Yahoo Finance Commodities round-up: Gold, wheat and oil prices gain
A look at how oil prices, precious metals and wheat futures are performing this week
Oil prices gained again on Wednesday with both Brent and US crude trading around the $80 (£63.05) level as tight supply concerns weigh on the minds of investors.
Meanwhile, wheat futures surpassed the $6.80 per bushel mark, rebounding from a recent two-week low of $6.43 on 1 August, also due to supply concerns following attacks on Ukrainian ports.
Oil prices
Crude continued to climb on Tuesday despite weak economic data from the world’s second biggest oil consumer China this week.
The country’s manufacturing data showed the sector is still contracting with July’s PMI reading at 49.3. However, it was up from 49 in June. A reading above 50 represents expansion.
At the time of writing, US crude oil, or West Texas Intermediate (CL=F), was up 0.38% to $81.68 a barrel, while Brent crude (BZ=F) gained 0.32% to $85.18 a barrel.
Despite China headwinds, tight supply concerns have been supporting oil prices since the OPEC+ group agreed to extend output cuts until the end of 2024. Saudi Arabia also cut production by 1 million barrels per day (bpd) from July but said at the beginning of July it plans to extend those cuts into August.
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Russia also said at the start of the month that it would cut crude exports by 500,000 barrels a day this month.
Will the supply concerns continue to push up oil prices? Dr Yousef M.Alshammari, chief executive and head of oil research at CMarkits, said: “I think the rally isn’t over yet, yet the question is not about more cuts, it’s about whether Saudi Arabia will extend its 1 million bpd voluntary beyond august, something the markets are starting to price in, and I think it could send prices to $90 within the next weeks. Other than that I wouldn’t expect a change to the OPEC+ policy.”
Wheat futures
Chicago wheat futures (ZW=F) rose 2.09% on Wednesday, gaining about 19% since the last dip on 31 May as concerns over supplies due to attacks on Ukrainian ports weigh on the minds of traders.
London wheat was also trading higher on Wednesday, by 0.45%, gaining about 11% since 31 May.
It comes after reports that Russian drones had targeted port and grain storage facilities in the southern region of Ukraine's Odessa that resulted in some of them catching fire.
Elsewhere, the USDA's weekly crop report on Monday indicated that the US winter wheat harvest is nearing its latter stages, which provided much-needed milling wheat to the market and offered some relief amidst the global supply concerns, Trading Economics reported.
Precious metals
Meanwhile, gold’s macroeconomic backdrop has been uncertain after the US Federal Reserve raised interest rates by another 25 basis points in July and left the door open for another rise in September, which could cap gold’s price rise.
“We expect shifting expectations around its terminal rate could cap the upside in the near term. Investment demand remains lacklustre, as investors wait for the Fed to end its tightening cycle,” analysts at ANZ said in a note.
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Gold was trading up 0.27% at $1,954.19 an ounce on Wednesday.
Since the start of the year it has gained about 8% but has not returned to the peak seen on 3 May this year, when the price reached $2,081.58, which was close to the high last seen in March 2022, just after Russia’s invasion of Ukraine.
ANZ also noted that platinum holds more upside due to a favourable supply-demand backdrop, while palladium continues to see a structural downtrend in autocatalyst demand.
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