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Commodities Briefing 04.Apr 2016

Posted on 04 April 2016 by VRS |  Email |Print

Have we hit the bottom yet? That seems to be the question of the moment. No one knows, although there are signs of hope. And there are also signs that this nascent mood of optimism is spilling over into commodities.
What to make of a week when one headline screams “Dow posts biggest quarterly comeback since 1933” (another version was: “The Dow is doing something it hasn’t done since 1933”)? They were talking about the fact that, in the last week of March, the Dow and the S&P 500 wiped out their losses for the quarter. Quite a performance, and thanks largely to the Federal Reserve more than hinting it was going dovish on further rate rises. So ZIRP (zero interest rate policy) and NIRP (that’s negative interest rate policy) seem to be the new normal………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

The prolonged commodity price slump has provided the impetus for sectorial rebalancing of African economies away from the extractive sector, towards a greater diversification of economic base, Economic Insight Africa Report by Oxford Economics said. In its quarterly briefing for the first quarter of 2016, it said the continent is at a threshold of a large-scale rotational shift towards the services and manufacturing sectors.
Although growing at a fast pace, the contribution of the manufacturing sector to Africa’s gross domestic product remains minimal. A retraction from the extractive sector opportunities, due to subdued commodity prices could provide scope for development of downstream activities. Moreover, development of the manufacturing sector would provide Africa with alternative to increase direct benefits derived from natural resources, including improved tax potential and job opportunities………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

From 2004 to 2008 and 2010 to 2014, oil production and prices both rose. The price increases were completely divorced from the market principle of a supply-demand balance. In the middle of 2014, the price momentum ran out of steam and prices began sinking in a bog of unconsumed, overproduced, expensive new oil.
That market disorder should have been a reason for concern. Unfortunately, greed suppressed the voices that raised the alarm and warned of the long-term dangers of short-term gains. Today, the producers who used to be price setters through supply control can produce only what costs less than the market price, which they no longer influence. Things will become normal only when we have the horse back before the cart………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Iran’s oil exports have surpassed 2 million barrels per day following the lifting of sanctions under its nuclear deal with world powers, Oil Minister Bijan Zanganeh said on Sunday.
“Iran’s oil and gas condensate exports are now at more than 2 million barrels per day” after rising by 250,000 bpd since March 1, the ministry’s Shana news service quoted Zanganeh as saying. Iran has doubled exports since its nuclear accord took effect on January 16………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Kuwait hopes that coordination among oil producers inside and outside OPEC will help to stabilise the market, acting oil minister Anas al-Saleh told reporters on Sunday. “As long as there is coordination among major producers in OPEC and outside OPEC, that will certainly help stabilise prices,” he said.
Saudi Arabian Deputy Crown Prince Mohammed bin Salman said on Thursday that Riyadh would not join an output freeze without the participation of Iran and other major producers, Bloomberg reported. A meeting to discuss the production freeze has been scheduled in Doha on April 17………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

From 2004 to 2008 and 2010 to 2014, oil production and prices both rose. The price increases were completely divorced from the market principle of a supply-demand balance. In the middle of 2014, the price momentum ran out of steam and prices began sinking in a bog of unconsumed, overproduced, expensive new oil.
That market disorder should have been a reason for concern. Unfortunately, greed suppressed the voices that raised the alarm and warned of the long-term dangers of short-term gains………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Money managers lost faith in oil’s recent rally as doubts grew over whether major producers will be able to agree on an output freeze.Futures in West Texas Intermediate oil retreated last week for the first time since mid-February.
Prices had surged from a low of almost 13 years on a proposal by Saudi Arabia, Russia, Venezuela and Qatar to cap oil output and reduce a global surplus. They’ll meet with other countries in Doha on April 17. While Iran said it would attend the talks, it ruled out limiting supply as it restores exports after sanctions were lifted in January………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

The recovery in the price of oil may not be sustainable as Iran chooses to play hard ball. There’s quite a way to go yet. Burgeoning oil-producer unity, which was leading toward an accord in Doha to cap output, came under immense strain as Saudi Arabia’s deputy crown prince said the kingdom’s commitment depended on regional rival Iran, which has already ruled out its participation.
If any producer increases output - and Iran has made clear its intention to do so - Saudi Arabia will likewise boost sales, Mohammed bin Salman said this weekend in an interview with Bloomberg………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

With oil prices down by almost 70 per cent from mid-2014, and touching multi-year lows recently, economies across the globe are gradually adjusting to the ‘new oil normal’ and the massive transfer of real income from producers to consumers.
The market has changed radically from the days when the Organisation of the Petroleum Exporting Countries was formed in the 1960s. Set up with the objective of coordinating and unifying petroleum policies among its member countries to “secure fair and stable prices” and “maintain efficient, economic and regular supply of petroleum”, OPEC is a cartel. ……………………………………….Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

The enthusiasm surrounding gold’s big first-quarter rally suggests its shine is set to dull sooner rather than later. Gold investors should enjoy the party while they can. The good times are probably coming to an end.
Bullish headlines following gold’s 16.5% first-quarter surge were in full force last week. CNBC claimed there was still upside ahead following the biggest quarterly rally in three decades. Bloomberg said even the bulls were stampeded by gold’s sharp move. And The Wall Street Journal touted the growing number of bullish bets on the metal………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Notice on the very short term chart, a 2 hour run, gold has been in a steady decline since the middle of last month with rallies attracting selling at the key resistance levels noted on the chart. Price is currently holding below $1212 – $1210.
Initial resistance begins near $1225 and extends higher towards $1228. Above that lies $1237-$1240. Watch out if that low near $1205 were to give way. There still remain a large number of spec longs in this market. On a percentage basis, this is the largest combined large spec long position going back past 2011………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Remember last year when some people were saying that gold prices would crash because the U.S. Federal Reserve would raise interest rates? Well, they couldn’t be more wrong. Since December 16, 2015—the date of the first Fed rate hike since the financial crisis—the gold spot price has surged 14.3%. Going forward, there are still quite a few catalysts that could send the price of the shiny metal even higher.
While several Fed people have been calling for more rate hikes, Fed Chair Janet Yellen thought otherwise. Speaking at the Economic Club in New York on Tuesday, Yellen said that the Federal Open Market Committee (FOMC) would “proceed cautiously” with interest rate policies, and that caution “is especially warranted.”……………………………………….Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Here’s why Governor Elvira Nabiullina is in no haste to resume foreign-currency purchases after an eight-month pause: gold’s biggest quarterly surge since 1986 has all but erased losses the Bank of Russia suffered by mounting a rescue of the ruble more than a year ago.
While the ruble’s 9 percent rally this year has raised the prospects that the central bank will start buying currency again, policy makers have instead used 13 months of gold purchases to take reserves over $380 billion for the first time since January 2015………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Even after a lackluster March, money managers are betting the best-performing commodity last quarter still has further to run. While gold futures have dipped from a 13-month high, hedge funds are the most bullish since January 2015.
The precious metal posted its biggest quarterly advance in three decades as turbulent financial markets and ebbing global economic growth boosted demand for it as a haven. Federal Reserve Chair Janet Yellen said last week that U.S. central bankers should “proceed cautiously” on plans to raise interest rates because of risks from the global economy. London-based research firm Metals Focus Ltd………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Slow and steady wins the race. Investors seeking an exchange traded fund strategy that can produce attractive risk-adjusted returns over the long haul should take a look at the low-volatility theme.
“Imagine a race between a speedy, boastful hare and a steady, quiet tortoise,” Andrew Ang, Head of BlackRock‘s Factor Based Strategies Group, mused in a research note. “You can think of minimum volatility strategies as akin to the tortoise – humble and sometimes overlooked, but a formidable participant in the race over the long term.”……………………………………….Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

The commodity market has seen a surge lately, with precious metals deserving a special mention. A falling dollar in the wake of a volley of subdued U.S. data points, concerns over global growth and an acute plunge in oil prices have marred the possibility of frequent rate hikes this year.
This has taken the shine off the greenback and has helped the rally in precious metals in the first quarter of 2016. Within the entire collection, the surge in gold was unparalleled, approaching ‘the best quarter in nearly 30 years’. Gold bullion ETF iShares Gold Trust ETF has advanced 16.1% so far this year (as of March 31, 2016)………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

From Sweden to China, central banks are undermining their money for global advantage. In 2010 Guido Mantega, then Brazil’s finance minister, accused the United States and fellow powerful economies of deliberately weakening their currencies in order to take a greater slice of global trade — what he called a “currency war”.
His comments sparked calls from officials at the World Bank and the International Monetary Fund for the world’s leading economies to do more to avoid inflaming tensions by pursuing protectionist monetary policies. The issue dominated the agenda of both the IMF meeting in Washington and the G20 meeting of world leaders in Seoul that year………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

China’s central bank revealed its short foreign-currency positions in forwards and futures for the first time, providing more clarity on the monetary authority’s efforts to shore up the yuan. The People’s Bank of China held $28.9 billion (Dh106.14 billion) of such positions with commercial lenders as of the end of February, which mainly reflects the currency hedging demand from domestic companies, according to a statement posted on its website.
The amount is less than half of the average monthly decline of the country’s foreign reserves since August, when China made a surprise devaluation of the yuan and allowed market forces to play a bigger role in setting the exchange rate………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

In shift, many now expect further declines, which could help stocks, emerging markets, commodities. Investors are betting on a trend that few analysts predicted heading into 2016: a depreciating dollar.
Hedge funds and other speculative investors are less bullish on the dollar than at any time since May 2014, according to Commodity Futures Trading Commission data. The ICE Dollar Index, which measures the greenback against a basket of six currencies, fell 4.2% in the first three months of the year, its worst quarterly performance since 2010………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Over the last 10 years, “climate change” has become almost synonymous with “carbon emissions”. The reduction of greenhouse gases in the atmosphere, measured in tonnes 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. The world runs on abstractions — calories, miles, pounds, and now tonnes of CO2e — that are seemingly objective and reliable, especially when embedded in “expert” (often economic) language……………………………………….Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

The growth of global CO2 Emission has been slowed in recent years of rising rapidly, a new study points out just days before Paris climate summits. After a decade of rapid growth in global CO2 emissions, which increased at an average annual rate of 4 percent, much smaller increases were registered in 2012 (0.8 percent), 2013 (1.5 percent) and 2014 (0.5 percent).
In 2014, when the emissions growth was almost at a standstill, the world’s economy continued to grow by 3 percent. The trend over the last three years thus sends an encouraging signal on the decoupling of CO2 emissions from global economic growth………………………………………..Full Article: Source

Posted on 04 April 2016 by VRS |  Email |Print

Pollution by companies in the European Union’s emissions cap-and-trade program, the world’s largest, fell by 0.8 percent last year as warmer-than-average weather reduced demand for electricity.
Preliminary EU data implies pollution in the bloc’s emissions trading system fell to 1.796 billion metric tons, the lowest since the market started in 2005, according to Bloomberg New Energy Finance. The estimate excludes airlines, which together with more than 11,000 installations owned by utilities and manufacturers are also a part of the EU ETS, Europe’s flagship policy tool to reduce greenhouse gases blamed for climate change………………………………………..Full Article: Source

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