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Commodity Markets

10

OPEC Monthly Oil Market Report – September 2017

Average

energy prices

in August increased by 4.4% m-o-m and by around 27% in the Jan-Aug period

compared to the previous year. This has supported headline consumer price inflation readings, though the

effect would tend to fade towards the end of the year should energy prices stay around current levels. The

largest monthly average increase in the energy group was in Australian benchmark thermal coal prices which

increased by 9.6% m-o-m and are 53% higher y-o-y in the January-August period.

Agricultural prices

decreased by 1.7% in August, with average food prices decreasing by 3.4%. Agricultural

commodity prices have been relatively flat on average in a year to date comparison therefore their

contribution to inflation has been relatively muted compared to energy commodities. Prices of winter wheat,

rice, maize and soybeans decreased m-o-m by 15.4%, 5.8%, 5.7% and 4.4%, respectively.

Average base metal prices

increased by 7.6% in August, with advances among all group components.

Metal prices are around 23% higher year to date and have experienced the best performance among

commodity groups since the beginning of the year. Copper, aluminium and nickel advanced by 8.4%, 6.7%

and 14.7% during the month, respectively.

In the group of

precious metals

, gold prices increased by 3.7% on average, a trend that has continued at

the beginning of September on the expectation of a lower path of interest rates in the US.

Graph 2 - 1: Major commodity price indices

Graph 2 - 2: Inventories at the LME

In August, the

Henry Hub natural gas index

declined. The average price was down by 9ȼ, or 2.7%, to

$2.88/mmbtu after trading at an average of $2.96/mmbtu in the previous month.

The

EIA

said utilities added 65 bcf of

working gas in underground storage

during the week ending

1 September 2017. This was slightly above the median analysts’ expectations of a 63 bcf injection. Total

working gas in underground storage stood at 3,220 bcf, 6.2% lower than at the same time the previous year,

but 0.5% higher than the previous five-year average.

20

40

60

80

100

120

20

40

60

80

100

120

Aug 15

Oct 15

Dec 15

Feb 16

Apr 16

Jun 16

Aug 16

Oct 16

Dec 16

Feb 17

Apr 17

Jun 17

Aug 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

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

'000 Tonnes

'000 Tonnes

Copper

Lead

Nickel

Zinc

Pr. Aluminium (RHS)

Sources: London Metal Exchange and Thomson Reuters.