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Commodities Briefing 27.Jul 2016

Posted on 27 July 2016 by VRS |  Email |Print

There’s a new meme going around that claims that we’re heading into a global economic slowdown. It sounds a lot like the other dire warnings that we heard in February, May and most recently in June right after the Brexit vote: “Slowdown! Crash! Recession! Catastrophe!” But the fearmongers were wrong then, and I believe that they’re wrong now.
Granted, the global economy isn’t growing very rapidly. But it is growing — and has defied all expectations of a recession so far because we continue to see high and rising levels of fiscal stimulus from the world’s major economies. That means the United States, China, Japan and very soon even the European Union (I predict)………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The commodity pits are aghast. The economy keeps growing while commodity prices remain depressed. Inconceivable does mean what they think it means. Efficiency is the decade’s watchword. Public good demand will come, from somewhere, next year.
The rise is all based on hope for commodities, especially for things like copper and gold. Copper is up over the last month, gold over the last three. This has spurred regular rallies in FCX stock, although when the hope turns out to be misplaced, the stock goes back down. It’s down again today, after losing another penny per share and disappointing on the revenue side………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Commodities have been on a tear this year. Led by gold, the commodity complex emerged as the best performing asset class of the second quarter and first half of 2016, according to Citigroup. The Wall Street bank expects the strong performance of commodities to continue this quarter and through to the end of the year, as investors continue to show interest in commodity-based investment funds.
“This is in stark contrast to the last two years, during which time commodities sold off during the second half, leading the asset group to be the worst performing (asset class) compared with equities and debt securities,” the bank said in a recent report………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

One of these two camps of risk assets is sending the wrong signal: Emerging markets and junk bonds, or commodities – and more particularly, oil. While crude oil and commodities in general have weakened notably in July, both emerging markets and junk bonds finished on a high note last Friday.
Emerging markets can be replicated in the MSCI Emerging Markets Index, while commodities can be measured by the CRB Commodity Index or by the price of crude oil as the most important commodity. In this chart, the Emerging Markets Index (in red) roughly replicates the oil price (black line) until the last month………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Notwithstanding a relative slowdown as a result of the prolong drop in commodity prices, sub-Saharan Africa remains one of the fastest growing regions in the world, a report has shown.
This was reflected in the foreign direct investment (FDI) levels in 2015, where FDI project numbers increased by seven per cent, according to EY’s (Ernst & Young) 2016 Africa attractiveness programme titled: “Staying the course, despite a relative slow down,” obtained on Monday………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The World Bank is raising its 2016 forecast for crude oil prices to $43 per barrel from $41 per barrel due to supply outages and robust demand in the second quarter. Oil prices jumped 37 percent in the second quarter of 2016 due to disruptions to supply, particularly wildfires in Canada and sabotage of oil infrastructure in Nigeria. The revised forecast appears in the World Bank’s latest Commodities Markets Outlook and takes into account a recent softening of demand and the recovery of some disrupted supply.
“We expect slightly higher oil prices for the second half of 2016 as oil market oversupply diminishes,” said John Baffes, Senior Economist and lead author of the Commodities Markets Outlook. “However, inventories remain very large and will take some time to be drawn down.”……………………………………….Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Hedge funds and other money managers have begun to amass another large short position in futures and options contracts linked to the price of crude oil. But the current wave of short-selling has been associated with a much smaller decline in WTI prices than last summer, at least so far.
Hedge funds increased their short positions in NYMEX WTI futures and options from 53 million barrels on May 31 to 141 million barrels on July 19, anticipating a further drop in prices………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Oil prices have tumbled to a three-month low as surging supply once again exposes the chronic global glut and threatens to perpetuate the energy slump for another year. US crude contracts crashed through key technical barriers to $42.40 on Tuesday before recovering slightly in late trading on profit-taking. They have fallen by 9pc over the last four sessions.
Speculators have given it an extra push. Data from the Commodity Futures Trading Commission in the US shows that 52 hedge funds have taken out large short positions, betting that the summer sell-off still has a further leg to run………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The oil industry is still “a disaster,” with an oversupply issue that doesn’t appear to be balancing out anytime soon, John Kidluff, partner at Again Capital, said Tuesday. Kilduff, who has been bearish on crude, pointed out that refiners are soon going to go into their seasonal maintenance.
“The little bit of oil that got taken out of storage for the past 12 weeks or so, in terms of inventory reports, is going to come right back on,” he said……………………………………….Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The Turkish military’s attempted coup to topple president Recep Tayyip Erdogan didn’t last long. The government restored control the following day and soon declared a three-month state of emergency, with more than 60,000 people since arrested or placed under investigation.
This isn’t just Turkey’s problem. The country’s pivotal position in the transport of oil and gas gives it huge geopolitical significance. Straddling Europe and the Middle East and providing export routes from Central Asia to the rest of the world, Turkey is an important and growing energy transit hub………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The Organisation of the Petroleum Exporting Countries is dead. Saudi Arabia killed it. Now, OPEC is just a toothless zombie, attracting attention, but without having any impact on the living.
Few have noticed OPEC’s demise for a simple reason: it never really had the impact that it was widely perceived to have. It was never actually a cartel, possessing monopolistic market power. Anyone who thought otherwise was mistakenly attributing to it Saudi Arabia’s market power………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Changed sentiment stemming from increased uncertainty from economic and political outlooks has prompted GFMS to revise its 2016 average gold price forecast. These include the Brexit, reduced expectations of a rate rise from the Fed, a wobbly Italian banking sector and the US presidential race, it said in its latest gold survey report on Tuesday.
“Gold is likely to retain its status as a risk hedge for the remainder of the year, particularly as uncertainty persists and risks to the global economy remain elevated,” GFMS added. It now sees the metal averaging $1,279 per ounce this year, up from $1,184 in its forecast in April………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

A surge in Western gold investment helped offset sliding Asian demand in the second quarter, GFMS analysts at Thomson Reuters said on Tuesday, as they hiked their gold price forecast for the year in response to jitters over the economic outlook.
In the Q2 update of its Gold Survey 2016, GFMS said it now expects gold to average $1,279 an ounce this year, up from $1,184 previously.That reflects concern over the economic and political landscape, as well as a 24 per cent surge in gold prices in the year to date. “The revision is a mark to market of the impressive gains that gold has posted so far this year, and reflecting the changed sentiment stemming from increased uncertainty from economic and political outlooks,” it said………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The gold price today (Tuesday, July 26) was up 0.37% and trading at $1,321.20 an ounce. Gold prices are up 25% in 2016, putting the metal among the top 10 best-performing assets this year. But that’s just the start of gold’s rally…
In fact, our Money Morning experts recommend buying gold today because we see gains as high as 278% for the precious metal by 2020. Before we reveal our gold price prediction, here’s why the price of gold is rallying this year………………………………………….Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Gold has seen a downward swing and has extended its first back-to-back weekly drop since May. Gold and silver have seen trailing-five-day losses of 0.9% and 2.7%, respectively. The reason behind the fall in the precious metals is the buoyancy of the equity markets and the gains in the US dollar. Both factors have significantly hurt the precious metals.
The holdings of the SPDR Gold Shares (GLD), the world’s largest gold-backed ETF, fell 0.22% to 963.1 tons on Thursday, July 21. The physical demand from the giant gold-consuming markets, India and China, has also been slowing down………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Nickel and zinc fell to one-week lows as weaker oil prices heightened concerns over the health of the global economy. Oil closed at the lowest since April in New York amid speculation that fuel stockpiles increased in the U.S., the world’s biggest fuel-consuming nation. Weaker oil prices cut mining costs and reduce the price floor for metal production.
Metals also retreated as investors took profits after prices of some metals reached multi-month highs, according to Commerzbank AG. The decline in most industrial metals comes a day before the Federal Reserve announces its latest policy-making statement………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Zinc prices , along with nickel, rallied to hit multi-month highs last week as investors hedged on continued supply disruptions. According to a report from the Financial Times, the zinc price climbed to its highest point in 14 months to $2,275.5 per metric ton on the London Metal Exchange.
Investor sentiment surrounding commodities has improved due in part to a weaker dollar and growing oil prices, in addition to government stimulus in China. That stimulus has enhanced the Far East nation’s transportation and infrastructure sectors. Meanwhile, nickel could reach as high as $12,000 per metric ton………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The Australian alumina daily assessment slipped $1/mt to $235/mt FOB on Tuesday, as buyers remained scarce amid a generally pessimistic market outlook. “There’s no one buying at the moment, as everyone is expecting the market to go down further, probably breaking below $230/mt soon,” an Asian consumer source said.
“The Chinese are not buying as domestic prices are falling, and the Middle East, India and Malaysia have all bought recently. We don’t see the Chinese buying in the next three months at least,” he added………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Thirty-two new ETFs and ETNs came to market in June, and three closed up shop. The net increase of 29 puts the listed count at 1,931 (1,729 ETFs and 202 ETNs) at the end of June. Assets climbed by $30.6 billion, with $19.3 billion coming from inflows and $11.2 billion the result of market action. Overall assets of U.S.-listed ETFs and ETNs now stand at $2.25 trillion.
The most dubious new offering of the month was the roll-out of another teeter-totter fund pair from a firm with a misleading name………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Industry endures its longest sequence of quarterly withdrawals since 2009. Global hedge funds suffered net outflows of $20.7bn in June, as investors pulled more of their money out despite improved performance from most managers.
After inflows in April and May, the withdrawals took total aggregate net redemptions for the second quarter to $10.7bn, according to data from eVestment, marking the third consecutive quarter in which money has left the sector………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The Russian ruble is proving surprisingly impervious to the price of oil. The currency of the world’s largest energy exporter has more or less ignored the value of the commodity in the past few months, according to Citigroup Inc. analysts led by Luis Costa. Usually when oil prices fall, so does the currency, but not so recently:
Fair value for the currency is 68 rubles to the dollar, according to the analysts’ calculations — based on regression modelling of Brent crude futures and the dollar-ruble exchange rate. The current level is more like 65.8………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

The judge threw out money laundering charges against a man who sold bitcoins to undercover cops. In a win for bitcoin advocates, a Florida judge on Monday ruled that bitcoins do not count as money, throwing out felony charges against a website designer accused of illegally transmitting and laundering $1,500 worth of bitcoins.
Florida resident Michell Espinoza faced felony charges after selling bitcoins to undercover detectives who told him they wanted to use the bitcoins to buy stolen credit card numbers, as the Miami Herald reports………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Carbon Trade Exchange (CTX), a global leader in environmental commodity markets, today announced that the firm has launched a new technology platform and has rebranded as Colonial Bourses.
“The new technology will enable us to implement our multi-product vision and provide market participants with greater access to the world’s environmental markets that is simple, secure and transparent.” comments Nathan Rockliff, Executive Director and COO………………………………………..Full Article: Source

Posted on 27 July 2016 by VRS |  Email |Print

Political hurdles and low prices have made carbon pricing a low-impact affair. But there’s still hope it can help limit climate change. Earth’s atmosphere has long served as a free dump for carbon dioxide and other greenhouse gases generated by humans.
That is changing as policy-makers embrace economists’ advice that the best way to cut greenhouse gas emissions is to charge an atmospheric disposal fee. As a result, governments are increasingly tacking on a price for carbon when fossil fuels are sold and/or consumed, allowing their economies to internalize some of the social and economic costs associated with burning coal, oil and natural gas………………………………………..Full Article: Source

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