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How Global Growth and Infrastructure Are Driving Commodities

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Posted by Financial Sense

on Thursday, 01 March 2018 06:09

"For the first time in a decade, we are looking at across the board global growth in both developed and developing economies, setting up tremendous demand for commodities". In another on the theme of on incoming bull market in commodities (see Jack Crooks brilliant forecast), that comment above is proven with argument and facts by Richard Mills in this article. Another well worth ingesting - Robert Zurrer For Money Talks

The global economy is booming again after years in the doldrums, commodities are back in a big way, and metals prices are for the most part, way up.

In our last article showing how commodities are the place to be in 2018, we looked at five drivers: inflation, the low dollar, economic growth, the relative undervalue of commodities versus other sectors, and tightness of supply. This article expands on the economic growth argument and explains how commodity prices are being moved by a bevy of infrastructure projects around the world – all demanding “yuge”, as Donald Trump would say, amounts of metals.

But we'll also talk about how insecurity of supply has created a climate of uncertainty around commodities, fuelled by increasing trade tensions that could lead to tariffs and quotas, driving up the prices of some imported metals – further exacerbating supply-demand imbalances. The US is finally starting to get that it must reduce its reliance on foreign metal suppliers, which is great for domestic exploration and mining. But first, let's talk about global growth and what it means for commodities.

Three-Quarters of the World Is Growing

A year ago the global economy was stagnant following the recession of 2007-09, an overhang from the debt crisis in Europe, and slowing Chinese growth which had seen double-digit GDP numbers throughout the 2000s. According to the International Monetary Fund, 75% of the world is now enjoying a full recovery. The IMF predicts global growth to hit 3.7% this year, the fastest rate since 2010.

The World Bank says it’s the first year since the financial crisis that the global economy will operate at or near capacity. Emerging markets will see the lion’s share of growth, 4.5%, while advanced economies including the US, Japan, and the EU will grow at 2.2%. China is expected to grow between 6 and 7%. India, Ghana, Ethiopia and the Philippines will grow more than China, and eight of the 10 fastest-growing countries this year are likely to be in Africa, according to consulting firm PwC.

Goldman Sachs was quoted saying that “rising commodity prices will create a virtuous circle, improving the balance sheets of producers and lenders, and expanding credit in emerging markets that will, in turn, reinforce global economic growth.”

At the end of 2017 the Bloomberg Commodity Index, which measures returns on 22 raw materials, had the longest rally on record dating back 27 years to 1991.

01-bloomberg-commodity-index

 

.....continue reading and viewing charts HERE



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Energy & Commodities

Jack Crooks: Shorting Oil: A trade!

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Posted by Jack Crooks - Currency Currents

on Wednesday, 21 February 2018 13:22

For those bullish oil, Jack Crooks sees an immediate temporary decline of $5-$6 to the mid-fifties. Setting up a great opportunity to get long, or for those not willing to suffer a decline a chance to get out now - Robert Zurrer for Money Talks

 

We continue to be long-term bulls on oil; but we went short this afternoon for a trade. We are targeting down to the mid-50's for oil on this EW chart setup.  We have overlaid the US dollar index (inverted in blue) so you can see the correlation.  (I.E. because the dollar index is inverted, when the blue line goes down it means the US dollar is actually increasing in value.  Thus, oil and the dollar are actually negatively correlated, as you likely know.)  The dollar staged a strong reversal rally this afternoon and looks as if it has more to run, even if this is not the major move we are expecting at some time.  Either way, we think oil short here is a good trade idea.  

shortoil

 

 go to http://www.blackswantrading.com or http://www.blackswantrading.com/blog/ for his free Currency Currents where this article appeared today.

 



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Energy & Commodities

Shattered XLE Collapses Into Seasonal Low

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Posted by Chartworks - Institutional Advisors

on Friday, 16 February 2018 06:59

The smashed Stock Market, an $8 drop in Oil combined with a seasonality situation has created an exceptional opportunity. One look at the chart of the XLE Energy Select Sector Fund and you can see you'll be buying low! Whether its a new bull market or not, Institutional Advisors sees an 8 week rally from a severly oversold situation. Take a look - Robert Zurrer for Money Talks:

We reported on the upside Exhaustion Alert in the big cap oils (XLE) on January 11th, anticipating a pullback into the normal seasonal low in February with the possibility of two legs to the downside. Prices continued higher for another ten days, but with bearish divergences in the money flow oscillators. Needless to say, the break has been more than normal. Downside Capitulation Alerts have been generated as of Friday. These follow a daily Sequential 9 Buy Setup. A 40% to 50% retracement of the decline, back to the 50-day moving averages within three to six weeks would be the normal action. 

chartworks 

Seasonally, the XLE tends to bottom around the 20th of February and rally for eight weeks (profitable 14 of the 18 years). The most reliable moves have been when the price has been oversold in the preceding weeks. This year clearly offers that set of circumstances. 

Opinions in this report are solely those of the author. The information herein was obtained from various sources; however, we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.

Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.

BOB HOYE,

INSTITUTIONAL ADVISORS

EMAIL bhoye.institutionaladvisors@telus.net

WEBSITE www.institutionaladvisors.com 



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Energy & Commodities

Understanding Crude Oil Behavior

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Posted by Nadia Simmons & Przemyslaw Radomski& Przemyslaw Radomski

on Wednesday, 14 February 2018 06:10

On Monday, oil bulls extended gains after Friday's invalidation of the breakout, which together with the buy signal generated by the Stochastic Oscillator suggest further improvement. A least at the first sight. But does watching the room through the keyhole give us a full picture of what's inside? We also think so, therefore, we invite you to analyze a broader picture of crude oil.

Let’s analyze the charts below (charts courtesy of http://stockcharts.com).

2018-02-13-wtic-D



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Energy & Commodities

Future U.S. Oil Production Will Collapse Just As Quickly As It Increased

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Posted by Steve St. Angelo - SRSRocco Report

on Thursday, 08 February 2018 06:07

While U.S. oil production reached a new peak of 10.25 million barrels per day, the higher it goes, the more breathtaking will be the inevitable collapse.  Thus, as the mainstream media touts the glorious new record in U.S. production that has both surpassed its previous peak in 1970 and Saudi Arabia’s current oil production, it’s a bittersweet victory.

Why?  There are two critical reasons the current record level of U.S. oil production won’t last and is also, a house of cards.  First of all, oil production profiles tend to be somewhat symmetrical.  They rise and fall in the same manner.  While this doesn’t happen in every country or every oil field, we do see similar patterns.  For example, this similar trend is taking place in both Argentina and Norway:

Argentina-Norway-Oil-Production-768x303

Here we can see that oil production increased, peaked and declined in a similar pattern in both Argentina and Norway.  However, many countries had their domestic oil industries impacted by wars, geopolitical events, and or enhanced oil recovery techniques that have resulted in altered production profiles.  Regardless, the United States experienced a symmetrical oil production profile from 1930 to 2007:



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