The demand for oil in 2015 will drop to its lowest level since 2002 because of an oversupply of crude and stagnant economies in China and Europe, according to OPEC’s latest forecast. And that’s just one of several sour estimates.
Oil futures fell over 4% in London as OPEC announced it would leave its oil output target unchanged, leading further momentum to the bear market in energy commodities.
OPEC announced Thursday that it would keep steady its output ceiling of 30 million barrels a day, according to Ali Al-Naimi, Saudi Arabia’s oil minister. Brent crude futures fell to less than $75 per barrel, the lowest point since 2010, while the WTI crude fell to $71.34 per barrel.
Oil prices have declined for the better part of the past five months. The unexpected contraction in the Japanese economy in Q3 underscores that the strong supply growth is taking place amid weakening demand. OPEC’s meeting is still ten days away. Remember that OPEC oil is mostly the heavy sour variety, while the US shale product is mostly light sweet. This means that even if OPEC can agree and implement a cut in output, it may not have as much impact on the US benchmark WTI as it may appear.
In the commodity world, lithium has been a rising star as its use and prevalence has skyrocketed in recent years. Even renowned investment sage Warren Buffett chose to invest in a little-known Chinese battery producer in 2008, eventually earning back nearly $1 billion. Is it too late to jump on the bandwagon, or are there still opportunities for you to capitalise on the trend?
When the price of gold crashed in April, some analysts were quick to point out that the gold market may well be manipulated by large banks. However, the fact that authorities are turning a blind eye to the alleged manipulation of gold suggests that higher powers may actually have a hand in the rigging.
Gold has been touted a safe store of wealth, particularly when there are serious risks to global financial markets. However, gold suffers from wild price gyrations when the markets become too disruptive, and data suggests that gold prices are regularly manipulated for the benefit of large banks and to the detriment of any retail investor trying to protect their wealth by investing in gold.
On January 14, Deutsche Bank published their 2013 market outlook in which they identified several geopolitical hotspots to worry investors and businesses. They include a wide range of developed and less developed economies, many of which are key producers of commodities and/or a key link in product supply chains. If something goes awry in any of these hotspots what will be the impact on commodities?
Commodity prices swelled in the last decade – mostly on the back of insatiable demand from China. Yet, if you exclude China, global demand for commodities like steel, for example, grew only 2 percent per year in the last twenty years, implying that China accounted for almost all the increase in global demand in the last two decades. With a China slowdown and rebalancing on the cards, could a subsequent commodity market crash be imminent?
A commodity is an article of commerce or trade that is in demand and sold by various suppliers without any qualitative differentiation. Generally, commodities are raw materials whose prices are based on market demand and supply. Commodities are of two types, hard and soft. Tea, coffee, sugar, sisal, cocoa, corn soya and pork bellies come under the category of soft commodities. Some examples of hard commodities are metals, such as aluminum and copper.
