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Commodities Are Stable Early on February 1, US Dollar Struggles

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Crude oil rose

After posting moderate gains on Tuesday, crude oil prices regained strength in the early hours. Even though the build in crude oil inventories is weighing on oil prices, signals of output cuts are supporting the prices.

According to data released by the American Petroleum Institute, crude oil inventories rose by 2.9 MMbbls (million barrels) in the week ending on January 27. It’s higher than the market’s expectation of an increase by 2.8 MMbbls. According to data released in the early hours, Russia cut its oil output by 100,000 barrels per day in January. It shows that Russia is in compliance with the supply cut agreement. At 6:30 AM EST on February 1, the West Texas Intermediate crude oil futures contract for March 2017 delivery was trading at $53.06 per barrel—a gain of ~0.49%. The Brent crude futures contract for March 2017 delivery rose ~0.54% to $55.85 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $40.80 after falling 0.2% on January 31.

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Precious metals are stable, copper pulls back

Copper rose to two-month high price levels on Tuesday amid weakness in the dollar and Chile’s union vote. However, copper prices pulled back in the early hours due to profit-booking. Doubts about strong demand from China amid global political conditions—such as Trump’s comments on China’s currency devaluation—dented the sentiment.

At 6:35 AM EST on February 1, the COMEX copper futures contract for March 2017 delivery was trading at $2.71 per pound—a fall of ~0.64%. The PowerShares DB Base Metals ETF (DBB) and the SPDR S&P Metals & Mining ETF (XME) rose 1.9% and 0.36%, respectively, on January 31. Gold (GLD) and silver (SLW) are stable in the early hours as the dollar struggles to regain strength. The weaker dollar supports dollar-denominated commodities. Platinum and palladium are stable in the early hours.

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