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Commodity Markets

10

OPEC Monthly Oil Market Report – October 2017

Copper inventories in the London Metal Exchange rose by around 30%, while the aforementioned

deceleration in industrial production and fixed asset investment in China in August weighed on prices.

Nonetheless, on the positive side, manufacturing surveys continued to signal resilient global manufacturing.

The JP Morgan global manufacturing Purchasing Managers’ Index (PMI) stayed unchanged at a 75-month

high of 53.1 in September, thanks to further improvements in activity in the US and the Eurozone, providing

support to metal prices at the beginning of October. Meanwhile, amid geopolitical uncertainty and the

potential impact of the hurricane season on the US economy, gold prices reached their highest level since

July 2016. However, as those concerns receded and the Fed left the door open for an additional rate hike

this year, gold prices lost around 5% from their peak.

Graph 2 - 1: Major commodity price indices

Graph 2 - 2: Inventories at the LME

Investment flows into commodities

Open interest (OI)

increased in September for selected US commodity futures markets such as precious

metals and crude oil, while it declined for natural gas and copper. Meanwhile, in monthly terms, speculative

net length positions increased for natural gas, while declining for crude oil and copper.

Table 2 - 2: CFTC data on non-commercial positions, ‘000 contracts

Henry Hub’s natural gas OI

decreased slightly by 0.7% m-o-m in September. Money managers increased

their net length by half to 99,000 contracts, one month before the beginning of seasonal withdrawal.

Copper’s OI

decreased by 7.7% m-o-m in September. Money managers decreased their net long positions

by 6.4% to 109,000 contracts in September. Speculator positions have increased and remain elevated since

the start of the last rally, which spanned four months.

Precious metals’ OI

increased by 11.8% in September, while money managers turned more bullish, as

shown by a jump in their net long positions by 44% during the month to 206,000 contracts. This put the

money managers’ net length as a share of open interest at 47.3%.

20

40

60

80

100

120

20

40

60

80

100

120

Sep 15

Nov 15

Jan 16

Mar 16

May 16

Jul 16

Sep 16

Nov 16

Jan 17

Mar 17

May 17

Jul 17

Sep 17

Index

Index

Energy

Non-energy

Agriculture

Food

Base metals

HH natural gas

Gold

Source: World Bank, Commodity price data.

Base year 2010 = 100

0

500

1,000

1,500

2,000

2,500

0

100

200

300

400

500

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

'000 Tonnes

'000 Tonnes

Copper

Lead

Nickel

Zinc

Pr. Aluminium (RHS)

Sources: London Metal Exchange and Thomson Reuters.

Aug 17

Sep 17

Aug 17

%OI

Sep 17

%OI

Crude oil

2,246

2,365

247

11

198

8

Natural gas

1,324

1,316

66

5

99

8

Precious metals

675

755

206

31

296

39

Copper

329

303

117

36

109

36

Total

4,574

4,739

636

82

703

91

Note: Data on this table is based on monthly average.

Source: US Commodity Futures Trading Commission.

Open interest

Net length