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Pre-Market Report: Mixed Global Markets and Higher Commodities

PART:
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Part 5
Pre-Market Report: Mixed Global Markets and Higher Commodities PART 5 OF 5

Commodities Are Strong on July 14, Supported by the Weak Dollar

Crude oil

Despite lingering oversupply concerns, crude oil gained for four consecutive trading days. In the early hours on Friday, crude oil is stronger and rising.

Commodities Are Strong on July 14, Supported by the Weak Dollar

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Market sentiment

Expectations of increased crude oil demand in 2H17 are offsetting oversupply concerns and pushing prices higher on Friday. According to the IEA (International Energy Agency), not all of OPEC’s producers are in compliance with the supply cut agreement. On the other hand, according to the IEA’s monthly report, crude oil’s demand growth is accelerating. According to China’s imports report, China’s crude oil imports rose 13.8% in 1H17. Reports on increased output in Nigeria and Libya weighed on crude oil prices. Nigeria and Libya are exempt from OPEC’s supply cut agreement. In order to support crude oil’s weaker price, Nigeria agreed to limit its oil production after the output reaches the target of 1.8 million barrels per day.

At 7:20 AM EST, West Texas Intermediate crude oil futures contracts for August 2017 delivery were trading at $46.48 per barrel—a rise of ~0.87%. Brent crude futures contracts for September 2017 delivery rose ~0.93% and were trading at $48.87 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $31.64 after rising 0.76% on July 13. The market is looking forward to Baker Hughes’s US oil rig count report. The report will be released at 1:00 PM EST today.

Metals

After pulling back on Thursday, copper prices are stable in the early hours on Friday. Copper opened higher on Friday amid increased expectations of China’s upbeat copper demand. China’s increased fiscal spending and upbeat trade report improved the economy’s 2H17 outlook. Since China is the largest copper consumer, China’s economic outlook will be impacted by copper’s demand and price trends.

The PowerShares DB Base Metals ETF (DBB) rose 0.18%, while the SPDR S&P Metals & Mining ETF (XME) rose 1.11% on July 13. Gold (GLD) and silver (SLW) are strong in the early hours. Gold prices rose after Fed Chair Janet Yellen’s dovish tone in her testimony on Wednesday. On Friday, the weaker dollar is supporting commodities. Platinum and palladium are strong in the early hours.

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