Gold:
- Gold returned above $ 2,000 an ounce due to the weak dollar
- Still a clear divergence with yields in the short term, but the direction of changes with gold is the same, which no longer poses a threat
- The behavior of the dollar will be of key importance, there are good chances than the EURUSD pair will increase to 1.20
- ETFs sold gold only to a small extent. Positioning looks more interesting, there are more sellers, while buyers are rather in a moderate retreat
ETFs did not sell gold despite falling prices. Source: Bloomberg
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Yields returned to declines (bond prices are rising). The dollar weakness is a key indicator for gold at this point. Source: xStation5
Oil:
- Prices on the spot market in Asia have decreased significantly, which is related to a significant increase in supplies from OPEC countries
- Volatility on the WTI and Brent crude oil markets has been the lowest since January
- In their latest reports, OPEC and IEA are lowering their forecasts for global demand by 0.1 million barrels per day and 0.14 million barrels per day. Institutions believe that demand this year will fall by 9.1 million barrels per day and 8.1 million barrels per day, respectively, compared to the previous year.
- The latest data from July regarding the number of kilometers traveled by planes shows that it is still 2/3 lower than before the pandemic
- High implementation of the production cut agreement by OPEC in July (94%) and by non-OPEC countries (99%)
The price of oil is still consolidating. At levels around $ 45-50 a barrel, there is a risk that supply will return. The current OPEC + strategy may be to keep prices relatively low for some time to come. Source: xStation5
Natural gas:
- Subsequent changes in weather forecasts, which indicate heat waves, cause price increases
- Seasonality indicates a further increase, on the other hand, positioning is already very close to the overbought level
- Gas inventories remain above the 5-year highs for the period
- Increased demand related to the increased operation of air conditioners does not compensate for losses resulting from limited industrial activity and still low LNG exports
- In our opinion, there should be a significant correction before the next seasonal increase, which should start at the end of October
It may seem that natural gas is overbought, although the seasonality indicates that we should observe increases until the end of the year. Source: xStation5
US gas inventories are above the 5-year average. Meanwhile, changes in gas inventories do not suggest that there is anything extraordinary going on when it comes to supply or demand. Source: Bloomberg
Coffee:
- Significant divergence with USDBRL, both in the short and medium term
- The recent improvement in the fundamental situation is leading to the emergence of demand on the coffee market
- Commerzbank warns that coffee market is overbought, but at the same time points to a recent very strong decline in inventories
- In July, exports from Brazil amounted to over 3 million bags. This is a decrease of approx. 10% compared to the same period a year earlier, but at the same time the 2nd best July in history in terms of exports. In terms of value, exporters obtained almost 23% more money in terms of BRL than the year before. Still cheap BRL could lead to further sell-off of coffee inventories.
Coffee inventories levels are approaching the 2017 lows. Source: Bloomberg
Substantial divergence between coffee and BRL. Weak BRL can lead to a sell-off of coffee inventories. On the other hand, demand is relatively high, which is expected to lead to a deficit in the current season. It is worth noting, however, that net positioning is in the overbought zone. Source: xStation5
