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Commodities Briefing 27.Jan 2016

Posted on 27 January 2016 by VRS |  Email |Print

The World Bank has cut its price forecast for 80 percent of the world’s major commodities as oversupply and weaker emerging market growth prospects weigh on demand. In its latest report, out Tuesday, the bank has cut its 2016 forecast for crude oil prices to $37 per barrel, down from $51 per barrel in its October report, citing the sooner-than-anticipated resumption of exports by the Islamic Republic of Iran and greater resilience in U.S. production.
Oil prices fell by 47 percent in 2015 and are expected to decline, on an annual average, by another 27 percent in 2016, according to the World Bank………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Commodity bears are testing nerves of producers. Several commodity producers, especially those related to metals and US shale, have blinked and cut production. However, there is always a limit to the extent they can cut production. Prices are at multi-year lows — metals around 7-8 year lows, oil at 12-year lows. Gold and silver are no exceptions and so are other commodities like iron ore, steel and coal.
Most resource commodities are in a bear market, down significantly from their peaks, largely due to lower demand. The criteria to indicate whether commodities are in a bear market is when a commodity is down 50% or more from its peak or is around its long term low levels………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Bank forecast plays down likelihood of further collapse with average price of oil expected to stabilise below $40 a barrel. The World Bank has slashed its forecast for oil prices this year, saying the cost of a barrel of crude will stay near its current lows for the rest of 2016.
The Washington-based institution said a glut of oil that sent prices crashing by almost half last year and another 27% this month will continue to dominate the market for the next year………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

The World Bank on Tuesday dramatically revised down its forecast for crude oil prices, predicting they would average just $37 a barrel this year and warning commodity markets to brace themselves for the possibility of a much sharper than expected slowdown in emerging economies.
The new forecast — down from a predicted $52 average for 2016 just three months ago — underlines how rapid the recent fall in oil prices has been and the growing concerns at the World Bank and elsewhere over the link between tumbling oil and the health of emerging economies………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Global oil prices are expected to remain low in the near future according to analysts, even though the price has lately climbed to about 30 U.S. dollars a barrel. On Monday, the West Texas Intermediate for March delivery moved down 1.85 U.S. dollars to settle at 30.34 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery decreased 1.68 dollars to close at 30.5 dollars a barrel on the London ICE Futures Exchange.
Crude oil prices began to recover when the United States faced a patch of extreme cold weather last week, while Europe raised hopes of more economic stimulus measures………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Kuwait’s OPEC Governor Nawal al-Fuzaia hinted on Tuesday that the Organization of the Petroleum Exporting Countries is ready to cut production in an effort to stem the persistent slump in oil prices. The governor told an energy forum in Kuwait that the cartel is ready to “cooperate” with others to stabilize the oil market, according to media reports.
“OPEC is willing to cooperate with producers outside the group if they show that they are serious about cooperating with OPEC. Non-OPEC producers keep on making statements that they are willing to cooperate, but the reality is different,” she said, according to Dow Jones Newswires………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Early last year, Mark Yusko, founder and CEO of Morgan Creek Capital Management, predicted crude oil would approach $30 a barrel and deflation would become the main economic headwind for the developed world, rather than the inflation with which the market had been obsessing.
Yusko, whose dour market views were prescient, doesn’t have any brighter view of economic or market conditions now. The easing of sanctions on Iran and Saudi Arabia’s reluctance to cut production are among the factors that will continue to crush energy prices………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

The gold price is set for a gradual recovery this year, particularly in the second half, driven by improving fundamentals, Thomson Reuters GFMS said in its latest gold survey. The ‘Gold Survey 2015 Q4 Update & Outlook’ report, released on Tuesday, noted that the gold price would trade above $1 200/oz towards year-end and would average $1 164/oz.
“Once it becomes clear that the gold price is on the road to recovery, we are likely to see a rebound in investor interest from key Asian markets, particularly if concerns about the emerging market slowdown and weakening currencies persist,” the report noted………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

The gold market — expecting extremely dovish comments from the Federal Reserve Wednesday, following its monetary policy meeting, could be disappointed, creating some selling pressure according to some analysts.
Comex February gold futures pushed to nearly a three-month high Tuesday as the U.S. central bank started the first day of its two-day meeting and last traded at $1,118.3 an ounce. According to some analysts, gold prices are benefiting in part because of shifting interest rate expectations. In December, the Fed indicated that they expected to raise interest rates four times in 2016 with the next rate hike scheduled for March………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Gold demand fell 2 percent last year, GFMS analysts at Thomson Reuters said on Tuesday, but is set to recover in 2016 as U.S. rate hikes arrive more slowly than expected, while concerns over economic growth and yuan weakness stimulate Chinese buying.
In 2016 GFMS sees gold prices, currently near $1,100 an ounce, recovering to above $1,200 an ounce by year-end, and averaging $1,164 an ounce in the full year. Gold demand is expected to grow by 5 percent this year, it said. Chinese consumers concerned about a falling yuan eroding their wealth may seek gold as an alternative store of value, GFMS said………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Silver lost ground in 2015, continuing a three-year losing streak that cut another 12% off the price of the metal to around $14.45 per ounce. The question going forward is whether silver can finally manage to bounce back in 2016, or whether the ongoing slide in commodities will keep its grip on the silver market.
The bullish argument for silver going forward hinges on the metal’s unusual combination of characteristics. On one hand, silver trades somewhat in line with gold and the rest of the precious metals complex, despite its obviously cheaper price compared to its peers………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

The London Bullion Market Association is planning a central hub for posting trades in the $5 trillion a year London gold market, LBMA consultant David Gornall said in an editorial in the association’s trade magazine the Alchemist on Tuesday.
It has also agreed on the need for a voluntary reporting system for gold, silver, platinum and palladium spot transactions, as well as non-cash settled forwards, and favours the creation of a data warehouse to gather and store information on transactions, Gornall, a former chairman of the LBMA, said………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Zinc led industrial metals higher in its longest winning streak since the start of September on an increase in Chinese imports. It rose 2.1% to $1 547 a metric ton by 10:43am on the London Metal Exchange, a fourth straight day of gains. Copper jumped as much as 1.9% and lead 0.9%.
Chinese imports of zinc surged last month to the highest since May 2009 as buyers took advantage of low prices and bought in anticipation of further declines in the yuan exchange rate. The country also imported the most refined copper since 2008………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

For those who like their market narratives nice and simple Dr. Copper’s message is resoundingly clear. The metal with the reputation for shining a light on the state of global manufacturing is telling us that demand growth has all but evaporated, thanks first and foremost to China.
Moreover, this is no cyclical aberration. Rather, to quote credit agency Moody’s, which has just put 175 commodities companies on review for possible downgrade, “the effect of slowing growth in China indicates a fundamental change”………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Amid an ongoing rout in commodities prices during the latter stages of 2015, some commodities exchange traded products continued bleeding assets. Gold ETFs were pressured last year amid speculation the Federal Reserve is preparing to raise interest rates, which has pushed the dollar higher.
Higher interest rates would diminish gold’s attractiveness since the precious metal does not pay interest like fixed-income assets. Investors yanked $2.2 billion from the SPDR Gold Shares last year, including $1.4 billion in the last three months of the year………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

State Street Corp, the company behind the first and best-known U.S. exchange traded fund, reported a record $22.8 billion in estimated withdrawals in 2015, even as sales for the broader ETF industry were strong.
Moreover, its flagship fund - the SPDR S&P 500 ETF - did the worst, losing $39 billion to withdrawals while a competing Vanguard ETF took in $12 billion, according to Lipper. Since its founding in 1993, State Street’s so-called “Spider” has been the largest ETF to package every stock in the S&P 500. ……………………………………….Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Two ETF analysts on what worries them about the rise of exchange-traded funds, including increased regulations over perceived liquidity concerns, broken markets and leveraged funds.
Dave Nadig, FactSet’s director of exchange-traded funds and co-host of Inside ETFs, the largest conference for ETF investors, suggested during the conference’s opening keynote address on Monday that 2016 will be the year of “the battle for the soul of the ETF revolution.”……………………………………….Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Investment funds under management hit a record high of £871 billion in 2015, up from £835 billion in 2014. The figures, published by The Investment Association – a body that represents UK investment managers – come despite the turmoil in markets in the latter half of the year as a Chinese slowdown and commodity rout dented investor sentiment.
UK Equity Income was once again the best-selling fund sector of the year. Meanwhile tracker funds, which aim to replicate performance of a particular stock market index such as the FTSE, had their best year ever………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

The currencies of commodity-exporting nations held gains after raw-material prices rebounded, providing a respite from this month’s selloff. The Canadian dollar and South African rand rose about 1 percent on Tuesday as prices for crude oil, metals and agricultural commodities gained.
The currencies had advanced amid a broader climb for natural-resource exporters against the U.S. dollar in the previous five days. “The key driver for commodity currencies today is that oil is up 3 to 4 percent,” Ian Gordon, a foreign-exchange strategist at Bank of America Corp. in New York, said ……………………………………….Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

Not long after billionaire George Soros forecast a so-called hard landing for the Chinese economy, Beijing fired back by calling out the high-profile investor, warning him of betting against its currency, according to media reports Tuesday.
“Soros’ challenge against the renminbi and Hong Kong dollar is unlikely to succeed, there is no doubt about that,” said a government official in an opinion piece widely cited by several media outlets………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

UK’s chief climate envoy has revealed to BusinessGreen that China is developing a carbon trading system scheme that will be “compatible” with the EU’s – but what will this mean in practice?
Over the past few months newspapers have been full of reports detailing the UK’s deepening relationships with China, from the Chinese backing of a new nuclear power station at Hinkley Point to the “clean energy partnership” signed by the two countries during Chinese premier Xi Jinping’s state visit to the UK in October………………………………………..Full Article: Source

Posted on 27 January 2016 by VRS |  Email |Print

After nearly five years of talks, the EU and Switzerland on Monday announced the conclusion of a deal linking their respective emissions trading schemes, in a move that will allow covered entities in both systems to trade emissions permits with each other.
Set up in 2008, the Swiss scheme includes around 55 companies, and last year covered 5.5 million tonnes of carbon emissions. By comparison, the EU’s Emissions Trading System (ETS) launched in 2005 is currently the world’s largest carbon market, regulating some 11,000 power stations and manufacturing plants representing around two billion tonnes of carbon emissions………………………………………..Full Article: Source

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