Commodity week roundup

Energy

It was a good week for crude oil. Brent crude oil was able to make a gain of 2.00% to close the week at $72.92 per barrel. Likewise, WTI crude oil closed in the plus, at $69.71 which is up 2.4%.

In the Gulf of Mexico, repair work is progressing slowly. Still, many oil facilities are offline which affects about 1.4 million barrels of oil per day. Before the facilities in the Gulf of Mexico are operational again, the oil supply chain remains tense.
To ease the situation for the moment, China has decided to release some of its strategic oil reserves.

Positive news came from the political side. A phone call between President Biden and his Chinese counterpart Xi Jinping raised hopes for an improvement in trade relations. Trade relations have already been strained since President Trump.

In Europe, energy prices are soaring. The price of baseload power from France rose to €100.4 per MWh. Baseload power in Germany now costs €96.43 per MWh. Analysts believe the reason is natural gas prices, which have more than doubled since the start of the COVID-19 pandemic.

Uranium

Encouraging news at Uranium. The uranium spot price was able to clear the $40 hurdle this week and is now at $40.40. YTD this means an increase of 41.33%. The price upswing is mainly due to the new physical uranium trust of Sprott on the one hand and on the other hand, the current price development pleases the uranium producers who have so far little interest to increase the supply. Sprott’s Physical Uranium Trust has already bought 24,914,382 pounds of U3O8 from the spot market and has a net asset value of $1.08 billion. Uranium investors are pleased with the news of a coming uranium bull market.

Precious metals

Gold did not have a good week and slipped below $1800. Gold closed the week down 2.19% at $1787.72.

What about inflation concerns? Inflation remains at a high level, but the majority of investors trust the Fed that inflation to this extent is transitory. The Germans look with quite more concern on the inflation in Germany now rising to 3%. With a view to the past of the Weimar Republic, the German gets a stomachache at the keyword inflation and seeks safety. Physical gold purchases in Germany are up 35% this year, according to the World Gold Council.

On the subject of tapering, the Fed has so far responded with even more liquidity. As the money spigot remains open and debt rises immeasurably, the only question is how many generations it will take to pay off the debt. Since neither the Fed nor the government is interested in this question so far, the patient citizen continues to wait for an answer. Maybe the answer will be the big reset and the world will sink into the depths of socialism.

The silver price has been carried along by all the hullabaloo and has slipped below $24. With a minus of 3.94%, the silver price closed at $23.74. Silver has for some time been able to gain fans who stock up on physical silver. The silver price and its regulatory forces have so far left this cold. Nevertheless, the omens are good for silver. With the race to electric vehicles and solar cells, the demand for silver will increase massively in the coming years.

Platinum, on the other hand, is on the decline. The faltering auto industry is causing problems for the precious metal. The price of platinum has now slipped to $962. Palladium is in the same situation. The price of palladium stands at $2,220 an ounce.

Base Metals

Latest from Doctor Copper. Copper is up 20.2% YTD and currently costs $9,515 per ton. The copper price has weakened somewhat recently after the Chinese government criticized the high copper prices. Copper is essential to governments’ carbon targets. For example, significantly more copper is used in electric vehicles than in combustion vehicles. The U.S. infrastructure plan will not be implemented without an immense amount of copper. Knowing this, however, it is questionable what is currently happening with the Resolution Copper Mine. Politicians want to block the project in Arizona. The Resolution copper mine could meet U.S. copper demand by 25%. Since many copper mines in the world have already arrived in the fall, copper hopes are again focused on copper trees.

Aluminum prices are at a high level. YTD, the price of aluminum has increased by 42.02% and is at $2916.07 a ton. Are the high prices due to inflation? The Fed continues to insist that inflation is transitory, pointing to lumber prices that have weakened from their highs. With more aluminum than lumber likely to be used in the planned renewal of U.S. infrastructure and the push for electric vehicles, we hope for the Fed’s sake that inflation remains transitory.

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