Commodity Calls: Week Ending 9 August 2024

Weak Chinese oil imports raises alarm, Taiwan shuts down a nuclear reactor, and gold voted best safe haven asset.

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 ETF Express? Check out this week’s Market Moves and Thematic Spotlight.

Crude Oil

Bullish

  • The Russian Energy Ministry reports that crude oil production fell significantly from June to July, and more supply cuts will be on the way as the nation starts to comply with OPEC’s mandated supply cuts.1 OPEC is set to release the group’s official production numbers for July this week.
  • Reports of Israel stockpiling war supplies and shoring up bunkers have put markets on alert for an impending escalation of conflict with Iran.2  Iran is a major oil producer, and resurfacing concerns of possible supply disruptions caused the return of war-risk premiums.

Bearish

  • Chinese oil imports fell 12% MoM and 3% YoY in July, stoking fears of weakening demand from the world’s largest consumer of the commodity.3  Independent refiners in the country also operated at a mere 56% of capacity last month, the lowest utilisation rate since 2021.4
Explore crude oil with BCOM.

Uranium

Bullish

  • Kazakhstan, the world’s top uranium producer, announced a surprise mineral extraction tax for uranium products with the possibility of a further increase in 2026, discouraging projects and investments for uranium mining output and adding to global supply pressures.5

Bearish

  • Taiwan has shut down its second-to-last nuclear reactor despite debate among lawmakers about whether the nation should seek to extend the lives of its existing nuclear fleet.6  Nuclear currently accounts for 5% of Taiwan’s energy mix which is mostly dependent on imported coal and LNG.
  • Electricite de France SA may have to curb nuclear output after a heat wave warmed the river used for cooling a nuclear power station in the southwest of France.7
Explore uranium with ATOM.

Gold

Bullish

  • The latest Bloomberg Pulse survey saw investors vote for gold as the best safe haven asset in the event of a Trump presidency.8  53% of respondents favoured the precious metal, USD came in second, with Swiss Francs coming in third. Gold rose more than 50% during Trump’s previous term.9

Bearish

  • China’s gold demand has cracked in the face of record-high prices for the precious metal, with sales at the country’s jewelers in a funk as buyers hold off on purchases: Bullion consumption fell almost 6% in first half year-on-year.10

Explore physical gold with GOLD.