Oil prices rebound in post-Brexit bargain hunting

By Ron Bousso has posted by Oil prices rebound in post-Brexit bargain hunting

LONDON (Reuters) - Oil prices topped $48 a barrel on Tuesday as investors took advantage of a two-day slide in crude triggered by Britain's vote to leave the European Union.

The vote's impact on oil, despite sending global stocks and currencies spiralling, has so far been limited due to expectations of strong summer demand in Asia and the United States and tightening supplies after a two-year rout.

A looming strike at several Norwegian oil and gas fields which threatened to cut output in western Europe's biggest producer also helped support prices on Tuesday.

Brent crude futures were up 2.5 percent, or $1.17, at $48.33 per barrel at 1116 GMT.

U.S. West Texas Intermediate (WTI) futures were 2.6 percent higher, up $1.22 at $47.55 a barrel.

A report by industry monitor Genscape that showed a 1.3 million barrel fall in crude inventories at the benchmark's pricing hub in Cushing, Oklahoma, added further support, brokerage PVM said.

Sterling and London's FTSE 100 stock market index also rose on hopes of a coordinated central bank response to financial market losses.

"Oil is recovering on some bargain hunting after the drop below $47 a barrel proved unsustainable and news of a possible strike in Norwegian oil and gas industry," said Commerzbank analyst Carsten Fritsch.

He said the turmoil in Europe was not expected to have a "meaningful impact on the physical global supply and demand balances".

Over its two previous sessions oil fell more than 7 percent to seven-week lows as the Brexit vote cooled investor appetite for volatile commodities such as oil.

A strike in Norway, which could start on Saturday, would add to a number of production outages in oil-producing countries including Nigeria.

Still, news that a successful ceasefire in Nigeria had allowed repairs to oil pipelines weighed on the market, ANZ Bank said.

Oil production in Nigeria has risen to about 1.9 million barrels per day from 1.6 million, a state oil company spokesman said on Monday.

(Additional reporting by Henning Gloystein in Singapore; editing by David Clarke and Jason Neely)

10 reasons why gold price will go up in the future

Business-standard has Posted by 10 reasons why gold price will go up in the future The price of gold in India has seen a highest single day jump in the last five years, with the previous one being in August 2011. 

Globally, too, following the UK votes favoring exit from EU, which is an unprecedented event, has seen nearly $100 per ounce jump in gold prices, which was not a usual phenomenon. After closing at $1313 on Friday, today it is trading 1% higher in early trade around $1325 per ounce.

There are several factors that suggest gold will be a preferred asset for all kind of investors — retail, institutional or even central banks.

1. In terms of sterling, the price of gold soared nearly 20% to GBP 1,000/oz on Friday, which fell later. However, it again went up today as lower pound meant higher gold price in pound terms, a better hedge against currency for UK investors. Sterling or British pound is trading at three-decade low. 

2. Bank of England and other central banks are preparing to take all actions to address fears in market, which according to the World Gold Council report released on Friday evening said, “Central bank action has already capped the gain in other safe haven assets." This means gold will shine. 

3. According to an analysis on implications of Brexit by S & P Platts, the environment will now be favouring low interest rates and "a lower interest rate environment on the back of elevated economic and financial market uncertainty, has a "more fundamental and sustainable positive impact" on gold." It however said, "A strong dollar should provide a headwind, however, while the increased volatility and prices should keep physical buyers out of the market for now. Yet as uncertainty in financial markets is expected to only increase in the months ahead, gold prices could benefit strongly in the medium term."

4. Institutional investors' gold buying has however increased as reflected in the rise in holding in world's largest exchange traded fund SPDR. On Friday, net addition in that fund was 18.5 tons to total 934.31 tons which in start of the June was 868 tons, largely believed to be bought by European and British institutions ahead of referendum. The SPDR holding was just 630 tons six month ago when US Fed raised rates first time after a decade. 

5. WGC believes that, "Pension funds could start buying gold, a class not traditionally investing in gold," as portfolio diversifier. 

6. The Council also said that, Pound Sterling is one of the few reserve currencies and central bank buying more gold is very likely. This will be true for all countries' central banks which need to diversify reserves to hedge currency risk. Brexit results has already started raising demand for separation from EU from other European nations like Italy, France and so on which is expected to increase global uncertainty.

7. Along with rise in gold prices, gold mining companies’ share prices were also rising as value of the gold stock with them, mined or un-mined has risen and now prices are well above their gross cost of production. Many of them may soon be out of debt and start making money. This means they may not be in a hurry now to sell gold for liquidity. 

8. Another expectation is that when prices were $1200 and above, many of them had started hedging their future production in forward markets which means that the gold they were to mine in future were sold by them in advance. Now prices are quite above that level and a feeling will start evolving that they would have been better off had they not have hedged. This could result in de-hedging or buying back their forward sales which will further push up gold prices. That may happen in every correction, when profit taking happens, which will provide support to falling gold prices as overall perception about gold has improved.

9. Data on Shanghai Gold Exchange shows that volumes on its spot gold segment have increased to 346 tons on Friday against usual 100 tons daily volumes, suggesting Chinese demand resuming. 

10. In India, however, gold was quoted at $40 per ounce discount, which means higher arbitrage by buying spot gold and selling on MCX and gold demand for exports that could be round tripping in nature. For a few weeks global uncertainty will support gold. The demand could see a boost once monsoon spreads and hopes emerge of a better agriculture crops, resulting in higher rural income. This coupled with festive season beginning in early July could further support gold market and hence push up prices.

Commodity brokers worry as clients' bets go wrong in opening

Business standard has posted by Commodity brokers worry as clients' bets go wrong in opening Early indications indicating a win with a marginal difference for the ‘Leave’ vote for Britain has created a situation where many traders’ positions could go wrong. Current trends suggest Britain may exit the European Union, leading to gold rising 5.6% to trade at $1335 over yesterday's close and dollar rupee down below 68 or 1.4%. 

This means gold on MCX will open in higher circuit or hit high circuit of 6% in opening. Margin cover with brokers for precious metals is usually 6% and hence when circuit opens after a breathing period, if additional margin is not deposited, exchanges most likely to block brokers' terminals if they can't cough up additional margins. 

Silver is up 4.5% to $ 18.4er ounce.

On MCX Thursday night, gold closed at Rs.29914 per 10 gram and silver closed Rs.41190 per kg. Gold could open Rs 1,000 higher. Over the past few days, the sentiment in Britain seemed to be turning to ‘Remain’ in EU, which prompted traders in India to go short in gold and long in oil and metals. All bets could go wrong. 

Brent crude was down over 6% to $47.6 and other metals were also down 2-4%. Hence commodity traders could see losses in opening. 

Ajay Kedia, director Kedia commodities said while final results are yet to be out and reports suggest urban vote counting is yet to be known and in case of very close result where difference is in decimal points, that could create dilemmas for decision makers. Still if trend continues they way initial indicators suggest than it is time to remain cautious for market players.

SEBI officials have said they have already asked their exchanges to remain alert and put its own surveillance mechanism on high alert to handle any unforeseen eventualities. 

Oil up 3 percent as Brexit chances dim; gasoline surges too

An offshore oil platform is seen at the Bouri Oil Field off the coast of Libya August 3, 2015.Oil up 3 percent as Brexit chances dim; gasoline surges too

Oil prices rose 3 percent on Monday, settling higher for a second straight day, after polls showing a lower likelihood of Britain leaving the European Union while U.S. gasoline surged 5 percent in anticipation of peak summer driving demand.

Data from market intelligence firm Genscape pointing to a drawdown of 568,213 barrels at the Cushing, Oklahoma delivery base for U.S. crude futures in the week to June 17 was also supportive, said traders who saw the numbers.

A Reuters poll also showed total U.S. crude stockpiles likely fell 1.9 million barrels last week, declining for a fifth straight week. [EIA/S]

U.S. gasoline futures RBc1 jumped 5 percent, their most in six weeks, as the rally in crude extended to refined oil products. Traders cited speculative buying in gasoline ahead of the July 4 Independence Day weekend when summer driving usually hits a high in the United States.

"Demand has been very strong year-over-year for gasoline and coupled with the peak driving season just ahead of us, we got a strong bid today that should continue in the short term," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

Crude futures rose after three opinion polls ahead of Thursday's vote on Britain's future in the EU showed the 'Remain' camp recovering some momentum, although the overall picture was of an evenly split electorate. Traders said Britain's exit, or "Brexit," could cause economic turmoil to Europe and beyond.

The British pound GBP= climbed 2.3 percent to $1.4685 against the dollar. A weaker dollar .DXY makes commodities denominated in the greenback more attractive for other currency holders. [USD/]

Brent crude futures' front-month contract, August LCOc1, settled up $1.48, or 3 percent, at $50.65 a barrel. The contract has risen 7 percent since Thursday's settlement, after falling 10 percent in six previous sessions.

U.S. crude's West Texas Intermediate (WTI) futures gained $1.39, or 2.9 percent, at $49.37 a barrel for the July front-month CLN6. But the contract, which expires on Tuesday, was barely traded, transacting a tenth of average daily volume. Investors flocked instead to August WTI CLQ6, the new front-month from Wednesday, which settled up 3 percent at $49.96.

Analysts said oil prices should stay firm as long as a Brexit looked unlikely, although a strong rally may be difficult absent fresh supply outages.

"We are not expecting sustained crude price strength back to above the $50-51 area in either WTI or Brent as fundamentals appear to be undergoing a very gradual shift back toward the bearish side," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

(Additional reporting by Amanda Cooper in LONDON; Editing by Marguerita Choy)

Gold edges up on softer dollar; Brexit concerns ease further

Reuters has Posted by Gold edges up on softer dollar; Brexit concerns ease further Gold inched higher early on Tuesday as the dollar weakened, even as some opinion polls indicated Britain could be more likely to opt to remain in the European Union in a referendum later this week.

FUNDAMENTALS

* Spot gold had risen 0.2 percent to $1,292.0 an ounce by 0054 GMT. Bullion fell 0.7 percent on Monday, touching a low of $1,277.34.

* U.S. gold was up 0.2 percent at $1,294.70

* Two opinion polls on Monday suggested support for Britain staying in the European Union had recovered some ground following the murder of a pro-EU lawmaker, but a third poll found support for a "Brexit" ahead by a whisker.

* A vote on June 23 by Britain to leave the 28-member EU, dubbed "Brexit," could tip Europe back into recession, putting more pressure on the global economy.

* The British pound held near three-week highs against the dollar and euro on Tuesday, a day after it had made its biggest daily gains since late 2008, while the dollar index stood near a one-month low of 93.425 hit earlier this month.

* George Soros, the billionaire who earned fame by betting against the pound in 1992, said Brexit would trigger a bigger and more disruptive sterling devaluation than the fall on Black Wednesday.

* Brexit could have "moderate direct effects" on the U.S. economy, but probably does not pose big financial risks, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said.

* Confidence at Japanese manufacturers inched up in June from the prior month's three-year low and is seen rising only slightly ahead, a Reuters poll found, reflecting worries about the yen's rise as Britain decides whether or not to quit the EU.

* Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.10 percent to 908.77 tonnes on Monday, the highest since September 2013.

* Russia's gold reserves increased to 47.6 million troy ounces as of the start of June from 47.5 million ounces a month earlier, the central bank said on Monday.

* India is seeking the participation of Rio Tinto and Anglo American's De Beers to explore for diamonds and gold, part of Prime Minister Narendra Modi's ambition to make the country a major mineral producer, the mines secretary said.

(Reporting by Vijaykumar Vedala in Bengaluru; Editing by Joseph Radford)

Gold rises to nearly four-week high as Asian stocks slide, dollar weakens

Reuters has Posted By Gold rises to nearly four-week high as Asian stocks slide, dollar weakensGold held steady after hitting its highest in nearly four weeks on Monday, supported by a softer dollar and a slide in Asian stocks ahead of key central bank meetings this week and Britain's June 23 referendum on its European Union membership.

The U.S. Federal Reserve, Bank of England, Swiss National Bank and Bank of Japan will all meet this week, and are expected to hold monetary policy steady against a backdrop of caution about the global economic outlook as well as the impact about a possible "Brexit".

Often perceived as a hedge against economic and financial uncertainty, gold has so far gained 5 percent in June and 20 percent for the year.

Spot gold was nearly flat at $1,273.95 an ounce at 0357 GMT. Bullion had earlier touched a session best of $1,278.03 an ounce, its highest since May 18.

U.S. gold was up 0.1 percent at $1,277.40.

"The market is full of uncertainty over Brexit and also over the interest rate decision by FOMC (the Federal Open Market Committee) as well as other regional concerns," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

"Gold has been up and $1,300 should be an immediate target at least for the coming week, with $1,240 being the support level."

Asian stocks fell the most in more than two months and the safe-haven Japanese yen soared on Monday as riskier assets took a hammering.

The dollar fell to a one-month low against the yen and last stood at 106.08 yen, down about 0.8 percent.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.74 percent to 893.92 tonnes on Friday, the highest since October 2013.

Speculators raised their net long position in COMEX gold contracts in the week to June 7, and cut their bullish stance in silver, U.S. Commodity Futures Trading Commission data showed.

"Gold could push a little higher during the early part of the week, but we expect it to hit some turbulence by Wednesday, the day of the Fed meeting," said INTL FCStone analyst Edward Meir in a note.

"That is when we expect the bank to signal that it is warming up to a rate increase for July," he said, although adding that the lack of a clear signal from the U.S. central bank could lead to further gains in gold.

Among other precious metals, spot silver fell 0.9 percent to $17.16 per ounce, spot platinum was down 0.8 percent at $982.21 per ounce and spot palladium was lower 0.2 percent at $541.25 per ounce.

(Reporting by Vijaykumar Vedala in BENGALURU; Editing by Michael Perry and Tom Hogue)

Indian gold discounts hit widest in 3-1/2 months on muted Asian demand

Reuters has posted by Indian gold discounts hit widest in 3-1/2 months on muted Asian demand, Gold discounts in India expanded to their widest in nearly 3-1/2 months this week amid lacklustre demand elsewhere in Asia, with bullion's recent rally dampening retail demand.

The safe-haven asset, which is highly sensitive to interest rates, has climbed almost 2 percent this week after weak U.S. payrolls data and comments from Federal Reserve Chair Janet Yellen undercut expectations of an imminent rate hike.
"Physical demand for gold has been quiet for the past two weeks. Most investors are on the sidelines and we are seeing more selling at the moment," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.

In India, the second-biggest gold consumer, dealers were offering a discount of up to $46 an ounce to the global spot benchmark this week, the largest since Feb. 26. Last week dealers were offering a discount of $14.

"Consumers are very price sensitive. They are postponing purchases due to the recent rally in prices," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

"Traditionally demand remains weak in June but we never witnessed such kind of a lull in the market."

In rural areas farmers are purchasing seeds and fertilisers, while urban consumers are spending on their children's education, said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in the southern Indian city of Chennai.

Two-thirds of India's gold demand comes from rural areas, where jewellery is a traditional store of wealth. Farmers typically start sowing crops with the arrival of monsoon rains in June, when most schools and colleges also start.

"Indian demand is expected to remain sluggish for the next few weeks unless prices correct steeply," Rathod said.

Meanwhile, demand in top-consumer China continued to remain weak as higher gold prices and a holiday break for the Dragon Boat Festival kept Chinese buyers away. Premiums in China dipped to $1 per ounce this week versus $3 last week.

"I think a one dollar premium is not enough to cover the cost for banks to import gold into the domestic markets," said a gold trader in China.

Premiums in Singapore were quoted at 60-80 cents an ounce, nearly unchanged from last week. Hong Kong premiums were at 50-80 cents as against $1 last week.

(Reporting by Rajendra Jadhav in MUMBAI and Koustav Samanta in BENGALURU; Editing by Tom Hogue)

Oil price of up to $60 will not hurt fiscal maths: Sinha

Business Standard has reported by Oil price of up to $60 will not hurt fiscal maths: Sinha 

As crude oil price hit an 11-month high of $50 per barrel, the government today said its fiscal maths and inflation calculations will not be impacted if the commodity stays below the $60 mark.

Minister of State for Finance Jayant Sinha, in an interview to PTI, said Indian economy will be "fine" if the oil price stays in the range of $40-60 per barrel, but there could be a concern if it goes beyond.

The slump in oil price is one of the factors that has helped Indian economy notch up big gains by cutting its import bill and reining in inflation.

India, which depends on imports to meet 80% of its oil needs, will have to spend Rs 9,126 crore ($1.36 billion) more every year for one dollar per barrel increase in crude oil. Besides, the rising crude oil trajectory impacts inflation and growth.

"If oil prices stay in the range that most forecasters are expecting them to be, which is in the $40-60 dollar range, then I think we will be fine. If it goes beyond that range, then it becomes a question," Sinha said.

India spent $63.96 billion on crude oil import in 2015-16, about half of $112.7 billion outgo in the previous fiscal and $143 billion in 2013-14. For the current fiscal, the import bill has been pegged at $66 billion at an average import price of $48 per barrel.

Asked what rate of oil prices could upset the fiscal maths as well as inflation calculations of the government, Sinha said the ministry's analysis is based on assumption that oil prices would remain in the $40-60 a barrel range.

Last week, Finance Minister Arun Jaitley too had stated that India can handle the current range of oil prices, but higher rates will impact economy and also lead to inflationary pressure.

"Obviously, higher crude prices is not good news for India. But If it remains within a range, as it is at present, it is something that can be handled. If it goes beyond the range, then certainly it creates an adversity," he had said.

Oil declines after Opec decides not to impose new ceiling

Livemint has Posted Oil declines after Opec decides not to impose new ceiling

Crude oil dropped after Organization of Petroleum Exporting Countries (Opec) decided to stick to its policy of unfettered output.

Futures fell on both sides of the Atlantic after closing above $50 a barrel in London for the first time in seven months. While members of Opec rejected a proposal to adopt a new production ceiling, ministers were united in their optimistic outlook for markets. US output declined for a 12th week and crude stockpiles dropped, according to a report from the department of energy’s statistical arm.

Oil has surged about 85% in New York from a 12-year low earlier this year amid disruptions in Nigeria, Libya, Venezuela and Canada and declines in US output. Opec needs more time to come up with a new production ceiling, outgoing secretary-general Abdalla El-Badri said after the meeting in Vienna, adding that it’s hard to find a target when Iranian supply is rising and significant Libyan volumes are halted.

“The good news yesterday was that Opec is getting along better,” said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors Llc who helps manage $14.1 billion. “The pain inflicted on US producers, which was their goal, also hurt Opec members. A reconciliation process is taking place.”

West Texas Intermediate oil for July delivery fell 46 cents, or 0.9%, to $48.71 a barrel at 10.52am local time on the New York Mercantile Exchange. Prices are down 1.3% this week after three straight weekly gains. Total volume traded was 30% below the 100-day average.

Brent for August settlement slipped 49 cents, or 1%, to $49.55 a barrel on the ICE Futures Europe exchange. Prices closed on Thursday above $50 for the first time since 3 November. The contract is up about 0.5% for the week, heading for a fourth weekly advance. The global benchmark crude traded at a 40-cent premium to WTI for August delivery.

Before the Opec meeting, Saudi Arabia had floated the idea of reinstating a group production ceiling as a gesture to show it had no plans to flood the market and it was serious about making the gathering a success. Iran, which has rejected any cap on output as it restores volumes following the removal of sanctions in January, argued that a group quota would be meaningless.

Nevertheless, relations among Opec members improved significantly after several acrimonious meetings, Iran’s oil minister Bijan Namdar Zanganeh said in an interview in Vienna on Friday.

Prices are recovering and the market is in good shape, said Saudi Arabia’s oil minister Khalid Al-Falih. Oil at $50 a barrel isn’t high enough to spark a significant production gain, he told reporters in his suite in a Vienna hotel.

“The Opec outcome was expected,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “The continuing decline in North American output and the idea that global growth will boost demand have pushed prices higher. Whether they are enough to push us decisively over $50 has yet to be seen.” Bloomberg

Caroline Alexander contributed to this story.