U.S. West Texas Intermediate and international-benchmark Brent crude oil finished mixed on Wednesday.
May Benefit from Flight-to-Safety Buying – Gold had a volatile session on Wednesday. Early in the day, the market was driven into a 2 ½ month low after reports that Republican senators told President Trump that they favored Stanford University economist John Taylor as the next head of the U.S. Federal Reserve. The news drove up U.S. Treasury yields which also helped underpin the U.S. Dollar. The stronger dollar pressured demand for dollar-denominated gold.
The market turned around late in the session and was able to close slightly higher after a steep drop in U.S. equity markets sent investors into the safety of gold.The government also said it was unable to isolate the effects of Hurricanes Harvey and Irma on the data as the survey is “designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas.”
NATURAL GAS – U.S. natural gas futures broke sharply on Wednesday as investors continued to digest the weather’s impact on heating demand over the near-term. Traders also noted U.S. output hit a record daily high this week. According to Thomson Reuters, homes and businesses would use less gas next week than previously forecast. U.S. gas consumption was now projected to average 81.5 billion cubic feet per day (bcfd) next week, down from an earlier forecast of 82.8 bcfd. That is still up from this week’s forecast of 72.4 bcfd because the weather is expected to turn colder than normal during the first week of November. U.S. gas exports, meanwhile, were expected to average 9.0 bcfd this week, up 76 percent from a year earlier, due primarily to rising shipments of liquefied natural gas, according to Reuters data.
COPPER – December Comex High Grade Copper futures spiked lower on Wednesday in an attempt to take out a recent low, but buyers came in to defend the uptrend, leading to a marginally lower finish. Traders said gains were being limited by a weaker stock market which is causing investors to take a more cautious approach toward risk. The market was underpinned, however, by a weaker U.S. Dollar. Traders are also saying the last week’s spike to the upside put copper prices above fundamentally justified levels. In other news, the International Copper Study Group (ICSG) said on Tuesday that the copper market should see a deficit of 151,000 tonnes this year and a deficit of 104,000 tonnes in 2018.
Brent Needs Production Cut Extension to Sustain Rally Over $60.00 – U.S. West Texas Intermediate and international-benchmark Brent crude oil finished mixed on Wednesday. Brent crude was supported by comments from Saudi Arabia’s energy minister on Tuesday reiterating the country’s determination to end a three-year supply glut. WTI crude was pressured by a surprise build in December WTI Crude Oil settled at $52.18, down $0.29 or -0.55% and January Brent Crude Oil finished at $58.23, up $0.06 or +0.10%.According to the U.S. Energy Information Administration (EIA), crude oil inventories rose 856,000 barrels in the week to October 20. Traders were looking for a decrease of 2.6 million barrels. The report also showed that production rebounded from a steep decline due to Hurricane Nate, and imports rose as well. The EIA report also showed gasoline and distillate inventories fell by more than 5 million barrels, and refinery utilization rates rose 3.3 percentage points. Earlier in the week, Saudi Arabian Energy Minister Khalid al-Falih raised hopes of a prolonged cut in production after the initial OPEC-led pact to trim output expires at the end of March 2018.
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