The Commodities Feed: Central Banks Increase Gold Reserves Amid Geopolitical Uncertainty
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The Commodities Feed: Central banks increase gold reserves
The latest data from the World Gold Council shows that central banks purchased around 800 tonnes of gold over the first three quarters of 2023 as geopolitical uncertainty pushed them to diversify more towards safety assets. The trend is likely to continue in the fourth quarter amid tensions in the Middle East.
Energy – US oil inventory increased over last week
The crude oil front-month contract has been trading soft at around US$85.7/bbl this morning as the risk premium continues to soften in the absence of any immediate danger to the oil supply from the Middle East. Oil supply remains healthy with a Reuters survey reporting that OPEC oil production increased by another 180Mbbls/d in October compared to September with higher production coming from Nigeria, Angola, Iraq and Iran. Having said that, the risk of an escalation in the Middle East cannot be ruled out and the market remains cautious on that front.
Weekly inventory data from the API shows that the US crude oil inventories increased by 1.35MMbbls over the last week; lower than the average market expectations of around 1.6MMbbls. Cushing crude oil stocks are reported to have increased by 375Mbbls. On the products side, API reported that gasoline and distillates inventories fell by 357Mbbls and 2.48MMbbls respectively, over the week ending 27 October. The more widely followed Energy Information Administration (EIA) report will be released later today.
India’s crude oil imports dropped to a YTD low of 17.4mt in September 2023 as firm prices and refinery maintenance weighed on crude oil demand. However, some reports suggest that imports may have recovered in October as refineries increased operating rates whilst some of the state refiners also increased imports to meet annual purchase obligations under the term deal.
The European gas market traded softer yesterday following the expectations of the arrival of the Ciaran storm over the coming days, which could bring down electricity demand due to infrastructure damages. Meanwhile, gas storage is running nearly full in Europe (99.3% of the capacity as of 30 October) as unusually mild temperatures have reduced the overall heating consumption in the nation.
