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Commodities Briefing 16.Feb 2015

Posted on 16 February 2015 by VRS |  Email |Print

Is there a productivity force at work driving commodity prices lower? Why might lumber prices be higher? What industry cousin might offer clues about innovation in commodity markets? One of the more perplexing developments in this economic recovery is the collapsing prices of commodities.
During an economic expansion demand for commodities typically rises, sending prices higher. That has not been the case in this recovery. Metals, agriculture, energy, livestock and cotton - all of these commodities are trading at prices well below levels at the start of 2012. How could this be?……………………………………….Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

The WTI was $52.78/barrel and Brent was $61.52/barrel by the end of last week. It had surged recently due to fall in the number of oil drilling rigs in the US to its lowest since August 2011. The number of rigs drilling for oil in the US fell by 84 last week to 1,056, a clear sign of the pressure that tumbling crude prices have put on oil producers.
Oil prices have rebounded since late January, partly due to expectations the lower rig count will eventually shrink US production, curtailing the supply glut. Oil price also arose on account of eurozone growth of 0.3% in last quarter of 2014. The eurozone’s biggest economy, Germany, was a clear outperformer, growing by 0.7% in the quarter. The positive job data from US economy also contributed to surge in oil prices………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Sberbank CIB boosted commodities staff as a slump in oil and metals spurred demand from Russian companies for a protection from volatile prices. The bank’s commodities trading team now consists of 20 people, up from four 18 months ago, said Francois Mantion, head of commodity trading at Sberbank.
As global lenders from JPMorgan Chase & Co. to Deutsche Bank AG trim or exit raw materials operations, Russia needs a bank with expertise in the field, he said. Russia, the world’s biggest energy exporter, gets about half of its budget revenue from oil and gas. “Commodities is a natural asset class for a bank in Russia,” Mantion, who joined the corporate and investment banking arm of Russia’s biggest lender from JPMorgan in 2013, said……………………………………….Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Global oil demand is estimated to have grown by 0.95 million barrels per day (mb/d) in 2014, representing an upward revision of 20 thousand barrels per day (tb/d) from the previous month, according to OPEC Monthly Oil Market Report (MOMR).
According to a report by UAE’s official news agency Wam, quoting OPEC MOMR, the adjustment mainly reflects better-than-expected oil demand data from OECD America and China. In 2015, world oil demand is anticipated to rise by 1.15 mb/d, following an upward revision of 30 tb/d due to expectations of higher oil requirements in OECD America and Other Asia, the MOMR said……………………………………….Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Last week analysts at Citigroup slashed their forecast for crude oil to $20 a barrel before prices begin to recover. They see prices dropping to that point by the end of the first quarter or the beginning of the second quarter. The forecast is based on two points: the amount of crude oil in storage and the end of OPEC’s role as the so-called swing supplier.
WTI crude oil for March delivery closed at around $44 a barrel on January 29th and at $52.65 this past Friday, about where it traded before Citi’s forecast was published. Crude dipped to around $49 last Wednesday before climbing back up on Thursday and Friday………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Oil prices are likely to increase in the second half of 2015 due to lesser investments in shale projects, says a senior economist. “Additional supplies of oil in the market will be gradually removed, which will contribute to higher oil prices in the second half of this year,” Said A. Al-Shaikh, group chief economist at the National Commercial Bank (NCB), said.
He was speaking on the sidelines of a press conference in Jeddah where Dun & Bradstreet South Asia Middle East Ltd. (D&B) in association with the NCB released the D&B Business Optimism Index (BOI) survey for Saudi Arabia for Q1, 2015. The BOI survey highlights mixed trends in the optimism levels of both the hydrocarbon and non-hydrocarbon sectors in Saudi Arabia………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

The oil market is in a state of flux, says former Bank of England economist Spencer Dale. Is it now on the road to recovery? The oil market is in a state of flux. Prices have fallen by over 50pc since last summer. The Organisation of the Petroleum Exporting Countries (Opec) seems to have forgotten its lines. There are howls of pain from large and small oil producers alike.
Against such a backdrop, it is tempting to focus on the here and now. Although prices may be down for some years, the world’s demand for energy is likely to increase by almost 40pc over the next 20 years or so, driven by growth in developing economies………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

The world’s three big energy agencies are forecasting higher demand for OPEC’s crude oil this year, a sign the producing nations’ strategy to let prices fall is starting to win them back market share from rivals who are cutting output. After an oversupply of world oil sent prices tumbling in 2014, top OPEC exporter Saudi Arabia urged fellow members not to prop up the market and to try to knock out competing sources like U.S. shale, which, because it has higher production costs, had to cut output when prices fell.
In reports this week, The International Energy Agency and the Organization of the Petroleum Exporting Countries have raised by at least 200,000 barrels per day (bpd) their estimates of demand for OPEC crude in 2015, while the U.S. government’s Energy Information Administration forecasts OPEC will pump 140,000 bpd more………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Gold is falling back out of favor with investors. Hedge funds cut their net-bullish position in New York futures and options by the most since November, U.S. government data show. A stronger dollar and gains for equities are cutting gold’s appeal as an alternative asset. Prices in New York fell for three straight weeks, snapping a surprise January gain that was the biggest monthly advance since 2012.
The global growth concerns that pushed gold higher last month are starting to subside as tension eases between Greece and its euro-area creditors. Europe’s economy picked up momentum at the end of last year, data showed Friday. The World Gold Council estimates demand for the metal reached a five-year low in 2014 as Chinese purchases slowed………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Global demand for gold fell last year as buying plunged in two important markets, China and India, the World Gold Council said Thursday. Total demand in 2014 weighed in at 3,924 tons, compared with 4,088 tons the previous year. However, growth in demand increased into the end of the year: Fourth-quarter demand was 988 tons, up 6% from the year-earlier quarter.
Last year “was a year of stabilization…after the record-breaking level of buying seen in 2013,” said Marcus Grubb, managing director of investment strategy at the World Gold Council………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

From the outside, it looks like any other automatic bank machine on the streets of Istanbul. But rather than notes, this one distributes small pieces of gold. Gold is hugely prized in Turkey not just for ornamentation or investment by banks but as a secure way for private individuals to hold their savings.
Many people in Turkey – which has one of the lowest private savings rates among major economies – keep gold as security for a “rainy day” rather than products offered by banks. According to estimates, Turks hold some 3,500 tons of gold. Banks have sought to capitalize on the tradition by offering accounts denominated in gold………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Silver, a tangible asset, which is recognized as a store of value, its price can be affected by inflation, values of paper currency and fluctuations in interest rates and deficits. Silver investors insist on staying exposed to the metal despite its price weakness in 2014. Total physical demand for silver stood at a record 1,081 million ounces (Moz) last year.
If gold is poised to hit the $1,400 to $1,500 range in 2015, the biggest question for investors is whether a silver rebound will follow. Other precious metals like Silver and Platinum have generally followed the gold price. Silver is currently trading near all time low levels and has toyed with a rebound for months………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

The weakness in broad commodities seen last year has spilled over into 2015. This is especially true as a strong dollar, lower oil prices, supply glut, bumper crop and weak global fundamentals are dulling the appeal for these commodities.
While the U.S. economy is improving, the slowdown in the world’s largest consumer of raw materials – China – as well as sluggish growth and deflationary pressures in Europe and Japan added to the woes. Further, key emerging markets are also witnessing a slowdown. All these are tempering demand for commodities across the globe……………………………………….Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

If you spend any time wishing you were wealthy so that you could have a huge house, a fancy car, and a “wealth manager” to oversee and advise you on your finances, I have a little bit of good news for you. I can’t get you the house or car, but I can tell you that many of the top wealth managers have parked some of their customers’ money in exchange-traded funds (ETFs) — ones that you, too, can invest in.
And better still, they’re actually good investments. Last year, the folks at Forbes listed the top 50 wealth managers ranking them by assets under management. (The top-ranker managed $13.1 billion, and No. 50 managed $2.5 million.)……………………………………….Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Azerbaijan is planning to abandon its currency peg to the dollar as the oil price tumble strains its energy-dependent economy, the central bank governor has told the Financial Times.
“It is critical to make some kind of corrections to fiscal and monetary policy,” Elman Rustamov, who has led Azerbaijan’s central bank for two decades, said in an interview in Baku. “We consider that we should transit to a more flexible exchange rate regime and gradually we will transit to an inflation-targeting regime.”……………………………………….Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

Six and a half years after the global financial crisis, central banks in emerging and developed economies alike are continuing to pursue unprecedentedly activist—and unpredictable—monetary policy. How much road remains in this extraordinary journey?
In Januar alone, Australia, India, Mexico, and others have cut interest rates. China has reduced reserve requirements on banks. Denmark has taken its official deposit rate into the negative. Even the most stability-obsessed countries have made unexpected moves. Beyond cutting interest rates, Switzerland suddenly abandoned its policy of partly pegging the franc’s value to that of the euro. A few days later, Singapore unexpectedly altered its exchange-rate regime, too………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

EU politicians are expected to agree on a compromise 2018 start date for reforms to the Emissions Trading System (ETS) to try to bridge divisions over efforts to prop up the world’s biggest carbon market, sources said on Friday (13 February).
In an attempt to boost carbon prices and spur industry to switch to greener energy, the European Commission has proposed a plan to remove hundreds of millions of surplus carbon allowances (EUAs) from the trading system from 2021………………………………………..Full Article: Source

Posted on 16 February 2015 by VRS |  Email |Print

LG Chem, SK Global Chemical and other chemical companies are considering filing a collective lawsuit against the government to nullify their respective annual carbon emission quotas, sources said Thursday.
They have engaged in negotiations with the ministry to increase their quotas. However, if the talks end fruitlessly, the companies will take legal action, they said. “It’s very difficult to reduce carbon emissions to a level that meets the state quota,” said a chemical industry insider. “Under the quotas, each company will have to spend a lot of money to buy emission rights. And this will end up denting the competitiveness (of chemical companies).”……………………………………….Full Article: Source

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