Highlights 

• US inflation hit 7.5% in January to reach the highest level since February 1982.
• Crude oil, the world's largest traded commodity, headed to record substantial weekly gains as the US warned of an imminent Russian invasion of Ukraine.
• Precious metals including gold and silver also recorded marginal gains in the last week as investors struggled with hot US inflation data.

 

The ongoing geopolitical unrest across the globe has triggered a slump in the worldwide commodity trade. The headwinds appear to be intensifying with surfacing tensions between Russia and Ukraine. The heightening tensions between Ukraine and Russia have raised questions on the global supply concerns.

Crude oil, the world’s largest commodity by trading volume, recorded substantial weekly gains as the US warned of an imminent Russian invasion of Ukraine. On the flip side, the 2015 Iran nuclear deal – if revived – is expected to bring roughly 1Mbpd oil supply into the market. On top of that, a faster-than-expected rise in the US consumer prices has also fuelled bets on the aggressive Federal Reserve tightening, stoking bearish sentiments. Natural gas futures tumbled below US$4 per MMBtu during the second week of February.

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Among industrial metals, Rhodium, Neodymium, and Iron ore recorded substantial weekly gains last week with prices of all three commodities rising more than 6%. The significant rise in the prices of rhodium and neodymium is underpinned by robust demand in the automotive industry. At the same time, the rise in iron ore demand is attributed to speculations that demand will increase when construction projects resume and pick up pace in China.

Precious metals including gold and silver also recorded marginal gains in the last week as investors struggled with higher US inflation, which hit 7.5% in January – the highest level since February 1982. The prices dipped on hawkish comments from a Federal Reserve official which fuelled bets for a more aggressive tightening.

Against this backdrop, let's skim through a few commodities that were popular among traders in the past week.

Source: Eikon EODHD/Others

Here are a few significant commodities that recorded substantial volatility during the last week.

Crude Oil

Crude oil prices hovered near the seven-year highs amid rising concerns related to Russia-Ukraine conflict. In the last week alone, the Brent crude oil prices jumped as much as 1.39% whereas the WTI Crude oil futures climbed 1.82%.

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Natural Gas

Natural gas prices slumped as much as ~20% in the last week on the back of warm forecasts in mid-February, decreasing the projected demand for heating. Investors are eyeing EIA’s storage report to get a clear picture of supply and demand.

Iron Ore

Iron ore prices jumped 3.73% in the previous week on expectations that demand for the steel-making raw material will rise after the winter Olympics and ramp-up in construction projects. However, Beijing has been signalling that it would focus on stabilising iron ore prices.