Commodities Are Mixed amid the Stable Dollar
After consolidating for two days, crude oil prices are stable in the early hours on Tuesday. The market is concerned about the increase in US shale oil output, which is offsetting the positive sentiment from producers’ output cuts.
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In its “Oil 2017” report, the IEA (International Energy Agency) reported that according to its forecasts, US shale oil output will grow at 1.4 MMbpd (million barrels per day) by 2022. Shale oil production will grow as oil prices rise. According to the report, higher oil production is around $60 per barrel. The pace of output growth reaches 3 MMbpd when crude oil prices are above $80 per barrel. In its five-year report, the IEA reported that oil demand will cross 100 MMbpd in 2019. Oil demand could reach 104 MMbpd in 2022 with increased demand from emerging economies.
At 5:30 AM EST on March 7, the West Texas Intermediate crude oil futures contract for March 2017 delivery was trading at $53.34 per barrel—a gain of ~0.26%. The Brent crude futures contract for March 2017 delivery rose ~0.20% to $56.12 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $38.10 after rising 0.63% on March 6.
After starting the week on a lighter note, copper prices weakened in the early hours on Tuesday. Copper prices reached the lowest levels in a month. The market sentiment is weaker due to an increase in the London Metal Exchange inventory levels. According to Li Baomin, the chairman of Jiangxi Copper—China’s second-largest copper refinery—the increase in US interest rates would impact copper prices. It would increase the cost of infrastructure project financing. However, the global copper demand is expected to rise in 2017.
At 5:40 AM EST on March 7, the COMEX copper futures contract for May 2017 delivery was trading at $2.64 per pound—a fall of ~0.53%. The PowerShares DB Base Metals ETF (DBB) fell 1.5%, while the SPDR S&P Metals & Mining ETF (XME) fell 1.9% on March 6. Gold (GLD) and silver (SLW) are weaker in the early hours due to the stronger dollar. The stable dollar and higher chances of an interest rate hike weighed on gold and silver. Platinum and palladium are weaker in the early hours.