Commodities: Dovish ECB triggers rebound in oil, base metals left out
By Alexander Bueso
Date: Tuesday 18 Jun 2019
(Sharecast News) - Very 'dovish' remarks from European Central Bank chief Mario Draghi pushed energy futures higher, but a stronger Greenback dulled traders' appetite for base metals, according to traders.
Speaking at the annual ECB Forum in Sintra, Portugal, Draghi said that if the economic outlook failed to improve then "additional stimulus would be required", adding that "considerable" room remained to expand quantitative easing in the euro area.
He was speaking the day before rate-setters in the States were set to announce their own policy decision, with traders a bit unsure about just how dovish Federal Reserve chairman, Jerome Powell, would be, although he was generally expected to be dovish as well.
Boosting investor sentiment further, in a post to his account on Twitter, towards the start of the trading day on Wall Street, the US President said he would indeed meet his Chinese counterpart at the 28-29 June G-20 meeting in Fukuoka, Japan.
As of 1901 BST, front month West Texas Intermediate crude oil futures were adding 3.45% to $53.72 a barrel on the NYMEX, while July-dated Brent was up by 1.85% to $62.07 a barrel.
Copper also bounced back, with three-month LME futures for the industrial metal rising from $5,845 per metric tonne at the session open to $5,949 per tonne, but perhaps only as a result of a strike at Chile's Codelco mine dragging into a fifth consecutive day.
Indeed, the other main LME bse metals futures all finished unchanged or lower, with traders at Sucden Financial pointing the finger at US dollar strength.
"Another day of mixed activity on the LME saw copper make gains through 5900 while the rest of the complex struggled for any significant traction as the USD gained ground," they said to clients.
August gold on COMEX was also higher, following reports that the US would dispatch 1,000 more troops to the Middle East, rising by 0.51% to $1,349.80/oz..
Going the other way were grains, with September wheat on CBoT erasing 1.84% to $5.3275 a bushel.
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