Commodities Update
Track the performance of popular commodities such as oil and gold with our detailed Thursday-morning report. Research analyst Anthony Grech offers a weekly round up of the latest commodity news in the UK.
May Copper (Comex) Chart (11/03/10 11:00)
| Daily % Chg | -0.83% | 3 months | 3.68% | |
| 1 week | -1.00% | 6 months | 17.38% | |
| 1 month | 14.21% | 1 year | 111.51% |
Details
| Prev close | 335.50 | 52 week high | 354.40 | |
| Last trade | 332.70 | 52 week low | 157.90 | |
| High | 336.00 | Low | 332.70 |
Bloomberg Median Forecasts
| Q1 2010 | 325.00 | Q3 2010 | 304.00 | ||||
| Q2 2010 | 313.00. | Q4 2010 | 308.00 |
Commentary
May copper futures have fallen 1% on the week. On Wednesday, copper benefitted from an exceptionally robust trade report from China, which showed a 46% year-on-year surge in exports in February and a 10% monthly rise in copper imports, implying that demand for the commodity continues to remain robust. The bigger-than-expected surge in exports, although positive for growth, is also inflationary. As a matter of fact, data released on Thursday morning indicated that China’s consumer prices rose 2.7% from a year earlier. This has encouraged investors to speculate that China will tighten monetary policy, a bearish sign for the commodity, as tightening would slow construction activity and dampen demand for copper. ‘The CPI number fueled speculation for interest rate hikes, possibly in the second quarter,” said Yang Su, an analyst at Jiangsu Suwu Futures today. ‘That’s going to damp metals demand, especially from speculators.’ [1] Anthony Grech, London
Forward Month Nymex Chart (11/03/10 11:00)
| Daily % Chg | -0.30% | 3 months | 10.70% | |
| 1 week | 2.03% | 6 months | 20.26% | |
| 1 month | 13.84% | 1 year | 92.56% |
Details
| Prev close | 82.09 | 52 week high | 83.95 | |
| Last trade | 81.84 | 52 week low | 39.40 | |
| High | 81.97 | Low | 81.50 |
Bloomberg Median Forecasts
| Q1 2010 | 75.00 | Q3 2010 | 80.00 | |
| Q2 2010 | 79.00 | Q4 2010 | 84.00 | |
Commentary
April crude oil futures jumped to $83.03 a barrel on Wednesday evening, after the US Energy Department announced that crude oil stockpiles grew less than anticipated. The report showed inventories rising by 1.43 million barrels to 343 million in the week to 5 March, substantially less than the 2.1 million build-up shown in a survey by Platts, the energy information division of McGraw-Hill. The report follows a positive note from the Organisation of the Petroleum Exporting Countries (OPEC), which on Wednesday raised its global oil demand projections, saying it expects worldwide requirements for crude oil to grow by 900,000 barrels per day to 85.24 million barrels per day in 2010. This is 100,000 barrels per day higher than its February projections. OPEC's projections are more conservative on global oil demand growth than those of the US Energy Department, which on Tuesday forecast global oil demand to rise by 1.5 million barrels per day - 300,000 barrels per day more than its February projections. On Thursday crude oil retreated back to $82 a barrel, however, on speculation that China may end its stimulus programmes to rein in inflationary pressures. Anthony Grech, London
Spot Gold Chart (11/03/10 11:00)
| Daily % Chg | 0.00% | 3 months | -0.63% | |
| 1 week | -2.10% | 6 months | 11.22% | |
| 1 month | 2.81% | 1 year | 23.41% |
Details
| Prev close | 1108.41 | 52 week high | 1226.56 | |
| Last trade | 1108.42 | 52 week low | 864.97 | |
| High | 1111.75 | Low | 1105.60 |
Bloomberg Median Forecasts
| Q1 2010 | 1113.00 | Q3 2010 | 1160.50 | |
| Q2 2010 | 1144.00 | Q4 2010 | 1195.00 | |
Commentary
Spot gold has declined 2% over the last week, with much of the metal’s weakness due to remarks from the Chinese foreign-exchange regulator Yi Gang, who said that bullion is ‘unlikely’ to be China’s primary investment for diversifying its $2.4 trillion of foreign-exchange reserves. While the price had made ‘handsome gains’ in recent years, there were ‘big ups and downs’ over the past 30 years, Yi Gang told Bloomberg News on Tuesday. The precious metal was also hit by fresh Chinese monetary tightening speculation on Thursday. Also weighing on the precious metal was a drop in gold holdings from the SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund. On Thursday SPDR said its holdings of gold stood at 1,115.511 tonnes as of 10 March, down 0.609 tonnes from the previous business day. ‘We have seen investors withdraw holdings in the SPDR ETF, which has stalled the upward trend seen since the end of February,’ said David Barclay of Standard Chartered. ‘The stronger-than-expected CPI numbers out of China this morning raise the prospect of a 27 [basis point] rate hike by end-Q1, which would move policy further away from a super-loose stance to a more accommodative one. This could weigh on commodities markets in the near term, which would be bearish for gold.’ [2] Anthony Grech, London
Notes: Source: [1] Bloomberg News (11 March 2010) [2] Reuters News (11 March 2010). Chart data sourced from Bloomberg. Bloomberg Median Forecasts are produced by Bloomberg by taking the median level from rates forecast by a number of contributors. These contributors consist of leading banks and security firms.
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