Gulf Oil and Gas accountACCOUNT

Trends in Selected Commodity Markets - March ?2017

Source: OPEC 3/19/2017, Location: North America

Share |
In February, market participants expected a lower path for interest rate increases by the US Federal Reserve (the Fed) and are awaiting further clarity regarding the economic proposal of the new US administration. This generally translated into weakness in the US dollar and support for commodities, particularly for the group of precious metals, which were heavily sold in the fourth quarter of last year. However, this trend reversed at the end of the month as the Fed officially signalled increasing certainty of a March hike. Meanwhile, a further expansion in global manufacturing, as shown by JP Morgan’s global manufacturing PMI, which is at a 69-month high, together with supply disruption for key copper suppliers, supported further increases in base metals.

Agricultural commodities showed different trends with larger declines in the group of beverages, led by a further drop in cocoa prices, which have steadily declined since mid-2016 on persistent oversupply. On the other hand, raw material prices were underpinned by a continuing increase in natural rubber prices, which are currently around 60% higher than their 2016 lows, buoyed by strong exports to China. Food prices were relatively stable on average. The US Department of Agriculture revised down its world ending stock estimations for wheat and corn for the 2016/17 market year on lower expected output of wheat in India and Kazakhstan, while higher consumption of corn was expected in China and Mexico. Meanwhile, vegetable oils were generally weak, led by falls in palm oil prices, as output from Malaysia, and Indonesia were expected to recover from last year’s El Nino-induced drought. Competitor soybean oil also fell on the prospect of plentiful supplies of soybeans from the US and a record crop in Brazil.

Metal prices showed a broad-based advance as global manufacturing surveys continued to point to an expansion in activity, most importantly in the largest consumer, China, where the manufacturing PMI reading of 51.7 for February showed further and more accelerated expansion in activity than in the previous month. However, supply factors were the main driver during the month. Copper prices have been supported by a strike at the Escondida mine in Chile – the world’s largest mine – as well as disputes between the government of Indonesia and Freeport McMoRan, operator of the Grasberg mine – the world’s secondlargest mine – disrupting mine operations. At the same time, aluminium prices rose on the expectation of supply curbs during the winter months in China, with the goal of helping to ease pollution problems. Nonetheless, recent data from the International Aluminium Institute showed world primary aluminium output increasing by 1% in January m-o-m, up 10% y-o-y, led by a 2% m-o-m and 19% y-o-y increase in Chinese output, capping further price increases. Iron ore prices rose by around 11% following robust imports from China. World crude steel output for the month of January was up by 7% y-o-y.

In the group of energy commodities, crude oil prices were underpinned by conformity with the suppliers’ agreement. Natural gas prices declined sharply in the US as temperatures were significantly above normal, dampening demand and translating into smaller-than-normal net withdrawals from inventories. Furthermore, for the week ending 24 February, the US Energy Information Administration (EIA) registered the earliest weekly injection to storage on record. Meanwhile, at the beginning of the month, US national weather services reported that La Nina conditions were not present any longer. In Europe, term prices advanced significantly on the lagging impact of oil indexing, while spot prices declined on milder temperatures. EU inventories reported by Gas Infrastructure Europe (GIE) were at 29.5% of capacity versus around 41% at the end of the previous month. Coal prices declined for the third consecutive month as Chinese authorities relaxed mining restrictions.

Average energy prices in February increased by 0.7% m-o-m, due to a 1.4% increase in average crude oil prices, while natural gas prices in the US declined by 13.5% m-o-m, but increased in Europe by 14.5%, due to oil indexing in term contracts. Meanwhile, Australian benchmark thermal coal prices decreased by 3.8%.

Agricultural prices advanced slightly by 0.2% in February, with average food prices remaining almost flat. Beverages declined by 3.5%, mainly due to a 7.3% fall in cocoa prices, while raw material prices were up by 2.3%, led by a 3.3% increase in natural rubber. In the group of food, wheat and corn prices increased by 1.3% and 1.8%, respectively, while palm oil and soybean oil prices decreased by 3.7% and 3.9%, respectively.

Average base metal prices increased by 3.5% in February, led by a 3.2% monthly increase in copper prices and a 3.9% increase in aluminium prices. Average iron ore prices leapt by 11.3%.

In the group of precious metals, gold prices increased by 3.5% on average, due to lower interest rate expectations in the US for the past two months.

In February, the Henry Hub natural gas index declined. The average price was down by 44?, or 13.5%, to $2.82 per million British thermal units (mmbtu) after trading at an average of $3.26/mmbtu the previous month.

The EIA said utilities added 7 billion cubic feet (bcf) of working gas in underground storage during the week ending 24 February. This was the first addition to storage in that week on record and it was above the median analysts’ expectations of a 4 bcf injection. Total working gas in underground storage stood at 2,363 bcf, 7.3% lower than at the same time the previous year and 14.3% higher than the previous five-year average.

Economics/Financial Analysis News in United States >>

Austria >>  4/13/2017 - Commodity prices were under pressure in the first half of the month as interest rate expectations in the US increased sharply in the run-up to the US ...
Austria >>  4/12/2017 - Global economic growth remains firm with the current momentum relatively broad-based in terms of geographies and sectors, a dynamic that is forecast t...

Austria >>  4/12/2017 - In March, average prices for energy and non-energy commodities were generally down. In the group of energy, crude oil prices showed their first declin...
Austria >>  4/5/2017 - Open interest (OI) increased in February for selected US commodity markets such as agriculture, crude oil, copper, precious metals, natural gas and li...

Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


United States Oil & Gas 1 >>  2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 | 36 | 37 | 38 | 39 | 40 | 41 | 42 | 43 | 44 | 45 | 46 | 47 | 48 | 49 | 50 | 51 | 52 | 53 | 54 | 55 | 56 | 57 | 58 | 59 | 60 |

More News

 

Oil & Gas Companies in United States >>


Related Links

Gulf Oil and Gas
Copyright © Universal Solutions All rights reserved. - Privacy Policy.