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Commodities Slip Amid Growth Fears

Highlights:

  • ENERGY:
    WTI crude oil futures for October as delivery increased by $0.82 to $68.36 a barrel Wednesday. Brent crude oil for October delivery advanced by $1.20 to $72.25 a barrel.
    Natural gas futures for September delivery settled unchanged at $3.90 per 1,000 cubic feet.
  • METALS:
    Gold futures for December delivery dropped by $17.50 to $1.791 an ounce.  Silver futures for September delivery shed 12 cents to $23.78 an ounce, and September copper added 1 cent to $4.27 a pound.
  • AGRICULTURAL:
    Soybeans slipped by 0.4% to $13.2725 a bushel, and corn lost 0.5% to $5.4875 a bushel. 

Crude oil slipped after Wednesday’s advance

WTI crude oil futures for October delivery increased by $0.82 to $68.36 a barrel Wednesday. Brent crude oil for October delivery advanced by $1.20 to $72.25 a barrel.

However, prices saw a decline on Thursday. According to Prathamesh Mallya from Angel Broking stated that oil prices increased amid bets over a global demand recovery. The approval of two coronavirus vaccines supported the market sentiment. 

However, concerns are still growing about the Delta variant which led to extended restrictions globally. It creates uncertainty about oil demand. 

The US Energy Information Administration announced that US crude oil inventories declined by 2.979 million barrels per day. In contrast, the market expected a drop by 2.683 Mbpd for the week ended August 20. 

 

Natural gas is testing a level of $4

Natural gas futures for September delivery settled unchanged at $3.90 per 1,000 cubic feet.

Meanwhile, wholesale gasoline price for September delivery advanced by 12 cents to $2.30 a gallon. 

The markets for natural gas have fallen to the beginning of the session on Wednesday but found buyers and showed signs of strength. However, it did not develop in the end. Natural gas is testing the $4.00 level. It is not usual for natural gas to be so high at this time of year, but the heatwave over the United States has contributed to increasing demand and rising prices.

According to the Department of Energy, gasoline stocks slipped by 2.24 million barrels. In contrast, the market expected a 1.5 million drop.

Analysts believe that Natural gas will keep moving upwards due to the idea that the heat is going to increase the demand for refrigeration. Right now the temperatures are very high in the United States, so the demand could also rise. 

At the strategy level, buyers will enter the market whenever they see falls. Considering the historical figures, this should be the end of the climb.

 

Gold and silver slipped while copper posted a slight increase

Gold futures for December delivery dropped by $17.50 to $1,791 an ounce. Silver futures for September delivery shed 12 cents to $23.78 an ounce, and September copper added 1 cent to $4.27 a pound.

Precious metal prices slumped in Wednesday’s session partly because the dollar increased ahead of the Jackson Hole meeting.

All comes down to the Jackson Hole Symposium that ends this week and the possibility that the Federal Reserve decides to announce when it will begin to cut monetary stimulus. If the Fed announces that it will reduce its bond purchases within the year, interest rates are likely to increase. That would make bonds much more attractive assets than gold.

Corn and soybeans fell due to higher yields

Soybeans slipped by 0.4% to $13.2725 a bushel, and corn lost 0.5% to $5.4875 a bushel. Prices were influenced by higher soy and corn yields in the growing areas of the United States. Besides, harvesting is set to begin soon. Rains in the dry Midwest areas could also support grain yields, especially soybeans.

Coffee is finishing volatile August 

Coffee started August with a price of $1.7935 and reached its maximum of $1.8822, an increase of 4.95%. The commodity reached its historical high on July 26, 2021, due to the intense frosts in Brazil, settling at $2.1520. Coffee in the different time frames in August showed a mixed trend, between bullish and bearish. 

Currently, it is trading at around $1.8635 per pound. According to analysts, despite its seemingly upward trend, the relative strength index is close to 70%. It may indicate the beginning of a downtrend, which can also be interpreted by the difference of approximately $29 cents or 13%.

 

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