Moneycontrol » News » Markets » Commodities

OPEC may keep output of crude unchanged in Dec

Published on Mon, Nov 16, 2009 at 15:13 | Source : CNBC-TV18

Updated at Mon, Nov 16, 2009 at 16:03

Like this story, share it with millions of investors on M3

Share on Tumblr

Risk appetite has improved as the US dollar saw a decline after wider than expected deficit from US on Friday and also because of speculation on the yuan as President Obama tours China though President Obama has said that Washington is not trying to contain China but also said that the two giants need to be more balanced in trade and currency as well.

Another currency to look at is the Australian Dollar (AUD) which is trading at 15 month lows at 0.94 and as per latest reports analysts feel that come March, you might see the dollar and AUD come into parity. Euro also is holding quite firm against the Yen and the dollar, but 1.50 for that continues to be stiff resistance. There is important data coming out today; Europe inflation numbers and US retail sales to look forward for further direction.

In the case of commodities, gold prices continued to make record highs USD 1,130 per ounce in the day today. The RBI is holding USD 100 in profits for every ounce and they have bought 200 tonnes, so good money made only in the case of paper there.

But there are important reports coming in from BlackRock Investment which says that central banks would continue to buy and are expected to hold net long positions not just in 2009 but in 2010 as well.

The ComEx interest rates or the open interest is also at record highs so the trade in that sense is very crowded and people have been buying from USD 900 on the lower side. We are holding at around USD 1,130 per ounce at this point of time. So liquidation when that comes would see very heavy liquidation on the lower side. But USD 1,000 per ounce is very strong support for gold prices.

Support is also coming in from crude prices which are holding around USD 77 per barrel in trade today. We have seen a low of USD 75.5 per barrel on Friday, but strength continues there. There are some statements coming in from OPEC and they say USD 75-80 per barrel is a fair price for crude and they are not looking to touch production when they meet in December. Also supplies are still on the higher side and at this point in time, OPEC countries have 62 days of forward cover. But USD 79-80 per barrel is an immediate resistance on crude.

Good start to the week for base metal prices. Last week wasn't so good and we have seen some consolidation happen in the recent few weeks, but today it is nearly 2-2.5% up on LME and in Shanghai as well.

Copper is trading at 13 month highs in the Shanghai exchange today. It has to do with weakness in the US dollar, strength in equities as well. Other commodities trading on the higher side has been supportive as well. Gold is at all time highs and crude prices also holding above USD 77 per barrel with 1.5% gain is also helping this commodity.

Other factors are that there are supply concerns coming in from China where it is snowing in Northern part of the country and that has been supportive as supplies might dip because of that.

Apart from that, the outlook for a pickup in demand from Europe and US, have improved and that has also been supportive. Copper is holding around USD 6,600 per tonne in the LME markets and expected to close above USD 7,000 per tonne in coming few days and that has been quite supportive. If you look at further direction that would come in from US data - you have the retail sales coming in today, industrial production data tomorrow and housing starts day after and that would give further cues.