Etikett: SOIL

Divergent flows following further price falls

ETF Securities Divergent flows following further price fallsDivergent flows following further price falls

Commodity ETP Weekly – Divergent flows following further price falls

•    Inflows accumulate into oil ETPs as prices weaken.
•    Gold and PGM flows head in the opposite direction.
•    Copper continues to suffer from negative sentiment.
•    Upcoming webinar: Global commodities, have we reached the floor in prices? Register here to attend

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• Falling prices drove bargain-hunting inflows in to oil and PGMs while testing investors’ patience in gold and copper.
• Continued weakness in oil prices are likely to put oil and gas companies under further pressure for more production and expenditure cuts which bodes well for the global oil market to rebalance as early as next year.
• Pressure on precious metals will remain until the Federal Reserve meeting in mid-December. However, the typical “buy on the rumour, sell on the news” investor behaviour, could benefit the metal after the move is made.

Inflows accumulate into oil ETPs as prices weaken. WTI oil fell 3% to US$40.5/bbl. while Brent failed to make any gains, driving continued bargain hunting. Last week saw US$64.7mn into long WTI oil ETPs and US$15.5mn into long Brent oil ETPs, up 39% and 42% respectively compared to the previous week’s inflows. While there was no clear trend from the CFTC non-commercial positions into oil futures contracts, last week marks the second consecutive week of strong inflows into oil ETPs, suggesting that ETP investors have strengthened their conviction that oil prices will rise in the near future. ETFS Daily Short WTI Crude Oil (SOIL) also saw outflows of US$1.2mn last week, in line with the general sentiment on the ETP market. After seven weeks of sharp increases, US oil inventories growth slowed last week, up by only 252,000 barrels. In its November issue of the Short term Energy Outlook, the EIA projects that while the global oil supply will remain in surplus next year, it will stabilise at around 95.5 million barrels per day on the back of declining oil production in the US and in Canada. Inventory build-up in the US is also expected to slow down next year.

Gold and PGM flows head in the opposite direction. Continued price weakness defeated investors’ patience in gold. Gold fell a further 0.4% last week and led to the first outflows in 10 weeks. Gold ETPs saw large outflows of US$70.6mn last week, at a magnitude we have not seen since August 2015. Despite China imports of gold at a seven month high and confirmation that Diwali sales in India drove up October gold demand, rising rate hike expectations in the US continued to mount pressure on gold prices. Meanwhile, last week saw net inflows into platinum and palladium ETPs marking the first creations since the beginning of August as the price of platinum reached another record low (of at US$844/oz. last Wednesday) while palladium approached its August low. Johnson Matthey last week increased the size of its PGM deficit forecasts for 2o15, highlighting the tightness in the metal’s supply.

Copper continues to suffer from negative sentiment. Last week saw copper price reaching another record low on Wednesday at US$4,633/MT, resulting in US$10mn outflows out of copper ETPs. The copper market has been in a deficit for 5 years with 2015 expected to be balanced, before heading into another deficit in 2016 according to the International Copper Study Group (ICSG) forecasts. The ICSG November report released last Friday shows August in a surplus of 81,000 tonnes on low refined copper usage after 4 months of deficit.

Key events to watch this week. While Europe manufacturing PMI in October was relatively stable, the US ISM manufacturing PMI was weaker than expected. Investors will likely follow the November estimates from Markit due this week along with the November consumer confidence for the US and for France.

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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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.

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China fears fade but commodity investors remain defensive on Fed rate outlook

China fears fade but commodity investors remain defensive on Fed rate outlook

ETF Securities Commodity ETP Weekly – China fears fade but commodity investors remain defensive on Fed rate outlook

Highlights

•  Defensive investors prompt third week of inflows into gold ETPs.

•  Nine week inflow streak breaks on profit taking in oil ETPs.

•  ETFS Short Copper (SCOP) sees largest outflows in 17 weeks as sentiment rebounds.

•  Wheat drives first inflows into agricultural sector in four weeks.

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Rebounding economic sentiment has seen cyclical commodity prices surge over the past week, with the exception of the agricultural sector. Despite more optimism surrounding US economic activity – a tighter jobs market and an overall robust report from the US Beige Book – investors have maintained a relatively defensive stance, with gold receiving the largest inflows in the commodities sector. We expect that as the prevailing optimism over global growth overshadows fears over a Chinese slowdown, commodity markets should continue to benefit, even in the face of a rising US Dollar as we saw last week. The Fed lies ahead.

Defensive investors prompt third week of inflows into gold ETPs. G20 deliberations over the weekend addressed concerns about Chinese market volatility but any conclusions or detail was scarce. Alongside the potential for a Fed rate hike in 20- 15, investors are retaining a cautious stance, with both gold and silver receiving solid inflows. Long gold ETPs have received nearly US$265mn over the past three weeks, and this is likely to continue, especially from European investors trying to seek a buffer against further Euro depreciation. Certainly the ECB appears prepared to do more on the stimulus front after last week’s policy meeting and gold continues to provide a good buffer against a loss of international purchasing power for Eurozone residents, with gold in Euros rising nearly 3% so far this year. Silver saw the largest inflows in 22 weeks, totaling US$7.8mn after rising 3.1%.

Nine week inflow streak breaks on profit taking in oil ETPs. Back-to-back weekly gains in crude oil prices has seen investors reduce exposure to the energy sector. The gains appear to be somewhat premature, with US stockpiles posting the largest gains since April last week. Indeed, stockpiles, while in the midst of a seasonal downtrend, are 20% above the 5-year average, indicating the market remains oversupplied. Outflows totaled US$45.9mn last week and were dominated by US WTI exposed ETPs. Meanwhile, reinforcing the view that potential weakness lies ahead, ETFS Daily Short WTI Crude Oil (SOIL) received the largest inflows in 15 weeks, totaling US$6.9mn.

ETFS Short Copper (SCOP) sees largest outflows in 17 weeks as sentiment rebounds. SCOP experienced US$5.8mn of outflows, and alongside US$3.3mn inflows into long copper ETPs, indicates a sharp shift in the negative sentiment that has previously been affecting the industrial metals sector. ETFS Aluminium (ALUM) received the largest inflows in four weeks as global stockpiles reached 6-year lows.

Wheat drives first inflows into agricultural sector in four weeks. Investors appear to be ignoring the
plentiful global supplies that are having a depressing impact on wheat prices in recent weeks, with inflows into long wheat ETPs the largest in three weeks. Five of the past six weeks have seen positive inflows into long wheat ETPs, totaling over US$20mn over that period. Sugar was again the best performer among agricultural commodities as wetter weather in Brazil and fears of the El Nino impacting production in India lent support to price. Investors thus far have not capitalized on the gains seen in sugar over the past month, with outflows totaling US$6.5mn.

Key events to watch this week. Central bank policy will remain key focus this week, as investors weigh the growth and inflation outlook of major economies against a backdrop of lingering uncertainty surrounding China. Ahead of the Fed next week, the Bank of England and Reserve Bank of New Zealand rate meetings will be scrutinised for any hints of the extent of feedback from global volatility on domestic economies.

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.