Quantcast
Other Stories

The energy sector was lower as the continued rise in what were already record-level US crude inventories had WTI crude oil futures on the ropes for a second week.

04 May 2014

LONDON (Commodity Online): The commodities complex suffered the first loss in six week as China manufacturing expanded at a lesser pace than expected and US inventories reached a new record high to pull down crude oil prices.

Ole S Hansen, Head of Commodity Strategy at Saxo Bank, pointed out that improved soil conditions in US have enhanced the prospects for the planting of the key crops. The DJ-UBS commodity index fell by 1.1% wutg all sectors except livestock and feeder cattle futures reaching a record high.

The energy sector was lower as the continued rise in what were already record-level US crude inventories had WTI crude oil futures on the ropes for a second week. It dropped below USD 100/barrel for the first time in three weeks while Gasoline, which rallied strongly in early April, dropped to a four-week low as the 2½ month long decline in inventories was halted. Brent crude oils' premium over WTI rose to USD 8.8/barrel as tightness in the spot month supported the global benchmark despite the expected resumption of Libyan exports over the coming weeks. The number of bullish bets held by hedge funds on both crude oils is close to a record and the failure to break higher during the recent period of geopolitical uncertainty has left both futures markets exposed to long liquidation.

Industrial metals was the worst performing sector following news that China's manufacturing sector expanded less than expected and the US Federal Reserve continued to withdraw liquidity. Hardest hit was aluminium while HG copper returned to its recent area of support around 300 cents/lb. Nickel, which has been the star performing metal of 2014, saw its first weekly loss in five as some of the recent attention on reduced supply due to the Indonesian export ban and the potential for Russian sanctions shifted to a potential outlook for slowing demand, especially from China. Overall, the price was ripe for a correction after becoming overbought, but for now, the physiological level at 18,000 USD/tons continues to attract support.

Precious metals were driven lower by silver which continues to struggle to hold its relative value against gold despite trading just above what looks like an interesting area of support. The lack of renewed geopolitical support, continued tapering and the strongest month for US job creation since January 2012 sent gold down into the lower half of its current range between 1270 and 1310 USD/oz. Silver traded back below 19 USD/oz and reached the cheapest level relative to gold since August 2010. Healthy demand and worries about supply continue to leave both platinum and palladium relative well supported, not least the latter with its value relative to platinum currently at the highest in 12 years.


YOUR RESPONSE
Click on the image to reload it
Click to reload image
COMMENTS (0)

@2013 COMMODITYONLINE ALL RIGHTS RESERVED