Commodities Are Weaker in the Early Hours as the Dollar Rises
After starting the week on a weaker note, crude oil prices were still weak in early hours today. Signs of an increase in US production, higher oil inventory levels, and an increase in the oil rig count are the main factors weighing on crude oil prices. Also, lower demand from China, one of the biggest consumers, dented the sentiment. China’s oil demand grew at the slowest pace in three years in 2016.
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On the other hand, signs of a production cut by oil producers are limiting the losses. OPEC and non-OPEC producers agreed to cut their production by 1.8 MMbpd (million barrels per day) to support weak oil prices. According to recent reports, OPEC and Russia cut the oil production by 1.1 MMbpd so far. The market is looking forward to the crude oil inventory report by the American Petroleum Institute today.
At 7:00 AM EST on February 7, the West Texas Intermediate crude oil futures contract for March 2017 delivery was trading at $52.88 per barrel—a fall of ~0.25%. The Brent crude futures contract for March 2017 delivery fell ~0.18% to $55.65 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $40.06 after falling 1.5% on February 6.
Copper started the week with a positive tone by gaining on Monday. However, it pulled back in the early hours today. The stronger dollar in the early hours is weighing on copper prices. At 7:05 AM EST on February 7, the COMEX copper futures contract for March 2017 delivery was trading at $2.64 per pound—a fall of ~0.55%. The PowerShares DB Base Metals ETF (DBB) and the SPDR S&P Metals & Mining ETF (XME) rose 1.3% and 0.38%, respectively, on February 6. Gold (GLD) and silver (SLW) are slightly weaker in the early hours as the dollar moves higher. Gold is stable near three-month high price levels. The dollar rose amid political uncertainty in Europe. Platinum and palladium are weaker in the early hours.