COMMODITY TIPS

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Market Wrapup




Base Metals fall sharply; Short-term outlook weak

Base Metals decline sharply in intraday despite Chinese inflation beating expectations in October. Nickel is the worst performer currently losing.

over three percent to trade at 794.90 whereas Copper is at 440.65, down 4.45 or a percent currently.
After the Chinese customs report showing that imports of refined copper dropped on a monthly basis, the government reported that the inflation grew at a steady pace in October beating expectations at 1.9% compared to 1.6% in the previous month.

The market seems to have taken this on a negative note as the figures on base metals consumption did not match with the solid growth figures. China has been shifting its growth policies from the commodity-centrist build in the recent months by banning and enforcing policies on base metals import and production.

The short-term outlook on base metals remain solid but corrective price swings in the immediate term should be expected. Copper broke below a key support at 442 and a daily close below this should confirm a corrective move to 430 and possibly lower in the short term. The AL-PB-ZN trio should also be pushing lower amidst strong volatility as selling grips the market with Nickel being the only exception. Nickel should come down but the downside should be largely limited to the metal.




Crude Oil trades volatile after inventories report, minor correction expected


Crude Oil traded volatile last day after the official inventories report showed a surprise build in storage along with large draws in gasoline and distillate stocks. MCX Crude Oil is trading steady today at 3695, unchanged. Natural Gas is down 0.40% at 206.20.

The EIA report surprised traders last evening showing a surprise build of 2.23 mln for the week ending November 3 whereas Gasoline and Distillate stocks dropped more than expected at 3.31 mln and 3.35 mln respectively.

The strong upside seen in oil over the last few weeks has been led by stronger OPEC compliance and largely by rumors of the production cut extension when the oil cartel meets on November 30 in Vienna. Despite positive news flows and the futures curve indicating a shortage of supply ahead – we would like to notice that the oil market has been historically driven by sentiment and expectations rather than factual reports, so price correction could be seen if the OPEC rumors lead to inaction.


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