The energy fundamentals, helped by Hurricane Harvey, are now in place for solid rebalancing and for potentially continued strong performance. Metals have reflected bullish sentiment but have recently been hindered by Chinese growth and credit concerns. Agriculture has been well oversupplied on better than expected weather and from improving farming technologies. In September, three of Read more […]
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 […]
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 […]
According to my colleague, Howard Silverblatt, Senior Index Analyst, “The S&P 500 posted a $317.2 billion fall, after Friday’s $656.9, making the two-day fall $974.2 billion – the third worst on record. The 2-day point drop of 112.79 was the second worst point drop on record, and on a percentage basis, the 5.37% decline for 2-days is Read more […]
S&P Dow Jones Indices today announced the composition and weights for the 2016 S&P GSCI and Dow Jones Commodity Index. The two indices have the same constituents by definition but the weighting methodologies are different. The DJCI is equally weighted with 1/3 of its weight to each sector – energy, metals, and agriculture and livestock, Read more […]
The Brent crude oil and unleaded gasoline price difference, or “crack spread“, is a widely followed relationship to measure the value extracted along the chain of producing oil to refining it that can serve as a proxy for profit margins. The EIA (Energy Information Agency) reported global gasoline supply and demand patterns have been evolving with demand greater Read more […]
While many assets have some relationship with oil, there are varying degrees of correlation and even a few surprises. For example, Canadian equities are more correlated with oil than are the emerging markets and the US equities; Australian equities are barely correlated with oil, and China who is not nearly as big a producer as a consumer is moderately Read more […]
The 2015 rebalance for commodity indices may be remembered as the one trying to catch a falling knife. Today, two significant events are happening in commodity indices: 1. The world production weighted S&P GSCI is entering its first year with Brent crude oil as the biggest commodity in the index, overtaking WTI. 2. The passive index Read more […]
With oil prices down 50% from last June and holding steady consumers are looking forward to cheaper gasoline and lower heating bills and investors are rethinking where to put their money; it is a good time to take stock of what might happen next. As discussed on this blog in late November, both lower demand Read more […]
Now that brent broke the $80 mark, many are questioning whether a bottom has been reached. The combination of slowing Chinese demand growth and Saudi’s will to maintain market share make this an unlikely bottom, but it depends more on the supply growth than the slowing demand growth from China. Kuwait and Saudi Arabia have Read more […]