Weekly look at Commodities

Global energy markets saw their largest percentage moves after last week’s drone attacks on Saudi oil production facilities in Abqaiq and Khurais. The attacks that immediately halved the country’s output came at a time of high tensions between Iran and Saudis’ biggest ally the United States.

Riyadh and Washington quickly put the blame on Tehran for the attacks in eastern Arabia which triggered oil prices to jump more than 20 percent at the following week open, the biggest percentage rise since Iraq’s invasion of Kuwait in 1990. Iran has consistently denied all the accusations and instead pointed at the ongoing Saudi-led war on the Tehran-allied Yemen’s Houthi movement.

The newly-appointed Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement that 5.7 million barrels a day of crude oil and gas production were affected. The Saudis have since started repair work at the two targeted Aramco oil facilities and led shut nearly 5% of global oil production. Officials reported that at least 30% output of Abqaiq was back online as of Friday and that full production levels at both will be before September ends.

The attacks that frightened the kingdom and world economies dependent on its soil raised the possibility of a second Middle East conflict if not an all-out war and supply shortages.

US President Donald Trump imposed even more sanctions on Iran on Friday, this time targeting the country’s national bank and said Washington was ready if it came to the question of war.

The US Federal Reserve slashed its key interest rate by 25 basis points to between 1.75% and 2%. At a press conference after the decision, Powell stated that the cut was aimed at supporting the US economy in the midst of threats from abroad such as the global slowdown, Brexit and the trade wars.

Powell did not signal further cuts and insisted there was still no cycle in question while defending the central bank’s view that there was no recession in sight, nor did they foresee one.

Trump continued to attack Powell and the Fed for not playing along with his demands of drastically cutting the rates.

Another development concerning the markets is the resumption at low-level of Sino-US talks in Washington. The two sides are set to continue high-level negotiations in October in a bid to end their bitter trade war.

US crude oil ınventories increased unexpectedly in the week to September 13 as imports grew, the Energy Information Administration numbers showed on Wednesday. After four consecutive weeks of falls, crude stockpiles saw a rise of 1.1 million barrels during the week compared to a forecast of over 2.5 million barrels decrease.

US President Trump added the Central Bank of Iran to a sanctioned entities list, triggering a rise in precious metal prices. The decision taken ahead of the United Nations General Assembly leads to a phase in the US and Saudi tensions with Iran, decreasing risk appetite in the markets. The 1522–1530 channel will be decisive for the continuation of the current rise. If the upward movement exceeds this region, levels 1539 and 1550 may come up again. In the event of potential withdrawals, the 1500 level remains crucial as a support position, and if the sell pressure reaches below that level, we will follow the 1484 and 1476 lines.

The increase in the value of precious metals due to rising risk factors is valid also in silver. While the price is trying to maintain a hold above the exponential average of 120 months, the 18.90 and 19.70 regions will be monitored in terms of resistance, if the current uptrend goes on. If the upward movement exceeds this region, then we will be watching the 20.15 level. The 1760 level will continue to act as a support if the move takes a reversal. The 17.20 and 16.75 lines will be important if the sall pressure accelerates.

Oil prices that jumped after the attacks on two production plants owned by Saudi Arabia’s national oil company Aramco are now giving back the gains after the announcement that output will reach previous levels in at the end of the month. The 70.65 level remains as a significant support in a continuation of the current withdrawal. We will be monitoring the 69.00 and 68.20 levels if the sell pressure intensifies. 74.35 and 75.60 levels will be monitored in the case of possible upward moves. If the move accelerates, we will be watching the 76.90 region.

The most recent rise in natural gas was limited by the 78.6 percent Fibonacci retracement. 2.70 and 2.62 levels remain solid supports in the face of the current short-term sall pressure. But an ongoing profit realization in global oil prices could sustain the pressure on natural gas. If the drawdown reaches below 2.62, we will be following the 2.58 line. While the 2.98 level remains important in terms of resistance, if the price exceeds there, we will be following 3.04 and 3.17 levels.


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