Commodities: Broadly positive across the board - ANZ

Research Team at ANZ notes that the commodities were broadly positive across the board in the previous session as the impact of a more hawkish Fed lingered across the market.

Key Quotes

Crude oil prices inched higher as another strong increase in drilling activity in the US was negated by signals that OPEC may be willing to extend production cuts. Baker Hughes data showed that the number of oil rigs operating in the US rose 14 to 631 last week, the highest level since September last year. Saudi Arabian Energy Minister Khalid Al-Falih said they are ready to extend the current level of cuts if supplies stay above the five year average. Russian Energy Minister Alexander Novak said OPEC and its partners should decide by May whether to continue curbs on output. OPEC also reported that producers who signed up to the production agreement had implemented 94% of the pledged 1.8mb/d in output cuts.”

Base metals were higher as the weaker USD helped improve investor sentiment. Zinc prices led the gains after LME stockpiles recorded another strong drawdown. They are now down 12% since the start of the year, and are touching 8-year lows. Copper threatened to push back above USD6000/t as supply disruptions showed no signs of easing. Escondida increased its offer to striking workers in Chile. In Indonesia, Freeport started letting staff go as the impact of the halt to exports lingered.”

Iron ore spot prices rose further again as optimism on the outlook continued to improve following the recent release of better than expected economic data in China. There are also signs that the level of price gains is worrying authorities in China. The NDRC released a statement on Friday saying the recent increases in coal and steel prices are temporary and short term.”

Gold pushed higher as the relief rally post the Fed meeting continued. With concerns of a more hawkish Fed now easing, the outlook for gold looks a little bit more positive.”

Agriculture markets were mixed, with moves relatively muted. A lack of concern over weather has kept the pressure on corn and soybean markets. However, a dry outlook in the US Plains did see wheat prices edge higher.”