“Both the stock market rally and economic recovery are missing what historically has been a key element – a house call from “Dr. Copper.”

The industrial metal has earned its nickname for being a reliable barometer on growth and, in turn, a sign to investors that it’s safe to buy the types of industrial stocks normally associated with a robust market.

But copper has dipped 5 percent just in the past month and is down 10 percent over the year, suggesting that either the market rally and hopes for future growth may be too high, or that the “doctor” may be guilty of malpractice.

“You want to have confirmation, particularly on a macro scale, for (gross domestic product) globally,” said Quincy Krosby, chief market strategist at Prudential Annuities. “Very often you’ll see the industrial metals start to move before money goes into the industrial sectors and subsectors.”

Industrial stocks, though, are on fine footing, as is the broader market, despite copper’s weakness….”

Full article

BHI, CHK, CVX, COP, EPD, XOM, KMI, NOV, PSX, SLB, RIG, VLO

BP sees a rise in short interest…..

Full report

“BofA Merrill Lynch strategist David Woo is out with a report this week on the changing nature of the U.S. dollar’s relationship with oil prices and what it means for the future of the American economy.

The main conclusions of the piece are that a stronger dollar will help remove volatility from the business cycle in the U.S., make more people want to invest in U.S. assets, and further enhance U.S. economy’s competitiveness vis-a-vis China and Europe.

All of this is thanks to the American energy boom.

Woo says that the biggest surprise of 2013 so far has been the noticeable decoupling of a longstanding negative correlation between the U.S. dollar and world stock prices – “one of the most enduring features of financial markets over the past decade” – as illustrated in the chart below.

BofA Merrill Lynch Global Research

U.S. dollar versus MSCI world stocks (click to enlarge)

According to the report, a big component of this inverse correlation between the U.S. dollar and global growth over the last decade has been the rise in Chinese energy consumption….”

Full article and charts

“Did you think last summer was dry? It’s going to get worse.

On the heels of the worst U.S. drought since the 1950s, long-range weather forecasts are showing that not only will the drought continue, it will intensify.

Consequences could be disastrous for farming and ranching communities across the Midwest — and lead to another spike in commodities prices should yields again suffer.Read “How droughts will reshape the United States” on The Washington Post.

The U.S. economy is still only starting to process last year’s drought. On the consumer side, recent government reports confirm that food prices have just begun to rise due to last year’s drought that — at its peak last September — covered nearly two-thirds of the country. Though hot weather and lack of rain caused futures prices for corn and soy to peak at new record highs last August, a lag in the country’s agroprocessing system means consumers — and therefore the broader economy — won’t feel the full brunt of higher supermarket prices for meat, dairy, and grains until later this year. Read USDA report on the 2012 drought.….”

Full article

“American drivers finally saw some relief at the pump as U.S. gasoline prices fell 5.56 cents per gallon over the last two weeks, a widely followed industry analyst said on Sunday.

The Lundberg survey said the national average price of self-serve, regular gasoline was $3.7394 per gallon on March 8, down from $3.7950 on Feb. 22.

The first drop of the year reflects easing crude oil prices, said survey editor Trilby Lundberg, but it is mostly due to refiners cutting wholesale prices for retailers following weeks of increases.

“It was practically in the cards that retailers would be able to pass through price cuts to motorists,” Lundberg said in an interview.

In the nine weeks through Feb. 22, retail gasoline prices rose more than 53 cents, or 16.5 percent, as refiners idled capacity for maintenance work ahead of the spring and summer driving seasons.

Lundberg predicted gasoline prices would fall another 10 to 12 cents or more in coming weeks, since refiners and retailers both have profit margins healthy enough to support price cuts…..”

Full article

“Brent crude fell for a second day as industrial production slowed in China, the world’s second- biggest oil consumer, and Saudi Arabia boosted output.

Futures slid as much as 0.9 percent after gaining 0.4 percent last week, snapping three weeks of declines. Saudi Arabia’s crude production rose in February from a 20-month low, according to an official with knowledge of the country’s oil policy. China started the year with the weakest industrial output since 2009, government data showed March 9. Iran, which is under Western sanctions because of its nuclear program, said the prospects for resolving the dispute have improved.

“We have no reason to rally,” amid rising Saudi output and reduced demand from refiners during seasonal maintenance, Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in an e-mailed response to questions. Brent probably won’t drop below support at $109 a barrel, he said.

Brent for April settlement on the London-based ICE Futures Europe exchange declined as much as 95 cents to $109.90 a barrel and was at $110.15 a barrel as of 11:41 a.m. London time. The volume of all futures traded today was 34 percent above the 100- day average for Brent, and 32 percent lower for West Texas Intermediate. The European benchmark was at a premium of $18.52 to WTI. The gap was at $18.90 on March 8, the narrowest close since Jan. 31.

WTI for April delivery fell as much as 43 cents to $91.52 a barrel in electronic trading on the New York Mercantile Exchange. The contract advanced 39 cents to $91.95 on March 8, the highest close since Feb. 28. Prices have lost 0.4 percent this month.

Cushing ‘Deficit’….”

Full article

“The Bloomberg Chart of the Day shows silver tonnage in exchange- traded funds backed by the metal rose for four straight months, while holdings for gold ETPs dropped in January and February. Silver futures may jump 20 percent this year to $34.50 an ounce from yesterday’s settlement of $28.808 in New York on investment demand and industrial use, said Rohit Savant, a senior commodity analyst at the New York-based research company. Holdings in silver ETPs rose 3.6 percent in the two months ended Feb. 28, reaching a record 19,699 metric tons on Jan. 18, data compiled by Bloomberg show. Last month, assets in gold ETPs fell 4.1%. Sales of American Eagle silver coins by the U.S. Mint jumped to a record in January and more than doubled in February from a year earlier, the Mint’s website showed. China’s imports of the metal surged 14% in January, the biggest monthly gain since July….”

Full article

“TransCanada Corp. (TRP) faces court arguments from Texas landowners that its plans for the Keystone XL pipeline to transport Canadian tar-sands oil to coastal refineries don’t give it the right to condemn their property.

One farmer, in an appellate hearing set for today in Beaumont, Texas, will try to build on a state Supreme Court decision and what may be a groundswell of support for property rights and environmental protection in a state whose laws and courts have historically accommodated the oil and gas industry. David Holland, whose cattle and rice farm lies next to a cluster of refineries, argues TransCanada doesn’t qualify as a common carrier under state law and doesn’t have a right to take an easement for the pipeline.

Lawsuits by four landowners constitute the last hurdle blocking the pipeline’s southern leg from Cushing, Oklahoma, to the Gulf Coast. For the northern leg across the Canadian border, the Calgary-based pipeline and power company needs approval from the Obama administration, which has delayed a decision amid environmentalists’ opposition.

“There’s a lot of contemporary salience” for the landowners’ fight, Lynn Blais, who teaches environmental and property law at the University of Texas in Austin, said in a phone interview. “This is a property-rights state. But while the courts will be sympathetic, I don’t know whether the landowners will win. These are two of the most important interests to appear in court in Texas — property owners and the oil industry.”

Reversal Sought…”

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“Iron ore will decline over the rest of the year as global supply increases and a rally spurred by restocking in leading global importer China ends, according to Morgan Stanley.

The price probably peaked at about $159 a metric ton last month and will average $133 this year, analysts Joel Crane and Peter Richardson said in a report today. The consensus forecast for 2013 is $121, a figure that’s “overly negative,” they wrote. Global seaborne supply will rise 9.1 percent this year, topping an 8.3 percent gain in demand, Morgan Stanley estimates.

Full article

“Brent crude was little changed near its highest in four days as a North Sea pipeline system remained shut. Venezuela, OPEC’s fourth-biggest producer, announced the death of President Hugo Chavez.

Futures fluctuated, having climbed by the most in a month yesterday. Venezuelan Vice President Nicolas Maduro said on state television that Chavez died at 4:25 p.m. at a military hospital in Caracas. The Brent pipeline system has been shut since an oil leak was discovered March 2 on the Cormorant Alpha platform. U.S. crude stockpiles rose 5.6 million barrels last week, data from the American Petroleum Institute showed.

“There’s still positive sentiment, risk appetite is still high,” said Filip Petersson, a commodities strategist at Stockholm-based bank SEB AB, who estimates that a fair value for Brent would be $105 a barrel. “There’s plenty of crude out there at the moment.”

Brent for April settlement was at $111.40 a barrel, down 22 cents, on the London-based ICE Futures Europe exchange at 12:20 p.m. in London after advancing as high as $112.23. The volume of all futures traded was 68 percent above the 100-day average. Prices gained $1.52, or 1.4 percent, to $111.61 yesterday, the highest level since Feb. 27 and biggest increase since Feb. 8. The European benchmark grade’s premium to WTI futures was little changed at $20.63.

WTI for April delivery was at $90.64 a barrel, down 18 cents, in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was 38 percent below the 100-day average.

Brent Pipeline…”

Full article

“South Korea joined Russia and Kazakhstan in boosting gold holdings, even as the metal had its worst start to a year since 1991 and billionaire investor George Soros cut his stake in the biggest bullion exchange-traded fund.

The Bank of Korea added 20 metric tons in February, raising its gold reserves by 24 percent to 104.4 tons, it said in a statement today. Holdings rose about $1.03 billion by value to $4.79 billion at the end of last month, equivalent to 1.5 percent of total foreign exchange holdings, according to the statement. Prices advanced.

Russia and Kazakhstan expanded bullion reserves for a fourth straight month in January and the World Gold Council expects central banks to remain strong buyers this year after increasing purchases in 2012 by the most in almost five decades. Banks from Goldman Sachs Group Inc. to Credit Suisse Group AG predict the metal’s 12-year bull market may be unwinding after five straight monthly losses.

“They are buying gold for a long-term commodity that they can put into their portfolios,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “The timing of their entry into the market can sometimes be quite contrary to what’s happening price-wise.”

Gold for immediate delivery has fallen 5.9 percent this year, making it the worst-performing precious metal. It touched $1,555.55 on Feb. 21, lowest level since July, and traded 0.1 percent higher at $1,577.32 at 4:55 p.m. in Seoul.

Gold Hoards…”

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“Oil rebounded from the lowest level in 10 weeks as traders speculated recent declines may have been excessive, while a North Sea pipeline system remained shut after a platform leak.

West Texas Intermediate advanced as much as 0.6 percent, and Brent futures as much as 0.9 percent. The Brent pipeline system was closed for a fourth day after an oil leak was discovered March 2 on the Cormorant Alpha platform, according to Abu Dhabi National Energy Co. (TAQA)PJSC, the operator known as Taqa. U.S. crude stockpiles probably increased for a seventh week, the longest stretch since May, a Bloomberg News survey showed before Energy Department data tomorrow.

“It’s worth keeping an eye on developments at Cormorant Alpha since any prolonged disruption in the North Sea would support Brent,” said Andrey Kryuchenkov, an analyst at VTB Capital inLondon who predicts that Brent will trade in a range of $109 to $112 a barrel this month.

WTI for April delivery rose as much as 58 cents to $90.70 a barrel in electronic trading on theNew York Mercantile Exchange and was at $90.37 at 12:21 p.m. London time. The volume of all futures traded was 24 percent below the 100-day average. The contract fell 56 cents to $90.12 yesterday, the lowest close since Dec. 24.

Brent for April settlement on the London-based ICE Futures Europe exchange gained as much as 97 cents, or 0.9 percent, to $111.06 a barrel. The volume of all futures traded was 49 percent above the 100-day average. The European benchmark grade was at a $20.27 premium to WTI, widening for a fourth day.

Brent Pipeline…”

Full article

“……Gold for immediate delivery rose 0.6 percent to $1,582.55 an ounce by 11:19 a.m. in London, after falling 2.5 percent the past four days. Futures for April delivery gained 0.6 percent to $1,581.50 on the Comex in New York. Futures trading volume was 16 percent above the average in the past 100 days for this time of day.

Bullion rallied the past 12 years as nations from the U.S. to China pledged to do more to support economies. The metal is down 5.5 percent this year and fell for a fifth month in February, the longest run of declines since 1997. Investors sold the most gold ever from exchange-traded products last month, and the 2,500 metric tons now held is 5 percent below the Dec. 20 record, data compiled by Bloomberg show.

Silver for immediate delivery rose 1.2 percent to $28.8988 an ounce in London. Palladium was up 1 percent at $724.35 an ounce. Platinum gained 1.2 percent to $1,587.10 an ounce. It fell as low as $1,563.60 yesterday, the lowest since Jan. 8.”

Full article

“Copper may advance this year as consumption in China, the world’s biggest user of the metal used in wires and pipes, is poised to expand, said Li Baomin, chairman of Jiangxi Copper Co. (358), China’s largest producer.

“Demand growth momentum is strong on expansion of urbanization,” said Li, whose promotion as chairman of the Jiangxi-based company was announced in Beijing yesterday. “Global copper market is expected to be in balance,” he said without giving a forecast for Chinese demand growth.

Copper use in China will jump 8 percent to a record 8.833 million metric tons this year, boosting global demand and creating a 6,000-ton product deficit, compared with a surplus of 216,000 tons in 2012, according to Goldman Sachs Group Inc. The metal tumbled 4.3 percent last month on the London Metal Exchange, erasing gains this year.

Copper may trade in a range of $8,000 a ton and $8,300 a ton….”

Full article

“Some of the bearish calls we’ve heard on gold lately are closely tied to the outlook for real interest rates. The idea is that as real interest rates begin to normalize from ultra-low levels, gold will underperform.

The inverse correlation between the price of gold and the interest rate on 5-year TIPS (Treasury Inflation-Protected Securities), for example, is fairly tight, as the chart below shows.

Yet, when one examines the chart, as @Dutch_Book pointed out on Twitter, while the initial sell-off in gold that started in November correlated with a slight backup in real yields, it’s definitely starting to appear overdone.

Since then, gold has continued to tumble, even though real yields reversed course and kept heading lower….”

Full article

“LONDON–The Brent Pipeline System, which transports 100,000 barrels a day of the benchmark crude oil from North Sea fields to the export terminal at Sullom Voe, in the Shetland Islands, has been shut after a leak closed a key platform for the second time this year.

The outage cuts off supplies of as much as an eighth of all the crude that makes up the so-called BFOE, the four major North Sea crude-oil grades: Brent, Forties, Oseberg and Ekofisk. Other pipeline networks carry the Forties, Oseberg and Ekofisk components.

BFOE can be delivered against the Brent oil-futures contract on the IntercontinentalExchange Inc. (ICE). Prices for other grades of crude are set in relation to that contract, so changes in the BFOE price can echo more widely.

The pipeline system’s operator, TAQA Bratani, owned by Abu Dhabi National Energy Co. (TAQA.AD), said in a statement that a “hydrocarbon release” was detected on March 2 in one of the Cormorant Alpha platform’s legs…..”

Full article

“West Texas Intermediate crude fell to trade near $90 a barrel after money managers cut bets on rising prices.

Futures retreated for a third day in New York after sliding to a 10-week low on March 1. Net-long positions in WTI dropped 16 percent, according to data from the Commodity Futures Trading Commission. Services industries in China expanded at the slowest pace in five months in February, a survey of purchasing managers showed yesterday.

“Oil is going to remain under pressure for a while yet,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who correctly predicted last month that prices were set to drop. “When prices were strong last month there was an influx of fresh speculative buying, and the opposite is happening now.”

WTI for April delivery fell as much as 59 cents to $90.09 a barrel in electronic trading on the New York Mercantile Exchange. It was at $90.51 at 11:33 a.m. London time. The volume of all futures traded was 10 percent below the 100-day average. Prices declined 2.6 percent last week for a second weekly drop and are down 1.4 percent this year. WTI last traded at $90 on Dec. 31.

Bullish Bets

Brent for April settlement gained 11 cents to $110.50 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 52 percent higher than the 100- day average. The European benchmark grade was at a premium of $19.99 to WTI futures, from $19.72 on March 1….”

Full article

“A long-awaited assessment of TransCanada Corp.’s Keystone XL pipeline by the U.S. State Department made no specific recommendation on the project, cheering oil companies and outraging environmentalists who said it underestimated the project’s impact on climate change.

The draft analysis, which is subject to public comment, examined the revised route TransCanada proposed after President Barack Obama blocked an original path amid concerns it posed a threat to an aquifer in Nebraska.

The State Department report doesn’t make a recommendation on whether the pipeline should be approved or denied. It instead points to ways in which the pipeline could harm the environment, though supporters said none should derail the project. Administration officials stressed the analysis was a work in progress.

“We’re looking for feedback now from the public to help us shape this going forward,” Kerri-Ann Jones, State’s assistant secretary for oceans and international environmental and scientific affairs, told reporters today on a conference call. After 45 days for public comment, and additional time for federal agencies to weigh in, a final decision may be made in late September.

Environmental groups said they were “outraged” by the analysis because it found the pipeline would have little impact on greenhouse-gas emissions.

‘Dirty, Dangerous’ ….”

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“Forestar Group boasts a rich portfolio of assets and businesses, including 136,000 acres of real estate, mostly in Texas; 752,000 acres of oil and gas properties; 1.5 million acres of water rights; and 275,000 acres of timberland. Yet the company trades for just a fraction of its net asset value, as investors don’t quite know what to make of this diverse mix.

Peter Martin, an analyst at JMP Securities, believes the shares are trading at a 40% discount to net asset value, which he puts at $18 to $43 a share. Forestar’s shares (ticker: FOR) closed on Friday at $17.56, or 1.2 times book value. The midpoint of Martin’s range is $30 a share.

The discount to net asset value isn’t likely to persist. With the housing market improving, Forestar is accelerating its sales of residential lots and investing the proceeds in higher-returning ventures, including its oil and gas business and real-estate development properties.

The strategy calls for tripling sales of residential lots, oil and gas production, and earnings before interest, taxes, depreciation, and amortization. From 2008 to 2011, Forestar generated average Ebitda of $34 million a year. Through 2015, management is targeting average annual Ebitda of $120 million. Last year, Ebitda reached $90 million.

As Forestar’s strategy unfolds, net asset value and book value could rise, driving the stock higher, perhaps by as much as 70%. Martin thinks the shares are worth $29, or 1.6 times his estimated 2013 book value.

Incorporated in 1955 as the Lumberman’s Land Corp., Forestar develops residential and commercial lots and sells them to builders. In addition, it owns interests in a hotel and three residential communities. Seventy percent of the company’s real-estate investment is located in Texas, in attractive markets such as Austin, Dallas, and Houston. A legacy timber business in Georgia produces fiber that Forestar sells primarily to Temple-Inland, its previous owner. Forestar was spun off from Temple Inland, now part ofInternational Paper (IP), in 2007….”

Full article

“Commodities dropped for a fourth day and stocks fell as $85 billion of spending cuts were set to be triggered in the U.S. and manufacturing slowed in China and the euro area. The 17-nation shared currency and the pound weakened while the Swedish krona strengthened.

The Standard & Poor’s GSCI gauge of 24 raw materials dropped 1.1 percent at 7:25 a.m. inNew York as lead, aluminum and copper fell at least 2 percent. Oil in New York declined 1.5 percent. The Stoxx Europe 600 Index slid 0.9 percent and S&P 500 Index futures lost 0.4 percent. The euro dropped below $1.30 for the first time in eight weeks. The pound tumbled 0.9 percent to $1.5027 and gilts rose after manufacturing unexpectedly shrank last month, whileSweden’s currency climbed at least 0.4 percent against its 16 major peers as fourth-quarter gross domestic product exceeded analyst estimates.

The U.S. Senate rejected a pair of partisan proposals to replace the automatic across-the-board spending reductions which the International Monetary Fund says will hurt global growth. Manufacturing in America probably expanded in February while consumer spending and construction increased in January, economists said before reports today. Data showed China’s manufacturing slowed for a second month while factory output in the euro area contracted for the 19th straight month.

“Risk assets underperformed as data such as PMIs reinforced a view that we are in a low growth environment,” said Michael Quach, investment strategist in London at Smith & Williamson Investment Management, which has $19 billion in assets. “Stimulus and other confidence boosting measures provided by central banks around the world have helped to reduce systemic risk, but there are still a lot of headwinds in the economy.”

Dollar Gains…”

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