Analys

Risk hedges in favour on heightened geopolitical risks

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11 år sedan

den

28 juli, 2014

Geopolitical risks remained in focus last week, with the Ukrainian crisis somewhat worsened by the resignation of the Ukrainian Prime Minister, while the unrest in the Middle East threatened to get out of hand. According to the IMF, the conflicts in Ukraine and Iraq will likely hinder global growth, which is now forecast to be around 3.4% vs 3.6% predicted back in April. While prices are yet to react to the heightened risks, gold and oil ETPs continued to see strong inflows as investors seek hedge against a further deterioration of the situation.

Gold and oil ETPs continue to see strong inflows on geopolitical risks. The Ukrainian crisis and unrest in the Middle East prompted investors to seek a potential hedge against a deterioration of the situation, driving US$80.6mn and US$23.1mn into gold and oil ETPs, respectively. While prices are yet to react to the heightened risks, with the Gaza conflict threatening to escalate following an Israeli missile attack on a UN school for refugees and the Ukrainian Prime Minister resigning, demand for oil and other defensive assets is likely to remain strong.

Long platinum ETPs record US$6mn of inflows on relative value prospects. The platinum to palladium ratio is standing at the lowest level since 2002, despite a South African strike that took over 1moz of platinum off the market. While palladium price is better positioned to benefit from a pick-up in global growth, investors deem the current platinum undervaluation excessive and anticipate platinum playing catch up to palladium.

Expectations of a prolonged ore export ban in Indonesia drive inflows into ETFS Nickel (NICK) to an 8-week high of US$12.8mn. Joko Widodo won the Indonesian presidential election and is due to be sworn into office on the 20th October. While his election might bring a relaxation of the export ban in place since January 2014, it is unlikely that any change will be carried out before next year, meaning that nickel market will remain tight for some time. With Indonesian industrial metal supply substantially reduced by the ban we expect industrial metals to continue being supported as global demand begins to pick up. Cyclical commodities demand is being driven by the Chinese government’s stimulus measures and a quickening pace in the US recovery.

Wheat ETPs see US$6.4mn of inflows as the recent price correction is deemed excessive. The Australian Bureau of Meteorology expects below average rainfall in the north-eastern and south-eastern wheat growing areas over the next few months. Investors are building positions in the hope that the large surpluses forecasted by the USDA prove wrong, which could lead to the next price rally. At the same time, profit taking drove US$2.5mn out of ETFS Daily Leveraged Coffee (LCFE), as the Arabica coffee price jumped by over 10% last week. Heavy rains at the tail end of the harvest in Brazil, the biggest producer, could lower the quality of the coffee beans that are currently being harvested.

Key events to watch this week. While investors focus will likely remain on the evolving situation in the Ukraine and the Middle East, a number of key economic statistics for the US and China will also be monitored to gather the strength in momentum in those economies. July Manufacturing PMIs for China, the US and the UK will be coming out this week, together with Q2 US GDP growth and July non-farm payrolls. The US FOMC rate decision will also be watched closely as investors try to identify the future path for rates in the US.

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Physical gold ETPs see largest inflows in 17 months

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SEB – Råvarukommentarer, 28 juli 2014

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Analys

Stronger inventory build than consensus, diesel demand notable

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3 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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5 dagar sedan

den

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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7 dagar sedan

den

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.