Etikett: ETPS

A Four-Year High in Oil ETP Inflows

A Four-Year High in Oil ETP Inflows

Commodity ETP Weekly A Four-Year High in Oil ETP Inflows

Weekly oil ETP inflows highest in four years – US$76.9mn.

Natural gas ETPs saw US$7.5mn of inflows last week.

ETFS Physical Silver (PHAG) received highest inflows in nine weeks.

ETFS Aluminium (ALUM) sees outflows of US$41.3mn, the most in five weeks.

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Continued oil price declines drove further rounds of bargain hunting last week, with WTI and Brent oil ETPs seeing their highest weekly inflows since 2011. WTI fell to US$48/bbl and Brent came within a whisker of US$50/bbl, putting their price at more than 5-year lows. We believe that oil prices at these levels are unsustainable. Although OPEC resisted calls to cut production in November, highlighting the need for oil prices to find a new equilibrium, we believe the cartel will eventually have to reduce supply to help stabilise global oil prices. The cartel jointly produces approximately 40% of global oil output. Saudi Arabia, the largest producer in the cartel, raised its sale price of Arab Light grade oil in Asia for February last week, implicitly acknowledging that the price-war has gone too far. Demand for cyclical commodities, including oil, could rise this year as economic growth continues to improve. US non-farm payrolls released on Friday displayed an upside surprise once again, providing a boon to cyclicals.

Weekly oil ETP inflows highest in four years. Long Brent oil ETPs received US$76.9mn of inflows last week, the highest since March 2011, while Long WTI oil ETPs gained US$81.6mn of inflows, the highest since June 2011. Bargain hunting is clearly continuing to drive the flows in a week where Brent fell 11.1% and WTI dropped 8.4%. WTI investors in particular do not appear to be deterred by the falling prices with 15 continuous weeks of inflows having been recorded (during which time WTI has fallen a cumulative 45%). Brent oil ETPs have seen four consecutive weeks of inflows, also indicating that many investors think that global oil prices are nearing a bottom. US oil rigs have already started to decline and are 10% below September level. Historically, oil rigs have taken about 16 weeks to adjust to lower oil prices. During periods of strong declines in WTI crude price, like during the 2008 crisis, oil rigs have halved in the following four months and we expect a similar pattern to occur in 2015. Tightening of oil supply in the US and other oil producing countries could be a precursor to the OPEC cartel cutting supply come its June 2015 meeting.

Natural gas ETPs saw US$7.5mn of inflows last week, marking the seventh consecutive week of inflows. A cold snap drove the price of natural gas 1.3% higher last week. Gas storage inventories also fell more than expected, supporting prices. Most of the flows came into ETFS Leveraged Natural Gas (US$5.1mn), indicating a short-term tactical play on the weather issues that are driving the price.

ETFS Physical Silver (PHAG) received highest inflows in nine weeks. Flows into PHAG amounted to US$17.3mn. Silver prices rebounded 2.5% last week to the highest level since mid-December 2014 as geopolitical risks once again drove the price of the defensive precious metals like gold and silver. With terrorist attacks in France and questions surrounding the future of Greece in the euro area, geopolitical concerns have once again come to the fore. The positive employment numbers from the US released on Friday failed to cap the gains in both gold and silver last week.

ETFS Aluminium (ALUM) sees outflows of US$41.3mn, the most in five weeks. After a 12% rally between October and November 2014, aluminium prices have been falling. Excess production capacity, especially in China continues to weigh on aluminium prices. While we believe that capacity will be eventually be cut, the process will take some time.

Key events to watch this week. Chinese lending and exports data will be closely watched as investors assess the strength of demand from the world’s largest consumer of commodities. US inflation data could give an indication of the urgency or lack thereof for interest rate hikes. Consensus expectations of a fall in headline inflation are likely to keep calls for quicker rate rises at bay.

Video Presentation

Nitesh Shah, 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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Gold in Focus as Swiss Gold Referendum Looms

Gold in Focus as Swiss Gold Referendum Looms

ETFS Multi-Asset Weekly Gold in Focus as Swiss Gold Referendum Looms

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Highlights

Natural gas surges on colder weather.

Swiss gold referendum key for CHF strength.

Gold miners rally as gold rebounds.

Cyclical assets broadly performed well last week as central banks reiterated economic support. But so did gold and it could continue, despite the strength in the US dollar, in a sign that its price has bottomed after weeks of de-rating, as the Swiss gold referendum looms. Sentiment was buoyed last week with the European Central Bank pledging once again “to do whatever it takes” to ward off deflation. The ECB commenced purchases of asset-backed securities, expanding its QE programme, while the People’s Bank of China cut interest rates to spur flagging demand.

Commodities

Natural gas surges on colder weather. Natural gas rebounded 13.7% as a cold snap ate into gas storage levels. Natural gas transportation is highly constrained during times of peak demand in New York and New England and last week’s cold weather led to a strong rally in the US North East region in particular. Gold and silver gained 2.4% and 2.9% last week, respectively. With both metals having fallen close to their marginal cost of production, it is increasingly likely that production will be cut, helping to tighten the supply of the metals. Soybeans and corn fell 3.2% each as the rising probability of an El Niño weather event bodes well for growing conditions for the crops in South America over the coming months. The Australian Bureau of Meteorology increased the odd of an El Niño to 70% from 50% previously. Nickel bounced up 6.2% as Indonesia reaffirmed its ore export ban.

Equities

Gold miners rally as gold rebounds. DAXglobal® Gold Miners Index continued its recovery from record lows this week, rallying 8.9%, tracking the performance of bullion, albeit in a more volatile manner. Miners initially outperformed gold this year, but in recent months gains have been erased following the tumble in the spot price of gold to the 1,200 $/oz level, slashing the profit margins for high cost producers. Meanwhile, in Europe stocks advanced after Mario Draghi’s dovish comments surrounding the ECB’s asset purchase program which suggested measures will extend to sovereign bond buying if inflation continues to remain depressed and well below the medium term target of below but near to 2%.The DAX 30 and FTSE MIB rose 2.55% and 2.27% respectively, as investors anticipate stimulus measures to be extended.

Currencies

Swiss gold referendum key for CHF strength. We expect the Swiss franc to lift and test the SNB commitment to maintaining its currency policy floor against the Euro if the ‘Save Our Swiss Gold’ referendum is passed. A ‘yes’ vote for the referendum would mean that the CHF would have a stronger gold backing, in turn increasing its attractiveness for investors looking for hard asset exposure in an uncertain period for European economies. While recent polls have indicated that an affirmative response from voters is waning, as the central back campaign against the proposition, a large proportion undecided voters will be the likely key for victory for either side. Nevertheless, the market does not appear to have priced in the chance of the referendum being passed and we expect the risks for the Swiss Franc (and gold) are skewed to the upside.

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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Europe Monthly ETF Market Review – €3.3bn into DM Equities Amidst Positive Macro Outlook

Europe Monthly ETF Market Review – €3.3bn into DM Equities Amidst Positive Macro Outlook

Europe Monthly ETF Market Review – €3.3bn into DM Equities Amidst Positive Macro Outlook

European ETP Highlights
Global equity markets registered a strong February, especially in Developed Markets (DM), recovering losses from January. Equities in Developed Europe saw the most robust performance where MSCI Europe was up over 7%, driven by improving PMI data, upbeat corporate commentary and expectations of improving credit. The ETF flows observed for February was mostly in-line with market performance except for Emerging Markets (EM) which continued to see outflows despite having a positive monthly performance.

Developed Markets over Emerging Markets continues to play out
In February 2014, global ETPs had a significant turnaround raising total assets to a new high of $2.3 trillion, a 2% increase YTD.

European domiciled ETPs had inflows of +€4.9bn during this period, where ETPs with equity exposure commanded almost 60% of inflows. Having analysed these flows in further detail, we found that DM equities experienced +€3.3bn of inflows while EM equities saw c.-€400mn of outflows which is inline with our strategists preference for DM over EM.

The benefactors within DM equities – Europe
European domiciled ETPs with European equities exposure received +€1.9bn of inflows while exposure to US saw +€0.8bn of inflows. This again supports our Equity View where we are constructive on Europe with a year-end STOXX Europe 600 target of 375..

Southern Europe on the Up
ETFs with exposure to Southern Europe continued to see net inflows since the region saw a sharp turn in PMIs in October 2013. European listed ETFs tracking equities in Spain, Italy, Greece and Portugal experienced average monthly net inflows of over +€300mn since October 2013. This compares to a monthly average of just under +€70mn from Jan 2013 to Oct 2013.

Large flows into Fixed Income ETFs
Investors trading European listed instruments exercised caution by channelling +€1.9bn into fixed income assets amidst weak data coming out of China. An Emerging Markets Bond ETF (SEMB LN) was the biggest benefactor of this inflow.

Europe Monthly ETF Market Review – €3.3bn into DM Equities Amidst Positive Macro Outlook

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