MOST COMMODITIES FUTURE STAYS BULLISH

WTI CRUDE futures were up around 1% to the $82 a barrel level on Friday, a fresh 7-year high, and are on track to book a 3% gain on the week, as shortages of natural gas in Europe and Asia continue to boost demand for oil and supply tightness persist. The IEA said on Thursday said the energy crunch is expected to boost oil demand by 500,000 bpd. On the supply side, the EIA said this week that crude oil output in the US is going to drop in 2021 more than previously forecast thought it will bounce back in 2022. Meanwhile, the agency reported an increase of 6.088 million barrels of crude in the US in the latest week, almost 6 times market expectations.

NATURAL GAS futures jumped to $5.9 per million British thermal units in the second week of October, moving towards a seven-year high of $6.5 early hit earlier in the month, after the EIA reported an injection of 81 Bcf natural gas into storage for the week ended October 8th, below market expectations of a 94 Bcf build and compared with the five-year average of 79 Bcf. Prospects of strong demand during the winter heating season and depleted inventory levels, especially in Europe and Asia, have been behind the recent rally. Meanwhile, gasoline futures rose towards $2.4 a gallon, the highest since September 2014, amid lingering supply disruptions and prospects of strong demand. Oil production still lagged behind pre-hurricane levels at some US Gulf platforms, with Royal Dutch Shell warning that the damage to offshore transfer facilities is expected to curb production until early 2022. At the same time, demand came back stronger than expected, with Americans driving at rates nearly 50% above their pre-pandemic level, according to Apple's mobility index. The oil and gas market is also receiving support from substitution effects amid soaring natural gas prices.

GOLD was set on Friday for its best week in over five months, supported by softening the US dollar and a retreat in Treasury yields. At around 04:15 AM GMT, the yellow metal was trading around $1,796 an ounce. Data on Thursday showed US producer prices posted their smallest rise in nine months in September. The report came on the heels of a solid increase in consumer prices.

SILVER prices bounced back above $23 per troy ounce, the highest in near 4 weeks, and tracking gains in gold and other precious metals as long-lasting inflation poses a threat to the global economy. Prices paid by American consumers rose in September by more than expected, marking the sixth consecutive month of hot inflation. As a consequence, Federal Reserve officials are likely to agree on tapering next month as shown in the latest FOMC minutes. The white metal reached an 8-year peak of $30/oz in February on prospects that a global shift towards green technologies, such as solar panel production, would boost demand, but has since declined more than 20% amid reduced industrial demand and expectations of higher interest rates

COPPER futures break above $4.6 per pound for the first time in nearly four months, tracking gains in other metals such as aluminum and zinc as output cuts driven by power crunch in Europe and Asia more than offset worries over falling demand at metals-manufacturing companies. Also, the latest data showed imports of unwrought copper and copper products to Chinese ports rose month-over-month to 406,016 tonnes in September, after five months of decreases, as shipments previously held up by pandemic curbs made their way into the world’s largest copper consumer. in the meantime, Shanghai steel futures prices continued to tumble towards CNY 5,500 a tonne in, a level not seen in roughly a month, amid mounting demand concerns from the Chinese real estate industry, which accounts for a quarter of domestic steel demand. Property developers have been hit by a series of credit-rating downgrades as a recent slump in new-home sales further enhanced investors’ jitters about the sector’s debt, while Evergrande continued to miss on interest payments to dollar-denominated bonds. Earlier in the month, steel futures hit a 5-month high of CNY 5,925 after authorities forced strict output curbs at Chinese steel mills, while prices of coal, a key input, soared to record highs.

IRON ORE with 63.5% iron content for delivery in Tianjin fell back to the $120 per metric tonne level after briefly touching one-month highs of $129 in mid-October, remaining well below an all-time high of $229.50 in May of 2021. The debt crisis faced by Chinese property firms remains a threat to industrial metals and the power shortage in China is likely to continue into winter while production curbs in the country are already hurting companies and households. According to reports, more than 80% of China’s domestic steel mills have suspended operations for maintenance in September. Whereas , COAL futures rose to above $240 per metric ton, getting closer to a record of $269.5 hit on October 5th as flooding put in question China's efforts to address energy shortages. Heavy rains have forced the closures of 60 coal mines in Shanxi province, the largest coal mining hub in China. Last week, the coal prices eased to $230 after Beijing ordered coal miners to boost production in an effort to curb an ongoing energy crisis, while Russian President Vladimir Putin said Gazprom will send more gas to European countries via Ukraine.