Commodities Dodge Equities Rout
While commodity prices were mostly weaker overnight Tuesday, that was more due to usual trading issues rather than a contagion of fear spreading from volatile share markets.
The US dollar traded slightly higher, then eased to be flat in late trading while US 10 year bond yields rebounded after the startling quick slide on Monday to trade around 2.77% early Wednesday in Asia. The Aussie dollar edged up to trade around 78.88 US cents in Asia.
In fact so far as commodity markets were concerned, it seemed to be business as usual.
Gold bounced around, rising, then finally settling lower for a small loss, mirroring the swings in Wall Street shares.
Comex April gold futures fell $US7, or 0.5%, to $US1,329.50 an ounce. Prices had earlier climbed to as high as $US1,349.30. The yield on the US 10-year Treasury bond traded at 2.777%, compared with 2.794% on Monday afternoon in New York.
The 10 year yield had risen to a four-year high of 2.883% at one point on Monday, and had fallen under 2.70% in electronic trading on Tuesday in Asian markets.
Comex March silver lost 9.1 cents, or 0.5%, to $US16.58 an ounce, while Comex March copper fell 3.2 cents, or 1%, to $US3.189 a pound. Oil prices fell with US crude settling at a three week low in New York.
While some of thew weakness was linked to the volatility in sharemarkets, a major factor was a lift in forecast US oil production by the Energy Information Administration (EIA).
It said sees US production jumping to record levels well above 10.5 million barrels of oil a day.
The EIA expects US crude average 10.59 million barrels a day this year, and 2019 output at 11.18 million barrels a day, both estimates up 3.1% from the previous forecasts.
The 2018 forecast “would mark the highest annual average US crude oil production level, surpassing the previous record of 9.6 million [barrels a day] set in 1970,” the EIA said.
March West Texas Intermediate crude fell 76 cents, or 1.2%, to settle at $US63.39 a barrel, the lowest finish since January 19, according to US financial data group, FactSet.
In Europe, Brent crude for April delivery also gave up 76 cents, or 1.1%, to $US66.86 a barrel—a roughly five-week low.
In Asia the Metal Bulletin’s iron ore prices rose modestly on Tuesday to $US75.92 a tonne for 62% ore delivered to northern China - a rise of 22 cents a tonne.
Prices are firmer ahead of the Lunar New Year holiday in China starting at the end of next week.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.