Pressure mounts on Tsipras as clock runs down

Time is quickly running out for Greek officials as Greek banks run the risk of a shortfall of collateral with buffers dangerously low, threatening to derail any potential deal in the pipeline. Investors have hastily withdrawn cash from Greek banks over the past couple of weeks and with lenders increasingly using collateral held with the Greek central bank to release emergency liquidity, banks run the risk of a liquidity shortfall. Eurozone policymakers are beginning to lose patience with Alexis Tsipras as many market participants view his uncompromising stance as the key obstacle for any potential deal. With a summit of EU leaders in Riga later this week, market participants are hopeful that steady progress can be made but caution on whether Greece will be able to make its June 5th repayment to the IMF could see further choppy trading.

Crude oil exports from Saudi Arabia to the US have fallen to their lowest level since the crisis as the impact of shale oil in the US and increasing presence of Canadian exports impacts the oil rich nation’s current account. According to data from the US Census Bureau, US buyers purchased on average less than 1m bpd of Saudi Crude over the past year. But while appetite for The Kingdom’s crude has waned in the US, the focus has switched towards Asian buyers, with China particularly taking advantage of lower prices. Front month Brent futures have consolidated sideways throughout much of the month, trading broadly rangebound between $65-67.50/bbl.

Rio Tinto have announced a fresh attempt to sell-off surplus aluminium assets in a deal that could come with a $1bn price tag as it struggles to restructure itself and shed non-core assets in the face of a worldwide commodities slump. The Anglo-Australian mining group is keen to offload its Pacific Aluminium business unit, which operates smelters in Australia and New Zealand, continuing with the cost cutting efforts which saw the mining group sell-off $4bn worth of assets over the past two years. After reaching a four and a half month high at the start of the month towards $1,979/tonne, three month LME aluminium prices have lost over 6% since then trading broadly flat year-to-date. However, market participants are hopeful that prices will rebound throughout the coming quarters as global demand improves and stockpiles are drawn lower. LME warehouse stocks of primary aluminium have fallen 9.7% since the start of the year and despite some modest inflows through March and the start of May, stockpiles have hit their lowest levels since May 2009.

Brent futures consolidate sideways throughout much of May

CO1 Comdty Generic 1St CO Fut 2015 05 18 07 59 22

Aluminum prices expected to rally further as stockpiles draw lower

NLSAH Index LME Cls Stck Prim A 2015 05 18 07 40 01

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