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Commodities Briefing - Archive | May, 2016

The banks where the commodities rout will hurt most

Posted on 31 May 2016 by VRS  |  Email |Print

When it comes to souring commodity-related loans putting pressure on banks, the credit ratings of lenders in Singapore, South Korea and Mongolia are the most at risk. That’s the verdict from Moody’s Investors Service, which highlighted the three countries as areas of particular concern, even though the ratings agency does not expect negative bank rating actions for most of Asia Pacific despite the prolonged commodities rout.
However “pressure on the quality of commodity-related loans could be a contributing factor behind possible negative bank rating actions in Singapore, Korea and Mongolia over the next 12-18 months, as reflected in our negative outlooks on many banks in these systems,” the ratings agency said………………………………………..Full Article: Source

Is the worst now over for commodity prices?

Posted on 31 May 2016 by VRS  |  Email |Print

The last couple of years have been truly horrific for investors in a number of resources companies. Profits have tumbled, share prices have plunged and investor sentiment towards mining and oil and gas companies in particular has weakened significantly.
However, in recent months the outlook for a number of commodities has improved dramatically. For example, since the turn of the year gold has risen by around 18% while the price of oil is now almost 80% higher than it was earlier in the year. For many investors, such figures may mean that commodities as a whole are worth investing in. But in reality, it depends on which commodity is being discussed. In other words, some commodities may perform well, while others see their prices come under pressure………………………………………..Full Article: Source

Why the commodity slump could be a good thing for Africa

Posted on 31 May 2016 by VRS  |  Email |Print

There is an urgent need for diversification of Africa’s economies and while it is having an immediate negative effect, the recent commodities slump is beginning to drive change. For example, some investors in Nigeria who have historically thrown their lot behind the oil and gas industries are now looking to buy large tracts of agricultural land in a bid to mitigate the effects of the slump in the commodities sector.
After many years in the wilderness, the agricultural sector is fast emerging as one of the most attractive investment opportunities on the continent – and a sector where innovation and supportive policies can be harnessed to drive growth and jobs, so sorely needed across the continent since the Chinese and global economic slowdowns knocked commodity export opportunities………………………………………..Full Article: Source

Is Opec relevant in an oil market of falling prices and overproduction?

Posted on 31 May 2016 by VRS  |  Email |Print

The Organization of Petroleum Exporting Countries’ inability to reach consensus amid low point in commodity cycle comes under question before 2 June meeting. As the Organization of Petroleum Exporting Countries (Opec) meets on 2 June, questions are rising about the oil cartel’s continuing relevance.
Many Opec members have suffered as the oil price has collapsed and countries, most notably Saudi Arabia and Iran, have fought to retain market share rather than set prices by adjusting production. Crude-oil prices briefly fell under $30 a barrel for both Brent and West Texas Intermediate earlier this year, but have rebounded, with values touching $50 for Brent Thursday………………………………………..Full Article: Source

Crude oil price at $60 per barrel gains more backers

Posted on 31 May 2016 by VRS  |  Email |Print

The United Arab Emirates’s economy minister joined forecasters looking for $60 crude this year with demand and production moving more in line. “It’s possible for oil prices to reach $60 or more during this summer” as demand increases in the US, UAE Economy Minister Sultan Bin Saeed Al Mansoori said at a conference in Abu Dhabi on Monday. Crude will end the year higher than $60 a barrel, Mario Maratheftis, global chief economist at Standard Chartered, said.
SEB Bank forecast last week that Brent would touch $60 at times in 2016. Oil futures jumped 31 per cent this year, climbing above $50 a barrel last week, as US crude stockpiles declined, trimming a glut. Robust demand in India and other emerging nations led the International Energy Agency in May to reduce its estimate of the global oil surplus for the first half. Brent last traded above $60 in July………………………………………..Full Article: Source

Sberbank CEO: Oil price of $45 per barrel to boost Russian economy

Posted on 31 May 2016 by VRS  |  Email |Print

Russia’s economy may grow next year if oil prices stay at around $45 per barrel, Sberbank CEO Herman Gref said. “If the curernt trend continues, and the oil price will be around $45 per barrel,… next year, most likely, we will be a small growth of the Russian economy,” he said.
Gref added that oil price in 2020 could reach $60 per barrel, and by 2024 could increase to $80 per barrel. On May 26 the price of Brent crude oil exceeded the mark of $50 per barrel for the first time since November 4, 2015. The maximum price for July Brent crude oil futures contract reached $50.08 per barrel, according to the London’s ICE Futures Europe………………………………………..Full Article: Source

Why India could be the oil market’s next big driver of consumption

Posted on 31 May 2016 by VRS  |  Email |Print

Oil’s rise to US$50 a barrel earlier this month proved to be short-lived, but at least it suggested that oil prices had established a new and higher range. We might not be looking at a return to US$100-a-barrel WTI anytime soon, but prices seem to have stabilized somewhat, remaining north of US$40 for several weeks now.
Who knows how long this will last, of course. Support for higher prices has come at least in part from supply disruptions — in Nigeria and Libya, as well as Alberta, thanks to the Fort McMurray fires. Recent U.S. Energy Information Administration data suggest that stockpiles of crude are coming down………………………………………..Full Article: Source

Gold Price Forecasts Revised Higher – Citi Says “Buy the Dip”

Posted on 31 May 2016 by VRS  |  Email |Print

Gold price forecasts have been revised higher in recent weeks and Citi became the latest bank to revise higher their projections for gold, despite the recent weakness in the price. Citi Research, the research division of one of the world’s biggest banks, raised its gold price forecast to an average $1,280 in the current quarter, $1,300 in the July-September period, and $1,250 in the final three months of the year.
Citi said that despite the recent gold pullback, now is an “opportune moment” for buyers and now is the time to invest in gold………………………………………..Full Article: Source

Gold will not fall below $1,200/oz for long – Commerzbank

Posted on 31 May 2016 by VRS  |  Email |Print

There is the short-term potential for the gold price to fall below $1,200 per troy ounce due to the high level of speculative interest and renewed Fed rate hike speculation, said Commerzbank . But the price is not expected to fall lastingly below this threshold because such a price level is likely to be viewed by investors as an attractive opportunity to buy, it said.
“What is more, lower prices should cause physical buying interest to pick up in Asia, as the consumer restraint exercised there in recent months has generated pent-up demand,” it added. At present, there is also little to suggest that the interest in gold ETFs might wane abruptly or even switch to selling, it noted………………………………………..Full Article: Source

Mines can put gold price respite to good use

Posted on 31 May 2016 by VRS  |  Email |Print

Stakeholders need to address alternative job opportunities for mineworkers, but it can also be expected that mining posts will steadily become more skilled and better paid. A surging gold price and a weakening rand have been good to South African gold producers in the first half of 2016, but how can the much-needed financial respite be used to build more sustainable mines?
There is a danger of this windfall revenue simply being used to repay debt and issue dividends to expectant investors. Rather, these pressing demands should be tempered by considering where the business will be when the rand gold price weakens again. What is needed are bold strategic and technical efforts to improve productivity and drive these companies down the industry cost-curve in the medium to long term………………………………………..Full Article: Source

Increasingly bearish indicators weigh down lead price

Posted on 31 May 2016 by VRS  |  Email |Print

Last year lead was the best-performing base metal on the LME by virtue of dropping by the least over the duration of 2015. The lead price declined 2.8% last year compared to 20%-plus falls in zinc, tin, cobalt and copper and ever volatile nickel’s 42% drop (moly fared just as badly).
In 2015 lead was buoyed by expectations of a handful of significant mine closures, a reduction in Chinese stockpiles and firm demand from the country’s lead-acid battery industry. Things haven’t quite panned out this way and lead is now the base metals deepest in the red year-to-date trading at $1,698 a tonne on Friday down 5.7% in 2016. In contrast sister metal zinc has managed to hold onto 18% gains since January………………………………………..Full Article: Source

Iron ore heads down again — Lower for longer?

Posted on 31 May 2016 by VRS  |  Email |Print

The world’s biggest iron ore miners believe that the recent rally in the price of the commodity will not last, because, while demand remains mostly flat, they have committed to maintaining or increasing their supply.
The price of iron ore, a key raw material to make steel, has fluctuated wildly so far this year, with the Northern China benchmark price plunging to a 10-year low of $39.30 per metric ton in January, a fraction of the commodity’s record high of $188 a ton in February 2011………………………………………..Full Article: Source

Indian banks to hurt from weakness in metals, mining: Moody’s

Posted on 31 May 2016 by VRS  |  Email |Print

Global rating agency Moody’s expects banks in the Asia-Pacific region (excluding Japan) to feel the ripple effects of the problems in commodities-related sector. The asset quality and profitability of banks in Mongolia, Singapore, Korea, Indonesia and India are exposed to the more vulnerable parts of the energy/commodity sectors, such as oil services, offshore marine, shipping and shipbuilders, and metals & mining and steel, says the Moody’s report.
“For metals and mining, banks in Mongolia, India, Indonesia and China are more exposed,” says the report. Moody’s expects 2016 to be another challenging year for metals and mining firms, leading to higher problem loans and weak recoveries for existing problem and restructured loans. ……………………………………….Full Article: Source

Active ETFs make major leap ahead of passive brethren

Posted on 31 May 2016 by VRS  |  Email |Print

Assets in active ETFs grew at more than double the rate of passive ETFs in 2015, Pensions & Investments’ annual money manager survey found. Among managers in Pensions & Investments’ universe of the largest managers of U.S. institutional tax-exempt assets, active ETF assets grew 26.7%, to $24.7 billion.
That total, however, is still only a sliver of the $2.46 trillion total reported in ETFs and exchange-traded notes sponsored by the managers in P&I’s universe………………………………………..Full Article: Source

16 Europe ETFs to Hedge Foreign Exchange Risks

Posted on 31 May 2016 by VRS  |  Email |Print

With the U.S. dollar rebounding and European markets recovering, exchange traded fund investors may want to consider a currency-hedged strategy to capture the gains while mitigating the negative effects of an appreciating USD.
For example, the WisdomTree Europe Hedged Equity Fund , the largest Europe currency-hedged ETF, rose 7.6% over the past three months and recently broke above its long-term resistance at the 200-day simple moving average………………………………………..Full Article: Source

China commodity exchange to curb speculation

Posted on 31 May 2016 by VRS  |  Email |Print

Dalian Commodity Exchange (DCE) will closely monitor the commodity market to stop illicit trading, said vice general manager Wang Fenghai. Wang said that spot prices of some commodities swung violently this year and he had seen signs of excessive speculation in the trading of coal and metal-related futures since April.
The DCE, one of China’s four futures exchanges, has raised deposits and commission for heavily traded futures, among other measures to curb speculation and maintain market order………………………………………..Full Article: Source

EFSA finalises amendments to commodity exchange draft law

Posted on 31 May 2016 by VRS  |  Email |Print

The Egyptian Financial Supervisory Authority (EFSA) finalised the amendments to the draft law 95 of 1992 to establish a commodity exchange in the Capital Market, and intends to discuss them with the parties of the capital market in the coming days, chairperson of the authority Sherif Samy told Daily News Egypt.
He explained that the new regulations of the law are designed to regulate the relationship between the parties that deal with trading goods contracts, which include the exchange market itself, the suppliers of goods, brokerage firms, and traders of these contracts………………………………………..Full Article: Source

Buhari Leaves Traders Guessing on Path for Nigerian Currency

Posted on 31 May 2016 by VRS  |  Email |Print

Nigerian President Muhammadu Buhari’s Sunday speech has left foreign-exchange traders with little clue as to the fate of the naira. Far from clarifying the government’s approach on the currency, following central bank Governor Godwin Emefiele’s pledge last week to adopt a more flexible exchange-rate policy, Buhari’s words have left the market as confused as ever.
While some, including Standard Chartered Plc, said a looming recession had forced Buhari to change tack and allow the naira to depreciate, others said the president — who once likened letting the currency weaken to “murder” — had signaled continued resistance to reducing its value………………………………………..Full Article: Source

Chinese currency falls to three-month low

Posted on 31 May 2016 by VRS  |  Email |Print

The Chinese currency fell yesterday, heading for the steepest monthly decline since it was devalued last August, after the US Federal Reserve chief said an interest rate increase could come in the next few months.
Onshore yuan declined 0.24 per cent to a three-month low of 6.5814, extending losses this month to 1.55 per cent. The People’s Bank of China (PBOC) had set the mid-point rate at 6.5784 per US dollar before the market opened, 0.45 per cent weaker than the previous fix of 6.549 and the currency’s softest fixing since February 2011………………………………………..Full Article: Source

Tokyo’s cap and trade scheme goes beyond hitting the bullseye

Posted on 31 May 2016 by VRS  |  Email |Print

The city-wide Tokyo Cap and Trade Program has stimulated energy efficiency in the commercial and industrial sector so effectively it has achieved double its emissions reduction goal across the 1300 properties covered, according to a recent research report.
The commercial office sector outperformed all others, achieving a reduction of emissions intensity of 27 per cent by financial year 2013, compared to the year 2000 baseline. The target had been set at eight per cent by FY 2015, and 20 per cent by 2020………………………………………..Full Article: Source

Does organic agriculture boost local economies?

Posted on 30 May 2016 by VRS  |  Email |Print

For the first time, there is now evidence linking organic agriculture and economic health. The organic industry is one of the fastest-growing sectors of the United States food industry. Organic food sales grew 11 percent to almost US$40 billion in 2015, according to the Organic Trade Association (OTA), while the food market as a whole had a 3 percent growth rate.
This growth is partly because organic crops command a premium price over conventional crops—as demand for organic food rises, so does the interest in organic production from farmers and producers………………………………………..Full Article: Source

Global Oil Market May Recover by End of 2017 - Russian Energy Minister

Posted on 30 May 2016 by VRS  |  Email |Print

Global oil market recovery can be expected by the end of 2017, Russian Energy Minister Alexander Novak said Sunday. “It seems to me that by the end of 2017 we will see the end of the respective cycle [of low oil prices] and the recovery of the market,” Novak stated at the Vestifinance forum.
The supply will be below the level of 2015 during the second, third and the fourth quarter of the current year and only by the year-end, it will reach the previous year’s notch, he noted, citing experts’ forecast and assessment………………………………………..Full Article: Source

The only certain thing about oil’s price is its uncertainty

Posted on 30 May 2016 by VRS  |  Email |Print

A large number of clever people backed by deep-pocketed employers spend a great deal of time trying to work out where the oil price is heading. It’s rather surprising, therefore, how wrong most of their predictions are. Forecasts generally amount to extrapolating the recent past.
When the oil price hit $150 a barrel in 2008, many thought that it would reach $200; earlier this year when the price of Brent crude hit $26, experts (often the same ones who were warning of the price spike eight years ago) predicted further falls to $15………………………………………..Full Article: Source

Why oil prices will head back toward $20 next winter

Posted on 30 May 2016 by VRS  |  Email |Print

One of today’s more fascinating examples of a widespread misunderstandings of cause and effect is that of the relationship between the U.S. dollar and crude oil or, if you prefer, the larger definition of the same problem — the dollar vs. commodity prices.
Commodity prices are down over the last two years, but not because the dollar is strong. They are down because there is too much supply and not enough demand. That causes commodity-related currencies — such as the Brazilian real, Russian ruble, South African rand, and the Canadian and Australian dollars — to be weak against the U.S. dollar (from a long-term perspective, not a couple of months)………………………………………..Full Article: Source

Oil States Expected to Stick With Saudis : OPEC Reality Check

Posted on 30 May 2016 by VRS  |  Email |Print

OPEC members gathering in Vienna June 2 are expected to go along with a Saudi Arabia-led policy focused on squeezing out rivals amid signs the strategy is working. That means the meeting may be less fraught than the previous summit in December, which ended with public criticism of the Saudi position from Venezuela and Iran.
By allowing prices to fall, high-cost producers are being forced out, easing the supply glut and spurring a rally of 80 percent since January to about $50 a barrel. All but one of 27 analysts surveyed by Bloomberg said the Organization of Petroleum Exporting Countries will stick with the strategy. An alternative proposal — to freeze output — was finally rejected in Doha last month………………………………………..Full Article: Source

Oil Pessimists Exit Market as Supplies Seen Closer to Balance

Posted on 30 May 2016 by VRS  |  Email |Print

The oil market doomsayers are beginning to capitulate. Speculators reduced bets on falling prices to the lowest level in 11 months as oil briefly breached $50 a barrel on signs supplies are coming into balance.
Crude climbed 7.4 percent this month in New York amid lower U.S. production and unplanned disruptions in Canada and Nigeria. Prices are up almost 90 percent since February. Money managers’ short position in U.S. benchmark crude reached the least since June, according to data from the Commodity Futures Trading Commission………………………………………..Full Article: Source

Iran soon to regain its oil market share: Rouhani

Posted on 30 May 2016 by VRS  |  Email |Print

Iran will retake its pre-sanction oil market share in the near future, Shana quoted President Hassan Rouhani as saying on Saturday. The president made the remarks in the inauguration ceremony held Saturday morning for the start of new Iranian parliament.
In the event, Rouhani noted that during the past four years Iran lost $180 million of its oil revenues per day because of the sanctions, “If we had those financial resources, which we lost due to the sanctions, we could have had a better employment condition and higher economic growth today”, he added………………………………………..Full Article: Source

The Real Question for OPEC: Who’ll Be Its New Top Official?

Posted on 30 May 2016 by VRS  |  Email |Print

As internal opposition to Saudi Arabia’s plan to squeeze rival suppliers fades, OPEC might not have a big policy question to debate when it meets next week. Nevertheless, the group will still have one thing to argue about: Who will replace Abdalla El-Badri as the next secretary-general?
El-Badri, a Libyan, was originally due to stand down in 2012 after serving the maximum six years in the position. The group has been extending the 76-year-old’s term ever since as squabbling members failed to agree on a successor………………………………………..Full Article: Source

Will gold continue to shine in 2016?

Posted on 30 May 2016 by VRS  |  Email |Print

Gold has been one of the best performing assets of 2016 and is up 15% since 1 January. Gold bugs around the world have been calling this the start of a furious bull market in gold and silver. Today I’m looking at the reasons gold has made this move and whether it will continue.
After the Federal Reserve increased US interest rates in December last year, most of us were expecting multiple rate rises this year. However this hasn’t happened and the Fed has been surprisingly dovish, which has weakened the dollar. The US Dollar index tracks the dollar against a basket of currencies and is down nearly 4% this year………………………………………..Full Article: Source

UBS: Investors Have Opportunity To Buy Gold At ‘More Attractive Levels’

Posted on 30 May 2016 by VRS  |  Email |Print

UBS says any further weakness in gold may be a buying opportunity. The metal has fallen some $90 an ounce from its recent highs, leaving it not far from $1,200 psychological support.
The bank says it’s “understandable” that some investors might be hesitant to buy into weakness, considering recent gains in the U.S. dollar, equities back near the highs for the year, rising 10-year Treasury yields and financial markets pricing in an increased likelihood of Federal Reserve tightening since the start of last week……………………………………….Full Article: Source

Emerging markets should shift from dollars into gold

Posted on 30 May 2016 by VRS  |  Email |Print

Managers of the world’s $10tn or so foreign exchange reserves are in a bind. More and more of the global government bond market shows a negative yield. If held to maturity, such bonds will inflict a certain loss. Those bonds that do offer a positive yield are horribly overvalued by historic standards.
If held to maturity, they will show a profit. But the capital value of these so-called safe assets is vulnerable to a spike in yields, which is bad news if central banks need to liquidate them to cope with a currency crisis or fiscal disaster………………………………………..Full Article: Source

High gold price prompts miners’ switch to lower grades

Posted on 30 May 2016 by VRS  |  Email |Print

With the price of gold continuing to hold at near record levels, Australia’s gold miners have switched to mining lower grades while also hedging their exposure to ensure ongoing access to the high price.
The latest quarterly survey by Surbiton Associates found a 2 per cent decline in March quarter gold production to 71 tonnes when compared with the previous quarter. March quarter output is usually weak due to the industry slowdown for summer holidays and the impact of the cyclone season, which slows output in mines in the country’s north………………………………………..Full Article: Source

Funds Step Back From Gold Before Yellen Says Rate Rise Is Coming

Posted on 30 May 2016 by VRS  |  Email |Print

Hedge funds decided to take a breather from gold just before Janet Yellen gave investors more reason to ditch the precious metal.
After a roaring start to the year, the excitement over bullion has dissipated this month on increasing expectations that the Federal Reserve is getting ready to raise U.S. interest rates again as the economy improves. Last week, money managers who have been bullish since January reduced their wagers on a price rally by the most this year………………………………………..Full Article: Source

There are signs of life in the iron ore price

Posted on 30 May 2016 by VRS  |  Email |Print

After falling below the $50 a tonne level for the first time since February 29 on Thursday, iron ore prices rebounded solidly on Friday, boosted by renewed strength in Chinese futures markets.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 3.38%, or $1.67, to $51.15 a tonne. It was the largest percentage gain recorded since April 29, and left the year to date gain at 17.4%………………………………………..Full Article: Source

Commodities hit by oil and metal falls amid flat pre-holiday trade

Posted on 30 May 2016 by VRS  |  Email |Print

Commodities producers were knocked by a sudden reversal in metal and oil prices, as the rally in Brent crude that began earlier this year gave way.
The price of a barrel of Brent, an oil benchmark, slid from the seven-month peak of $50 it touched on Thursday, to tumble beneath $49 as the week drew to a close. Coupled with declines in hard commodities, the moves weighed down the minerals- heavy FTSE 100………………………………………..Full Article: Source

ETFs help London to eclipse China for Swiss gold imports

Posted on 30 May 2016 by VRS  |  Email |Print

London has overtaken the traditional gold centres of India and China for shipments of bars from refineries in Switzerland, as the precious metal is sent to UK vaults to back a surge of buying from exchange traded funds.
The UK was the biggest destination for gold exports from Switzerland last month, Swiss customs data show, the most since September 2012. At 78.761 tonnes, more gold was dispatched to UK in April than to Hong Kong, India and China combined. That reflects a sharp change from recent years, when bars were sent from London to be refined in Switzerland before heading to India and China, the largest consumers of gold………………………………………..Full Article: Source

Smart-index ETFs good for passive investors

Posted on 30 May 2016 by VRS  |  Email |Print

Sundeep Sikka, chief executive officer, Reliance Nippon Life Asset Management, believes that one of the main reasons investors should buy passive funds is the massive cost difference of about 150-200 basis points vis-a-vis actively-managed funds. “And for a relatively-low cost, passive funds allow investors to earn broader market returns,” adds Sikka.
Obviously, many fund houses are looking aggressively at this segment to attract investors. Edelweiss Asset Management recently launched Edelweiss ETF-Nifty Quality 30. This exchange-traded fund (ETF) is based on the concept of smart indices. Reliance and Kotak AMC already have ETFs based on these indices. The launch of these ETFs is an interesting development in the evolution of passive investing in India………………………………………..Full Article: Source

Currency tranquillity is calm before storm

Posted on 30 May 2016 by VRS  |  Email |Print

It’s all quiet in currency markets, a little too quiet for some traders who warn that an uptick in volatility is just around the corner. Price swings in global exchange rates slid to the lowest since January this week, according to a JPMorgan Chase & Co. index. A three-month measure of dollar volatility versus the euro tumbled to the least since December 2014 while a gauge against the yen fell to a two-month low.
That tranquility, which comes before holiday weekends in the U.S. and U.K., isn’t likely to persist. Event risk stemming from Britain’s vote on EU membership to Federal Reserve meetings to the U.S. presidential election threaten to roil currencies around the world………………………………………..Full Article: Source

Currency Traders Look Beyond the Pound to Combat Brexit Turmoil

Posted on 30 May 2016 by VRS  |  Email |Print

It’s one of the biggest dilemmas facing currency managers: how to protect against the fallout from the U.K. leaving the European Union without losing money should it vote to remain.
With the pound’s volatility against the dollar at the highest in six years and options on its most traded currency pair the most expensive on record, traders are looking for other solutions in the run-up to the June 23 vote. For some investors, including Unigestion SA and Aberdeen Asset Management Plc, that means buying options on the Swiss franc and Swedish krona or using the euro as a proxy for sterling………………………………………..Full Article: Source

Carbon Pricing Under Binding Political Constraints

Posted on 30 May 2016 by VRS  |  Email |Print

In a new working paper titled “Carbon pricing under binding political constraints,” MIT Institute for Data, Systems and Society doctoral candidate Jesse Jenkins and Sloan School of Management Assistant Professor Valerie Karplus discuss the political obstacles facing efforts to price carbon emissions — either via a carbon tax or emissions cap and permit trading system — and outline a set of starting points that are both politically palatable and steps toward effective policies to curb climate change.
“While putting a price on carbon is the most economically-efficient strategy to confront climate change-related risks, in the real world, efforts to price carbon routinely run right into a range of political constraints,” explains Jenkins………………………………………..Full Article: Source

Carbon trading ‘to expand due to Paris climate deal’

Posted on 30 May 2016 by VRS  |  Email |Print

Carbon markets are expected to expand as a result of the Paris agreement. That’s according to 82% of the 146 carbon traders from the International Emissions Trading Association (IETA) surveyed by PwC, which added the figure is up from 58% from 2015.
IETA members were asked questions about “a broad range of organisation types and locations” such as Europe, North America and China. Around 61% of respondents said existing emissions trading systems (ETS) will make substantial contributions towards meeting the Paris targets. However 70% agreed existing ETS initiatives are being undermined due to an overlap with other climate policies………………………………………..Full Article: Source

Are commodities signaling a Lehman-sized meltdown? Japan’s Abe thinks so

Posted on 27 May 2016 by VRS  |  Email |Print

Only hours after Brent oil prices shot past $50-a-barrel for the first time in months, Japanese Prime Minister Shinzo Abe warned that the past few difficult years for commodities in general could be a red flag for another global financial crisis. Abe made the comments while hosting a meeting of the Group of Seven leaders on Thursday in Ise-Shima, Japan, according to a report from Reuters.
Abe showed his fellow leaders data charting a 55% drop in global commodity prices between June 2014 and January 2016. He said that’s similar to how much prices fell between July 2008 to February 2009 after Lehman Bros. went bankrupt and triggered a global financial crisis………………………………………..Full Article: Source

The Commodities Market Has A Sweet Tooth

Posted on 27 May 2016 by VRS  |  Email |Print

Despite appearances that the entire commodities sector is continuing on a major downslide, one resource remains steadfast – sugar. Sugar has been one of the best-performing commodities so far this year – largely driven by a global supply shortage, after wallowing in a five-year surplus.
Supply woes are pushing futures prices higher, while demand continues to increase on a global basis. In fact, the International Sugar Organization – along with most analysts – forecast global deficits through 2017………………………………………..Full Article: Source

Oil hits $50, global commodities dragged higher

Posted on 27 May 2016 by VRS  |  Email |Print

Oil’s advance through $50 a barrel in line with a softer dollar is energising the commodity sector, but bourses are otherwise under pressure as the latest global rally struggles to maintain momentum.
After a mixed Asia-Pacific session, the pan-European Stoxx 600 equity index is slipping 0.2 per cent while US futures point to the S&P 500 easing 0.1 per cent to 2,088, writes Jamie Chisholm. The cautious mood in stocks is encouraging buyers of government bonds, nudging down Treasury yields. The gold price is higher, and so is the yen………………………………………..Full Article: Source

Oil price rises above $50 a barrel

Posted on 27 May 2016 by VRS  |  Email |Print

Data suggests global glut is easing due to fall in US output and supply disruption in Canada, Libya and Nigeria. Oil prices have broken through the $50 per barrel mark for the first time in almost seven months after storage figures suggested that the glut in global crude supplies was easing.
Many analysts have predicted that the recovery, which will help the North Sea oil industry and could steady the global economy but hurt motorists through higher petrol costs, could be short-lived. The price of Brent crude edged up 0.9% to $50.2 a barrel, boosted by data from the US government showing a sharper than expected fall in crude stocks last week, and it later fell back slightly………………………………………..Full Article: Source

Oil Prices Poised to Hit Sweet Spot for Global Economy

Posted on 27 May 2016 by VRS  |  Email |Print

Oil prices, which have been on a jagged rise to near $50 a barrel, are poised to hit a sweet spot for global growth, traders, economists and investors say. On Thursday oil prices rose above $50 a barrel for the first time since November as a combination of supply disruption and declines in U.S. oil inventories raised hopes the oversupplied market was inching toward a better balance.
That puts crude back within a range between $50 and $60 in which almost everybody benefits, economists and investors say. In a so-called goldilocks scenario, oil is not too pricey for consumers and industry, which have benefited from cheap crude for almost two years. But it is priced well enough to help profits in the beleaguered oil industry………………………………………..Full Article: Source

This is what makes OPEC even less relevant

Posted on 27 May 2016 by VRS  |  Email |Print

A series of unexpected disruptions in the world oil market has driven crude to the $50 per barrel level more swiftly than expected — a factor that makes OPEC and its meeting next week less relevant. Both international Brent and West Texas Intermediate crude futures crossed above $50 Thursday, though analysts expect prices to temporarily head lower again in the next couple of months as some supply returns and demand drops off as it does every year after summer driving season peaks.
By year end, however, $50 or above is expected to be the norm. Oil production in the last several weeks has dropped by several million barrels a day due to everything from forest fires in Canada to rebel attacks in Nigeria………………………………………..Full Article: Source

OPEC Likely to Choose New Secretary-General Next Week

Posted on 27 May 2016 by VRS  |  Email |Print

Abdalla Salem el-Badri has been set to retire since 2013 but has stayed on because the fractious oil cartel has been unable to agree a new leader. The Organization of the Petroleum Exporting Countries is likely to choose a new secretary-general at its meeting next week, the only concrete action the cartel is expected to take, said national delegates of the group.
The 13-nation group that controls more than a third of the world’s crude-oil output has been unable to agree on much since petroleum prices began a long swoon nearly two years ago. Once able to swing production up or down to influence prices, OPEC has stayed on the sidelines during this downturn as an American oil boom floods the market and prices remain far below what the group’s members want………………………………………..Full Article: Source

Saudi Arabia Aims to Protect Share of Global Oil Market

Posted on 27 May 2016 by VRS  |  Email |Print

Saudi Arabia is not politicizing the oil problem and is acting solely on economic reasoning in discussion of oil prices and production output, Saudi Foreign Minister Adel al-Jubeir said Thursday. In an interview with Russia Today television, al-Jubeir dismissed assertions that Riyadh was using the oil issue to achieve political goals and insisted that Saudi Arabia approached the current situation on the global oil market solely from the economic standpoint.
“The market determines the oil price depending on demand and offer. The goal of Saudi Arabia is to protect its share of the market and not to support producers that have high oil prices,” the minister stressed………………………………………..Full Article: Source

A 107pc return in six months: Gold funds storm 2016 performance tables

Posted on 27 May 2016 by VRS  |  Email |Print

Specialist gold funds have clocked up incredible gains since the start of the year, with some doubling investors’ money. The rally, thanks to a 20pc rise in the gold price, puts them among the best performers of the 3,500 or so collective investments available to British investors.
Investec Global Gold, MFM Junior Gold, Ruffer Gold and Blackrock Gold & General are all among the top performers, while WAY Charteris Gold & Precious Metal and the Smith & Williamson Global Gold & Resources fund have also delivered stand-out performance………………………………………..Full Article: Source

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