the plan………………………………………..Full Article: Source

The Disruption In Oil Markets Is Just Beginning

Posted on 31 March 2016 by VRS  |  Email |Print

The near-term outlook for oil markets is a mess. Price volatility recently reached its highest level since the global financial crisis as traders, investors and the industry as a whole try to sort through the significance of two big changes: the rapid rise of the upstart U.S. shale industry, which grew from essentially nothing in 2010 to being the world’s sixth largest source of oil supplies in 2015; and Saudi Arabia’s decision to abandon its role as market manager.
These are important issues for the near term, but they pale in comparison to a much bigger set of long-term issues. Two mega-trends are gaining steam that together have the potential to truly upend the energy industry………………………………………..Full Article: Source

Gold price holds $1,240/oz following US Fed comments

Posted on 31 March 2016 by VRS  |  Email |Print

The gold price pared back from its earlier highs, but remained trading firmly in positive territory following a cautionary statement on Tuesday by the US Fed Chair Janet Yellen. Yesterday, Yellen’s tone contrasted with the hawkish views of various Fed members, who offered their support for a rate hike as soon as April, but is more in-line with the March Fed statement, which warned on global risks and resulting instability.
“Yellen’s comments clearly indicate that the risk of another delay is significant, particularly if economic data were to unexpectedly weaken and/or financial market volatility to increase again,” Credit Suisse noted………………………………………..Full Article: Source

Where are Gold Prices Headed?

Posted on 31 March 2016 by VRS  |  Email |Print

The best performing precious metal for the week was platinum, however still down -2.35 percent. Price action was driven by increased auto demand in the European Union, reports Market Realist, which rose 14 percent in February. Platinum and palladium is used in the production of catalytic converters.
Germany announced this week that it wants half of its gold reserves back by the year 2020, reports Bloomberg. Bundesbank, the country’s central bank (which has gold in London and New York), has repatriated 1,400 metric tons, or 41.5 percent, of Germany’s gold reserves to Frankfurt………………………………………..Full Article: Source

Central bank action may rejuvenate gold in Europe

Posted on 31 March 2016 by VRS  |  Email |Print

Gold prices remain low in historical terms, despite a rally at the start of this year, but demand may yet appear from an unexpected source. Some precious metal experts see interest returning to Europe, in part because the push towards negative interest rates has made depositing cash with banks less and less rewarding.
“Although gold is very much driven by U.S. Federal Reserve (Fed) policy, the impact of European Central Bank (ECB) policy decisions may become increasingly relevant for gold price action, as concerns about negative interest rates gain traction among investors,” UBS strategist, Joni Teves, said in a report this month………………………………………..Full Article: Source

Good as Gold: Why Russia and China Are Busy Buying Bullion

Posted on 31 March 2016 by VRS  |  Email |Print

The currencies of Russia and China are moving to become as “good as gold,” F. William Engdahl notes, explaining why the countries are buying gold at a steady pace. Since US President Nixon unilaterally abrogated the 1944 Bretton Woods Treaty in 1971 the US dollar has been no longer backed by gold; however, gold still remains as a store of value which paper money cannot compete with.
Remarkably, the Central Bank of Russia became the world’s leading purchaser of gold, as it bought 356,000 ounces of the precious metal in February 2016, according to the International Monetary Fund (IMF). In general, Russia increased its reserves of monetary gold by 208.4 metric tons in 2015 and continues to buy the precious metal at a growing pace………………………………………..Full Article: Source

Here’s How We Could See $2,000+ Gold Bullion

Posted on 31 March 2016 by VRS  |  Email |Print

After a stellar start to 2016, gold prices have pulled back a little. With this, the negative sentiment towards the precious metal is back; we are hearing about how there could be more downside again.
Don’t get lured in by the noise! Here’s what you really need to know: gold prices are setting up to soar big-time. You will kick yourself later if you don’t pay attention to the precious metal now. This may sound bold, but the last bull market in gold prices we saw after 2002 may look menial compared to the one that’s coming………………………………………..Full Article: Source

Is the worst of the bear storm over for iron ore?: Andy Home

Posted on 31 March 2016 by VRS  |  Email |Print

The iron ore market has had a good first quarter. True, the spot price has retreated from the frothy heights of early March, when it rocketed by over 20 percent in the space of just two days to $63.60 per ton. That speculative frenzy, fueled by massive trading activity on China’s Dalian Exchange, has abated.
But at a current $54.70 per ton, iron ore is on course to close the first three months of 2016 with price gains of around 27 percent. Compare and contrast with copper, another industrial commodity plagued by the same demons of slowing demand growth and oversupply, which is currently showing year-to-date gains of just six percent………………………………………..Full Article: Source

Aluminum Continues to Struggle below the $1,500 Price Level

Posted on 31 March 2016 by VRS  |  Email |Print

Aluminum prices are a key driver of aluminum companies’ price movements. Aluminum producers such as Alcoa (AA), Century Aluminum (CENX), Norsk Hydro (NHYDY), and Rio Tinto (RIO) have varying sensitivities to aluminum prices. In this part of the series, we’ll look at the current trend in aluminum prices.
Aluminum has now closed below the crucial price level of $1,500 per metric ton for three consecutive days. The spread between 3M and cash contracts now stands at ~$11 per metric ton. Note that aluminum moved into backwardation in February 2016………………………………………..Full Article: Source

The Best Gold ETF to Buy for Market-Beating Gains in 2016

Posted on 31 March 2016 by VRS  |  Email |Print

We’ve found the best gold ETF for investors to buy in 2016 as the price of gold continues to outpace the markets. Gold prices are up 16.53% year to date, compared to a gain of just 1.6% for the Dow Jones Industrial Average in the same time.
And we see the price of gold continuing to beat the market in 2016. But before we get to our favorite gold ETF for 2016, here’s how gold prices are trending…After rising $15.70, or 1.29%, to $1,235.60 an ounce on Tuesday, gold prices were mostly flat Wednesday. Dovish comments from U.S. Federal Reserve Chair Janet Yellen have been the catalyst for gold prices this week………………………………………..Full Article: Source

An Investor’s Guide to the 10 Most Popular Leveraged ETFs

Posted on 31 March 2016 by VRS  |  Email |Print

Over the past decade, Exchange Traded Funds (ETFs) have gained tremendous popularity due to the advantages and flexibility they offer investors including cost effectiveness and transparency.
Investors have embraced these factors as total ETF industry assets currently stand at $2.17 billion. Year-to-date, assets have risen 2.0% and the number of ETFs has increased 1.1% with 43 new funds launched………………………………………..Full Article: Source

CME Remains in First Place in Terms of Volumes: FIA

Posted on 31 March 2016 by VRS  |  Email |Print

According to the trading volumes survey for 2015 published by the Futures Industry Association (FIA), the US Chicago Mercantile Exchange (CME) is still in first place among 78 exchanges of derivatives instruments in the world, reporting trading volume growth to 3.5 billion contracts (+2.6%) year-over-year (YoY).
The official press release published by the Dalian Commodity Exchange (DCE) states that all of the three commodity futures exchanges in Mainland China ranked within the top 10 entities in terms of number of contracts. DCE’s trading volumes in 2015 totaled 1.116 billion contracts which allowed its jump in the rankings to 8th position (from 10th in 2014)………………………………………..Full Article: Source

What Currency Has the Highest Purchasing Power?

Posted on 31 March 2016 by VRS  |  Email |Print

Establishment economists are the first vindicators that having a weak currency is essential to foster international trade. The utter absurdity that a nation can prosper when their coin of the realm buys less is inherently illogical.
Yet, for the globalists, maintaining the myth that promoting exports in a system that is designed around transporting our domestic manufacturing capacity overseas is intellectually incongruent. So what is the essential argument for having a strong currency? If you are an economic nationalist, you will agree with Stephan Smith, when he acknowledges in How a Strong Currency Affects an Economy………………………………………..Full Article: Source

New climate campaign moves full steam ahead

Posted on 31 March 2016 by VRS  |  Email |Print

Home to the second largest coal facility in the country, Montana makes for an interesting case study in dealing with Obama’s climate rules. It’s one of 27 states challenging the Clean Power Plan and one of 20 that has halted compliance work following the Supreme Court’s stay of the rule.
Today we’ll hear what’s next for the state and its coal industry, as Attorney General Tim Fox, Cloud Peak CEO Colin Marshall, and Montana Public Service Commission Vice Chairman Travis Kavulla gather in Billings for an energy conference hosted by Senate coal champion Steve Daines………………………………………..Full Article: Source

Commodities may tumble amid ‘rush for exits’, says Barclays

Posted on 30 March 2016 by VRS  |  Email |Print

Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits. Copper may slump to the low $US4000s a tonne, from $US4945 in London last week, while oil could fall back to the low $US30s a barrel, analyst Kevin Norrish said in a note.
The risk for raw materials is that investors seek to liquidate bets on gains quickly and in unison, with potentially highly negative consequences, Norrish wrote in the note entitled Buffalo Jump, a term that describes a cliff where North American natives herded bison to their death………………………………………..Full Article: Source

Commodities rebound seen faltering as demand stalls

Posted on 30 March 2016 by VRS  |  Email |Print

Prices for copper and oil are poised to fall, according to a new report that adds to the growing skepticism around the great commodity revival. Kevin Norrish, a widely followed analyst with Barclays PLC, warns that raw materials prices could get trampled if the buyers who have piled into the commodity sector during recent weeks decide to simultaneously rush for the exits.
“Investors have been attracted to commodities as one of the best performing assets so far in 2016,” he said. “However, in the absence of any concerted fundamental improvements, these returns are unlikely to be repeated in the second quarter, making commodities vulnerable to a wave of investor liquidation.”……………………………………….Full Article: Source

Riding out the commodities storm

Posted on 30 March 2016 by VRS  |  Email |Print

The era of oil shocks is far from over. In the past two years, oil prices have been in a free-fall, tumbling from US$100 (RM401.5) a barrel to around US$30. Frighteningly, nobody knows for sure where the bottom is. The International Energy Agency optimistically predicts a rebound to US$80 a barrel in 2020.
Calculation by the Federal Reserve Bank at St Louis proposes oil prices could drop all the way to zero by mid-2019. This by no means suggests that oil will be offered for free. The conclusion is based on a model that combines inflation expectations with oil prices. What the study does point to is the contradiction of economic data and the roller-coaster nature of the oil market………………………………………..Full Article: Source

Funds Look For a Bottom In Commodity Prices: Scotiabank

Posted on 30 March 2016 by VRS  |  Email |Print

Scotiabank’s Commodity Price Index edged down in February by -0.3% m/m (-25.0% yr/yr) — the fourth consecutive monthly decline — but is expected to rally significantly in March. Commodity prices have rebounded across a broad front since mid-February amid some easing in concern over the outlook for China’s economy and a weaker U.S. dollar.
“Equally important, hedge & investment funds appear to be looking for reasons to bid commodity prices higher, after the rout of recent years. The Scotiabank Commodity Price Index is currently at a more than a decade low,” said Patricia Mohr, Vice President of Economics and Commodity Market Specialist at Scotiabank………………………………………..Full Article: Source

Why you should take this commodities rally with a grain of salt

Posted on 30 March 2016 by VRS  |  Email |Print

Signs are beginning to surface that the global commodities implosion has reached bottom. The questions for investors, though, are how long the relative good times will last, and just how good they will be.
On the surface, at least, the news has been positive. Last week, the Baltic Dry Index — which reflects the price of moving dry goods by sea, is often considered an indicator of global commodities demand and trade, and has nothing to do with drought in Estonia — finished above 400, which represents a 38 per cent increase in a little more than six weeks………………………………………..Full Article: Source

Hidden force behind oil’s rise: sabotage by terrorists

Posted on 30 March 2016 by VRS  |  Email |Print

Oil prices have surged on hopes of a freeze in global production. But a more hidden factor is also fueling the price spike: terror attacks on oil facilities.
Sabotage to key oil pipelines have driven global supply outages to “elevated” levels estimated at more than 3 million barrels per day, according to the Royal Bank of Canada. For instance, last month a critical pipeline in Nigeria was bombed, taking around 250,000 barrels of crude offline until May………………………………………..Full Article: Source

Oil at $45-$50 Is a Fair Price for World’s 4th-Biggest Buyer

Posted on 30 March 2016 by VRS  |  Email |Print

Crude at $45 to $50 a barrel is enough to encourage India’s own exploration without squeezing fuel consumers, according to the oil minister of the world’s fourth-largest user.
While the collapse in prices has created a buyers’ market and boosted India’s bargaining power amid an oversupply, low crude is “challenging” for the nation’s own oil fields, Dharmendra Pradhan said in an interview in New Delhi on Monday. The government’s priority is to protect the interest of consumers and simultaneously attract investments in domestic production activity, he said………………………………………..Full Article: Source

Saudi Arabia loses oil market share in key countries

Posted on 30 March 2016 by VRS  |  Email |Print

The world’s largest crude exporter, Saudi Arabia has lost its leading position in nine of the 15 top markets in the past three years reports the Financial Times citing data from energy consultancy group FGE. According to the analysis, the kingdom lost ground in China, South Africa and the US between 2013 and 2015, despite the goal of maintaining its crude market share amid the oil glut.
“Saudi Arabia has had very difficult time selling oil in this environment,” Citigroup analyst Ed Morse told the FT. “Its rivals are going into a very crowded market in a very aggressive way.”……………………………………….Full Article: Source

China investors drive gold price spike as bullion beats jewellery

Posted on 30 March 2016 by VRS  |  Email |Print

Chinese investors have been snapping up gold bars and coins, overshadowing the usual purchases of gold jewellery and contributing to the metal’s price rise of about 15 per cent from six-year lows in December.
Typically, gold purchases in China are strongly associated with jewellery buying around the Lunar New Year holiday, which this year fell in early February. But uncertainty confronting global economies along with forces in Chinese markets have driven up gold demand from a different sort of buyer: the hard-nosed investor………………………………………..Full Article: Source

Gold touches lowest in six weeks following global move

Posted on 30 March 2016 by VRS  |  Email |Print

Gold hit its lowest in six weeks as markets widely awaited confirmation of the US Federal Reserve’s stance on interest rates. A Fed official had hinted last week of more rate increases this year than estimated earlier. This renewed confidence is resulting in the dollar gaining against major global currencies.
Standard gold in Zaveri Bazaar declined to Rs 28,235 per 10 g, a level not seen since February 10. The metal, however, closed with a marginal recovery of Rs 40 to Rs 28,275 per 10 g on Tuesday amid thin trading due to a jewellers’ strike against the excise levy of 1 per cent………………………………………..Full Article: Source

Negative interest rates spark 2016 gold rush - but can German buyers push prices even higher?

Posted on 30 March 2016 by VRS  |  Email |Print

Almost a quarter of world GDP lies in economies whose central banks now have negative interest rates of some form. This experimental policy – used variously to weaken strengthening currencies and attempt to stimulate growth – has its fans, but investors have not been among them.
“There’s a sense that central banks are running out of ways that they can stimulate the economy,” says Chris Beauchamp of IG. As Deloitte economist Ian Stewart, among others, has pointed out, while in theory negative rates should encourage banks to lend and consumers to spend, in practice, they could just prompt individuals and companies to hold physical cash instead………………………………………..Full Article: Source

Precious-metals funds emerge as a powerful leveraged gold play

Posted on 30 March 2016 by VRS  |  Email |Print

The stunning run so far this year by equity precious-metals mutual funds might be enough to temp some investors and financial advisers to try and jump on the bandwagon. A better strategy, however, would be to take a lesson from the rally in order to be prepared to catch the next one.
As a broad category, equity precious-metals funds have lapped the field since the start of the year, cranking out an average gain of more than 36%, according to Morningstar. The category performance more than doubled the 15% gain by the next best category, commodities precious metals, which includes just one fund………………………………………..Full Article: Source

A Look at What’s Boosting Oil ETFs, How Long it Will Last

Posted on 30 March 2016 by VRS  |  Email |Print

The United States Oil Fund, which tracks West Texas Intermediate crude oil futures, is up 9.4% over the past month in what can be described as a stunning reversal of fortune for the previously downtrodden oil exchange traded fund.
While that type of rally would appear to lure new investors, those considering fresh positions in USO and rival oil ETFs should consider one of the catalysts that is driving oil prices higher: Short covering. Oil’s rally, like gold’s, has drawn plenty of skeptics………………………………………..Full Article: Source

India: Sebi tightens noose on commodity exchanges

Posted on 30 March 2016 by VRS  |  Email |Print

Tightening the noose on commodity trade, the Securities and Exchange Board of India (Sebi) has directed commodity exchanges to comply with the provisions of client code modifications in equity markets within one month.
Superseding the circulars issued by the erstwhile Forward Markets Commission (FMC), Sebi directed national and regional commodity exchanges to use the facility of client code modification only in exceptional cases. “The objective of this provision is to streamline client code modifications across entire spectrum of trading including equity and commodity markets alike,” Sebi stated………………………………………..Full Article: Source

Pressure mounts on Nigeria to devalue its currency

Posted on 30 March 2016 by VRS  |  Email |Print

Nigeria is under pressure to devalue its currency in order to aid growth and investment in Africa’s largest economy. According to reports, the United States intends to press the West African nation to lower the naira in order to create more flexibility in its foreign exchange.
The two countries are set to hold talks in Washington on Wednesday that will primarily focus on the West African country’s economy, security and development. Africa’s largest economy is facing its worst economic crisis in years pegged to the tumbling of global oil prices. A number of analysts and the members of the central bank monetary policy committee (MPC) have called for the devaluation of the currency, a move President Muhammadu Buhari is against………………………………………..Full Article: Source

China’s Currency Stronger As U.S. Dollar Falls

Posted on 30 March 2016 by VRS  |  Email |Print

China’s yuan strengthened against the dollar midday Tuesday, after China’s central bank fixed a stronger midpoint in response to the greenback’s slip as soft U.S. data dampened expectations for an April Federal Reserve interest rate hike.
“This surely further eased the short-term depreciation pressure on the yuan,” a trader at an Asian bank said. “I have to say luck was on our side when the dollar was not faring well.”……………………………………….Full Article: Source

Beyond Carbon Metrics

Posted on 30 March 2016 by VRS  |  Email |Print

Over the last ten years, “climate change” has become almost synonymous with “carbon emissions.” The reduction of greenhouse gases in the atmosphere, measured in tons of “carbon equivalents” (CO2e) has emerged as the paramount objective in the quest to preserve the planet.
But such a simplistic approach cannot possibly resolve the highly complex and interconnected ecological crises that we currently face. Global environmental policy’s single-minded focus on “carbon metrics” reflects a broader obsession with measurement and accounting………………………………………..Full Article: Source

Is a global aviation emissions deal quietly being prepped for takeoff?

Posted on 30 March 2016 by VRS  |  Email |Print

Could September see the delivery of the second historic international climate change deal in less than 12 months? That is the hope shared by a growing band of businesses and NGOs who are increasingly optimistic the Paris Agreement could be followed later this year by a long-awaited deal to tackle aviation emissions.
The U.N.-backed International Civil Aviation Organization (ICAO) is to meet in September to discuss a series of proposals for tackling emissions from the global industry, including a recently published Draft Resolution for a Market-Based Measure which could usher in a global carbon market for aviation………………………………………..Full Article: Source

Barclays warns of a “rush for the exits” on commodities

Posted on 29 March 2016 by VRS  |  Email |Print

Analysts at Barclays have warned of a “rush for the exits” as investors back away from commodities, resulting in price levels for oil and copper dropping as much as 25pc. A note issued by the bank said that although investors have been attracted to commodities as one of the best performing assets so far in 2016, returns are unlikely to be sustained in the second quarter of the year.
“This could make commodities vulnerable to a wave of investor liquidation that we estimate could, in a worst case scenario, knock as much as 20-25% from current price levels,” the note said. This would take the price of oil back to the low $30s and copper to the low $4,000s, the analysts said………………………………………..Full Article: Source

The commodities slump won’t undermine Australia’s banks

Posted on 29 March 2016 by VRS  |  Email |Print

Australians hate a tall poppy, which means the country’s richly valued banks are liable to get cut down at the first hint of bad news. So when Australia & New Zealand Banking Group admitted last week that it would have to take higher bad-debt charges due to the slump in commodity prices the shares fell as much as 6 per cent, the biggest drop in more than seven months.
Overvalued banks, rising defaults, troubled mining companies: What’s not to dislike about that picture? Sadly for the dwindling band still shorting the country’s big four banks, there’s little evidence such problems will pose more than a temporary speed-bump to their earnings. ……………………………………….Full Article: Source

Commodity Prices: The Cycle Turns?

Posted on 29 March 2016 by VRS  |  Email |Print

Rising commodity prices have given the Asia-Pacific’s miners a much-needed boost. Is this really a turning point? On March 24, U.S. oil futures settled at around $39 a barrel, up nearly 50 percent on January’s 12-year low of below $27. Meanwhile, the benchmark copper price on the London Metal Exchange closed at $4,945 a ton, up 15 percent from its six-year low in January, while iron ore prices have risen by nearly 30 percent this year to more than $50 a ton.
The iron ore price posted its biggest one-day gain on record on March 7, surging 19 percent to $62.60 a ton after Chinese Premier Li Keqiang pledged to spend 1.65 trillion yuan ($250 billion) on building roads and 800 billion yuan on railway construction, as part of efforts to ensure a minimum gross domestic product (GDP) growth rate of 6.5 percent for the next five years………………………………………..Full Article: Source

Why Commodities Are The Trade Of The Year

Posted on 29 March 2016 by VRS  |  Email |Print

We talked last week about the weakness in the Chinese economy, which has been compounded by the weak-yen policies in Japan (which threatens China’s king-of-exports throne). And we know, based on history, Chinese policymakers won’t sit back and let weak global demand and a currency war from Japan undo the path of their economy.
They’ve already reversed course on their currency policy of the past decade, as they’ve begun taking back some of the appreciation of the yuan of the past 10 years. And they’ve already responded with more rate cuts and bank stimulus. But with growth running at recession-like levels in China (even at 6%), expect them to do more, maybe a lot more………………………………………..Full Article: Source

What Low Oil Prices Really Mean

Posted on 29 March 2016 by VRS  |  Email |Print

Since the start of 2016, oil prices have swung between $27 and $42 per barrel, about a quarter of the 2008 peak crude oil price of $145. On February 16, oil ministers from Saudi Arabia, Russia, Qatar, and Venezuela agreed to a tentative deal to freeze their production in an attempt to boost prices. This was a characteristic move.
For decades, this is how the oil business has worked. Producers carefully control production to try to match supply to demand. But there’s a lag between these decisions and their effects, creating the boom and bust cycles so typical in the business………………………………………..Full Article: Source

Saudi Arabia loses oil market share to rivals in key nations

Posted on 29 March 2016 by VRS  |  Email |Print

Saudi Arabia lost market share in more than half of the most important countries it sold crude to in the past three years, even as the kingdom increased output to record levels. The world’s biggest oil exporter lost ground to rivals in nine out of 15 top markets between 2013 and 2015, including China, South Africa and the US, according to an analysis of customs data.
Saudi Arabia set itself a goal in late 2014 of maintaining its crude market share amid a glut that prompted a collapse in oil prices, but the imports data compiled by FGE, an energy consultancy, suggest the country’s strategy suffered setbacks in some of its key customer countries last year………………………………………..Full Article: Source

Why we could see an oil price shock in 2016

Posted on 29 March 2016 by VRS  |  Email |Print

The depletion of old oil wells is expected to surpass new sources of supply in 2016, as the ongoing oil price slump puts a long list of oil projects on the shelf.
Bloomberg flagged new data from the Norwegian consultancy firm Rystad Energy, which predicts that legacy production will tip the supply balance into the negative in 2016 for the first time in years. The production from an average conventional oil field typically ramps up in the early years, plateaus and then enters a period of decline………………………………………..Full Article: Source

China and India Rewrite the Rules of the Oil and Gas Game

Posted on 29 March 2016 by VRS  |  Email |Print

As the current oil price crisis leads to some game-changing upheavals in the global energy market, Asia’s two powerhouses, China and India, are taking advantage of the supply glut to rewrite the long-established rules of business.
India and China have seen exponential growth in oil demand over the past 25 years. Combined, they consume 16 percent of the world’s oil—second only to the U.S. at 20 percent. And analysts expect that by 2040, these two growing economies will double their combined consumption to 30 percent. These are game-changing numbers that have all major producers seeking inroads to this territory………………………………………..Full Article: Source

Bears are fleeing the oil market at a record pace, but that’s no reason to be bullish

Posted on 29 March 2016 by VRS  |  Email |Print

Oil enthusiasts haven’t been jumping on board the latest rally. As crude has soared 50 per cent since Feb. 11, the number of bets on increased prices has barely budged. Instead, the upward pressure on prices appears to have come from traders cashing out of bearish wagers at an unprecedented pace.
The liquidation of short positions during the last seven weeks covered by data from the U.S. Commodity Futures Trading Commission was the largest on record. “The rally has come from shorts getting scared out of their positions, and you’re not seeing a lot of money coming in on the long side,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “It really calls into question the fortitude and staying power of the rally.”……………………………………….Full Article: Source

OPEC’s Little Helper

Posted on 29 March 2016 by VRS  |  Email |Print

Oil ministers from OPEC and non-member countries are looking hard for a recovery in prices, and are hoping their meeting next month will produce an output freeze that can be a first step toward that goal.
They’re getting some surprise help from Iraq, the member which added more to supply last year than any other country, and that’s due in large part to a change in fortunes in Kurdistan.The Kurdish Regional Government had planned to be overseeing production of 1 million barrels a day of oil by now. Instead, it faces declining output, recurring difficulties in getting its oil to market and renewed pressure from federal authorities………………………………………..Full Article: Source

Who sets the gold price?

Posted on 29 March 2016 by VRS  |  Email |Print

How is the price of gold established? Scratching the surface, the answer seems obvious: it is a result of a free interplay of market forces. However, there is no single gold market; the yellow metal is traded in many places.
Who then sets the price of gold? London or New York? Which of them shapes the price discovery process? What is the relationship between the LBMA Gold Price and Comex futures and spot prices? As the chart below shows, there is an almost perfect correlation between London and New York prices; but which leads the dance?……………………………………….Full Article: Source

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