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What's behind the collapse in commodities?

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What’s happening to commodities? The BBG Commodity Index has fallen to a five year low this week, with weakness seen across all sectors. Saxo’s Ole Hansen says increasing supplies are being met with falling demand as economies outside the US continue to stutter. On top of that the rising dollar has also added another negative dimension.

Oil markets are also looking more depressed as Brent Crude reached a two year low this week. There was also a triple whammy of bad news as OPEC, the International Energy Agency and the US Energy Agency said that oil demand will slow going into 2015. At the same time, supply, particularly in the US, is still growing. Hansen says that Saudi Arabian production is down to a three year low.

It doesn’t look much better for metals which have also turned increasingly negative this week, including palladium and platinum. But Hansen believes there could be opportunities there. He suggests looking at platinum as a buy against gold. He also says that the fundamentals for palladium are also looking supportive.