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Commodity Markets

8

OPEC Monthly Oil Market Report – November 2017

Commodity Markets

Energy commodity prices generally increased in October, led by higher crude oil prices. Natural gas prices

showed mixed trends, decreasing in the US, but advancing in Europe while coal prices remained relatively

stable. Base metal prices reached the highest levels since October 2014, with further gains in global

manufacturing. Gold prices declined on the increasing likelihood of interest rate hikes by the US Federal

Reserve in December.

Trends in selected commodity markets

Average

energy prices

increased by around 3.3% in October and have been around 24.4% higher in the

January-to-October period compared with the previous year.

In October, the

Henry Hub natural gas index

was down by 10ȼ, or 2.7%, to $2.86/mmbtu, after trading at

an average of $2.96/mmbtu in the previous month. Average prices have ranged between $2.9 and

$3.1/mmbtu since June. The EIA said utilities added 65 bcf of working gas to underground storage

during the

week ending 27 October 2017. This was above the median 60 bcf injection expected by analysts. Total

working gas in underground storage stood at 3,775 bcf, 4.6% lower than at the same time the previous year,

and 1.1% lower than the previous five-year average. In October, the

US Climate Prediction Centre

(CPC)

issued a La Nina advisory with a 65%-75% chance through winter in the Northern hemisphere. This

phenomenon is normally associated with below average temperatures in the northernmost regions of the US

and the opposite pattern in the southernmost regions of the country.

Natural gas prices

in

Europe

increased with average prices up by 10% to $6.08/mmbtu. Natural gas inventories for EU Member States

increased to 89.9% full at the end of September from 84.6% in the previous month, slightly below last year’s

end-of-September inventories at 90.6%, according to data from Gas Infrastructure Europe.

Australian thermal coal prices

advanced slightly to $97.1/mt. Raw coal output in

China

in September was

7.6% higher y-o-y versus 4.1% higher y-o-y a month earlier, however output is expected to decelerate in the

following month, due to a push by the government of China to reduce pollution during winter months. As

many other heavy industries are expected to limit their output as well, coal demand will likely decelerate. The

last available import data shows a decline in Chinese coal imports to 21.3 million mt in October, from

27.1 million mt in September, though this year they are still 12% higher in the first 10 months, compared to

the previous year.

Table 2 - 1: Commodity price data

During the month,

average base metal prices

increased by 2.7% reaching the group index highest since

August 2014, supported by continuing strength in global manufacturing. The JP Morgan global

% Change

Aug 17 Sep 17 Oct 17 Oct 17/Sep 17

2016

2017

Energy*

65.0

68.5

70.8

3.3

53.2

66.2

Coal, Australia

US$/mt

95.9

96.9

97.1

0.3

56.8

85.0

Crude oil, average US$/b

49.9

53.0

54.9

3.7

40.7

50.8

Natural gas, US

US$/mbtu

2.9

3.0

2.9

-3.3

2.3

3.0

Natural gas, Europe US$/mbtu

5.3

5.5

6.1

10.3

4.4

5.5

Non-energy*

84.1

85.6

85.6

0.0

79.7

84.3

Food*

89.4

91.1

91.0

-0.1

92.1

92.3

Base metal*

88.4

90.5

92.9

2.7

66.5

83.5

Precious metals*

99.4 101.8

99.1

-2.7

98.2

97.7

Note: * World Bank commodity price indices (2010 = 100).

Source: World Bank, Commodity price data.

Unit

Commodity

Monthly averages

Year-to-date