Etikett: Crude Oil

Likely supply disruptions lead to industrial metals rally

Likely supply disruptions lead to industrial metals rally ETF SecuritiesLikely supply disruptions lead to industrial metals rally

ETF Securities Weekly Flows Analysis – Likely supply disruptions lead to industrial metals rally

Highlight

  • Industrial metal basket ETPs see largest inflows since February as supply disruptions likely
  • Energy sector ETP flows continue to bifurcate – energy baskets attract inflows while crude oil ETPs suffer outflows
  • Investors appear to bet on a stronger Euro vis-à-vis the US Dollar

Industrial metal basket ETPs see largest inflows since February. Industrial metals gained a strong tail-wind last week, rising 2.9%, as trade-wars escalate. Inflows of US$46.1mn in to industrial metal ETPs followed. Trade restrictions will likely disrupt supply chains and increase the scarcity of many metals. Protectionist pressures initiated by the US -including imposing tariffs on EU, Canadian and Mexican steel and aluminium imports and a raft of tariffs on Chinese imports have been met by announcements of retaliation. This tit-for-tat ratcheting of a trade war may escalate further.

Most base metals are already in a supply deficit. Trade wars further complicates metal availability. In addition to trade wars, US sanctions placed on Oleg Deripaska, the largest shareholder of Rusal (the world’s largest aluminium producer), have led to tightness in aluminium. The world largest copper mine, Escondida, has resumed wage negotiation after postponing them last year. Last year the mine underwent a 43-day strike following the impasse in wage negotiations. Investors fear a déjà vu moment, as the unions have placed a very ambitious request forward. The closure of a large Indian smelter and US Dollar weakness have also contributed to copper rising to a 4 ½ -year high. Copper ETPs saw US$13.1mn of inflows last week, the highest since April 2018.

Energy sector ETP flows continue to bifurcate. Continuing a trend that started last week, long energy basket ETPs gained inflows of US$29.6mn, reaching the highest weekly inflows since December 2015. While long crude oil ETPs suffered further outflows of US$ 19.9mn, extending outflows for the ninth week in a row. Oil prices endured a lot of volatility last week. A higher than expected build in crude and product in the US sent prices lower. Added to that were reports that the US has asked Organization of Petroleum Producing Countries (OPEC) to raise production by 1 million barrels per day. With OPEC meeting later this month to discuss policy, we expect oil prices to remain volatile as the market tries to guess the what the 14-member cartel will do next. Oil prices started to rise again toward the end of the week as Iran signalled that it will restart nuclear enrichment as soon as the current nuclear deal collapses. Such cavalier discussion could repel the EU who have thus far been seeking to circumvent the US’s extraterritorial sanctions in favour of keeping trade open with Iran.


Investors appear to bet on a stronger Euro vis-à-vis the US Dollar. Inflows into long Euro, short US Dollar ETPs rose to a four week high of US$9.4mn, reversing all of the prior week’s outflows from the pair. The Euro has seen a lot of volatility over the past few weeks during the sage of the formation of a new Italian government comprising of parties from the political extremes. Today, however, a commitment from the new Italian Finance Minister to the Euro and a pledge to avoid financial instability has offered the currency some support.


ETF investors feel the Italian equity shakeout is overdone. We saw the third consecutive week of inflows into Italian equities, with US$3.9mn last week. Although Italian equities have been falling over the past month, the conciliatory words from the Italian Finance minister have led to a 2% rally in the Italian FTSE MIB today at the time of writing. ETF investors also sold US$3.7mn from broad European equity short ETPs last week, likely taking profits on a month of declining prices.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0)207 448 4330
E research@etfsecurities.com

Important Information

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Precious metal ETP outflows surge as sentiment sours

Precious metal ETP outflows surge as sentiment sours

ETF Securities Weekly Flows Analysis – Precious metal ETP outflows surge as sentiment sours

Highlights

  • Precious metal weekly outflows surge amidst a stronger US dollar and rising US Treasury yields.
  • WTI’s discount to Brent widens and outflows from crude oil ETPs rise for the sixth week in a row.
  • Yen ETPs remain well bid, despite the soft economic patch reported in Q1.

Download the complete report (.pdf)

As WTI’s discount to Brent crude oil prices deepens, outflows worth US$5.4mn continue for the sixth week in a row. Brent prices surged to US$80 per barrel for the first time since November 2014; likely owing to the ongoing concerns of supply from Venezuela and Iran. The unsurprising overnight victory of President Nicolas Maduro at the Venezuelan election is likely to spark unrest within the nation and worsen the decline in Venezuelan oil production. Last week the International Energy Agency (IEA), showed signs of further tightening on the oil market, as oil stocks in OECD countries decreased in March to their lowest level in three years and dipped below the five-year average for the first time since 2014. The crude oil inventory reduction was aided by record high crude oil exports, as the deep discount of the WTI price with Brent is making US crude oil more attractive to the international buyers. In contrast to the inventory build reported by the API, the US department of Energy reported a 1.4 million barrel fall in US crude oil stocks. Furthermore, US oil rig count held steady at 844 last week after rising for six weeks in a row.

Gold ETPs faced weekly redemptions worth US$82.3mn, the highest level in 12 weeks. Gold prices faced significant pressure as the US dollar strengthened and 10-year US treasury yields crossed 3.112% last week. The yield differential of the 10-year US Treasuries versus the equivalent German government bonds of the same maturity widened to 250 basis point, marking its widest level in over 30 years. This points to further strengthening of the US dollar against the euro and more weakness ahead for gold prices as it fails to yield any interest, making it appear unattractive in the current rising rate environment. Meanwhile, gold’s historical role as a safe haven, may allow significant upside potential from the ongoing geopolitical risks emanating from protests in Gaza, uncertainty over the Iranian Nuclear agreement, US-China trade wars, the Korean conflict and progress from the coalition of populist Eurosceptic parties in Italy.

Gold prices declined for a time to their lowest level since the start of the year, falling below the psychologically important $1300 mark, such low levels should also encourage physical buying. Silver prices recouped some if its losses over the latter half of last week resulting in the gold/silver ratio declining to 78.5. Investors took profits as we saw weekly outflows from Silver ETPs surge to US$98.4mn their highest level since September 2017. Precious metal basket ETPs also saw US$12.3mn worth of 0utflows as sentiment toward the precious metals sector deteriorated.

Long Yen ETPs versus the Euro attracted the highest inflows in 10 weeks, last week. Following eight consecutive quarters of growth, the Japanese economy contracted in the first quarter as GDP contracted -0.6% more than consensus estimates owing to sluggish household consumption and capital spending. However strong corporate profitability, an upbeat global growth outlook and signs that wage pressures are starting to build provide evidence that the Japanese investment case still remains intact.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0)207 448 4330
E research@etfsecurities.com

Important Information

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Broad commodity basket ETPs took the lion’s share of flows

Broad commodity basket ETPs took the lion’s share of flows

ETF Securities – Broad commodity basket ETPs took the lion’s share of flows

Highlights

  • Diversified commodity basket ETPs dominate inflows.
  • Softening momentum in global manufacturing data sparked outflows from copper, aluminium and industrial metal basket ETPs.
  • Outflows from gold ETPs rose for the fifth consecutive week amidst a strong US dollar.
  • Crude oil ETPs faced another week of outflows as higher inventory data caused oil prices to decline.

Download the complete report (.pdf)

Inflows into diversified commodity basket ETPs, totalling US$92.5mn surged to their highest level since May 2016. Rising volatility across global financial markets in conjunction with supportive fundamentals for most commodities favours the case for diversifying a portfolio.

Softening momentum in global manufacturing data sparked outflows from copper, aluminium and broad industrial metal basket ETPs worth US$28.9mn, US$11.1mn and US$14.8mn respectively. The decline in Chinese Purchasing Managers Index (PMI) for the manufacturing sector to its lowest level since July 2016 appears to have stoked concerns of future demand for industrial metals, coupled with weaker manufacturing PMI data across US, Europe and UK. Added to that, copper production in Chile, home to the world’s largest copper mining producer, rose 6.3% over the prior year in January providing evidence of rising copper supply. The imposition of trade tariffs by President Trump on steel and aluminium imports generated volatility across industrial metals prompting outflows from industrial metal basket and aluminium ETPs for the first time in three weeks. Nickel ETPs bucked the trend, by recording inflows of US$9.4mn owing to expectations of demand from battery technology.

Outflows from gold ETPs amounting to US$93.8mn rose for the fifth week in a row amidst a strong US dollar. In the first nine weeks of 2018, the overall trend of gold ETP flows has largely been negative. Last week marked the fifth consecutive week of gold ETP outflows as the US dollar strengthened in the aftermath of Federal Reserve chairman Jay Powell’s optimistic view of the US economy and upward trajectory of interest rates. Meanwhile, precious metal basket ETPs garnered inflows worth US$11.1mn for the fifth consecutive week.

Crude oil ETPs faced another week of outflows worth US$15.8mn. Since the start of 2018, there has only been one week of inflows into crude oil ETPs highlighting the ensuing pessimism amongst ETP investors, who have been opportunistically selling into the price rally that began around June 2017. Last week, crude oil prices came under significant pressure owing to an unexpected sharp increase in US crude oil stocks in conjunction with the firmer US dollar. Added to that, weaker manufacturing data in China, known to be the world’s largest crude oil importer, amplified risk aversion amongst investors. The drop in OPEC production to a 10-month low in February failed to counteract the bearish sentiment since it is largely attributable to temporary production shortfalls in Venezuela.

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Investors remain sceptical over the recent oil rally

Investors remain sceptical over the recent oil rally

ETF Securities – Investors remain sceptical over the recent oil rally

Highlights

  • Investors continue to sell long positions in crude oil ETPs with outflows of US$36mn last week.
  • In currencies, investors sold out of long ETPs in both the USD and EUR to the sum of US$61m, the largest flows since June 2017.
  • Robotics ETPs posted another strong week of inflows – totalling US$53m – just shy of the record US$56 the previous week.

Download the complete report (.pdf)

Investors continue to sell long positions in crude oil ETPs with outflows of US$36mn last week. With the exception of one week, we have now seen 29 consecutive weeks of outflows. That is similar to the period of outflows seen in 2013/14, just prior to the fall in oil prices in late 2014. To further highlight investor scepticism in the sustainability of current oil prices, we have seen inflows of US$53mn in short positions over the same 29 week period. The oil market currently has two key opposing forces influencing prices: further signals that OPEC and Russia will persevere past 2018 with regards to production freezes, and the most recent IEA report highlighting that they expect US oil production to surpass that of Saudi Arabia. We continue to believe the oil price is likely fall back into the range between US$45 to US$60 per barrel in the coming year.

Precious metals saw broad outflows of US$55mn, with the majority of outflows from silver ETPs, which saw outflows of US$49mn last week, bringing year to date outflows to US$77mn. The current gold:silver ratio is currently at 78, above 1x standard deviation from its average, highlighting silver is historically cheap at current levels after the recent gold price rally.

In currencies, investors sold out of long ETPs in both the USD and EUR to the sum of US$61mn, the largest flows since June 2017. We believe this was due to increasing rhetoric of further tightening from the ECB and worries from investors over rising government bond yields in the US. USD and EUR ETPs saw outflows of US$27mn and US$5mn respectively, further highlighting investor bearishness over the currencies.

Robotics ETPs posted another strong week of inflows – totalling US$53mn – just shy of the record US$56mn the previous week. This brings total inflows this year to US$128mn. Expectations are high for the upcoming earnings season. Consequently Robotics ETPs have outperformed the S&P500 by 5% this year. Valuations remain at 31x, at their long-term average, to the MSCI Global Technology index.

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

2018 ETP flows pick up right where 2017 left off

2018 ETP flows pick up right where 2017 left off

ETF Securities – 2018 ETP flows pick up right where 2017 left off

Highlights

  • Global equity ETPs garnered US$21.6mn buoyed by a synchronised global growth story.
  • Gold ETPs received inflows of US$19.2mn led by higher gold prices, having gained support from a weaker US dollar.
  • Outflows worth US$14.1mn from crude oil ETPs mark a continuation of last year’s trend of outflows.

Download the complete report (.pdf)

Gold ETPs received inflows of US$19.2mn, staging a strong start to the new year. Gold prices ended the week higher by 1% supported by a weak US dollar. While the rise in US payrolls missed estimates by a considerable margin of 42,000 workers in December, owing to a shortfall in the services sector, it is unlikely to be a significant shift in the overall trend. The US ADP employment data showed private employers added 250,000 jobs in December, marking the biggest monthly increase since March last year. The accomplishment of passing the US tax bill is also likely to benefit US corporate earnings. We continue to expect the Fed to hike in March. Moreover the December FOMC minutes released last week, highlight concerns of higher inflation expectations in 2018 stemming from wage growth. The likelihood of higher inflation should keep the Fed on track with its three rate hike projections in 2018 and is likely to be a headwind for gold prices going forward.

Global equity ETPs garnered US$21.6mn buoyed by a synchronised global growth story. Strong economic data in US, Europe and China has helped reinforce the positive sentiment helping global stock markets attain new highs. In addition, the cut in the US corporate tax rate has boosted expectations for corporate earnings that kick off this week.

Precious metal ETPs garnered strong inflows worth US$18.8mn. Palladium prices rose to US$1100 for the first time in 17 years, in continuation with last years trend. Fears of a supply shortage continue to drive palladium prices higher. However we expect to see its closely traded counterpart platinum outperform palladium, owing to its steep price discount and the strengthening European car market.

Crude oil ETPs saw outflows of US$14.1mn, extending last year’s trend of relentless outflows. Fears of political unrest in Iran disrupting oil supply coupled with OPEC’s high compliance with production cuts helped push Brent crude above US$68, its highest level since May 2015. Meanwhile positive economic data across the globe and severe cold weather conditions in the US sent WTI crude oil just shy of its 2015 high. Evident from the build-up in short positioning of crude oil ETPs, investors are increasingly becoming aware that current prices are unsustainable as the US continues to expand production and the unrest in Iran settles.

Diversified basket ETPs received US$12mn as major commodities kick start the year with a strong performance. The Bloomberg commodity spot index, known to track a broad basket of 22 major commodities, attained its highest level since 2014. The improving global growth story is benefiting the outlook for commodities and drawing investors into broad based diversified commodity baskets.

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.