In Peru’s hills, an artisanal miner boom frustrates Big Copper’s plans

By Marco Aquino and Marcelo Rochabrun

TAPAIRIHUA, Peru (Reuters) – In the hills of Tapairihua in Peru’s Andes, Samuel Retamozo and other artisanal miners have found a rich seam of copper on their indigenous community’s land. Armed with temporary government permits, they started exploiting it earlier this year.

There’s just one problem – the seam is within the site of Southern Copper Corp’s planned $2.6 billion Los Chancas mine. One of the world’s biggest copper miners, it also has a permit to dig in the same area.

Grupo Mexico’s Southern Copper aims to start producing here in 2027 after decades of studies. The planned mine is crucial to the company’s goal of producing 1.8 million tonnes of copper annually by 2030.

But the rise of artisanal copper mining – driven by high global metal prices and sustained by a messy government permitting system – is threatening billions in new investments by Southern Copper and others in Peru, according to Reuters reviews of internal company reports, interviews with executives and a visit to Tapairihua to meet the miners.

Small-scale copper miners are now challenging Big Copper for territorial control of rich deposits of the red metal. Artisanal copper mining is creating much-needed income for impoverished Andean Peruvians even as it brings them into conflict with major miners, a rare and previously unreported trend in the world’s No. 2 copper producer.

“This used to happen with silver and gold, but now it’s affecting copper,” said Raul Jacob, Southern Copper’s chief financial officer, bemoaning what the company sees as the government’s poor handling of artisanal mining permits.

In Peru, artisanal mining permits have doubled to 80,000 since 2020, government records show. And copper is the new focus.

Southern Copper is not the only mining company in a stand-off with the miners. Chinese-owned MMG Ltd’s nearby Las Bambas copper mine is struggling to develop two new open pits because of artisanal miners who have settled on the same land. The company says its current pit is running out.

“Informal mining is entering lands granted to formal (mining) companies and threatening the development of large-scale projects,” a source close to MMG told Reuters.

While companies often call small-scale miners “informal” or “illegal,” what complicates the matter are two dueling authorizations – one for artisanal mining and another to hold the mining rights to a given area. Mining companies own the latter, known as concessions.

But since 2012 Peru has been granting artisanal mining permits on lands that overlap with concessions, giving the small-scale miners some legal protection, Reuters found after checking the geolocations of the permits and reviewing an internal document in which Peru’s mining ministry did the same.

POTENTIAL FOR MORE DISPUTES

Disputes between mining firms and artisanal miners may only increase over time. Peru’s leftist administration presented a new framework for artisanal mining last week that declared artisanal mining is “as important” as big mining.

Southern Copper has asked the government to revoke all artisanal mining permits on its concession. About half have now been canceled, causing resentment in Tapairihua.

“We are going to defend ourselves. At the end of the day we are at home, and from home there is nowhere to go,” Retamozo, a mining engineer and president of the Tapairihua Mining Association, told Reuters.

While artisanal permits have existed since 2012, lower copper prices that decade meant they were not in demand. But copper has risen more than 60% since 2020 due to demand for electric vehicles.

The surge in artisanal copper mining is forcing the government to review its artisanal permitting system, a mechanism that was meant to be a temporary bridge toward formalization and intended mostly for gold miners.

“Our country is a mining country but we haven’t had until now a mining framework that gives a long-term view about small-scale mining,” Alberto Rojas, Peru’s top mining formalization official, told Reuters

Rojas, however, suggested artisanal miners would lose in a dispute against concession holders.

“Where we have concessions we can’t have (artisanal mining permits),” Rojas said. “We can’t disavow the concessions that have already been granted.”

DIGGERS, TRUCKS

On a recent day in Tapairihua, Reuters visited the artisanal mining operations, where dozens of wood and blue tarpaulin homes were erected, and tunnels supported with wooden beams burrowed into the steep rocky hillside.

In Peru’s Andes many feel the copper under the ground is a right, with mining dating back to the Incas and other cultures that existed before Spain’s colonization. Tapairihua looks down onto the river Antabamba, meaning “copper plain” in the Andean Quechua language.

Many of the miners are also local subsistence farmers who took up mining in search of income. Many declined to be named because they have been sued by Southern Copper over their mining activities.

To extract copper, they use dynamite to explode rock that they bring out in wheelbarrows and bags. Miners earn 80 soles ($20.61) a day, extracting enough rock to fill a handful of trucks a week, usually containing around 5% copper, though this level can rise as high as 18%.

Gherson Quintanilla arrived in Tapairihua earlier this year with a background in artisanal gold mining. He came because he heard copper was abundant and expertise was low.

“My goal is to extract up to two truckloads a day,” he told Reuters.

But artisanal copper mining is not always as small scale.

Graphic: Las Bambas: Small-scale miners https://www.reuters.com/graphics/PERU-MINING/zjpqjkdbyvx/chart.png

An internal Las Bambas presentation seen by Reuters estimated informal miners were blasting some 1,950 tonnes of rock per day, almost double their output a year ago.

The report said artisanal miners were using heavy machinery and diggers as well as pneumatic tools.

Overall, it estimated the government has issued 700 permits that overlap with Las Bambas’s concession,

But removing those miners is not straightforward. While Las Bambas and Southern Copper hold mining rights – which grants them access to the mineral underground – in most cases they have yet to buy the property rights to the surface terrain.

That limits their options because they cannot file an eviction claim on land they do not own.

The source close to Las Bambas said MMG recognized this difficulty and anticipated it would have to buy out the miners if it wants them to leave the site of its third pit, set to open in 2027 – if there are no delays.

At the site of its second pit, which was supposed to open this year, Las Bambas has filed eviction claims against the miners there because it already owns that particular parcel of land. The company estimates almost a dozen mining sites in the area. Reuters was unable to determine the number of miners working in them.

Graphic: Las Bambas: artisanal mining https://www.reuters.com/graphics/PERU-MINING/lbvggnmarvq/chart.png

‘FUEL TO THE FIRE’

In May, Southern Copper sued Retamozo and other Tapairihua miners, saying their mining permits were non-compliant.

Weeks later a fire destroyed Southern Copper’s local headquarters, which is made up of tents, just minutes downhill from where the small-scale miners are operating. Burned-out cars remain there today.

Nobody was hurt in the fire and no arrests have been made. Peruvian authorities say the matter remains under investigation.

The miners have distanced themselves from the arson, though Retamozo acknowledged the lawsuits have angered them and that some individual members may have acted out of “resentment.”

The number of valid artisanal mining permits in Tapairihua has fallen from 100 to 32 since May, according to government records. An internal mining ministry document seen by Reuters shows that the process is under way to revoke the remaining permits.

Retamozo cautioned about what would happen if those were canceled.

“Canceling them would add fuel to the fire,” he said.

($1 = 3.8811 soles)

(Reporting by Marco Aquino and Marcelo Rochabrun; Editing by Adam Jourdan and Ross Colvin)

CME cobalt contract use soars above LME as big players join

By Pratima Desai

LONDON (Reuters) – Activity in CME Group’s cobalt futures has this year soared far above London Metal Exchange volumes, with sources citing major firms including top producer Glencore as users covering their exposure to the battery metal.

Consumers, producers, commodity traders, brokers and banks are backing the CME’s cash-settled contract as they want a liquid instrument to hedge cobalt, which has grown in importance due to its use in electric-vehicle batteries, which are crucial for meeting targets for cutting emissions.

Growing volumes for CME cobalt are expected to help the U.S. exchange win market share in contracts for other materials used in electric vehicles such as lithium and aluminium.

Meanwhile, the LME’s cobalt contract has failed to gain traction due to a lack of interest from its members.

A source with direct knowledge said Glencore, the world’s largest cobalt producer, wanted to support the establishment of a liquid cobalt futures market.

Glencore uses CME cobalt and also trades bilaterally with banks using over-the-counter (OTC) contracts, the source said.

Glencore declined to comment.

“Interest in CME cobalt is consistent,” one source familiar with the matter said. “Volkswagen and other automakers have to include cobalt in their hedging programmes.”

Volkswagen makes electric vehicles which use batteries containing cobalt. The German automaker told Reuters it does not use the CME’s cobalt futures, but it trades bilaterally with banks using cash-settled OTC contracts.

Banks then hedge their exposure to Volkswagen using CME cobalt, a second source familiar with the matter said.

Volumes on the CME’s cash-settled cobalt contract, launched in December 2020, have climbed 273% to 11,003 tonnes in the 10 months to end-October from the same period last year.

Open interest, the number of outstanding contracts held by the market, for CME cobalt at 8,258 tonnes in October has jumped 352% from the same period last year. Open interest is spread across maturities from November 2022 to December 2025.

CME Group declined to comment.

The LME’s cash-settled cobalt contract has not traded since its launch in 2019, while interest in its physically-deliverable contract has faded, evidenced by a 68% drop in volumes to 238 tonnes in Jan-Oct from the same period last year.

Open interest on the LME’s physically deliverable contract has been stuck at 13 tonnes since August compared with levels near 800 tonnes in December 2018.

“CME brokers want to make the contract work. LME brokers don’t care, it’s not a core offering for them,” the second source familiar with the matter said.

LME declined to comment.

According to Benchmark Mineral Intelligence (BMI), cobalt demand from the battery sector accounted for 47% of the total at 88,147 tonnes in 2015.

BMI expects cobalt demand for batteries to rise to 68% at nearly 164,000 tonnes this year and 82% at 360,231 tonnes by 2030.

Most of that growth will come from electric vehicles batteries, according to BMI analyst Caspar Rawles. Cobalt ensures batteries do not easily overheat or catch fire and it helps extend their life, which automakers typically guarantee for eight to 10 years.

Glencore produced 31,300 tonnes of cobalt last year, much of it in the Democratic Republic of Congo where it is a byproduct of copper. Cobalt is also a byproduct of nickel production.

(Reporting by Pratima Desai; Editing by Veronica Brown and Arun Koyyur)

China’s lithium newcomer Zijin eyes rich returns from battery demand

By Siyi Liu and Dominique Patton

BEIJING (Reuters) – The head of China’s Zijin Mining Group Co Ltd said lithium prices now at record levels could halve by end-2025, telling the Reuters NEXT conference however the miner would still forge ahead with heavy investment in the sector.

The company, China’s top gold extractor and a leading producer of copper, has already spent $16 billion buying three lithium mines over the past year, making it one of the world’s top 10 producers of the battery metal. The flurry of deals comes even as warnings emerge that lithium prices, driven to records by rapid growth in electric vehicles, may peak next year because of a looming supply glut.

“Zijin aims to become one of the top three to five mining companies in the world by 2030. To do that, we need a new growth driver on top of our gold, copper and zinc sectors,” said company president Zou Laichang.

“New energy and new materials are the key strategic path for us to achieve this goal.”

Zijin’s recent purchases include Canada’s Neo Lithium Corp, a company focused on lithium mining in Argentina, bought for C$920 million ($690 million) in a deal completed in January and giving it access to the Tres Quebradas (3Q) project.

It also bought majority stakes in the Lakkor Tso Lithium Salar mine in China’s Tibet region and the Xiangyuan lithium mine in Hunan province.

Zou said more investments are planned, giving no details on how much the company was planning to spend. Zijin has a market capitalisation of about $35 billion and net profit of 15.7 billion yuan ($2.2 billion) last year.

But competition for resources is fierce, with companies such as Chinese battery maker Contemporary Amperex Technology Co Ltd (CATL) and automakers BYD and Tesla also seeking access to lithium.

Some firms are also working to develop alternative battery materials, which could reduce lithium demand in the long term.

“Of course there are concerns … but we will take full advantage of our technology and cost advantage to remain competitive,” Zou said.

“We’ve been working on our lithium extraction from salt lake brine and hard-rock deposits to bring down cost and improve utilisation rate efficiency,” he said.

A surge in supply coming onstream by 2025 is expected to push prices down to a “normal range” of 300,000 yuan to 400,000 yuan a tonne in the second half of that year, Zou said.

That would cut as much as half from China’s current spot lithium carbonate battery grade prices, which according to Fastmarkets sit at a record 597,500 yuan ($83,430) a tonne, about three times higher than they were a year ago.

China accounts for about 60% of world lithium chemical supply and its prices are an important global benchmark. Zijin told investors recently it made its mine acquisitions based on lithium carbonate prices of 100,000 yuan a tonne.

There are growing headwinds for Chinese miners seeking to invest overseas, however. Last month, Canada ordered three Chinese companies to give up investments in lithium mines there, citing national security.

“We will be more careful, focusing more on assessing policy and political risks,” Zou said.

Zijin is also in a legal dispute with Australian miner AVZ Minerals Ltd over the purchase of a 15% stake in the Democratic Republic of Congo’s Manono project, thought to be one of the world’s largest lithium mines.

Zijin is aiming to have 150,000 tonnes of lithium carbonate equivalent (LCE) capacity by 2025, according to an investor briefing on Nov.15.

That’s about half the capacity planned by major Chinese producer Ganfeng Lithium Co. Ltd..

Zijin is also expanding downstream and starting lithium iron phosphate (LFP) production. Zou said about 20,000 tonnes of LFP capacity would be launched by the end of this year.

To view the Reuters NEXT conference live on Nov. 30 and Dec. 1, please click here.

($1 = 1.3379 Canadian dollars)

($1 = 7.1462 yuan)

(Reporting by Siyi Liu and Dominique Patton in Beijing; Additional reporting by Gao Zhuo in Hong Kong; Editing by Tom Hogue)

Europe’s STOXX 600 logs best month since July on China, smaller rate hikes cheer

By Susan Mathew and Devik Jain

(Reuters) -The STOXX 600 index closed higher on Wednesday and registered its second straight month of gains on hopes of easing COVID curbs in China and after cooler euro zone inflation data bolstered case for smaller rate hikes by the European Central Bank.

The pan-European index rose 0.6% to end November with a 6.8% gain, its best monthly performance since July.

China-exposed luxury stocks <.SXQP> were among the biggest boosts to the STOXX 600 on Wednesday, followed by auto <.SXAP> and commodity <.SXEP>, stocks.

The giant Chinese cities of Guangzhou and Chongqing announced an easing of COVID curbs on Wednesday after a string of protests against the world’s toughest coronavirus restrictions. But with record numbers of cases nationwide, there seems little prospect of a major U-turn in “zero-COVID” policy.

“Optimism about China reopening is really starting to filter through,” said Giles Coghlan, chief market analyst at HYCM.

Meanwhile, data showed consumer prices in the euro zone grew 10% in November, well below expectations for 10.4% and after a 10.6% increase in October, prompting traders to raise their bets to 57% for a 50 basis point rate hike by the ECB in December. [0#ECBWATCH]

The report came amid mixed signals from policymakers recently about the pace and path of future increase in borrowing costs.

“Euro zone inflation is following that of the U.S. in making some tentative declines from peak levels. It would be foolish to be complacent about the risks of inflation taking a new leg higher,” said David Goebel, associate director of investment strategy, Evelyn Partners.

“Nonetheless, these latest readings will give consumers and investors some hope that the worst of this inflationary episode could be in the rear-view mirror.”

The benchmark STOXX 600 has climbed nearly 15% from its September closing lows on hopes that the Federal Reserve will shift to smaller interest rate hike amid signs of cooling U.S. economy.

With the energy crisis seen persisting in Europe, Citigroup expects the euro zone and the UK to slip into recession by the end of this year and forecast contractions of 0.4% and 1.5%, respectively, for the coming year.

Among single stocks, argenx SE jumped 7.1% after the Dutch biopharmaceutical company announced a deal to acquire a U.S. FDA Priority Review Voucher (PRV) for $102 million.

United Internet added 5.4% after UBS upgraded the German telecommunications provider’s stock to “buy”.

Avanza Bank Holding slid 5.2% after the financial company flagged smaller boost from recent rate hike by the Swedish central bank.

Telecom Italia (TIM) shed 5.2% after Italian cabinet undersecretary Alessio Butti said that the state had no plans to launch a full takeover bid for the former phone monopoly.

(Reporting by Susan Mathew and Devik Jain in Bengaluru; Editing by Savio D’Souza, Devika Syamnath and Maju Samuel)

WTI Oil Stays Above $80 After EIA Report

Key Insights

  • Crude inventories declined by 12.6 million barrels from the previous week. 
  • Natural gas moved below the $7.00 level as rail strike risks declined. 
  • Copper rallied as traders bet that China would relax its zero-COVID policy after recent protests. 

WTI Oil Pulled Back From Highs But Stayed Above The Key $80 Level

WTI oil continues to trade above the $80 level after the release of the EIA Weekly Petroleum Status Report.

The report indicated that crude inventories declined by 12.6 million barrels from the previous week, compared to analyst consensus of 2.76 million. It should be noted that crude oil imports declined by 1 million bpd from the previous week.

Total motor gasoline inventories increased by 2.8 million barrels, while distillate fuel inventories grew by 3.5 million barrels. Domestic oil production remained unchanged at 12.1 million bpd.

The sharp drop in crude inventories was driven by the fall in crude oil imports, while gasoline and distillate fuel inventories increased significantly. In the near term, traders will stay focused on the upcoming OPEC+ meeting and the Russian oil price cap story.

Natural Gas Retreats As U.S. Lawmakers Are Ready To Prevent The Strike

Natural gas pulled back below the $7.00 level as traders reacted to the decreasing risk of a rail strike.

The U.S. lawmakers plan to pass legislation that would avert the strike, which is bearish for natural gas markets. At this point, it looks that natural gas has a good chance to gain additional downside momentum in the near term.

Gold Pulls Back From Session Highs As Dollar Rebounds

Gold has recently made another attempt to settle above the $1760 level but lost momentum and pulled back towards $1750 as the U.S. dollar rebounded from session lows.

Gold

If gold settles below the $1750 level, it will move towards the next support level, which is located near the 20 EMA at $1730. A move below this level will open the way to the test of the support at the 50 EMA at $1715.

On the upside, gold needs to settle above the resistance at $1765 to gain additional upside momentum. The next resistance level for gold is located at $1775. A successful test of this level will push gold towards November highs at $1785.

Other precious metals are moving higher as traders hope that China will gradually ease its strict zero-COVID policy. Silver made an attempt to settle above the $22.00 level. Platinum moved towards $1050, while palladium rebounded towards the $1850 level.

Copper Tries To Settle Above $3.75

Copper rallied towards the $3.75 level as traders bet that China’s demand would increase when the country relaxes its anti-coronavirus measures. If copper settles above $3.75, it will head towards the next resistance at $3.80.

For a look at all of today’s economic events, check out our economic calendar.

WTI Oil Pulls Back From Session Highs As OPEC+ May Keep Output At Current Levels

Key Insights

  • Recent reports about OPEC+ plans to keep production levels intact put pressure on oil markets. 
  • Natural gas is moving higher as traders stay focused on the potential rail strike. 
  • Precious metals rebound despite higher Treasury yields. 

WTI Oil Failed To Settle Above The $79 Level

WTI oil  moved back towards the $79 level as fears about Chinese lockdowns eased. It looks that protests in China are under control, which is also bullish for oil markets.

However, oil markets lost momentum after reports indicated that OPEC+ may keep its production policy unchanged at the next meeting.

WTI Oil

The nearest support level for WTI oil is located at $77.25. If oil settles back below this level, it will head towards the support at $76.75. A move below $76.75 will push WTI oil towards the support at $76.30.

On the upside, a move above the $78 level will push WTI oil towards the resistance level at $79.15. If WTI oil climbs above this level, it will head towards the psychologically important resistance at $80.

Natural Gas Keeps Moving Higher

Natural gas prices have moved towards the $7.35 level as the potential rail strike continued to provide support to the market.

The weather forecast remains unfavorable for higher natural gas consumption, but traders focus on the potential demand boost from the strike. The timing of the Freeport LNG restart remains uncertain, and the market will be extremely sensitive to any news on this front.

The nearest resistance level for natural gas is located at $7.55. In case natural gas climbs above this level, it will head towards the resistance at $7.80.

Gold Rebounds Despite Higher Treasury Yields

Gold managed to get above the $1750 level despite higher Treasury yields. From a big picture point of view, gold is stuck in the $1740 – $1760 range.

Meanwhile, silver moved back towards the resistance at $21.25. In case silver settles above this level, it will head towards the next resistance level at $21.60.

Platinum made an attempt to settle above the resistance at $1015, while palladium pulled back towards $1825 after an unsuccessful attempt to settle above the $1850 level.

Copper Rebounds As Traders Hope That China Will Gradually Relax Its Strict COVID Rules

Copper rebounded towards the $3.65 level as traders bet that recent protests in China would not put additional pressure on the economy. Copper bulls hope that China will slowly relax its zero-COVID policy, which will provide additional support to copper markets. It remains to be seen whether China is ready for any serious moves on this front in the near term.

For a look at all of today’s economic events, check out our economic calendar.

Wall St falls as U.S. crude oil shakes off losses

By Sinéad Carew and Lawrence White

NEW YORK/LONDON (Reuters) – Wall Street equities deepened losses on Monday while U.S. oil futures reversed course to settle higher on production rumors after starting the day mired in worries that China’s strict COVID-19 restrictions would stunt global economic growth.

While a surge in COVID cases and clashes between police and protesters across several major Chinese cities over the weekend helped push U.S. Treasury yields lower, that move had also reversed course in afternoon trading.

“The China protest news was the source of market sentiment souring this morning but we’re also coming off a strong few weeks,” said Mona Mahajan, senior investment strategist at Edward Jones, referring to stock trading. The Dow Jones industrial average for example had risen more than 10% in the last month and almost 20% since September.

“Some of this is just a bit of consolidation from the last few weeks,” she said, noting that stocks had taken a leg lower when Treasury yields gained and oil prices switched from red to green on Monday as the prospect of higher oil prices brought inflation concerns back to the forefront.

Along with inflation trends, investors are also monitoring Federal Reserve commentary for any clues on its future rate hiking path. While New York Federal Reserve President John Williams declined to say how far and fast he believes the central bank will need to hike rates in coming months he said that it could be 2024 before rates are cut.

The Dow Jones Industrial Average fell 497.57 points, or 1.45%, to 33,849.46, the S&P 500 lost 62.17 points, or 1.54%, to 3,963.95 and the Nasdaq Composite dropped 176.86 points, or 1.58%, to 11,049.50.

MSCI’s gauge of stocks across the globe shed 1.42%. Emerging market stocks lost 1.13%.

Earlier, U.S. crude oil futures had fallen to December 2021 levels on concerns about demand in China – the world’s biggest crude importer.

But the commodity since regained lost ground on speculation ahead of the Dec. 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+. In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.

U.S. crude settled up 1.26% at $77.24 per barrel and Brent settled at $83.19 a barrel, down 0.5% on the day but still well below its trough of the day.

In currencies, the dollar rose against the euro after earlier falling as both U.S. and European policy makers sounded hawkish tones.

European Central Bank President Christine Lagarde on Monday hinted at a series of interest rate hikes ahead, saying euro zone inflation has not yet peaked and risks turning out even higher than current expectations.

The dollar index rose 0.339%, with the euro down 0.59% at $1.0334.

The Japanese yen strengthened 0.14% versus the greenback at 138.90 per dollar, while Sterling was last trading at $1.1951, down 1.17% on the day.

Treasury prices swung around during the session with Fed speakers pushing back on the notion that the U.S. central bank could soon cut interest rates to revive the economy.

Benchmark 10-year notes were down 1.3 basis points at 3.689%, from 3.702% late on Friday.

Earlier, China announced a fifth consecutive day of record new local COVID-19 cases with 40,052 infections on Monday, while in Shanghai demonstrators and police clashed on Sunday night.

Gold prices gave up gains after touching a one-week high of $1,763.70 per ounce. Spot gold dropped 0.9% to $1,740.72 an ounce. [GOL/]

(Reporting Sinéad Carew and Karen Brettell in New York, Lawrence White in London, Scott Murdoch in Sydney; Editing by Susan Fenton and Matthew Lewis)

WTI Oil Gains Ground After Testing Yearly Lows

Key Insights

  • WTI oil received support near $73.60 and moved towards the $77 level. 
  • Gold pulled back below $1750.
  • Copper found itself under pressure as traders bet that protests in China would hurt the economy. 

WTI Oil Rebounds As Traders Bet On Aggressive Production Cuts From OPEC+

WTI oil  tested lows near the $73.60 level as traders reacted to the protests in China, which were driven by strict anti-coronavirus measures.

However, oil prices managed to gain upside momentum and moved back towards the $77 level amid rumors that OPEC+ may decide to cut production aggressively at the next meeting on December 4.

Meanwhile, EU countries failed to reach consensus on the Russian oil price cap deal. Negotiations continue, and it remains to be seen whether EU officials will be able to strike a deal before December 5, when the EU embargo on Russian oil would be implemented.

Natural Gas Continues To Trade Above The $7.00 Level

Natural gas  is trading above the $7.00 level as traders wait for additional catalysts. The weather forecast points to moderate natural gas consumption in the near term, but there is no sell-off in natural gas markets.

Some traders continue to exit their positions after the recent rally, but demand for natural gas remains strong. Most likely, the market will need significant catalysts to gain additional momentum and move out of the current trading range.

Silver Retreats As Dollar Rebounds

Silver found itself under strong pressure today and moved below the $21.00 level. The strong rebound of the U.S. dollar served as a bearish catalyst for silver markets.

Silver

If silver settles below the $21.00 level, it will get to the test of the next support at $20.80. A successful test of this level will open the way to the test of the support at $20.60. In case silver declines below $20.60, it will head towards the support at $20.40.

On the upside, silver needs to climb back above $21.00 to have a chance to gain upside momentum in the near term. The next resistance level for silver is located at $21.25. If silver moves above this level, it will head towards the resistance at $21.60.

Other precious metals are also moving lower today. Gold pulled back towards the $1745 level, while palladium declined towards $1825. Platinum is trading near the $1000 level.

Copper Is Under Pressure Amid Protests In China

Copper moved below the $3.60 level as traders reacted to the protests in China, which is the world’s main consumer of copper. If China maintains its zero-COVID policy or protests get out of control, its economy will get hurt and demand for copper will drop. The events in China will likely serve as the key catalyst for copper markets in the upcoming days.

For a look at all of today’s economic events, check out our economic calendar.

Rare China protests roil global commodities markets

By Noah Browning, Pratima Desai and Michael Hogan

LONDON (Reuters) – Global commodities markets were hit on Monday by worries over rare demonstrations in China against COVID-19 curbs, with oil and grains hitting significant multi-month lows and safe-haven gold rising.

The protests added a new political dimension to investor concerns after months of stringent measures to curb the virus in one of the world’s largest importers of raw materials just as global economic headwinds mount and recession fears grow.

International benchmark Brent crude erased nearly all the gains seen in 2022 on the back of the invasion of Ukraine and subsequent sanctions on Russia, to hit a low of $80.61 a barrel earlier in the session, its lowest since Jan. 4.

Chicago Board of Trade (CBOT) most-active wheat hit $7.82 earlier on Monday, its lowest since Aug. 22.

“The long-standing COVID restrictions in China have been extremely restrictive to its growth. As the world’s second largest economy, having civil unrest added to this backdrop is bound to create immense uncertainty,” Craig Erlam, senior markets analyst at OANDA in London, told Reuters.

“It remains to be seen whether the leadership listens and look into loosening its zero-COVID policy or it tries to double down on its policy and suffers the economic consequences.”

China has stuck with President Xi Jinping’s signature zero-COVID policy even as much of the world has lifted most restrictions.

Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over the restrictions flared for a third day and spread to several cities, with police on Monday stopping and searching people at the sites of weekend protests in Shanghai and Beijing.

Gold prices rose to more than one-week high on Monday, boosted by diminished investor appetite while copper prices fell on the China demand worries but a weaker dollar helped to support sentiment.

The impact on energy has been especially sharp, as markets brace for a meeting by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) over the weekend which could rein in supply just as economic woes hit demand.

“A meltdown in energy markets continues to gather steam amid a money manager exodus. Concern for Chinese oil demand is adding to downside pressures on the complex as demand fears weigh,” analysts at Canadian bank TD Securities said.

Meanwhile traders await Beijing’s next move.

“CBOT futures are lower amid China’s rising daily Covid infections and the weekend protest of the government’s lockdown policy,” according to Chicago-based consultancy AgResource Co.

“There is a risk of social instability as traders await the reaction of President Xi.”

(Reporting By Noah Browning; Editing by Conor Humphries)

Workers for Chile’s Escondida mine accept BHP’s offer and will not strike-union source

By Fabian Cambero

SANTIAGO (Reuters) – GWorkers at Chile’s Escondida mine accepted a new offer from BHP Group Ltd and will not move forward with a strike that had been planned for Monday and Wednesday, their union said Monday.

Workers represented by the Sindicato No. 1 union at the Australian company’s mine in northern Chile, the largest copper deposit in the world, had been threatening to strike over safety concerns.

The union said that at 3:00 a.m. (0700 GMT) 1,495 members out of the 1,902 who voted accepted the company’s new proposal.

“This proposal contains a series of concrete and verifiable measures to improve the hygiene and safety of workers,” the union said in a statement. “Especially an intense joint inspection program between the union and the company of all work areas.”

The union said the proposal also “set aside changes in operating practices the company was pursuing.”

BHP had reached a deal with the union early last week, but the agreement was pending approval by some 2,000 workers represented by the union.

Workers voted to reject the proposal on Thursday and threatened to strike if their demands weren’t met.

“The assemblies together with the (union) board of directors decided to reject the company’s proposal,” the union said in a statement Thursday, adding that its members considered proposed security measures to be insufficient and wanted “concrete and verifiable” measures such as joint inspections of work areas.

The company said in a statement that the proposal keeps initiatives that benefit both workers and the company.

“In addition, it includes a new ‘Safety Plan’ with concrete and collaborative actions that will strengthen the common efforts of the unions, joint committees and the company, which will begin to be implemented soon,” the statement said. (This story has been corrected to fix first day of the strike to Monday instead of Tuesday)

(Reporting by Fabian Cambero; Editing by Toby Chopra, David Evans and Jonathan Oatis)

Silver Tests Resistance At $21.60

Key Insights

  • Weaker dollar provided some support to precious metals in today’s trading session. 
  • WTI oil continued to trade near the $77.50 level as traders waited for the news on the Russian oil price cap. 
  • Natural gas made an attempt to settle below the support at $7.20.

Silver Tries To Continue Its Rebound

Silver  has recently made an attempt to settle above $21.60 but lost momentum and pulled back towards the $21.50 level. Weaker dollar provided support to silver in today’s trading session, but it looks that some traders decided to take profits off the table after the recent rebound.

Silver

The nearest resistance level for silver is located at $21.60. In case silver settles above this level, it will move towards the next resistance level at $21.80. A successful test of the resistance at $21.80 will open the way to the test of the resistance at $22.00.

On the support side, the nearest support for silver is located at $21.25. In case silver declines below this level, it will head towards the next support at $21.00. A move below the support at $21.00 will push silver towards the support level near the 20 EMA at $20.80.

Meanwhile, gold managed to gain some upside momentum and moved closer to the $1760 level. Platinum pulled back towards $1000, while palladium made an attempt to settle above $1900.

WTI Oil Is Mostly Flat As Traders Wait For News

WTI oil remains stuck near the $77.50 level as traders are waiting for the news about the Russian oil price cap.

Interestingly, rising coronavirus cases in China did not put additional pressure on the oil markets. In the near term, the Russian oil price cap story will remain the key driver for oil prices.

Natural Gas Tested Support At $7.20

Natural gas has recently made an attempt to settle below the support at $7.20 as traders took profits after the recent rally.

However, natural gas markets failed to develop additional downside momentum as rail strike fears provided some support to natural gas prices.

Most likely, natural gas markets will remain volatile in the upcoming trading sessions as traders will react to the developments in the rail strike story.

Copper Tried To Settle Above $3.65

Copper made an attempt to settle above the $3.65 level despite worries about the situation with coronavirus in China. Traders should keep in mind that trading volume will be low due to the holiday in the U.S., so it remains to be seen whether copper markets will be able to gain sufficient upside momentum to move above the $3.65 level.

For a look at all of today’s economic events, check out our economic calendar.

In Mexico, Aztec dig sets new records as royal mystery deepens

By David Alire Garcia

MEXICO CITY (Reuters) -An extensive cache of Aztec ritual offerings found underneath downtown Mexico City, off the steps of what would have been the empire’s holiest shrine, provides new insight into pre-Hispanic religious rites and political propaganda.

Sealed in stone boxes five centuries ago at the foot of the temple, the contents of one box found in the exact center of what was a ceremonial circular stage has shattered records for the number of sea offerings from both the Pacific Ocean and off Mexico’s Gulf Coast, including more than 165 once-bright-red starfish and upwards of 180 complete corral branches.

Archeologists believe Aztec priests carefully layered these offerings in the box within the elevated platform for a ceremony likely attended by thousands of rapt spectators amid the thunder-clap of drums.

“Pure imperial propaganda,” Leonardo Lopez Lujan, lead archeologist at the Proyecto Templo Mayor of Mexico’s National Institute of Anthropology and History (INAH), which is overseeing the dig, said of the likely spectacle.

In the same box, archeologists previously found a sacrificed jaguar dressed like a warrior associated with the Aztec patron Huitzilopochtli, the war and sun god, before the COVID-19 pandemic forced a more than two-year pause on excavations.

Previously unreported details include last month’s discovery of a sacrificed eagle held in the clutches of the jaguar, along with miniature wooden spears and a reed shield found next to the west-facing feline, which had copper bells tied around its ankles.

The half-excavated rectangular box, dating to the reign of the Aztec’s greatest emperor Ahuitzotl who ruled from 1486 to 1502, now shows a mysterious bulge in the middle under the jaguar’s skeleton, indicating something solid below.

“Whatever is underneath the jaguar is something enormously important,” said Lopez Lujan.

“We’re expecting a great discovery.”

Lopez Lujan, who heads excavations at what is today known as the Templo Mayor, thinks the box could contain an urn holding the cremated remains of Ahuitzotl, the emperor whose military campaigns expanded the empire to modern-day Guatemala while linking Mexico’s Pacific and Gulf coasts. But he says at least another year of digging is needed to settle the question.

AZTEC WORLDVIEW

To date, no Aztec royal tomb has ever been found despite more than 40 years of digging around the Templo Mayor, where more than 200 offerings boxes have been found.

The temple towered as high as a 15-story building before it was razed in the years after the 1521 Spanish conquest of Mexico, the rubble serving to obscure many of the latest finds.

Besides the central offering containing the jaguar, two additional boxes were recently identified adjacent to it, with both set to be opened in the next few weeks.

More ferocious animals dressed as warriors, perhaps adorned with jade, turquoise and gold, are likely.

The aquatic offerings covering the jaguar may represent the watery underworld where the Aztecs believed the sun sank each night, or possibly part of a king’s journey after death.

Joyce Marcus, an archeologist specializing in ancient Mexico at the University of Michigan, says the recently unearthed offerings illuminate the Aztec “worldview, ritual economy, and the obvious links between imperial expansion, warfare, military prowess and the ruler’s role” in ceremonies that sanctified conquests and allowed tribute to flow into the capital.

“Each offering box adds another piece of the puzzle,” she said.

Lastly, the skulls of a dozen sacrificed children between one to six years old were also discovered in a nearby pit, dating back decades earlier but also linked to Huitzilopochtli.

The information obtained from the excavations goes far beyond incomplete colonial-era accounts that were also colored by the European invaders’ own justifications for conquest, according to Diana Moreiras, Aztec scholar at the University of British Colombia.

“We’re really getting to know the Aztecs on their own terms,” she said, “because we’re actually looking at what they did, not what the Spaniards thought about them.”

(Reporting by David Alire Garcia; Editing by Stephen Eisenhammer and Josie Kao)

TSX notches 5-month high as tech and industrials climb

By Fergal Smith

TORONTO (Reuters) – Canada’s main stock index rose on Wednesday to its highest closing level in five months, lifted by technology and industrial shares as the Federal Reserve signaled it could slow the pace of interest rate hikes.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 62.25 points, or 0.3%, at 20,282.26, its highest closing level since June 9.

“To the extent that investors are still bearishly positioned, there is a good chance that we are going to see further rally into the end of the year,” said Mike Archibald, a portfolio manager at AGF Investments.

Wall Street also gained ground after minutes from the Fed’s November meeting showed interest rate hikes may slow soon.

“Industrials continue to be a massive leader in this market and I view that as very positive for future prospects for the broader economy,” Archibald said.

“Many of the companies that I’m speaking to across a number of different industries are indicating that the demand environment for their products across a number of different industries still remains very robust.”

The industrials sector, which includes railroad and airline stocks, rose 0.4%, while technology ended 1.9% higher.

It was boosted by a 22.6% jump in shares of Converge Technology Solutions after the company commenced a strategic review process, including evaluations on a possible sale, merger or divesture.

Capping gains for the market was a drop in energy. The sector fell 1.2% as the price of oil settled 3.7% lower at $77.94 a barrel.

The move lower in oil came as the Group of Seven (G7) nations considered a price cap on Russian oil above the current market level and gasoline inventories in the United States built by more than analysts’ expected.

(Reporting by Fergal Smith; Additional reporting by Johann M Cherian in Bengaluru; Editing by Chris Reese)

Chile miners say trucker strike a threat to supplies

SANTIAGO (Reuters) – Miners in Chile, the world’s largest copper producer and second largest lithium producer, said on Wednesday an indefinite strike by truckers threatened supplies to operations in the north of the country.

Caravans of truckers protesting over issues such as high fuel prices and the need for better security have been striking since Monday when they set up roadblocks in the mining regions of Tarapaca and Antofagasta.

In a statement on Wednesday, the truckers said the action would continue indefinitely.

Chile’s National Mining Society (Sonami), which represents small, medium and large-scale miners, said the free transit of goods, especially fuel, must be guaranteed.

Jorge Riesco, president of Sonami, said in a statement that the blockades were “preventing the normal transit of trucks with supplies”.

There was no indication of disruption to mine production.

Large copper mining companies have not reported changes in operations due to the roadblocks. BHP said it was operating normally while Canada’s Teck said it had taken advance precautions for its operations and projects.

(Reporting by Fabian Andrés Cambero; Writing by Alexander Villegas; editing by Barbara Lewis)

Glencore to sell Australian copper mine to SPAC for $1.1 billion

(Reuters) – Glencore said on Wednesday that blank-check firm Metal Acquisition Corp (MAC) agreed to an amended agreement to buy the global miner’s Cobar copper mine in Australia in a deal valued at $1.1 billion.

Glencore said the terms include Glencore receiving $1.1 billion, as originally agreed in a March deal, but with amended payment terms of $775 million in cash and up to $100 million common equity, besides other payments.

Glencore also has the right to appoint one director to MAC’s board for each 10% interest it holds in the U.S.-listed special purpose acquisition company (SPAC) from time to time, MAC said in a statement overnight.

SPACs are shell companies that raise money in an initial public offering and put it in a trust for the purpose of merging with a private company and taking it public.

MAC said it would need to raise at least $125 million to fund the cash component of the deal, which is expected to close in the first quarter of 2023.

(Reporting by Yadarisa Shabong; Editing by Savio D’Souza)

WTI Oil Retreats Towards $77 As Traders Focus On Russian Oil Price Cap Rumors

Key Insights

  • WTI oil gained strong downside momentum as traders reacted to the latest rumors about the Russian oil price cap. 
  • Natural gas rallied as traders continued to prepare for the potential rail strike. 
  • Gold rebounded as U.S. dollar declined against a broad basket of currencies. 

WTI Oil Remains Under Strong Pressure After EIA Report

WTI oil remains under strong pressure after the release of the EIA Weekly Petroleum Status Report. The report indicated that crude inventories declined by 3.7 million barrels from the previous week. Total motor gasoline inventories increased by 3.1 million barrels, while distillate fuel inventories grew by 1.7 million barrels. Domestic oil production remained unchanged at 12.1 million bpd.

According to recent reports, G7 wants to set the Russian oil price cap at $65 – $70 per barrel. This is bearish for the oil market as such a price cap increases chances that all Russian oil will stay in the market. Traders are also worried that rising coronavirus cases in China will lead to slower economic growth and hurt demand for oil. China has already introduced additional curbs.

WTI Oil

Oil markets have been extremely volatile in recent trading sessions. Technical levels are not important when the market is focused on the news. In the near term, traders should be prepared for fast moves, which will be driven by the news on the Russian oil price cap.

Natural Gas Rallies As The Potential Rail Strike May Boost Demand

Natural gas rallied towards the $7.50 level as traders focused on the potential rail strike.

The weather forecast is not favorable for high natural gas consumption, but the market is worried that the rail strike would boost demand for natural gas as utilities will be forced to switch from coal to natural gas.

In case natural gas settles above the $7.50 level, it will head towards the resistance level at $7.75.

Gold Rebounds As U.S. Dollar Declines

Gold moved back above the $1740 level as the U.S. dollar found itself under significant pressure against a broad basket of currencies.

Silver gained strong upside momentum and moved towards the $21.30 level. Platinum declined towards $1000, while palladium made an attempt to settle above $1900.

Copper Remains Stuck Near The $3.60 Level

Copper continues to trade near the $3.60 level as traders remain worried about potential lockdowns in China.

In case copper fails to settle above the $3.60 level, it will get to another test of the support at the 50 EMA at $3.57.

For a look at all of today’s economic events, check out our economic calendar.

Anglo American secures desalinated water supply for Los Bronces copper mine in 2025

SANTIAGO (Reuters) – Anglo American said on Wednesday that it reached an agreement to supply half of its Los Bronces copper mine in Chile with desalinated water from 2025.

The agreement with Aguas Pacifico, controlled by Patria Investments, will bring water from Chile’s coast to the mine’s water recirculation systems. The system will also supply municipalities in northern Santiago.

Central Chile, where Los Bronces is located, has been hit particularly hard by a persistent drought that has hit mining output.

In the first phase, Anglo American said it will use 500 liters per second of desalinated water to cover 45% of its operations. In the second phase, the company said it will use treated waste water in exchange for supplying desalinated water for human consumption.

“In a scenario of water scarcity like the one we are currently in, human consumption has priority,” Anglo American’s interim executive president in Chile, Patricio Hidalgo said in a press release, adding that the project will generate “social value” for the country.

In June, Anglo American said that it planned to stop using fresh water altogether by 2030 through desalination and water recirculation.

The miner is trying to convince a government committee, led by the environment minister, to extend its mining permit at the site after being rejected by the country’s environmental permit evaluator earlier this year.

The $3.3 billion mining project has been criticized for its impact on water availability in the capital region.

Los Bronces is part of Anglo American Sur, owned by Anglo American (50.1%), the Codelco-Mitsui consortium (29.5%) and Mitsubishi (20.4%).

(Reporting by Natalia Ramos, Writing by Alexander Villegas; Editing by Emelia Sithole-Matarise)

Indian tycoon Adani’s mega port hangs in the balance as a fishing community protests

By Munsif Vengattil, Arpan Chaturvedi and Aditya Kalra

VIZHINJAM, India (Reuters) – On the main road to billionaire Gautam Adani’s planned Vizhinjam mega port on the southern tip of India, a shelter built by the coastal region’s Christian fishing community blocks the entrance, preventing further construction.

The simple 1,200 square-feet structure with a corrugated-iron roof has since August stood in the way of ambitions for the country’s first container transhipment port – a $900 million project that seeks to plug into the lucrative shipping trade flowing between juggernaut manufacturers in the East and wealthy consumer markets in the West.

Decorated with banners proclaiming “indefinite day and night protest”, the shelter provides cover for roughly 100 plastic chairs, although the number of protesters taking part in the sit-ins on any one day is usually much lower.

Across the street, supporters of the port including members of Prime Minister Narendra Modi’s ruling party and Hindu groups have set up their own shelters.

Even when protester numbers are low, up to 300 police officers with batons will gather nearby each day to carefully monitor the situation. Despite repeated orders by Kerala state’s top court that construction should proceed unhindered, the police are unwilling to take action against the protesters, fearful that doing so will set flame to social and religious tensions simmering over the port.

For Adani, the world’s third-richest person according to Forbes, it’s a high-stakes impasse with no apparent easy solution.

Reuters interviewed more than a dozen protesters as well as port supporters, police officials and reviewed hundreds of pages of filings in legal actions brought by the Adani conglomerate against the Catholic priests leading the protests and against the state government. All point to an intractable divide.

Protest leaders allege construction of the port since December 2015 has resulted in significant erosion of the coast and further building promises to wreak havoc with the livelihood of a fishing community they say numbers some 56,000.

They want the government to order a halt to construction and independent studies on the impact of the port’s development on the marine ecosystem.

The Adani conglomerate plans to send heavy vehicles to the port on Friday after the court this week said vehicle movement should not be blocked. In October, vehicles that tried to exit the port had to turn back.

Eugine H. Pereira, vicar general of the archdiocese leading the protesters, said they would not be removing the shelter despite the court order.

“We are willing to be arrested in large numbers if need be,” he told Reuters.

Adani Group said in a statement the project is in full compliance with all laws and that many studies conducted by the Indian Institute of Technology and other institutions in recent years have rejected allegations relating to the project’s responsibility for shoreline erosion.

“In light of these findings by independent experts and institutions, we feel that the ongoing protests are motivated and against the interests of the state and the development of the port,” it said.

The Kerala state government, which has been in talks with protesters and argues that erosion has occurred due to cyclones and other natural disasters, did not respond to a request for comment.

GRAPHIC: Adani’s transhipment hub in southern India (https://graphics.reuters.com/ADANI-INDIA/PORT-PROTESTS/mypmonboypr/graphic.jpg)

THE VEDANTA EXAMPLE

Adani, whose empire spans gas and power projects as well as a ports and logistics business valued at some $23.5 billion, has described Vizhinjam as an “unmatched location” on one of the world’s main shipping routes. As a transhipment port, it would be well-positioned to grab business from Sri Lanka – where arch-rival China has invested heavily in port infrastructure – as well as from Singapore and Dubai.

With transhipment, containers are transferred from mainline vessels on key trade routes to smaller, feeder vessels on other trade lanes – creating a hub-and-spoke network that is more economical and flexible than relying on point-to-point shipping.

Eager to get on with plans to complete the first phase of construction by December 2024, the Adani conglomerate has sued the Kerala government for police inaction.

But Prakash R, a senior police officer in charge of security outside the port, said his aim is to avoid a situation like the 2018 environmental protests against a Vedanta copper smelter in neighbouring Tamil Nadu state that resulted in 13 deaths and the smelter’s closure.

“We are holding back from using forces to avoid any untoward incidents. What if someone threatens or commits suicide? All hell will break loose.”

“We can’t rule out the possibility of this spiralling into communal tensions. We are strategically positioned between the two sides to prevent any such incident,” he added.

Each day, the protesters and port supporters blare music from loudspeakers and chant slogans. Prakash R describes the situation as a standoff between “people of the sea”, who are mostly Christian and make their living from fishing and “people of the land” who are predominantly Hindu.

The fishing community erected the shelter after years of failed efforts to get the Kerala government to intervene while watching the coast steadily erode. An easing of the pandemic also made it easier than previous years to protest.

Protesters say the construction has reduced the size of their catches and if the port is completed they’ll be forced to fish much further out to sea.

A group of 128 residents from the fishing community near the port has also sued the Vizhinjam unit of Adani Ports and Special Economic Zone Ltd as well as the Kerala government, claiming dredging and other construction work has caused erosion that is destroying their homes.

Following protesters’ demands, the state last month set up a panel to study coastal erosion at the site.

Adani Group said in its statement that India’s National Green Tribunal, which has been monitoring the impact of the project, has not found any environmental or social violations.

For their part, pro-construction supporters at their shelters accuse the protesters of impeding progress.

“This is a matter of providing jobs to the many localities here,” said Mukkola G Prabhakaran, a Kerala state council member in Modi’s Bharatiya Janata Party.

ADANI’S LEGAL ACTIONS

The Indian protests recall the backlash Adani faced in Australia over his Carmichael coal mine. There, activists concerned about carbon emissions and damage to the Great Barrier Reef forced Adani to downsize production targets and delayed the mine’s first coal shipment by six years.

In Kerala, the Adani conglomerate which is shouldering a third of the project’s cost with the rest borne by the state and federal governments has repeatedly sought relief from the state’s court.

In filings, it has claimed the protests have caused “immense loss” and “considerable delay” to the project, adding that protesters have warned port officials of “dire consequences” and pose a “constant and continuous militant” threat.

An Oct. 27 “land and sea protest” saw protesters burn a fishing boat and more than 1,500 people break into the port’s grounds with some carrying iron rods to the main gate, according to the filings.

Asked about the claim, Pereira said: “We do not endorse or promote any sort of violence. Our protests have been peaceful all along.”

Accusing the Kerala state police of being “mute spectators”, the Adani conglomerate has also called for federal police to be brought in. The court’s next hearing on Adani’s complaints is slated for Monday.

For the time being, the tense standoff continues, with protesters saying they can congregate quickly if police move to dismantle the shelter. The site has four CCTV cameras providing a live feed so protest leaders can keep tabs on the situation with their phones.

“We’re prepared to go to any lengths to protect our livelihood. It’s a matter of do or die,” says Joseph Johnson, a protesting fisherman.

(Reporting by Munsif Vengattil in Vizhinjam, Arpan Chaturvedi and Aditya Kalra in New Delhi; Additional reporting by Melanie Burton in Melbourne; Editing by Edwina Gibbs)

WTI Oil Settles Above $81 As Traders Worry That OPEC+ May Cut Production

Key Insights

  • WTI oil continues to rebound amid worries that OPEC+ will cut production instead of boosting output. 
  • Natural gas is testing the resistance at $6.75 as traders stay focused on rail strike risks. 
  • Copper gained upside momentum after a lengthy pullback.

WTI Oil Climbed Above The $81 Level As The Rebound Continued

WTI oil  moved above the $81 level as traders worried that OPEC+ may cut production at the next meeting on December 4. Yesterday, oil markets found themselves under pressure amid reports that OPEC+ may increase production by 500,000 bpd ahead of the Russian oil price cap.

The market sentiment shifted quickly, and oil is gaining ground as traders fear that a production cut may be coming. Interestingly, the market ignores the problems with coronavirus in China.

WTI Oil

At tis point, it looks that WTI oil has sufficient support near the $75 level, and the oil market will need significant catalysts to settle below this level.

Natural Gas Tests Resistance At $6.75

Natural gas  continues its attempts to settle above the resistance at $6.75 as traders prepare for the potential rail strike.

The weather forecast has recently changed, and warmer weather is expected. The natural gas demand should be moderate, but the strike risk is sufficient enough to push natural gas prices towards the $6.75 level. A move above this level will open the way to the test of the resistance at $6.90.

Gold Gains Ground As Dollar Is Under Pressure

Gold has recently made an attempt to settle above the $1750 level as Treasury yields declined. Weaker dollar served as an additional bullish catalyst for gold and other precious metals.

Silver managed to get back above the $21 level after an unsuccessful attempt to settle below the support at $20.80. Platinum rebounded above $1000, while palladium settled near the $1865 level.

Copper Rebounds After The Strong Pullback

Copper moved back above the $3.60 level as some traders were ready to bet on a rebound after a lengthy pullback.

Problems with coronavirus in China remain the key risk for copper markets in the near term as China is the world’s main consumer of copper.

If China introduces additional curbs, copper markets will find themselves under pressure, and copper prices may settle below the $3.50 level.

For a look at all of today’s economic events, check out our economic calendar.

WTI Oil Rebounds As Saudi Arabia Denies Report About Output Increase

Key Insights

  • Saudi Arabia officially denied the recent report that it was discussing a production increase of 500,000 bpd. 
  • Natural gas rallied as traders feared that a potential rail strike would block coal shipments and force utilities to boost natural gas consumption.
  • Gold pulled back as dollar gained ground against a broad basket of currencies. 

WTI Oil Rebounds From Session Lows As Saudi Arabia ‘Categorically Denies’ Recent Report About Production Increase

WTI oil has suffered a strong sell-off as traders reacted to problems with coronavirus in China and Saudi Arabia’s potential plans to boost production at the next OPEC+ meeting.

However, Saudi Arabia stated that it did not have such plans. According to the Saudi Press Agency, “Saudi Energy Minister, Prince Abdulaziz bin Salman, categorically denies recent reports that Saudi Arabia is discussing with other OPEC producers an output increase of 500 thousand barrels per day.”

WTI Oil

The report from the Saudi Press Agency provided significant support to oil markets, and WTI oil moved closer to the $80 level.

Natural Gas Rallies As Traders Focus On The Potential Rail Strike

Natural gas gained 7% and tested the resistance level at $6.75 as the largest rail union rejected labor deal. The risk of a national strike is rising, which means that coal shipments could be hurt, and utilities’s demand for natural gas could increase.

The weather forecast is favorable for high natural gas consumption, providing additional support to the market. In case natural gas manages to settle above $6.75, it will move towards the next resistance level at $6.90.

Gold Declines As Dollar Rallies

Gold  settled below the support at $1750 and made an attempt to get below the next support level at $1730 as traders focused on the strong U.S. dollar. Treasury yields moved lower today, but this move did not provide any support to precious metals.

Meanwhile, silver tested the 20 EMA at $20.65. Platinum made an attempt to settle below $975, while palladium pulled back towards the $1850 level. Problems with coronavirus in China served as an additional negative catalyst for precious metals markets.

Copper Tests Support At The 50 EMA

Copper settled below the $3.60 level and is testing the 50 EMA at $3.57 as traders abandon hopes about rising demand in China.

In case copper manages to settle below the 50 EMA, it will gain additional downside momentum and move towards the $3.50 level.

Traders should note that China is the world’s main consumer of copper, so the continuation of the strict COVID curbs in China would have a significant negative impact on copper markets.

For a look at all of today’s economic events, check out our economic calendar.