Etikett: Joshpreet Tiwana

Signs of Slowing US Shale Output Lifts Crude

Signs of Slowing US Shale Output Lifts CrudeSigns of Slowing US Shale Output Lifts Crude

ETF Securities Commodity ETP Weekly Signs of Slowing US Shale Output Lifts Crude

Investors lock in profits as crude benchmarks rally.

Investors shed long copper exposure as price rebounds.

Soft US data prompts precious metal price recovery.

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After last week’s revelation that US consumer prices had tipped into deflation on an annual basis and retail sales surprised to the downside, investors will be monitoring US manufacturing and home sales data for continued signs of weakness. Any subpar data readings that reflect a moderation of US growth could delay market expectations of tightening and prove bullish for precious metals. In Europe, investor’s brace for a Greek default as signs emerge of deteriorating relations between the newly elected Syriza party and international creditors, calling into question Greece’s Eurozone membership.

Investors lock in profits as crude benchmarks rally. Investors withdrew US$52mn of funds from ETPs providing exposure to US crude this week as the price hit the highest level this year. Following a 25 week streak of inflows, long WTI ETPs have experienced the largest four weeks of outflows since 2010. ETFS Daily Leveraged WTI Crude Oil (LOIL) witnessed US$21.1mn of outflows, as US crude inventories grew by 1.3mn barrels, 2.7mn barrels below market expectations, indicating that US shale production may finally be declining in the face of recent price weakness. The weak inventory build corroborated an Energy Information Administration (EIA) report released earlier in the week that forecasted that US shale oil production would start to drop in May. Adding further to bullish sentiment was the withdrawal of government forces from oilfields in Yemen, reflecting a deteriorating internal situation which threatens the security of key oil transit routes. Going forward the price of crude will likely grind higher as shale output shows further signs of curbing and geopolitical tensions in the Middle East remain elevated. The main downside risks to the price in the near term are US Dollar strength and the potential for onshore oil storage capacity to reach limits and force supply onto the market.

Investors shed long copper exposure as price rebounds. The price of copper has rebounded from January lows, driven in part by the recent pullback in the US Dollar and the reduction of the Chinese Reserve Requirement Ratio (RRR). Long copper ETPs saw US$14.2mn of redemptions as investors harvest profits from the recent price bounce. Following data that showed that China grew at the slowest pace in six years, policy makers are under intensifying pressure to support growth targets. Investors in the copper futures market have cut short positions from record highs as accommodative measures are likely to boost the red metal and sustain its recent strong performance.

Soft US data prompts precious metal price recovery. Recent weak retail sales and jobs data has relieved bearish pressure on the precious metals complex. Soft US data pushed back expectations of rate normalisation which weakened the Dollar and boosted precious metals, with gold and silver rising 0.8% and 1.0% respectively. Gold and silver ETPs benefited seeing a total of US$7.1mn of inflows.

Key events to watch this week. This week cyclical commodities are likely to be in focus following recent stimulus measures announced by Chinese authorities and the release of manufacturing data for US, China and Europe. In Europe, aside from Greek debt negotiations, the UK will be under the spotlight as the Bank of England (BOE) releases minutes from its April meeting and the general election draws closer.

Video Presentation

Joshpreet Tiwana, 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.

Gold loses its shine

Gold loses its shine

ETF Securities Commodity ETP Weekly Gold loses its shine

Long gold ETPs witness the largest weekly outflows since inception.

ETFS Daily Leveraged WTI Crude Oil (LOIL) receives largest weekly inflow since 2012.

Dollar strength weighs on platinum price.

Download the complete report (.pdf)

Following the recent robust US non-farm payroll reading, the market will be paying close attention to the FOMC’s press statement on Wednesday for any affirmation that the committee intends to raise rates in June. Any such indication will likely send the Euro closer to parity with the Dollar and be bearish for gold. In Europe, monetary policy will remain in the fore as the BOE releases minutes of its latest meeting and the SNB meets to discuss policy. In the UK, George Osborne will reveal his latest budget, which will be an opportunity for the government to impress voters in the run up to the general election in May.

Long gold ETPs witness the largest weekly outflows since inception. US$376.5mn of funds exited ETFS Physical Gold (PHAU) last week amidst a broad market selloff for gold. The robust US payroll reading on the 6th March stoked speculation that the Federal Reserve intends to increase interest rates in its June meeting as the economy continues to display signs of strength. The prospect of higher US rates does not bode well for the precious metal which is itself a zero yielding asset. Since reaching a five month high of over US$1,300/oz in January, the gold price has fallen 11.2% as a series of positive events, including the announcement of a Greek debt deal, has boosted investor confidence. Going forward, bullion will likely find some support from investors outside of the US as central banks globally continue to cut interest rates and expand their respective balance sheets in an effort to combat deflation.

ETFS Daily Leveraged WTI Crude Oil (LOIL) receives largest weekly inflow since 2012. The 11.7% drop in the price of WTI this week has sparked a resurgence of investor interest in US crude as flows into long WTI ETPs hit a 7 week high. Last week’s price decline was prompted by the release of a somewhat bearish report from the Energy Information Administration (EIA) and news that US crude stockpiles are at a record high. The report explained that US crude inventories look set to grow into the second half of 2015, at which point the recent cuts to investment expenditure will take effect and curtail production growth. Long WTI ETPs have experienced the longest streak of inflows to date as bargain hunting investors seek to benefit from the considerable upside to the price from current depressed levels.

Dollar strength weighs on platinum price. The price of platinum fell to US$1,118/oz last week, the lowest level since 2009, prompting the first weekly outflow from long platinum ETPs in six weeks. The price drop was driven by the US Dollar appreciating to multi year highs against major currencies and reduced safe haven demand. At current levels, platinum will likely witness price sensitive demand from China pick-up, which in conjunction with tight supply fundamentals, should aid a price recovery later in the year.

Key events to watch this week. Central banking activity will once again dominate the agenda next week: the upcoming FOMC meeting will clarify if the Fed continues to emphasise patience, which could derail the USD rally, followed by the release of BOE meeting minutes and the SNB interest rate decision. In addition, inflation data from the Eurozone will be monitored for any signs of undesirable deflation.

Video Presentation

Joshpreet Tiwana, 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.