Commodities: Mixed with downward pressure from geopolitical tensions – ANZ

Analysts at ANZ explain that commodities were mixed in the previous session, with geopolitical tensions keeping downward pressure on prices.

Key Quotes

“Crude oil prices were slightly weaker as another rise in the rig count in the US spurred speculation that higher US output would offset OPEC production cuts. Baker Hughes data showed the number of oil rigs operating in the US rose 11 to 683 last week. The fear of higher US output was boosted by an EIA report that forecast shale oil output would rise to approximately 5.2mb/d in May, from a forecast 4.96mb/d in April.”

“Base metals were unchanged, with the London Metal Exchange closed due to a public holiday. However, copper on the Comex was stronger after economic data in China buoyed sentiment. This was on the back of better than expected commodity trade data which showed strong gains in imports of copper into China.”

“The fall in iron ore prices continued unabated as sentiment in the steel market in China remained weak. Steel rebar futures extended the losses from last week, falling another 1% yesterday. Data showed steel production remained strong in China. Steel output in March hit a record 72 million tonnes, up 1.8% from a year ago. That brought the Q1 total to 201.1 million tonnes, up 4.6% y/y.”

“Coking coal remained little changed, with the price holding above USD300/t. Reports that Japanese buyers are now covered until early May could see limited upside in prices for the moment. However, another round of buying could emerge if damage to the rail infrastructure in Queensland is still not repaired.”

“Gold prices fell slightly on the back of some profit taking after the precious metal hit a six month high last week. However, with geopolitical tensions still high, support from safe haven buying remains strong. A slightly weaker USD also softened the impact of the profit taking.”