Oil prices rise
Oil prices closed higher after a volatile session on fears the United States would not consider additional concessions to Iran in response to a draft aimed at reinstating Tehran’s nuclear deal.
Iran says it has received a response from the US to the EU’s final text on reinstating Tehran’s 2015 nuclear deal with world powers.
Ending session 24/8, Brent crude oil increased by 1 USD to 101.22 USD/barrel while WTI oil increased by 1.15 USD to 94.89 USD/barrel. Both of these oils fell more than $1 in early trading.
Oil was also supported after Saudi Arabia this week suggested OPEC might consider cutting production, although signs of economic weakness from central banks and falling stocks have weighed on oil.
Sources said OPEC+ was already producing 2.9 million bpd below its target, complicating any decision to cut or how the baseline to reduce output would be calculated.
Oil prices fell early in the session after US government data showed weaker gasoline demand. Gasoline demand data shows that the 4-week average daily supply of petroleum products is 7% lower than in the previous period this year.
Stable gold
Gold prices were mostly stable as the USD gave up earlier gains in this session, while investors waited for the event at Jackson Hole for clues on interest rate hikes.
Spot gold edged up 0.1% to $1,749.35 an ounce. US gold for December term closed unchanged at $1,761.5 per ounce.
Helped gold reverse its initial decline in USD around 108.6 after rising to 109.112 earlier in the session.
Markets await Federal Reserve Chairman Jerome Powell’s speech at the Economic Policy Symposium in Jackson Hole on August 26. The speech could shed light on the Fed’s path to tightening monetary policy. Gold tends to underperform if interest rates rise.
Investors also await the release of second-quarter U.S. gross domestic product estimates and July consumer spending data to be released later this week.
Aluminum rises as smelters close
Aluminum prices rise as smelters shut down supply, analysts say any rally could be capped by looming economic slowdown and its impact on demand metal.
A smelter in Slovakia last week became the latest in Europe to announce closures due to high energy costs, and a German plant is also considering cutting output.
Meanwhile, authorities in China’s Sichuan province have ordered the temporary closure of smelters that can produce about 1 million tonnes a year, citing drought and recent heatwaves.
But weak economic data, rising interest rates and inflation kept investors cautious, sending global equities lower and keeping the dollar near 20-year highs.
On the London Metal Exchange (LME) aluminum rose 0.3% to $2,430 a tonne. The price of the metal has largely stabilized in recent weeks after falling 40% from a peak in March.
Citi said aluminum capacity of about 1 million tons has been withdrawn from Europe, while another 500,000 tons in Europe and another 200,000-300,000 tons in the US are under threat. About 65 – 70 tons of aluminum are produced each year. However, Citi said supply in Asia is still oversupplied.
Iron ore highest a week
China’s iron ore prices rose to a one-week high on the prospect of strong demand in the country ahead of the peak construction season.
On the Dalian Commodity Exchange, iron ore closed up 2.7% to 716 yuan ($104.35) a tonne and the Shanghai steel bar contract gained 1.5% to 4,086 yuan a tonne. Both contracts hit their highest levels since Aug. 17.
More measures from China to support the country’s real estate sector. On August 22, Bloomberg reported that China is planning to provide a special loan of 200 billion yuan to developers in difficulty.
There are signs of iron ore inventories falling this week, with Mysteel showing that inventories at ports in China fell 0.3% on August 22 from a week ago, to 138.6 million tonnes.
However, the long-term outlook remains bleak as a recovery in the number of Covid-19 cases and continued global economic slowdown weigh on steel demand.
In Shanghai hot rolled coil increased 2% to CNY 4,008/ton, stainless steel increased 0.7% to CNY 15,465/ton.
Reduced rubber
Japanese rubber prices fell in line with the trend in the Shanghai market, due to the decline in crude oil prices.
The January rubber contract on the Osaka exchange closed down 1 JPY, or 0.4%, to 226.7 JPY ($1.66)/kg.
In Shanghai, the January rubber contract fell by 160 CNY to close at 12,705 CNY (US$1,851)/ton.
Japan’s Nikkei index closed down 0.49%.
On the supply side, rubber output from top exporter Thailand could be impacted by forecasts of continued showers and floods across the country, including in the southern rubber growing provinces.
Coffee increased by more than 4%
December Arabica coffee futures closed up 10.75 US cents, or 4.7%, at $2.39/lb, after rising to the highest since June 6 at $2.40/lb.
Dealers say the market continues to be supported by dry weather in Brazil’s coffee growing regions that increases the likelihood of insufficient moisture to sustain bud and pod development after rain. fence in the beginning of the month causes some flowers to bloom early.
The recovery in exchange stocks still reflects a bearish bias, but is currently being dwarfed by crop concerns in Brazil.
November robusta coffee futures rose $90, or 4%, to $2,348 a tonne after rising to its highest level since January 5 at $2,355 a tonne.
The opposite path
Raw sugar for October delivery closed 0.15 US cents or 0.8% higher at 18.04 US cents/lb, partly due to lower-than-expected sugar production in south-central Brazil in the first half of August.
Sugar production totaled 2.63 million tons, down 12% from the same period a year ago, according to Brazil’s Unica organization.
October white sugar futures fell $0.30, or 0.1%, to $549.5 a tonne.
Maize gains 6th session in a row, soybeans down, wheat up
U.S. corn prices edged up slightly after hitting a nearly two-month high, bolstered by concerns about hot, dry weather in the Midwest during a key growing period of the crop.
Wheat was strong, gaining for a fourth straight session, while soybeans fell on profit-taking after rising to a three-week high in overnight trading.
Corn prices continued their sixth straight session of gains but closed below their previous night’s peak, pressured by some reports of strong production capacity in several key producing areas of Illinois and Iowa.
CBOT corn for December term closed up 2 US cents to 6.57-1/4 USD/bushel. The price peaked at $6.71, the highest since June 27.
CBOT soybean for November delivery fell 4 US cents to 14.57 USD/bushel and winter soft red wheat for December delivery rose 12-3/4 US cent to 8.13-1/4 USD/bushel.
Prices of some key items on the morning of August 25:
