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Commodities Briefing 17.May 2016

Posted on 17 May 2016 by VRS |  Email |Print

An uptick in prices across a range of commodities in 2016 may have been welcomed by miners and traders, but one CEO has told CNBC that he’s not getting carried away just yet. “They always say ‘a swallow doesn’t make a summer’,” Ben Magara, the CEO of London-listed platinum miner Lonmin said.
“We have seen dollar prices improve from a low in January to where they are now so the trend is quite encouraging … we have seen that rand low price in November and it continues on that upward trend. Indeed, it’s early days a swallow doesn’t make a summer but it’s very helpful.”……………………………………….Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

From the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors. But rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016.
Over the span of just two wild months, daily turnover on the nation’s futures markets has jumped by the equivalent of $183 billion (Dh672.15 billion), outpacing the headiest days of last year’s Chinese stock bubble and making volumes on the Nasdaq exchange in 2000 look tame………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Goldman Sachs says “the oil market has gone from nearing storage saturation to being in deficit much earlier than we expected and we are pulling forward our price forecast, with second quarter/second half of 2016 WTI now $45/bbl and $50/bbl.”
Goldman says forecasts a more gradual decline in inventories in second half than previously and a return into surplus in first quarter 2017, with low-cost production continuing to grow in the new oil order. Goldman Sachs says lowering its 2017 forecast from $57.5/bbl to $52.5/bbl, with a first quarter 2017 decline back to $45/bbl and a recovery to $60/bbl by fourth quarter 2017………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Algeria will supply oil and other energy products to Jordan for the first time under a memorandum of understanding signed on Monday, as the OPEC member seeks to diversify sales after years of stagnating crude production.
Algeria’s state-run Sonatrach Group will start shipping liquefied natural gas and liquefied petroleum gas to Jordan in September, followed by crude oil, Algerian Energy Minister Salah Khebri said in an interview in Amman. Sonatrach and National Electric Power Co. of Jordan should reach a final agreement in the next few weeks, he said, without specifying shipment volumes. Sonatrach will also explore for oil and gas in Jordan………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

The ongoing crisis in Nigeria adds significantly to the current increase in global oil prices, according to Bloomberg. Bloomberg’s Julian Lee believes that the political standoff in Nigeria has added greatly to upward pressure on global oil prices.
In his article ‘Forget the Saudis, Nigeria’s the Big Oil Worry’, Lee said that apart from “Saudi Arabia’s oil market machinations,” policymakers should also be concerned about what is now “happening 3,000 miles away in the Niger River delta.” ……………………………………….Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

The oil market has started to bid adieu to the global glut of crude supplies—but the goodbyes may be premature. Although some traders and analysts agree that the world’s crude oversupply, which has plagued the market for more than two years, is dwindling or slipping into a deficit, few believe it’s a situation that’s likely to last long.
“Outages in Canada and Nigeria are helping to bring the market into balance, but these outages are more temporary in nature,” said Matt Smith, director of commodity research at ClipperData………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

European oil demand is stagnating after a warm winter in the first quarter coupled with the fading impact of low prices halted the growth seen last year, according to OPEC’s monthly report. Downside risks to demand are also multiplying from the debt pile weighing on several countries, high taxes in the transportation sector, and rising sales of hybrid or electric cars.
European oil demand is expected to grow just 10,000 b/d this year compared to 260,000 b/d last year, the OPEC analysts estimate. Demand fell 120,000 b/d in the big four countries of Germany, France, Italy and the U.K. in March from a year earlier, the report notes………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Billionaire financier George Soros and other big investors have returned to gold for the first time in years, U.S. Securities and Exchange Commission filings showed on Monday, a move which spurred a rally to 12 month highs.
Institutional and retail buying has propelled prices to fresh one-year highs of $1,303 an ounce this month. In the first quarter, Soros, who once called gold “the ultimate bubble,” returned to gold after three years, with 1.05 million shares in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund (ETF), valued at about $123.5 million………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Gold Prices rose to 1-week highs in London bullion trade Monday, touching $1288 per ounce as China’s stock markets held flat overall but New York equities pointed lower with UK shares as half of Europe stayed shut for the Whit Monday holiday.
Silver just outpaced the rise in gold prices, gaining 1.2% from the close of Friday’s US trade but only to two-session highs of $17.38 per ounce. Recovering 2.4% from last week’s lows versus the Dollar, the gold price also rose against all other major currencies, reaching the highest level against the Euro at €1135 since March’s retreat from 13-month highs………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Can you dig it? This year’s best-performing exchange-traded funds are all gold plays. Among ETFs with more than $500 million in market value, the top dog is triple-leveraged gold miners product (NUGT), with an insane 315 percent rally.
But nipping at its heels is unleveraged gold mining pick (GDXJ), which tracks smaller, or “junior” gold miners, which tend to be more volatile. That ETF is up 98 percent this year, outperforming its bigger brother (GDX), which is also a VanEck Vectors product. What’s incredible is that even after nearly doubling this year, the GDXJ is still down 73 percent over the past five………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Gold bull John Paulson slashed his bets on bullion while billionaire investor George Soros and other big funds returned to the metal for the first time in years, filings showed on Monday, as prices staged their biggest rally in nearly 30 years.
New York-based hedge fund Paulson & Co, led by John Paulson, one of the world’s most influential gold investors, slashed its investment in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund (ETF), by 17 percent to 4.8 million shares, U.S. Securities and Exchange Commission filings showed on Monday………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Over the past trading week, silver prices per ounce have been in an ongoing battle with the U.S. Dollar Index (DXY). Late last month, we saw the silver price flirt with the $18 level. It has since backed down but has continued to trade in a relatively narrow range between $16.80 and $17.50.
But we’ve recently witnessed some strength in the U.S. Dollar Index (DXY), which arguably became somewhat oversold in early May. It’s bounced back 1.7% so far this month. That’s been the biggest headwind facing silver prices right now. And by many accounts, it may not be over yet………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Prices of precious metals platinum and palladium are likely to peak this year, as the market lacks the support that gold draws from investors, a survey said on Monday at the start of London’s annual platinum week.
Both metals, which are used in auto catalysts as well as in jewellery, are likely to fall short of their 2014 highs, according to Metals Focus, a leading metals consultancy. “Ultimately, neither the fundamental market conditions nor the investor activity that would be needed to drive a more decisive bull market seem likely to emerge over the next few months,” Metals Focus said………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

What goes up on unrestrained speculation will inevitably be back on earth at some stage. We saw it when iron ore speculation defying fundamentals took the mineral’s price to a peak of $70.46 a tonne in the third week of April this year - a rise of 80 per cent since December 2015.
Buoyed by weather-related iron ore supply disruptions in Australia, fresh stimulus measures by Beijing and routine moves by China to start rebuilding inventories in the year’s beginning, speculators went on marking up prices. Ore stocks at Chinese ports at close to 100 million tonnes (mt), the highest since March 2015, signals the end of inventory build up linked imports for some time………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

A price retreat in Chinese markets for rough metals, including iron ore, steel, and reinforcing steel, or rebar, likely reflects deeper growth concerns for the world’s second-largest economy, not just short-term market machinations, said analysts. Similar indications emerged in a weekend release of Chinese economic data.
“China released a raft of data that reignites doubts about the nation’s economic stabilization. Fixed asset investment, retail sales and industrial production all missed expectations and slowed in April, suggesting that the upbeat March prints were not descriptive of the underlying trend in economic activity,” said Charalambos Pissouros, senior analyst at IronFX global………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

China’s ICBC Standard Bank said on Monday that is has agreed to buy Barclays’ London precious metals vaulting business as it moves to expand its capabilities in precious metals clearing and storage services.
The agreement, which is due to close in July, will make ICBC Standard the only Chinese bank to operate a vault in London, a key trading and storage centre for precious metals. The facility, used to store gold, silver, platinum and palladium, is one of the largest in Europe………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

The World Gold Council reported last week that demand for the yellow metal grew at 21% in the first quarter, its fastest quarterly pace on record. This comes despite the fact that demand in China and India—the two biggest countries when it comes to gold purchases—was down.
What’s driving the price of gold in 2016 are physically backed gold ETFs. Nearly $10 billion of new inflows have hit the SPDR Gold Trust, $7.7 billion year-to-date, and the iShares Gold Trust, $1.7 billion. For perspective, the two funds had combined outflows of $2.4 billion in 2015 and outflows of $3.5 billion in 2014………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Billionaire hedge-fund manager John Paulson retreated from gold for a second straight quarter, even as prices of the metal posted the biggest gain in three decades. At the end of the first quarter, Paulson & Co., owned 4.8 million shares of SPDR Gold Shares, the world’s biggest exchange-traded product backed by bullion, a government filing showed.
That compares with 5.8 million shares in the three months ended December. Gold futures have climbed 20 percent this year, including a 17 percent surge in the first three months that marked the best quarter since 1986………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Sometimes an ETF isn’t exactly an ETF. As investors, the media and regulators put more focus on exchange-traded funds, it’s worth asking what exactly an ETF is. The term was coined back in 1996 by Morgan Stanley, which needed a generic name to put into the prospectus for its new World Equity Benchmark Series (WEBS) products, which years later became iShares.
Until 1996, that really was just the SPDR S&P 500 Trust (SPY). Little did the bank know how quickly the ETF acronym would catch on, eventually growing to include an eclectic group of products – some of which aren’t technically funds and don’t always trade on an exchange, if they trade at all. Here’s a breakdown of an acronym that can, at times, be a bit misleading………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Brazil’s real joined gains in emerging markets on Monday as commodities advanced, boosting the outlook for the country’s raw-materials exports. The Ibovespa was little changed. The currency strengthened 0.9 percent to 3.5014 per dollar on Monday as metals and crude rallied.
The Bloomberg Commodity Index added 0.8 percent, improving inflows prospects for a country where half of exports are of raw materials. The Ibovespa erased gains and ended little changed at 51,802.92 after earlier gaining as much as 1 percent. Producers account for 22 percent of the index’s weighting………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Russia and Vietnam intend to expand the use of national currencies in mutual trade and develop cooperation in the banking sector, Russian Prime Minister Dmitry Medvedev said Monday.
“We have agreed to develop cooperation in the field of banking, and to extend where possible the scope of the use of national currencies in bilateral turnover,” Medvedev said after meeting his counterpart Nguyen Xuan Phuc………………………………………..Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

When it comes to learning about emissions trading, China has had a leg up. The world’s leading emitter of greenhouse gases has spent 15 years scouting the globe to learn from the mistakes of other nations and find the best ways to build a trading system of its own, which could become the world’s largest.
One of China’s earliest mentors was Dan Dudek, an agricultural economist and vice president of the Environmental Defense Fund (EDF) who, early in his career, got into an argument with its president, Fred Krupp, over whether China might be a big piece of the puzzle the group was exploring: Was there a way to use economics, rather than politics and regulations, to shift the world’s businesses away from polluting the environment toward protecting it and to reward low-cost innovations that do that?……………………………………….Full Article: Source

Posted on 17 May 2016 by VRS |  Email |Print

Two Investment Leader Group reports seek to promote longer-term investment thinking and better reporting of environmental impacts. For all the encouraging developments in the sustainable investment sector in recent years, high profile attempts to remove fossil fuels or polluting businesses from investment portfolios remain hampered by an absence of clear information on assets’ environmental and social impacts.
The Financial Stability Board’s new taskforce may have recently called for improved reporting on climate-related risks and the Paris Agreement and UN Sustainable Development Goals may have made it clear businesses need to better consider long term trends and opportunities………………………………………..Full Article: Source

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