Commodities: Oil futures weaker going into OPEC meeting, natural gas jumps
By Alexander Bueso
Date: Friday 09 Nov 2018
(Sharecast News) - Commodity prices were lower across the board at the end of the week, except for natural gas, weighed down by concerns around the Chinese economy and with another move higher in the US dollar further dampening sentiment.
Key to Friday's price action were reports that Beijing will set quotas for the country's lenders to lend to the private sector.
According to traders at Sucden Financial, those reports came amid speculation that lending in China was being funeled towards state-owned enterprises even as private companies struggled to obtain financing.
Then, of course, there were the concerns around the policy path the US central bank was following and a more general reduction in policy stimulus in the West.
"The question will be how the Chinese government intend to stimulate in the event of weaker demand, and leads us to wonder if Trump will try and turn the screw more than kiss and make up?," Sucden said.
As of 1900 GMT, the Bloomberg commodity index was down by 0.51% to 82.85 as the US dollar spot index advanced 0.20% to stand at 96.92, just off its intra-day highs.
In parallel, three-month LME copper futures slipped from $6,130 per metric tonne at the session open to $6,034, with the entire base metals complex under pressure, outside of zinc.
To take note of, overnight Bloomberg had reported that soon-to-be-publish research would reveal that approximately 22% of China's urban housing stock was unoccupied.
On a more positive note, according to strategists at Bank of America-Merrill Lynch, the more than 500 investors and 200-plus corporates who took part at their conference in Beijing over the past week expected a trade deal with the US to materialise in the first quarter of 2019.
Nevertheless, the rally in Chinese bonds, the only major bond market that was doing so, might be signaling a "big" slowdown in the first quarter and a further depreciation in the Chinese yuan, BofA-ML also said.
Oil was also very much in the spotlight, ahead of a Sunday meeting of OPEC member countries and their allies to decide on policy.
Front month Brent futures were sliding 0.84% lower to $70.06 per barrel on the ICE, but off their session lows of $69.13.
West Texas Inmtermediate crude oil futures meanwhile were trading lower for a tenth consecutive session, their longest losing streak ever and in the process surrendering their year-to-date gains.
NYMEX natural gas futures for December delivery on the other hand jumped 4.63% to $3.71/MMBtu.
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