Oil traders also reacted to Tuesday’s
release of the latest inventory data from the American Petroleum Institute. The
report showed that crude oil inventory rose to 940,000 million barrels. This was
largely in line with expectations, and sharply lower than the 4.46 million
build seen last week.
The data suggests that investors
should continue to be concerned about the over-supply situation. However, there
may be some relief coming if there is a pick-up in seasonal demand for gasoline.
Prices are concerns over potential disruptions to supplies in the
Gulf of Mexico from Wednesday to Friday due to tropical storm activity with
just over 20% of output in the Gulf shut down for a few days.Iraq - which exported more crude this month from its southern
ports than in July - will continue ramping up output, its oil minister said on
Saturday.A Nigerian militant group has said it has ended attacks on the
nation's oil and gas industry that have reduced the OPEC member's output by
700,000 barrels a day to 1.56 million bpd.But the prospect of a recovery in oil production from Libya
happening any time soon was tempered after the head of the country's National
Oil Corp. said budgetary delays from the new government were undermining oil
production.
The huge global oil oversupply that has weighed on prices for the
past two years may not clear until the second half of 2017, Shell's chief
energy adviser Wim Thomas told Reuters.
NATURAL GAS:
Natural Gas rallied as traders took advantage of the low prices to buy
up the commodity as weather forecasts call for a warmer later autumn season.
There are hopes of a lower inventory after a drop last week. Prices have failed
to rally significantly this season as NG is expected to trade around 3.20 in
its off season between summer and winter.
In the last three months, prices are up by 21.3% due to
expectations of a hot summer, short covering, and traders watching for possible
impacts from La Niña. As a result of that rally, the contract broke above the upper
boundary of the downward sloping trend channel that had defined price action
since the early July peak was established. The breakout above the upper channel
line and subsequent follow through left resistance at the late July/early
August highs at $2.885/$2.911 in play, and this zone is currently capping
upside price action.
COPPER:
Copper remains at the bottom of its trading range at 2.079.
Bloomberg reported that copper prices were at their lowest in two months after
stockpiles surged and Barclays Plc flagged concern over growth in China, the
world’s biggest consumer.Inventories tracked by exchanges in Shanghai, London and New York
climbed five straight days last week to the highest since May. Barclays said in
a report that a recent slump in the copper market “may be an early warning sign
of weakening in China’s economic momentum.”Hedge funds and other large speculators held a net-short position
of 4,991 U.S. copper futures and options contracts in the week ended Aug. 23,
according to Commodity Futures Trading Commission data released three days
later. They switched from a net-long position of 2,237 a week earlier.
Holdings in warehouses tracked by the London Metal Exchange
climbed every day last week to the most since 2015 on Friday.
Chinese growth is forecast to slow to 6.5 percent this year, the
weakest since 1990. Copper will be in “substantial surplus” for at least the
next two years as a “huge wave of new mine supply hits the market,” according
to Barclays.
Chile’s copper production was 448,000 tonnes in July, down 1.5%
year-on-year and 5.5% month-on-month, according to Chilean government.
ALUMINIUM:
China Aluminum International Trading Co.
(Chalco Trading) cut aluminum prices it offered in major markets today after
three consecutive days of hike, it said on its WeChat.
LEAD:
LME lead should range between USD 1,860-1,890/mt on Wednesday
and SHFE 1610 lead to range between RMB 13,750-13,950/mt.
NICKEL:
Nickel Prices Retrace As Indonesian
Supply Soars.Philippines Supply Down In June and July, nickel rallied as
the Philippines reviewed all existing mines in order to close those that had
adverse impacts on the environment. At least eight nickel mines have been shut
down so far this year, cutting around 10% of the country’s capacity.
The Philippines is by far the largest
nickel ore supplier to China since Indonesia imposed an export ban for
unprocessed material back in 2014. Lower production is already showing up in
the export numbers. For the first seven months, China imported 13.84 million
metric tons from the Philippines, down 27% from the same period last year.
The current disruptions in the
Philippines have no doubt tightened the market for nickel ore triggering a
price rally this year. However, will this shortage in China’s nickel-pig iron
industry translate into a shortage of nickel in the global market .
Indonesian Refined Nickel Supply Up While supply of nickel ore to China
is declining, supply of refined nickel to China is rising. For the first seven
months, China’s imports of ferronickel from Indonesia have surged more than
four-fold to 390,700 mt. Comparing apples to apples, the nickel content of the
year to date ferro nickel exports equal to about 4 million mt of nickel,
slightly less than the 4.13 mmt loss in the Philippines so far this year.
For this reason, we hear some
analysts saying that China isn’t importing less nickel, it is just changing the
form in which it imports the metal.
What
This Means for Metal Buyers
The
supply and demand balance for the coming months will depend on how many more
mines the Philippines shut down versus how much more ferronickel/refined nickel
Indonesia continues to supply. So far, we believe it’s too early to call
for the end of nickel’s Bull Run.
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