Tag Archives: oil

Energy Just Had Its Worst Start in 19 Years

Commodities just had their worst start in seven years.  The S&P GSCI Total Return lost 10.2% year-to-date (YTD) ending June 30, 2017, logging its worst first half (H1) performance since the first six months of 2010 when it lost 11.2%. However, it’s not the bloodbath it may seem to be.  Half, or 12 of the Read more […]

Commodities Ex-Energy Are Fine Despite Contango

Energy is back in a bear market now led by oil’s slide mainly due to rising output from Libya and Nigeria, two OPEC members exempt from cutting supply.  The S&P GSCI Energy Total Return is on pace for its worst quarter since the fourth quarter of 2015 losing -13.4% quarter-to-date (through June 19, 2017.) This is driven Read more […]

Inflation, Rising Rates Can Spark Oil’s Rebound

In anticipation of the Federal Reserve’s policy meeting starting Wednesday that may raise the federal funds target rate, here’s what you need to know about how the decision impacts commodities. Historically rising interest rates are positive for commodities for two main reasons.  One is the return on collateral increases, pushing up the total return. The other reason Read more […]

Commodities Mixed in May Might Pay

No single sector dominated commodity performance in May, which means the supply-side is currently more potent than macro factors like global aggregate demand, the dollar, interest rates or inflation.  Each commodity is being driven by something in its own supply/demand model, mostly unrelated to one another.  That is not just lowering the intra-commodity correlation that can create buying Read more […]

OPEC’s Cuts Are Shrinking Trading Opportunities

The unintended consequences of OPEC’s policy (in summer of 2014) of flooding the market with oil to lower prices and gain market share are starting to show.  It seems they failed to realize increasing the price by cutting back supply wouldn’t work with high U.S. inventories.  The spare capacity of OPEC does not matter for Read more […]

Why Energy May Halt This Commodity Rally

Although OPEC agreed to cut production to help support the oil price, they may have miscalculated their power as a cartel.  The U.S. producers are filling in the gap causing inventories to soar, and that has caused the S&P GSCI Crude Oil index to fall 9.4% this month. It is the biggest 9-day decline since Read more […]

When Will This Oil Contango End?

Today “oil jumps to a nearly 3-week high as output cuts take hold” as March West Texas Intermediate crude CLH7, +1.82%  rose $1.03, or 2%, to settle at $53.78 a barrel on the New York Mercantile Exchange—the highest settlement since Jan. 6. The S&P GSCI Crude Oil (Spot Return) is now positive in 2017 through Jan. 26, up Read more […]

S&P GSCI Rebalance Triggers Brent Outflows 8X Bigger Than For WTI

The S&P GSCI annual rebalancing is beginning today to adjust the commodity weights to their 2017 target weights over the next five days.  Energy remains the biggest sector in the index in 2017, targeting 56.2%, despite a significant decrease from its 2016 target weight of 63.1% and ending weight on Jan, 6. 2017 of 62.2%. Read more […]

Base Metals Beat Precious Metals By Most In 26 Years

November was sandwiched between two eventful surprises, starting with the election and ending with OPEC’s agreement to cut output, that resulted in a month filled with big moves, mostly positive.  The Dow Jones Commodity Index (DJCI) Total Return for the month was 2.3%, bringing its year-to-date (YTD) total return to 11.8%.  The S&P GSCI Total Return Read more […]

Why Cutting OPEC Supply From Highest to Higher Still Hurts

After OPEC agreed to an oil output cut in Algiers on Sep. 29, they increased supply by 230 kb/d to a record 33.83 mb/d in October according to the International Energy Agency (IEA).  Supply from Iraq reached the highest level ever and Iran pushed flows to a pre-sanctions rate of 3.72 mb/d. Now OPEC supply has Read more […]