Oil hikes after OPEC+ deal, gold and copper rise

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Highlights:

  • ENERGY:
    Crude oil prices recovered from yesterday’s drop trading at around $69.
    July natural gas delivery contracts slid by 0.39% on the sign of increasing production.
  • METALS:
    Gold advanced by 0.26% trading at $1,817.
    Silver slipped by 2.5% on the Comex.
    Copper advanced by 0.5% at $9,265.50 a tonne after sinking by 2.2% on Monday.
  • AGRICULTURAL:
    Corn futures for September traded flat at $5.56 a bu, August soybeans closed at $14.28 a bu.

Crude oil prices rise on spot demand

Crude oil increased to around $69 a barrel after Monday’s 7% drop. 

Market participants widened their positions on a firm spot demand. 

Analysts stated the raising of bets by participants held crude oil prices higher in the futures trade.

OPEC and its allies agree to extend oil production

After a few weeks in which the oil price has reached highs not seen in three years and tensions within OPEC and its allies, the long-awaited agreement has arrived.

The UAE has given in to increase production from August to balance supply and demand. The markets have not taken the news positively and have pushed the prices of the barrel down.

OPEC and its allies decided to end the policy of production cuts that supported the prices. Between August and December, an increase of 400,000 barrels per day is expected each month by Iraq, Kuwait, Russia, Saudi Arabia and the UAE.

According to the group, the decision is based on clear signs of oil demand improvement. OPEC expects global demand to exceed 100 million barrels a day for the first time next year.

After 2020, which has been a nightmare for oil-producing countries, Brent crude has advanced 43%. Compared to summer 2020, it has gained a substantial 60% rise. 

Natural gas is cheaper today

Natural gas prices posted moderate losses on Tuesday. The market participants increased their short bets, as seen by the open interest. 

On the MCX, July natural gas delivery contracts slid by 0.39%, or Rs 1.10, to Rs 281.20 per mmBtu. Gas delivery for August dropped by 0.39%, or Rs 1.10, to Rs 279.70 per mmBtu.

MCX iCOMDEX Natural Gas Index yielded 0.36% or 12.22 points, to 3,419.52.

The commodity prices have been trading with a bullish trend for the past few weeks, supported by hot weather on the West Coast and midWest of the US. The gas price had soared 2.9% yesterday on the NYMEX. 

However, the sign of increasing production has weighed on the commodity value. On the other hand, there have been concerns that growing prices may cause power generations to turn to coal.

Falling yields are bullish for gold

coppershu

coppershu

Gold prices advanced by 0.26% intraday and were trading at $1,817. 

Gold futures are trading higher on Tuesday as the US dollar has fallen slightly from three-month highs, making dollar-denominated assets a more attractive investment. In addition, falling yields offered by Treasury bonds are also providing support.

Besides, the rise in the Delta version of the coronavirus boosts the precious metal. 

Bullish gold traders believe that uncertainty about possible damage to the global economy from rising infections could encourage several major central banks to delay the start of stimulus cuts. Monetary stimulus and low interest rates have supported gold prices since their rebound began. 

Silver dipped due to slowdown in China’s manufacturing activity 

Silver slipped by 2.5% yesterday on the Comex due to the dollar’s strength. The white metal prices were reduced on Tuesday, weighed down by the health concerns and the slowdown in China’s manufacturing activity. 

Silver holdings in the iShares ETF plunged by 224.9 tonnes to 17,451.62 tonnes. The fund NAV is trading at a reduction of 0.78%.

Copper rebounded from yesterday’s losses

Copper prices recovered from the losses posted in the previous session. Hike in coronavirus infections caused a sell-off of assets that benefit from economic growth.

Copper on the London Metal Exchange advanced by 0.5% at $9,265.50 a tonne after sinking by 2.2% on Monday.

In May, the red metal reached its historical record of $10,747.50. the red metal reached 

According to an independent analyst Robin Bhar, the situation is different for copper than a few months ago. Fundamentals are weaker, demand has dropped, China has slowed its manufacturing activity, and supply is not tight.

Corn futures advanced while soybean posted a slight drop

Corn futures increased slightly. September corn futures traded flat at $5.56 a bu. Meanwhile, later contracts through September 2022 were higher. 

According to the latest USDA report, corn and soybean fields have reacted well to recent rains. Corn conditions were rated at 68%, which means good to excellent. Meanwhile, soybean conditions were rated at 66%. 

Soybeans futures experienced a slight decrease due to rains that improved prospects for the crop. August soybeans slipped by 26¾¢ to close at $14.28 a bu. August soybean meal dropped by $3.40, settling at $359.80 a ton. Meanwhile, August soybean oil lost 1.62¢ to close at 66.69¢ a lb.

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