MCX COMMODITY MARKET NEWS UPDATES - 16 OCT 2017

Prices Jump on Iraqi Military Action, Fear of New Sanctions Against Iran - U.S. West Texas Intermediate and international-benchmark Brent crude oil surged early Monday after Iraqi army units advanced toward Kirkuk, a major oil city that is populated by the country’s Kurdish people and which recently declared independence. According to the Associated Press which cited state-run television, the Iraqi national army has taken control of nearby areas claimed by the Kurds, and has done so without facing opposition from Kurdish peshmerga fighters. However, there were no confirmed reports of fighting. Iraq is the second-biggest oil producer in OPEC. Kurdish-controlled areas of Iraq are among the most productive in the country and contain much of its energy infrastructure. Prices were also supported by concerns over renewed U.S. sanctions against Iran. On Friday, U.S. President Trump refused to formally certify that Tehran is complying with the accord even though international inspectors say it is.

GOLD - Gold futures finished the week on a high note amid concerns over U.S. inflation. The catalyst behind the rally on Friday was a lower-than-expected U.S. consumer inflation report. The price action indicates investors are worried about inflation’s impact on the pace of U.S. interest rate hikes by the Federal Reserve. December Comex Gold settled last week at $1304.60, up $29.70 or 2.33%. According to the Labor Department, the Consumer Price Index jumped 0.5 percent last month after advancing 0.4 percent in August. Traders were looking for a 0.6 percent increase. However, the more closely followed core rate was unchanged at 1.7% for the fifth month in a row and still below the Fed’s 2% target. Gold traders said the headline inflation was misleading because it rose largely because hurricanes drove up gas-pump prices. Stripping out the impact of volatile food and energy, Core CPI rose a much smaller 0.1%. Additionally, the recent energy-driven rise in CPI pushed the yearly rate of inflation to 2.2% from 1.9% to match a six-month high. Throughout the week, gold was supported by a softer U.S. Dollar and geopolitical tensions in Spain and North Korea. In Spain, the leader of Catalonia’s government called for a reduction in tensions in its standoff with Madrid over a bid in the wealthy northeastern region for independence. Also last week, Russia and China both called for restraint on North Korea following a Twitter post from U.S. President Trump hinting that military action was on his mind.

Supported by Rising Heat Demand, Cold Weather - After struggling early in the week, U.S. natural gas futures mounted strong recovery late in the week to finish higher. Prices were supported by forecasts for rising heating demand and colder weather this winter than in the past two years. Traders also said that output was slow to recover as energy companies were still reactivating Gulf of Mexico gas wells that had been shut due to Hurricane Nate, which hit the area the week-ending October 6The new forecast is expected to underpin prices this week, but it’s hard to tell at this time if this means a range bound trade or an extension of the newly formed rally. Additionally, traders think the gas burned to heat homes and businesses as the weather turns colder through the end of October would basically offset declines in gas burned to generate power to run air conditioners.

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