Commodity trading proved highly lucrative for gold traders as the precious metal continued to increase in value.

Oil, on the other hand, has been middling in performance and dropped in the second week of April 2024.

In this article, we take a look at commodity trading trends and provide unique insights.

Commodity Trading Update: Oil Prices Dip Amid Middle East De-Escalation

The price of oil plummeted by more than a dollar a barrel after a drop in tensions between Israel and Palestine saw Opec’s oil quotes rise for the previous seven sessions.

Stocks fell across Europe on Monday as traders took their profits after a week of gains based on hopes for a greater US economic stimulus.

Oil reached $89 per barrel for the first time in three weeks in electronic trading in New York.

Brent crude futures retreated $1.60, or 1.8%, to trade at $89.57 a barrel by midday, while US West Texas Intermediate crude fell $1.36, or 1.6%, to $85.55.

Commodity trading: Middle East Tensions

On the same day, market participants focused their attention on Israel’s announcement that it was decreasing its troop levels in southern Gaza, which helped to knock more than $2 off both benchmarks on the day during the afternoon session.

Moreover, oil prices were dragged down by expectations of a build in US crude oil inventories as stated by Staunovo.

The oil market reaction could remain muted until Iran’s move in response to last week’s bombing of its consulate in Syria, as Tehran promised to retaliate against Israel for the strike that killed two Iranian military generals.

Commodity trading: Oil Demand Outlook

Oil demand outlooks are also predicated on economic activity readings, and Friday’s US employment report provided another reason to believe that the first quarter will end on a positive note.

A resilient economy would, for instance, be less likely to prompt the Federal Reserve to cut interest rates, advancing the timeframe for cuts.

Investors will continue to be eyeing the release of consumer price index readings from the US as well as from China to begin to form a fuller picture of the likelihood of a forthcoming Federal Reserve rate cut and, more broadly, the health of the world’s two leading oil consumers.

Commodity Trading Spotlight: Gold’s Record Streak Continues Amid Central Bank Buys and Global Tensions

Gold’s price momentum hit new record highs on Monday, for the seventh straight session, as crisis buying from central banks and geopolitical tensions amid strong economic readings have not been enough to dent the appeal of the precious metal.

Spot gold had a slight dip of 0.1% to $2,326.19 an ounce by the afternoon, after earlier touching $2,353.79.

US gold futures were at $2,344.80.

Commodity trading: China boosts gold reserves

In March, China’s central bank boosted its gold reserves by 160,000 troy ounces, while India, Kazakhstan, and several other eastern European countries have all increased their gold stocks this year.

But central bank purchases and geopolitical tensions nonetheless set up gold for an important floor.

Commodity trading: Interest Rate Cuts

Interest rate cuts are becoming more and more likely, it seems, as market traders are betting on a 52% probability of a 25 basis point cut in June, according to the CME Group.

However, news that US job growth for March was much stronger than expected has brought the exact timing of that rate cut into question, as lower interest rates generally pull the opportunity cost of holding non-yielding gold, such as jewelry, down.

Long positions in COMEX gold among speculators have soared. The speculative net long position in gold is the highest in months.

In silver, the spot price was up 0.7% to $27.68, as you can see below. It is now at the highest price since November 2014.

India imported 87 tonnes of silver in February, according to local statistics, the highest monthly total on record, thanks to a lower tariff and big buying from the United Arab Emirates.

Platinum and palladium markets also saw big gains, with platinum up 3.9% to $963.19 and palladium by 4% to $1,043.00.

Commodity Trading Boosts UK Share Indexes: Miners and Entain Surge

Commodity trading drove the main UK share indexes higher on Monday, with miners gaining as Shanghai’s record-high copper prices helped shine a light on the sector, and the betting group Entain going on a tear amid reports of takeover interest.

The UK’s commodity-heavy FTSE 100 index lifted 0.4% on the session, recovering from a sluggish open, while the midcap FTSE 250 index gained 0.7%.

Shares in the mining giants Rio Tinto, Glencore and Anglo American rose.

Meanwhile, UK GDP data for the last quarter and US inflation figures are due this week, and UK equities finished lower again last Friday as investors marked up expectations about the pace of interest-rate hikes from the Federal Reserve after a raft of surprisingly robust US economic indicators.

Commodity trading: UK Big Data Delay

This Friday, Britain’s next big data delay, the latest figures for GDP, is due in February, up on the 0.2% increase in January.

At the same time, a survey by Deloitte found uncertainty about the state of the economy among FTSE 350 firms had dropped to its lowest level since mid-2021.

But that optimism has yet to feed into investment choices.

In other market moves, shares in Entain rose 5.2% after a report in the Sunday Times of an approach from private equity groups including Apollo, while the aircraft operator EasyJet rose 3.3% after UBS lifted its stock price target.

Commodity Trading Update: BP Nears Asset Sale in Trinidad and Tobago to Perenco

BP is close to selling some of its Nigerian oil and gas assets to the Anglo-French oil firm Perenco, according to two people familiar with the discussions.

BP is the largest gas producer on the island of Trinidad and Tobago, producing more than 1.3 bcfd a day, which it supplies to Europe and Latin America in the form of LNG.

It supplied 18% of its LNG last year from its operations in this Caribbean country, it said in its annual report.

BP remains an important player, but its gas production within this area has shrunk in the past five years, from more than 2.2 bcfd to about 1 bcfd.

The company is talking to Trinidad and Tobago, as well as the socialist and oil-rich nation of Venezuela, about the possibility of developing a transnational offshore gas field in the Caribbean.

The assets it is proposing to sell to Perenco are the Amherstia, Cashima and Immortelle fields, which have been producing for more than two decades and peaked at almost 2 bcfd combined in 2004, but are now producing just short of 200 mmcfd.

This deal will allow Perenco to continue or even increase production in these fields. Neither BP nor Perenco have commented officially on the sale, and the terms remain confidential, at least for now.

Commodity trading: Trinidad and Tobago’s Energy

Neither has Trinidad and Tobago’s Energy Minister, Stuart Young, commented on the deal, which another source said we should expect to hear about before the end of the summer.

The British-owned Perenco, which operates in Africa, Latin America and Europe, lists 420,000 barrels of oil equivalent per day (boepd) as its net production figure on its website, including 10,000 boepd at bargain pricing from its Teak Samman Poui operations in Trinidad.

Almost all of BP’s exploration and production activity is in the Columbus Basin off Trinidad, where it has found gas and oil in abundance.

Its president in Trinidad told Reuters this year that the company’s future exploration on the island would be concentrated in the deep-water frontier, particularly around the borders with Venezuela.

Trafigura Forecasts Significant Copper Demand from AI and Data Centers by 2030

The commodity trading giant Trafigura last year identified a coming surge in demand for copper, driven by the proliferation of AI and data centres, which it estimates could rise by as much as a million metallic tons by 2030, as the decade progresses.

The Switzerland-based firm predicts that demand for copper will grow as the world undergoes ‘an unprecedented energy transition’ including the widespread adoption of electric vehicles and renewable electricity sources.

This energy transition is set to power the growth of copper used in the coming decade as we seek to decarbonise the global economy.

Trafigura’s chief economist, Saad Rahim, told the Financial Times Global Commodities Summit in Lausanne last year that the growth in demand from the ‘data centres and the AI world is not linear; it’s exponential’.

The additional demand ‘compounds the fact that, if we’re looking at the copper market, for 2030 there’s a deficit of four to five million tonnes anyway.

That’s not in the supply-demand analysis.’ Though Rahim didn’t specify what he was expecting global copper demand to be specifically by 2030, forecasts have the market set at about 26 million tons for this year.

January data on the market from Reuters predicted the copper shortfall would exceed 100,000 tons by 2025, versus this year’s 35,000-ton deficit.

But China is also the biggest producer and consumer of copper – and of many other industrial metals important for the energy transition.

As the world’s biggest producer of many metals linked to the transition away from fossil fuels, that’s something to contend with for Western countries that are hoping to meet the transition to net-zero emissions targets.

Western countries and their allies control little more than 20% of the production of vital raw materials for electric vehicles such as rare earths and graphite, China which produces half of the world’s rare earths makes more than half of global supply.