ICICI Securities

Published on 18/01/2022 11:49:46 AM

Energy Outlook

• Oil futures rallied 0.66% on Monday on the back of tight supply and easing worries of Omicron variant fuel demand

• Natural gas futures rose more than 1.08% on Monday mainly due to decline in Russian Yamal pipeline gas flows to Europe and rising geopolitical tensions between Russia and Ukraine

• Meanwhile, Libya’s total oil output is back to 1.2 million barrels per day (bpd), which has put pressure on crude oil prices

• At the same time, Saudi Energy Minister Prince Abdulaziz bin Salman said on Monday that it is the prerogative of the US government whether to release supply from strategic petroleum reserves

• MCX crude oil prices are likely to trade in the range of | 6180 to 6380 levels with a positive bias amid concerns over tight supply. Further, investors will anxiously wait for an Opec monthly report

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ICICI Securities

Published on 18/01/2022 11:48:17 AM

Base Metal Outlook

• Copper prices rebounded 0.50% on Monday despite increase in LME inventories and economic data from top consumer China suggested slowing demand for industrial metals

• Property investment in China dropped by 13.9% year on year in December, falling at the fastest pace since early 2020. Investment grew 4.4% in 2021, the slowest annual growth since 2016

• Further, stocks of copper in LME registered warehouses increased to 92,850 tonnes, putting pressure on copper prices

• MCX copper prices are likely to trade in the range of | 732 to 748 levels with a negative bias on the back of rise in LME inventories. Further, strong dollar and concerns over China’s economic growth may continue to put pressure on copper prices for the day

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ICICI Securities

Published on 18/01/2022 11:47:56 AM

Bullion Outlook

• Gold prices surged 0.29% on Monday on the back of rising geopolitical tensions between Russia and Ukraine

• However, large speculators reduced their net long positions in COMEX Gold to 199,737 from 211,400 contracts over the previous week, indicating bearish sentiment in the gold market

• MCX gold prices are likely to rise towards | 48,300 levels due to concerns over rising geopolitical tensions between Russia and Ukraine. Further, elevated inflation may boost the demand for safe heaven metal. However, sharp upside may be capped on rise in risk appetite in the global markets and uptick in the dollar index

• Silver prices are expected to take cues from gold prices and likely to march towards | 63,000 level for the day

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ICICI Securities

Published on 18/01/2022 11:19:07 AM

Energy Outlook

• Crude oil prices advanced more than 6% in the previous week, mainly due to a decline in US crude oil inventories and rising geopolitical tensions between Russia and Ukraine

• US crude oil inventories declined by 4.5 million barrels over the last week, which was more than expected draw level of 1.9 million barrels

• Opec+ oil producers continued to hold back more than 3 million barrels per day (bpd) in output while Iranian exports were pinned back by continuing US sanctions

• According to the Commodity Futures Trading Commission (CFTC) data released on Friday, large speculators increased their net long positions in WTI crude oil to 360,505 from 332,800 over the previous week, indicating bullish sentiment in the crude oil market

Crude oil Outlook

• Crude oil prices are likely to trade in the range of 6050 to 6,500 levels with a positive bias amid geopolitical tensions between Russia and Ukraine. Further, investors will anxiously wait for an Opec and IEA monthly report

Natural gas Outlook

• Natural gas prices are expected to rise further towards | 360 levels due to cooler weather and higher heating demand in the next two weeks than previously expected

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ICICI Securities

Published on 18/01/2022 11:18:51 AM

Base Metal Outlook

• Copper prices surged around 0.43% last week on the back of a decline in LME inventories and supply disruptions

• Further, global copper smelting activity was steady in December as a slowdown in China was offset by gains elsewhere, including other parts of Asia and North America

• Meanwhile, the central bank of top metals consumer China is set to unveil more steps to support economic growth, which is expected to fall to 5.2% this year

• Moreover, copper stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE), at 29,182 tonnes, are near their lowest since 2009. Inventories in LME-registered warehouses, at 86,300 tonnes, are down from more than 250,000 tonnes in August

Copper Outlook

• MCX copper prices are likely to trade in a range of | 730-765 levels with a positive bias due to supply disruptions and on declining LME inventories. However, a surge in dollar and global demand concerns may continue to put pressure on prices. Further, investors will keep an eye on building permits data from the US

Aluminium Outlook

• MCX aluminium prices are expected to trade in the range of | 228- 245 levels with a positive bias due to smelter shutdowns and declining LME inventories

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ICICI Securities

Published on 18/01/2022 11:18:42 AM

Bullion Outlook

• Gold prices rose almost 1.17% last week amid weakness in dollar Gold vs. Dollar Index index and higher inflation

• US consumer price index increased 0.5% last month after advancing 0.8% in November, the Labour Department said on Wednesday. In the 12 months through December, CPI surged 7.0%, the biggest year-on-year increase since June 1982

• Further, the number of Americans filing new claims for unemployment benefits increased to 230,000 compared with expectations of 200,000 applications for the week ended January 8

• Meanwhile, Fed Chair Jerome Powell said the US labour market is recovering rapidly from the hit it took during the Coronavirus pandemic and should not face added weakness as the Fed begins to remove some of the support offered during the crisis

Gold Outlook

• MCX gold prices are likely to trade in the consolidation range of ₹ 47,000 to 48,500 levels due to rise in US treasury yields. However, a sharp downside may be prevented on a higher inflation. Meanwhile, investors will focus on a series of macroeconomic data from the US

Silver Outlook

• Silver prices are expected to take cues from gold prices and are likely to trade in the consolidation range of | 60,000 to 63,500 levels for the coming week

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ICICI Securities

Published on 12/01/2022 2:45:48 PM

Energy Outlook

* Oil rose to more than $81 a barrel on Tuesday, supported by tight supply and expectations that rising Coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery

* A lack of capacity in some countries has meant that supply additions by Opec are running below the allowed increase under a pact with its allies. Recent outages in Libya have also supported prices

* Meanwhile, US crude oil output is expected to rise 610,000 barrels per day to 12.41 million bpd in 2023, the government said in its first forecast for next year

* Crude oil prices are likely to rise further towards ₹ 6090 level for the day amid lower than expected supply additions from the Opec+ nations. Further, falling US inventories and rising global demand will add more support to crude oil prices in the near term

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ICICI Securities

Published on 12/01/2022 2:45:28 PM

Base Metal Outlook

* Base metal prices surged on Tuesday, boosted by tight supply concerns as producers cut production while strong raw material prices also offered support

* Aluminum traded near recent highs due to soaring energy costs and production cuts, which have exacerbated deficits of the metal used in the power, construction and packaging industries

* Aluminum stocks at three major Japanese ports were down 6.4% to 268,600 tonnes at the end of November from 287,100 tonnes at the end of October, Marubeni Corp said on Tuesday

* Base metal prices are expected to remain supported for the day amid falling warehouse inventories and rising demand. Further, weakness in the dollar will make greenback priced metals cheaper for other currency holders. Investors will now focus on key inflation data from major economies along with trade data from top consumer China

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ICICI Securities

Published on 12/01/2022 2:45:15 PM

Bullion Outlook

* Gold prices bounced back on Tuesday, buoyed by a retreat in the dollar, as Federal Reserve Chairman Jerome Powell said he expected the Fed to raise interest rates this year and end its asset purchases but added that the central bank had not made any decision about the timing for tightening monetary policy

* Further, Fed Chair Jerome Powell said the US labour market is recovering rapidly from the hit it took during the Coronavirus pandemic and should not face added weakness as the Fed begins to remove some of the support offered during the crisis

* Overall, gold and silver prices are expected to remain supported for the day amid subdued dollar and ahead of the key US inflation data, which is expected to have risen to its highest in decades

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