Commodities Are Mixed in the Early Hours on August 31

Pre-Market Report: Global Market Sentiment Improved on August 31 PART 4 OF 4

Crude oil

After falling for four consecutive trading weeks, crude oil started this week on a negative note amid the weaker market sentiment. After falling in the first three trading days this week, the crude oil market is showing signs of strength on Thursday. In the early hours on August 31, the crude oil market is trading with stability above the opening prices.

Market sentiment

For crude oil, the market sentiment is weak due to several factors such as oversupply concerns, a lack of compliance to the supply cut agreement by OPEC producers, and concerns about the demand for crude oil in the coming months. However, the downward momentum has increased this week due to damage from Hurricane Harvey. Crude oil refineries were damaged in the Gulf Coast region. Despite the supporting inventory report from the American Petroleum Institute on Wednesday, crude oil prices fell. The market is concerned about the demand from the Gulf Coast region amid devastating floods. Approximately 25% of the US refinery capacity has been stalled due to Hurricane Harvey.

According to the U.S. Energy Information Administration, crude oil inventories fell by 5.392 MMbbls (million barrels) last week—a bigger inventory draw than the market’s forecast of 1.908 MMbbls. At 7:25 AM EST on August 31, the West Texas Intermediate crude oil futures contracts for October 2017 delivery were trading at $46.16 per barrel—a gain of ~0.44%. The Brent crude oil futures contracts for November 2017 delivery rose 0.69% and traded at $51.08 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $29.62 after rising 0.27% on August 30.

Metals

After a brief pullback on Wednesday, copper resumed its rally on Thursday. Copper opened strong on Thursday amid China’s upbeat manufacturing PMI data. It traded at fresh three-year high levels in the early hours. China is the biggest copper consumer. China’s manufacturing activity trends will impact copper’s demand and price trends. Gold (GLD) and silver (SLW) are weak in the early hours on Thursday amid strong global economic data and a rebound in the US dollar. The strong dollar weighs on the prices of dollar-denominated commodities like copper, gold, and silver. Platinum and palladium are also trading with weaker upward momentum in the early hours on August 31.

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