A couple of updates. One quick, and one at greater length.
First, from the energy sector of East Africa — where I discussed Monday how ExxonMobil may be on the verge of its biggest natural gas acquisition since the energy market collapse.
As serendipity would have it, that rumoured deal coincided almost exactly with another big natgas announcement from this part of the world. With Dubai-based Dodsal Group saying Monday it has found the largest-ever gas discovery in onshore Tanzania.
Dodsal announced it has found 2.7 trillion cubic feet in the Ruvu Basin near Dar es Salaam. Which is indeed a huge discovery for the onshore environment — and further demonstrates why E&Ps are increasingly enthusiastic about this part of the world. Related: Is A Gas War Between The U.S. And Canada About To Start?
Sentiment is also running hot in another key commodities market: the India gold sector. Where a strike by some of the country’s major gold-sellers is still continuing, with protests turning aggressive in Delhi this week over the government’s proposed 1 percent sales tax on gold jewelry.
The photo below was taken outside government finance offices Tuesday. Showing jewellers knocking down barricades to push their demands that officials roll back the proposed tax.
As I wrote last week, a number of jewellers associations have agreed to end their strike. But other groups such as the Confederation of All India Traders (CAIT) and All India Bullion Jewellers and Swarnkar Federation (AIBJSF) said Sunday they will continue shuttering their shops — with strikes by these organizations now on their 30th day. Related: As Net-Long Positions Near Records, Is The Oil Rally Overdone?
All of which shows that gold sales are not back to normal in the world’s number one consuming nation. With sources saying countrywide gold sales are likely to be reduced by some 40 to 50 tonnes (1.3 to 1.6 million ounces) for the first quarter of 2016, due to the labor action.
Reports further suggest many Indian buyers are still having problems securing gold supplies — which is a growing issue during the current wedding season buying period.
What effect is this having on prices? Right now, it’s unclear — with the possible resumption of some sales likely giving a boost to prices over the past week.
But it’s important to remember that a lack of full-out buying here still represents a potential drag on the market. Watch for a resolution to the remaining strikes, which would be a critical trigger for increased buying and a lift in prices.
Here’s to getting everyone onside
By Dave Forest
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