Published on 22/03/2017 10:50:51 AM | Source: Sushil Finance

We expect Natural gas prices to trade sideways - Sushil Finance

Posted in Commodities Reports | #Commodity Tips #Sushil Finance


Gold

Gold rallied to the highest level in nearly three weeks on Tuesday after a strong debate performance from French centrist presidential candidate Emmanuel Macron and as fading expectations for near-term U.S. interest rate hikes pushed the dollar lower.

The Fed's policy statement last Wednesday was less hawkish than expected, dampening speculation that the U.S. central bank would raise interest rates quickly this year. Gold is highly sensitive to rising U.S. rates, because they increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. Gold fell in the run-up to the Fed's rate hike last week, with hedge funds and money managers sharply cut their net long position in COMEX gold futures.

Holdings of the largest gold-backed exchange traded fund, New York-listed SPDR Gold Shares, declined for a third straight day on Monday. Meanwhile, data from the Swiss customs bureau showed Hong Kong's net gold exports to Switzerland hit their highest level in February since records began five years ago.

 

Outlook

We expect gold prices to trade positive on the back of fading expectations for near-term U.S. interest rate hikes.

 

Silver

Silver was up 0.7 percent at $17.53 an ounce.

 

Outlook

We expect silver prices to trade positive on the back of fading expectations for near-term U.S. interest rate hikes.

 

Crude Oil

Oil prices fell on Tuesday, with U.S. crude dropping to its lowest since November, as concerns about new supplies overshadowed the latest talk by OPEC that it was looking to extend output cuts beyond June. The decline also came ahead of the release of U.S. crude inventory data later Tuesday and on Wednesday that is expected to show a crude stock build of 2.8 million barrels for last week, according to a Reuters poll.

The Organization of the Petroleum Exporting Countries and some non-member producers agreed on Nov. 30 to curb production by 1.8 million bpd from January for six months. But that deal has unintentionally helped what could be the largest increase in mega projects' production in history, Goldman Sachs said in a research note.

New production projects and a fresh shale boom could boost output by a million barrels per year and result in an oversupply in the next couple of years, the bank said.

The market has declined despite indications on Tuesday that OPEC members increasingly favour extended production cuts but want the backing of non-OPEC oil producers, such as Russia, which have yet to deliver fully on existing reductions. Outlook We expect crude oil prices to trade sideways on the back of short covering after drop in prices.

 

Natural Gas

U.S. natural gas futures on Tuesday climbed to their highest in over five weeks as the market ignored the weather and focused on a report later this week expected to show a big storage draw.

Analysts forecast utilities pulled 146 billion cubic feet of gas from storage during the cold week ended on March 17, the biggest withdrawal for the week on record, according to data from U.S. Energy Information Administration (EIA) going back to 1994.

The latest U.S. and European weather models forecast temperatures will remain mostly above normal through the first week of April. Heating demand has become much less of a market factor as temperatures edge higher for the spring, traders said, making high stockpiles, low production and rising exports increasingly more important.

 

Outlook

We expect Natural gas prices to trade sideways on the back of profit booking after sharp up-move.

 

Base Metals

Copper hit a one-week low on Tuesday as talks to resolve a strike at the world's biggest copper mine in Chile were set to resume and production at another huge mine in Indonesia restarted.

Trade houses plan to place orders for large amounts of lead to leave LME warehouses in the next few days as they scramble for supply, a source said. Cash lead is trading at a discount of $6 a tonne versus the three-month price compared with a discount of $18 a tonne last week.

Peru's copper production rose 24.8 percent in January from the same month a year earlier while zinc output increased 11.3 percent.

 

Outlook

We expect base metal prices likely to trade volatile on the back of mixed fundamentals.

 

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