The commodity market in q1 2021 has particularly seen some buying pressure relatively on reports revealing COVID caseloads are being subdued coupled with the $1.9 trillion stimulus deal boosting investors’ appetite for riskier assets, higher after the worst pandemic known to man disrupted financial markets at an unprecedented level.
The commodity market is made up of primary commodities like crude oil, cocoa, coffee, corn, hog, gold, silver, platinum, and so on, that trade on major global exchanges found in the United States, United Kingdom, and other major financial centers.
Platinum – 8.13%
The precious grey metal has seen high buying pressure of late due to strong demand from the automotive, jewelry, and industrial demand, offsetting reduced yet very strong investment demand.
Investors are also keying on the metal on macros that reveal light-duty vehicle production is expected to recover this year reaching levels just below those seen in 2019.
Tin – 7.86%
The industrial metal is facing one of the biggest supply squeeze in the history of metals markets as remote working drives a spike in demand amid plunging supplies
Demand for tin, used in soldering, electronics has surged amid booming sales of smartphones, TV, and other stays-at-home appliances used in the work-from-home era.
Orange Juice – 4.45%
The agro-based derivative has of late recorded impressive gains on reports key producing areas are witnessing some damage on a significant number of orange trees around Texas and northern Mexico in the wake of the recent hard freeze.
Also driving the price of the orange-colored agro derivative are speculators that appear to be the best buyers at the moment on increasingly bullish chart formations sighted on its most recent price actions
Gasoline RBOB – 4.41%
The price of the fossil-backed derivative remains strong as the world’s largest economy gasoline inventories plunged for a second week in the week ended March 5, Energy Information Administration data revealed March 10, as rising demand stressed winter-storm weakened production.
Spot Silver – 3.61%
The demand for precious and industrial metal still remains strong amid rising U.S yields. Demand for shiny industrial metal is expected to hit an8 year high of 1.025 billion ounces in 2021, according to the Silver Institute. A recovery in industry use of the metal – in medicine, water purification, semiconductors, solar panels, batteries, among other applications – is expected to lift demand.
Copper – 2.99%
Industrial metal in the past few days advanced on major commodity exchanges in hopes of rising demand. Metal pundits are anticipating copper prices might likely surge to an all-time high over the next 12 months as a result of strong demand from China’s clean energy drive and years of under-investment in global mine supply.
Data Source:investing.com, data accumulated at about 6.30 am West African time in real-time.
Common ways to invest in Commodities
Using commodity futures; These are agreements to sell or buy a given amount of commodity at a particular price and specified date in the future. They can be traded online through a broker that connects to commodity exchange.
Using CFDs; A contract for difference (CFD) is a derivative asset, where there is an agreement (usually between a broker and a commodity trader) to pay the differential in the commodity price of an underlying asset between the beginning and end of that contract.
Using the Physical method; The most popular way of commodity investing would be purchasing the commodity itself. Commodities such as cocoa, gold can easily be traded physically, unlike crude oil, natural gas that requires a significant amount of infrastructure.
Oil prices surge over China’s growing appetite for energy
British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.
Oil prices rallied high at the second trading session of the week as data from the world’s second-largest oil consumer’s (China) import growth picked up coupled with rising tensions in the Middle East after rebels from Yemen disclosed that they fired missiles on Saudi’s energy infrastructure.
At the time of writing this report, the British based contract ticked up by 0.3% to trade at $63.59 a barrel while the West Texas Intermediate futures edged near $60 a barrel.
The world’s second-largest economy recorded impressive gains for last month in yet another boost to China’s economic recovery as global demand gained momentum. Crude oil imports into China surged by 21% in March from a low base of comparison a year earlier.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the parabolic of the energy market, as oil traders seem to be uninspired on the resurging COVID-19 virus;
“The oil market’s magnetic attraction to the $63 level should tell us much about the near-term outlook amid conflicting signal of new Covid waves coming to shore ahead of what should be a summer gasoline buying bonanza.
But overall, this is an oil market that feels completely uninspired outside of a few micro lurches here and there.
Still, positive comments on the US economy from Fed Chairman Powell help to reassure the outlook for oil demand, balancing concerns about the continued spread of Covid-19 in some regions.”
What to expect
Recent price actions suggest oil traders might hold the $60 a barrel baseline in the near term even if U.S Treasury yields surge while struggling to resolve with what form and fashion the next leg of the reflation trade will take.
Oil prices stay on course as Saudi’s Energy Minister reassures traders
British based oil contract traded at about $63 a barrel while the WTI futures were trading slightly below the $60 price level.
Crude oil prices remained relatively firm at the early hours of Friday’s trading session as oil traders digested Saudi Arabia’s defense of OPEC+ plans in raising output thereby capping gains.
At press time, the British based oil contract traded at about $63 a barrel while the West Texas Intermediate futures were trading slightly below the $60 price level.
Saudi energy minister Prince Abdulaziz bin Salman recently revealed that there were no pressing concerns of demand/supply dynamics changing gear amid the gradual boost in outputs in an interview aired on Thursday, adding that OPEC+ had all ammunition put in place to change course if necessary. OPEC+ will continue to meet monthly on reviewing the energy market supply dynamics.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the prevailing market sentiment amid macros pointing to more oil supplies hitting the sensitive energy market and an upsurge in COVID-19 caseloads.
“Positioning is much cleaner, although the market remains directionally long oil. However, the sudden calm and drop in volatility have attracted passive investors back to the fray as the market structure around prompt spreads start to tighten and the dollar begins to roll over.
“Still, the conflicting signals around OPEC+ supply coming back to market amid spiking coronavirus case numbers in India plus parts of Canada as well as Tokyo backtracking into the lockdown Abyss, together with reports linking the UK’s Covid-19 vaccine workhorse to the higher frequency of blood clots, continues to hold the bulls at bay.”
What to expect: The most recent OPEC+ agreement on releasing barrels into such present demand was not out of place – suggesting the futuristic price of oil might range between the $60 -$70 price levels with production normalization vs current high excess production capacity taken into consideration.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Linkage Assurance Plc proposes N500million as final dividend for 2020, and a bonus issue on its existing shares.
- VFD Group set to raise additional capital of N9.01 billion through rights issue and private placement.
- GT Bank records a 9% dip in profit to N45.55 billion in Q1 2021.
- Secure Electronic Technology Plc records a 121% surge in Profit after tax in Q1 2021.
- Lafarge Africa Plc notifies stakeholders of 62nd Annual General Meeting.