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1. Weekly Newsletter
Commodity- 22 May 2017

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FOCUS OF THE WEEK
Crude oil prices extend last week's strength in Asia Monday. With both benchmarks holding above US$
50/bbl, the market is awaiting the OPEC/non-OPEC meeting schedule on May 25. The market has priced in
an output extension deal until March 2018. We are concerned that the deal would be incapable of
revitalizing the energy prices further from current levels due to US' rapid shale investment. In the FX
market, US dollar stabilized after the selloff over the past week. GBPUSD weakened as traders respond to a
Sunday Times article in which Brexit Secretary David Davis said that the UK would be prepared to walk out
of talks if the EU tried to impose a high exit bill on the UK. PM Theresa May, as she told the Sunday Telegraph,
indicated that the final bill must take account of the UK's past contributions to the European Investment
Bank (EIB) and other joint projects.
For the week ahead, the focus of the FOMC minutes due Wednesday is on the discussion over balance sheet
reduction. We expect the policymakers had come up with a broad outline in terms of general timing and
operating principles. While not a voter this year, St Louis Fed president James Bullard indicated that he
would not oppose another fed rate hike, but cautioned that the Fed's projected rate path is "overly
aggressive" given the recent macroeconomic and financial markets developments. Bullard, however,
suggested that he is in favor of the Fed beginning to shrink its balance sheet from later this year. The BOC
meeting would unlikely bring any change in the monetary policy. Although the unemployment rate slipped
to 6.5%, the lowest level since October 2008, in April, inflation has remained subdued. Headline CPI rose
+0.4% m/m in April, leaving annual inflation steady at 1.6% y/y, missing expectation of +1.7%. BOC's three
preferred measures suggested that core inflation weakened. For instance, the median inflation declined to
1.6% y/y, the lowest since September 2015.
On the dataflow, US' flash Market PMIs for May, Richmond Fed's manufacturing survey for May and new
home sales for April would be released on Tuesday, followed by the April existing home sales report due
Wednesday. Friday comes the revision on the 1Q17 GDP growth, the durable goods orders report for April,
as well as the final May reading of the University of Michigan survey. In the Eurozone, we would receive a
detailed report on Germany's 1Q17 GDP, and the IFO business survey for the country. ECB President Mario
Draghi is scheduled to speak on Wednesday.
Commitments of Traders:
Speculators were bullish over the energy complex in the week ended May 16. Net LENGTH for crude oil
futures gained +201 contracts from a week ago to 328 952. Net LENGTH of heating oil rose +2 642 contracts
to 14 983 while net LENGTH for gasoline added +2 513 contracts to 32 319. Net LENGTH for natural gas
jumped +37143 contracts to 56 618 for the week.
With the exception of platinum, speculators were also bearish over the precious metal complex last week.
Net LENGTH for gold plummeted -23 282 contracts to 126 724, while that for silver futures slumped -10 651
contracts to 43 004. For PGMs, net LENGTH for platinum gained +1 929 contracts to 12 169 while that for
palladium slid -708 contracts to 19 901.

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BULLION
GOLD
For the 24 hours to 23:00 GMT, the Gold rose 0.71% against the USD and closed at USD1255.8 per ounce on Friday, as the US Dollar weakened
against other currencies amid current political crisis in the US.
In the Asian session, at GMT0300, the pair is trading at 1252.5, with the gold trading 0.26% lower against the Dollar from Friday’s close.
The pair is expected to find support at 1247.3667, and a fall through could take it to the next support level of 1242.2333. The pair is expected
to find its first resistance at 1257.3667, and a rise through could take it to the next resistance level of 1262.2333.
Gold is expected to find support at [1232.60-28076] and a fall through could take it to the next support level of [1212.50-27518] Gold is expected to find its
first resistance at [1268.90-29098] and a rise through could take it to the next resistance level of [1185.10-29562]
TECHNICAL LEVELS
COMMODITY EXCHANGE QUOTE S2 S1 R1 R2
GOLD COMMEX USD/OZ 1212.50 1232.60 1268.90 1185.10
GOLD MCX RS/10 GM 27518 28076 29098 29562

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SILVER
For the 24 hours to 23:00 GMT, the Silver rose 1.42% against the USD and closed at USD16.84 per ounce on Friday, tracking gains in gold
prices.
In the Asian session, at GMT0300, the pair is trading at 16.85, with the Silver trading 0.06% higher against the USD from Friday’s close.
The pair is expected to find support at 16.6417, and a fall through could take it to the next support level of 16.4333. The pair is expected to
find its first resistance at 17.0167, and a rise through could take it to the next resistance level of 17.1833.
Silver is expected to find support at [16.50-38436] and a fall through could take it to the next support level of [16.10-37761] Silver is expected to find its
first resistance at [17.20-39580] and a rise through could take it to the next resistance level of [17.50-40049]
TECHNICAL LEVELS
COMMODITY EXCHANGE QUOTE S2 S1 R1 R2
SILVER COMMEX USD/OZ 16.10 16.50 17.20 17.50
SILVER MCX RS/KG 37761 38436 39580 40049

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ENERGIES
CRUDE OIL
For the 24 hours to 23:00 GMT, the Crude Oil rose 2.03% against the USD and closed at USD50.37 on Friday, on rising hopes that OPEC and
other oil producing nations would agree to extend output cuts in a meeting scheduled this week.
Meanwhile, Baker Hughes reported that US drillers added eight oil rigs in the week ended 19 May, bringing the total count to 720.
In the Asian session, at GMT0300, the pair is trading at 50.82, with the Crude Oil trading 0.89% higher from Friday’s close.
The pair is expected to find support at 49.93, and a fall through could take it to the next support level of 49.04. The pair is expected to find its
first resistance at 51.3, and a rise through could take it to the next resistance level of 51.78.
Crude oil is expected to find support at [49.00-3140] and a fall through could take it to the next support level of [46.90-3010] Crude oil is expected to find
its first resistance at [52.30-3340] and a rise through could take it to the next resistance level of [53.30-3410]
TECHNICAL LEVELS
COMMODITY EXCHANGE QUOTE S2 S1 R1 R2
CRUDE OIL COMMEX USD/BBL 46.90 49.00 52.30 53.30
CRUDE OIL MCX INR/BBL 3010 3140 3340 3410

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NATURAL GAS
Natural gas futures for June delivery rose 7.4 cents to settle at $3.256 per million British thermal units, up 2.3% for the session but about 4.9%
lower for the week.
Natural gas is expected to find support at [3.20-202.90] and a fall through could take it to the next support level of [3.00-195.30] Natural gas is expected to
find its first resistance at [3.40-218.50] and a rise through could take it to the next resistance level of [3.60-226.30]
TECHNICAL LEVELS
COMMODITY EXCHANGE QUOTE S2 S1 R1 R2
NATURAL GAS COMMEX USD/MMBTU 3.00 3.20 3.40 3.60
NATURAL GAS MCX INR/MMBTU 195.30 202.90 218.50 226.30

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BASE METALS
COPPER
Copper prices climbed to the highest level in more than two weeks Friday, as a threatened labor strike at a mine in Indonesia looked set to
disrupt supplies.
Copper climbed 2.19% to $2.58 a pound
Copper is expected to find support at [2.50-360.80] and a fall through could take it to the next support level of [2.40-352.10] Copper is expected to find its
first resistance at [2.60-374.20] and a rise through could take it to the next resistance level of [2.70-378.90]
TECHNICAL LEVELS
COMMODITY EXCHANGE QUOTE S2 S1 R1 R2
COPPER COMMEX Cents/Lb 2.40 2.50 2.60 2.70
COPPER MCX INR/Kg 352.10 360.80 374.20 378.90

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Disclaimer
The recommendations made herein do not constitute an offer to sell or a solicitation to buy any securities mentioned. Readers using the
information contained herein are solely responsible for their actions. The information and views contained herein are believed to be reliable but
no responsibility or liability is accepted for errors of facts and opinions. Editors may or may not have trading or investment positions in the
securities mentioned herein.
Report by,
Research Analyst
Desh Deepak
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