Quotes from Commerzbank Corporates & Markets:
-Oil prices gained noticeable ground on Friday and are largely defending their gains as the new week begins. Brent is trading at $103 per barrel and WTI just below $96 per barrel. As the CFTC data published on Friday revealed, financial investors have more or less stopped withdrawing from crude oil. After falling sharply three weeks in a row, speculative net long positions in WTI declined only slightly in the week to 26 August and still find themselves at their lowest level since May 2013.
-The abating selling pressure on the part of financial investors is likely to have lent support to the price recovery recently. The ICE will be publishing the corresponding positioning data for Brent at lunchtime today. The ample supply situation is precluding any significant rise in prices. Libya for example has been able to scale up its oil production to 700,000 barrels per day of late, according to the National Oil Corporation (NOC).
-As compared with the lows it recorded in May, Libyan oil production has thus grown by more than 500,000 barrels per day. The additional supply from Libya is compounding the oversupply on the European market because the other OPEC producers are not scaling back their supply accordingly.
-This is also shown by a recent Bloomberg survey of OPEC production in August, which is supposed to have risen by almost 900,000 to 31.033 million barrels per day – the highest level for a year. Nigeria, which has increased its production by 380,000 barrels per day, made the biggest contribution to this. Higher supply was also reported for Saudi Arabia, Angola, Libya and Iraq.
-At just shy of $1,290 per troy ounce, the gold price is still trading well below the $1,300 mark. The price continues to face headwind from speculative financial investors, who reduced their net long positions by 21% to 81,200 contracts in the week to 26 August.
-This was already the second consecutive weekly decline again, putting net long positions at their lowest level since mid-June.
-Until the headwind from this side abates, the gold price will probably not manage to regain any noticeable ground, especially since ETF investors are continuing to exercise restraint. The still firm US dollar likewise argues against a significantly higher gold price.
-This week the market will be focusing on the ECB meeting, at which ECB President Draghi may announce an ABS purchasing programme as an interim step towards broad-based bond purchases (“QE”).
-Metal prices look amazingly robust as the new week gets underway, no doubt finding support from firm Asian equity markets despite somewhat weaker economic data having been published once again from China. The official Purchasing Managers’ Index for the manufacturing sector, for example, fell noticeably to 51.1 in August, its first decline in six months. HSBC’s PMI was also revised slightly down.
-Both point to a fairly sluggish Chinese economy in the third quarter. Evidently, the market is pinning its hopes on the government implementing stimulus measures in the near future. Unless the economy gathers pace significantly in the remainder of the year, this could be reflected in cooling demand for metals, which would then doubtless preclude any marked rise in prices.
-According to the latest CFTC figures, speculative financial investors more than doubled their net long positions in copper on the COMEX in New York in the week to 26 August to 17,300 contracts, albeit from a low level. This was largely due to the covering of short positions.
-The increase in the price of copper observed during the period under review was therefore driven at least in part by speculation and could thus turn out not to be sustainable. The LME will be publishing new positioning data tomorrow. Today is a public holiday in the US, meaning that the trading volumes on the markets are likely to be considerably lower.
Source: FxWire Pro