Many believe gold will again reach $1,300 an ounce next year and China now imports more crude oil than the U.S.

Gold Above $1,300/Ounce? Next Year, Poll Says

Gold is likely to recover to above $1,300 an ounce next year as a pickup in physical demand counters more potential U.S. rate increases, a Reuters poll at an industry event showed.

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The precious metal had lost nearly 9% from July’s two-year highs to trade around $1,255 an ounce on Tuesday, hit by expectations the Federal Reserve would raise interest rates in December for the second time in a year.

China Overtakes U.S. as Top Crude Oil Importer

China imported record volumes of crude oil last month, eclipsing the U.S. as the world’s top buyer of foreign oil as Beijing’s state reserves shipped in cheap crude to fill new storage tanks.

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September’s crude imports rose 18% from a year earlier to 33.06 million metric tons or 8.04 million barrels per day (bpd) on a daily basis, customs data showed.

Chinese aluminum companies are looking to get into the lucrative aerospace and automotive markets while U.S. oil drillers are ramping up production with oil above $50 per barrel.

China Eyes Automotive, Aerospace Aluminum Markets

China’s giant aluminum makers are pushing into the global automotive and aerospace markets, with industry sources expecting their presence to heat up competition and possibly spark a buying spree for Western metals companies.

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China’s top aluminum companies are venturing into the more lucrative parts of the global value chain.

US Drillers Extend Rig Recovery

The number of oil rigs drilling in the U.S. rose again this week, extending one of its best recoveries with no cuts for 16 straight weeks, with analysts expecting more additions as crude prices hold over $50 a barrel. Drillers added 4 oil rigs in the week to Oct. 14, bringing the count up to 432, the most since February, but still below 595 rigs a year ago, according to energy services firm Baker Hughes Inc. on Friday.

The Organization of Petroleum Exporting Countries’ first agreement to cut oil production since the financial crisis — reached at a meeting in Algiers last week — can be seen as something of both.

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The market reacted positively to news of an output cut, with both Brent Crude and West Texas Intermediate surging 6% before a little profit taking took over. Not surprisingly, oil company shares also perked up with some smaller oil companies up 7-10%.

Oil Price_FT

Source: The Financial Times.

The gist of the agreement, such as it is, is to cut production to 32.5-33 million barrels a day with seemingly all OPEC members agreeing, in principal, to the plan and some non-OPEC members like Russia giving cautious support, essentially saying “if they stick to it we may make some modest cuts, too.”

How Strong an Oil Price Deal is This?

A major breakthrough? Well certainly a much more positive and unified position than came from the last meeting in April which collapsed in acrimonious dispute particularly between Saudi Arabia — the architect of the current glut — and its regional arch rival, Iran. Clearly, behind the scenes, some form of agreement has been reached with Iran that they will be allowed, when the final quotas are agreed in Vienna on November 30, to pump close to 4 million barrels. This was the magic number Iran was producing before sanctions and some say is probably all they could produce with current infrastructure and technology, anyway. Read more

Investors are still giving platinum the cold shoulder and oil production likely hit its recent high in September. Oil likely hit an output record in September.

Platinum Still Not Trusted

Investors bruised by platinum’s dismal failure to capitalize on a five-month strike in 2014 are not convinced that stocks of the metal have shrunk enough to justify a return to the market, despite positive supply-side news this year.

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Uncertainty over how abundant stocks of the metal are is continuing to curb investment interest in the metal, with holdings of platinum-backed exchange-traded funds (ETFs) falling to their lowest since mid-2013 this month.

Oil Likely Hit an Output Record in September

The Organization of the Petroleum Exporting Countries‘ oil output is likely to reach its highest in recent history in September, a Reuters survey found on Friday, as Iraq boosted northern exports and Libya reopened some of its main oil terminals.

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The increase comes despite lower output in top exporter Saudi Arabia and this week’s OPEC agreement in Algeria to limit supply to support prices.

Welcome back to the MetalMiner week-in-review. This week, the aluminum world got together in Washington to discuss the threat of overcapacity and the particular problem of Chinese overproduction.

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The U.S. International Trade Commission is involved now. Read our investigation of Chinese overproduction and how it affects aluminum companies around the world while the ITC deliberates.

Source: Thomson Reuters Datastream/China Customs 8/9/2016

We’ve seen Chinese steel exports consistently climb. Source: Thomson Reuters Datastream/China Customs 8/9/2016.

Oil Overproduction

Speaking of overproduction, the Organization of Petroleum Exporting Countries has finally agreed to its first production cuts since 2008. Read more

OPEC has agreed to its first deal to curb production since 2008. Some are saying that Deutsche Bank may collapse without a bailout from the German government.

OPEC Agrees to Cut Output

The Organization of Petroleum Exporting Countries‘ member-states agreed on Wednesday to modest oil output cuts in the first such deal since 2008, with the group’s leader, Saudi Arabia, softening its stance on arch-rival Iran amid mounting pressure from low oil prices.

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“OPEC made an exceptional decision today … After two and a half years, OPEC reached consensus to manage the market,” said Iranian Oil Minister Bijan Zanganeh, who had repeatedly clashed with Saudi Arabia during previous meetings.

He and other ministers said OPEC would reduce output to a range of 32.5-33 million barrels per day. OPEC estimates its current output at 33.24 million bpd.

Deutsche Bank Bailout?

Only a substantial intervention by the German government can stop the collapse of the country’s largest lender, Deutsche Bank, according to Stefan Müller, the CEO of Frankfurt-based boutique research company DGAW.

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“Deutsche Bank doesn’t realize that something serious needs to happen,” he told CNBC Thursday morning. “(CEO John) Cryan clearly showed that he has no idea how to survive.”

Traders love volatility.

They say that today’s electronic trading platforms play to that desire of investors to make a buck, regardless of the fundamentals, allowing investors to play each twitch up and each slip down at the touch of a button.

Oil Prices: Perception vs. Reality

Indeed, if you can shape the perception of those fundamentals so much the better, and that seems to be what has been happening in the oil market this year. In reality, the world is as awash with oil today just as it was six months ago. As it dawns on the market that nothing much has changed, prices fall and producers make statements like a cutback deal is near, or an output freeze is being discussed — bingo! up goes the market by several dollars a barrel and you can bet producers and investors alike are rubbing their hands in glee.

Then, news comes out reminding us of the reality of the situation: the Environmental Protection Agency reports that gasoline stocks are up 600,000 barrels and distillates like diesel up 4.6 million barrels. The news that refiners are drawing on crude reserves only to process it into unwanted downstream products depresses the markets and prices fall again. Read more

Oil prices fell as Saudi Arabia poured cold water on a potential deal with other Organization of Petroleum Exporting Countries members and other countries such as Russia. China is threatening to place tariffs on sugar imports.

Crude Oil Selloff

Crude prices are selling off today, aided by Saudi comments that a decision will not be forthcoming from next week’s Organization of Petroleum Exporting Countries meeting in Algiers.

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Many had thought that OPEC was close to reaching a deal to curtail production for up to a year with its members and non-member producers such as Russia, but the Saudi announcement makes it highly unlikely that any deal will happen soon now.


Source: Clipperdata.

Saudi Arabia has made production by regional rival Iran an issue in any deal to constrain production. The Saudis say Iran must abide by any deal just like other member-states and Iran and its allies say Iran should be allowed to bring its capacity up to full production, as it just re-entered markets after decades of sanctions, before it starts to cut.

China Explores Sugar Tariffs

China has launched a probe into soaring sugar imports following complaints by its domestic industry, the government said on Thursday, the latest sign that trade tensions between major commodities producing nations is intensifying.

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The Ministry of Commerce said the probe will look at imports since 2011 and into possible protectionist measures provided by foreign countries for their producers. It will last six months, with an option to extend the deadline, it said.

OPEC members are now talking about a deal that lasts one year, whether that means curtailing production for that period is still unknown. Australia is attempting to collect $766 million in taxes.

OPEC Deal Could Last a Year

A possible deal to support oil prices by the world’s leading producer-countries may last for one year, the secretary-general of the Organization of Petroleum Exporting Countries said on Tuesday, longer than other officials have indicated.

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OPEC and non-member producers including Russia are discussing a deal to stabilize the market by possibly freezing output, although key details such as the timing and baseline for any deal have yet to emerge.

BHP Vows to Fight Australian Tax Bill

BHP Billiton said it disagreed with Australian tax collectors’ assessment that the miner needs to pay $766 million in back taxes and charges for its Singapore commodities marketing hub, and that it could resort to court action to fight the claim.

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BHP is under investigation by the Australian Tax Office (ATO) for allegedly shifting billions of dollars in iron ore profits through marketing hubs in Singapore, where it operates under an effective tax rate of zero as part of a concessional tax deal.

Chinese authorities have frozen money invested by commodity trader Trafigura in a copper smelter there and Venezuela claims that an Organization of Petroleum Exporting Countries  (OPEC) agreement to curtail production will come together soon.

Trafigura Sees its Chinese Copper Smelter Stake Frozen

Chinese authorities have frozen part of commodity trader Trafigura’s investment in a Chinese copper smelter as part of a years-long probe into the Swiss firm’s oil trading, according to documents from the police and banks reviewed by Reuters.

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In October, police in the northern Chinese city of Cangzhou, froze $32.9 million Trafigura Pte Ltd had injected into the metals project, a joint venture with Chinese metals producer Jinchuan Group Co Ltd  in the southwestern city of Fangchenggang, documents dated Oct. 28, 2015 show.

OPEC Output Deal Imminent?

Venezuelan President Nicolas Maduro said on Sunday that OPEC and non-OPEC countries were close to reaching a deal to stabilize oil markets and that he aimed for a deal to be announced this month.

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OPEC members may call an extraordinary meeting to discuss oil prices if they reach consensus at an informal gathering in Algiers this month, OPEC Secretary-General Mohammed Barkindo said during a visit to Algeria, the country’s state news agency, APS, reported on Sunday. Venezuela’s economy has been facing complete collapse for more than a year now as oil prices have seen prices fall by more than half during that time.