Commodities move sideways in Asian session Monday. Oil prices recover slightly after the selloff last Friday as Mubarak stepped down. The front-month WTI contract edged higher but continued hovering around the lowest level in more than 2 months. Brent crude also climbed, hence sustaining the record spread between the 2 benchmarks. Gold remained pressured after the drop on Friday as ease in the crisis in Egypt reduced the demand for safe-demand.
US trade balance widened to $40.6B in December from $38.3B in the prior month as growth in imports (+2.6%) outpaced growth in exports (+1.8%). While 90% of the increase in imports was from petroleum, recovery in imports from areas beyond petroleum is expected in coming months. Indeed, US market sentiment has improved markedly recently as driven by encouraging economic indicators. The University of Michigan consumer sentiment index rose to 75.1 this month from 74.2 in January.
Expansion in US imports should benefit China. While the country's trade surplus probably shrank to USD10.3B in January from $13.1B a month ago, it's driven by the robust growth in domestic demand. Apart from trade data, China will also release a series of macroeconomic data. Notably, headline inflation is expected to have rebounded to +5.2% y/y in January after a temporary in December. While food and energy prices the major driver for prices, other commodities, utilities and rentals have risen rapidly.
Commitments of Traders:
Crude oil futures were the only candidate in the energy complex that was attractive to traders in the week ended February 8. This was driven by the political unrest in Egypt and concerns about contagious effect to the Middle East. Indeed, protests over the past 2 weeks had not disrupted oil shipments, signaling the power of market sentiment of commodity prices. Net length for crude oil futures increased +12 799 to 165 508 contracts. Net length for heating oil futures and gasoline futures dropped -3 242 to 27 522 contracts and -3 983 to 69 321 contract respectively. Net short for natural gas futures soared for a second week to a fresh record of 225 254 contracts.
Speculators were generally bullish towards precious metals during the week. Net length for gold futures increased for the first time in 6 weeks, by +15 899, to 167 093 contract. Tensions in Egypt raised safe-haven demand for the yellow metal. Silver followed gold's suit with net length for futures rose +6 383 to 37 063 contracts. For PGMs, net length for platinum futures soared for a second consecutive week to a new record high of 30 123 contracts while that for palladium futures to a 13-week high of 15 331 contracts.