This Week in Commodity Stocks

With the world's attention focused on the seemingly endless rise in commodity prices, the frenzied barrage of related news, information, and commentary has surpassed the point where a hard-working Fool can be expected to follow it all. In an effort to ensure that Fools remain current with the commodity news that matters most, we offer this weekly series. Let's dive right in.

M&A heating up for summer
Brazilian iron ore giant Vale (NYSE: RIO  ) raised the temperature on the M&A gauge this week when it announced a share offering to raise $15 billion to pursue takeovers. Although several names have been tossed around as potential targets, see why Fool contributor David Lee Smith singled out Freeport-McMoRan (NYSE: FCX  ) as the natural choice.

In the energy space, Precision Drilling Trust (NYSE: PDS  ) flirted with a competitor by offering an unsolicited bid to Grey Wolf. Meanwhile, XTO Energy (NYSE: XTO  ) snatched up 1.2 trillion cubic feet of natural gas by acquiring privately held Hunt Petroleum for $4.2 billion.

Gas fire scorches major miners
After the smoke cleared from last week's devastating fire in western Australia, Apache (NYSE: APA  ) announced that it could be two months before partial flow is restored through a natural gas facility. Miners in the region were concerned even when the outage was expected to last just a few days. They drew down on-site diesel supplies and scrambled to keep operations moving. With news of the two-month repair time, BHP Billiton (NYSE: BHP  ) announced a coincidental smelter closure for unscheduled maintenance, and nickel prices rose 6% on the news.

Speculation debate becomes more speculative
As gasoline prices averaged more than $4 across the U.S., and oil traded throughout the $130s, the hunt for scapegoats continued in Washington. After last month's assault on OPEC, attention turned to the index funds holding long positions in futures for energy and agricultural products. The White House approved a task force to investigate the issue, and U.S. Sen. Joe Lieberman, I-Conn., vowed to ban large institutional investors from the commodities markets. Whatever a Fool's stance on the regulation or the impact of these funds on the futures markets, it seems the folks in Washington continue to ignore the key elements pushing up the price of oil, such as the weakened U.S. dollar, surging demand, and constraints to supply. Who knows, maybe they'll get it right next week.

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Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found in the CAPS community under the username TMFSinchiruna. He owns shares of Vale, Freeport-McMoRan, XTO Energy, and BHP Billiton. The Motley Fool has a disclosure policy.

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Related Tickers

10/25/2016 4:01 PM
APA $60.57 Down -1.01 -1.64%
Apache CAPS Rating: ***
BHP $35.71 Up +0.74 +2.12%
BHP Billiton CAPS Rating: ***
FCX $10.55 Up +0.37 +3.63%
Freeport-McMoRan C… CAPS Rating: ****
PDS $4.82 Up +0.04 +0.84%
Precision Drilling… CAPS Rating: ****
RIO $34.12 Up +1.00 +3.02%
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XTO.DL $41.81 Down +0.00 +0.00%
XTO Energy, Inc. CAPS Rating: *****