Mixed Commodities and Weaker Crude Oil in the Early Hours

Val Kensington - Author

Jul. 17 2017, Published 10:11 a.m. ET

Crude oil

Crude oil regained strength last week amid expectations of improved global demand for oil in 2H17. In the early hours on Monday, crude oil is trading with mixed sentiment and below the opening price.

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Market sentiment

Oversupply conditions in the market moved crude oil prices until the second week of July. The market sentiment improved after the IEA’s (International Energy Agency) monthly report. The IEA reported that crude oil’s demand growth has been accelerating. The report caused demand expectations to offset the market’s supply concerns. Increased crude oil imports from China, one of the largest crude oil consumers, also improved the demand outlook. According to China’s imports report, its crude oil imports rose 13.8% in 1H17.

The drawdown in inventory levels also supported crude oil prices last week. At 7:25 AM EST, the West Texas Intermediate crude oil futures contracts for August 2017 delivery were trading at $46.41 per barrel—a fall of ~0.32%. Brent crude futures contracts for September 2017 delivery fell ~0.08% and were trading at $48.87 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $31.91 after rising 0.85% on July 14.

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After regaining strength last week, copper opened this week on a stronger note. Copper opened higher on Monday and traded with strength in the early hours. China’s stronger-than-expected GDP, fixed-asset investment, and industrial production data improved the copper market’s sentiment. Since China is the largest copper consumer, its 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 0.16% on July 14. 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 last week. Weakness in the dollar is supporting gold prices. The weak dollar supports the prices of dollar-denominated commodities. Platinum and palladium are strong in the early hours.


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