SPECIAL REPORT
| August 04, 2011
No More Diversification? Commodity correlations are on a higher plane
The case for portfolio diversification through commodities investment is weaker now than in the early to mid-2000s. • Correlations between returns from commodities and stocks have increased considerably during and since the recent financial crisis. • As commodities are becoming more positively correlated with each other and other asset classes, they might be in the process of losing one of their most significant characteristics in terms of investor attraction, i.e. the ability to diversify a.....
GLOBAL OIL RECAP AND BALANCES
| July 13, 2011
July 2011
Please find attached a PDF file detailing official oil supply and demand projections from the IEA , OPEC , and the US DOE . Arguably the most significant revision to both the IEA and the EIA’s projections for 2011 comes in their views on demand growth. Both the IEA and the EIA revised down estimated OECD demand growth for this year, the IEA by 0.17 mb/d and the EIA by 0.19 mb/d. As a result, the IEA sees OECD demand shrinking even more significantly than it had held previo.....
DATA INSIGHT
| June 30, 2011
Inconspicuous Consumption: Weak consumption could hinder growth in Q2
Monday’s personal spending and outlays data were no exception to the recent spate of weak economic data. Real personal consumption expenditure ( PCE ) declined -0.1% m-o-m in May (similar to a downward revised -0.1% in April). While the data could be revised going forward, current growth rates for April and May are the lowest since January 2010. • The 2-month average PCE growth rate is at the lowest level since October 2009 and represents +0.5% (annualized) growth over Q1 levels, indicating.....
DATA INSIGHT
| June 28, 2011
Declining net imports: The 2nd largest source of U.S. natural gas demand growth
In March 2011, net imports slid 1.2 bcf/d below year-ago levels. Viewed as a source of demand growth (rather than a decline in supply), net imports have served as the second largest source of demand growth (behind power) since 2009. Growing demand for LNG from Europe and Asia has contributed to higher international prices, while the U.S. shale gas boom has deflated U.S. natural gas prices. As a result, we estimate that LNG sendout in the U.S. has fallen to just about 0.8 bcf/d today......
SPECIAL REPORT
| June 28, 2011
The IEA’s credible threat to release additional stocks significantly enhances upside price protection over at least 2H11
THE SO- CALLED “FREE OPEC PUT” WAS A STAPLE OF THE OIL MARKET LEXICON during the price run-up of 2003 to 2008. The crux of the OPEC Put was the notion that OPEC , unified in its willingness to curtail output to stop prices from falling, would provide greatly enhanced downside protection for investors by guaranteeing a price floor. Over the second half of 2011, however, we would argue that a radical new flipping of the OPEC Put is likely to be in effect: the IEA Call.
SPECIAL REPORT
| June 24, 2011
The IEA backs words with actions
Stock releases intended to buoy OPEC’s promised volumes THE IEA ANNOUNCED ON THURSDAY that it will release 60m bbl of oil to counteract the ongoing loss of Libyan exports. It agreed to make 2m bbl of oil per day available from their emergency stocks over an initial period of 30 days. Oil supplies from IEA member countries should begin hitting the market around the end of next week. The Agency estimates that preventing a further tightening in the market through 3Q11 will require this 2.....
GLOBAL OIL RECAP AND BALANCES
| June 16, 2011
June 2011
Please find attached a PDF file detailing official oil supply and demand projections from the IEA , OPEC , and US DOE . This morning’s IEA Oil Market Report revised 2010 demand growth downward 0.05 mb/d to 2.77 mb/d and lowered 2010 supply growth 0.30 mb/d to 1.80 mb/d. Looking back at 2010, the IEA decreased its demand growth figure for last year by 0.05 mb/d for a 2010 global demand figure of 88.02 mb/d. The IEA lowered its estimate of OPEC’s effective spare capacity 0.13 mb/d to .....
DATA INSIGHT
| June 15, 2011
Slow and steady - Nondurable manufacturing is likely tempering IP
May aggregate industrial production (IP) came in lower than Bloomberg median estimates for the fourth time this year at +0.1% m-o-m (Figure 1). Aggregate IP has gradually increased at around +0.4% m-o-m (+9.5 pp) since bottoming out in June 2009. Some of the main takeaways from today’s release are: a) Mining IP has expanded more than manufacturing IP since the end of the recession by +11.8 pp and +9.7 pp, respectively (Figure 2). Aggregate IP follows manufacturing IP closely due to its relativ.....
DATA INSIGHT
| June 10, 2011
Dealing with no deal
For crude bulls on Wednesday, the “worst meeting we’ve had in years” was the best news they’d had all day. A $2 bounce in front-month Brent on Wednesday inflated to about $3.50 in trading yesterday, before gravity set in today, weighing particularly heavily on WTI . The market’s brief bullish reaction to the news that OPEC did not reach an agreement was in line with the views we expressed in our June 7 Special Report, “The Short-Term Price Impact of OPEC Announcements.” Looking forward, w.....
SPECIAL REPORT
| June 07, 2011
The short-term price impact of OPEC announcements
Analyzing the econometric evidence This report scrutinizes an extensive body of econometric research to assess the impact of OPEC quota announcements on short-term crude oil price activity.