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Crude Futures Rise ~0.70%, Copper Extends Decline

COMMODITIES
  • Crude markets are approaching US close trading around 0.70% higher Wednesday, despite an above-expectation crude stock build. Support is coming from rising product demand, while comments from Israel’s PM appearing to reject a ceasefire deal or a pause in the fighting in Gaza maintains the geopolitical risk premium.
  • WTI futures remain soft following last week’s steep sell-off. The move lower undermines the recent bullish theme, and a continuation would expose support at $70.62, the Jan 17 low, and $69.56, the Jan 3 low. For bulls, a reversal higher would be required to refocus attention on the key short-term resistance at $79.29, the Jan 29 high. Clearance of this level would reinstate a bullish theme. Initial resistance is at $76.95, the Feb 1 high.
  • For precious metals, there was a spike in spot gold shortly after the cash equity open which was closely linked to further concerns over New York Community Bancorp. XAU/USD rose to a session high of $2044.60, however, the subsequent stabilisation for broader sentiment halted the rally, and price has since moderated back to unchanged (~$2035) as we approach the APAC crossover.
  • Copper futures have extended the most recent decline from Jan 31 to 5.33%. The price action echoes an MNI report that growth in Chinese copper demand will slow to 3-4% y/y in 2024, as work on electrical grids and new energy slows. However, policy support for copper intensive housing completions and new energy industries will underpin consumption into late 2025, analysts told MNI.
  • Policymakers’ renewed focus on completing unfinished properties and urban village renewal will support demand until next year before decreasing, said He Tianyu, a Shanghai-based senior copper analyst at CRU.
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