[Fujitomi] Positive reaction to extended production cuts; overseas crude surges, but prices fall sharply from the high

（NY Precious Metals）
On the 15th, NY gold continued to rise, marking its fourth consecutive day of gains. The nearby NY gold for June was up 2.3 dollars from the previous week’s close at 1,230.0 dollars, and NY platinum for July was up 11.2 dollars at 928.7 dollars.
As a safe-haven asset, it attracted attention and showed upside movement even around the 1,230-dollar level. A rapid rise in crude oil further fueled buying, and the near-month June contract briefly reached 1,237.4 dollars. However, due to a price pullback from crude’s highs and a sharp rally in the US Dow, NY gold gradually moved lower, briefly breaking below 1,230 dollars. Since then, it has shown a tendency to hold around the 1,230-dollar level. The expanding uncertainty of the Trump administration and cyber-attack risk are also in focus. The upcoming events, including Iran’s presidential election and President Trump’s visit to Israel scheduled for the 22nd, are expected to support a steady mood amid risk-off positioning. The sharp drop from palladium’s high price is also seen as triggering profit-taking in the precious metals market.

(WTI crude oil, NY petroleum products, North Sea Brent)
WTI crude oil rose sharply on the 15th but failed to sustain the gains, giving back much of the rise. The near-month July WTI was up 0.99 dollars from the previous week’s close to 49.16 dollars, and July North Sea Brent was up 0.98 dollars at 51.82 dollars. RBOB gasoline (June) was up 1.93 cents at 159.54 cents, and NY heating oil near-month June was up 1.63 cents at 150.96 cents.
Russia’s Novak said that Russia and Saudi Arabia agreed to extend the current production cuts through March 2018, raising expectations for an extension at the OPEC meeting on the 25th, with buy stops hitting and pushing prices higher. In particular, buying intensified during European trading hours, and the front-month July contract rose to as high as 49.97 dollars, approaching 50 dollars. However, once the US trading session began, gains narrowed, with both WTI and Brent falling by almost a dollar from the highs. Although the timing of an extension was unexpected, there was no surprise in the content, and concerns arose that US oil production would accelerate, potentially exhausting the market’s reaction before the OPEC meeting on the 25th. If US oil production accelerates, the effect of extending the cuts would be diminished. Reuters’ pre-release inventory data were strong, but with the focus on the extension of cuts, the data were not treated as market-moving.

(CBoT Soybeans)
On the 15th, CBoT soybeans posted a small gain in the nearby contract. The nearby July contract rose 2.75 cents from the previous week to 9.6575 dollars, and the new-crop November contract rose 1.25 cents to 9.6100 dollars.
The nearby July contract held around the 9.60-dollar level, which supported technical buying and allowed for a brief move back toward the 9.70-dollar area, but buying did not last. The USDA’s weekly export inspections came in well below the lower end of expectations. NOPA’s April crush came in at 139.134 million bushels, well below the consensus average of 145.739 million, adding to-soft demand signals. Yet selling pressure did not fully materialize and the market was supported by value-oriented buying. Fundamentals remained weak, and it is expected that the 9.60-dollar level will be decisively broken at some point. The Chicago-delivered weekly crop progress report’s average pre-release expectation was 28% (vs. 14% prior).

(CBoT Corn)
On the 15th, CBoT corn retreated following the sharp drop in wheat. The nearby July contract fell 3.50 cents to 367.50 cents, and the new-crop December contract fell 3.75 cents to 385.00 cents.
Wheat moved lower amid concerns about a global increase in supply; Chicago wheat briefly surged on frost damage fears in Kansas, but then slid, though still perceived as relatively expensive and under selling pressure. In reality, frost damage was minimal, while market participants remained wary of supply pressure from Russia and Ukraine. For corn, attention centered on planting progress, with expectations for rapid progress through the weekend and even forecasts of rain at the start of the week, but the rally could not gain traction. The Chicago close’s pre-release average for the US crop progress was 68% (vs. 47% prior). The end-of-session declines broadened, leaving prices near the lows.
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