Daily Metal and Energy Outlook 17th May
BULLION – Bullion counter may trade on volatile path .Gold fell on Friday, following its biggest one-day percentage loss in a month in the previous session, on a firmer dollar and increased investor appetite for riskier assets due to strong U.S. data and corporate results. Strong corporate earnings have also helped to give some support to equities and dollar. Most of the managed-money managers are trying to take out profits, which is pressuring gold. U.S. stock indexes extended gains on upbeat earnings as well as robust economic data that underlined the strength of the domestic economy. Meanwhile, the dollar index rose to its highest level in nearly two weeks against a basket of currencies. The U.S. housing data showed homebuilding increased more than expected in April, while unemployment benefits fell more than expected last week, pointing to sustained labour market strength that should underpin the economy. Even though trade worries have taken a backseat, investors are still wary of possible tensions emanating from a U.S. bid to block China Huawei Technologies from buying vital American technology.
ENERGY- Crude oil may trade with upside bias as oil prices edged higher on Friday, extending gains into a fourth session as rising tensions in the Middle East stoked fears of potential supply disruptions. The market is also awaiting the decision of the Organization of the Petroleum Exporting Countries (OPEC) and other producers on whether to continue with supply cuts that have boosted prices more than 30% so far this year. A meeting of OPEC ministerial monitoring committee in Saudi Arabia this weekend will assess member states commitment to a deal reducing oil production, Iraq oil minister said on Thursday. U.S. natural gas futures rose on Thursday as output declines despite a government report showing a bigger-than-usual storage build last week. The U.S. Energy Information Administration (EIA) said utilities added 106 billion cubic feet (bcf) of gas to inventories during the week ended May 10. The increase last week boosted stockpiles to 1.653 trillion cubic feet (tcf), which was still 14.7% below the five-year average of 1.939 tcf for this time of year but only the lowest for the week since 2018. The amount of gas in storage has been below the five-year average since September 2017 .
BASE METAL – Base metals may remain sideways bias. Polish mining company KGHM may produce more copper than planned at its Sierra Gorda mine in Chile in 2019, while keeping capital expenditure below target, its deputy chief executive in charge of foreign assets said. Shanghai aluminium prices moved higher for a sixth consecutive session in early trade on Friday, as alumina refinery shutdowns in northern China’s Shanxi province raise production costs for the metal used in everything from cans to cars. Aluminium is on course to gain 1.7% in Shanghai this week, which would mark its best week since the one ended Aug. 24, 2018. Alumina prices in northern China have now exceeded 3,000 yuan a tonne and touched their highest since Dec. 10.
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