Tag Archives: OPEC

Dec 2, 2019

Unlikely Tariff Rollback Deflated Commodities in November

The broad commodities were tepid in November. The S&P GSCI was flat for the month and up 9.9% YTD. The Dow Jones Commodity Index (DJCI) was down 2.1% in November and up 4.5% YTD. Gains were driven by the energy complex, while both precious metals and industrial metals detracted from headline performance. The S&P GSCI…

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May 21, 2019

Commodities Markets Can Provide Valuable Insights into the State of the Global Economy

Notwithstanding the recent correction associated with renewed trade tensions between the U.S. and China, a strong start to the year for global equity and commodities markets suggests a strong macroeconomic backdrop and a high risk appetite among investors. However, when drilling down into the performance of individual commodities sectors, it is clear that the situation…

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May 25, 2017

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…

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Nov 29, 2016

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…

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Oct 24, 2016

Crude Reality of Enhanced and Excess Returns

(“Excess Return” does not mean any additional return on the ETF’ s performance) is a footnote in an ETF provider’s investment objective about an ETF that tracks the S&P GSCI Crude Oil Excess Return.  That disclaimer is true but never explains what excess return means in terms of additional performance.  After all, excess means more, and…

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Feb 17, 2016

Oil Gains This Big Only Happen Around Bottoms

The S&P GSCI (WTI) Crude Oil posted a 3-day gain of 14.4% ending Feb. 17, 2016. This is the biggest 3-day gain in about 6 months for the index, and gains of this magnitude have only happened near oil bottoms. After the index hit its lowest since Nov 4, 2003, on Jan. 20, 2016, it capitulated,…

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Dec 8, 2015

OPEC May Be Losing Oil Pricing Power

In May 2014, the new deal Gazprom signed to supply 38 billion cubic meters (bcm), which is about the amount NY state uses annually, of natural gas to China each year for the next 30 years changed the world more than anyone may have anticipated. It’s not just because it took 10 years to negotiate…

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Jun 5, 2015

OPEC’s Decision Might Backfire

In light of the decision by OPEC (Organization of the Petroleum Exporting Countries) to maintain its 30 million barrel-a-day production level, the S&P GSCI All Crude lost 4.5% this week, bringing its year-to-date return down to -1.7%, back into negative territory. A status the index has not been able to maintain for more than 3 consecutive days since April…

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