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In commodity trading, metal prices were resilient in the face of a strong dollar while oil held gains after advancing more than 1% .

Commodity trading alert: Oil, Gold prices soar in market

In commodity trading, oil prices held steady Wednesday near six-month highs after rising by a dollar a barrel the day before.

Investors are bracing for more volatility from the Middle East to affect prices.

Brent crude futures rose 27 cents or 0.3% to $90.75 a barrel and US West Texas Intermediate crude futures climbed 25 cents or 0.3% to $86.46 a barrel.

Commodity trading: Middle East Unrest

The Middle East is bracing itself for possible Iranian retaliation over an alleged Israeli air strike on Iran’s embassy in Syria.

But Israel and Hamas this week began a third round of talks over how to resume after the war in Gaza broke out six months ago. So far, they’ve made no progress.

U.S. Secretary of State Antony Blinken told Israeli Defence Minister Yoav Gallant on Wednesday that the United States stands with Israel in the face of any Iranian aggression. The U.S. State Department said in a statement.

Higher-for-longer rates could dampen economic growth and suppress oil demand.

Minutes from the holiday meeting of the US Federal Reserve revealed that officials thought recent progress in bringing down inflation might be at a halt, and now a lengthier period of tighter monetary policy would likely be required to tame inflation in the world’s largest economy.

Investors, who were betting on a June cut earlier this month, are shifting their bets to September, when the easing cycle begins, after a third straight stronger-than-expected reading on consumer inflation.

Commodity trading: Oil spikes on unrest

Oil traders will also be eyeing a monthly oil market report due later on Thursday from the Organization of the Petroleum Exporting Countries (OPEC) and a report from the Paris-based International Energy Agency due Friday.

Commodity trading: Gold Rally

Gold prices pushed higher on Thursday, recovering from the previous session’s losses, as geopolitical tensions, spurred by a US-led missile strike on Syria, coupled with flush global liquidity and recent steep corrections in equities to underpin bullion.

Spot gold rose 0.1% to $2,334.64 an ounce by 0809 GMT. The precious metal had touched a record for a ninth straight session on Tuesday. US gold futures increased 0.2% to $2,352.40.

Numbers overnight confirmed that US inflation in March once again came in swifter than expected, curbing the opportunity for a June rate cut. Core CPI surged 0.4% while economists had expected only a 0.3% rise.

The gold rally is driven by central bank buying, and safe-haven flows in response to continued geopolitical risks and momentum funds.

At March’s meeting, Federal Reserve officials pointed to evidence that progress on inflation might be slowing, increasing the need for a longer period of tight monetary policy according to the minutes of the US central bank published last week.

Add to that recent hot inflation data and a US employment report last week that blew past expectations, and questions about whether the Fed will cut rates at all this year became more intense.

Commodity trading: Higher interest rates affecting gold price

Higher interest rates in 2024 are reducing the appeal of holding gold. Spot silver dropped 0.2% to $27.93 per ounce, having earlier been at its loftiest since June 2021 on Wednesday. In other metals, platinum rose 1.3% to $972.60 while palladium gained 0.5% to $1,056.31.

US stock futures, meanwhile, remained flat after Wall Street had dropped more than 1%. Treasuries also steadied after the jump in yields lifted them to the highest level since November.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slipped 0.3% in early trade, giving back some earlier losses, while Japan’s Nikkei (.N225), dropped 0.5%.

The beleaguered yen was in the spotlight, though – after the rampaging dollar pushed the Japanese currency to a 34-year low of 153.24 per dollar.

It tapered off slightly to 152.90 yen, likely because the risk of government intervention looms large now. And Japan’s top currency diplomat Masato Kanda said on Thursday there would be no file intending disorderly exchange-rate moves.

In commodity trading, a firmer dollar failed to pressure metal prices, while oil extended gains of more than 1% after an Israeli air strike killed the three sons of a Hamas leader, stirring concerns that peace talks and a ceasefire might be in trouble.

Brent crude rose 0.15% to $90.62 a barrel, while US crude went up 0.1% to $86.33 a barrel. Gold rallied 0.3% to $2,338.79 an ounce, not far off record highs, after falling 0.8% overnight.

Commodity trading: Russia-Sudan oil deal

After the EU embargo, Russia showed signs of increased exports of refined diesel products to Sudan. As of June 2022, Russia began exporting diesel to Sudan.

This trade raised European concerns, especially in Britain, about new customers for Russian refining products, which are produced by Rosneft and Gazprom, two major Russian companies.

These countries played a crucial role in Putin’s proposal to construct the Nord Stream 2 pipeline to deliver Russian gas to Germany.

According to LSEG data, Russia began diesel exports to Sudan. Since the start of the full EU ban on oil product imports from Russia in February 2023, supplies have been rerouted to Brazil, Turkey, countries in Africa, Asia, and the Middle East, and STS loadings.

LSEG data reveals that Pavo Rock and Conga – two fuel tankers – delivered a combined total of approximately 70,000 metric tons of ultra-low sulfur diesel to Sudan, after being loaded in Russian at Primorsk in February. The two cargoes were discharged at Port Sudan Al Khair Terminal on April 2 and April 5 respectively.

Meanwhile, another ship – the Marabella Sun – loaded in March from the Russian Baltic port of Vysotsk and is destined for Port Sudan and is due to be discharged on 17 April, according to LSEG data. Sudan’s petroleum ministry did not respond to a request for comment.

Sudan requires about 45,000 bpd (6,000 tons per day) of diesel ‘to bridge the gap between local demand and current supply’ as one expert has noted.

About 60,000-70,000 metric tons of diesel are imported into the country each month, most of it from Saudi Arabia and the United Arab Emirates, according to the LSEG data. Diesel shipments inflowing into Sudan in March amounted to about 116,000 metric tons.

Commodity trading: UK Natural Gas issues

The UK’s two national transmission companies for gas and electricity said there is sufficient supply to meet British energy demand during the summer months from April to September this year.

Total UK gas demand was expected to come in at 29 billion cubic metres (bcm) this summer, compared with 33.3 bcm in the same modern-day period of 2023, National Gas said in its annual summer outlook.

The cut is largely linked to expected decreased exports to continental Europe and less demand for gas for electricity generation, according to National Gas.

Britain sends some gas to the continent via interconnectors, with UK average exports to the rest of Europe due to being 3.6 bcm against 7.1 bcm last summer. Initially, higher exports will decline sharply in the summer as European gas storage sites fill, requiring less gas from Britain, National Gas said.

Stocks in Europe wrapped up the winter at 59%, significantly above the five-year average, it added.

Supply, largely from the North Sea and Norway, was expected to be 29 bcm, compared with 31.8 bcm last year. New fields coming on stream and less maintenance outages mean that Norwegian gas output will increase from last summer’s level, said National Gas.

Production in the UK is expected to decline as the legacy fields run out. LNG supplies are expected to drop by 2.5 bcm this season, down to 3.9 bcm from the 6.4 bcm they were at the same time last year. It also stated: ‘The appetite to transit LNG through Britain to continental Europe is not so great since continental Europe has built out its import capacity.’

In a separate report, Britain’s Electricity System Operator (ESO) said it expected there to be sufficient supply to meet electricity demand during the summer. They predicted that summer peak demand would be 29.2 gigawatts (GW), and that demand at least 16.2 GW would be necessary just to keep the lights on.

Commodity trading: Rhone Energies

Its joint venture, Rhone Energies, with Trafigura’s commodity venture and a venture capital firm called Entara LLC, has exclusive negotiations with Exxon Mobil, whose energy branch is called ESSO SAF (O:ESSF.PA), to buy the 365,000-barrel-a-day refinery at Fos-sur-Mer in southern France, as well as terminals at Toulouse and Villette de Vienne.

Trafigura said in a statement on Thursday that it would enter into a minimum 10-year exclusive crude oil supply and product offtake agreement, including crude oil and product stocks.

Fos-sur-Mer refinery has a crude oil processing capacity of 140,000 barrels per day.

Trafigura added that Rhone Energies would continue to supply ESSO SAF in the region.

While it retains working assets, the transaction ‘will be concluded upon the achievement of regulatory approvals and is expected to be completed by the end of 2024,’ the firm said. The financial terms of the proposed deal remain confidential.

It is Trafigura’s second billion-dollar deal this year after an agreement to buy out the European operations of the UK-based fuels and biodiesel producer Greenergy.

Trading houses such as Trafigura and its larger rival Vitol are seeking acquisitions globally as they reap windfall profits this year, fuelled by the European energy crisis and volatility created by sweeping Western sanctions against Russia.

The firm recorded a net profit of about $7.4 billion last year, a 5% increase on 2022.

ESSO shares are up 9.2% on Thursday, the highest since July 2008.

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