Commodities Weekly: Oil dips from six-month high on inventory build

A robust US GDP print for the primary quarter gave a brief raise to threat urge for food prior to now week, although this has been tempered considerably by weaker PMI numbers out of China at present. Dovish expectations have been constructed into the US FOMC assembly beginning at present, and if these are usually not realized, then commodities may endure. Commodities are already buying and selling with a softer bias this week.

Power

CRUDE OIL costs slid to a three-week low final Friday following a shock construct in inventories which induced some profit-taking. US President Trump additionally famous that costs have been “too excessive” and known as on OPEC to extend manufacturing to counter the shortfall as soon as Iran sanction waivers expire. In a current report, the IMF calculated that Saudi Arabia wanted oil costs at $85 per barrel to steadiness its spending finances, that’s up from $73 within the September report.

UK’s Telegraph newspaper famous that greater oil costs may have a knock-on impact on airways, with unhedged aviation gas methods probably costing Europe’s greatest airways as a lot as one billion Euros within the January to March interval.

Speculative traders stay bullish on the commodity nevertheless, with web lengthy positions boosted to the best since October within the week to April 23, based on the most recent knowledge snapshot from CFTC. Traders have added to web lengthy positions for 9 out of the final 10 weeks.

West Texas Intermediate Day by day Chart

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NATURAL GAS costs superior final week for the primary time in three weeks because the commodity makes an attempt to construct a worth base from 2-1/2 yr lows. Hotter climate forecasts throughout the US for subsequent week are constructing a case for an uptick in demand, although costs look set to finish a fifth month-to-month decline this month.

Speculative traders remained unimpressed within the week to April 23, including to web quick positions for a 3rd straight week. Positioning is now at its most bearish because the week of September 18.

Treasured metals

GOLD managed the primary up-week in 5 weeks final week however remains to be going through the third consecutive month-to-month drop this month. Gold held by exchange-traded funds proceed to slip and at the moment are solely up web about one ton to this point this yr. Knowledge out of China confirmed that the nation remains to be including to its gold reserves, rising holdings by 11.2 tons in March. Within the shopping for spree over the previous 4 months, the nation’s central financial institution has added 43 tons of gold. Russia can be persevering with its diversification out of the US greenback in its reserves and acquired 18.7 tons of gold final month.

Web lengthy positioning by speculative traders is at its lowest because the week of November 27. Goldman Sachs can be not so inspired by gold’s worth motion and lately trimmed its gold forecasts for 2019 citing the low volatility atmosphere and receding recession fears. Its new three –month goal is 1,300, 6-month estimate is 1,325 and in a single yr it sees gold at 1,375 per ounce.

Gold is presently buying and selling inside a wedge formation and will wrestle to beat the 100-day transferring common at 1,292.

Gold Day by day Chart

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Bearish bets on SILVER by speculative traders are on the highest since December, based on CFTC knowledge, as the valuable metallic languishes close to four-month lows. The gold/silver (Mint) ratio stays elevated, holding comfortably above the 55-day transferring common at 84.729, because it has completed for 2 months.

PLATINUM has been consolidating this yr’s transfer greater, which has taken it to ranges not seen since Could final yr. The metallic is now at 897.38 after touching 914.37 earlier this month, the best since Could 31. Speculative positioning has remained static, with web lengthy positioning hovering close to 13-month highs.

PALLADIUM continues to wrestle to get previous the 55-day transferring common resistance at 1,466.04 after dropping under it on March 27, and suffered the most important one-day drop in a month yesterday. The metallic is now sitting under the 100-day transferring common at 1,396.71.

Regardless of the dearth of upward momentum, speculative accounts are increase web lengthy positions once more, with positioning turning web optimistic for the primary time in 9 weeks, the most recent knowledge from CFTC reveals.

Base metals

COPPER has been range-bound throughout the parameters of two.84-2.98 for the previous two months as merchants watch for the result of the protracted US-China commerce negotiations. Web lengthy positions held by speculative traders are at a four-week low, based on the most recent knowledge as at April 23 revealed by CFTC.

Agriculturals

WHEAT fell to the bottom since January 2018 in early buying and selling this morning amid provide pressures. India introduced on Friday that it might increase the import tax on international wheat to 40% from 30% as a way to defend home growers. In the meantime, Russia’s Agriculture Minister said that 20% of its winter wheat crops had been misplaced because of hostile climate within the Volga area in the midst of this month.

Speculative traders stay bearish, with web quick positions rising within the week to April 23, the most recent knowledge reveals.

SUGAR costs fell for a fourth straight day yesterday and look set for a second weekly loss. Costs could discover some technical help on the 200-day transferring common at zero.1190 and the 55-week transferring common at zero.1187.

Sugar Day by day Chart

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Presumably lending further help is information that China’s sugarcane rising areas are going through heavy rains and flooding this week, based on the native meteorological centre, which may affect crops.  Thailand’s Cane and Sugar Board introduced that sugar output for the November 20 to April 15 interval was 14.four million tons, which was derived from 129.7 million tons of sugarcane.

Speculative positioning in sugar turned web lengthy for the primary time because the week of February 26, the most recent CFTC knowledge reveals, as traders accomplished six straight weeks of web shopping for.

CORN is recovering from seven-month lows struck final week, however could also be going through a adverse day at present after a three-day rally. A moist climate outlook for US corn areas could possibly be lending help. Speculative traders nonetheless stay uber-bearish, with web quick positioning on the highest since July 1997.

Speculative traders are bearish on SOYBEANS, with web shorts on the highest since June 2017, as costs slide to six-month lows. April would be the third month-to-month drop in a row.

This text is for basic data functions solely. It isn’t funding recommendation or an answer to purchase or promote securities. Opinions are the authors; not essentially that of OANDA Company or any of its associates, subsidiaries, officers or administrators. Leveraged buying and selling is excessive threat and never appropriate for all. You could possibly lose your whole deposited funds.

A seasoned skilled with greater than 30 years’ expertise in international change, rates of interest and commodities, Andrew Robinson is a senior market analyst with OANDA, chargeable for offering well timed and related market commentary and stay market evaluation all through the Asia-Pacific area. Having beforehand labored in Europe, since transferring to Singapore he labored with a number of main establishments together with Bloomberg, Saxo Capital Markets and Informa International Markets, proving FX methods primarily based on a mixture of technical and elementary evaluation in addition to market move data. Andrew started his profession as an FX seller with NatWest and the Royal Financial institution of Scotland within the UK.

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