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Trading commodities: Start trading oil & gold today!

US crude oil, gasoline, and distillate inventories dropped in the week ending 28 May as refining activity jumped in trading commodities, the Energy Information Administration said on Wednesday.

The figures are crucial to commodities traders, who seek clues to commodity pricing and inventory levels.

Crude inventories dropped by 2.5 million barrels to 457 million barrels in the week through 10 May, the EIA said, versus a 543,000-barrel draw seen in a Reuters poll.

Trading commodities: Oil trading opportunities

Refinery crude runs rose by 307,000 barrels per day while refinery utilisation rates increased by 1.9 percentage points to 90.4% of capacity. For commodity traders, this is very important.

Crude pared some of its losses after the report, with Brent last down 0.7% at $81.8 a barrel, and US crude 0.8% lower at $77.43 a barrel.

Prices of crude futures attract the attention of commodities traders, although they don’t directly impact them that much.

In the US, losses for gasoline and diesel futures eroded after an 11th-hour report showed a draw in inventories. Gasoline stockpiles dropped by 235,000 barrels to 227.8 million barrels, compared with the forecast for a 537,000-barrel build.

Top stocks today: Market trends you should know!

Distillate stockpiles, comprising of diesel and heating oil, fell by 45,000 barrels to 116.4 million barrels against forecasts for an 823,000-barrel increase. Inventories are among the crucial reports for those trading commodities.

Releases from the EIA also showed that net US crude imports rose by 108,000 bpd, and stocks at the Cushing, Oklahoma, delivery hub of Nymex fell by 341,000 barrels.

Such information is relevant for traders and analysts who focus on trading commodities.

Trading commodities: EIA report

In summary, the EIA’s report is helpful for commodity traders in that it gives insight into movements in inventory levels, refinery activity, and market reactions that could impact trading positions and decisions.

Gold prices rose to a three-week peak on Wednesday as the dollar nursed losses and yields fell after data showed the US consumer price index (CPI) rose less than expected in April, cementing prospects of Fed rate cuts as the key event of yesterday for commodity traders.

Spot gold was up 0.4% at $2,367.29 an ounce, while US gold futures rose 0.6% to $2,372.70.

The CPI climbed 0.3% in May after rising 0.4% in March and February, a trajectory that suggests inflation has eased at the start of the second quarter.

That’s given a boost to bets in financial markets that the Fed would cut interest rates in September, which is a factor for anyone in the market for commodities.

Economists polled by Reuters had forecast the CPI rising 0.4% on the month and gaining 3.4% on a year-on-year basis.

A decline of 0.5% for the dollar against a basket of currencies moved gold toward a more than one-month low for holders of other currencies. Yields on benchmark 10-year Treasuries hit more than a one-month low as well.

For those trading commodities, these trends are critical to the attractiveness and pricing of gold.

Technically, gold bulls remain in the near-term driver’s seat. Bulls still have a near-term breakout objective of successfully closing June futures contracts above the $2,400.00 level and offering solid footing until then, Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note.

For commodities traders, this type of insight is useful because it offers a helpful framework for understanding where prices might go next.

Traders are now pricing in about a 69% chance of a rate cut in September, according to the CME FedWatch Tool.

Slower interest rates mean that the opportunity cost of holding non-yielding gold decreases. For commodities traders, this is key.

After winning a 3.1% gain on Monday, spot silver rose another 1.5% to $29.03 per ounce on Tuesday.

Spot palladium gained 2.8% to $1,005.50 an ounce, spot platinum rose 2.1% to $1,052.90 an ounce, hitting a near one-year high.

These developments in the markets for gold and other precious metals are important for any commodity trader because they reflect the broader economic picture and possible changes in the direction of monetary policy.

Spotting trends in these markets can help a trader to anticipate the direction in which assets are going to move.

On Wednesday, the German container company Hapag-Lloyd (HLAG.DE) announced that first-quarter net profit fell 84% but said it raised the bottom end of its 2024 guidance amid rising demand and freight rates, an important update for commodity traders.

‘We are very happy to have started the new year with a good quarter,’ said chief executive Rolf Habben Jansen.

The world’s largest container shipping operator announced a net profit of $1.33 billion, down 63% on a year ago, while Europe’s fifth-largest container shipping operator saw its net profit decline to €299 million from €1.893 billion a year earlier, with revenues falling by 24% to €4.260 billion. Such is the fate of everyone who trades commodities.

All this is to say that shipping costs and dynamics of the market are critically important for price movements.

For 2024, it now forecasts earnings before interest, taxation, depreciation and amortisation (EBITDA) of 2-3 billion euros – up from the previous 1-3 billion euros, issuance on 14 March this year – and earnings before interest and taxes (EBIT) of between zero and 1.0 billion euros – up from the previous minus 1 billion to 1 billion. Those are the numbers that matter for commodity traders.

Commodity trading: Oil, gold rises – trade today!

Profits should also benefit from rising tensions in the Red Sea, where shippers transiting the Suez Canal are avoiding attacks on their vessels by Yemen-based Houthi militants, driving up shipping rates as routes around the southern tip of Africa are longer and more expensive for customers. All of this matters to commodity traders.

Anticipating scores of ships added to the world’s fleet, the group has taken steps to those handling commodities, since it provides a context on supplychain and demand dynamics.

To conclude, the information provided by Hapag and it is crucial for commodity traders to understand these trends to make the right decisions.

The state energy firm Pertamina and the US major ExxonMobil want to build a carbon capture and storage (CCS) hub in Indonesia.

With the finalisation of an initial storage deal with South Korea’s KNOC announced on Wednesday, the development is full of implications for markets in commodities, energy and climate change.

Indonesia estimates its depleted oil and gas reservoirs and saline aquifers could store hundreds of gigatonnes of CO2. Companies operating CCS there have this year secured the right to reserve 30% of their storage capacity for imported carbon.

This is relevant to commodity traders because the added supply potentially shifts the carbon market dynamics.

Meanwhile, at the Indonesia Petroleum Association’s annual conference on Wednesday, both Pertamina, the State oil and gas firm, and ExxonMobil signed a deal for preparatory work to develop a commercial model for the Asri Basin Project CCS hub.

‘Pertamina Hulu Energi and ExxonMobil will conduct appraisal drilling to collect data that will later serve as a reference for the development of the hub,’ said Awang Lazuardi, the chief executive of Pertamina Hulu Energi.

This kind of smart step is the one to watch for traders with commodities at stake, as it serves as a potential tip-off for future enhancements in energy infrastructure.

A pre-feasibility study undertaken jointly by Pertamina and Exxon concluded that the Asri Basin in Pertamina’s Offshore South East Sumatra block could store up to 3 gigatonnes of carbon dioxide and would require around $2 billion in investments.

Pertamina also signed a framework agreement with South Korea’s state-owned KNOC, enabling it to join the partnership and inject emissions into the storage facility.

This would involve a series of collaborations among companies that trade commodities, thereby affecting the shape of the carbon storage market and the flow of investments.

Nicke Widyawati, chief executive of the state-owned oil and gas company Pertamina, said on the sidelines of the conference that his company had already signed an agreement with KNOC.

These CCS projects are the leading edge of carbon emission rules and compliance strategies that will reshape commodity markets and supply chains in the years to come.

In conclusion, these developments in CCS technology and international cooperation inform those trading commodities about shifts in the energy production, energy storage capability and the regulatory environment that can impact the decision-making process in the volatile commodities market.

Colombia is producing an average of around 800,000 barrels of oil per day (bpd), as the largest producer in Latin America seeks to add to its renewable energy capacity, for traders of the commodity to note.

The president of the National Hydrocarbons Association (ANH) gave the update, as the leftist President Gustavo Petro’s government seeks to wean Colombia off its reliance on oil and coal in favour of solar, wind and geothermal energy.

Most renewable energy projects face substantial obstacles.

Better management of existing oil and gas contracts is helping to increase Colombia’s oil output this year by another 30,000 bpd, to 777,000 bpd, according to the president of the country’s national hydrocarbons agency, Orlando Velandia.

‘We hope to get to almost 800,000 bpd this year,’ Velandia told Reuters on Tuesday, adding that his agency expects the target to be ‘pretty much there’ by the month of May.

It’s the sort of information that commodity traders need because it affects supply dynamics and market expectations.

Environmental licensing hold-ups and the country’s decades-old civil war have meant that as many as 30 hydrocarbon contracts have been shelved, Velandia said. ‘In the past 90 days we have helped to solve matters that would have generated at least 10 more suspensions,’ he added.

Anyone dealing in commodities has to be able to read the regulatory, geopolitical and physical factors that govern production.

Nor has Petro’s government announced any new oil and gas licensing rounds.

Velandia pointed out that signing more contracts won’t necessarily translate into more resources, since some companies speculate with the contracts without ever deploying the funds.

In particular, the ANH will review the companies that are currently harvesting oil to see if they are fulfilling their contracts.

‘We’re going contract by contract to see where there is good reason to suspend these activities and where there isn’t, to declare possible non-compliance due to negligence,’ she said. This type of context can be invaluable to commodity traders, who need to consider potential supply disruptions and compliance issues.

Critics in the industry have also voiced concerns that there won’t be any new licensing, which could affect energy self-sufficiency: but Velandia said reserves stand at around five to eight years. Reserves figures, as of the end of 2023, will be announced this week, for those trading commodities to factor in.

Colombia is also preparing for its first-ever offshore wind auction, which the Colombian majority state-owned energy company Ecopetrol has said it will join.

So far, at least five companies have expressed their intention to bid.

Other companies have also held meetings with the regulator to find out more about the process. ‘We have had a lot of companies come forward to show their interest since the launch of the process, and this makes us quite optimistic,’ said Velandia.

The development of renewable energy projects and auctions represents a new opportunity for those who trade commodities and could potentially shift the competitive landscape.

In conclusion, Colombia is exploring methodologies on how to maintain the production of oil while still investing in renewable energy.

All in all, this information is useful for commodity traders to keep them informed about the oil situation in Colombia and assist them in trading commodities effectively.

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