Commodities outlook: A massive week for oil traders
18th June 2018 14:30
by Rajan Dhall from interactive investor
It's that time again! OPEC…will they won't they? by how much? The OPEC and non-OPEC delegates meet in Vienna this week to discuss tapering the output cut agreement.
The energy markets have not been without their problems of late as Venezuela's oil production falls off a cliff and Trump backed out of the nuclear deal.
Most investment banks are expecting a hike of 500,000-to-one million barrels of oil per day (bopd) in production, but this morning there are reports that OPEC may only hike by 300-600 bopd.
Any comments from journalists and OPEC officials must be taken with a pinch of salt as rumours fly around all over the place ahead of these meetings. Another key thing to consider this time around is Iran's power to veto any deal.
"If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity," says Hossein Kazempour Ardebili, Iran's OPEC representative.
Past performance is not a guide to future performance
Elsewhere, other commodities took a battering at the end of last week after the combination of a stronger dollar (USD) and trade wars caused havoc.
Copper fell 5% after a massive rise the week before following a union dispute at the world's largest copper mine Escondida. Looking forward, copper could continue to struggle as the USD breaks higher and the US vs China trade war looks set to continue.
Next week we have Chinese manufacturing data, and all copper traders are looking to see if the data backs the move lower. There is a chance the red metal may consolidate around the $3.05 - 8/lb area, which seems to be a sticky point on the chart.
Past performance is not a guide to future performance
Gold struggled again last week but fell in a delayed reaction.
The precious metal remained resilient early in the week, but in line with the other major commodities fell on Friday. Prices were down just under 2%, way below the $1,300/oz sticking point, as US rate-setters signalled four hikes this year and market sentiment backed the USD over all major counterparts.
Looking at the daily chart you can see from the image that a long term trendline support level was broken.
Past performance is not a guide to future performance
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