Energy and Natural Resources Market Radar (September 9, 2013)

September 8, 2013

2 minute read

Brent and WTI crude oils moved higher this week due to declining production in Libya, the North Sea and Azerbaijan as well as more talk of military strikes in Syria. WTI closed the week at a 28-month high of $110.40 per barrel.
The Dow Jones Oil & Gas Index gained 2.08 percent this week on rising oil prices.
The Baltic Dry Shipping Index gained 12.5 percent and hit an 18-month high this week.
The China steel PMI reached 53.4 in August 2013, 0.9 percent higher month-over-month. This is the third month the PMI has been above a reading of 50 this year.
The Energy Information Agency reported that U.S. oil production reached its highest levels since October 1989 last week. U.S. oil production hit 7.61 million barrels per day, or 38.9 percent higher than production one year ago.

NYMEX natural gas futures slipped 5 cents this week to finish at $3.53 per million Btu (mmbtu) as inventories increased more than expected this week.
Refiners underperformed the S&P Energy Index by the most in four weeks as crack spreads hit their lowest level since 2011 with the group down on average 1.6 percent.

According to an analysis by Macquarie, palladium demand should be boosted by the continuing acceleration in U.S. auto sales, which topped 16 million units (on a seasonally adjusted annualized basis) in August 2013 for the first time since November 2007. On a monthly basis, sales were 1.5 million units, up 17 percent year-over-year. Larger vehicles, which typically use more platinum group metals (PGM) because they have larger catalytic converters, are also gaining market share, with Ford selling 71,115 of its F-series truck, the most since 2006 (and some of these very large personal vehicles will have diesel engines and, hence, platinum-rich catalysts). The age of the current fleet is a reason for the pickup in U.S. car sales but is also a caveat to the bullish story—many of the new sales are to replace scrapped vehicles, which in time will mean higher flows of recycled PGM.

Annual capital expenditures by the top 20 biggest mining companies by market cap is forecast to drop by about a third to $66 billion in 2015 from 2012 levels according to forecasts compiled by Bloomberg.