Commodity wrap: oil recovers as India eyes Russian import halt; gold, silver extend rally

Most commodities were in the green on Thursday even as gold prices hit new record highs on safe-haven demand. 

Oil prices recovered some of their losses from the last few sessions as India may stop buying Russian crude oil, which could reshape global oil flows. 

Meanwhile, silver prices rose more than 2% on Thursday as supply concerns continued to boost sentiments. 

Oil recovers

On Thursday, oil prices remained steady as traders anticipated a potential suspension of India's Russian oil imports.

This development could alter global oil flows and increase demand for alternative supplies.

Indian Prime Minister Narendra Modi reportedly assured US President Donald Trump on Wednesday that India would cease oil purchases from Russia. 

Russia currently stands as India's primary oil supplier, fulfilling approximately one-third of the country's oil import needs.

Oil prices, however, faced significant upward limitations due to a bearish report released by the American Petroleum Institute (API).

API data revealed a third consecutive weekly increase in crude oil inventories, rising by 7.36 million barrels last week.

This is contrary to the market's average expectation of a 136,000-barrel draw.

Inventories of refined products showed a rise of 3 million barrels in gasoline stocks, while distillate reserves saw a decline of 4.8 million barrels.

“The decline in distillate inventories provided mixed signals on energy consumption in the country,” analysts at ING Group, said in a note. 

The more widely followed EIA weekly inventory report will be released later on Thursday. 

At the time of writing, the price of West Texas Intermediate crude was at $58.31 per barrel, up 0.1% from the previous close, while Brent crude was at $61.92 per barrel, largely steady. 

Gold hits new record

The gold contract on COMEX hit a new record high of $4,728.40 per ounce on Thursday. 

Gold’s rise was driven by rising US-China tensions and expectations of two more Fed rate cuts this year.

Meanwhile, silver prices had surged over 3% in the previous session, closing above $53 per ounce due to tight supply in London. 

Concurrently, US Treasury yields dropped to a multi-month low following signals from Fed Chair Powell indicating a probable quarter-point rate cut this month. 

As for China, Trump issued a fresh trade threat against the country, obviously heightening trade tensions, with Beijing vowing retaliation over Washington’s proposed 100% tariff hike.

ING analysts said:

This year, gold and silver have emerged as top-performing commodities, with their prices surging over 55% and 80% year-to-date, respectively. 

This growth is largely attributed to increased central bank acquisitions and significant inflows into ETF holdings.

ING analysts added:

The December silver contract on COMEX was at $52.830 per ounce, up 2.8% from the previous close. 

Copper

The three-month copper contract on the London Metal Exchange was at $10,577.35 per ton, down 0.4% from the previous close. 

Copper prices have had a roller coaster October so far, with prices exceeding $10,800 per ton, and hitting as low as $10,480 per ton. 

Neil Welsh, head of metals at FCA regulated multi-asset brokerage Britannia Global Markets, said:

Saudi Aramco's trading division is reportedly seeking to employ copper traders, signaling a major move by the global energy firm to quicken its expansion into the metal trading sector.

Welsh added:

In September, China's core CPI growth reached 1%, marking its first return to this level in almost 19 months. 

This suggests a modest rebound in domestic demand, which bodes well for aluminum prices, according to Welsh.

Combined with inventory reductions, aluminum is projected to maintain a strong performance in the near term.