CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Commodities continue to struggle on weakening demand and supply pressures

Article By: ,  Financial Analyst

Oil ended the day’s trade lower with US crude down 40 cents to US$73.69 (£46.79) per barrel, ahead of the crucial OPEC meeting later today (November 27th) in Vienna, where members are expected to decide on whether to reduce oil production to stabilise prices. 

The market is expecting no changes to supply, with the major Gulf producers expected to win the debate and maintain supply levels. This is not the result hoped for by smaller producers, such as Venezuela and Ecuador, who have been struggling in the tumbling price environment. 

Oil has declined significantly this year, down almost 30 per cent since June, largely due to lower demand in Europe and China, the stronger US dollar and the boom in US shale production.

Iron ore

The price of iron ore continued to slump, dipping to a five-year low of US$68 per tonne, as major producers including BHP Billiton and Rio Tinto continue to pump supply into the market, despite weakening demand from China. 

Iron ore has now fallen 50 per cent over the past 12 months, reaching what is considered to be close to break-even point. Several smaller producers in Australia have signalled a shut-down in production, with only the largest producers seemingly able to compete at these pricing levels, thanks to their large scale and cost-cutting expertise. 

Gold

Gold prices opened the day’s trade marginally higher at £758.96 per ounce at 10:30 GMT, ahead of a key pricing decision in Switzerland at the weekend. On Sunday, the Swiss will hold a referendum on whether the nation’s central bank should more than double its gold reserves. 

The market consensus is that it is unlikely to pass, with a continued downtrend in gold prices expected. Goldman Sachs is sticking to its bearish forecast with a year-end target of US$1,050 an ounce, as reported in Bloomberg last week. If the Swiss surprise, gold prices could spike globally, with some analysts forecasting an increase of more than US$50 per ounce. 

Find out about commodities trading at City Index.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024