Crude Jumps on API Draw, Gold Firms on Trade Concerns, Nat Gas Oversold

U.S. commodity markets traded well on Tuesday with crude oil, gold and natural gas producing solid gains. Crude oil prices jumped after an industry report showed another larger-than-expected weekly inventories drawdown. Gold prices surged as dampened hopes of a US-China trade deal increased the chances of additional Fed rate cuts beyond July. Natural gas prices were boosted by oversold technical conditions and a mixed weather outlook.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures jumped late Tuesday after the American Petroleum Institute (API) reported a crude oil inventory draw of 6.024 million barrels for the week-ending July 25. Analysts were looking for a much smaller 1.818-million barrel draw. Last week, the API reported an even bigger 10.961 million barrel draw.

After last week’s data, inventories are down 4.83 million barrels for this year’s 31-week reporting period, according to the API data.

September WTI crude oil settled at $58.05, up $1.18 or +2.07% and October Brent crude oil closed at $64.63, up $0.71 or +1.10%.

Gold

Gold prices rose on Tuesday despite firm Treasury yields and a higher U.S. Dollar. The move may have been supported by a drop in demand for higher-risk assets. Global equity markets weakened after a series of tweets by President Trump raised fresh trade war concerns.

Trump renewed his attacks on China, decreasing hope the two largest world economies will reach a trade deal. In a series of tweets, Trump said China in not keeping its promise of buying more U.S. agricultural products. “China is doing very badly,” he wrote. “Worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. That is the problem with China, they just don’t come through.”

Trump warned China against waiting out his presidency before finalizing a trade deal, saying if he wins re-election in November 2020, the outcome could be no agreement or a harsher one.

December Comex gold futures settled at $1441.80, up $8.50 or +0.59%.

Natural Gas

Natural gas futures strengthened on Tuesday as traders lightened up on the short side on the thought that excessive concerns about cooling temperatures had produced oversold trading conditions. Short-sellers also adjusted positions in reaction to a slight change in mid-day forecasts that came in slightly cooler for this weekend into next week, but slightly hotter for August 10-14.

September natural gas futures settled at $2.137, up $0.021 or +0.99%.