Archive | Futures trading RSS feed for this section

US oil inventories hit record high as supply increases

Imagine that 5 years ago, you had been asked by your Board to forecast future oil prices.  And suppose you had prepared a forecast which said: Oil demand growth will slow in the West, as cars become more fuel-efficient and ageing populations drive less Demand growth in the emerging economies will be supported temporarily by real estate […]

Continue Reading

Oil prices vulnerable to China property market fall

Oil futures markets are a wonderful thing, in theory.  They are supposed to enable price discovery, whilst their liquidity is meant to enable companies to reduce inventory levels.  Instead of tying up working capital, they can simply go to the market and buy what they need, when they need it. But the chart above, of US oil […]

Continue Reading

Cotton prices slip as US supply rises and China’s imports fall

It seems that cotton prices are about to return to normal levels again.  The blog’s detailed discussion of the issues last September highlighted how current Chinese government policies seemed doomed to fail, at enormous cost to the wider world.  It now looks as though China’s new leadership agrees with this conclusion. Since late 2008, the previous leadership’s […]

Continue Reading

High-frequency trading continues to take markets higher

The blog was very pleased to see the Nobel Prize awarded jointly to Robert Shiller, whose words of wisdom on housing and stock markets it has cited many times. Shiller’s key insight, in his book Irrational Expectations and since, has been to confirm Ben Graham’s famous saying: “In the short term, the market is a […]

Continue Reading

Aluminium warehouse changes threaten caustic soda sales

Strong aluminium markets have provided great support to caustic soda producers in recent years.  PVC and construction markets have been weak, but volumes into aluminium mining have kept prices and overall chloralkali margins strong. Now this may be about to change.  As the blog noted in March, aluminium prices have been supported by the behaviour of […]

Continue Reading
Brent May13.png

Oil markets risk rapid repricing – Part 1

Since 1900, as the chart shows, oil prices have never been so high for so long as now. Until 2003, they had only been above $30/bbl for 4 years between 1979-1982, during the OPEC production cuts in the Iran crisis. But since 2004, they have been continuously above this level. The reason is the misguided […]

Continue Reading
S&P 23Apr13.png

High frequency trading causes another mini-crash

Do any blog readers routinely trade on the basis of Twitter comments? Or more specifically, do any trade within milliseconds of receiving a tweet? The answer of course is “no”, as readers have no ability to trade in milliseconds. But last week the computers did just that. As the Financial Times chart shows, the US […]

Continue Reading
Aluminium Mar13.png

Aluminium prices rise as stocks reach record levels

The blog was with the mining industry last week, when giving the keynote speech on The Impact of the ‘Demographic Cliff’ on Demand Patterns at the annual Metal-Pages conference. Mining is seeing similar demand patterns to those in chemicals, whilst the price performance of aluminium shows very similar influences to those at work in oil […]

Continue Reading
Coffee, cotton Nov12.png

Commodities supercycle myth enters the end-game

If something seems to be ‘too good to be true’, then it usually is. This may be the learning for the world’s largest pension funds, as they plan their next moves in commodity investment. Their involvement jumped from 2009 after central banks began stimulus programmes, as the blog discussed last month. The funds were looking […]

Continue Reading
Cotton2 Nov12.png

Polyester markets head for crisis as cotton prices crash

Cotton prices, as the chart shows, have returned to the 50c-70c/lb range that has dominated since 1982. This proves, once again, that ‘reversion to the mean’ is usually the best investment strategy. Sadly, however, it is the people who did not believe the hype around higher prices who will have to pick up the pieces, […]

Continue Reading