Oil traders also reacted to Tuesday’s release of the latest inventory data from the American Petroleum Institute. The report showed that crude oil inventory rose to 940,000 million barrels. This was largely in line with expectations, and sharply lower than the 4.46 million build seen last week.
The data suggests that investors should continue to be concerned about the over-supply situation. However, there may be some relief coming if there is a pick-up in seasonal demand for gasoline.
Prices are concerns over potential disruptions to supplies in the Gulf of Mexico from Wednesday to Friday due to tropical storm activity with just over 20% of output in the Gulf shut down for a few days.Iraq – which exported more crude this month from its southern ports than in July – will continue ramping up output, its oil minister said on Saturday.A Nigerian militant group has said it has ended attacks on the nation’s oil and gas industry that have reduced the OPEC member’s output by 700,000 barrels a day to 1.56 million bpd.But the prospect of a recovery in oil production from Libya happening any time soon was tempered after the head of the country’s National Oil Corp. said budgetary delays from the new government were undermining oil production.
The huge global oil oversupply that has weighed on prices for the past two years may not clear until the second half of 2017, Shell’s chief energy adviser Wim Thomas told Reuters.
Natural Gas rallied as traders took advantage of the low prices to buy up the commodity as weather forecasts call for a warmer later autumn season. There are hopes of a lower inventory after a drop last week. Prices have failed to rally significantly this season as NG is expected to trade around 3.20 in its off season between summer and winter.
In the last three months, prices are up by 21.3% due to expectations of a hot summer, short covering, and traders watching for possible impacts from La Niña. As a result of that rally, the contract broke above the upper boundary of the downward sloping trend channel that had defined price action since the early July peak was established. The breakout above the upper channel line and subsequent follow through left resistance at the late July/early August highs at $2.885/$2.911 in play, and this zone is currently capping upside price action.
Copper remains at the bottom of its trading range at 2.079. Bloomberg reported that copper prices were at their lowest in two months after stockpiles surged and Barclays Plc flagged concern over growth in China, the world’s biggest consumer.Inventories tracked by exchanges in Shanghai, London and New York climbed five straight days last week to the highest since May. Barclays said in a report that a recent slump in the copper market “may be an early warning sign of weakening in China’s economic momentum.”Hedge funds and other large speculators held a net-short position of 4,991 U.S. copper futures and options contracts in the week ended Aug. 23, according to Commodity Futures Trading Commission data released three days later. They switched from a net-long position of 2,237 a week earlier.
Holdings in warehouses tracked by the London Metal Exchange climbed every day last week to the most since 2015 on Friday.
Chinese growth is forecast to slow to 6.5 percent this year, the weakest since 1990. Copper will be in “substantial surplus” for at least the next two years as a “huge wave of new mine supply hits the market,” according to Barclays.
Chile’s copper production was 448,000 tonnes in July, down 1.5% year-on-year and 5.5% month-on-month, according to Chilean government.
China Aluminum International Trading Co. (Chalco Trading) cut aluminum prices it offered in major markets today after three consecutive days of hike, it said on its WeChat.
LME lead should range between USD 1,860-1,890/mt on Wednesday and SHFE 1610 lead to range between RMB 13,750-13,950/mt.
Nickel Prices Retrace As Indonesian Supply Soars.Philippines Supply Down In June and July, nickel rallied as the Philippines reviewed all existing mines in order to close those that had adverse impacts on the environment. At least eight nickel mines have been shut down so far this year, cutting around 10% of the country’s capacity.
The Philippines is by far the largest nickel ore supplier to China since Indonesia imposed an export ban for unprocessed material back in 2014. Lower production is already showing up in the export numbers. For the first seven months, China imported 13.84 million metric tons from the Philippines, down 27% from the same period last year.
The current disruptions in the Philippines have no doubt tightened the market for nickel ore triggering a price rally this year. However, will this shortage in China’s nickel-pig iron industry translate into a shortage of nickel in the global market .
Indonesian Refined Nickel Supply Up While supply of nickel ore to China is declining, supply of refined nickel to China is rising. For the first seven months, China’s imports of ferronickel from Indonesia have surged more than four-fold to 390,700 mt. Comparing apples to apples, the nickel content of the year to date ferro nickel exports equal to about 4 million mt of nickel, slightly less than the 4.13 mmt loss in the Philippines so far this year.
For this reason, we hear some analysts saying that China isn’t importing less nickel, it is just changing the form in which it imports the metal.
What This Means for Metal Buyers
The supply and demand balance for the coming months will depend on how many more mines the Philippines shut down versus how much more ferronickel/refined nickel Indonesia continues to supply. So far, we believe it’s too early to call for the end of nickel’s Bull Run.
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