Expectations play a big role in commodity markets. From farmers deciding how much wheat to grow next season to consumer choices over what car to buy given their expectations over the price of fuel. Oil producers, like miners gave to look many years into the future to gauge what the demand will be for their output. The gradual introduction of electric vehicles is one such step change. The conventional wisdom is that it will result in lower demand for oil and hence lower prices. However, the opposite could be true, at least in the short term.
On the morning of 9th September a leak was discovered on a pipeline carrying gasoline in Alabama. The Colonial Pipeline carries 1.3 million barrels per day of gasoline from refineries in Houston to be distributed across the South East and eastern seaboard, all in all accounting for up to 40% of the regions gasoline supply. The authorities first concern is the potential environmental impact – on the local water supply and wildlife. Markets of course react immediately to facts and speculation as to the potential impact on supply as well as demand.
According to The World Platinum Investment Council (WPIC) now is a good time to invest in platinum…well I guess they would say that. So what is the reason for why the WPIC (backed by platinum miners to promote the use of platinum) is so positive on the outlook for the metal right now?
As the FT reports “This is only the fourth period in … 40 years where platinum is at a sustained discount to gold. Investors are increasingly telling us that they view this divergence from historical norms as significant and temporary,” the council said.