Commodity Trade Mantra

Posts Tagged ‘Cost of Production’

The Oil Glut And Low Prices Reflect An Affordability Problem

There has been a belief that oil supply decline will come by way of high oil prices. Demand will exceed supply. But it seems that the decline in supply will come through low oil prices. The oil glut seen now reflects a worldwide affordability crisis, which in turn keeps demand depressed. Lack of demand keeps prices low–below cost of production.

Oil Prices on a Decline - Is this Good News, or Bad?

Growth in oil consumption has mostly been outside of the US, EU & Japan, in the recent past. China & other emerging market countries kept demand for oil high, fueled by debt growth. This debt growth now seems to be stalling. Commodities such as oil & food are necessities. Why would less be needed? The issue, is affordability.

Gold Prices Below $1,200 Could Mean Production Cutbacks - WGC

If gold dips below $1,200 per ounce (average industry cost of production) for a “sustained” period, serious production cutbacks are likely, World Gold Council representatives warned. Not that prices can’t fall below cost of production – It’s just that there’s a significant sensitivity to the price there.

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