Abans Group Commodity World Round Up

14th Sept - 18th Sept

1. Oil demand recovery will slow for the rest of 2020: IEA

Sept 15, 2020

The International Energy Agency (IEA) trimmed its 2020 oil demand forecast on Tuesday, citing caution about the pace of economic recovery from the pandemic. The IEA cut its 2020 outlook by 200,000 barrels per day (bpd), to 91.7 million bpd, in its second downgrade in as many months. Increasing global oil output and the downgraded demand outlook, also mean a slower draw on crude oil stocks, which piled up at the height of the lockdown measures.

Source: Reuters

2. OPEC+ compliance with oil production cuts in August was seen at around 101%

Sept 16, 2020

According to a Reuters report, compliance with oil production cuts in August among OPEC+ members was seen at around 101%, although the UAE missed its target in August. The UAE had said that its over-production was due to higher demand for associated gas for power generation. The Abu Dhabi National Oil Company (ADNOC) will be reducing crude oil supplies to term buyers in October and November.

Source: Reuters

3. Gold found support from dovish ECB commentary

Sept 18, 2020

Gold found support from dovish ECB commentary. ECB policymaker, Pablo Hernandez de Cos, has said on Friday that the European Central Bank (ECB) may need to introduce fresh stimulus measures to support an uneven, and uncertain recovery in the Eurozone, and bring inflation closer to its 2% target.

Source: Reuters

4.  Fed kept policy rate unchanged and upgraded economic outlook

Sept 16, 2020

The US Federal Reserve kept its short-term rates unchanged at 0%-0.25%. Officials also changed their economic forecasts to reflect a smaller decline in GDP, and a lower unemployment rate in 2020. The Fed officials addressed a new policy regime, in which the Fed will allow inflation to run somewhat above the 2% target rate, before hiking rates, to control inflation.

Source: CNBC

5. Bank of England kept QE at 745 billion, and interest rates steady

Sept 17, 2020

Gold prices are trading in a range, post the BOE meeting. The Bank of England held the course on interest rates and QE. The decision to keep the official bank rate at 0.10%, and QE at 745 billion pounds, was unanimously agreed to by all the nine MPC members. Investor attention was directed at the BoE’s Monetary Policy Summary, which stated that MPC members had discussed the possibility of negative interest rates, given the current climate of low equilibrium rates.

Source: Reuters

6. Bank of Japan (BOJ) kept monetary policy steady and upgraded view on the economy

Sept 17, 2020

The Bank of Japan kept the monetary policy steady. As widely expected, the BOJ maintained its -0.1% short-term interest rate target, and also a pledge to cap 10-year bond yields around zero. It also made no major tweaks to its asset-buying and lending schemes for easing corporate funding strains. The BOJ Governor, Haruhiko Kuroda, has said that Japan’s economy would likely continue to improve, but at a moderate pace, given the worldwide impact of the coronavirus.

Source: Reuters

7. Natural Gas Inventories are 13.2% above the 5-year average

Sept 17, 2020

The weekly EIA report showed that gas inventories rose +89 bcf last week, to 3,614 bcf, which was above the consensus of +77 bcf, and the 5-year average of +77 bcf. The report left total U.S. natural gas supplies at 3,614 bcf in the week ended September 11. Inventories are up +16.5% y/y, and are +13.2% above the 5-year average.

Source: Reuters

8.  Copper prices are up more than 50% from the lows in March

Sept 15, 2020

Copper prices have rallied more than 50% from the lows in March, on the back of Chinese demand, and an inventory drop. On warrant copper stocks in LME-registered warehouses rose to a three-week high of 45,950 tonnes, but have fallen from around 250,000 tonnes in May. Copper prices found support as China’s industrial output accelerated the most in eight months in August, and retail sales grew, suggesting that the economic recovery is gathering pace.

Source: Live mint