Crude Oil
Crude oil prices experienced a slight increase of 0.5% on Monday, reaching $78.48 per barrel. This fluctuation was influenced by the ongoing volatility surrounding the potential resolution of the Gaza conflict. While Hamas expressed acceptance of a ceasefire proposal from Qatar and Egypt, Israeli Prime Minister's rejection of the proposal dampened optimism in the market.
Despite this setback, several bullish factors suggest that last week's significant drop in oil prices may have been excessive. These factors include Saudi Arabia's recent price hike for Asian markets and positive technical indicators. Additionally, OPEC and its allies are expected to continue implementing supply cuts to prevent oversupply in the market.
Copper
Copper prices continued their upward trend for the second consecutive day, bolstered by a positive price forecast from Goldman Sachs and growing optimism about potential Federal Reserve rate cuts later this year. Expectations of a shift in the Fed's policy stance in 2024 also contributed to a more positive overall market sentiment.
The release of soft US jobs data prompted investors to anticipate rate cuts sooner than previously expected. Swap markets now indicate a 53% chance of a rate reduction by the end of the year, compared to around 40% at the end of April.
On the London Metal Exchange, copper prices reached $10,065.50 per ton. Other metals, including aluminum, tin, and zinc, also saw increases of over 1%. This year's rally in copper prices, which have risen by 18%, is driven by expectations of high demand from green industries amidst potential supply challenges for global miners.
Natural Gas
Natural gas prices surged on Monday, continuing an upward trend and positive momentum after breaking key trend lines. Hot weather conditions in Texas and the southern United States boosted demand, while a bearish outlook persisted elsewhere, leading to volatile market conditions.
Increased feedgas usage by Freeport LNG contributed to the price rise. However, a significant storage build reported by the Energy Information Administration suggests a potential supply surplus.
Reductions in active drilling rigs add complexity to supply forecasts. The upcoming launch of the LNG Canada project could potentially reshape North American gas trade. Despite rising temperatures, the long-term market outlook for natural gas remains bearish.
Traders are advised to closely monitor weather developments and adjust their strategies accordingly.