Commodities: Traders eyeing multiple risks in 2018, including from US policy
Commodities were little changed on Wednesday despite the generally risk-off tone in other markets on the back of a report that China might be mulling reducing or stopping its purchases of US government debt.
Against that backdrop, West Texas Intermediate crude futures for next month delivery were among the biggest gainers after the Department of Energy reported a 290,000 barrel a day fall in domestic US oil production last week to 9.492m b/d.
Conversely, the same set of data revealed a 4.1m barrel build in gasoline stockpiles last week, which sent NYMEX-traded RBOB gasoline futures slip 0.16% to $1.8333 a gallon.
Making headlines, in a research note sent to clients strategists at Citi reeled off a long list of potential risk factors for commodity prices, while emphasising those linked to America's shift from a guarantor of a global rules-based system to a "challenger" of the prevailing rules of governance.
"The unpredictability stems from new calculations of the time-tested rules of diplomacy, with the US seemingly applying new weightings to the balancing of ends vs. means, of stakes vs. risk, and of actions vs. reactions.
"This appears to be the case in the pursuit of sanctions against North Korea, in the dealings surrounding sanctions against Iran, in the renegotiation of trade agreements and in the handling of relations with allies and enemies alike," Citi said.
Base metals were also mostly bid higher, with three-month LME-traded copper futures rising from $7,132 per metric tonne to $7,153.
Yet the strongest corner of the market was the soft commodities space, with March 2018 ICE-traded cocoa futures gaining 2.21% to $1,941.0 a metric tonne cotton#2 adding 1.66% to $0.7965 a pound.
April CME live cattle futures were again to be seen heading lower, earsing 0.71% to $1.1868 per pound.