Commodities: Mix of weaker fundamentals and stronger USD drags lower - ANZ

Research Team at ANZ, notes that the commodities were lower as a mix of weaker fundamentals and a stronger USD saw investors head for the exits.

Key Quotes

“Crude oil struggled to keep its head above water after the weekly EIA showed another large rise in inventories in the US. Stocks of crude oil jumped 5.27m barrels, much more than expected. This was countered by a 11kb/d fall in output and an increase in refineries utilisation and crude input runs. Reports that OPEC and Russia will meet in Doha later this week to discuss production cuts also helped improve investor sentiment.”

“Industrial metals suffered further falls as investors continued to lock in profits and liquidate long positions after the strong run since the US election. Nickel was the only metal to end the day higher as inventories continue to fall. Iron ore trading volumes on exchanges in Asia returned to normal levels after the exuberance earlier this week. However, it still was not enough to entice physical buyers back into the market, with relatively few tenders being settled. This saw spot prices head lower.”

“Gold prices edged lower as investors continued to sell positions. Holdings of gold-backed ETFs dropped 13.6t to 1952.7t as of Tuesday according to Bloomberg data. This is the biggest four day plunge in more than three years.”

“Agriculture markets were weaker, with sugar leading the losses. Heavy rain and heat boosted sugar cane growth in Brazil. The overly bearish positions of investors have also seen many lock in these profits.”