Copper prices gained for a fifth straight trading session to its highest since January on Wednesday, supported by global industrial demand for copper metal
Copper futures on the London Metal Exchange (LME) gained about 0.8% at $5,822 per ton in official trading, after touching its highest level since Jan. 24 at $5,862.50.
What you should know about copper? Copper is a malleable metal, a good conductor of electricity, used in making electrical wires.
Copper is also used in the construction sector and the mining industries, taking a technical view, copper broke through the 100- and 200-day moving averages, thereby giving metal traders the green light to increase their purchases in copper contracts.
“Copper is being carried higher by an improved fundamental outlook but also by an improved technical picture,” Saxo Bank analyst, Ole Hansen told Reuters
“The next area of resistance for LME copper lies at $6,050,” Hansen added.
The bullish momentum building on copper future shows a positive signal that the worse is over since the COVID-19 pandemic onslaught began early in the year.
“Net positioning on LME copper is on the verge of turning long, with the net short position shrinking from over 40,000 contracts in February to just 895 contracts as of early June,” said BMO analyst, Timothy Wood-Dow.
“Any aggressive buying here would have a positive effect on prices.” Timothy Wood-Dow added.
Oil prices stay on course over successful rollout of COVID-19 vaccines
The British-based oil contract, Brent crude surged by 0.46%, to trade at $62.99 a barrel, up from four days of losses.
Crude oil prices recorded early gains at the third trading session of the week. Oil traders are riding, on high hopes on progress made by COVID-19 vaccine rollouts in the world’s largest economy.
At the time of drafting this report, U.S. West Texas Intermediate (WTI) crude futures gained 0.3%, to $59.93 a barrel, partly recovering from the week losses.
Also the British-based oil contract, Brent crude surged by 0.46%, to trade at $62.99 a barrel, up from four days of losses.
However, it’s fair to say the bulls were not yet in full control as recent price action suggested capped gains.
Some oil pundits anticipate energy demand recovery is on the right track partly to the successful rollouts of COVID-19 vaccines at emerged markets.
That being said, Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the rising oil stockpiles at the world’s largest economy, keeping oil bulls far from holding their grip,
“U.S oil stockpiles rose last week and product inventories fell sharply in a cause and effect of the cold snap that forced refiners to shut down Texas operations.
“The unexpectedly large crude inventories build hit at a worrying time for oil bulls. This is particularly significant on the rising possibility that OPEC major oil producers could agree to ease production cuts at a critical meeting this week amid concerns that demand will likely outstrip supply as the global vaccine-led recovery gathers a head of steam,” Innes said.
What to expect: Oil traders are anxiously waiting for Thursday’s OPEC+ meeting. It appears to represent some overdue caution going into the OPEC+ meeting as market participants continue to draw straws and attempt to gauge the likely rise in production.
Oil prices plunge on fears OPEC+ may increase Oil supply
Oil traders are becoming wary that OPEC+ will increase oil output and further distort the energy demand/supply dynamics.
Oil prices lost more than a percent at the second trading session of the week. Oil traders are virtually going to extend short on concern that OPEC may agree to increase global supply in a meeting this week and Chinese demand may be dropping.
At the time of writing this report, Brent crude dropped by 1.2%, to trade at $62.91 after losing 1.1% in the past day. U.S. West Texas Intermediate (WTI) crude dropped by 1.2%, to trade at$59.90 a barrel, having lost 1.4% on Monday.
Oil traders are becoming wary that OPEC and its allies, a group often referred to as OPEC+, will increase oil output and further distort the energy demand/supply dynamics.
The group meets is scheduled to hold on Thursday as discussions might include allowing as much as 1.5 million barrels per day of crude oil back into the market.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics explained why the OPEC+ meeting matters most to many oil traders.
“Constructive oil market fundamentals have blown slightly off course ahead of the OPEC + meeting on Thursday as oil prices took to the plunge pool overnight, with Brent back to the soft US$63 handle after trading as high as $66.82 only last Thursday.
“Commodities were mostly weak overnight as the dollar regained a bit of ground. OPEC+ will meet this Thursday, and expectations are that despite Saudi Arabia’s call for caution, most members will push for an increase in output,” Innes stated.
Bottom line: energy pundits expect the all-important meeting this week in being one of the most interesting oil meetings in recent times, with Saudi Arabia urging producers to remain “extremely cautious”.
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