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Copper and agricultural commodities take a hit 

Highlights:

  • ENERGY:
    WTI crude futures for December delivery were trading with an increase of 1.51% or $1.05, to $70.78. Brent crude futures for December added 1.42% or $1.04 at $74.11.
    Natural gas futures for December delivery were trading with a loss of 1.01% or $0.052, to $5,080.
  • METALS:
    Gold was trading steadily at $1,763.60 per ounce
    Silver advanced by 0.1% to $22.26 per ounce
    Copper on the LME was trading flat at $9,035.50 a tonne.
  • AGRICULTURAL:
    On Monday, the soybean fell by $7.5 to $464.3 in Chicago.
    Corn futures also closed with losses of $2.1 to $205.5.

Hurricane will reduce oil production till the end of the year

Oil supply concerns outweigh concerns about China’s growth

The general calm in financial markets is helping crude oil futures to recover from yesterday’s heavy losses. 

Traders have refocused their attention on the shortage of supply in the US. However, they also remain attentive to the possible impact on China’s economic recovery from the financial turbulence created by Evergrande’s crisis.

WTI crude futures for December delivery were trading with an increase of 1.51% or $1.05, to $70.78. Brent crude futures for December added 1.42% or $1.04 at $74.11.

Nearly 18% of the crude oil in the US Gulf and 27% of its natural gas production remained suspended on Monday, more than three weeks after Hurricane Ida.

Royal Dutch Shell, the largest US oil producer in the Gulf of Mexico, said that damage from Ida would reduce production until the next year. Continued disruptions have hindered exports and pushed up crude prices.

Analysts stated that the disruptions are affecting the total amount of crude available for export from the US. Based on current prices much less crude will be exported. 

 

Gas storage is expected to exceed the five-year average

 

Natural gas futures for December delivery were trading with a loss of 1.01% or $0.052, to $5,080. The main catalysts behind the formation of the four consecutive lows have been weather forecasts projecting colder temperatures and moderate demand.

According to NatGasWeather, September 21-27, the Midwest and Ohio will experience showers and thunderstorms for the next several days, with pleasant highs of 60-80 degrees.

The strongest demand for the gas will be from California to South Texas. High pressures will bring hot highs of 90 to almost 100 degrees Fahrenheit. However, conditions will be colder in North Texas.

Domestic demand is forecast to be low to very low in the shorter term future.

Meanwhile, Thursday’s US Energy Information Administration storage report is expected to be slightly above historical averages. 

Gold could recover in the middle of the week

In the global markets, spot gold was trading steadily at $1,763.60 per ounce. Meanwhile, gold futures were at $1,764.40. As for silver, it advanced by 0.1% to $22.26 per ounce, after hitting a nine-month low in the previous session. 

Commerzbank published its projections for gold in its recent report. According to the German bank, the metal could recover its old level from the middle of this week. It all depends on the US Federal Reserve’s decision on its monetary policy. 

Gold has been pressured by the strength of the dollar and the rise in bond yields, caused by good US economic data. While waiting for what happens at the Fed meeting, most economists hope that the Fed will give some clue when it expects to start withdrawing its bond purchase program.

Commerzbank believes that decision on tapering will be made in the fourth quarter of the year and will begin in early 2022.

 

Copper near one-month lows amid demand concerns

Three-month copper on the LME was trading flat at $9,035.50 a tonne. The red metal contract has plunged as much as 5.1% so far this month. 

Evergrande Group crisis encouraged sell-off across the copper market due to worries about the demand in construction. 

On the other hand, investors were concerned about the Fed starting tapering soon. 

 

Corn and soybeans could not escape from the Evergrande crash 

On Monday, the soybean fell by $7.5 to $464.3 in Chicago. The drop in prices was, on the one hand, due to the rapid advance of the harvest in the US, benefitting from favorable weather. On the other hand, the fall of the giant Evergrande is adding pressure, putting global investors on alert.

Corn futures also closed with losses of $2.1 to $205.5 due to an acceleration in the cereal harvest in the US Midwest. Likewise, delays persist in the Gulf ports. 

In addition, generalized falls in financial markets added to the downward pressure. The complications the Chinese group Evergrande is facing raise concerns about a possible negative effect on the Asian country’s economy. It strengthened the US dollar, affecting the prices of agricultural commodities.

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