Evening Track : Natural Gas extends gains on cold weather outlook - Kotak Securities Ltd
Comex Gold futures declined on Monday to trade near $2,707 per ounch, pressured by a stronger dollar following robust U.S. jobs data. This strengthened the Federal Reserve's position on maintaining higher interest rates, which typically weighs on gold. However, losses were limited by safe-haven demand amid uncertainty surrounding President-elect Trump's policies, particularly his proposed tariffs. The dollar index surged to a two-year high, reflecting the Fed's cautious stance and concerns over potential inflation stemming from trade disputes. Key economic data releases this week, including CPI, PPI, and retail sales, will provide further insights into the economic outlook. Fed officials' speeches will also offer clues on the future path of interest rates.
WTI crude oil futures surged to a five-month high of $78.58 per barrel on Friday following the imposition of stringent US sanctions on Russia's energy sector. These measures, targeting key exporters, insurers, and numerous tankers, significantly disrupt Russian oil supplies. The sanctions have placed a significant burden on major oil importers like India and China. Indian refiners anticipate substantial disruptions, potentially lasting up to six months, while Chinese independent refiners are scrambling to ensure uninterrupted crude deliveries. This development underscores the global impact of these sanctions and highlights the potential for increased volatility in the oil market.
LME Copper prices saw an uptick to trade near $9,107 per ton amidst positive economic indicators from China. December witnessed a record $336 billion in Chinese goods exports, exceeding expectations. This surge is attributed to pre-emptive shipments ahead of potential trade tensions and a sluggish domestic market. Notably, copper imports reached a three-year high, reflecting increased demand. While aluminum exports declined following the removal of tax rebates, the Chinese government's commitment to stimulate domestic consumption and stabilize trade provided a positive outlook. This supportive stance, coupled with the robust export figures, contributed to a renewed sense of optimism in the copper market after a challenging previous quarter. LME Aluminium up 0.33% to trade near $2,580 per ton while Zinc is up 1% to trade near 2,890 per ton.
European natural gas prices experienced a significant rebound on Monday, rising by 5.4%, following a 9% decline the previous week amid colder weather forecasts have emerged, increasing demand for heating while the recent imposition of stringent US sanctions on Russia's oil industry, including key LNG facilities, has heightened supply concerns. These sanctions, targeting major exporters, have already impacted oil prices, which are linked to some gas contracts. Furthermore, existing market pressures are exacerbated by rapid gas withdrawals from storage sites and the prospect of below-average temperatures throughout January. Adding to these challenges, Russia has accused Ukraine of attempting to sabotage a critical gas compressor station on the Turkstream pipeline, further jeopardizing gas supplies to Europe. This incident underscores the fragile state of European gas markets, characterized by heightened volatility and persistent supply uncertainties.
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