Data from the Vietnam Commodity Exchange (MXV) shows a clear divergence in the global commodity market last week (February 12-18). Escalating tensions in the Middle East pushed oil prices up for the second consecutive week, with precious metal prices rising due to their safe-haven role. In contrast, the agricultural and industrial raw materials sectors saw a predominant red hue on their price boards. By the end of the week, the MXV-Index for 3 out of 4 commodity groups decreased, dragging the overall MXV-Index down by 1.04% to 2,111 points. The average daily trading value across the exchange was more than 3,500 billion VND.

Oil Prices Increase for the Second Consecutive Week

According to MXV, by the end of the trading week, oil prices had risen for the second consecutive week amid escalating geopolitical tensions in the Middle East. Additionally, concerns about a tightening global supply contributed to the buying pressure in the market.

By the end of the week, WTI oil prices rose by 3.06% to $79.19 per barrel, and Brent oil prices increased by 1.56% to $83.47 per barrel.

Reuters reported that negotiations between the US, Egypt, Qatar, and Israel for a ceasefire agreement in Gaza ended without progress. Moreover, Hezbollah leaders suggested that the conflict against Israel would further escalate.

In the Red Sea, the threat to cargo ships persists due to harassment by Houthi forces. The United Kingdom Maritime Trade Operations (UKMTO) reported a vessel hit by a missile south of Al Mukha, Yemen. The US Department of State mentioned that the Panama-flagged crude oil tanker M/T Pollux, en route to India, faced a similar incident. Continued geopolitical instability poses a risk of supply disruptions, serving as a primary catalyst supporting oil prices.

US supply tightening signs also drove price increases over the past week. According to the US Energy Information Administration (EIA), crude oil production from the seven major US shale basins is expected to rise by 0.2% month-on-month to 9.72 million barrels per day in March, slowing from the average monthly growth rate of about 0.9% last year. Meanwhile, Baker Hughes oil services company data showed that the number of US oil rigs fell by two to 497 for the week ending February 16. This could increase market deficits as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) cut production.

Adding to the price support, Russian crude oil exports by sea fell back after reaching a seven-month high. Specifically, the country's weekly export volume dropped by about 290,000 barrels per day to 3.49 million barrels per day for the week ending February 11. Russia's refining throughput also declined by 4% in the first two weeks of February compared to the January average and dropped by 8.6% year-over-year.

In another notable development, natural gas prices plunged by more than 12% to the lowest level since July 2020, due to lower-than-expected stockpiles and warmer weather forecasts limiting heating demand. The EIA reported that US natural gas inventories fell by 49 billion cubic feet (bcf) for the week ending February 9, less than analysts' forecast of a 68 bcf drop and the 117 bcf decrease during the same period last year, and compared to the five-year average decline of 119 bcf.

Escalating Middle East Conflict Boosts Precious Metal Buying

Closing the trading week from February 12-18, all 10 major commodities in the metals group closed in green, with many items posting impressive gains of over 4%. Notably, precious metals saw significant increases, with silver prices rising by 3.9% to $23.47 per ounce, and platinum up by 4.02% to $913.5 per ounce. The primary reason is the heightened safe-haven demand amid escalating geopolitical tensions in the Middle East.

Officials reported that Gaza's largest hospital was besieged in the ongoing Israel-Hamas conflict, with fighter jets attacking Rafah, the last Palestinian stronghold in the area. Hamas leader Haniyeh stated that he would not accept any conditions unless the conflict completely ended, the occupying forces withdrew from Gaza, and the unjust sieges were lifted.

The increasing tensions spurred buying in silver and platinum as safe-haven metals, pushing their prices higher. Silver even hit a one-month high despite the pressure from the rising US dollar following a slew of US data indicating a return of inflation in January.

However, Raphael Bostic, President of the Atlanta Federal Reserve, said on Friday (February 16) that he was open to lowering interest rates at some point in the coming months. This somewhat eased market sentiment and boosted buying in silver and platinum.

For the base metals group, COMEX copper prices surged by 4.26% to $3.83 per pound after two consecutive weeks of decline. Iron ore prices rose by 3.67% to $131.27 per ton. The price increase in base metals mainly stemmed from expectations that the Chinese economy would soon show positive signals thanks to government economic stimulus measures following the holiday. Additionally, peak construction activity usually starts in March, prompting many factories to ramp up production and stockpile for sales, improving consumption prospects in China.

According to official reports compiled by Bloomberg, over 61 million train trips were made in the first six days of the Chinese Lunar New Year holiday. This is the highest level compiled by Bloomberg News in five years, marking a 61% increase compared to the same holiday period in 2023.

Source: MXV