Etikett: Energy sector

Continued inflows for commodities as energy sector bucks the trend

ETF Securities Continued inflows for commodities as energy sector bucks the trendContinued inflows for commodities as energy sector bucks the trend

ETF Securities Weekly Flows Analysis – Continued inflows for commodities as energy sector bucks the trend

  • Gold price continues higher, with 2016 inflows near US$1.9bn, as policy uncertainty reigns.
  • Palladium inflows hit six month highs on rising US car sales.
  • Profit-taking continues for crude oil ETPs, led by WTI products.

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Gold ETP inflows have experienced withdrawals in only two weeks in 2016, with inflows totalling US$1.9bn. Gold’s rally appears to be set to continue as the market reacts to softer economic data in the US. The downside surprise for US jobs will keep uncertainty surrounding US Fed policy elevated and will certainly support gold as a potential inflation overshoot in the US seems likely. Nonetheless, the gold price needs to sustainably break above the US$1300/oz level for confidence in the precious metal to remain high. Although futures market positioning is reaching stretched levels, with myriad economic indicators to be released this week from the US, China, the Eurozone and the UK, any disappointment will boost gold higher.

Palladium inflows reach the highest level since November 2015. Although modest, the US$3.0mn inflows represent the second consecutive week of inflows, and the largest since late November 2015. Car sales have been buoyant with US light vehicle sales rising 5% over the past month (4% yoy), according to Autodata. Meanwhile, support for platinum group metals could be renewed in coming weeks, as the so-called ‘strike season’ in the South African mining industry looms. New wage negotiations are expected to occur in June, when current agreements lapse. All indications point to troubled negotiations, which led to strikes and a slump in production from the world’s largest PGM mining country.

Energy sector bucks the trend with fourth consecutive week of outflows led by oil ETPs. More profit-taking has been evident in oil ETPs, as prices struggle around US$45/bbl. Last week’s outflows of US$38.7mn takes outflows over the past month to US$236mn. While crude prices were supported late last week as a wild fire threatened a not insignificant amount of Canadian oil sands output, such support is likely to fade with ongoing builds in US oil storage volumes. Last week’s outflows of US$38.7mn takes outflows over the past month to US$236mn. 80% of last week’s outflows consisted of withdrawals from WTI crude ETPs.

Diversified industrial metal exposures lead sector with US34.1mn inflows. Tighter fundamentals across a range of industrial metals have seen investors look to gaining broad exposures in the sector, with inflows into broad basket industrial metals ETPs the third highest on record. Copper remains the preferred choice for individual industrial metals exposures, resuming the trend of inflows, which totalled US$5.6mn last week.

Key events to watch this week. The economic calendar is bulging this week, with key economic indicators from around the globe scheduled for release. A raft of Chinese data is released, including trade, retail sales and industrial production will likely be the catalyst for a continued move higher for commodities, particularly industrial metals. Meanwhile, Eurozone inflation and GDP readings will leave no question on the outlook for ECB policy: more stimulus. Central bank report from the Bank of Japan and the Bank of England should shed some light on the outlook for monetary policy, but typically guarded communications could see asset market volatility remain elevated.

Video Presentation

Martin Arnold, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

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This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

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Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication 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.

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Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

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Sentiment overshadows fundamentals … for now

Sentiment overshadows fundamentals… for now

Commodity Monthly Monitor – Sentiment overshadows fundamentals … for now
June/July 2015

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Highlights

Currency impact overshadows stronger El Niño threat for softs.

Gold stable as tighter US policy overshadows Greece concerns.

Softer Chinese economic sentiment weighs on industrial metals

Energy sector buoyant as demand strengthens.

Outside the energy sector, investor sentiment for commodities has softened on the back of concern over the global economic outlook and the volatility that has pervaded financial markets. Volatility has been a ubiquitous force not only across asset classes, but across regions, as uncertainty over the health of the Chinese economy has lingered at the same time as fears of a Grexit has risen. Although policymakers have warned investors to expect protracted market volatility, stimulus in China, Japan, Europe and beyond is likely to keep demand conditions favourable for most commodities. With improving commodity fundamentals beginning to reassert, we expect that sentiment will rebound in coming months as stronger evidence of the global recovery begins to be witnessed.

Currency impact overshadows stronger El Niño threat for softs. Sharp moves in sugar have largely been currency related, offsetting any concern over reduced supply if the El Niño intensifies later in the year. Meanwhile good US growing conditions have kept any gains in check for grains.

Gold stable as tighter US policy overshadows Greece concerns. Gold outperformed other precious metals, remaining resilient despite the threat of rising US rates. Other metals in the sector were adversely impacted by evidence of softer demand.

Softer Chinese economic sentiment weighs on industrial metals. Despite broadly tighter fundamental conditions, deteriorating Chinese economic sentiment weighed on the industrial metals complex. We expect recovery in prices, as supply optimism begins to fade in the latter stages of 2015.

Energy sector buoyant as demand strengthens. Investors have cut bets of a near-term upside move in oil prices, despite rising demand. With oil supply remaining elevated on a global scale, the risk of a downside move in crude prices will increase if demand growth fades.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

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Platinum Buoyant Against Backdrop of Potential Labour Unrest

Platinum Buoyant Against Backdrop of Potential Labour Unrest

ETF Securities Commodity ETP Weekly Platinum Buoyant Against Backdrop of Potential Labour Unrest

Platinum defies precious metals trend with strongest inflows in 19 weeks.

ETFS Industrial Metals (AIGI) inflows reverse prior trend.

Energy price gains prompt 12th consecutive weekly outflow from long oil ETPs as investors anticipate near-term correction.

Last week we hosted a post-OPEC webinar providing an update on the current state of the oil industry with Amrita Sen, Oil Analyst at Energy Aspects – watch the recording

Divergent agricultural outflows led by wheat and coffe.

Download the complete report (.pdf)

The energy sector was the one bright spot within a gloomy week for commodity markets. Lingering Greek uncertainty and rising geopolitical risk is likely to remain a supportive influence for precious metals in coming weeks. At the margin, the US Dollar’s recent strength is having an adverse impact on commodity markets. We expect further US Dollar strength to keep commodity gains capped in the near-term, but rising economic activity, is likely to be supportive of commodity markets later in the year. Moreover, with commodities being priced in USD, European investors receive a currency benefit if local currencies posts further falls against the USD – a product of diverging monetary policy and the sluggish European growth.

Platinum defies precious metals trend with strongest inflows in 19 weeks. Reports of potential strikes at gold mining companies in South Africa appear to have prompted investors to deposit the largest amount of funds in long platinum ETPs since late January, fearing potential contagion in the mining sector. South Africa, a traditional hotbed of labour market unrest, is again experiencing tension between the two largest rival trade unions, the NUM and the AMCU over gold mining worker pay levels. Meanwhile palladium has traded to its lowest level in over two years after evidence of slowing Chinese auto sales. Palladium responded negatively to an announcement by the China Association of Automobile Manufacturers that sales fell 0.4% in May on a year earlier.

ETFS Industrial Metals (AIGI) inflows reverse prior trend. Investors are favouring broad industrial metals exposure at the expense of single commodity positions. AIGI received US$8mn in inflows, the largest in three weeks, as fundamental conditions appear to be tightening for a range of industrial metals. While individual industrial metals will continue to trade in line with their own fundamentals, we believe that an upside surprise in Chinese and European activity should be beneficial for the industrial metal complex, as policy makers from both jurisdictions continue to stimulate their economies.

Energy price gains prompt 12th consecutive weekly outflow from long oil ETPs as investors anticipate near-term correction. A further US$39.3mn was withdrawn from long oil ETPs last week, as investors continued to book profits ahead of a potential correction. US rig counts are appearing to stabilise at current price levels, with a decline of only four rigs last week. Investor positioning also highlights the near term pessimism for oil prices, with Brent and WTI positioning declining 44% and 5% on a month earlier, respectively.

Divergent agricultural outflows led by wheat and coffee. Broad based price declines prompted withdrawals from agricultural ETPs last week. The largest outflows in the agricultural sector since January was led by US$5.6mn outflows from wheat ETPs. The USDA surprisingly increased wheat supply forecasts for this year. Wheat had previously been rallying following excess rain in in the key growing areas in the US.

Key events to watch this week. Amongst a raft of central bank meeting this week, the FOMC meeting is the key event in the coming week, in order to gauge how far away the Fed is from the beginning of its tightening cycle. Other central banks (Bank of Japan and the ECB) will keep policy extremely loose, assisting the gradual recovery of their domestic economies.

Video Presentation

Martin Arnold, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

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 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 document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. 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.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication 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.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”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.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.