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An Oil Renaissance Begins, $45 Oil on Tap

“In a continuation of our series on the state of the oil industry we look at some of the other ramifications of what we are labeling the Oil Renaissance in the US, and around the world for that matter. This phrase was first proposed regarding the potential Nuclear turnaround here in the US, where companies like NRG Energy, Toshiba and many more players all along the supply chain were positioning themselves for the Nuclear Renaissance of cheap, and abundant Nuclear energy for the next 50 years.

Well, the natural disaster in Japan changed that movement in the span of a week of just untenable radioactivity readings coming out of Japan. An already uphill battle for changing public sentiment towards the dangers of nuclear energy became an impractical fight from an investment standpoint that relied upon large DOE loan guarantees to attract private investment.

It is ironic, but all these companies spent a lot of time and effort from lobbying to developing strategic partnerships with each other, and in the end, most of that 7 year effort had to be written off by firms. It really shows how firms have to get the industry right; Oil was so much the smarter play. Higher margins, better technology, much easier safety hurdles, and even the environmental fight is much more manageable.

Not to mention the number of jobs created is far more with an Oil Renaissance as opposed to a Nuclear Renaissance, even with a complete buildup of the entire nuclear supply chain. Nuclear projects are just not scalable like oil projects are from a numbers standpoint due to the regulation, lead times for components, inspection, build times, and many more constraints….”

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Trap or Treat? The CME Lowers Gold Margin by 9%,

“Adding to the confusion, for some, that is today’s trading session, here comes the CME which in a post-closing announcement, proceeds to hike outright margins on a variety of petroleum and freight products, but more importantly just cut the margins on gold by 9%. Is it that time when the establishment is clearing the path for everyone to rotate out of equities (and/or bonds) into gold, just to set the trap and pull the trapdoor…”

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LIGNET: Why 2013 May Have a Silver Lining

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“Silver, underestimated and underpriced, is poised to make big gains in 2013. Precious metals attract more than their fair share of excitable commentators, but the technical position in silver is fascinating. Both banks and non-banks have unusually large net short positions in the silver futures market, while silver has been leaving commodity exchange warehouses at a steady pace in recent weeks.

Click here to read Peter Warburton’s special economic analysis on the prospects for silver in 2013 at LIGNET.com. “

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Gold Has its First Weekly Loss in Five as the Dollar Remains Strong

“Gold declined in London, cutting the first weekly gain in five, as a stronger dollar curbed demand for the metal as an alternative investment. Palladium reached a nine-month high.

Gold for immediate delivery lost 0.2 percent to $1,661.15 an ounce by 9:40 a.m. in London. Prices are up 0.2 percent this week, increasing this year’s gain to 6.2 percent. Gold for February delivery was 0.1 percent lower at $1,661.40 on the Comex in New York. Trading in Comex gold was about 25 percent lower than the 30-day average for this time of day, according to data compiled by Bloomberg.

Bullion is set for a 12th straight annual gain as central banks from the U.S. to China pledge more steps to spur economic growth. Holdings in gold-backed exchange-traded products rose 0.6 metric ton yesterday to 2,631.7 tons, less than 1 ton below the record set Dec. 20, data compiled by Bloomberg show.

Silver for immediate delivery fell 0.2 percent to $30.115 an ounce. Platinum was down 0.2 percent at $1,530.50 an ounce. Palladium slipped 0.1 percent to $707.75 an ounce, after reaching $711.80, the highest since March 5, earlier today….”

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Black Gold Remains Steady into Last Ditch Budget Talks

“Oil headed for the biggest weekly gain since September in New York as U.S. lawmakers scheduled talks aimed at averting automatic tax increases and spending cuts that threaten the economy of the world’s largest consumer.

West Texas Intermediate climbed as much as 0.7 percent, extending this week’s advance to 2.7 percent. Congressional leaders plan to meet with President Barack Obama today, seeking to resolve a budget impasse before at least $600 billion in fiscal measures take effect on Jan. 1. House Majority Leader Eric Cantor announced the chamber will meet Dec. 30 for its first Sunday session in more than two years. U.S. stockpiles shrank last week, an industry report showed yesterday.

“Prices could jump if U.S. politicians strike a deal on avoiding the fiscal cliff,” said Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark, who predicts Brent, the benchmark grade for half the world’s oil, will be little changed in the first quarter, averaging $112 a barrel. “If no deal is struck, prices are likely to trade sideways at current levels.”

WTI for February delivery climbed as much as 62 cents to $91.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.02 at 12:24 p.m. London time. The volume traded for all contracts was about 34 percent below the 100-day average. Futures are set for their first annual drop since 2008.

Brent for February settlement on the London-based ICE Futures Europe exchange increased as much as 58 cents, or 0.5 percent, to $111.38 a barrel. The volume was 50 percent less than the 100-day average. It was at a premium of $19.62 to WTI, down from $19.93 yesterday, the narrowest closing spread in almost 10 weeks…”

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Iron Ore Melts Up the Most Since 2010 on China Rebound

Iron ore is rallying the most in about two years as analysts predict that China, the biggest buyer, will import a record amount in 2013 as its accelerating economic growth spurs demand for steel.

Trade to China will climb 6.9 percent to 778 million metric tons in 2013, or 65 percent of all shipments, according to the median of 10 analyst estimates compiled by Bloomberg. Seaborne demand will exceed supply for at least a 10th year, Morgan Stanley data show. Prices will climb as much as 26 percent to $170 a ton by June, according to Justin Smirk of Westpac Banking Corp. (WBC), who correctly predicted this year’s slump and was the most accurate industrial-metals forecaster tracked by Bloomberg….”

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Oil Trades Flat at a One Month High, Bumping Up Against Major Resistance

“Brent crude traded near the highest level in one month as U.S. lawmakers prepared to resume budget talks and the United Arab Emirates said it arrested members of a terror cell that was planning attacks on oil-exporting nations.

Futures were little changed in London after rising the most in five weeks yesterday. PresidentBarack Obama and legislators returned to Washington for talks aimed at averting more than $600 billion in tax gains and spending cuts that start Jan. 1. The U.A.E. coordinated with Saudi Arabian officials to arrest members of the terror group who had equipment needed for their attacks, according to the official WAM news agency.

“The arrests in the U.A.E. appear to have had a big impact with lower liquidity in the oil market,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts Brent will average $112 a barrel in the first quarter. “Fundamentals look pretty balanced.”

Brent for February settlement fell 39 cents to $110.68 a barrel on the London-based ICE Futures Europe exchange at 1:03 p.m. local time. The volume was 46 percent less than the 100-day average. Prices yesterday gained $2.27, or 2.1 percent, to settle at $111.07, the highest close since Nov. 30.

West Texas Intermediate for February delivery was unchanged at $90.98 a barrel in electronic trading on the New York Mercantile Exchange. The volume traded for all contracts was 39 percent below the 100-day average. Futures advanced $2.37 to $90.98 yesterday. The European benchmark crude was at a premium of $19.67 to WTI….”

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Gold and Silver Fall as Producers Dump

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“Gold fell in London on selling by mining companies seeking to hedge against the possibility of lower prices next year. Silver also declined.

Gold at the morning “fixing” in London when some miners sell output was $1,655.25 an ounce, down 0.4 percent from the last fixing on Dec. 24. Gold climbed 5.9 percent this year as investors and central banks purchased the metal.

“We saw a good amount of producer selling at the fix,” Bernard Sin, head of currency and metal trading at bullion refiner MKS Finance SA in Geneva, said by phone today. “It just gave an opportunity for bargain hunters to replenish stocks.”

Gold for immediate delivery fell 0.2 percent to $1,656.57 an ounce by 11:17 a.m. in London, the first drop in five days. Silver declined 0.1 percent to $29.97 an ounce, platinum was little changed at $1,537.12 an ounce and palladium gained 0.4 percent to $695.15 an ounce.”

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Oil Rises As Obama Cuts Vacation Short for Budget Talks

“Oil rose in New York for the first time in three days as President Barack Obama will cut short his vacation for talks to avert spending cuts and tax increases that threaten the economy of the world’s biggest crude consumer.

West Texas Intermediate gained as much as 0.7 percent before Democrats and Republicans convene tomorrow for talks aimed at avoiding more than $600 billion in automatic measures known as the fiscal cliff, which are scheduled to take effect Jan. 1. Crude stockpiles in the U.S. probably fell last week to the lowest in 10 weeks as imports decreased, a Bloomberg News survey showed. The volume for all WTI contracts was down 85 percent on the 100-day average.

“It is good news that President Obama is cutting his holidays to negotiate a solution to the fiscal cliff,” Ehsan Ul-Haq, a senior market consultant at KBC Energy Economics in Walton-on-Thames, England, said by e-mail. “Thin volumes don’t represent the overall market sentiment.”

WTI for February delivery climbed as much as 60 cents to $89.21 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.13 at 11:53 a.m. in London. Futures slid 5 cents to $88.61 on Dec. 24. There was no floor or electronic trading yesterday because of the Christmas holiday. Prices have lost 9.8 percent this year.

Brent for February settlement on the London-based ICE Futures Europe exchange gained 81 cents, or 0.7 percent, to $109.61 a barrel. The number of contracts trading was 81 percent lower than the 100-day average. The European benchmark crude was at a premium of $20.48 to WTI after closing at $20.29 on Dec. 24. Brent is up 2.1 percent this year…”

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Gold Expected to Climb, Silver Gains on Chinese and Indian Consumption

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“Gold may advance in New York on demand for the metal in China to India. Silver gained.

The price of gold traded in yen jumped 0.7 percent as the Japanese currency weakened against the dollar to the lowest since April 2011 on speculation of government easing. Futures in New York are up 5.9 percent this year and the Dollar Index, a measure against six major trading partners, is down 0.7 percent.

“The dollar is weakening and also we are seeing good physical demand from China as well as India,” said Afshin Nabavi, a senior vice president at bullion refiner MKS Finance in Geneva, by e-mail today. “We may have seen the lows for gold this year.”

Gold futures for February delivery were little changed at $1,658.50 an ounce at 6:06 a.m. on the Comex in New York. Silver for March delivery was up 0.2 percent at $29.945 an ounce. Platinum for April delivery gained 0.8 percent to $1,551 an ounce and palladium for March delivery advanced 0.4 percent to $687.30 an ounce.”

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$BHP Workers Reject Wage Proposal in Chile, Copper Climbs

“Copper rose in New York after workers at BHP Billiton Ltd. (BHP)’s Escondida mine in Chilerejected a wage proposal.

Plant and mine-shift workers at Escondida “unanimously” rejected the proposal on Dec. 22, according to their union. The contract expires in July. Copper rose 3.9 percent this year.

“The workers at BHP’s Escondida, the largest copper mine, rejected the wage proposal for the coming year and this is likely to limit much downside due to fear of future supply disruptions,” Hyderabad, India-based Karvy Comtrade Ltd. wrote in a metals-market comment today.

Copper for delivery in March climbed 0.7 percent to $3.5705 a pound at 5:55 a.m. on the Comex in New York.”

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Aluminium Stockpiles Expected to Subdue Prices for Quite Some Time

“The record glut in aluminum will be no bar to rising prices because of delays in getting metal from warehouses, even as Barclays Plc advises investors to sell and Morgan Stanley says it has the worst outlook of any commodity.

Stockpiles will expand for at least the next four quarters, reaching a record 8.67 million metric tons by the end of 2013, or enough to make about 62 million cars, Barclays estimates. Production will exceed demand by the most since 2009 as output expands from China to Saudi Arabia, the bank says. Futures will rise as much as 16 percent to $2,400 a ton next year, the median of 29 analyst estimates compiled by Bloomberg…”

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Brazil Doubles Gold Reserves as Central Banks Buy Bullion

“Brazil boosted gold reserves for a third month in November to double the country’s holdings since August as central banks from Russia to Belarus and South Korea add the metal to diversify their assets.

Brazilian holdings expanded 14.7 metric tons in November to 67.2 tons, the most since November 2000, according to data on the International Monetary Fund’s website. The country bought 17.2 tons in October after adding 1.7 tons in September, the first increase since 2008. Russia’s holdings increased 2.9 tons last month and Belarus’s reserves expanded 1.4 tons, the data show. Turkey pared holdings 5.9 tons and Mexico sold 0.1 ton.

Central banks have been expanding reserves as the metal heads for a 12th annual gain and investors hold a record amount in bullion-backed exchange-traded products. Nations bought 373.9 tons in the first nine months of the year and full-year additions will probably be at the bottom end of a range from 450 to 500 tons, the London-based World Gold Council estimates.

“Central banks, particularly in the emerging economies, are looking to increase the proportion of gold in their reserve assets,” Alexandra Knight, an analyst at National Australia Bank Ltd., said from Melbourne. “That will drive prices of gold because they can be quite significant purchases.”

Gold for immediate delivery traded at $1,647.41 an ounce at 4:09 p.m. in Singapore, up 5.4 percent this year. Still, the metal slumped to $1,635.70 yesterday, the cheapest since Aug. 22, as data showed the U.S. economy is improving…”

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Black Gold Tanks Spilling Over the Fiscal Cliff

“Oil declined the most in more than two weeks because of concern that U.S. lawmakers may fail to avert spending cuts and tax increases that threaten the economy of the world’s biggest crude consumer.

West Texas Intermediate dropped as much as 1.6 percent, paring a second weekly gain, after House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, throwing talks on budget issues known as the fiscal cliff into turmoil. Oil rose a fifth day yesterday, the longest rally since September, after government data showed the U.S. economy grew at a 3.1 percent annual rate in the third quarter, higher than a previous estimate of 2.7 percent.

“We are seeing a negative reaction to Republicans rejecting the latest proposal on tax hikes,”Andrey Kryuchenkov, a commodities analyst at VTB Capital in London, said in an e-mail. “It could have a U.S. demand impact.”

WTI for February delivery fell as much as $1.45 to $88.68 a barrel in electronic trading on theNew York Mercantile Exchange, the biggest drop since Dec. 6, and was at $88.98 at 11:25 a.m. London time. Prices are up 2.6 percent this week. The volume for all West Texas Intermediate futures today was about 4 percent higher than the 100-day average.

Brent for February settlement on the London-based ICE Futures Europe exchange slid as much as $1.05, or 1 percent, to $109.15 a barrel. The European benchmark crude was at a $20.58 premium to New York-traded WTI, from $20.07 yesterday. The volume traded for all Brent futures today was about 28 percent lower than the 100-day average….”

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2013 Will Be A Huge Year For Silver

“Prices again crept gradually higher in Asian trading prior to some retrenchment in early European trading but dollar weakness was supporting gold and silver.

Further weakness could be seen and it is worth noting that gold and silver saw considerable weakness last December (see chart above) and both bottomed near year end on December 29th prior to strong gains in January 2012.

Support for silver is at $30.67/oz and $30/oz. Gold’s support is at $1,647/oz and below that at $1,600/oz.

Silver will rise as much as 29% to $40.25/oz, from $31.10/oz today, in 2013.

This is based on the median estimate of 49 analysts, traders and investors compiled by Bloomberg.

Global investment through silver backed exchange traded products reached a record 18,854 metric tons in November, or more than nine months of mine output, data compiled by Bloomberg show. Holdings are now valued at about $19.2 billion.

Bullion dealers all over the world report robust demand for silver and there has been a shift in many Asian and Middle Eastern markets from gold to silver – due to silver’s relative cheapness and undervaluation versus gold.

According to Bloomberg, one of Singapore’s largest suppliers of coins and bars to retail investors, says sales tripled since October, part of a global surge in demand for silver that drove holdings to a record….”

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The Bow Tie Remains a Gold Bull, Feels Prices Could Weaken Short Term

“With gold prices being hammered in recent weeks, and trading near four-month lows on Wednesday, longtime gold bull Jim Rogers is sounding a word of caution, saying it’s possible the correction in bullion may continue into the new year.

 

“Just be careful, there’re too many bulls, including me, but I’m very cautious,” Rogers told CNBC. “Gold is having a correction— it’s been correcting for 15-16 months now— which is normal in my view, and it’s possible that [the] correction is going to continue for a while longer.”

Gold prices have been gaining for over 12 straight years now, Rogers noted, adding that the safe haven asset has only seen a major correction once in that time period, during the global financial crisis back in 2008 when bullion fell 32 percent.

“Most things correct 30 percent every year or two, even in big bull markets – 30 percent corrections are normal and yet gold has only done that once in the past 12 years,” Rogers said. “Gold on any kind of historic market basis is overdue for a nice correction…..”

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Black Gold Falls From Two Week Highs

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“Brent futures traded near the highest closing price in two weeks on plans for a drop in North Sea crude exports to the lowest in three months and before House Republicans vote on a U.S. tax proposal.

Brent was little changed after two days of gains. Daily exports of the 12 main grades of North Sea crude for shipment in January will drop 7 percent to the lowest since October, loading programs obtained by Bloomberg News showed. Republicans in Congress will vote today on House Speaker John Boehner’s plan to raise taxes on incomes over $1 million. The proposal is aimed at preventing more than $600 billion of automatic tax increases and spending cuts from coming into effect next year.

The North Sea grade for February settlement was at $110.43 a barrel, 7 cents higher on the London-based ICE Futures Europe exchange as of 12:35 p.m. local time. The volume traded for all futures today was about 23 percent below the 100-day average. The European benchmark was at a premium of $20.35 to West Texas Intermediate, compared with $20.38 yesterday.

WTI crude for February delivery was at $90.09 in electronic trading on the New York Mercantile Exchange, up 11 cents. The volume was 35 percent less than the 100-day average. The January contract, which expired yesterday, rose $1.58 to $89.51, the highest settlement since Oct. 19.”

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Crude Supply Drops, Gasoline Inventories Rise

“The US Energy Information Administration (EIA) released its weekly petroleum status report this morning. US commercial crude inventories decreased by 1 million barrels last week, bringing the total US commercial crude inventory to 371.6 million barrels, still well above the upper limit of the five-year range for this time of the year.

Total gasoline inventories rose by 2.2 million barrels last week and are now above the upper limit of the five-year average range. Total motor gasoline supplied averaged 8.5 million barrels a day over the past four weeks — a decline of 2.9% compared with the same period a year ago.Distillate inventories fell by 1.1 million barrels again last week, and remain well below the lower limit of the average range. Distillate product supplied averaged more than 3.8 million barrels a day over the past four weeks, down 2.7% when compared with the same period last year. Distillate production totaled nearly 4.9 million barrels a day last week, down slightly compared with the prior week.

The American Petroleum Institute reported an inventory draw of 4.1 million barrels in crude supplies last week. Platts estimated a drawdown of 2.3 million barrels in crude inventories for last week, with a build of 2 million barrels in gasoline supplies and a rise of 1.5 million barrels in distillate supplies. Dow Jones estimated a drop of 900,000 barrels in crude stocks, a rise of 1.5 million barrels in gasoline supplies, and a rise of 900,000 barrels in distillate inventories…”

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