Analys

Gold on track to reach new highs

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5 år sedan

den

3 juli, 2020

Redaktionen

Gold is the only major commodity to post year-to-date gains in the first half of 2020. The COVID-19 crisis has ripped apart the playbook for 2020. The International Monetary Fund, for example, started the year off expecting 3.3% GDP growth. That has been revised down to -4.9%. Cyclical assets experienced sharp drawdowns while defensive assets such as gold and US Treasuries have prospered. However, in recent months cyclical assets have staged a comeback as if these markets are expecting a V-shaped economic recovery. Unfortunately, the hard-economic data does not support such a swift economic recovery. Could the risk-on rally be gold’s undoing? Or will gold continue to remain in favour?

Judging by positioning in gold futures markets, sentiment towards gold has come off its all-time highs set in February 2020.

Net speculative positioning in gold futures — Source: WisdomTree, Bloomberg. Data as available 25 June 2020.

However, that may not tell the full story. Assets in gold exchange traded commodities are at an all-time high at 103 million ounces. Indeed, positioning in gold futures may have been lower than otherwise would have been expected due to market dislocations at COMEX, where the futures are traded. As these dislocations are easing, we may see futures positioning rise once again.

Nitesh Shah, Director, Research, WisdomTree

We expect positioning in gold futures to rise for several other reasons:

The disconnect from the equity markets and the economy could drive investors to seek defensive hedges.
The sustainability of rising indebtedness will likely worry some investors.
We are in a US Presidential election year. In the last election cycle, speculative positioning rose to what at the time was the highest level in the run-up to the election.
Spikes in COVID-19 cases could also drive more investors to defensive positions.

Gold prices in a U-shaped economic recovery using WisdomTree’s framework

Using our model framework, explained in “Gold: how we value the precious metal”, we try to illustrate how gold prices could move up to Q2 2021.

Gold price forecasts — Source: WisdomTree Model Forecasts, Bloomberg Historical Data, data available as of close 25 June 2020.

We believe we are in a U-shaped economic recovery. Continued economic stimulus will be required to prop up the economy. That will continue to distort various asset markets and leave them vulnerable to sharp corrections. A continued easing bias by the Federal Reserve will keep downward pressure on the US Treasury yields.

We believe that inflation in the U-shaped recovery will be higher than that assumed by consensus. That is largely because supply chains are broken and so input prices for many goods and services are rising. Furthermore, official measures of consumer price index (CPI) inflation may fail to accurately reflect inflation in this COVID-19 crisis. Notably, the consumption basket that statistics are compiled on are based on 2019 consumption, but what people consume today has shifted greatly in this new environment. We factor this into what we believe is reflective of an inflation experience rather than what will be measured by official statistics.

We believe the US Dollar will move back to the upper end of the trading range we have seen in the past 3 months. If there is haven demand for gold in this uncertain environment, there is likely to be haven demand for the US Dollar as well.

Our model indicates we could get to a gold price of $2070/oz at the end of the forecast horizon and we pierce the previous all-time high reached in May 2011 by the end of this year.

Economic recovery — Source: WisdomTree, data available as of close 25 June 2020.

Relaterade ämnen:guld nitesh shah wisdomtree

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Annons

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Stronger inventory build than consensus, diesel demand notable

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2 dagar sedan

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21 februari, 2025

Redaktionen

Yesterday’s US DOE report revealed an increase of 4.6 million barrels in US crude oil inventories for the week ending February 14. This build was slightly higher than the API’s forecast of +3.3 million barrels and compared with a consensus estimate of +3.5 million barrels. As of this week, total US crude inventories stand at 432.5 million barrels – ish 3% below the five-year average for this time of year.

Ole R. Hvalbye, Analyst Commodities, SEB

In addition, gasoline inventories saw a slight decrease of 0.2 million barrels, now about 1% below the five-year average. Diesel inventories decreased by 2.1 million barrels, marking a 12% drop from the five-year average for this period.

Refinery utilization averaged 84.9% of operable capacity, a slight decrease from the previous week. Refinery inputs averaged 15.4 million barrels per day, down by 15 thousand barrels per day from the prior week. Gasoline production decreased to an average of 9.2 million barrels per day, while diesel production increased to 4.7 million barrels per day.

Total products supplied (implied demand) over the last four-week period averaged 20.4 million barrels per day, reflecting a 3.7% increase compared to the same period in 2024. Specifically, motor gasoline demand averaged 8.4 million barrels per day, up by 0.4% year-on-year, and diesel demand averaged 4.3 million barrels per day, showing a strong 14.2% increase compared to last year. Jet fuel demand also rose by 4.3% compared to the same period in 2024.

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Analys

Higher on confidence OPEC+ won’t lift production. Taking little notice of Trump sledgehammer to global free trade

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4 dagar sedan

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19 februari, 2025

Redaktionen

Ticking higher on confidence that OPEC+ won’t lift production in April. Brent crude gained 0.8% yesterday with a close of USD 75.84/b. This morning it is gaining another 0.7% to USD 76.3/b. Signals the latest days that OPEC+ is considering a delay to its planned production increase in April and the following months is probably the most important reason. But we would be surprised if that wasn’t fully anticipated and discounted in the oil price already. News this morning that there are ”green shots” to be seen in the Chinese property market is macro-positive, but industrial metals are not moving. It is naturally to be concerned about the global economic outlook as Donald Trump takes a sledgehammer smashing away at the existing global ”free-trade structure” with signals of 25% tariffs on car imports to the US. The oil price takes little notice of this today though.

Bjarne Schieldrop, Chief analyst commodities, SEB

Kazakhstan CPC crude flows possibly down 30% for months due to damaged CPC pumping station. The Brent price has been in steady decline since mid-January but seems to have found some support around the USD 74/b mark, the low point from Thursday last week. Technically it is inching above the 50dma today with 200dma above at USD 77.64/b. Oil flowing from Kazakhstan on the CPC line may be reduced by 30% until the Krapotkinskaya oil pumping station is repaired. That may take several months says Russia’s Novak. This probably helps to add support to Brent crude today.

The Brent crude 1mth contract with 50dma, 100dma, 200dma and RSI. Nothing on the horizon at the moment which makes us expect any imminent break above USD 80/b

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Analys

Brent looks to US production costs. Taking little notice of Trump-tariffs and Ukraine peace-dealing

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6 dagar sedan

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17 februari, 2025

Redaktionen

Brent crude hardly moved last week taking little notice of neither tariffs nor Ukraine peace-dealing. Brent crude traded up 0.1% last week to USD 74.74/b trading in a range of USD 74.06 – 77.29/b. Fluctuations through the week may have been driven by varying signals from the Putin-Trump peace negotiations over Ukraine. This morning Brent is up 0.4% to USD 75/b. Gain is possibly due to news that a Caspian pipeline pumping station has been hit by a drone with reduced CPC (Kazaksthan) oil flows as a result.

Brent front-month contract rock solid around the USD 75/b mark. The Brent crude price level of around USD 75/b hardly moved an inch week on week. Fear that Trump-tariffs will hurt global economic growth and oil demand growth. No impact. Possibility that a peace deal over Ukraine will lead to increased exports of oil from Russia. No impact. On the latter. Russian oil production at 9 mb/band versus a more normal 10 mb/d and comparably lower exports is NOT due to sanctions by the EU and the US. Russia is part of OPEC+, and its production is aligned with Saudi Arabia at 9 mb/d and the agreement Russia has made with Saudi Arabia and OPEC+ under the Declaration of Cooperation (DoC). Though exports of Russian crude and products has been hampered a little by the new Biden-sanctions on 10 January, but that effect is probably fading by the day as oil flows have a tendency to seep through the sanction barriers over time. A sharp decline in time-spreads is probably a sign of that.

Longer-dated prices zoom in on US cost break-evens with 5yr WTI at USD 63/b and Brent at USD 68-b. Argus reported on Friday that a Kansas City Fed survey last month indicated an average of USD 62/b for average drilling and oil production in the US to be profitable. That is down from USD 64/b last year. In comparison the 5-year (60mth) WTI contract is trading at USD 62.8/b. Right at that level. The survey response also stated that an oil price of sub-USD 70/b won’t be enough over time for the US oil industry to make sufficient profits with decline capex over time with sub-USD 70/b prices. But for now, the WTI 5yr is trading at USD 62.8/b and the Brent crude 5-yr is trading at USD 67.7/b.

Volatility comes in waves. Brent crude 30dma annualized volatility.