Energy Leads Weekly European Commodity Winners
UK natural gas (NFX24) surged +12.39% last week to lead European commodity winners after UK gas production fell by 13% compared to last year, and even for this year a further 10% reduction is expected. As of today, production covers only 60% of current demand. There are reports highlighting that the North Sea basin output is showing fast decline rates.
The current UK total annual gas output is now close to the lowest in the last 15 years.
The weekly chart is showing a very bullish signal with prices trading above the 10, 20, and 50-unit exponential moving averages (EMAs). All of these are recent bullish crossings. The weekly Relative Strength Index (RSI) is at 64 and fast approaching the 70 “overbought” area.
The next target will be 150. Traders can use the 10 EMA as a support, and if broken down, activate stop losses.
Crude Oil WTI ICE (WIZ24), +4.5%
As mentioned before, less serious conflicts in the Middle East have sent prices rocketing in the past. It did not happen this time, which raises questions about the demand side.
For now, the trade is locked in a range. There is support at 67.50-68 and resistance at 77.50.
The only action that will send prices higher is some attack on Iran´s oil facilities or some OPEC+ surprise cut. The risk to the upside seems higher than to the downside in the current context.
Last Week's European Commodity Losers
Robusta Coffee 10-T (RMF25), -4.42%
Some traders expect the coffee crop in Vietnam - the top global producer of robusta, providing 40% of output - to fall by 10% this season, which started this month. Drought conditions will affect production to mark the lowest in a decade. Some estimates are less pessimistic, but fundamentally, the market remains in deficit.
Technically, the picture is different, as we see a continuation of profit-taking and fund liquidation.
Last week, I wrote: “Weekly prices have broken down the 10 and 20 EMAs in the last 3 weeks, with the last 4 candles in red and even showing a bearish gap from 4 weeks ago… If the weekly current candle remains below the 20 EMA this week, this will encourage further short selling.”
This is what happened last week, with the candle trading well below the 10 and 20 EMAs. Watch out for the next target, which is the 50-week EMA at 3,958. This could prove a key support. The weekly RSI is at 50, which is neutral and can go further down.
Nickel 3M Cash (P8Y00), -4.32%
LME inventories show now ample supply, with 135,522tn last reported on Oct. 25. One year ago, it was just around 42,000 tn.
Interestingly, LME Funds Net Positions were deeply shorted (around -16,000 contracts last month), but they are back in positive territory now, at +16,373 as of Oct. 20. Sometimes, this is a reliable leading indicator of trend changes.
This contract was down over 4% last week and it continues its way down. I mentioned last week that this metal is looking for a bottom at 15,900, and this remains a key level to watch. Breaking it down for over a week will send very bearish signals to the market.
Long traders will be very active at this level as statistically it represents a tough support to break.
Cocoa #7 (CAH25), -4.08%
We are seeing the lowest price levels since March with fundamental data showing better conditions in West Africa. Ivory Coast reports significant improvement in volume at its ports (13% up from the same time last year). Also, there are better output estimates coming from Ivory Coast for the next crop (up 10%).
Technically, prices have been in a zig-zag channel pattern with record volatility since the massive climb started in April 2024. Current prices are trying to break the lower end of this pattern. The chances look better for short positions if they remain below 4,800.
On the date of publication, Cesar Marconetti did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
