Commodities: Generally higher with a weaker USD supporting investor appetite - ANZ

Analysts at ANZ note that the commodities were generally higher in the last session, with a weaker USD helping support investor appetite but investors remained cautious ahead of Trump’s first policy speech.

Key Quotes

“Crude oil prices inched higher in the US session as the focus returned to the OPEC led production cut agreement.  The United Arab Emirates said it was adhering to the agreement, while Russia said it had lowered production in February by more than the 117kb/d it had cut in January. This comes on the back of a smaller than expected gain in US inventories. With the prospect of OPEC extending the current cuts even longer, we would expect to see prices continue to push higher from here.”

“Base metals were mixed, with markets with supply side issues continuing to find support from investors. The gains in copper were relatively small, as traders await more news on the current mine disruptions. BHP said it was back to talking with striking workers at the Escondida copper mine. Aluminium prices also edged higher, after data showed cancelled warrants (order to withdraw aluminium from warehouses) climbed for the 10th day in a row, suggesting demand is picking up around the globe.”

“Gold prices pushed above USD1260/oz during intraday trading as political uncertainty continues to drive safe haven buying. Investors continue to seek refuge in the precious metal heading into Trump’s speech to Congress later this week. However, prices could come under pressure if Trump outlines any further details on his economic stimulus plan.”

“Iron ore prices jumped higher again as sentiment in the Chinese steel market picked up. Steel traders remain hopeful that this weekend’s National People’s Congress meeting will both reveal further capacity closure measures, while reiterating some infrastructure spending programs. Prices were also supported by a unexpected fall in iron ore inventories held at the port. According to Antaike data, stocks fell 5mt to 110.7mt last week.”

“Agriculture markets were largely in the red, led by losses in grains. Wheat continued to suffer from investors liquidating long positions after the strong rise in prices since the start of the year.”