Commodities Are Stable Early on August 9

Pre-Market Report: North Korea Tensions Impact Global Markets PART 3 OF 3

Crude oil

After losing momentum last week, crude oil started this week on a weaker note by pulling back on Monday. Despite the decline in inventories, crude oil fell on Tuesday. In the early hours on Wednesday, crude oil is trading with strength.

Market sentiment

Crude oil prices are stable on Wednesday ahead of the much-awaited weekly inventory report by the EIA (U.S. Energy Information Administration). According to data released by the API (American Petroleum Institute) on Tuesday, the crude oil inventory levels fell by 7.839 MMbbls (million barrels) in the week ending on August 4—higher than the market’s forecast draw of 2.2 MMbbls. Despite the huge drawdown in crude oil inventory levels reported by the API, crude oil didn’t rise due to an unexpected surge in gasoline inventory levels. The market is looking forward to the weekly inventory report by the EIA. The report is scheduled to release at 10:30 AM EST today. The market expects the EIA to report a fall by 2.7 MMbbls in crude oil inventory levels. Lower crude oil imports increased the expectations of a crude oil inventory decline.

At 6:45 AM EST on August 9, the West Texas Intermediate crude oil futures contracts for September 2017 delivery were trading at $49.45 per barrel—a gain of ~0.63%. Brent crude futures contracts for October 2017 delivery rose ~0.52% and were trading at $52.41 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $30.71 after falling 0.16% on August 8.

Metals

Copper gained for three consecutive trading days and traded with strength in the early hours on Wednesday. The expectations of capacity cuts in China during the winter season are supporting copper prices. Also, increased expectations of higher demand for copper in 2H17 pushed copper prices to more than two-year high price levels. Gold (GLD) and silver (SLW) prices are strong in the early hours on Wednesday amid weak global sentiment due to tensions with North Korea. The weaker dollar is also supporting precious metals. The weaker dollar boosts the prices of dollar-denominated commodities like copper, gold, and silver. Platinum is stable, while palladium pulled back in the early hours on August 9.

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