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Trade the Bollonger Band Squeeze

Archive through April 02, 2005

Chart Forum » Commodities & Futures » Commodities - base metals/oil » Archive through April 02, 2005

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hilarius
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Post Number: 576
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Monday, March 14, 2005 - 02:12 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bro Rederob

Many are chased but few are caught

So it hard to count, but the race is almost as exciting as the victory

Hilarius


I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

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suemac
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Monday, March 14, 2005 - 07:07 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Now, where were we? Oh yes, Commodities - base metals/oil!







Behold the turtle; he makes no progress unless he sticks his neck out!

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rederob
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Monday, March 14, 2005 - 08:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bro Hilarius
If you must know, I did court the one most chaste.
But apparently suemac prefers to keep the thread more weft than warped - see what we can selvage for her.

Copper: tight, exchanges continue to draw down despite hefty backwardation
Nickel: 1500 tonnes added to inventory in past week after backwardation blew out to over $200/tonne - market remains very tight.
Lead: continues to tighten and with headroom on RSI it will hold its prices high for medium term
Aluminium: RSI will impede near term runups, though stock draw downs will keep price pressure lid on
Zinc: mooted for a big deficit this year and drawdowns suggest this is on cue: RSI getting toppy
Tin: thin market, low inventory, firm demand - expect another crack at $10,000 this year

Am waiting for Bro Hilarius to trump us with a majestic chart showing how BHP and RIO have moved vis a vis commodities.


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archer
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Tuesday, March 15, 2005 - 07:22 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Sorry for the distraction suemac but the more i study history-the more time seems like a wheel in that as the wheel turns one revolution and we return to the spoke we started on history starts to repeat-
As Gann said-"There is nothing new under the sun"
I have lightened up on resource stocks as i expect a significant correction soon
The CRB chart shows a clear 5 waves up with 3 almost equal drives up with very clear divergence against this last leg
I think the correction in resource stocks will coincide with a correction in the general market to 3500-3600 XAO
Similar to our hosts expected retracement area
CRB


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suemac
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Tuesday, March 15, 2005 - 08:24 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Gentlemen, I jest, of course! I enjoy the banter and probably understand it better than the bourse; appreciate clever tradesmen and wordsmiths.


Behold the turtle; he makes no progress unless he sticks his neck out!

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rederob
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Saturday, March 19, 2005 - 12:07 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



suemac
Just for you tonight we have a bath of sensuous oils to bathe in.
Pardon?
Oh
Dear me
Apparently that should be expensive oils.
Sorry
What was that?
And they're destined for Beijin!
Up yours, they're shouting
How rude
Sorry, that should have been crude - West Texas intermediate, it seems.
Hear here wie es dir gefallt:



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rederob
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Saturday, March 19, 2005 - 08:28 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



As a Comsec client, a couple of years ago I started reading more thoroughly through their range of market reports.
Inter alia, they (Comsec) have for some time had a "six month" view that oil prices will fall. Apart from a 30% slide in a matter of weeks about 2 years ago, oil prices have been on a constant incline and the pundits suggest $60/bbl is a dead cert.
But a year ago I though the "experts" would be getting it right and sold out of nice positions on OSH and STO (but kept WPL).
I now rely on my own counsel on commodity pricing, and am much happier being wrong because I got it wrong, than because I blindly followed a false god!
That said, I realise forecasting is an inexact science built on multivariate foundations.
So for one's edification I have tabled Comsec recent forecasts on base metals.
The overwhelming evidence of misfit is that present spot prices (except for tin) are substantially higher than 2004 year averages, let alone any of Comsec's forecasts: Note that in the space of 3 months Comsec made substantial revisions to 2005 forecasts, and still behind the 8-ball.



The question is, could Comsec be right this year?
Maybe
But it will require a substantial breakdown of the DOW.
In turn, this might add to a collapse of the greenback: Wherein we are faced with a dilemma. As commodity prices are expressed in US dollars there is every chance that US denominated commodity prices will increase significantly.
In Oz the issue will be whether or not we can maintain commodity price parity in AUD terms while the greenback dives - ie, can Oz miners maintain their shareprice momentum.
At this point in time I believe commodity prices will have another few runs higher before base metal demand wanes and/or supply gets on top.
This latter factor will kick in during 2006.
But will India have begun to take up any slack from the US by then?
Keep watching..........


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suemac
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Saturday, March 19, 2005 - 06:57 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ah Robert Rouge, At the wee small hour of your writing was it your hearing or sight that you had lost? Perhaps other senses? Hmmmmm. I note that it was your post number 666! Now there's another perspective!!!!



Behold the turtle; he makes no progress unless he sticks his neck out!

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rederob
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Saturday, March 19, 2005 - 07:09 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



suemac
the devil may care
but she never made me do it
i think it was my marbles lost
other senses just deprived in the fullness of time
nice to get a reply that's not about the farknosedoldwombat kerfuffle
enjoy the rest of your transmissions


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rederob
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Thursday, March 24, 2005 - 07:41 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bleak night for metals as funds took their money off the table with a stronger greenback.
Let's hope the retrace bites deeper and offers a better buying opportunity.
The next upleg will lock in price support at historical highs that may last until year's end.
I don't envisage base metals will have another buy opportunity in the medium term as prices for now seem well stretched and we would need to see what demand did with the numbers.


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danielc
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Thursday, March 24, 2005 - 10:45 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



redrob,read with interest your valued opinion on metals this morning,tis where all my 2 bobs are/also read where you had a position in a small nickle miner < nickle australia,NKL was wondering if you would give an opinion on it please/danielc/also an opinion on minara/MRE/ which i am watching closely and as i understand you are holding would be appreciated,


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rederob
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Thursday, March 24, 2005 - 08:11 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



daniel
NKL is a pure spec play - they have great tenements and an excellent exploration strategy.
But minerals don't have to obey any rules and many of the biggest finds are equally accidental - looking for gold and found nickel!!!
MRE is an interesting stock: Debt free and and a great eps multiple, but laden with a legacy of poor plant performance that prevents it running at nameplate capacity.
Nameplate capacity is the key here, as MRE's total output costs vary only marginally whether or not it produces 30000tonnes or 40000tonnes. In other words, the higher MRE's output, the cheaper per pound (in this example - 30ktonnes v's 40ktonnes - MRE would reduce per pound production costs by some 30%).
The good news is that present high nickel prices are allowing MRE the opportunity to invest substantially in lifting output performance.
It remains to be seen how successful they will be, but they are shortly due for a mandatory shutdown and will no doubt pull out all stops to reduce bottlenecks and renew outdated plant.


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rederob
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Thursday, March 24, 2005 - 08:58 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Base metals tonight are poised to recapture ground lost over recent days when the greenback was propped up temporarily by a Fed rate hike.
Inventories remain not only tight, but prone to large drawdowns that frighten the bejeebers out futures traders. For example, LME copper inventory declined 3% today (after last week's decline of 8% on Shanghai), sending the clear message that demand is very strong.
Given that copper backwardation is around $140/tonne and nickel around $370/tonne and no dents are made at exchange warehouses, one would be foolish not to be afraid!
Paul van Eeden, whose views I respect on commodities, (http://www.paulvaneeden.com/) is calling the commodity bull at an end. He may be right, but I reckon he's at least 6 months early, and possibly over a year too soon.
He also seems to be placing a UScentric view on his statement, with the longer term notion that the US is going down the gurgler.
The question to be answered is if a massive slowdown in the US will flow across national boundaries.
So consider this: If money is tighter in the US in future, will consumers be buying more expensive locally produced items, or buying the "made in China" label?
I suggest the latter!
In other words, it's entirely possible (some say probable) that a global slowdown can feed Chinese production beyond present levels.
So I urge readers to think a little beyond the printed ink on tabloids, and to carefully read the labels from now on.


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danielc
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Thursday, March 24, 2005 - 09:19 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



redrob,thank you for your response/danielc


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rederob
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Friday, March 25, 2005 - 09:45 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The below chart gives the best reason I know for suggesting that oil prices are destined for successively greater higher prices in years to come.

It shows that we are now depleting oil annually at a greater quantity - and an increasing pace - than we are adding to reserves.
The good news is that we have adequate and substantial reserves for our generation. But future generations will not be oil dependent as they will simply not have that luxury.
The crux of the present oil supply problem is when "peak oil" will happen. That is, when will our ability to extract oil from the ground be exceeded by its daily consumption, no matter what additional reserves are added.
Peak oil may happen in the next 5 or the next 50 years - we just don't know.
But the consensus of the greatest minds on this matter suggest that it will happen before 2025, or within 20 years.
The consequence of peak oil is that oil dependent nations (especially the US) will suffer the inability to grow (as distinct from economic contraction).
With peak oil being inevitable within most of our lifetimes you would think countries like the US would be implementing mitigation strategies.
Was one of those to invade Iraq?
Without wanting to digress, in the immediate term we have had the BP Texas refinery explosion occurring 2 months ahead of the US "driving season". This is a time where refineries are building their gasoline reserves to meet the incredible demand of some 250 million vehicles - many being huge gas-guzzlers - criss-crossing the US countryside.
US refineries are running at over 90% of capacity, and have been for some time. Production facilities running near peak for extended periods is not always a problem, but remember that no new refineries have been built in the USA for over 20 years, so we are talking about shelf life and nameplate capacities being reached: Accidents will become increasingly more common.
OSH, STO and WPL represent stocks good for buying the dips and will remain long term holds in my book.


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archer
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Friday, March 25, 2005 - 12:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rederob
Im with Eeden for reasons clearly explained in my CRB post
above-Just a correction though and not the end of the bull
I think our XAO has had the gong as well-the candle pattern
of the last 3 days(Three Black Crows)is most often predictive of a MUCH larger move in the same direction
Most times ive seen this pattern there is a good rally straight after-sometimes even to marginal new highs
Then the ass falls out
Mostly cash now except for a couple of still strong stocks
When blowoff moves like we had in our market and the CRB are
finished they often head back to where they started
Archer


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hailoh
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Friday, March 25, 2005 - 01:02 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Archer, can you put a time scale on your comment "... good rally straight after.." Better still, could you post a typical chart? Thanks.


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archer
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Friday, March 25, 2005 - 05:44 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Time frames vary Hailoh
A few examples in our market
Oct 9th 1997 recovered slightly then dumped 20%
Theres a few examples in the JUL-AUG 01 top
Nov 7th 2002


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rederob
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Friday, March 25, 2005 - 09:46 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



errata
my earlier reference to "peak oil" was technically incorrect
peak oil is where gross oil production cannot be increased, irrespective of consumption or reserves
but i wanted to focus on copper tonight, after Shanghai inventories declined 42% over the week, NYMEX warehouses are at cyclical lows, and LME is revisiting historical inventory lows
one needs to compare and contrast with a year ago - when the bottom was falling out of commodities after a massive spike late 2003-early 2004
a year in consolidation and steady consumer price rises have given the base metals complex a great start for 2005
all this despite high energy prices
all this despite strong backwardation and firm scrap prices
all this despite producers ramping up output
all this despite a greenback refusing to relent
all this despite constant calls that the boom is bust
at this point in time the fundamental rule is that fundamentals rule
demand continues to markedly outstrip supply


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hailoh
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Saturday, March 26, 2005 - 09:15 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Archer, thanks for your reply.

Looking laterally, the attached chart shows certain similarities between 1994 and now and lends support to maintaining short positions rather than waiting for a big retracement.

In saying that, I am punting that we are not at a point similar to November 1993, with a big surge to a peak like that in February 1994 yet to come. If such a late surge occurred, it would most probably be mining/oil stock related, so we would need to see a sharp weakening of the US$ and a big boost in mining stocks in the very short term. Is Rederob suggesting just that?

I could be biassed: I remember 1994 well because I took an early hiding in mining related call options, but fortunately while the rest of the market continued south, stocks like BHP moved started moving ahead again by mid year.

XAO weekly


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rederob
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Sunday, March 27, 2005 - 02:28 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Sometimes a local industry commentator paints a clear picture (https://www.clsa.com/public/login.asp?secure=1&)

China demand for commodities to grow at double-digit rates to 2010
Last Updated(Beijing Time):2005-03-25 11:00

China's consumption of steel, iron ore, nickel, copper, aluminum and oil will grow at double-digit annual rates for the next five years, CLSA said in a report.
Its report on commodity outlooks concludes that while growth in China's hunger for resources has passed its peak, the country will continue to drive global demand growth for almost all commodities.
"For investors concerned with commodity prices over the coming five years, the focus should be on how much supply will be coming on line and not the sustainability of Chinese demand," the report said.
It said that domestic demand, rather than foreign investment, is driving the commodity boom, making China less susceptible to downturns in other markets and less of a threat to other economies.
The strength of this demand for resources underpins CLSA's forecast of 8-9 pct GDP growth for the Chinese economy this year and 7-9 pct annual growth through 2010, the report said.
CLSA said the main threats to these forecasts are the high proportion of fixed asset investments in China that are government funded, plus the continued dependence on the banking system for almost all financial intermediation in China.
On oil, the report notes that the International Energy Association estimated in the late 1990s that China would need 7.1 mbd of oil in 2010, "but it now looks like demand will hit that mark this year."
"Consumption has far outpaced domestic oil production, leaving China with a rapidly growing appetite for imported oil," the report said.
On aluminum, China is likely to overtake US as top consumer of the commodity within two years.
Demand for copper will also continue to grow at annual rates of 10 pct or above, feeding China's growing power network and construction boom.
The report said China also has room for substantial increase in demand for steel, with per capita consumption rates still at relatively low levels.
Liquefied natural gas is the only commodity where China was not driving demand, but that is about to change "in a big way", it predicted.
It cited industry sources in Australia as saying China could import 40 to 60 metric tons per year of liquefied natural gas by 2020. About half the demand is coming from power plants.
"When it comes to energy and commodities, China already punches above its weight-class," the report said.
That hunger for resources is likely to translate into more overseas acquisitions by Chinese companies in the mining sector, it said, noting such investment is still in its early stages.


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rederob
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Friday, April 01, 2005 - 08:05 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Have lifted the below from this link:
http://www.finfacts.com/irelandbusinessnews/publish/article_10001138.shtml

For specific commodities, the Economist Intelligence Unit’s current forecasts are as follows:

Summary: Industrial commodities have gone from strength to strength, defying earlier expectations. Prices for the majority of markets have moved further upwards, thanks to strong fundamentals and speculative fund support. Base metals will remain firm for longer than expected as stocks continue to dwindle. A downturn is now not expected until 2006.
Aluminium: The impact of measures to control Chinese aluminium production remains the key uncertainty on the supply side. Demand remains very strong. The aluminium market is quite tight and will remain so for much of 2005.
Copper: With production struggling to keep up with consumption, copper stocks have dwindled to critical levels. Prices will remain high this year and weaken in 2006 as supply demand pressures ease, but stay above US cents 100/lb.
Oil: Following upward adjustments to global demand and downward revisions to former Soviet Union production, the call on OPEC crude has risen. With OPEC now willing to defend higher prices, oil will remain expensive for longer. Tight global spare capacity will keep the market vulnerable to upside price risks.
Lead: The tight physical market and continued fund support will push prices to new highs. But moves above US$1,000/tonne will prove unsustainable, and 2005 will represent the peak of the cycle.
Nickel: Prices have moved to a generally higher level, where they will remain until the first signs of easier supply-demand conditions emerge late in 2006.
Zinc: Stocks will continue to decline and prices to rise in response to fund buying. The shortage will ease in 2006.The relative cheapness of zinc has attracted fund interest. As inventories continue to decline prices will keep rising, peaking in the first quarter of 2006.


I haven't seen anything as concise that matches my view on commodities - the key comment being that no downturn is expected until 2006.
It's a long time off and other events could intervene to more quickly turnaround the market, but if the mooted Indian move occurs to industrialize in keeping with China, then we have a whole new ball game.
It is apparent that ramped up base metals output cannot keep pace with demand in a market that heralded the change several years ago.
So the question facing the big guns is how much to invest in new capacity?
Given the forecasts are for a turnaround in 2006, it makes little sense for the RIOs and BHPs of the world to overcommit.
Maybe we will see Chip Goodyear out there saying "we will ramp up output at a measured pace", as Mr Magoo cheers from the sidelines.


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rederob
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Friday, April 01, 2005 - 11:23 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Copper prices peaked yesterday, but have dipped today and may be quiet till key US data is out later tonight (Oz time).
Shanghai inventories fell almost 20% over the week - presently 16,327 tonnes and barely able to meet the next few weeks demand on present drawdown rates. LME inventories are little changed over the week, while NYMEX inventories fell about 4% (which is a major change after several weeks rigormortis).
OIL is again over US$55/bbl and clipped $57 the other day - on its way to $60 for sure after a Goldman Sachs report tipped its climb to $105.
I think the US driving season will tip the scales over $60 altho I suspect it will be due more to refining capacity than actual crude supply issues (the perception of short become de facto shortage to speculators).
Nickel backwardation has blown out over $400/tonne so should start attracting replenishment of warehouses and cool price increases.
In fact nickel has stunned traders this year as it rises at a subdued rate within relatively narrow daily dollar ranges. I suspect the speculators have backed away fearing a squeeze and the commercials are toying with the funds.
Aluminium has risen strongly in 2005 and is settled at 11 year highs - RSI give upside room for a push to $2000/tonne by mid year. LME inventories are on the decline while NYMEX has restocked considerably in the past fortnight - haven't worked out the reason for this yet!
Zinc drawdowns continue apace and sustain the position that comparative gains should be stronger for this base metal.
Lead remains tight although inventory drawdowns have declined of late. As with most of the base metals, RSI is in neutral territory with room to the upside open at any time the dollar dips.
Tin supplies are chronic, but satisfying demand in a sort of equilibrium that could only exist in in a thinly traded market.
So we enter the second quarter with most of the base metals at or near their cyclical peaks and overhead scope for rises on technical and fundamental grounds.
Holding onto BHP until its taken over WMC seems a good move to me even tho it's going to take quite a few months to achieve and some price volatility will affect it.
As a diversified industrial BHP is a bit weak on the oil/gas front. So it has a magnificent opportunity to bid for OSH, power up its FEED, and get gas flowing into hubs that can supply a number of larger States - including its own production facilities. That's my April fools prognosis.


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rederob
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Saturday, April 02, 2005 - 09:43 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Higher highs and higher lows - note the steady rise of the 200dma.
Oil has more technical upside and is supported by strong fundamentals in the US: There is a new "fear" factor built into the price - a fear that US supplies of gasoline will not meet demand.








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perler59
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Saturday, April 02, 2005 - 10:35 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rederob, won't lack of refining capacity cause an excess of crude? I keep waiting for the speculators to realise that and start selling...


The successful traders are the ones who's tolerance for their own bad habits, runs out before their money.

 
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Commodities - base metals/oil » Archive through December 21, 2006captain_chaza25 21-Dec-06  02:10 pm
Commodities - base metals/oil » Archive through December 07, 2006kate25 07-Dec-06  01:27 pm
Commodities - base metals/oil » Archive through November 18, 2006rederob25 18-Nov-06  09:23 am
Commodities - base metals/oil » Archive through July 27, 2006dydavo25 27-Jul-06  08:16 pm
Commodities - base metals/oil » Archive through June 05, 2006thommo7825 05-Jun-06  04:09 pm
Commodities - base metals/oil » Archive through May 23, 2006smallworld25 23-May-06  06:22 pm
Commodities - base metals/oil » Archive through May 19, 2006captain_chaza29 19-May-06  03:44 pm
Commodities - base metals/oil » Archive through November 09, 2005thommo7828 09-Nov-05  04:11 pm
Commodities - base metals/oil » Archive through October 06, 2005rederob25 06-Oct-05  11:02 am
Commodities - base metals/oil » Archive through September 17, 2005rederob25 17-Sep-05  05:14 pm
Commodities - base metals/oil » Archive through August 11, 2005rederob25 11-Aug-05  08:19 pm
Commodities - base metals/oil » Archive through July 05, 2005rederob25 05-Jul-05  08:20 pm
Commodities - base metals/oil » Archive through May 02, 2005archer67 02-May-05  08:50 am
Commodities - base metals/oil » Archive through March 14, 2005rederob25 14-Mar-05  02:00 pm

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