Commodity Market to Remain Volatile Amid FOMC Moderation

Investors will closely watch the statements of various FOMC members and Fed Chair Jerome Powell for clues on the direction of policy, particularly since both the ECB and the BoE have indicated that more rate rises are likely. 

Following an initial wave of optimism fueled by the impressive performance of tech giant Apple and a robust jobs report, a subsequent retreat occurred in most high-risk assets due to persistent macroeconomic challenges. In the past fortnight, risk sentiments were dampened by underwhelming economic data from both the United States and China, alongside ongoing concerns surrounding the US banking sector. These factors weighed heavily on market confidence. Additionally, the US dollar experienced gains as investors sought safe-haven assets amid the US debt ceiling standoff, marking its most significant weekly increase since February.  [EasyDNNnews:PaidContentStart]

Gold found stability after experiencing three consecutive sessions of losses, supported by a slight weakening of the dollar and concerns among investors regarding the US debt ceiling standoff, which has the potential to trigger fears of a global economic slowdown. In the past fortnight, the price of spot gold saw a modest increase of 0.1 per cent to reach USD 2,013.99 per ounce, recovering from its lowest level since May 5. US gold futures remained largely unchanged at USD 2,018.80. 

In May, US consumer sentiment plummeted to a six-month low due to worries surrounding the political disputes over raising the federal government's borrowing limit, which could potentially lead to a recession. Additionally, other precious metals saw positive movement, with spot silver rising by 0.5 per cent to USD 24.02 per ounce, platinum gaining 1.3 per cent to USD 1,062.87, and palladium climbing 1.4 per cent to USD 1,530.33. 

NSE Launches WTI Crude Oil & Natural Gas Futures Contracts 

The National Stock Exchange (NSE) introduced rupeedenominated futures contracts based on NYMEX WTI crude oil and natural gas as part of its commodity derivatives segment. This development follows the approval granted by the Securities and Exchange Board of India (SEBI) to the NSE in March to launch these contracts. With the addition of these contracts, the NSE has expanded its range of products in the energy sector and enhanced its overall commodity segment. 

It is worth noting that WTI serves as the underlying commodity for the New York Mercantile Exchange's (NYMEX) oil futures contract, and derivatives related to crude oil (Brent and WTI) are among the most heavily traded products in the commodity derivatives market. 

These rupee-denominated futures contracts are open to all categories of Foreign Portfolio Investors (FPIs), including individual investors, family offices, and corporate FPIs, thereby facilitating broader participation in trading activities. 

Oil prices experienced a slight increase as optimism about supply cuts by OPEC+ and the resumption of US purchases for reserves outweighed concerns regarding fuel demand from top global consumers, the United States and China. Brent crude futures rose by 39 cents or 0.5 per cent to reach USD 74.56 per barrel, while US West Texas Intermediate crude stood at USD 70.45 per barrel, up 41 cents or 0.6 per cent. Last week, both benchmarks experienced a fourth consecutive week of decline, the longest such streak since September 2022, due to concerns that the United States could enter a recession amid the risk of a historic default at the beginning of June. 

Nevertheless, global crude supplies are expected to tighten in the second half of the year as the OPEC+ alliance, consisting of the Organization of the Petroleum Exporting Countries and its allies, including Russia, implements additional output cuts, particularly reducing the volumes of sour crude. 

Moreover, the flow of northern Iraqi crude oil to Turkey's Ceyhan port has not yet resumed following Baghdad's request for its restart last week, contributing to the tightness in global supplies. The United States may begin repurchasing oil for the Strategic Petroleum Reserve (SPR) after completing a sale mandated by Congress in June.

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