ENERGY– Steadying after an overnight plunge following U.S. President Donald Trump move to impose more tariffs on Chinese imports, intensifying a trade war that has hit global growth. Brent crude slumped more than 7% on Thursday, its steepest drop in more than three years. U.S. crude fell nearly 8%, posting its worst day in more than four years, The collapse ended a fragile rally built on steady drawdown in U.S. inventories, even as global demand looked shaky due to the trade dispute between the world two biggest economies. Total U.S. oil demand in May fell 98,000 bpd to 20.26 million bpd, data showed earlier this week. OPEC and partners including Russia, an alliance known as OPEC+, have been curbing output this year to support the market. In July, OPEC production revisited a 2011 low, helped by a further cut by Saudi Arabia. Despite the rally on Wednesday, the hotter trends in the overnight data are still not hot enough to impress and suggests there is still a bearish bias in the market. The rally we say yesterday was probably driven by short-covering due to the slight change in the weather pattern and grossly oversold technical indicators. Weekly storage report is expected to show a 57 Bcf injection for the week-ending July 26. Energy Aspects is calling for a 55 Bcf injection. Intercontinental Exchange EIA Financial Weekly Index futures settled at 60 Bcf. Last year the EIA recorded a 31 Bcf injection for the period, and the five-year average build is 37 Bcf.
BASE METAL – Copper hitting its lowest in over three weeks after U.S. President Donald Trump said he would slap a 10% tariff on the remaining $300 billion of Chinese imports from next month. The reactivation of a smelter belonging to Chile state-run Codelco, the world top copper producer, will be further delayed until the end of October this year after missing a previous target of April. Copper contract on the Shanghai Futures Exchange dipped 0.6%, aluminium eased 0.2%. Three-month LME copper touched its lowest since July 10 at $5,876 a tonne before paring losses to $5,899, a decline of 0.5%.Zinc and lead dropped 0.8% each. However, nickel rose 1.2% and tin was almost unchanged. Nickel prices were also under pressure after Indonesia’s state mining company PT Aneka Tam bang nickel ore output in Jan-Jun rose 27% on year to 4.79 mln tn. Benchmark aluminium on the London Metal Exchange dropped for a third session and slipped 1.1% in final open-outcry trading to $1,780 a tonne, its weakest since July 3.
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