Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

No Respite For The Commodities Complex

www.investing.com/analysis/no-respite-for-the-commodities-complex-200630359
No Respite For The Commodities Complex
By ING Economic and Financial Analysis   |  Sep 27, 2022 08:06AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
Gold
+0.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-1.78%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XAU/USD
-0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CVX
-0.29%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AAL
-0.76%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ICE
+0.17%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

The move higher in the US Dollar has been unrelenting and this continues to weigh heavily on the commodities complex. Macro drivers remain firmly in the driving seat, while supply risks continue to be largely ignored across markets

Energy: Russian oil price cap hits a stumbling block

The oil market came under further pressure yesterday as the US Dollar continued to march higher. ICE Brent settled more than 2.4% lower on the day, leaving it to close below US$85/bbl. OPEC+ members have been oddly quiet in this latest sell-off. However, we are likely to hear a growing amount of noise in the lead-up to the OPEC+ meeting on 5 October. The group will likely be getting uneasy with the degree of weakness that we have seen in the market and so there is the very real possibility that we see OPEC+ announce supply cuts in order to support the market. Clearly though, if we are to see cuts, they will need to be quite a bit larger than the 100Mbbls/d agreed at the last meeting in order to have a meaningful impact on the market.

It appears that the EU will delay the planned Russian oil price cap due to disagreements between EU members. According to reports, both Cyprus and Hungary oppose the idea of a price cap, and in order to be adopted, all members need to agree. The European Commission had been wanting the price cap to be enforced at the same time as the EU ban on Russian seaborne crude oil, which comes into effect on 5 December. Clearly, given the latest delay, this may not happen now.

In the US, Hurricane Ian has led to the shut-in of some oil production in the US Gulf of Mexico. Both Chevron (NYSE:CVX) and BP (NYSE:BP) have evacuated and shut a couple of platforms each.

European natural gas has also been unable to avoid the weakness across the commodities complex. TTF fell by more than 6% yesterday and recorded its fourth consecutive day of settling lower. Meanwhile, the European Commission is still looking into the possibility of a price cap for natural gas. If the EU was to go down this route, it would not help solve the tightness in the gas market, as this move will likely only support gas demand. Spain introduced a price cap on gas used for power generation earlier this year, which unsurprisingly led to higher demand for gas.

Metals: Gold Enters Bear Market

A rallying US Dollar and surging treasury yields continue to put pressure on gold prices. Spot gold came off more than 1.3% yesterday, which saw it trading to its lowest levels in more than 2 years. Yesterday’s weakness also meant that the gold market entered a bear market, as it is now down more than 20% from its recent peak in March. Given the expectation that the Fed will continue to aggressively hike through this year, it is difficult to hold a constructive view on gold in the short term. We would need to see inflation coming off significantly before becoming more constructive towards the market. A meaningful fall in inflation could start to signal that the Fed will take a less aggressive approach in terms of hiking.

Anglo American (OTC:NGLOY) has announced the start of commercial operations at its Quellaveco copper mine in Peru with a copper production target of around 80-100kt this year at a c1 cash cost of around US$3,300/t. Previously the company was targeting output of around 100-150kt at a cash cost of around US$3,000/t. However operational constraints appear to have delayed the mine start and ramp-up. However, the miner continues to target around 320-370kt of copper production by 2023 and 2024 as the mine ramps up gradually. Meanwhile, the company has also reduced its copper production target in Chile to around 560-580kt for the current year compared to earlier estimates of around 560-600kt

Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Original Post

No Respite For The Commodities Complex
 

Related Articles

Michael Ashton
Oil Be Home for Christmas By Michael Ashton - Nov 24, 2022

As a general rule, don’t trade on pre-holiday thin-liquidity sessions. There can be amazing-seeming opportunities, but price can still get shoved in your face by whoever it...

No Respite For The Commodities Complex

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email