• Audere Research

Commodities Monthly Roundup ~ December 4th

Updated: Dec 4, 2020



Energy


Brent enjoyed a strong recovery in November, gaining 28.6% MoM. This positive momentum has been supported by news of three impending COVID-19 vaccines and growing optimism for a long-term rebound in fuel consumption. Risk-on sentiment has also returned to the market now that the transfer of power to President Elect Biden seems certain and this is also supporting energy prices.


OPEC reconvened on 1 December to continue discussions regarding future volumes of oil cuts and disagreements within the OPEC+ group which includes Russia. Failure to reach agreement could result in large moves in oil prices in the coming days although this morning’s rumour is of a modest production increase in January which should keep prices relatively stable.


Interestingly the CBOE Crude Oil Volatility index which measures WTI volatility has dropped by 31% in November, but the potential for further volatility looks likely due to a mixed outlook. The general lack of direction appears facilitated by mix positioning of bearish short-term headwinds and bullish long-term outlook.




Metals

Aluminium closed at its highest point in 2 years with a monthly gain of 10%. November 2020 had been the best month for Aluminium Corporation of China Limited, popularly known as Chalco, since its debut almost two decades ago, as investors have started taking keen interest in the Chinese aluminium sector. China’s leading company in the non-ferrous industry rose a spirited 80% in Hong Kong in November, as metals prices took heart from China’s V-shaped economic rebound.


Copper – China’s robust manufacturing data set the scene for the metal’s best month in 4 years, up by 12.7% in November. China’s PMI number rose to 52.1 in November and is the highest level since September 2017. This V-shaped post COVID-19 recovery should prove strongly supportive for copper.


Zinc – MoM Zink is up by 10.3% and 23.7% for the year.




Precious Metals

Gold

November proved to be a nightmare for Gold Bulls with the metal losing 5% in November and hitting $1,764, the lowest level since July 2nd, on November 30th. It has since rebounded and currently sits around $1842/oz as the market considers the positive affect of vaccines (-ve for gold) against the potential of a long drawn out recovery supported by huge monetary stimulus.

Platinum

Platinum prices are up 15.6% MoM but remain far below record territory with its long-term chart looking bullish.





New Links

Traders know that when there is a disagreement among the Organization of Petroleum Exporting Countries, OPEC members, or the OPEC+ members, which include Russia, this has a massive influence on oil prices. (Link)


Shale firms ramping up natural gas output despite shaky market - higher natural gas futures prices for 2021, as well as forecasts of a 45 percent jump in gas prices next year, compared to a 15 percent increase for Brent oil, appears to be reason enough for U.S. shale firms to boost gas drilling and production. (Link). U.S. Oil Demand Set To Soar In The Coming Months - Despite the surge in coronavirus cases in recent weeks, crude oil demand in the United States could be on track to increase in the coming months as inventories have been steadily declining since their peak levels in the summer. Total U.S. stocks of gasoline and diesel are still trending above their five-year averages, but the oversupply has considerably shrunk since June-July when inventories had built at a fast pace due to the lockdowns in the first COVID-19 wave.

(Link)


President-elect Joe Biden's promise to end U.S. fossil fuel subsidies worth billions of dollars a year for drillers and miners could be hard to keep due to resistance from lawmakers in a narrowly divided Congress, including from within his own party. (Link)


Vaccine vs Gold: A Wild Tangent - MY RESEARCH TEAM and I went off on a wild tangent trying to identify how the markets could react to the recent spike in price activity on Monday, November 9, writes Chris Vermeulen at TheTechnicalTraders. (Link)


3 Reasons The Price Of Platinum Is Likely Headed Higher (Link)


Chalco’s share price spikes to the highest since debut representing recovery in Chinese aluminium sector. (Link)


Copper and aluminium continued their uptrend on Tuesday December 1 and taking the complex on a morning of gains while the LME continues to react positively to Chinese and Eastern Asian economic data and a weaker US dollar index. (Link)


Copper and aluminium prices reached new year-to-date highs at the close of trading on the London Metal Exchange on Monday November 30, while the rest of the base-metals complex showed dips in their three-month prices.

(Link)




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