Commodities Report 27.4 – 1.5.2020

Oil:

  

It can be said that the previous week was a surprising bearish one amid the oil gloom since the start of 2020. Reports that lockdowns are going to be lifted soon and the economy is about to reopen in both the U.S. and Europe, gave strong boost on oil on Wednesday as WTI prices settled at $16.62 while Brent at $24.30. Additionally, data shows that storages do not fill as quickly as originally feared, after EIA announced Crude Oil Inventories 8.991mb actual vs 10.619mb forecast. Another factor that played a major role was Gilead’s progression on the COVID-19 treatment which gave a boost in both stocks and oil prices. 

image122

The rally continued on Friday as the historic oil cuts that OPEC+ announced during the previous month, took effect and Norway also announced production cuts of 250 million barrels/day. Donald Trump gave an ultimatum on Saudi Arabia demanding further oil production cuts. Specifically he demanded the resolution of the price war with Russia stating “cut oil supply or lose US military support”, something that pushed prices even higher. WTI managed a weekly gain of 16.29% at $19.70 while Brent gained 24.11% at $26.61. 

image123

Natural Gas:

The U.S. Energy Information Administration (EIA) stated on its weekly report that Natural Gas (NG) supply is down due to various reasons. Since the start of 2020, active rigs are lower 31% and 54% down comparing to the same period last year. Additionally, NG domestic inventories were lower than expected (43 bcf actual vs 68 forecast) for the previous week giving a boost in prices and therefore justifying the 1% lower supply comparing to the previous week according to IHS Markit. Moreover, the production decline can be is a reality mainly due to the lower oil prices which forces many NG rigs to close down. Prices are also getting a boost as the Canadian rigs may close for spring maintenance.  On the demand side, the continuing lockdowns are pushing consumption 3.8% lower. The NG future contract for June 2020 managed a 7.90% weekly surge settling at $1.884 MMbtu. 

image124

Gold:

The yellow metal was up in Monday mainly due to the fact the BoJ announced that the stimulus package to combat the COVID-19 pandemic is going to be expanded, by buying unlimited amount of bonds. Gold rose $1,739.60 (+0.23%). Even though the positive sentiment at the staring of the week, facts from Europe and the U.S. later, brought risk back on the table and thus gold was down again. Both U.S. and various European countries are planning to lift lockdowns and reopening their economies. Additionally, policy meetings in both ECB and the Fed kept trading at relatively low volumes. Gold was down at $1,725.30 (-0.6%) eliminating any earlier gains. A combination of good news during the week for the stock market like Fed’s additional stimulus and Gilead’s progression on the COVID-19 treatment sent gold at $1,678.55 (-4%, since Monday) on Friday. On Friday, with most od European countries on not trading due to Labor Day, trading was thinner. Moreover, Trump announced additional forthcoming tariffs on Beijing because of the mismanagement and the misinformation on the COVID-19 pandemic, pushing gold higher, at $1,710.25. Gold managed showed weekly losses of 1.46%. 

image125

  

The commodities weekly report is provided by 

Mr. Fotis Kanatas - Student at the Maritime Department of the University of Piraeus

  

Charts provided by   investing.com