Commodity Roundup: February 2015
Commodity prices showed divergent movement in February.
Crude oil prices finally rose in February after 7 consecutive months of decline amid expectations that the recent fall in prices will push high-cost producers of oil out of the market. Already, recent data show that US oil and gas rig count has declined in recent weeks. Consequently, we expect crude oil prices to recover in late-2015.
Gold fell 5% in February, following an 8% rise in January. Going ahead, we expect the bearish trend in gold to continue on the back of (1) expected strength in the US Dollar and (2) gold losing its appeal as an inflation-hedge amid low-inflation environment globally. In other development, RBI eased some gold import restrictions, which included removal of the ban on import of gold coins and medallions.
Industrial metal prices fell in February led by declines in nickel and lead. Copper was the exception and rose 7%. However, the move in copper was largely due to value-buying post the 13% fall in January; the LME copper price remains well below USD 6000 per tonne level.
Agricultural commodities recovered following the declines in January. Wheat rose 2% following a 15% decline in the previous month.