Commodity market falls under pressure

The commodity market received pressure from outside factors that led to major commodities fluctuating.

Oil was unable to evade the broader market impact seen yesterday. The lower US consumer confidence and a stronger USD pressured the risk assets. ICE Prices for Brent remained roughly 2.4% lower for the day, holding slightly above US$80/bbl.

The oil market already went through some weakening over the past week. Besides, the declining refinery margins stoked demand-related worries. Technically speaking, the market may still exhibit some weaknesses. In order to do so, the prices must still close the gap that the May-23 contract expiration caused. We would need to see Brent trade near US$79.80 per barrel to eliminate this gap.

Indeed, the macro data has not played a beneficial role in the oil market. However, the oil market truly benefited from overnight inventory data. The API stated that US crude oil stockpiles dropped by 6.1MMbbls during the past week. It is quite a significant decrease from the predicted 1-1.5MMbbls drop. On the side of refined goods, gasoline stockpiles decreased by 1.92MMbbls, though the distillate stocks rose by 1.7MMbbls.

Yesterday the European Union presented its new collective gas purchasing platform – AggregateEU. It will allow consumers to register the demand they anticipate for the next year. The aggregate must equal 15% of each nation’s requirement to fill its storage facilities. It will be elective beyond the initial 15% but will still use the same mechanism.

Metals: Iron ore prices fall below $100/t US

Yesterday, the end-use demand failed to impress. Iron ore prices momentarily fell under the US$100/t threshold for the first time since early December. China Iron and Steel Association (CISA) shared its most recent remarks with the public. Chinese steelmakers should reduce loss-making operations due to the weak demand and sharp drop in domestic steel prices. The Association anticipates that the domestic commodity market will remain unstable in 2Q23. According to data from CISA, steel stockpiles at significant Chinese steel mills increased to 18.5 mt in mid-April, up 1.2% from early April. At large mills, crude steel production fell from 2.29 mt/d in the middle of April by 1.4%.

According to the most recent LME statistics, exchange inventories and copper on-warrant stocks both grew by 6,900 tonnes. In 1Q23, domestic gold consumption increased 12% YoY to 296.1t, as per figures from the China Gold Association. The consumption of gold coins, bars, and jewelry also experienced a significant improvement in March and February recordings.