A team of overseas researchers discovered 54 billion cubic feet of helium gas in Tanzania’s Rift Valley, according to The Guardian. Helium is a rare gas used for research and medical purposes, and its scarcity has sent prices skyrocketing over 500% in the past decade. Norwegian firm Helium One has three extraction licenses pending with the Tanzanian government.
The Organization for Economic Cooperation and Development (OECD) has called a special summit of the world’s leading diamond producers to take place on May 23 in Dubai, United Arab Emirates (UAE). The purpose of the meeting is to discuss the issue of rough diamond valuation, which is an issue that has plagued the diamond trade for many years.
While cyclical challenges remain tough in global commodities, structural realities look more tolerable. According to conventional wisdom, the challenges of global commodities can be attributed to China’s slowdown and poor growth prospects. Advanced economies are not immune. In the US, just two commodity-related sectors – oil and gas, as well as metals and steel – accounted for more than half of the defaults in 2015.
This Great Graphic, created on Bloomberg, depicts the CRB Index, a basket of commodity prices. The technical picture has deteriorated, and the price action in the coming sessions is particularly important in determining outlook.
Much of Latin America has seen an unusually long period of relative political stability since the early 2000s. With the exception of Cuba, democratically elected governments seem embedded throughout the region. The political rules of the game largely seem to be followed. Indeed, the international outcry following the 2009 coup that removed Honduras’ president, Manuel Zelaya, served to reinforce how much Latin American politics had changed since the 1970s, when military dictatorships were the dominant form of government.
Anglo American, one of the largest mining companies in the world, has announced a restructure that will cut 85,000 jobs worldwide, a reduction of its workforce by almost two-thirds. The move follows a huge downturn in commodities prices, which have been decreasing since 2011 and have hurt the revenues and profits of mining companies across the globe.
The US dollar has exhibited one of the most impressive trends that the currency market has seen over the last year, as the greenback has risen close to parity relative to the euro on several occasions. Since the dollar maintains its position as the world’s reserve currency, this creates ripple effects in a number of different markets. For investors, this is important because it means not all markets are likely to perform at the same rate into the final months of the year.
In a previous article I posted a chart from the International Energy Agency’s recent Oil Market Report that shows global demand for refined products catching up to supply by the 3rd quarter of this year. My opinion is that all of the analysts who are now blaming the sharp drop in oil prices on a “glut” of supply could change their tune quickly as consumers adjust to lower fuel costs. Just as higher costs reduce demand for any commodity, lower costs will increase demand.
The price of oil has steadied in recent days after making new lows on Tuesday. The March WTI futures contract approached its 20-day moving average earlier today (~$52.30) for the first time since late November. This was a new selling opportunity as it has reversed lower. We are looking for lower prices and it would not surprise us to see the price of WTI fall to the late-2008/early-2009 lows in the $32-33 area.
As we ring in the New Year, let us take stock of where we are at with the oil markets. Last year proved to be a momentous one for the oil markets, having seen prices cut in half in just six months.
