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Commodities Briefing 20.Jan 2016

Posted on 20 January 2016 by VRS |  Email |Print

The International Monetary Fund cut its global growth forecasts for the third time in less than a year on Tuesday, as new figures from Beijing showed that the Chinese economy grew at its slowest rate in a quarter of a century in 2015.
To back its forecasts, the IMF cited a sharp slowdown in China trade and weak commodity prices that are hammering Brazil and other emerging markets. The Fund forecast that the world economy would grow at 3.4 percent in 2016 and 3.6 percent in 2017, both years down 0.2 percentage point from the previous estimates made last October. It said policymakers should consider ways to bolster short-term demand………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Falling commodity prices have been treated as one of the clearest indications available that China’s resource-hungry economy is slowing. Yet the latest data on metals consumption paint a more nuanced picture, with demand still rising even as the pace of growth has slowed.
While copper may have halved in price since its peak in 2011, China’s consumption is estimated to have still grown 1.8 per cent last year, according to a report from HSBC………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Commodities have no friends at the moment. From energy to softs to base and precious metals, prices have been hammered almost unilaterally across the board, weighed down by a combination of a strengthening US dollar, increased supply, tepid demand and, as a consequence, mounting disinflationary pressures.
The paragraph below, from Macquarie Bank’s commodity analyst team, is reflective of the broader investor mood when it comes to commodity markets - they hate them. The world simply hates commodities at the moment. Prices keep on falling, producers are in a battle for survival and, more worryingly, demand isn’t reacting that positively as of yet………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

The oil price is set to fall further this year as supply vastly exceeds demand, with major oil exporter Iran’s return to the market offsetting any production cuts from other countries, the IEA said on Tuesday.
“Can it go any lower?” the International Energy Agency asked in its monthly oil market report. “Unless something changes, the oil market could drown in over-supply. So the answer to our question is an emphatic yes. It could go lower.” The oil price this week hit lows not seen in 12 years, and is currently trading at or below 29 dollars per barrel………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Iran said it will cut crude prices to Europe next month in line with similar reductions by Saudi Arabia, signaling that it wants to compete with its largest rival but without making deep discounts after international sanctions were lifted on its oil.
In a price list published on its website in recent days, the National Iranian Oil Company said it will reduce its official prices in North West Europe by $0.55 a barrel for its light crude and by $0.15 a barrel in the Mediterranean for delivery next month………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

The use of oil in every part of our daily lives means consumers are dependent on the market. Oil prices affect our daily lives, as consumers, drivers and commuters - but the new 12-year low in the cost of a barrel is an unusual situation.
With the lifting of sanctions against Iran, the market, already oversupplied, is expected to be flooded. It’s the anticipation of this which pushed the price of Brent crude down below $28 - or £19.60 - on Monday………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

For the oil forecasting community, the most recent collapse in oil prices marks one more failure. The long trail of forecast errors includes the market implosions of 1982 and 1986, not seeing the run-up in commodity prices after 2004 and now missing the end of the same commodity boom. For those of us who depend on oil price forecasts, this is a big problem.
Try to forecast the economic outlook for Houston or the Gulf Coast, for example, without a good handle on oil prices. Right now, I am coping with oil price uncertainty by preparing several scenarios for Houston’s economic outlook, mostly conditioned by guessing when and how fast oil prices might recover………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Bahrain’s Energy Minister Abdulhussain Ali Mirza said that at the moment, oil supply exceeds demand by about 2 million barrels due to stagnation in the Chinese and other economies. The global oil market could recover within a year of the world economy returning to growth, Bahrain’s Energy Minister Abdulhussain Ali Mirza said.
“In a year, for example, the economy can return to growth and thus the situation in the oil market will be balanced,” he said………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

The International Energy Agency renewed concerns about a global oil glut after it said crude oversupply should continue through the end of 2016. The announcement follows the lifting of U.S. sanctions on Iran over the weekend, which experts project will add more crude to the market. Oil prices fell more than 3 percent Tuesday, settling at their lowest level since September 2003.
Despite the overwhelmingly bearish picture for the energy space, one expert maintains his view that we will see oil back above $40 by the end of the year………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Holding on to around 30-million-barrel-a-day production ceiling could land OPEC’s powerbroker with its own Arab Spring, one industry expert has warned. The prolonged slump in oil prices has eaten away the huge cash pile of Saudi Arabia, forcing the oil giant to introduce austerity measures such as cuts to subsidies it offers its citizens that can potentially fuel social unrest.
Andrew Su, chief executive of Australian brokerage Compass Global Markets, told CNBC, “When the Saudis and OPEC moved to push prices lower last year, they were trying to keep pressure on Russia and the US shale producers. That has happened.”……………………………………….Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Crude oil production in 2016 outside the Organization of Petroleum Exporting Countries (OPEC) will plunge by 660,000 barrels a day (BPD), the group said Monday in its monthly market report, a 270,000 BPD drop from its December estimate. The bulk of the production drop outside OPEC this year will come from the U.S., 380,000 BPD, OPEC projected in its January report, averaging 13.5 million barrels per day (MMBPD), Kallanish Energy finds.
The drop was revised down by 210,000 BPD compared to December’s projection due to the steep drop in global oil prices which could endanger output of marginal barrels from unconventional sources (tight crude and unconventional natural gas liquids)………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Declining Chinese demand has caused commodities like iron ore and many base metals to fall in price but gold remains pretty strong according to an expert. The analyst says the historically high gold price and outlook is bolstering the balance sheets of gold miners, and explorers should benefit over the next 12 months.
Mining and resources analyst Ryan Armstrong from Taylor Collison says siginificant interest in Australian gold is driven by the low US exchange rate. “With the market volatility gold is a bit of the ‘go-too’ precious metal,” he said………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Gold is typically considered a safe haven while markets are volatile, and with the recent equity slide both in China and US, investors are thinking of gold as an alternative, safe haven investment. Indeed, since the start of the year gold prices have received a boost, hitting a 2-month high as global stock markets sold-off.
The global stock rout didn’t have any bullish effect on silver prices since the precious metal has an industrial metal status, too. That might help explain why gold fared better than silver in January………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

A gold price rally has some investors thinking it might finally be time to start looking at gold mining stocks. Gold prices are just off two-month highs, outperforming commodity and financial markets in 2016 as fears about China’s stock market and its economy sent shock waves across global financial markets, hitting U.S. stock markets.
The yellow metal’s rise to around $1,100 an ounce comes after a few years of losses. Prices fell about 43 percent from their 2011 peak of over $1,900 an ounce – a nominal record high………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Down 9.3% over the past month, the S&P 500 is on the brink of correction territory and other equity markets around the world are faring worse. Elevated market volatility is having the predictable effect of sending investors in search of safe-haven investments and the result, also predictable, is benefiting gold.
Exchange traded funds such as the SPDR Gold Shares, iShares Gold Trust and the ETFS Physical Swiss Gold Shares finished modestly lower last week, but trimmed those losses by soaring last Friday as U.S. stocks tumbled………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Investors pulled more than $2.1 billion out of U.S. exchange traded funds that invest in emerging markets last week, the most since August. China and Hong Kong led the losses.
Redemptions from ETFs that invest across developing nations as well as those that target specific countries totaled $2.12 billion in the week ended Jan. 15, compared with $566.7 million of losses in the previous week, according to data compiled by Bloomberg. So far in January, investors have withdrawn $2.69 billion………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Despite growing concerns that China’s economy is in trouble, the country’s currency is widely seen as a contender to oust the U.S. dollar from its dominant position in international trade. Judging from data on money transfers, it has a very long way to go.
No doubt, the Chinese currency is gaining global credibility. In November, the International Monetary Fund said that it would add the yuan to its basket of reserve currencies, bringing it into a club that includes the dollar, the euro, the British pound and the Japanese yen………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Israel’s central bank will remain aggressive in battling the strong shekel, which is trading at its highest level in 15 years, the Bank of Israel’s head of market operations said.
Andrew Abir told Reuters in an interview that the bank would continue taking action on the shekel until there was an “unwinding” of the current over-appreciation. “We continue to be concerned about what we regard as a marked over-valuation of the exchange rate,” he said………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Beneath the political storm raging around the Obama administration’s climate change rules for the electricity sector, a quiet but powerful push for carbon trading is spreading across the nation. Close to half of states, including many run by Republicans, are hoping to use some form of a carbon market similar to cap and trade to meet federal Clean Power Plan targets, according to a ClimateWire review of high-level planning talks.
In at least 20 of the 47 states that must meet U.S. EPA requirements, top policymakers or major utilities are pushing for a system where power generators could purchase carbon allowances or credits across state borders as a way to meet EPA’s goals………………………………………..Full Article: Source

Posted on 20 January 2016 by VRS |  Email |Print

Lawmakers who oppose taking action to lower greenhouse gas emissions by putting a price on carbon often argue that doing so would hurt businesses and consumers. But the energy policies adopted by some American states and Canadian provinces demonstrate that those arguments are simply unfounded.
Around the world, nearly 40 nations, including the 28-member European Union, and many smaller jurisdictions are engaged in some form of carbon pricing. In this hemisphere, British Columbia, Quebec, California and nine Northeastern states have raised the cost of burning fossil fuels without damaging the economy………………………………………..Full Article: Source

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