Brent Oil ETPs See Largest Inflows in 11 months on Growth Optimism and continued Iran Crisis Hedging Demand

revision of Eurozone growth forecasts and rumours of apossible Portuguese downgrade by Fitch. Brent oil ETPs saw thestrongest inflows in nearly a year on the back of improved investormacro sentiment and continuing tension in the Middle East. Gold andsilver prices also benefited from the renewed macro optimism,prompting some investors to book profits in these assets. Persistentdisruptions at the Rustenburg platinum mine in South Africa, coupledwith the partial rejection of the indigenisation plan for the Mimosa minein Zimbabwe, helped drive further inflows into Platinum Metal GroupETPs. This week, the European Central Bank’s Long Term LiquidityOperation (“LTRO”) will be the key focus, to determine how muchmoney banks need to continue operations. Global growth data will alsobe watched closely, with the US manufacturing ISM, European andChina Purchasing Manager Indices data for February coming out.Finally, this week investors will likely monitor inflation data forconfirmation that central banks continue to have a green light formaintaining easy monetary policy.

ETFS Brent 1 mth (“OILB”) receives US$39m, the largest inflow since March 2011. ETFS oil ETPs have seen US$137mn inflows this year, the highest of any commodity. Improving global growth and risk sentiment together with on-going tension in the Middle East helped drive Brent crude oil prices to over US$124bbl last week, the highest level in over ten months. ETFS Leveraged Natural Gas (“LNGA”) saw the biggest outflow since September 2011, equal to US$6m, as mild weather slowed consumption. The US Energy Information Administration report last week showed gas inventories stand at 2.6 trillion cubic feet, 41% above last year and a record high for winter time.

ETFS Copper (“COPA”) records US$15m inflows, as investors expect demand from the US and China to pick up. The Greek bailout this week and the reduction in the Chinese reserve requirements last week spurred investors’ optimism over the outlook for economic growth and demand from the two top consumers, China and the US, prompting inflows into the metal.

Gold ETPs see outflows on gold price surge as investors take profits. The approval of the second bailout package for Greece last week prompted a risk rally across all asset classes. The gold price was up 3.1%, breaching the range it has been trading recently and prompting investors to reduce their positions in ETFS gold ETPs by $132mn. This compares to inflows of $1.3bn over the past year. Meanwhile, Platinum and Palladium ETCs continued to receive inflows, amounting to US$26m and US$7m respectively. Production disruptions at Impala’s Rustenburg mine persisted last week, with no resolution foreseen in the near future. At the same time, Zimbabwe’s government rejected the 50:50 joint-venture between Aquarius and Impala following the indigenisation policy. Supply-side events are likely to continue to play an important role in driving platinum and palladium prices in the near future.

Wheat ETCs receive over US$5m inflows ahead of the US Department of Agriculture annual outlook conference on Thursday. Investors were likely expecting bullish figures but they were disappointed in the event after the USDA announced the largest wheat acreage in three years.