Commodity Market Overview: Nickel, USO, & GSP Growing
Summary – Commodity Market Overview
- Indonesia’s upcoming export ban on ore along with increasing demand for electric vehicle batteries has increased the price of nickel.
- Meteorological, political, and inventory uncertainty is causing oil prices to grow.
- The GSP price has increased due to more expensive energy commodities such as oil and an increase in the demand for safe haven assets due to expectations of lower interest rates and growing economic uncertainty.
Nickel
Nickel prices hit a 3 month high on Friday due to concerns over supply. Indonesia, the world’s largest producer of nickel, may resume an export ban on ore including Nickel starting in 2022. In 2017, Indonesia relaxed its ban on nickel ore for five years; according to BMO Capital Markets Analyst Colin Hamilton, people were sceptical that the full ban would return but a recent Indonesian media report about retaining the ban sparked recent supply concerns.
Moreover, analysts expect demand for nickel to increase due to its use in electric vehicles. China’s energy vehicle sector leads demand for refined nickel.
Thus, due to both an expected decrease in supply and increase in demand, Nickel rose 6.06% over the past three days, in line with I Know First’s bullish outlook.
U.S. Oil
U.S. Oil is also facing supply concerns. APA data showed U.S. crude stockpiles declining by 8.1 million barrels for the week ending July 5th, compared to forecasts that expected a decrease of 3.1 million barrels. Moreover, Tropical Storm Barry in the Gulf of Mexico has also caused a decline in inventory – companies have more than 1 million barrels per day of output – 53% of the region’s production as the storm headed for land on Saturday. The forecast expected Tropical Storm Barry to grow to a category one hurricane. Finally, Iran’s increase in uranium above the 3.7% agreed upon in the Joint Comprehensive Plan of Action has fueled worries over the region. Furthermore, Tehran threatened that it will continue to breach the agreement unless European nations safeguard Iran against U.S. oil sanctions.
On the demand side, successful truce talks in the U.S. China trade war has sparked optimism for commodities like oil. Overall, USO rose over the three day period of the forecast by 3.99%. I Know First was correct in forecasting a positive future for the U.S. oil commodity.
GSP
GSP is an ETN that tracks a broad range of commodities. About 55.47% of these commodities are in the energy sector. As a result, the recent increase in oil prices has also prompted an increase in GSP. Moreover, 10.49% of GSP is industrial metals and 5.16% is precious metals. Due to current economic uncertainty with escalating tensions in the Middle East and recession expectations with an inverted treasury yield curve, the price of safe haven assets like metals is increasing because they retain their value during economic turbulence. Moreover, expectations of Federal Reserve interest rate cuts have increased the growth of metals because the opportunity cost of holding metals decreases when interest rates are lower, because metals carry no yield.
Over the past three days, from July 10th, 2019 to July 13th, 2019 GSP grew by 3.99%. Thus, I Know First correctly selected GSP as a commodity ETN with a bullish future.
I Know First Forecast Performance
On July 10th, 2019 the I Know First algorithm issued bullish predictions for commodities for a 3 day time horizon. This analysis analyzes the commodity market overview. I Know First’s predictions included Nickel, USO (U.S. Oil), and GSP (Commodity ETN). Nickel had a positive signal of 0.52, USO had a positive signal of 0.24, and GSP had a positive signal of 0.07. Nickel had a predictability indicator of 0.14, USO had a predictability indicator of 0.15, and GSP had a predictability indicator of 0.16. Over the 3 day trading period from 10th July to 13th July, Nickel gained 6.06%, USO gained 3.99%, and GSP gained 3.69% in good agreement with the I Know First forecast. This bullish commodities forecast was sent to the current I Know First subscribers on 10th July, 2019.
Algorithmic Stock Forecast: This article is a commodity market overview. The table is a commodities forecast produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. Note that the top 10 commodities in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant commodities have been included. The boxes are arranged according to their respective signal and predictability values (see the link for detailed definitions). A green box represents a positive forecast, suggesting a long position, while a red represents a negative forecast, suggesting a short position
Please note – for trading decisions, use the most recent forecast.Get today’s forecast and top commodities picks.
