Commodities Update 42

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After Pentecost, oil prices reached a six month high. Prices were buoyed by low production and low supplies in the USA. On Tuesday afternoon, Brent rose by 2 percent at USD 49 per barrel and WTI climbed by 4.5 percent at USD 48.50. Wildfires in Alberta expanded north in direction of major oil sand fields. As a consequence, many oil plants have been evacuated, which led to production drop. The International Energy Agency estimates that Canada will produce 660,000 barrel per day less in May. Moreover political instability in the delta region in Nigeria led to terrorism acts against oil installations. Nigeria’s production dropped by about 40 percent to 1.4 million barrel per day. Because of the production drop in Canada and Nigeria, oil prices remain, at least on a short term basis, supported.

A weak USD and uncertainty over economic growth continue to buoyed the gold price. According to World Gold Council, in the first quarter of 2016 also 1,300 tons of physical gold has been bought: a record. Star Investor George Soros invested through his hedge fund more than USD 264 million in Barrick Gold, which represent 1.7 percent of the company shares. Barrick Gold is the leading gold producer worldwide.

In the last two weeks arabica coffee reached year high. Causes of the high prices were a stronger Real and low supplies in Brazil. According to Brazil’s department of Commerce, Coffee export reached 2.2 million bags: the lowest April value since 2012. Robusta coffee prices soared in the last 10 weeks by 27% up, because of severe drought in major production countries such as Vietnam, Indonesia and Brazil.