Commodity Opening Bell 

Bullion -Opens on negative Note Gold -28310-28320 Silver -37760-37800

Energy - Opens on negative Note Crude Oil -3035-3030 Natural Gas -196-195 

Base Metals - Opens on positive Note Copper -387.25-387.45 Nickel -611-611.50 Lead -141.80-142 Zinc - 176.10-175.50 Aluminium -122.40-122.45

COMMODITY FUNDAMENTAL NEWS

Precious metals are likely to open flat after ending higher yesterday as the dollar slumped further. The ECB policy pushed the euro to a 23- month high despite Draghi’s comments suggesting that policy accommodation is still needed. Markets were probably reacting to his hint on discussion of tapering in the autumn meeting. Despite the dovish talk, euro area financial conditions are the tightest since 2014 which is underpinning euro strength. Consequently, gold and silver have found support in recent days as the dollar fell to 13-month lows. Reports also suggest that US special counsel Robert Mueller is expanding his investigation of Donald Trump to examine his financial dealings. The probability of a December rate hike is down to 47%. From a trading perspective, gold and silver are likely to maintain an upward bias in the near term as long as the dollar stays weak and dips will provide a buying opportunity.

Base metals traded choppy within a range, with copper near its highest in five months on expectations of solid Chinese demand, but nickel fell as Chinese steel prices slipped from recent highs. ADB raised its 2017 and 2018 growth forecasts for China and other countries in the region. DXY fell to its lowest in nearly two years against the euro after ECB chief Mario Draghi said policymakers would discuss possible changes to its bond-buying scheme in the autumn. The global world refined copper market showed a 53,000 tons deficit in April, compared with a 18,000 tons deficit in March. For the first 4 months of the year, the market was in an 80,000 tons surplus compared with an 185,000 tons deficit in the same period a year earlier, as per the ICSG report. 

Crude oil prices are likely to open flat and have failed to move convincingly in either direction this week. On the downside, prices found support as EIA reported surprise decline in US inventories across the board. US crude oil stocks fell by 4.7 million barrels last week. Gasoline stocks also fell sharply by 4.45 million barrels while distillate stocks fell by 2.1 million barrels. Gasoline inventories are now nearly 5% lower y/y. Additionally, Saudi Arabia’s domestic crude stocks declined in 16 of 19 months between Nov 2015 and May 2017 according to government data. Gains are however getting capped as US production continues to inch higher, touching 9.43 mbpd last week. New forecasts suggest that US shale output will touch a record 5.58 million bpd in August. Natural Gas prices fell as storage in the US rose by 28 bcf, below forecasts for a build of 32 bcf. From a trading perspective, crude oil is likely to be range bound ahead of rig count data while natural gas is likely to trade weak.