“Investors cut bullish commodity bets for the first time in three weeks as U.S. lawmakers appeared no closer to an agreement to avert more than $600 billion in automatic tax increases and spending cuts and Europe cut its growth outlook.

Speculators and money managers decreased net-long positions across 18 U.S. futures and options by 3.4 percent to 898,380 contracts in the week ended Dec. 4, U.S. Commodity Futures Trading Commission data show. Gold holdings fell 25 percent, the biggest drop since March, as Goldman Sachs Group Inc. said the longest winning streak in at least nine decades will peak next year. Wheat bets fell for the second time in three weeks…”

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An interesting read on the correlation of oil and gold…

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“The supercycle that saw the prices for many commodity prices soar over the past decade hasn’t finished yet, according to Goldman Sachs.

Commodities won’t appreciate much going forward, but bursts of global demand will spark short-term shortages, according to a new report from the bank. And that will create mini rallies in various commodities, it says.

“It is tempting to call an end” to the commodity supercycle, thanks to increased supplies and slowing growth in China, the report says, according to Marketwatch…”

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Oil is down again to cap off a week of downside.

WTI is down  $0.26 currently while Brent is up $0.13

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“Gold-producing companies in Ivory Coast may have to shut down operations in the West African nation if parliament approves a proposed tax on profit, according to Nouho Kone, head of a miners’ group.

A tax of 9 percent to 19 percent on profit “is not reassuring,” Kone, head of the Professional Group of Miners in Ivory Coast, said in a phone interview today from Abidjan, the commercial capital. “The worst-case scenario would be to see companies shut down their mines in the short term.”

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As i said earlier who really know what is going on in this disinformation world, but i found this quite interesting given the whole push on the energy for America campaign that has suddenly hit the idiot box over the past few weeks.

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“Shipping some of the newly abundant U.S. natural gas overseas would benefit the nation’s economy more than keeping it all at home, according to a long-awaited government study that has the potential to reshape the global energy market.

The endorsement could turn the tide in a politically sensitive issue. Gas producers are eager to export more, while big consumers including manufacturers and chemical companies are leery that exports could raise domestic prices. Environmental groups, meanwhile, fear that allowing exports would encourage more natural-gas production.

The administration had said the study would be central to its decision on approving exports. It analyzed more than a dozen scenarios for U.S. production and exports of natural gas. It found that “across all these scenarios, the U.S. was projected to gain net economic benefits” from liquefying and then exporting natural gas.

The looming prospect of the U.S.’s becoming a major exporter of natural gas underscores how the energy revolution is transforming the nation’s economic prospects. Just a few years ago, many energy companies were planning to build facilities to import liquefied natural gas into the U.S.

But thanks to technological advances, combining hydraulic fracturing and horizontal drilling, the U.S. has in a short time become a gas-producing powerhouse. The glut of cheap gas has helped underpin a revival in manufacturing and helped lower electricity costs for consumers.

Most of the companies seeking permission to liquefy and then ship gas overseas have been awaiting the report. The Department of Energy had said it wouldn’t issue permits for exports to countries lacking a free-trade agreement with the U.S. until the study was done and it could be assured that exports were in the national interest, as required by law….”

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“Gold dropped for a third day to trade near a one-month low as a stronger dollar damped demand for commodities, overshadowing the highest-ever holdings in exchange-traded products backed by bullion.

A few dozen Republicans joined a bipartisan call to break an impasse between PresidentBarack Obama and House Speaker John Boehner to avoid spending cuts and tax increases in January, known as the fiscal cliff. The U.S. Dollar Index, which tracks the greenback against six major partners, gained as much as 0.2 percent today. European Central Bank policy makers today refrained from cutting interest rates further.

“A stronger dollar added some pressure to the precious complex,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.

Gold for February delivery declined 0.2 percent to $1,691 an ounce by 7:48 a.m. on the Comex in New York. The metal dropped to $1,686 yesterday, the least expensive since Nov. 6. Spot gold slid 0.2 percent to $1,690.39 an ounce in London.

ECB policy makers meeting in Frankfurt held the benchmark rate at a record low of 0.75 percent, as forecast by 56 of 61 economists in a Bloomberg News survey. ECB President Mario Draghi will unveil the latest economic forecasts, including a first projection for 2014, later today.”

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“Oil traded near its lowest price in a week in New York as inventories of fuels such as heating oil rose by the most since July and U.S. lawmakers struggled to reach agreement on a budget plan.

West Texas Intermediate was little changed after declining a second day yesterday as U.S. distillate stockpiles climbed 3.03 million barrels, according to the Energy Department. They were forecast to gain 850,000 barrels. Crude also dropped amid disagreement between President Barack Obama and Republican leaders in talks to avert more than $600 billion in automatic tax increases and spending cuts known as the fiscal cliff.

“Supplies are plentiful going into early 2013, which would cushion any surprise disruptions,” saidAndrey Kryuchenkov, an analyst at VTB Capital in London. “Uncertainty over the U.S. debt reduction negotiations is seeing very cautious trading in crude at the moment.”

WTI crude for January delivery was at $87.76 a barrel, down 12 cents, in electronic trading on the New York Mercantile Exchange at 12:21 p.m. London time. Prices fell 62 cents yesterday to close at $87.88 a barrel, the lowest since Nov. 28. Futures have dropped 11 percent this year.

Brent for January settlement on the London-based ICE Futures Europe exchange was down 15 cents at $108.66 a barrel after sliding $1.03 yesterday. The European benchmark crude was at a premium of $20.88 to WTI. It closed at $20.93 yesterday, the narrowest gap since Nov. 2.”

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[youtube://http://www.youtube.com/watch?v=Ro44GBR7VQo 450 300]

“SAN FRANCISCO (MarketWatch) — Gold hasn’t been trading like a safe haven lately, leaving investors to wonder whether it still is one.

“The volatility that the price of gold has seen lately gives the illusion that it is not a safe haven, but in reality investors still view it as a place to protect their wealth,” said David Beahm, vice president at precious-metals investment firm Blanchard & Co.

That’s tough to believe, however, given the steep drops the precious metal has suffered in recent sessions.”

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“Goldman commodity analyst Damien Courvalin is out with a big call: The top in gold is in.

The firm says that the primary driver of gold prices are real interest rates (which have been super-low in the United States, in part thanks to aggressive Fed easing) and that with the economy coming back, this era is coming to an end.

We told you this weekend that Goldman economist Jan Hatzius made a big economic call… that the era of sub-par, post-Financial Crisis growth would come to an end sometime in the second half of 2013. And Courvalin, in lowering his gold outlook, is keying off of this call.

Here are the two key paragraphs from the report:

Improving US growth outlook offsets further Fed easing
Our economists forecast that the US economic recovery will slow early in 2013 before reaccelerating in the second half. They also expect additional expansion of the Fed’s balance sheet. Near term, the combination of more easing and weaker growth should prove supportive to gold prices. Medium term however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth. Our expanded modeling suggests that the improving US growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013. Risks to our growth outlook remain elevated however, especially given the uncertainty around the fiscal cliff, making calling the peak in gold prices a difficult exercise.

Gold cycle likely to turn in 2013; lowering gold price forecasts”

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“The continuing drought of 2012—which has created abnormally dry conditions over 80% of the contiguous U.S.—may soon prevent barge traffic from navigating the critical 180-mile stretch of the Mississippi River between the confluences of the Missouri River near St. Louis and the Ohio River at Cairo, Ill., along which river depth is 15 to 20 feet less than normal. At the same time, oil companies conducting fracking operations in North Dakota are demanding immense quantities of Missouri River water be diverted to them, further threatening levels on the Mississippi.

Experts predict the river could close to barges in mid-December and remain that way for two months, just as the harvest heads to market via river barges, and fertilizer shipments head north. According to the trade group American Waterways Operators, closing the Middle Mississippi for the next two months would impede the transport of $7 billion worth of products including 7 million tons of agricultural products worth $2.3 billion; 1.7 million tons of chemical products worth $1.8 billion; 1.3 million tons of petroleum products worth $1.3 billion; 700,000 tons of crude oil worth $534 million; and 3.8 million tons of coal worth $192 million. Finding alternative transportation will be costly, with consumers eventually footing the bill.”

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“Gold fell to a four-week low in London, dropping below $1,700 an ounce, as a stalemate in U.S. budget talks weighed on commodities.

Commodities retreated for the first time in four days as talks over the so-called fiscal cliff of spending cuts and tax increases remained deadlocked. European Union finance ministers meet in Brussels today to discuss measures to stem the debt crisis. Bullion pared some losses as the dollar reached a six- week low versus the euro.

“It’s more the risk aversion out of commodities which is probably having an impact on gold,”Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. Still, “there are arguments investors should buy gold on worries the U.S. economy could fall over the fiscal cliff,” he said, citing demand for a haven investment.

Gold for immediate delivery dropped 0.6 percent to $1,705.39 an ounce by 11:09 a.m. in London. Prices reached $1,696.78, the lowest since Nov. 6. Gold for February delivery was 0.8 percent lower at $1,706.80 on the Comex in New York.”

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“One of the big trends in U.S. energy has been the transition from coal to gas (CTG) as natural gas prices tumbled.

However, this period of superlow natural gas prices turned after production temporarily peaked earlier this year.

Now electricity markets are finally reckoning with the rebound in gas prices and are switching back to coal, according to Morgan Stanley’s Hussein Allidina:

With gas trading above $3/mmBtu, price- sensitive gas demand in the power sector is likely already being curtailed. Until CTG switching is completely shut off (which is unlikely at prices below $4.20/mmBtu), natural gas demand will remain price elastic.

Here are his charts. With natgas prices above $3.50, switching should have already begun: ”

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“November sales of U.S. American Eagle gold coins are on track to be the best in 14 years as uncertainty surrounding the U.S. fiscal cliff and the election of President Obama led to safe haven buying. Buyers timing the market also increased coin sales by buying during sharp price movements that occurred in the beginning and end of November, coin dealers noted. Bullion dealers in the U.S. report an influx of high net worth individuals that are buying gold coins in volume and taking physical possession of their bullion. Month to date 131,000 ounces of American Eagles sold, that tripled last year’s November sales and is the strongest November since 1998, data from the U.S. Mint’s website shows. In October, the U.S. Mint sold 59,000 vs 50,000 ounces the previous year, while November marked its 2nd successive monthly rise. Coin banks have come in to buy the stock as the mint usually ends 2012 coin production in early December so it can begin minting the 2013 coins.”

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“Exporting the U.S. shale energy revolution overseas turns out to be far tougher than anyone expected—giving the U.S. a significant competitive advantage.

Shale oil and natural gas have rejuvenated the North American energy industry and boosted the economy by supplying companies and consumers with cheap fuel. There are huge shale deposits outside of North America that global energy companies and governments are eager to tap.

But oil companies are running into obstacles as they try to replicate the U.S. experience on other continents. The result is that significant overseas shale energy production could be a decade away.”

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China has had poor economic data for many months now, but recent data points show that the slowdown may have halted. This has spurred hedge funds to get more aggressive with risk on trades in the commodity sector.

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“For the US economy, this would be a ‘Black Swan’ of a totally different variety.

In Bank of America/Merrill Lynch’s 2013 Energy Outlook, analyst Sabine Schels and colleagues make a shocking prediction about the possible path of West Texas Intermediate oil.

Surging US shale oil output creates risk of $50 WTI North America’s energy supplies are surging while the rest of the world continues to fight for scarce molecules of oil and gas. On our estimates, onshore US crude oil output now vastly exceeds previous growth rates in liquids and nat gas, particularly in Lower 48 states. With profitability for US domestic oil producers very high and no change in sight to US rules preventing crude oil exports, we expect WTI prices to continue to lag international prices. Indeed, we see a risk of WTI temporarily falling to $50/bbl over the next 24 months to force a slowdown in supply growth or a change in crude oil export rules.

A key point that Schels & Co. make is that the crude oil market could come to resemble the Natural Gas market. In the natural gas market, the US has natural gas coming out of its ears, as it just has way more supply coming out of the ground than it could possibly use or export. So while prices remain decent throughout much of the world, domestic natural gas prices have collapsed….”

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If you love to pay up then $SBUX has the first thing you might pay up for to begin your day….

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