Commodity Capsule: Brent crude oil fell; gold slips; copper dips

Commodity Capsule: Oil fell on Wednesday as frail economic growth in China raises future demand concerns, while US dollar strength dented investor's risk appetite.

Brent crude futures is range-bound with a weak bias between $77-78 a barrel.

However conflicts in the Red Sea increased concerns of tankers having to reroute to avoid the area, increasing costs and the amount of time for deliveries.

China's economy in the fourth quarter expanded by 5.2 per cent year-on-year (YoY), which missed analyst expectations and calls into question forecasts that Chinese demand will propel stronger global oil growth in 2024.

However, China's oil refinery throughput in 2023 rose 9.3 per cent YoY to a record, indicating oil demand is picking pace.

Some signs of steady Chinese demand have appeared as the country's refiners are actively booking oil cargoes for delivery in March and April.

London copper dipped on Wednesday, weighed by a strong dollar and demand concerns arising after mixed economic data releases by China.

LME copper slid near $8,300 per metric ton mark. February copper contract on the Shanghai Futures Exchange was up 0.2 per cent at 67,810 yuan/ton.

China's economic growth is likely to slow to 4.6 per cent in 2024, and cool further to 4.5% in 2025, a Reuters poll showed.

Weighing on the market was a steady dollar, hovering near one month high past 103 level.

The dollar index witnessed a sharp surge as remarks by the Federal Reserve.

Governor Christopher Waller dampened expectations for a March rate cut.

Gold slipped under $2030 an ounce on Wednesday extending weakness after a sharp drop in prices in the previous session.

Federal Reserve official's hawkish comments dampened expectations for a March interest rate cut.

Traders seek clarity from the comments of more Fed speakers this week.

Fed Governor Christopher Waller said that while inflation was approaching the central bank's 2 per cent goal, the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.

Over the weekend Atlanta Fed President Raphael Bostic said inflation could "see-saw" if policymakers cut rates too soon.

Even the ECB pushed back against market expectations of rapid rate cuts this year.

Waller's comments sent the dollar to a one-month high and US Treasury yields logged their biggest daily move in more than three months on Tuesday.

Chicago soybean futures is hovering near a two-year low amid expectations of a bumper harvest in Argentina, and weak Chinese demand for imported beans.

Corn futures edged lower, with plentiful global supply holding prices near a three-year low, while wheat traded near a seven-week low.

Soybean contract on the Chicago Board of Trade fell near $12.20 a bushel, its lowest since November 2021.

All three contracts have fallen by between 5 per cent and 7 per cent so far this month amid strong supply, lacklustre demand, and the strengthening US dollar.

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