OPEC+ ministers appear to have operated their meeting, listed for today early. OPEC later published a press statement that the group met on Tuesday. Nevertheless, the surprises end there, with the group choosing to boost oil output within May and July gradually. This easing will notice approximately 2.1MMbbls/d of supply taken back onto the market over this period.
While there is anxiety over the coronavirus situation in India, the group still considers that we will see a sharp recovery in the second half of this year. In addition, our balance sheet proceeds to show that the market will easily consume this supplementary supply from OPEC+.
The group is next arranged to meet on June 1st. They can then reassess the demand situation and determine whether there is any requirement to slow the pace of easing output cuts.
Apart from OPEC+, the API published US inventory numbers overnight. They revealed that US crude oil inventories developed by 4.32MMbbls over the last week. This is quite distinct from the approximately 1MMbbls drawdown that the market was expecting. Despite this surprise build, the market is holding up reasonably well in early morning trading today.
Metals
The metals complex spread gains for a third continuous session held by continued macro-optimism. Meanwhile, gold prices traded in a close range ahead of this week’s Federal Reserve meeting. LME copper continued its upward rally. Costs increased as much as 2.2% to hit an intra-day high of US$9,965/t (highest since 2011).
Nickel, the new laggard among LME base metals, also continued gains yesterday. It took a three-month price trading to an intra-day high of US$16,995/t.
The most advanced LME Commitment of Traders Report (COTR) published yesterday showed that investors had increased their net bullish positions in copper to the highest level in seven weeks, principally motivated by the bullish sentiment towards contracting supply conditions.
Furthermore, zinc and aluminum also noticed increased interest, reflecting a more general return of risk appetite to industrial metals over the last week.
Data from the Japan Copper and Brass Association notes that copper and copper-alloy fabricated products increased 14% YoY to 69.6kt in March (the highest after November 2018), helped by solid demand from the auto and semiconductor sectors. Nevertheless, on a year-to-date basis, output remained lower, dropping 11% YoY to 656.2kt.
Ultimately, Vietnam’s trade ministry proposed anti-dumping duties on some aluminum products from China (after evaluating its 2019 introduction of anti-dumping taxes) to 4.39%-35.58% beginning from April 25th, related to 2.49%-35.58% beforehand.
COMMENTS