COMMODITIES 5 minutes to read

A closer look at crude oil, silver and copper

Ole Hansen

Head of Commodity Strategy

Summary:  Chart focus on WTI crude oil, silver and copper


The crude oil market already on the defensive following Tropical Storm Barry’s failure to inflict the feared damage, received a White House double punch yesterday. Comments from U.S. Secretary of State Mike Pompeo on Iran and Trump’s threat to impose additional tariffs on China helped sent crude oil down towards the lower end of the current $56.50 to $60.50 range on WTI crude oil.

A day after Iran’s foreign minister Javad Zarif struck a conciliatory tone in an interview with NBC News, Mike Pompeo said that Iran had signaled an openness to talk. While later toned down by Iran, it was Trump’s threat to impose additional tariffs on Chinese imports which did most of the price damage. The risk of additional obstacles to global growth returned the focus to worries about demand.

Later today at 14:30 GMT the EIA will release its Weekly Petroleum Status Report and if data from the American Petroleum Institute are repeated, we could see a significant jump in distillate stocks and a small reduction in crude oil stocks.
Silver, the long-forgotten metal, broke higher yesterday after having completed a 50% retracement of the May to June rally. Tailwind from stronger China data on Monday leading to a general bid among industrial metals helped kickstart the move. With Trump’s renewed tariffs threat some of these metals have once again seen the wind being taken out of their sails. Silver, however, seems to have caught some fresh momentum which potentially could see it target $15.85/oz followed by $16.15/oz, the February highs. The speculative length, as per my weekly CoT update, is light and it may attract some switching from gold as the XAUXAG ratio trades back below 90 this Wednesday.
Source: Saxo Bank
HG Copper's attempt to challenge key resistance at $2.75/lb has once fallen flat after Trump reboots tariff threats and the dollar drifts higher following yesterday’s stronger-than-expected US retail sales. We maintain a constructive view on copper above $2.60/lb with a challenging supply outlook helping to off-set current headline risks.
Source: Saxo Bank
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)