Commodities: Key Things To Watch On August 10

Key Insights

• Oil traders will focus on fresh EIA data and developments around the “Druzhba” pipeline. 
• For gold and silver traders, inflation data from the U.S. will be the key driver. 
• Copper traders should monitor risk sentiment as copper markets are at risk of a pullback.

Oil

It’s a busy day for oil traders as the EIA will release its Weekly Petroleum Status Report. The report is expected to show that crude inventories remained mostly unchanged after growing by 4.47 million barrels in the previous week.

As usual, traders will also pay attention to the dynamics of the domestic oil production. WTI oil prices have recently settled near the $90 level, and it remains to be seen whether producers are ready to maintain the current production of 12.1 million bpd at these levels.

In addition, traders will monitor the fate of the Russian oil transit through Ukraine. Yesterday, Russia’s Transneft indicated that oil was not flowing through the “Druzhba” pipeline due to payment problems.

In the near term, the problems with Russian oil exports will likely have a bigger impact on Brent oil. If the solution is not found in the upcoming weeks, the situation will serve as a bullish catalyst for global oil markets.

Precious Metals

Today, gold and silver traders will wait for the release of the U.S. inflation data. Inflation reports will have a material impact on traders’ expectations regarding the next Fed’s move. Currently, the market expects that the Fed will raise the rate by 75 bps at the next meeting.

Treasury yields have pulled back from the highs that were reached back in June, providing some support to precious metals. However, it remains to be seen whether traders are ready to increase purchases of gold as a safe-haven asset.

In silver’s case, recession worries also play a role. The recent inflation data from China showed that pricing pressure has started to cool down due to weaker economic activity. This is bearish for silver.

Copper

Copper markets have rebounded from the lows that were reached in mid-July. The key driver for this move was the increase in risk appetite, which was especially visible for stock traders who enjoyed a strong rally in recent weeks.

Now, this rebound will be put to test. The disappointing earnings report from Micron put pressure on stocks as traders focused on recession risks. If markets remain focused on recession risks in the upcoming trading sessions, copper will pull back from recent highs. Most likely, copper traders will be able to use the S&P 500 as a leading indicator.

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