Ida effects support oil and gas outlook

Highlights:

• ENERGY:
  December WTI oil futures were trading with an increase of 1.41% or $0.95 at $68.56. Meanwhile, December Brent oil futures gained 1.41% or $1 to $71.79.
  December natural gas futures were trading with a drop of 0.29% or $0.015 at $5.143.
• METALS:
  The spot gold price was trading slightly above $1,803 an ounce early on Friday.
  Silver was trading with a rise of $0.013 at $24.19 an ounce on Comex.
  Copper recovered at the level of $ 4.2 per pound.
• AGRICULTURAL:
  The most active contract for corn on the CBOT traded with an increase of 0.3% at $5.11-1/4 a bushel. Meanwhile, CBOY soybeans also added 0.3% to $12.73-3/4.

Oil is developing a bullish bias

Oil advanced towards $73 a barrel on Friday.

At the moment of writing, December WTI oil futures were trading with an increase of 1.41% or $0.95 at $68.56. Meanwhile, December Brent oil futures gained 1.41% or $1 to $71.79.

The catalyst behind this upward move is growing concern over supply shortages in the US following the damage from Hurricane Ida. Besides, the potential for improved trade relations between the United States and China reinforced the demand for riskier assets. 

Meanwhile, Royal Dutch Shell Plc, the giant oil producer in the US Gulf of Mexico, canceled exports on Thursday. About three-quarters of the Gulf’s offshore oil production has been stalled since late August following Ida. 

Following the hurricane shutdown, oil and fuel reserves in the United States plummeted last week. Crude oil reserves fell by 1.5 million barrels in the week to September 3, to 423.9 million barrels. In contrast, analysts expected a drop of 4,6 million barrels. Refinery utilization rates fell 9.4%, largely due to the closure of refineries in the US Gulf. 

 

Oil has formed a solid base of support during the week. Analysts believe that prices could start to rise sharply if December WTI crude manages to break above $70.00. For December Brent crude, the key level to overcome is $73.00. 

Oil and stock markets also got a boost from news about a call between the presidents of the US and China. 

 

Gas advanced on lower production and shortage of reserves

Natural gas prices reached their seasonal highs in Asia. The average price stood at $20.10 per million British thermal units. 

US natural gas futures were declining early Friday after hitting a multi-year high in the previous session. Bullish momentum remains strong despite prices hovering just below seven-year highs. 

The catalysts for this week’s rise are reduced production due to the persistent impact of Hurricane Ida and the latest government storage report confirming that the balance between supply and demand is very tight.

December natural gas futures were trading with a drop of 0.29% or $0.015 at $5.143.

After a weak open on Thursday, natural gas futures reversed higher, hitting a new high for the week. The rise began after the EIA reported that national natural gas reserves increased by 52 billion cubic feet.

According to the government, total reserves now stand at 2.923 trillion cubic feet, representing a drop of 592 Bcf.

 

Gold steady after the ECB announcement

The spot gold price was trading slightly above $1,803 an ounce early on Friday. The precious metal barely reacted to the ECB’s announcement.

The European Central Bank meeting ended with a statement about future monetary policy. They stated that favorable financing conditions can be maintained with a lower purchase rate of assets.

The LBMA closed the session on Thursday, with gold trading at $1,788.25 an ounce.

Analysts already expected the European Central Bank to keep interest rates unchanged at 0.00%.

Silver – the metal of the future

Silver was trading with a rise of $0.013 at $24.19 an ounce on Comex.

The price of silver has long been stagnant at around $ 24 an ounce. However, various analysts believe that its prospects are better than the rest of the precious metals. John Feeney, an Australian precious metals custodian, stated that silver could attract investors’ attention. The current global monetary policy is favorable to precious metals. However, it is industrial demand that will turn silver into the market leader.

 

Copper scores its biggest daily rise in more than a week

The price of the red metal recovered at the level of $ 4.2 per pound. It is the largest increase in just over a week. The average for the month was $4,23519, and the annual average accounted for $4,16265.

 

Corn and soybeans recovered from losses

CBOT soybean and corn futures increased on Friday before the US government report. The USDA is forecast to increase harvest projections due to the favorable weather in the late summer. 

The most active contract for corn on the CBOT traded with an increase of 0.3% at $5.11-1/4 a bushel. Meanwhile, CBOY soybeans also added 0.3% to $12.73-3/4.

Traders believe that recent complications in export following Hurricane Ida may keep grain markets on the defensive, 

China decreased its corn consumption outlook for 2021/2022. The grain market is waiting for the weekly US export sales data, which will reveal demand overseas.