Commodity update 72
Gold stronger, OPEC's cut in production partially accomplished
According to Bloomberg and Reuters, the OPEC members accomplished their announced cut in production approximately to 90 percent. In particular, the accumulated production should be dropped by 1.2 million barrel per day. The largest OPEC member Saudi Arabia exceeded its duty by reducing the volume by 718,000 barrel which is 310,000 barrel more than initially agreed.
Nevertheless, the validity of these figures is questioned, since Saudi Arabia renounced the usual annual cut in production during the winter times and the exports of single members such as Iraq currently exceed the average annual exports by three percent.
Since the last raise in US interest rates in December 2016, gold increased in price by seven percent. Forecast Bernard Dahdah (London Bullion Market Association) suggests this rise might be caused by the entry of a major funds manager in the market. According to Bloomberg, the billionaire Stan Druckenmiller revealed his appearance as a buyer during the last months since he missed clarity in the US government policies.
In the view of Eily Ong from Bloomberg Intelligence, the investors still watch out for safe havens against the background of several elections in Europe with ambiguous outcome.
The International Lead and Zinc Study Group (ILZSG) published the supply and demand data for the prior year. Thus, a global deficit in supply of 286,000 tons was determined after an excess supply of 189,000 tons in 2015. The deficit was caused by an increase of demand by four percent up to 13,9 million tons. With a market share of 42 percent China remains as the world’s largest producer, followed by Peru.