Commodity Calls: Week Ending 5 July 2024

Tropical storms impact oil output, physical gold is getting harder to find, and France needs more nuclear-qualified workers.

Join Global X each week for ‘Commodity Calls’ to explore all the recent signals and developments that occurred in the world of commodities.

Looking for more? Check out this week’s Market Moves and Thematic Spotlight.

Crude Oil

Bullish

  • Tropical Storm Beryl is expected to be upgraded to hurricane status after hitting southern Texas. Oil rigs off the coast of Texas will be affected by the weather event and likely see decreases in output.1 Beryl is the earliest ever Category 5 to hit the Atlantic and could allude to a “supercharged” hurricane season.
  • US crude oil inventories declined the most in almost a year as Americans travelled record amounts through the July 4th holiday period.2 The Transport Security Administration (TSA) last predicted its officials will screen more than 32 million individuals over the weekend, 5.4% higher than 2023 and the most on record.3

Bearish

  • Chinese oil refineries are running at lower capacity than expected after returning from seasonal maintenance. Refiners have raised daily processing volumes by just 1.3% so far in July – the gain was about 3% during the same time last year.4

Explore crude oil with BCOM.

Gold

Bullish

  • Multiple US data points released last week signalled a broad weakening of the economy, providing support for the Fed to cut rates in the second half of 2024. Unemployment grew more than expected, and both manufacturing and services PMIs fell into contraction.5
  • Gold is getting harder to find and mine, according to the World Gold Council. Total mine production grew only 0.5% in 2023, less than half the pace of expansion seen in 2022.6 Global mine production appears to have hit a peak in 2018 and has since plateaued.

Bearish

  • The People’s Bank of China (PBOC) maintained its gold purchasing halt for the second month in a row.7 Gold bullion held by the PBOC stood unchanged at 72.8 million troy ounces (~2064 Tonnes) at the end of June.8

Explore physical gold with GOLD.

Uranium

Bullish

  • The US is getting closer to reaching a long-sought-after nuclear technology sharing deal with Saudi Arabia that would allow American nuclear firms to build reactors in the Middle Eastern nation.9 Once a deal is reached, Congress would have 90 legislative days to pass a veto-proof law rejecting the agreement or adding conditions to it before the measure comes into force.

Bearish

  • European nations are struggling to find workers qualified to work on nuclear reactors. The Electricite de France (EDF) has been commissioned to build multiple reactors over the next decade, however reaching that target would require up to 123,000 new qualified employees by 2030.10
  • To help achieve the target, the French government and industry names such as Rolls Royce and BAE Systems, have committed 736 million pounds to boost training regimes.11

Explore uranium with ATOM.

 

Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 09/07/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

Brokerage commissions will reduce returns.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.