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Weekly Commodity: Crude came in bear grip as it moved down by more than 20%

SMC | 28 Jun, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary            


Officially crude came in bear grip as it moved down by more than 20% from its recent high, it also dragged CRB index to multi months low. It made a low of 168.15. The Federal Reserve's hawkish tone also continued to weigh on the commodity prices, while political turbulence and uncertainties also contributed on the commodity's slump. Upside in dollar index also weighed on the prices. Bullion counter continuously fell for the three consecutive week, though it recovered to some extent on lower level buying, supported by an easing dollar and weakness in U.S. Treasury yields. Gold is highly sensitive to rising rates and yields, which increase the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced. Gold closed above 28600 and silver closed above 38700. Even it was not a favorable week for the energy counter once again. Oil prices have tumbled more than 20% this year on supply glut issue, marking its worst performance for the first six months of the year since 1997. Libya's oil production rose more than 50,000 barrels per day to 885,000 bpd. Meanwhile, exports of Nigeria's benchmark Bonny Light crude oil are set to rise by 62,000 barrels per day in August. Natural gas settled the week near 187. Natural gas prices moved down on the back of bearish weekend weather model updates. US home re-sales unexpectedly rose in May to the third highest monthly level in a decade and a chronic inventory shortage pushed the median home price to an all-time high, it boosted the base metals prices. Except aluminium, other base metals moved up.


Progress in monsoon stimulated selling pressure in agri commodities. Oils seeds and edible oil pack got hammered. Prices moved down on good monsoon amid supply glut issue. Soybean prices slipped below2800 after participants reduced positions in the wake of subdued overseas market. Mustard seed prices also went down below 3520 in futures trade. Guar complex prices plunged about 6% this week on forecast of rains in the western Rajasthan during the current week. Moreover, weak crude oil prices too supported the fall on anticipation of lower exports demand in coming months. The exports of guar gum in April 2017 dropped by 11% to 54,392 tonnes as compared to 61,457 tonnes in March. However, spice shone last week, especially turmeric on short supply due to expected decrease in sowing area.


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About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.


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