Commodity wrap - OIL, NATGAS, GOLD, COCOA (02.07.2024)

10:34 AM 2 July 2024

Oil

  • Rising geopolitical tensions (Middle East, France, US) and the approaching hurricane season in the US are pushing oil prices sharply higher
  • However, there is no sign of increased demand in the US - inventories have risen slightly, and despite the slight rebound, the crack-spread remains low
  • Comparative inventories do not justify strong increases in oil at the moment, although, of course, a very busy holiday season during which there will be significant declines in oil stocks cannot be ruled out
  • The spreads of the upcoming WTI and Brent oil contracts potentially suggest overvaluation. Of course, further increases cannot be ruled out if there is an escalation of the situation in the Middle East
  • Long positions on Brent Crude rebound, although the number of long positions is still far from the levels of April and May, when the price tested the vicinity of $90 per barrel

Oil inventories are rising, although seasonality suggests they should already be falling. The key period of decline is July-August. Source: Bloomberg Finance LP, XTB

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

Inventories are already above last year's levels. Stocks are also above the 5-year moving average. Source: Bloomberg Finance LP, XTB

Speculative positions on Brent crude oil are rebounding, reminiscent of the situation at the end of last year. However, the number of longs is still relatively low, looking at April/May levels. Source: Bloomnerg Finance LP, XTB

Contract spreads suggest possible slight overvaluation or extremely high demand for short-term oil supplies. Source: Bloomberg Finance LP, XTBThe price increase in the Brent oil market continues for the 4th week in a row. Previously, such a situation occurred in June/July last year. The entire upward wave ended then in mid-September. Then, too, there was a rebound in prices from the 200-period average. If the current situation were to repeat itself, we would have to see a clear drop in stocks (such as last year). This could at least lead to a test of the area around $90 per barrel. Source: xStation5

NATGAS

  • Gas price falls below $2.5/MMBtu early in the first week of July
  • Theoretically, the local low should be reached in late June and early July
  • On the other hand, speculation continues that the worst of the heat in the US is behind us
  • Seasonal weather behaviour indicates that the highest consumption of gas for electricity production occurs in late July and early August
  • Weather forecasts for most U.S. states indicate continued high temperatures, though not extremely high
  • Speculative positions on gas are falling (both longs and shorts). Low open interest does not work in favour of a given market, though of course it will depend primarily on the weather


Seasonality indicates that the local low may have already been reached, although on the other hand, many analysts say that the greatest heat is behind us. If these predictions were to come true, then possible declines to ranges of $2.2-2.3 USD/MMBtu. However, if there were to be a seasonal rebound, then possible increases even to the range of $3.0-3.3 USD/MMBtu. Source: Bloomberg Finance LP, XTB

Long and short positions are falling, although short positions are falling harder. In view of this, we are seeing a rebound in net positions. However, the decline in open interest is not positive for the price outlook. Source: xStation5The price has fallen below $2.5/MMBtu. The declines have continued for the 6th session in a row. The last such period was in February, and a steady price rebound occurred only weeks later (although the number of declines in a row then lasted 10 days). The key supply zone is the range from 2.2 to 2.3. A return to the uptrend could take place after a rise above $2.6, near the elimination of 38.2. Source: xStation5

Cocoa

  • Cocoa continues to hold support at $7,000 per ton, although at the same time there is no sign of a change in fundamentals to a more positive one
  • Cocoa stocks continue to fall, while if there was a consolidation in stocks, it could mean the start of stronger declines
  • We are seeing a further decline in open-interest on cocoa, which does not serve the market's long-term upside
  • On July 11 we will learn to process data in Europe, Asia and North America.
  • At this point, cocoa is behaving in line with the 5-year average. The 5-year average suggests that prices could reach a local low in early August


Cocoa inventories continue their very strong declines. However, if stocks reach a local low, it could mean the end of long-term increases for cocoa. Source: Bloomberg Finance LP, XTB

The average behaviour of the price over the past 5 years suggests potential further declines and the reaching of a local low in early August. Source: Bloomberg Finance LP, XTB

Speculative positions on cocoa (longs - shorts) continue to fall, which is not a good sign for the continuation of long-term growth. Source: Bloomberg Finance LP, XTBThe cocoa price is holding support at $7,000 per ounce. The key support zone is around $6,000 per ounce, where the lower limit of the downward trend channel is located. A return to the uptrend could take place once the $8000 per ounce level is breached again. Source: xStation5

Gold

  • Rising yields could hurt precious metals in the near term. However, if there is a change in communication from the Fed, which we expect in the second half of the vacation, then it will be possible to start a new upward wave and at least test the vicinity of historical peaks
  • Geopolitical tensions in the world (Middle East, France, US) may cause gold prices to hold support at $2,300 per ounce, even despite a strong rise in yields
  • Gold ETFs are seeing inflows, which could mean a very big change on the fundamentals side. We have typically seen inflows spike when monetary policy in the U.S. shifts to a more dovish stance
  • In terms of seasonality, the price usually started to gain in late July and early August. Nevertheless, it is already apparent at this point that the price's behavior this year pales in comparison to the price's behaviour at most over the past five years. The price has basically remained in consolidation for a long time
  • Although gold could potentially look for support from ETFs, the Q2 data may be mixed in terms of purchases from central banks. At the same time, we continue to see a reduction in long positions on the Shanghai Futures Exchange

Seasonality indicates that we can expect a recovery in late July. Potentially, this could be related to speculation about US rate cuts. Source: Bloomberg Finance LP, XTB

ETFs have not been selling off gold for quite some time, which could mean positioning for upcoming fundamental changes in the market. Source: Bloomberg Finance LP, XTB

At the same time, however, it is apparent that Chinese investors' enthusiasm for gold is fading, which may also be linked to an overly strong dollar. All the while, the number of long positions in gold on the Shanghai Stock Exchange is falling. Source: Bloomberg Finance LP, XTBGOLD cannot break above the zone associated with the 50-period average and the 2350 level. Given the recent rise in yields, one more test of the area around $2300 per ounce cannot be ruled out. After that, the further fate will depend on the Fed's statement at the end of July - a return to the upward trend with the expectation of cuts in September, or a drop to 2200-2250 if the Fed indicates that cuts will come only at the end of the year. Source: xStation5

Share:
Back
Xtb logo

Join over 1 000 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

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 25 October 2024
test_cookie cc 24 October 2024
adobe_unique_id cc 24 October 2025
__hssc cc 24 October 2024
SESSID cc 2 March 2024
__cf_bm cc 24 October 2024
intercom-id-iojaybix cc 21 July 2025
intercom-session-iojaybix cc 31 October 2024
xtbCookiesSettings cc 24 October 2025
TS5b68a4e1027
countryIsoCode
xtbLanguageSettings cc 24 October 2025
userPreviousBranchSymbol cc 24 October 2025
TS5b68a4e1027
intercom-device-id-iojaybix cc 21 July 2025
__cf_bm cc 24 October 2024
__cfruid
__cfruid
__cf_bm cc 24 October 2024
__cf_bm cc 24 October 2024
_cfuvid
adobe_unique_id cc 24 October 2025
_cfuvid
TS5b68a4e1027
xtbCookiesSettings cc 24 October 2025
SERVERID
TS5b68a4e1027
__hssc cc 24 October 2024
test_cookie cc 1 March 2024
__cf_bm cc 24 October 2024
_cfuvid
_cfuvid
__cf_bm cc 24 October 2024
__cf_bm cc 24 October 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-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 22 January 2025
_ga_CBPL72L2EC cc 24 October 2026
_ga cc 24 October 2026
__hstc cc 22 April 2025
__hssrc
_vwo_uuid_v2 cc 25 October 2025
_ga_TC79BEJ20L cc 24 October 2026
_vwo_uuid cc 16 October 2025
_vwo_ds cc 15 November 2024
_vwo_sn cc 16 October 2024
_vis_opt_s cc 24 January 2025
_vis_opt_test_cookie
af_id cc 23 February 2025
afUserId cc 25 January 2026
af_id cc 24 January 2026
AF_SYNC cc 1 February 2024
_ga cc 24 October 2026
_gid cc 25 October 2024
_ga_CBPL72L2EC cc 24 October 2026
__hstc cc 22 April 2025
__hssrc
_ga_TC79BEJ20L cc 24 October 2026
_gcl_au cc 22 January 2025
AnalyticsSyncHistory cc 31 March 2024

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 18 November 2025
_omappvp cc 6 October 2035
_omappvs cc 24 October 2024
_uetsid cc 25 October 2024
_uetvid cc 18 November 2025
_fbp cc 22 January 2025
fr cc 7 December 2022
_ttp cc 22 January 2025
_tt_enable_cookie cc 22 January 2025
_ttp cc 22 January 2025
hubspotutk cc 22 April 2025
IDE cc 10 November 2025
YSC
VISITOR_INFO1_LIVE cc 22 April 2025
hubspotutk cc 22 April 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 25 October 2024
_uetvid cc 18 November 2025
_ttp cc 22 January 2025
MUID cc 18 November 2025
_fbp cc 22 January 2025
_tt_enable_cookie cc 22 January 2025
_ttp cc 22 January 2025
li_sugr cc 30 May 2024
guest_id_marketing cc 24 October 2026
guest_id_ads cc 24 October 2026
guest_id cc 24 October 2026
muc_ads cc 24 October 2026
VISITOR_PRIVACY_METADATA cc 22 April 2025
MSPTC cc 18 November 2025
IDE cc 18 November 2025
MSPTC cc 18 November 2025

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
bcookie cc 24 October 2025
lidc cc 25 October 2024
UserMatchHistory cc 31 March 2024
bscookie cc 1 March 2025
li_gc cc 22 April 2025
bcookie cc 24 October 2025
li_gc cc 22 April 2025
lidc cc 25 October 2024
personalization_id cc 24 October 2026

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