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COMMODITIES - GOLD & OIL: GS WHAT'S DRIVING THE MARKET TODAY

FX:USOIL   Crude Oil (WTI)
GOLDMAN SACHS - COMMODITIES: WHAT'S DRIVING THE MARKET TODAY

The One-Liner

Commodities broadly higher with weaker USD. Copper             trading higher after failing to break $4750 in recent days.

The Fundamental Highlights

Energy: Crude marginally higher with spreads and cracks largely unchanged. The Iranian Oil             Minister has not yet decided whether he will attend the Algeria IEF15 meeting at the end of Sept, with the country not expecting to hit their pre-sanction production before the meeting (their longstanding condition of joining a production freeze). Elsewhere, Nigeria has said that it sees OPEC cuts as unlikely.

Industrial Metals: Base metals trading broader higher over the session, with Nickel (-1.5%) the significant outlier with Philippines expecting to complete environmental audit this month. Copper             is trading well with Antofagasta CEO             Ivan Arriagada saying the company is focused on profit rather than maximizing production and that output will be at the lower end of its 710,00- to 740,000 mt target. Copper             vols are unchanged on the session, although were once again marked lower into the close yesterday with Sep ATM vol             now 18v (-0.5v) vs realized at 15.8v.

Bulks: Ferrous metals have rallied however with Iron Ore +3.8%, Rebar +4%, Coking Coal +6% as a reiteration by the NDRC that they are less than half way through their steel and coal capacity cuts, and an announcement that they are planning a new 3-year infra stimulus programme for the northeast. China has promised 45mt of steel capacity cuts and 250mt of coal capacity cuts this year, but so far has only reached 47% and 38% of each target respectively.

Precious Metals: Gold             stronger over the London morning (+1%), moving in tandem with the weaker USD. Gold             ATM vols are largely unchanged this morning, although worth             noting that Gold             1m realized vol             fell to 12m lows yesterday. Participation feels light of late with aggregate OI 15% off the post Brexit highs. The ETF added 220k oz as of Friday’s data point, which doesn’t explain the $20 sell off into the close on Friday.
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