Commodities wrap: oil rebounds after OPEC+ meet; gold rally continues

Crude oil prices rebounded on Monday after steep losses last week as OPEC+ announced smaller output cuts than previously anticipated. 

Elsewhere, gold prices continued to rally, reaching fresh record highs, while silver consolidated near the $42 per ounce mark. 

Copper prices rose on Monday as positive trade data from China, the world’s largest metal-consuming country, supported sentiments. 

Crude oil rebounds

Oil prices rebounded and were up by more than 2% earlier today.  

Concerns of supply disruptions from possible sanctions against Russian oil exports also buoyed sentiments in the market. 

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $63.13 per barrel, up 2% from the previous close.

Brent crude oil on the Intercontinental Exchange was also up 2% at $66.80 per barrel.

The OPEC+ alliance, comprising Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, concluded a virtual meeting on Sunday, agreeing to an oil output increase for October. 

This decision to raise production by 137,000 barrels per day (bpd) was notably lower than market expectations for a more substantial increase.

This adjustment follows a series of consistent production hikes since April, reversing years of cuts aimed at stabilising the oil market. 

However, the latest increase is significantly less than previous adjustments, which saw production rise by approximately 555,000 bpd in both September and August, and 411,000 bpd in July and June.

Gold hits record high

On Monday, gold reached a new record high, surpassing $3,675 an ounce for the first time. 

This surge was driven by weak US labour data, which strengthened expectations of an interest rate cut by the Federal Reserve next week.

Peter Grant, Zaner Metals' vice president and senior metals strategist, indicated that gold could continue its upward trend, potentially reaching $3,700–$3,730 in the near future. 

He also suggested that any short-term declines in price should be viewed as chances to buy.

US employment growth significantly slowed in August, as revealed by Friday's jobs report. 

Consequently, traders are now pricing in a 90% probability of a 25-basis-point rate cut at the Federal Reserve's September meeting, with a roughly 10% chance of a more substantial 50-basis-point cut, according to the CME FedWatch tool.

Reduced interest rates decrease the cost of holding gold, which doesn't offer a yield.

Silver prices on COMEX saw a 1% increase, reaching $41.992 per ounce. Platinum also rose by 0.5% to $1,393.95, while palladium gained 2.8% to hit $1,160.25.

Copper prices buoyed by China data

Copper prices on the London Metal Exchange were up 0.4% at $9,923.75 an ounce on Monday. 

Positive data from China strengthened other metal prices too, with aluminium and zinc rising 0.2% and 0.5% respectively. 

China's preliminary trade data, released this morning, indicates robust domestic demand for industrial metals.

Imports of unwrought copper in August increased by 1.2% year-on-year, reaching 425.1 kilotons.

Copper imports for the first eight months of the year reached 3.5mt, marking a 2.2% year-over-year decrease.

In the first half of the year, uncertainty regarding US tariffs on copper imports led to a shift in supply from China to the US.

Analysts at ING Group said in a note:

Meanwhile, imports of copper concentrate saw a significant rise, increasing by 7.4% year-over-year and 7.8% month-over-month to reach 2.8 million metric tons. 

This surge was driven by robust domestic refined output, which, in turn, boosted demand for raw materials.

On a year-to-date basis, copper concentrate imports have climbed 7.9% year-over-year, totalling 20.1 million metric tons.

Last month, China's exports of unwrought aluminium and aluminium products saw a significant year-over-year decrease of over 9.6% (and a month-over-month decrease of 1.2%), reaching 533.5kt. 

In contrast, steel product exports experienced a slight annual increase, totalling 9.5mt.