Commodities: Mixed performance

Commodities were mixed in the last session with metals recovering from investors selling earlier in the past week, while energy fell as inventories continued to rise notes analyst at ANZ.

Key Quotes

“Crude oil prices eased back from recent highs after another large increase in inventories in the US. EIA data showed stocks rose 564,000 barrels to 518.7 million last week. However, it was the lowest increase over the past couple of months. This was most likely to result of the drop in oil imports. If this trend of lower imports and smaller gains in inventories persists over the coming weeks, it would suggest that the OPEC led production cuts are starting to have an impact.”

“Base metals were higher across the board as supply side issues returned to the headlines. News emerged that Escondida workers have established a USD1million contingency fund to help striking workers at the world’s largest copper mine. They estimate that strike action can now last at least two months. Aluminium was also higher, after LME data showed that orders to remove metal from warehouse rose 5.9% to 857kt on Friday. This is the highest level since October 2016.”

“Gold prices remained above USD1250/oz as safe haven buying continued to support the precious metal. With the market getting impatient with Trump’s proposed stimulus spending program, the rising political uncertainty around the globe is getting the bulk of the market’s attention. With Trump scheduled to make his first speech to Congress later this week, prices are expected to remain range bound.”

“Iron ore prices fell as the list of voices suggesting prices are too high continued to increase. The Reserve Bank of Australia was the latest to express its concern over the rise in prices, saying it expects prices to weaken again. This follows on from comments from BHP and China Iron & Steel Association that they will also fall soon.”

“Agriculture markets were weaker as fund selling emerged in grains and softs. A rather benign weather forecast in Brazil gave investors reason to sell. The relatively dry outlook should continue to favour soybean harvesting and corn planting.”

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