Commodities Quarterly
Table of Contents
Commodity Views ………………………………. 2
#1 Executive Summary ………………………… 3
#2 Trade Recommendations ………………… 4
#3 Commodity Indices …………………………. 8
#4 Global Macro………………………………… 12
#5 Crude Oil …………………………………….. 16
#6 Brent-WTI Spread …………………………. 22
#7 Global Refining ……………………………… 24
#8 Global Refined Products ……………….. 28
#9 US Natural Gas ……………………………… 33
#10 Thermal Coal ………………………………. 36
#11 German Power ……………………………. 40
#12 European Gas …………………………….. 43
#13 Precious Metals ………………………….. 46
#14 Gold Option ………………………………… 50
#15 PGMs ………………………………………… 51
#16 Industrial Metals …………………………. 55
#17 Agriculture …………………………………. 66
#18 Palm Oil …………………………………….. 69
#19 Rubber ………………………………………. 71
#20 EU Carbon Markets ……………………… 73
Commodities Chartbook ……………………. 76
Commodity Price Forecasts ……………….. 83
Global Economic Indicators ………………… 85
Glossary …………………………………………… 86
Correlation Matrix………..………………. 87
–> Commodities as an Asset Class: Financial markets are in a state of extreme uncertainty with outcomes binary and largely politically driven, in our view. We advise cautious growth bulls to go long the DBLCI Apex while outright growth bears would be wise to go long the DB Commodity Harvest index.
–> Crude Oil: Oil markets are being hit by economic worries, the potential return of Libyan oil exports and financial factors such as a weaker US equity market and a stronger US dollar. We believe the most dangerous threat to oil is if world growth falls below 3% in 2012.
–> Refined Products: Slower growth expectations will weigh on refinery margins going forward. However, refinery closures and a slower pace of capacity additions in 2012 mean the global refinery balance is unlikely to develop a significant surplus on par with 2009 levels.
–> US Natural Gas: We see US natural gas prices approaching a low point in the fourth quarter of this year, but the risk of economic turmoil and continuing supply strength could extend this period of weakness into 2012.
–> EU Power, Gas & Emissions: We are bullish on German power on capacity retirements and full auctioning of CO2 allowances in 2013. In European gas, we maintain our view that oil-indexation will remain important while we expect thermal coal markets will be increasingly oversupplied through 2015.
–> Precious Metals: The collapse in precious metal prices and specifically gold and silver prices may take weeks to repair. However, the commitment by the US Federal Reserve to keep interest rates on hold, central bank diversification and European sovereign risks are maintaining our bullish outlook.
–> Industrial Metals/Materials: We expect the complex will face ongoing headwinds with copper trading at rich levels of valuation. We expect aluminium will outperform the rest of the complex if risk aversion is sustained.
–> Agriculture: From a global inventory perspective, corn is the most precarious market and prone to price spikes. However, from a valuation point of view corn is trading rich and this may prove a liability in an environment of risk reduction.
Report: Link
