The beginning of the week was quite positive and composed for the commodity markets. The attention of traders is still focused on the impact of the sanctions against Iran and on the events in the United States of America. In particular, there are not only Congressional elections that may have a decisive influence on quotes, but also monthly meeting of the US Federal Reserve System. Analysts believe that, with optimistic expectation of the macroeconomic statistics data, the US dollar shows pretty weak dynamics. This means that the attention of investors will be switched precisely to the commodity market, where oil and gold will have high volatility in the coming week.
1. Oil is on a knife edge
On Monday oil quotes attempted to breakthrough to the level of USD 75, but, at the closing of the European session under the “bearish” pressure, they rolled back to the level of its opening.
The session opening level was USD 72.73 per one barrel (Brent oil), and the daily peak reached the level of USD 74, but “bulls” failed to keep their positions. So far, the initiative is in hands of the sellers supported by the following factors:
– Oil production in the United States of America has been increasing over the last 6 weeks;
– Oil production in the United States of America has increased to a record level. According to the data of the Energy Information Administration, the oil production in August reached 11.3 million barrels per day. More recent data is missing. Based on this data, the United States of America goes top, overtaking Saudi Arabia;
– OPEC forecasts regarding the increase of production level.
Taking into account the news coverage, the closest resistance level will be at USD per one barrel, and we expect that the trend will likely toll back to the above mentioned level this week. However, according to some other analysts (Goldman Sachs), the probable roll back will be of short duration. The response of the markets to the sanctions against Iran is quite calm, so the price may get back to the level of USD 80 by December.
2. Natural gas continues to show solid growth
In spite of the fact that oil has gradually been losing its grounds, the natural gas price growth, reaching its maximum over the last three years. Since early November, the quotes of December futures have increased from USD 3.274 to 3.556. Before it, the level of USD 3.631 had been spotted in January, 2018. Since the beginning of the year, the price growth has reached 18.77%.
Analysts think that the current natural gas price is not a limit. The hard winter of 2017-2018 has exhausted the natural gas reserves in gasholders. According to the data of the Energy Information Administration, as at the end of October, the natural gas reserves held in UGSF were 3 263 billion ft3, which was the lowest value for that date since 2005. The early temperature drop in November shows that with the beginning of the heating season, the natural gas consumption will grow up, which means that given the low reserve level, the price will continue to increase.
3. Gold and silver are volatile on the eve of elections in the United States of America
On Monday the gold quotes remained on the same level, showing pretty strong intraday volatility and losing some positions during the Asia session. But generally, the situation has not changed during the day.
The situation is somewhat different with the silver. After some positive dynamics in the end of the week, the silver quotes have declined on Monday. The chart of drawdown and growth follows the behavior of the price for the gold, except that by the end of the day the price of SL December futures was lower than the opening price. Analysts attribute this volatility to a huge number of events, and recommend not to participate in the intraday speculations until the market is stable.