Action in Commodities: Energy Higher - ANZ
Analysts at ANZ explained the action in the commodity sector.
Key Quotes:
"Energy was higher. Supply disruptions and closures helped push crude oil prices higher, despite the stronger USD.
While
the wildfire in the oils and regions of Canada is still wreaking havoc
with many producers, US oil output continues to feel the impact of low
prices. EIA data show that production fell another 113,000 b/d to
8.83mb/d. This is the lowest level since November 2014.
Precious
metals were lower. A slightly stronger USD outweighed growing
expectations of a weaker jobs report, pushing gold prices lower. • Bulks
were unchanged. The physical iron ore market held steady above USD60/t,
although derivatives continued their downward trend. Iron ore exports
from Australia’s Port Hedland terminal jumped 6.5% y/y in April as
Chinese demand picked up. Shipments hit 37.7mt. Of this, 30.1mt went to
China, up 8.3% y/y. Chinese steel prices remained weak, with rebar
prices falling another RMB100/t yesterday.
Industrials were
lower. Copper led the complex lower on persistent concerns that demand
in China remains weak. The stronger USD also weighed on the sector. Weak
prices continue to pressure the producers. Glencore has shut a furnace
at its Koniambo smelter in New Caledonia, keeping production well below
its 60ktpy nameplate capacity.
Agriculture was weaker. Early
gains were quickly erased as investors liquidated positions as the USD
strengthened. Sugar prices were stronger after expectations rose of
another record high deficit in the market. Wheat also came under
pressure as prospects of a strong harvest in the top US growing state of
Kansas improved."
