Commodities sell off: time to exit or more buying in?
RT: What is driving the selloff? GK: “Well it is a combination of factors really.We have got some weak macroeconomic data that has come out of the U.S. and Germany this week.We have, in Asia, talk of, not just talk, but some of the emerging economies there have been raising their interest rates and attempt to slow the economies down there.And I guess we have also had a little bit of the risk premium come out of the market this week, with the death of Osama Bin Laden, and no new news out of the Middle East or North Africa.” RT: Some analysts say that he commodities boom is over. Do you think that?GK: “Well prices seem to be still around $100 so, I mean, if analysts are saying that then that’s their opinion.I would rather not go into it.” RT: Could support come for oil?GK: “For oil? Well at the moment, we’ve still got support there from the situation in the Middle East.I mean the market is still watching that very closely, there is still a risk of it spreading, although it has been pretty quiet lately.You know, with Libya we don’t really know how long that is going to go, how long it’s going to last.So that area there is definitely providing the support.” RT: How much of this is down to fundamentals, is this sell-off the bursting of a speculative bubble?GK: “As far as fundamentals are concerned, even with the Libyan issue, and the 1.7 to 1.7 million barrels that would normally come out of there missing, Saudi Arabia has sort of suggested that the market is well supplied and that they have offered to put more into the market, and no one is willing to take it.So as far as fundamentals are concerned, it seems at the moment as if the supplies are there.” RT: We might see some slowing in China and India, but they're still growing quickly, doesn't this suggest they'll be strong future demand?GK: “As far as China and India are concerned, they have both indicated that they want to slow down their economy, but, I mean, how that impacts demand remains to be seen.” RT: What's now more important, demand in the U.S. or China?GK: “They are both important.The U.S is the biggest consumer of oil, so that remains important.China is the growing market, isn’t it.”