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Pre-Market Report: Mixed Global Markets and Weak Commodities

PART:
1 2 3 4
Part 4
Pre-Market Report: Mixed Global Markets and Weak Commodities PART 4 OF 4

Commodities Are Weaker amid the Stronger Dollar

Crude oil

Crude oil traded weaker for the past four trading days. In the early hours on Thursday, prices fell close to two-week low price levels. The market sentiment is mixed amid producers’ compliance with the output cut and rising inventory levels.

Commodities Are Weaker amid the Stronger Dollar

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According to data released by the U.S. Energy Information Administration on Wednesday, crude oil inventory levels rose by 1.50 MMbbls (million barrels) in the week ending on February 24. Total inventory levels reached 520.2 million—a fresh all-time high. It’s the eighth consecutive week that crude oil inventory levels rose and offset crude oil producers’ output cut. OPEC members decreased the oil output for the second consecutive month, according to the output cut agreement. A recent survey by Reuters stated that output cut compliance is 94%.

At 6:05 AM EST on March 2, the West Texas Intermediate crude oil futures contract for March 2017 delivery was trading at $53.35 per barrel—a fall of ~0.89%. The Brent crude futures contract for March 2017 delivery rose ~0.85% to $55.88 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $38.89 after rising 2.7% on March 1.

Metals

After closing at one-week high price levels on Wednesday, copper prices pulled back in the early hours on March 2. Copper prices moved higher due to the expectation of stronger demand from China amid stronger factory data. However, the stronger dollar is weighing on copper prices in the early hours. At 6:10 AM EST on March 2, the COMEX copper futures contract for March 2017 delivery was trading at $2.73 per pound—a fall of ~0.29%. The PowerShares DB Base Metals ETF (DBB) rose 1.2%, while the SPDR S&P Metals & Mining ETF (XME) rose 3.0% on March 1. Gold (GLD) and silver (SLW) are weaker in the early hours due to the stronger dollar. The firmer dollar weighs on dollar-denominated commodities such as copper, gold, and crude oil. Platinum and palladium are weaker in the early hours.

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