Commodity wrap - Oil, Nat Gas, Gold, Copper

Oil:

• A new energy minister in Saudi Arabia might be a positive signal for oil prices
• Iran supplies crude oil to Syria, Iran has confirmed that it exported its crude but did not specify who was a buyer
• Global crude oil demand growth for 2020 was cut to 1.2 mln barrels a day from 1.4 mln barrels a day (the higher number assumes no trade war)
• OPEC may consider setting new output levels at a technical meeting on Thursday
• OPEC+ countries may cut their crude output by 1.2 mln barrels a day by the year-end, due to US sanctions crude output in Iran and Venezuela has been notably lower
• OPEC may consider two scenarios: 1) cut output even more but risking to lose its market share 2) sitting on their hands and counting on a trade deal between the US and China

The current fundamental backdrop supports a supply side, hence downward pressure on prices could stay in place. Source: Bloomberg

Nat gas:

• Nat gas prices keep rising, in line with seasonality
• September futures expired with a large number of shorts in the market, hence a lot of investors did not decide to roll over 
• Rumours suggest the current price bounce has nothing to do with fundamental factors
• Stocks keep moving in line with seasonality, hence they should continue rising until early November
• Nat gas prices could be supported by expectations regarding low temperature
• November futures trade below 2.6 MMBTU, December futures trade at 2.71 MMBTU and January futures trade above 2.8 MMBTU

The 12-month rolling average suggests that a period of inventory rises could have already ended. Source: Bloomberg

Nat gas prices must keep above 2.8 MMBTU is a speculative rebound is to take place. Source: xStation5

Gold:

• An improvement in market sentiment has caused gold prices to retrace some of their gains
• Gold prices fall along with the dollar and rise as the buck does so, it shows a change in investors’ perception 
• A notable increase in “paper gold” in India, Indian ETFs saw a 20 mln USD inflow, the best since December 2012
• At the end of August Indian ETFs kept as many as 58 billion INR in gold, in August alone we had a 1.5 billion INR pick-up

Demand from ETFs have been propping up gold prices in recent weeks, or the other way around as causality analysis shows a bilateral relationship. Source: Bloomberg

A notable rise of “paper gold” in Indian ETFs. Source: Bloomberg

Gold price keep moving back from their peak along with better market sentiment. Source: xStation5

Copper:

• Copper prices rebound on the back of trade optimism
• Foreign trade data from China does not offer too many reasons to cheer though (a notable fall in exports suggesting Beijing did not front-load exports before a new round of Us tariffs)
• MS signals a revival in Chinese demand for copper mainly used in electronics
• There has been a decline in demand for copper in London
• Copper remains heavily oversold by speculators

US bond yields do not support higher copper prices. Source: Bloomberg

Copper is still heavily oversold, hence in theory there could be a bounce in prices in the foreseeable future. Source: Bloomberg