CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Commodity wrap - oil, gas, platinum, corn (09.02.2021)

14:20 9 February 2021

Oil:

  • Brent is trading above $ 60 a barrel. January 2020 highs are located around $ 70 a barrel
  • Huge amount of call options is located around $ 60 a barrel. Currently the number of call options in this area accounts for approximately 150,000 contracts, while a year ago it was only 100 000. The ratio of call options to put options is the highest since mid-2019
  • Despite the fact that the world is shifting towards renewable energy and electric transport, CAPEX in the oil and gas sector is highest since 2014. Saudi Arabia is increasing production capacity up to 13 mb / d, and the UAE up to 5 mb / d
  • Some analysts' expert that oil price will reach f $ 100 a barrel. On the other hand, one should remember about huge supply that is currently dormant, while demand is still limited
  • Despite the fact that OPEC + increased production in January, the total production of the group remains within the limits, mainly thanks to Saudi Arabia, Iran and Venezuela
  • OPEC + does not want to increase production in February or March. Nevertheless, the currently high prices may lead to a single large production increase after March or April (1.5-2.0 mb / d)

The number of call options around $ 60 per barrel is excessively high. Source: Bloomberg

Start investing today or test a free demo

Open account Try demo Download mobile app Download mobile app

Production increased significantly in January, but is now being further constrained by Saudi Arabia. Source: S&P Platts

Crude oil broke through a very important supply zone around $ 60 a barrel. As one can see, this is a key zone for investors from the options market. Therefore, there is a potential for a downward correction or acceleration of the upward move from this level. In the second scenario, the target is located around $ 70 per barrel and coincides with the long-term downward trendline. Source: xStation5

Natural gas:

  • The price of gas has risen again due to weather factors, both worldwide and especially in North America
  • There is speculation that prices will return to $ 3 for MMBTU
  • The volume and open interest show a rebound in the gas market, which wass not very common this year, as indicated by the seasonality
  • The seasonality indicates that price will be moving in sideways trend within the next 3 months, similar to a year ago
  • Gas inventories behave in line with the seasonality, however  we are entering a period during which inventories levels may fluctuate
  • LNG gas exports already surpass U.S. gas exports via pipelines, indicating that the fundamental factors may change in the future

Volume and open interest are both rising, which means an increase in investor interest. Source: CME

LNG gas exports surpassed gas exports via traditional transmission methods, which means changing long-term fundamental factors. Source: EIA

The price dropped to 3.00 MMBTU. Based on a similar price behavior as last year, the hard bottom should be located around USD 2.5 MMBTU. However, if the low temperatures persist, then this may affect the inventories level, which may lead to slightly higher prices. On the other hand, from May one should expect prices to stabilize at lower levels. Source: xStation5

Platinum:

  • According to UBS, this year we will see a very strong increase in investment demand for platinum
  • Since the end of last year, ETFs have clearly been buying up platinum, which of course led to a significant rebound in the price of this metal.
  • Currently, the price is testing the resistance around USD 1190 per ounce - a local peak from 2016. Should a break above occur, then price may be heading towards 2015 highs
  • Another resistance zone is located around $ 1,300 an ounce
  • The director of the World Platinum Investment Council indicates that the substitution of palladium with platinum in gasoline engine catalysts is already taking place. 
  • The lack of public information is the result of a very competitive market

ETFs were buying platinum heavily last year. Due to the fact that this metal is still relatively cheap, it may provide an opportunity for investors, especially in times of rising inflation. Source: Bloomberg

The price is testing around $ 1190 an ounce. Since the low point in March, the price has already increased over 100%. The same applies to the silver market. Still, these metals have a lot of room for growth compared to more expensive assets. Source: xStation5

Corn:

  • Corn is halfway from its historic peaks, testing a 50.0% retracement of the entire downward move that lasted from 2012 to 2020
  • Seasonality points to potential gains through March, while on the other hand, positioning remains at its all-time highs
  • Higher prices are the related to increased demand from China
  • Due to the high demand from China, the price target is located at 600 cents a bushel. However due to the drought in South Africa, there may be a shortage of corn on the market, which could push the price towards 700 cents a bushel

Imports in the current season may be several hundred percent higher than in the previous years, which will "drain" US corn inventories. Source: FAS, USDA

We may witness a similar situation to the one from 2007-2008 and 2010-2011. The fundamental situation seems to support the buyers, while the term structure shows a huge backwardation. Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back
Xtb logo

Join over 935 000 investors from around the world

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 2 March 2024
adobe_unique_id cc 1 March 2025
test_cookie cc 1 March 2024
SESSID cc 9 September 2022
__hssc cc 1 March 2024
__cf_bm cc 1 March 2024
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-22576382-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
AnalyticsSyncHistory cc 8 October 2022
af_id cc 31 March 2025
afUserId cc 1 March 2026
af_id cc 1 March 2026
AF_SYNC cc 8 March 2024
__hstc cc 28 August 2024
__hssrc

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
muc_ads cc 7 September 2024
lang
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 28 August 2024

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description
personalization_id cc 7 September 2024
UserMatchHistory cc 8 October 2022
bcookie cc 8 September 2023
lidc cc 9 September 2022
lang
bscookie cc 8 September 2023
li_gc cc 7 March 2023

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language