Oil up about 2% on China growth hopes
Oil prices rose about 2%, as hopes of a strong Chinese economic recovery outweighed worries that rising US interest rates would drag down consumption in the world’s largest economy.
Closing the session on February 28, Brent crude oil delivered in April, due in this session increased by 1.44 USD or 1.8% to 83.89 USD/barrel. The May contract rose $1.41, or 1.7%, to $83.45 a barrel.
WTI oil rose $1.37, or 1.8%, to $77.05 a barrel.
Anticipating a recovery in demand in China has bolstered the upside, the market awaits key data in the next two days. Economists polled by Reuters expect manufacturing activity in the world’s second-largest economy to increase in February.
Urals crude oil exports to China from Russia’s western ports increased in February from the previous month, due to lower transportation costs and increased demand.
Oil prices are expected to rise above $90 a barrel in the second half of 2023 as Chinese demand recovers and Russian output declines, according to a Reuters poll.
Similarly, JPMorgan oil analysts maintained their 2023 average Brent oil price forecast at $90 per barrel.
Oil’s gains were capped by fears of a U.S. rate hike after new orders for U.S. capital goods were stronger than expected in January.
The Organization of the Petroleum Exporting Countries produced 28.97 million bpd in February, according to a Reuters survey, up 150,000 bpd from January. Output is still down more than 700,000 bpd from September.
Meanwhile, the US Energy Information Administration (EIA) said that the country’s crude oil production in December 2022 fell to 12.1 million barrels per day, the lowest since August 2022.
Still, U.S. crude inventories are growing and are forecast to rise for a 10th straight week, with analysts polled by Reuters predicting a rise of nearly half a million barrels last week.
Gold has the biggest monthly drop since June 2021
Gold prices rose during the session but had their biggest monthly drop since June 2021 on a stronger dollar and fears that the US Federal Reserve would continue to raise interest rates.
Gold hit its highest level since April 2022 in early February, but soon reversed course. Gold prices fell more than 5% in February after strong economic data spurred further interest rate hikes.
Spot gold rose 0.6 percent to $1,828.28 an ounce, hitting its lowest level since late December 2022 at $1,804.20. US gold for April futures closed up 0.7 percent at $1,836.7 an ounce.
Over the next few weeks, the USD and US bond yields could fall and support gold prices, after which the price could fall (as the Fed continues to raise interest rates) and fall to the level of 1,700 USD/ounce.
The USD rose for the first time in 5 months, making gold more expensive for buyers in other currencies, causing the gold price to have its first monthly decline in 4 months.
The dong rose as investors took profits
Copper prices continued to rise as speculators adjusted their positions on hopes of recovering demand in China, the world’s top consumer of the metal.
Three-month copper on the London Metal Exchange rose 1.9% to $8,965.5 a tonne after gaining 1% in the previous session. However, the contract fell 2.7% in February, the first drop since October 2022.
Copper on the US Comex exchange rose 2.1% to $4.09/lb.
LME copper price recovers from an important level for investors watching for technical signals.
Since the session low on Feb. 27, the LME has fallen 9% since the seven-month high at $9,550.50 a tonne hit in January. In January, copper prices rose largely on hopes The easing of strict Covid-19 controls in China will boost demand.
Copper demand in China remained weak in February, putting pressure on prices, but analysts expect China’s economy to recover strongly from early March, the government is likely to unleash more stimulus at the National Assembly session.
Iron ore prices mixed
Iron ore prices in Dalian and Singapore fluctuated due to mixed short-term market prospects.
The May iron ore contract on the Dalian Commodity Exchange closed down 0.78% at 888.5 yuan ($127.98) a tonne. While iron ore in Singapore for March delivery rose 0.87% to 123.8 USD/ton.
Analysts at Huatai Futures said supply remains fairly tight and demand will be supported by a recovery in steel demand, while warning of the possibility of increasing price volatility stemming from uncertainty about the market. policy.
Brazilian miner Vale SA said production of fine iron ore is expected to increase in the coming years.
Steel prices continued their downward trajectory amid weakening raw material prices.
Rebar in Shanghai fell 0.64% to CNY 4,174/ton, hot rolled coil fell 0.54% and stainless steel fell 0.66%.
Japanese rubber decreased in February
Japanese rubber prices rose during the session, on the back of stronger domestic shares, although overall rubber fell in February on weak local factory output and fears of a global recession.
Rubber contract for August delivery on the Osaka exchange closed up 1.4 JPY or 0.6% to 224.2 JPY ($1.65)/kg. The contract fell 3.5% in February from the previous month.
In Shanghai, rubber for May delivery fell 70 CNY to 12,450 CNY (US$1,794)/ton.
Factory output in Japan fell at the fastest pace in eight months in January as slumping overseas demand took a toll on key industries such as autos and semiconductors.
The natural rubber market was also supported by rising oil prices.
Raw sugar hits new 6-year high
Raw sugar for March futures, which expires this session, closed down 0.01 US cents at 22.08 US cents/lb, having previously risen to 22.36 US cents, the highest since November 2016.
Raw sugar for May delivery fell 0.22 US cents, or 1.1%, to 20.07 US cents/lb. This market structure points to tight supply in the short term.
DATAGRO company director said at the Dubai Sugar Conference, sugar production in Brazil’s south-central region is forecast to increase 13% to 38 million tons in the 2023/24 season.
Brazilian energy producer Raizen SA expects 48% of cane in the South Central region to be used for sugar production in the 2023/24 season. This forecast is slightly higher than the average forecast of 46% in a Reuters poll released last month.
May white sugar futures fell $8.9, or 1.6%, to $562.4 a tonne.
Mixed coffee
Arabica coffee for May delivery closed down 0.15 US cents or 0.1% at $1,863 a lb.
Arabica coffee remains underpinned by tight spot markets in Brazil and Colombia and reduced exchange stocks.
Rabobank said that despite the good weather in Brazil, the outlook for this crop is unlikely to change much as the crop potential is established months in advance during bloom.
Robusta coffee for May futures rose $7, or 0.3%, to $2,140 a tonne.
Coffee exports from Vietnam are estimated to decrease by 13.1% in the first two months of 2023 year-on-year, to 323,000 tonnes.
Corn drops to lowest since August 2022, soybeans to 7-week low
Corn prices on the Chicago Mercantile Exchange fell 2.1 percent to a seven-month low on fund selling and concerns about dwindling export demand.
The May CBOT corn contract closed down 13-1/4 US cents to 6.3-1/4 USD/bushel. The price of corn previously fell to $6.3, the lowest for the most traded contract since August 22, 2022. For the whole month, corn fell 7.2%, the biggest month since June 2022.
Soybeans fell to a 7-week low as funds were liquidated before the end of February. CBOT May soybean futures fell 33-3/4 US cents to $14.79/bushel, down 3.8% in the month. February, the first month of decline since September 2022.
Wheat fell for the fifth time in six sessions on worries about overseas demand and improving US farm weather.
Winter soft red wheat for May delivery fell 4-1/2 US cents to 7.05-1/2 USD/bushel, down 7.1% in February, down for the 5th consecutive month.
Prices of some key items in the morning of March 1
