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Commodities Briefing 21.Oct 2016

Posted on 21 October 2016 by VRS |  Email |Print

If you look in the average investor’s closet of anxieties, inflation is probably the biggest, scariest monster of them all. And increasingly, investors have been looking at commodities funds as a way to offset the effects of inflation and diversify their portfolios.
If you’re considering adding a commodity fund to a client’s portfolio, you have your work cut out for you. “The biggest problem is that there’s no real agreement as to what a commodity fund should look like, and that’s a real problem,” said Dave Nadig, director of exchange-traded funds at FactSet Research…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

The World Bank is raising its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel as members of the Organization of the Petroleum Exporting Countries (OPEC) prepare to limit production after a long period of unrestrained output.
Energy prices, which include oil, natural gas and coal, are projected to jump almost 25 percent overall next year, a larger increase than anticipated in July. The revised forecast appears in the World Bank’s latest Commodity Markets Outlook. Oil prices are expected to average $43 per barrel in 2016, unchanged from the July report…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Saudi Arabia’s Minister of Energy, Industry and Mineral Resources Khalid al-Falih said on Wednesday that the oil-price downturn was coming to an end. Speaking at the Oil & Money conference in London, Falih called for new investments to avert a supply shortage in the future, a Saudi Gazette report said.
“We are now at the end of a considerable downturn,” he told an audience that included top executives from oil firms such as Exxon Mobil Corp., Royal Dutch Shell PLC and Total SA. Falih said the oil industry was starved of financing during a downturn over the past two years in which crude prices fell to less than $28 a barrel this year from $114 a barrel in 2014…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Nigeria cut the price of every type of crude it sells in an effort to regain share of the global oil market at a time when there’s a “huge” glut of cargoes.
Nigeria National Petroleum Corp. lowered by at least $1 a barrel its official selling prices, or OSPs, for 20 out of 26 oil grades monitored by Bloomberg, according to pricing lists. Qua Iboe, Nigeria’s largest export crude under normal circumstances, was reduced by the most since 2014…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

As several of the world’s top oil executives rolled up at a Mayfair hotel in London this week for an industry summit, Brent crude, their benchmark product, was trading at $52 per barrel — exactly same the level as a year ago.
This might not seem like a cause for celebration. But, after the brutal retrenchment since prices collapsed from above $100 per barrel in mid-2014, the near 12-month highs of recent days have added to confidence that the worst is over for oil producers…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Russia’s largest oil company said the nation is capable of a substantial increase in production, less than two weeks after President Vladimir Putin pledged his support for international efforts to limit output.
“In the future, Russia can significantly increase oil production,” Rosneft PJSC Chief Executive Officer Igor Sechin said Thursday. The country has capacity to add as much as 200 million metric tons a year, or 4 million barrels a day, if there’s demand and technological and economic conditions allow, he said…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

In 2014, the Organization of Petroleum Exporting Countries (OPEC) declined to reduce oil production in the face of falling prices. Last month, at a meeting in Algiers, OPEC went in the opposite direction, setting out a goal of capping production collectively at 33 million barrels per day.
Why the change of course? And does OPEC’s most recent pronouncement carry any weight? A recent report from the Center on Global Energy Policy at Columbia University, and authored by Antoine Halff, director of the center’s Global Oil Markets Research Program, provides some perspective…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

The European Union (EU) and the Organisation of Petroleum Exporting Countries (OPEC) have pledged their support to ensure a stable global oil market. After a joint roundtable tagged: “Prospective for Future Production of Non-Crude Liquids”, held in Brussels, Belgium, the two groups agreed that in the light of current challenges in the energy markets, ongoing dialogues of this nature would continue to be of great importance.
Both parties agreed that a stable and orderly energy market is essential for both producers and consumers, and a pre-requisite for achieving sustained world economic growth. The roundtable provided an outlook of the production levels of non-crude liquids around the world from 2000 to 2015. ……………………………………Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Love it or hate it, you can’t ignore it. Gold’s stunning 20 per cent rally has made it one of the best performing assets in calendar 2016, vexing those who disregard it, and lining the pockets of its faithful supporters.
Buoyed by Brexit and an uncertain US Federal Reserve, gold bugs rejoiced as their favourite store of value soared from $US1076 ($1404) on January 1 to a record high of $US1365 ($1781). The question on everybody’s lips now, however, is whether or not the drivers of the past 12 months can continue to support the precious metal, propelling gold to fresh highs, or whether its moment in the sun has passed…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Is gold’s momentum really dependent on the victor of the U.S. presidential election? According to RBC Capital Markets commodity strategist Chris Louney, a correlation has developed between Republican presidential candidate Donald Trump and gold.
Speaking with CNBC’s Futures Now, Louney said in an interview that “gold reacts when Trump’s chances of winning rise above 40 percent or below 20 percent in the mainstream media.” Over first seven months of the year, gold really “glittered,” he said, with uncertainty surrounding monetary policy and Brexit fears…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Regulators are forcing lenders to cover their holdings of the precious metal. Gold refiners are warning that regulators’ plans that forces banks to utilise longer term funding against their holdings of the precious metal will ultimately make it more costly for consumers buying jewellery.
Banks lend gold to refiners, which typically use it to pay suppliers and customers, but under new rules proposed by the Basel Committee on Banking Supervision, the costs to banks could triple, according to the London Bullion Market Association…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

A strong intermediate resistance lies around $1,278-85 followed by a stronger one at $1,295-1,305. Only a fall below $1,250 could revive bearish hopes for $1,208-10 levels. The favoured view expects prices to test resistance around $1,295-1,305, while supports around $1,245-50 holds for the week.
But subsequently, we expect prices to dip again. Only a direct rise above $1,320 on high volumes on a closing basis could revive bullish hopes. Such a rise will hint that the downward correction has ended and the rally above $1,400 levels has begun…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Analysts predicts precious metal will survive political uncertainty in US and end year on a high. Gold looks set to buck three weeks of straight losses – and according to one analyst, it could “ride” political and economic uncertainty to a significant advance before the end of this year.
Prices hit a two-week high of $1,273 an ounce on Wednesday. Gold has since pared those gains a little, but at around $1,268 this morning, it is still heading for a weekly gain of around 1.5 per cent…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

One of the dominant financial trends of the past decade has been a move by investors out of actively managed funds and into passively managed index funds or exchange traded funds (ETFs).
The latest example is the Illinois State Pension Board, which according to The Wall Street Journal, decided to jettison active mutual fund managers altogether, leaving only passively managed choices for its state workers. The reasons cited for the move into ETFs included lower fees and potentially better performance as many active managers fail to outperform their passive peers…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Daily average primary aluminum output hit a record high in September, driven by buoyant output in top producer China, data from the International Aluminium Institute (IAI) showed on Thursday. The global daily average rose to 164,600 tonnes from 159,800 in August while total Chinese output for the month increased to 2.75 million, the highest in 15 months.
“The rally in Shanghai aluminum prices so far this year has improved profitability and is encouraging restarts. There are also ongoing additions to capacity,” said Caroline Bain, senior commodities economist at Capital Economics in London…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Aluminium slid to its lowest in nearly a month on worries about oversupply after a rise in output from China and heavy flows into LME warehouses in Asia. Total Chinese production in September rose to 2.75 million tonnes, the highest in 15 months, while global average daily output touched a record, data from the International Aluminium Institute (IAI) showed.
The London Metal Exchange also reported that 77,075 tonnes of aluminium had arrived at Asian warehouses over two days, largely in South Korea. Benchmark aluminium on the LME shed 1.2 per cent to close at $US1612 a tonne, its weakest since September 22…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

The Japanese spot import market for Chinese aluminum alloy ADC12 was lackluster in recent sessions after the yen weakened against the dollar, Japanese trade and consumer sources said Tuesday.
S&P Global Platts assessed the spot export price of Chinese-origin auto diecasting (ADC12) aluminum alloys at $1,680-$1,720/mt FOB China Tuesday, unchanged from a week ago. Chinese producers mostly offered at $1,700-$1,730/mt CIF Japan for December loading. There was a handful of producers in south China offering $1,690-$1,695/mt CIF Japan but volumes were limited…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

The IMF has expressed concern that if Egypt continues to control the exchange rate of the pound, bottlenecks in the economy that have been building up due to a scarcity of foreign currencies will only increase and scare away much-needed investment to help revive growth.
“The Egyptians have been saying that they want to move to a [monetary policy] model that is determined by supply and ­demand,” said Masood Ahmed, the regional head of the IMF, as the fund released its latest assessment of the region ­yesterday. “We are basically keen to support moving to that objective and most observers agree that staying with the current model would create an increasing bottleneck in the economy.”……………………………………Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Since their independence, Latin American countries have displayed a common fervor for populist socialism. Whether it is a residue of three centuries of European imperial rule, or simply a fondness for charismatic leaders – and an extraordinary talent for producing them – the widespread formula of clientelism and cronyism disguised as socialism has proven to have devastating consequences for the continent’s economic, social and political development.
Nowhere is this phenomenon displayed more clearly at present than in the Bolivarian Republic of Venezuela. The country is suffering its worst humanitarian and economic crisis in history, which calls for an urgent solution…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

Global co-operation on carbon trading could reduce the costs of climate change mitigation by 32% by 2030. That’s according to a new report by the World Bank which adds the figure could rise to more than 50% by 2050.
It shows increased international carbon trading could enable large-scale emission reductions at much lower costs based on the carbon mitigation goals spelled out in countries’ Nationally Determined Contributions (NDCS) under the Paris Agreement…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

The Parliamentary Commissioner for the Environment’s recent report on agricultural greenhouse gas emissions highlights the need for agriculture to make meaningful progress in reducing its emissions. In New Zealand this is particularly important because agriculture is responsible for 48% of our emissions.
The Commissioner’s report follows disturbing analysis from the Ministry for the Environment, where a senior official this week advised that meeting New Zealand’s Paris Climate Agreement pledge could cost the country more than $70 billion, and see carbon prices rise to $300 a tonne if we are not part of international carbon markets…………………………………….Full Article: Source

Posted on 21 October 2016 by VRS |  Email |Print

In the 1800s a popular American saying was “As Maine goes, so goes the nation,” meaning that what happened in Maine had a significant impact on U.S. presidential elections. Today, some economists are adapting that sentiment to “As China goes, so goes the world.”
Beijing recently announced a 6.7 percent economic expansion in the third quarter, matching predictions and consistent with its last two quarters. One is tempted to be encouraged by such remarkable stability…………………………………….Full Article: Source

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