Investment Idea

Commodities Update 53

10/08/2016 | 2 min read

Oil price increasing, gold stable

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Oil prices were strongly increasing at the beginning of the week. WTI gained 1.5% to USD 42.5 per barrel and Brent increased about 1% to roughly USD 45. The demand for Oil is split at the moment, in the US the DOE-Report showed decreasing US Gasoline inventories followed by a strong demand in gasoline. In China the imports of Oil are on a new low, China imported 7.3 million barrels, at the same time the exports of oil related products increased to 2.5 million tones. This shows a weak domestic demand and production surplus combined. The weak demand of the second biggest economy is also displayed in the exports of the whole economy: In July there was a decrease by 4.4% in the annual comparison – the fourth decrease in a row.

Unexpected strong US labor market data was putting gold under pressure last Friday. 255.000 new Jobs were created, only 180.000 new jobs were expected, which could bring a new increase in the interest rates by the FED on the table. The US-Dollar was appreciating because of this, which led to a lower demand in Gold. Gold dropped to USD 1.336 after the Labor market data was released , at USD 1.330 it stabilized and increased on Monday afternoon to USD 1.338.

The price of copper started a little bit more solid this week, it was about USD 4.800 per tonnes and was supported by slightly increasing stock prices. On the other hand, the Chinese imports of copper decreased about 14% compared to the month before. They have been falling for the fourth time in a row and now hit a new 11-months low. China is really important for the pricing of copper, because the country is dominating half of the market. Goldman Sachs said that copper could get under pressure during this year and in 2017 because of the strong surplus and that the 20 biggest mining companies, which are responsible for about 60% of the copper supply, just raised their production level about 5%. Against the background of the increasing production, Goldman Sachs expects a decrease in the price to about USD 4.000 per tonnes. However the future development remains to be seen.