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The weaker US dollar has benefited most commodities in the last week, though some agricultural commodities have failed to gain much traction.
Energy
CRUDE OIL prices have been rising steadily this year as planned production cuts by OPEC members and their allies restrict supply. Saudi Arabia limited production to 10.2 million barrels in January versus a target of 10.3 million, and announced plans to restrict production by a further 400,000 barrels in March.
NATURAL GAS prices remain subdued despite severe frigid weather across the US Mid-west and Northeast prompting an increase in demand and drawdowns on gas storage over the past 13 weeks. The next storage data release from EIA on Thursday is expected to show a further drawdown of 157 billion cubic meters. Gas supply in the UK is also facing supply disruptions this week due to some unplanned outages.
Prices breached the 2018 lows last week, touching the lowest since December 22, 2017 last Friday. They are now at 2.652.
Precious metals
GOLD has benefited from a weaker US dollar during the past week, rising to a near-10 month high of 1,328 yesterday. Despite the latest uptick, speculative investors have been reducing longs for three straight weeks up to January 22, with net long positioning now at its lowest since the week of December 11, according to the latest delayed snapshot from CFTC.
SILVER is also being supported by the US dollar’s decline, with the precious metal rallying from three-week lows struck last week. The gold/silver (Mint) ratio has been retreating from Fibonacci resistance at 84.347 since late last week. The Fibonacci level represents the 61.8% retracement of the drop from December 24 to January 4.
Base metals
COPPER prices have rallied this week amid hopes for significant progress in the US-China trade talks which would help global growth and hence rekindle demand for the industrial metal. In addition, strong new loans data from China suggests economic stimulus measures may be filtering through in to the broader economy, which would again be supportive of copper. Talks last week in Beijing supposedly went “very well”, so much so that they will continue this week in Washington.