December 8, 2014 / 4:12 PM / 3 years ago

Energy ETPs attract strong inflows in Nov ahead of OPEC meeting

* Energy futures ETPs attract $1.1 bln year-to-date
    * Aluminium boosts industrial metals in November
    * Silver YTD flows outpace those into broad-basket ETPs

    By Claire Milhench
    LONDON, Dec 8 (Reuters) - Energy futures exchange-traded
products (ETPs) attracted a hefty $312 million in November,
their second-highest monthly inflows of the year, as investors
bet OPEC would cut oil production and thereby trigger a rebound
in the oil price.
    In the two-month run-up to OPEC's Nov. 27 meeting, energy
futures ETPs attracted $1.153 billion, data from BlackRock
showed. As a result of this surge, energy had the largest net
inflows of all the commodity ETP sub-sectors in the first 11
months of 2014.  
    But investor expectations that OPEC would trim output to
stabilise the oil price were dashed as Saudi Arabia blocked
calls for a cut. 
    The S&P GSCI Energy index lost 15.7 percent in November and
Brent crude futures sold off almost 10 percent in just
two days following the announcement. 
    Energy equity ETPs also did well in November, attracting
$1.3 billion, the highest inflows of all the U.S. equity sector
ETPs. Globally, they have gathered $9.2 billion year-to-date. 
    Ursula Marchioni, head of ETP research EMEA at BlackRock's
iShares, said investors had used energy equity ETPs as a
momentum play, adding funds steadily in the first half of the
year when the energy sector outperformed the S&P 500.
    Although energy stock price performance has taken a
hammering following OPEC's decision not to cut output, Marchioni
said BlackRock did not expect a big erosion of the year-to-date
energy equity ETP inflows. 
    "The valuation of this sector appears to be attractive
compared to the S&P 500 and big integrated energy companies
generate good dividends," she said.
    The rest of November's flows were mixed, with industrial
metals ETPs attracting $116.8 million and silver ETPs $100.9
million, while gold racked up $969.7 million of outflows. It is
now down almost $3.9 billion year-to-date.
    Marchioni said the industrial metals inflows were mainly due
to one Europe-listed aluminium fund, which attracted $94
million. Nitesh Shah, a research analyst at ETF Securities, an
issuer of ETPs, said this was likely driven by bargain-hunting.
    "At these prices a lot of aluminium smelters are not
profitable," he said. "During 2015 we expect the market to
tighten."
    Silver's year-to-date inflows have outstripped those
of broad-basket commodities ETPs. "It's so cheap at current
levels people are finding a lot of value in silver," Shah said.
    Investors believe that if the global economy continues to
pick up in 2015, silver is likely to benefit because of its
industrial applications, he added.

    Global commodities ETPs at end-November (US$ mln)
 SECTOR                        NOV FLOWS   YTD FLOWS
 Broad/Diversified             -35.9       611.8
 Agriculture                   -73         -291.2
 Energy                        311.8       1,079
 Industrial Metals             116.8       160.8
 Gold                          -969.7      -3,875
 Silver                        100.9       713
 Other Precious Metals         30.4        -342.2
 Precious Metals TOTAL         -838.4      -3,504.2
 TOTAL COMMODITIES             -518.6      -1,943.8
 Source: BlackRock   

 (Reporting by Claire Milhench; Editing by Dale Hudson)

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