Hedge funds playing 'dangerous game' with copper, Rio says  

Hedge funds betting that copper will drop further are playing a "dangerous game" with prices, according to the head of copper at Rio Tinto Group, the world's second- biggest mining company. 

PHOTO: BLOOMBERG

OCT 12, 201510:29 AM

[LONDON] Hedge funds betting that copper will drop further are playing a "dangerous game" with prices, according to the head of copper at Rio Tinto Group, the world's second-biggest mining company.

The metal is "not trading on fundamentals," Rio Copper & Coal Chief Executive Officer Jean-Sébastien Jacques said in an interview in London. "There is lots of short-selling in copper and we've seen the pick up in terms of short-selling in copper on the back of what happened in China a few months ago." A glut of copper has exacerbated short-selling by hedge funds and China's move in August to restrict such sales in equities has prompted funds to redirect bearish bets on the nation's economy to copper, Jacques said.

His view echoes Glencore Plc CEO Ivan Glasenberg's comments last week that the market was being distorted but that supply and demand would eventually prevail. The metal has slumped about 16 percent this year amid a slowdown in China, the biggest user.

Copper has plunged almost 50 percent from a record US$10,190 a metric ton set in 2011. The price, at about US$5,306.50 now, will drop to an average US$4,500 a ton in 2017 and 2018, Goldman Sachs Group Inc wrote in an Oct 8 report. Money managers have been betting on lower prices for almost every week since June, US government data show.

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"We continue to strongly recommend producers increase the hedging of their copper exposure and investors either reduce long exposure or take out long-dated short exposures in copper," Goldman Sachs analyst Max Layton said in the report.

The rout has prompted miners including Glencore and Freeport-McMoran Inc. to cut back less-profitable production. Stockpiles of copper tracked by the London Metal Exchange have dropped to a seven-month low, another sign that supplies may be tightening. Prices will remain volatile until a deficit returns in 2017 or 2018, Rio's Jacques said.

"It can be a very dangerous game in the medium and long term," he said. "You don't want to have a short position when the market moves into a deficit. From an industry standpoint, the sooner we move back into a deficit situation the better it is because currently there is a lot of noise in the system."

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Oil edges up on lower US rig count, weaker dollar

Oil prices rose in early Asian trading on Monday after US drillers cut oil rigs for six straight weeks, while traders awaited Chinese trade data to be published following the one-week National Holiday. 

PHOTO: AFP

OCT 12, 20159:14 AM

[SINGAPORE] Oil prices rose in early Asian trading on Monday after US drillers cut oil rigs for six straight weeks, while traders awaited Chinese trade data to be published following the one-week National Holiday.

US drillers removed nine oil rigs in the week ended Oct 9, bringing the total rig count down to 605, oil services company Baker Hughes Inc said late on Friday.

That total was the least since July, 2010. Drillers had cut a total of 61 rigs over the prior five weeks.

Since hitting an all-time high of 1,609 during this week a year ago, weekly rig count reductions have averaged 20. "Another fall in the US oil rig count helped support WTI price (but) the focus will be on the release of China's trade data, which will indicate whether low prices have kept import demand high," ANZ said bank.

US West Texas Intermediate (WTI) crude futures were trading at US$49.79 per barrel at 0008 GMT, up 16 cents from their last settlement. Internationally traded Brent futures were up 11 cents at US$52.76 a barrel.

Oil was also supported by a weaker US dollar, since it makes imports for countries using different currencies cheaper.

The US dollar hit three-week lows against the euro as minutes from the Federal Reserve's September policy meeting showed the Fed in no rush to raise interest rates.

Data from China in coming days is likely to point to further weakness in the world's second-largest economy, starting with import and export data to be published on Tuesday.

Some investors fear the economy is at risk of a hard landing which could jeopardise an increasingly fragile international outlook, though most analysts forecast a slow deceleration, predicting that a raft of earlier support measures will gradually kick in.

REUTERS

   
 

Opec chief confident of a balanced oil market in 2016 

Opec is confident that the oil market will be "more balanced" next year as non-Opec production has contracted and global demand is increasing, the cartel's secretary general Abdullah el-Badri said Sunday. 

PHOTO: BLOOMBERG

OCT 12, 20156:25 AM

[KUWAIT CITY] Opec is confident that the oil market will be "more balanced" next year as non-Opec production has contracted and global demand is increasing, the cartel's secretary general Abdullah el-Badri said Sunday.

"Opec is confident that it will see a more balanced market in 2016," Mr Badri told an oil and gas conference in Kuwait City.

"In recent months, there has been a contraction in production from non-Opec producers and an increase in global demand," he said.

However, Mr Badri also admitted that the "market remains oversupplied", and insisted that stability is paramount to the crude market which faced "extremely challenging times".

The Opec chief said market fundamentals did not support the sharp drop in oil prices which have fallen by almost 60 per cent since June 2014.

Mr Badri said that global demand for oil is forecast to rise to 110 million barrels per day by 2040 from 93 million bpd now.

"This requires investments of US$10 trillion between now and then," he said.

Earlier Sunday, Qatar's Energy Ministry Mohammed bin Saleh al-Sada, who is acting Opec president, said there were signs of an oil price rise next year, adding that the oil price has "bottomed out".

He said world GDP growth in 2016 is slated to be 3.4 per cent as against an expected 3.1 per cent in 2015, and that this would result in an increase in global oil demand by 1.3 to 1.5 million bpd.

Growth in supplies from non-Opec producers over the past five years has substantially reduced in 2015 and is likely to show zero to negative growth in 2016, the statement said.

Venezuela - which has been trying hard to persuade oil producers to cut output to boost prices - said on Thursday a technical meeting of Opec and other crude-producing countries would take place on October 21.

Mr Badri on Sunday confirmed the meeting would take place at an expert level and that Opec and non-Opec producers will attend.

He said the cartel was ready to cooperate with non-Opec producers to deal with the market glut if they show a similar desire.

There were no specific recommendations or proposals for the technical meeting, Mr Badri said, but "it will be a discussion to find a solution" for the oil market.

Mr Badri said Opec believes the current problem in the oil market has been created by all producers, but especially by non-Opec states which raised their production sharply.

"Non-Opec increased their output by 6.0 million barrels per day in the past six years, and Opec believes this is the reason for the glut in the oil market," he said.

On Friday, oil edged up in New York and slipped in London as traders booked profits from the week's rally fuelled by hopes for oversupply relief from lower US crude production.

AFP

      

Oil prices extend gains in Asian trade

Oil prices climbed in Asia Monday boosted by a weaker dollar and expectations a rise in demand will ease a global supply glut, while investors await the release of key Chinese economic data this week.

PHOTO: REUTERS

OCT 12, 20154:37 PM

[SINGAPORE] Oil prices climbed in Asia Monday boosted by a weaker dollar and expectations a rise in demand will ease a global supply glut, while investors await the release of key Chinese economic data this week.

Both main crude contracts have rallied since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on waning expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower.

A softer dollar makes dollar-priced oil cheaper, spurring demand.

Comments by OPEC secretary general Abdullah el-Badri at the weekend that the cartel sees a "more balanced" oil market next year also provided support.

In afternoon Asian trade, US benchmark West Texas Intermediate for November delivery rose 0.89 per cent to US$50.07 and Brent crude for November added 0.91 per cent to US$53.13 a barrel.

Attention is on the release of Chinese trade and inflation data, which will give a fresh idea about the state of the world's biggest energy consumer. Confidence was given a lift at the start of the month by a report indicating the country's key manufacturing sector saw a slight improvement in September.

The news provided some cheer after a string of figures highlighting a sharp slowdown in Chinese growth. Fears about the Asian economic giant were inflamed in August when authorities devalued the yuan currency, raising questions about their grip on the crisis.

Bernard Aw, market strategist at IG Markets Singapore, said Monday's price rise was bolstered after el-Badri said Sunday: "OPEC is confident that it will see a more balanced market in 2016.

"In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand." The comments meant the oil producers' cartel - which accounts for about 40 per cent of global production - "still sees stronger demand in the medium term", Aw told AFP.

Despite the recent uptick, oil prices remain depressed owing to concerns about demand as the global economy stutters, a supply glut and the weakness in China.

AFP

    
 

SIA to deploy first A350 to Amsterdam in April '16

By

Nisha Ramchandaninishar@sph.com.sg@Nisha_BT

Singapore Airlines will receive its first Airbus A350 aircraft in January next year, which it plans to deploy to Amsterdam. 

PHOTO: AFP

OCT 12, 20154:11 PM

SINGAPORE Airlines will receive its first Airbus A350 aircraft in January next year, which it plans to deploy to Amsterdam.

The airline has a total of 63 A350-900s on firm order, plus purchase options for a further 20. It expects to take delivery of 11 planes in the first year of operation.

Services to Amsterdam will start in April, prior to which the airline will use the new aircraft on certain Kuala Lumpur and Jakarta flights to train its crew.

In addition to its next-generation cabin products, the A350s will also include premium economy class, which it launched in August.

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"Our investment in the A350s is in line with SIA's longstanding commitment to operate a young and modern fleet," said SIA's senior vice-president (marketing planning) Lee Wen Fen. "The highly efficient new aircraft will offer us the potential to open new routes, enhancing our network and further strengthening the Singapore hub."

More A350 destinations will be announced in the coming months.