Energy ETPs attract $191 mln in June on Iraq supply fears

By Claire Milhench

LONDON, July 8 (Reuters) - Energy exchange-traded products

(ETPs) attracted almost $200 million in June as investors moved

into crude oil after civil war broke out in Iraq, the latest

monthly flows data from asset manager BlackRock (NYSE: BLK - news) showed.

Worries that Iraq's crude exports would be disrupted by

violence have proved largely unfounded to date, but the rapidity

with which Islamist militants seized territory in the north and

west last month alarmed the market, driving up futures prices.

The S&P GSCI Energy index was up 3.2 percent in June, with

Brent up 3.8 percent and unleaded gasoline up 3.6 percent.

"The bulk of the energy flows went into crude oil ETPs, and

most of that went into Brent-tracking products," said Nick

Brooks, head of research and investment strategy at ETF

Securities, an issuer of ETPs.

"The main reason for that was the deterioration of the

situation in Iraq which came as a surprise to markets."

ETPs, whose value is linked to moves in their underlying

assets, offer an easy route into commodities for investors and

allow asset allocators to make quick, tactical changes to their

portfolios.

With $191 million of inflows, energy futures ETPs were the

only commodity futures ETPs to record inflows in June. For the

year to date, they had net inflows of $33 million.

Energy equity ETPs also attracted strong flows of $1.4

billion in June, with $8.2 billion of inflows in the first half.

This was the strongest inflow for sector equity ETPs globally.

"The main drivers included the strength of energy commodity

prices this year - crude oil mostly - and investors' continued

hunt for yield," said Ursula Marchioni, head of ETP research

EMEA at BlackRock's iShares.

Energy bucked the trend as the other commodity ETP segments

experienced outflows or were flat on the month. Total (NYSE: TOT - news) commodity

ETP outflows amounted to $392 million in June, with $837 million

of outflows in the first half of the year.

GOLD ENDS MONTH FLAT

Inflows into U.S.-listed gold ETP products were offset by

outflows from European products. U.S.-listed gold ETPs had $317

million of inflows in June, whereas Europe-listed gold ETPs had

outflows of $325 million, BlackRock said.

Precious metals were the second best performing sector in

the S&P GSCI, with gold up 6.1 percent and silver up 12.5

percent in June as a result of geopolitical tensions and a

weakening dollar, S&P Dow Jones Indices said.

"A safe haven asset, the gold price rallied significantly in

June," said Marchioni. This was partly influenced by the Iraqi

and Ukrainian crises. "Investors may have followed the momentum

or endorsed the contrarian view and taken their profits."

She added that for some European investors, the ECB's

decision in early June to cut rates resulted in a more stable

euro/dollar rate.

"European investors who used gold to hedge against

short-term euro FX movements ahead of the ECB decision may have

taken some of their profits with the gold price in euros

recovering in late June," she said.

Agriculture ETPs lost $126 million in June and are down $404

million on the year - the biggest sector outflow after gold.

The June redemptions were fuelled by a forecast for a bumper

corn harvest in the United States, which will leave inventories

at very healthy levels over the coming winter, Ole Hansen, head

of commodity strategy at Saxo Bank, said.

Industrial metals ETPs attracted the most inflows in the

first half at $264 million, with only modest outflows in June.

Brooks said that diversified industrial metals ETPs were

benefiting from a rebound in Chinese demand growth, although

copper ETPs have suffered due to an investigation into

irregularities at Qingdao's bonded warehouses in China.

At the end of June, BlackRock's data covered 911 commodity

ETPs worldwide, worth some $126 billion.

Global commodities at end-June (US$ mln)

SECTOR JUNE FLOWS YTD FLOWS JUNE ASSETS

Broad/Diversified -140 -64 18,130

Agriculture -126 -404 4,843

Energy 191 33 7,412

Industrial Metals -6 264 2,143

Gold 0 -829 72,759

Silver -247 187 12,208

Precious Metals Total -311 -665 93,817

TOTAL COMMODITIES -392 -837 126,346

Source: BlackRock

(Reporting by Claire Milhench, editing by David Evans)