Silver Drops 2% Amid A Broad Pullback In Commodity Markets

Key Insights

• WTI oil retreats as Russia’s ban on oil exports is weaker than expected. 
• Natural gas dropped 15% as warm weather crushed demand. 
• Higher yields and stronger dollar put pressure on gold. 

WTI Oil Pulls Back As Russia’s Ban On Exports Misses Expectations

WTI oil moved below the $78 level as traders reacted to Russia’s ban on oil exports to countries that support the price cap scheme.

It took some time for traders to translate Russia’s decree and make up their opinions. The market’s reaction shows that traders expected more drastic moves from Russia.

The decree left some questions unanswered and showed that Russia did not choose the hardest options, which means that most of the Russian oil would likely stay in the market in 2023.

Natural Gas Retreats As Traders Prepare For Record Warmth

Natural gas  markets suffered a strong sell-off as traders focused on the changes in weather. The warm weather arrived and pushed natural gas consumption to very low levels.

Current weather forecasts imply that warm weather will stay for the next 12 days. The record warmth will likely continue to put material pressure on natural gas prices, which are currently trying to settle below the $4.50 level.

Silver Drops Amid A Sell-Off In Precious Metals Markets

Silver is currently trying to settle below the $23.50 level amid a broad pullback in commodity markets. Treasury yields have started to move higher, providing support to the U.S. dollar. Higher yields and stronger dollar are bearish for precious metals.

Gold has also found itself under pressure and moved below the psychologically important $1800 level. Platinum pulled back towards $1010 after another unsuccessful test of the $1040 level, while palladium declined below $1750.

Copper Pulls Back As China Faces A Huge COVID Wave

Copper pulled back below $3.85 as traders worried about China’s coronavirus problems. The country has recently relaxed its zero-COVID policy, which was viewed as a bullish catalyst for commodity markets.

However, new infections surged, and China faced an unprecedented wave of the disease. As a response, China stopped publishing daily COVID figures. Traders worry that China’s economic activity will decrease in the near term as the country’s population is afraid of contracting COVID after the relaxation of the strict zero-COVID policy.

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