Posts tagged: commodities

How big is the oil market? Bigger than all raw metal markets combined…

While the amount of uses in one barrel of oil is quite incredible, we still need a mind-boggling amount of the natural resource each year to sustain consumption.

Oil production per year: 34 billion barrels (incl. other liquids)
Oil market size at current prices: $1.7 trillion per year

To consider how big this actually is, we compare the annual market sizes of all major metals and minerals that are mined throughout the world:

  • Gold: $170 billion
  • Iron: $115 billion
  • Copper: $91 billion
  • Aluminum: $90 billion
  • Zinc: $34 billion
  • Manganese: $30 billion
  • Nickel: $21 billion
  • Silver: $20 billion
  • Other metals: $67 billion (Including platinum, palladium, titanium, tin, moly, uranium, and more)

The total amount works out to $660 billion –  just a tiny fraction of the size of the oil market.

 

Chart: The True Size of the Oil Market

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Asset classes. Expected return from UBS

In the years ahead, selecting the right asset classes will be crucial.

Cash and Bonds

Source: UBS

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How Hard Is It To Pick Winners In The Commodities Market?

2013 was a really terrible year for commodities, as flagging  demand worldwide ate into prices. Just four major commodities – natural gas, oil, palladium and,  barely, zinc saw year-over-year price gains, according to the “commodities  quilt” below from U.S. Funds. Growth  in the top performer, natgas, which climbed 33%, diverged 66% from the worst  performer, corn, which fell 23%.

That may seem extreme, but it’s  been worse: in 2006, the disparity was almost 200 percent between winning nickel  and losing natural gas. It’s also importants to  recognize that annual returns for each commodity can be quite volatile. That’s  why the pattern of colors in the quilt is so chaotic. “The price movement of commodities is historically both seasonal and cyclical,” wrote the folks at U.S. Funds. “That’s why when investing in natural  resources, we believe it is important for your portfolio to hold a diversified  basket of commodities and to be actively managed by professionals who understand  these specialized assets and the global trends impacting them.”

commodities quilt

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