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Crude oil prices rose slightly on Wednesday amid signs of oil supply tightness after output cuts by major producers, with demand concerns in China and the U.S. also in focus. In addition, investors were bracing for Fed Chair Jerome Powell’s testimony for more clarity on how the central bank plans on proceeding with monetary policy this year.
It’s a busy day ahead on the economic calendar, with focus on the ADP jobs report, JOLTS data, wholesale inventories (preliminary) data and EIA figures that energy traders will closely watch. Meanwhile, Saudi Arabia, the world’s biggest oil exporter, announced on Wednesday slightly higher prices for April crude sales to Asia, its biggest market.
Global gas prices meanwhile gained, TTF and UK gas prices up close to 2%, amid renewed supply side issues. Spain has asked the European Union to take a tougher stance on Russian liquefied natural gas imports by ensuring that countries can block them without shipments being diverted to neighbors, as per reports.
ANZ analysts noted, “while the EU will soon allow member states to block such flows, it’s not clear how effective it will be.”
Stocks to focus include CBL International (BANL), Permian Basin Royalty Trust (PBT), Ranger Energy Services (RNGR), Crescent Energy (CRGY), Dawson Geophysical (DWSN) and Kosmos Energy (KOS).
Turning to metals, with gold taking the spotlight over the past couple of sessions, spot prices (XAUUSD:CUR) of the yellow metal have pulled back slightly from the record high, but traded well above $2,100 an ounce by 6:12 am ET, supported by hopes for U.S. rates easing by June.
The scale of the move has surprised some market watchers, particularly since there has been no significant change in expectations for the Fed’s easing or other macroeconomic drivers during the period. Elsewhere, the ECB is widely expected to leave interest rates at a record 4% at its policy meeting on Thursday.
However, the rally has highlighted an increasing disconnect between spot prices and outflows from bullion-backed ETFs. Holdings in gold-backed exchange-traded funds, the other major part of gold demand, continue to slide for now. The world’s largest gold-backed ETF – SPDR Gold Trust’s GLD holdings – dropped 7% so far this year.
Independent analyst Ross Norman expects gold to hit $2,300 this year, Reuters reported. “It’s clear that the Fed will certainly cut rates and you’ll start to see the market move towards those numbers. Will it happen in next few weeks? Maybe not. But it will probably happen in the next six-month window.”
Among agriculture commodities, wheat futures fell nearly 2%. As per ING, the latest data from Ukraine’s Agriculture Ministry shows that grain exports so far in the 2023/24 season dropped to 30mt as of 5 March, a decline of 9% year-on-year. The above includes wheat exports of 12mt, up 4% YoY, and corn shipments of 16.1mt, down 16% YoY. Separately, weekly data from the European Commission shows that soft wheat exports for the season so far fell 2% YoY to reach 21mt as of 28 February, down from 21.9mt for the same period last year, the report added.
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