Oil Slipped while Gas Delivered Superb Gains

Highlights:

• ENERGY:
  Brent futures were trading with a decline of 0.60%, or $0.47, to $77.88. Meanwhile, WTI futures slipped by 0.68%, or $0.51, to $74.39.
  Natural gas prices for January delivery were trading above $6 per million British thermal units. 
• METALS:
  Spot gold was trading with an increase of 0.4% at $1,740.92 per ounce.
  Meanwhile, Silver fell by 0.8% to $22.26 per ounce.
  Copper on the LME slid by 0.6% at $9,215 a tonne. 
• AGRICULTURAL:
  Corn was trading with a rise of 0.9% at $5.37 a bushel. Meanwhile, soybeans added 0.2% to $12.80 a bushel.

Crude oil prices slipped after a gaining streak

Crude oil prices slipped after surpassing $80. Brent futures were trading with a decline of 0.60%, or $0.47, to $77.88. Meanwhile, WTI futures slipped by 0.68%, or $0.51, to $74.39. 

Analysts believe there are several factors encouraging investors to get profits after the recent five-day spike. Among them is a surge in Covid-19 cases around the world, a stronger dollar, and an unexpected increase in crude and product reserves.

Asian crude oil imports will decline for the second month in a row in September. In terms of the recovery in demand, the world’s largest importing region lags behind other parts of the world.

Iran and Venezuela challenge sanctions through oil trade

Iran and Venezuela have reached an agreement to trade two types of oil, giving Venezuela a new supply of extra-light crude. The deal will see shipments of Iranian condensate from the National Iranian Oil Company exchanged for shipments of crude oil from the Venezuelan state oil company PDVSA.

The agreement appears to violate US sanctions on both nations’ oil sectors. Iran faces tough US sanctions related to its nuclear program. In addition, PDVSA is subject to US sanctions for its role in supporting the regime of Venezuelan President Nicolás Maduro. 

Natural gas surged to 7-year highs

Natural gas prices climbed to their seven-year high on the NYMEX.

Moreover, natural gas prices for January delivery were trading above $6 per million British thermal units. 

Extreme weather conditions in the United States and disruptions caused by Hurricane Ida assisted the rally. Traders expect the commodity shortage this winter and they put fresh bets on it.

Fuel dispensers run dry in the UK and Europe

Fuel supply problems started late last week when UK oil companies reported difficulties in transporting petrol and diesel from refineries to filling stations.

A shortage of truck drivers strained supply chains and rising wholesale natural gas prices in Europe led to energy companies being out of business.

Gold recovered some ground on Wednesday

Gold prices increased on Wednesday, encouraged by a slight dip in US bond yields. Spot gold was trading with an increase of 0.4% at $1,740.92 per ounce.

Meanwhile, Silver fell by 0.8% to $22.26 per ounce.

Compared to the highs of 2020, the current gold price may seem low, but analysts don’t think so. First, because of the circumstances we lived through last year, gold behaved as expected in a situation of crisis. Second, to compare with the same dates in previous years, the difference is obvious. In 2019, gold was trading at $1,485.30 an ounce. Meanwhile, in 2018, its price was $1,187.25 an ounce.

In addition, no asset can be rising indefinitely. It is healthy that there are periods of corrections. The market stabilizes, some investors take profits, and others take advantage of the decline to increase their positions or enter.

That is happening now after gold surpassed the $2,000 an ounce barrier for the first time in its history.

Copper falls on demand concerns

Copper prices decline for the second consecutive day on Wednesday. The power supply crisis in China, which caused shutting factories and generated concerns on demand, weighed on the red metal prices. 

Copper on the LME slid by 0.6% at $9,215 a tonne. 

Corn and soybeans edged up 

Chicago corn bounced on Wednesday after grain traders assessed mixed yield in the US harvest. Soybeans also increased as investors also adjusted positions in the grains stocks data on Thursday.

The most active corn contract on the CBOT was trading with a rise of 0.9% at $5.37 a bushel. Meanwhile, soybeans added 0.2% to $12.80 a bushel.

Traders are waiting for the USDA report on quarterly stocks. 

Analysts expect the US government report on corn stocks to be at 1.155 billion bushels. It is below the 1.187 billion bushels that the USDA forecasted in its last report on September 10.

As for the soybeans stocks, they stood at 174 million bushels, close to the September 10 prediction of 175 million bushels.