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Oil prices down
Oil prices fell about 1.5% and were on track for a weekly decline on weak Chinese demand and hopes a ceasefire in Gaza could ease Middle East tensions and supply concerns.
At the close of the July 26 session, Brent crude fell $1.24 or 1.5% to $81.13/barrel. WTI crude fell $1.12 or 1.4% to $77.16/barrel.
Brent crude fell more than 1% this week and WTI crude fell more than 3%.
Figures released last week showed China’s total fuel oil consumption fell 11% in the first half of 2024, raising concerns about the demand outlook in China.
China’s economy is at risk of entering a deflationary cycle, where prices fall due to falling demand.
Meanwhile, demand from the world’s top oil consumer is also expected to fall as US refineries prepare to cut output as the summer travel season ends in early September.
The country’s second-largest refiner, Valero Energy, said its 14 plants would operate at 92% of total capacity in the third quarter. Valero’s refineries operated at 94% of capacity in the second quarter.
In the Middle East, hopes are growing for a ceasefire in Gaza. A ceasefire is closer than ever, a six-week truce in exchange for Hamas releasing hostages including women, the sick, the elderly and the wounded.
However, oil’s decline was limited by threats to output from Canadian wildfires, a large drawdown in US crude inventories and continued hopes of a Fed rate cut in September following strong US economic data.
Gold price increase
Gold prices rose 1% as U.S. Treasury yields fell on optimism about the timing of a Federal Reserve interest rate cut in September after data showed U.S. consumer prices rose moderately in June.
Spot gold rose 0.8% to $2,382.98 an ounce, after hitting its lowest since July 9 in the previous session. U.S. gold futures for August delivery closed up 1.2% at $2,381 an ounce.
Fed policymakers got fresh evidence of progress in the fight against inflation, fueling expectations that next week’s meeting will signal the start of interest rate cuts in September. Lower interest rates reduce the cost of holding gold.
Gold demand in India, the world’s second-largest gold consumer, was boosted when the country cut import duties on gold and silver earlier this week.
Copper posts third weekly decline
Copper prices posted a third weekly decline on concerns that spot buying may not be sustainable in China as the economy remains sluggish in the absence of significant stimulus measures.
Three-month copper on the London Metal Exchange (LME) fell 0.1% to $9,107 a tonne, down 2.2% this week.
More Chinese copper consumers are returning to the market after two months of gloom, lured by a 17.8% drop in prices from a record high in May.
Copper inventories on the Shanghai Futures Exchange fell to a two-month low of 301,203 tonnes.
This month, China reported weaker-than-expected economic growth and investors were disappointed after a meeting of key leaders focused on policy continuity rather than any structural changes.
The Fed’s monetary policy meeting on July 31 is also in focus, as investors look for clues on interest rate cuts that market participants widely expect to begin in September.
Iron ore ends 3-day decline
Dalian iron ore rose, snapping a three-session losing streak on fresh economic stimulus from China, but posted weekly losses amid concerns about demand from the struggling property sector.
The September iron ore contract on the Dalian Commodity Exchange in China closed up 1.5% at 779 yuan ($107.45) a tonne. On a weekly basis, the contract fell 2.75%.
In Singapore, iron ore futures for August delivery rose 1.94% to $101.85 a tonne, down 4.41% on the week, the biggest weekly drop since June 7.
The report of rising steel inventories from China shows ongoing weakness in the steel market amid a slowdown in construction activity in the property sector, ANZ analysts said in a note.
Data from consultancy Mysteel showed that finished steel inventories at traders’ warehouses in 132 Chinese cities fell 0.8% from the previous week in the July 19-25 period to a one-month low of 21 million tonnes, but were up 11.9% from the same period last year.
In Shanghai, hot-rolled rebar and coil rose about 0.65%, wire rod rose 0.44%, while stainless steel fell 0.22%.
Japanese rubber increases
Japanese rubber closed higher as investors kept an eye on spot rubber prices, although the contract had a lackluster performance this week.
The January 2025 rubber futures contract on the Osaka Exchange closed up 2.4 yen, or 0.76 percent, at 317.7 yen ($2.07) per kilogram, down 0.41 percent for the week.
In Shanghai, the September rubber contract rose 15 yuan, or 0.1 percent, to 14,365 yuan ($1,981.6) a tonne. Prices have fallen 1.41 percent this week, the biggest weekly decline since July 5.
Thailand’s smoked sheet rubber exports increased 1.12% to 80.07 Thai baht/kg FOB.
Coffee discount
September arabica coffee futures closed down 4.45 US cents, or 1.9%, at $2.3025 a lb, having hit a three-week low of $2.2750 a lb on July 25. Arabica has fallen 1.9% this week.
Pressure on prices is an increased harvest pace in top producer Brazil, helped by recent dry weather.
However, Citi said it has revised down its forecasts for this year’s output in both Vietnam and Brazil due to poor weather, and now expects a global surplus of 100,000 60kg bags in 2023/24. It expects average arabica prices to be $2.45/lb in Q3, 10 US cents higher than its previous forecast.
Robusta coffee futures for September delivery fell 2.1% to $4,302 a tonne.
Sugar reduction
October raw sugar futures closed down 0.24 US cent, or 1.3%, at 18.42 US cents per lb.
Citi said below-normal rainfall in Brazil suggests a weaker crop, which could be down 2 million tonnes in 2024/25. It expects raw sugar prices to average 19.5 US cents/lb in Q3 and 20 US cents/lb in Q4.
October white sugar futures fell 0.9% to $526.7 a tonne.
Wheat, corn, soybeans down
Wheat futures on the Chicago Board of Trade fell on expectations that spring wheat fields in the Dakotas will produce a record yield.
CBOT soft red winter wheat for September delivery closed down 14-1/4 US cents at $5.23-1/2 a bushel, down 3.5% in its third week of declines.
Corn fell on forecasts of hot, dry weather in the corn belt.
CBOT September corn futures closed down 11-1/2 cents at $3.945 a bushel. For the week, prices rose 1.3%.
August soybean futures closed down 38-1/2 US cents at $10.77-1/2 a bushel.
Prices of some key commodities on the morning of July 27
