Commodity Traders Weekly Outlook: Heating Oil Soars, Natural Gas Falls (Reprise)

This week we saw a complete reversal in risk, from the VIX melting a softer US CPI report last week it was the top performer this week as indices floundered, though correcting much of that Friday with options expiration. Like a scratched record, natural gas futures were down again, losing another 8.34% while it’s energy brethren Gasoline, WTI, Brent Oil and Heating oil were all higher. Copper and gold continued higher but at a lesser pace. Copper had been a leader in the risk on movement for commodities. The Bloomberg commodity index rallied 0.5% for the week, but is still down 0.6% YTD)

With all the peak inflation chatter, we have noticed gold has gained $102, or 5.6%, to begin the new year. Copper is up 11.6%, Aluminum 8.8%, Zinc 16.3%, and Tin 16.1%. Gasoline futures surged 4.4% this week to a two-month high. Yes, we know the weakening USD is part of the story, but ……

Copper Rally Continued

January 22 – 28, 2023


Weekly Commodity Highlights

  • Bloomberg Commodities Index increased 0.5% (down 0.6% y-t-d).
  • Spot Gold added 0.3% to $1,926 (up 5.6%).
  • Silver fell 1.4% to $23.93 (unchanged).
  • WTI crude rose $1.78 to $81.64 (up 1.7%). Gasoline jumped 4.4% (up 8%),
  • Natural Gas dropped another 7.2% to $3.17 (down 29%).
  • Copper gained 0.8% (up 12%). Wheat slipped 0.3% (down 6%),
  • Corn increased 0.2% (unchanged).
  • Bitcoin rallied $2,800, or 14.2%, this week to $22,630 (up 36.6%).

Weekend January 20, 2022




  • On Friday three-month copper on the LME slipped 0.7% to $9,245 a tonne in official open-outcry trading, taking its gains to about 1% for this week and is up 11.6% to start the New Year, seven-month highs with the prospect of improving Chinese demand.
  • Shanghai Futures Exchange copper closed 0.1% up at 70,420 yuan ($10,399.47) a tonne, with a weekly gain of 2.3%. The exchange was closed for trading on Friday evening and next week because of the Lunar New Year holidays.
  • SHFE copper inventories jumped 36.6% to 139,967 tonnes on Friday.
  • The risk is clearly the potential for some extremely negative Covid news from China after potential virus swarms at the lunar new year festivities.
  • The precipitous slide in the US dollar adds additional optimism toward many commodities.
  • China’s December imports of unwrought copper and copper ores & concentrates saw declines from
  • Chinese government eased curbs on property and developer borrowing at the same time they have “vowed” to boost domestic prospecting of strategic minerals and energies. The Chinese government moved to relax extremely stringent “3 red lines” policy that was directed at the Chinese real estate sector.
  • Peruvian copper production rose 15.3% in November from year ago levels.
  • Chile, the world’s top copper producer, saw production fall 6.9% in November to 449,000 tonnes.
  • While daily Chinese infection numbers are highly suspect following the government’s decision to stop releasing the numbers, the World Health Organization yesterday indicated that new cases in the last 24 hours reached 37,017.
  • Markets are so far ignoring surging infections in Chinese equity markets, global commodity markets and most specifically in copper.
  • We watch for negative Chinese contractions in broad-based industrial measures compounded by the surging Covid crisis and could be compounded by the upcoming Chinese lunar new year holiday.
  • Fitch Solutions revised up its copper price forecast to $8,500 a tonne in 2023 from $8,400, as demand edges higher alongside a comparatively weaker supply outlook.
  • Commodity trader Trafigura and Goldman Sachs last year both warned that global copper stocks have fallen to record lows with current inventories enough to supply world consumption for just 4.9 days
  • Glencore estimates a supply shortfall of 50 million tonnes in 2023.
  • Analysts at Goldman Sachs Group Inc. predict copper will hit a record high of $11,000 a ton within 12 months, while BNP Paribas says prices will drop to $6,465 a ton by the middle of next year as the market swings into a huge surplus.


Copper followed through with its break to the upside out of the pennant through the 50wma after it rebounded sharply off the tenkan and failed three times there in the past month. The flattening Weekly Kijun acted as a magnet with the cloud twist. We closed right at the bottom of the previous bull flag from 2021. Copper had been a leader in the risk on movement for commodities.

Weekly Copper Outlook
Copper Supply Crunch

Precious Metals

  • Spot Gold rose 2.3% to $1,866 (up 3.8%).
  • Silver slipped 0.5% to $23.83 (up 6.5%).



  • Feb gold futures gained $4.30 to settle at $1,928.20 Friday as a softer U.S. dollar helped bolster precious metals prices. Gold rose to its highest since April 22 at $1,937.49 earlier in the session. Prices are up 0.3% this week.
  • Chinese November net gold imports through Hong Kong declined by roughly 10% versus October and reached a 6-month low. 
  • Indian gold jewelry retailers are projected to see revenues jump by as much as 25% this fiscal year reportedly because of rising disposable incomes and pent-up demand from the Covid period.
  • Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion and dent its appeal, and vice versa.

“China reported an increase in its gold reserves for a second straight month, topping up holdings again after its first reported purchase in more than three years. The People’s Bank of China raised its holdings by 30 tons in December… This follows November’s addition of 32 tons, and brings the nation’s holdings to a total of 2,010 tons. Central bank purchases of bullion hit a record in the third quarter of last year at almost 400 tons, with only a quarter going to publicly identified institutions…”

January 6 – Bloomberg (Sing Yee Ong)

“China’s central bank said… it had added 32 tonnes of gold worth around $1.8 billion to its reserves, the first time it has disclosed an increase since September 2019. The additions bring China’s reported holdings at the end of November to 1,980 tonnes, worth around $112 billion. China has the world’s sixth-largest official national gold reserves after countries including Russia, Germany and the United States, which is the biggest with 8,133.5 tonnes… The World Gold Council (WGC) said last month that central banks globally bought 399 tonnes of gold in the third quarter of 2022, by far the most ever in a single three-month period.”

December 7 – Reuters (Peter Hobson and Siyi Liu):

“Central banks bought a record 399 tonnes of gold worth around $20 billion in the third quarter of 2022, helping to lift global demand for the metal, the World Gold Council (WGC) said… Demand for gold was also strong from jewelers and buyers of gold bars and coins, the WGC said in its latest quarterly report, but exchange traded funds (ETFs) storing bullion for investors shrank… Buying by central banks in the third quarter far exceeded the previous quarterly record in data stretching back to 2000 and took their purchases for the year to September to 673 tonnes, more than the total purchases in any full year since 1967…”

November 1 – Reuters (Peter Hobson):


Gold Weekly

Gold futures successfully back tested the median after another rejection at the Tenkan (orange) moved towards the flat cloud and twist. Needs to get impulse off this ABC so double bottom gains more weight and it follows silver break higher. The yellow metal is consolidating after it accelerated after breaking the weekly triangle higher. Gold has bounced after support at its uptrend line since the August 2021 bottom and Kijun. To be bullish we need to stay above the triangle. Murrey Math resistance, watch Fibs & Chikou.

PBOC Buying Gold

  • PBOC in November added 32 tonnes of gold worth around $1.8 billion to its reserves, the first time it has disclosed an increase since September 2019.
  • PBOC in December added to its gold reserves for a second straight month, adding 30 tonnes of gold worth. Brings China’s holdings to a total of 2,010 tons.
  • China has the world’s sixth-largest official national gold reserves after countries including Russia, Germany and the United States, which is the biggest with 8,133.5 tonnes
  • The World Gold Council (WGC) said in October that central banks globally bought 399 tonnes of gold in the third quarter of 2022, by far the most ever in a single three-month period.
Gold in Perspective



  • March silver rose 0.3% to $23.90 per ounce Friday
  • Platinum gained 0.8% to $1,040.50, while palladium dipped 1.7% to $1,725.04, both metals having a second consecutive weekly fall.
  • The sharp gains in gold and sharp declines in the dollar have been a major component of this week’s modest recovery in silver, from risk-on sentiment in the marketplace.
  • Not surprisingly, the swift gains in silver resulted in a very aggressive corrective setback with investors above $24.00.
  • Signs of low supply have supported prices, as New York’s COMEX inventories fell 70% in the last 18 months to just over 1 million tonnes. London Bullion Market Association stockpiles fell for the 10th straight month to a record-low 27.1 thousand tonnes in November.


Silver Weekly Outlook

Silver bounced off the bottom trend line and was energizes in the sphere of influence. Back over 50wma after spitting tenkan, now providing support after reversed. Closing under outer channel which is now resistance. Major support is 50wma and tenkan.

Industrial Metals

The London Metal Exchange at the end of 2022 showed the smallest available warehouse stockpiles in at least 25 years. Available inventories of aluminum fell 72% decline, zinc shrank by 90%.



  • Alcoa reported Q4 earnings this week. a second consecutive quarterly loss as expected and missed on revenue. The company has been squeezed by higher energy and raw material costs and restructuring charges putting pressure on margins.
  • $AA projects 2023 total alumina shipments of 12.7-12.9 million metric tons and aluminum shipments between 2.5-2.6 million metric tons. $AA traded down 5.5% after the release.
  • LME aluminium futures rose 1% io $2,613 a tonne Friday trading. prices are the highest since June 2022, up more than 9% since the beginning of 2023 on prospects of more robust demand and fears of supply shortages.
  • LME tin advanced 1.8% to $29,315 Friday while zinc eased 0.9% to $3,425, nickel dropped 1.9% to $28,800 and lead was little changed at $2,143.
  • Aluminum is down roughly 40% from a record high of approximately $4,000 in March amid persistent fears of a demand-sapping global recession triggered by an aggressive tightening campaign from major central banks.
  • Several output cuts at key European smelters last year due to a surge in electricity prices, including Alcoa’s San Ciprian smelter and Hydro’s plant in Slovakia.
  • Global inventories now stand at just 1.4 million tons, down 900,000 tons from a year ago and the lowest since 2002.
  • Aluminum hit an all-time high of around 4,100 USD/T in March 2022 in the aftermath of Russia’s invasion of Ukraine.
  • In 2022 Aluminum and zinc on the LME had their worst year since 2018, with prices down 15% and 16%, respectively.
  • Tin was the worst performer, falling by more than a third and registered the biggest annual decline since at least 1990.
  • The world’s top aluminium producer, China’s primary aluminium production in November climbed 9.4% from a year earlier with 3.41 million tonnes as looser power restrictions allowed some regions to ramp up output and as new smelters started operation.
  • China is the biggest producer, accounting for 60% of production, followed by Russia and then Europe and the U.S.
  • On the supply side, LME has decided against banning Russian metal from trading and storing in its warehouses because many traders are still planning to buy the metal in 2023.
  • The car industry is the world’s largest aluminum consumer, with nearly 67 million vehicles per year, according to SkyQuest.

Technical (Alcoa)

We analyze Alcoa as a surrogate to Aluminum given its high beta relationship and more liquid aspect as an investment vehicle. $AA is back retesting the 50Wma and 50% confluence after earnings. From there the Chikou rebalanced it closed at the tenkan. We have support below at 2/8 sphere of influence under the tenkan confluence.


Agricultural Commodities


Lumber prices were a leading indicator of the supply-chain problems and inflation that followed pandemic lockdowns. They are a leading indicator for the strength of the home building industry.

The CME is attempting the replace the random length with the physical futures, but they have yet to achieve the critical mass necessary for success.

The existing legacy contract is freight on board (FOB) originating in Prince George, BC. It’s a reflection of the mill price of western spruce pine fir lumber, which legacy 110,000 board feet futures contract is derived from. The new mini lumber is FOB Chicago, so the premium of $105 represents the additional from delivering to the mill in Chicago. That’s the reason the premium in the mini. Secondly, the new contract has the ability for producers to deliver western SPF, eastern SPF, domestic and Canadian Doug Fir, and U.S. Hem Fir. Depending on the species and delivering mill, the FOB is anywhere from $80 to $105 premium to the legacy contract delivered to Chicago. Lastly, the new contract is sunset out of existence with the official and permanent expiration on May 15, 2023.

Greg Kuta, the President of Westline Capital Strategies,


  • Lumber futures were the best performing future in the second week of 2023, gaining 18.01%. This is line with our short squeeze thesis. These prices bounced after they have collapsed since high in early March giving back all of the 2021 and 2022 rally and some its lowest levels since June 2020.
  • Worth noting that before 2018, the price never eclipsed $493.50.
  • In January 2023, nearby March random-length lumber futures were sitting at the $417.70 level, with the new physical futures at $525.00.
  • Chicago lumber futures had fallen under the psychological $400 per thousand board feet mark, down more than 68% year-to-date and is off 79% from its record high reached in May 2021, as higher interest rates continued to depress real estate activity.
  • In March 2020, random-length lumber futures fell to $251.50 per 1,000 board feet as the global pandemic gripped markets across all asset classes. When commodities exploded higher over the following months lumber rose to $1,711.20 as supply chain and other issues created a shortage. In an almost perfect bullish storm for the lumber market, historically low interest rates caused a housing boom, increasing the demand for lumber when supplies were low. 
  • The Federal Reserve’s aggressive tightening cycle has briefly pushed 30-year mortgage rates to levels not seen since 2001, leading to slower home construction and souring sentiment among homebuilders.
  • The price keeps drifting lower despite expectations low inventories and diminished production have put a floor under prices.
  • The war in Ukraine and the tightening sanctions against Russia and its ally Belarus, which account for more than 10% of the global export of lumber, had squeezed global supplies.
  • Sawmill curtailments, with Interfor, Canfor, and West Fraser Timber announcing cutbacks, added to concerns about tight supplies.
  • On-the-spot wood prices have plunged, too. Pricing service Random Lengths said Friday that its framing composite index, which tracks cash sales is down from $1,334 in March, just before the Federal Reserve raised interest rates for the first time since 2018.
Lumber Futures




  • Wheat hanging in the along the bottom, all 3 classes of wheat closed higher Friday.
  • Old crop wheat exports at 17 mil. bu. were above expectations. YTD commitments are down 6% from YA, vs. the USDA forecast of down 3%.
  • The FF survey shows all 2023 wheat acres at 48.8 mil. up 7% from YA, the highest since 2016. They place winter wheat acres at only 34.9 mil., well below last week’s USDA forecast of 37.0 mil.
  • They estimate Spring wheat acres at 13.9 mil. up 12% from YA.
  • Selling tends to let up under $7.25 basis Mch-23 Chicago. Same with KC Mch-23 at $8.25, and $9.00 for Mch-23 MGEX.
  • Rallies capped by huge Russian supplies limiting US exports and higher than expected US winter wheat acres.
  • Ukraine’s agriculture ministry reported that the country’s 2022 wheat and barley harvests have now concluded, with respective production totals of 742.2 million and 266.4 million bushels. Ukraine is a significant exporter of both commodities.
  • Officials confirmed Egypt has purchased 4.4 million bushels of wheat from Russia. The grain is divided into two equally sized consignments that will be shipped between February 10 and February 25.
  • Australian wheat production was seen reaching record levels of around 1.543 billion bushels as harvest begins to wrap up. Recent rains increased yield potential but lowered quality in some fields, which now may be used as animal feed, according to one Sydney-based trader.
  • The harvest for top exporter Russia was the highest on record in the current marketing year, extending competition into North America.



Wheat lurched lower this week after last week’s close under the breakup level in August and 0/8 giving back up the whole October rally. Resistance is now the tenkan and the 50 and 61.8% Fibs. It had been drawn higher by the flat weekly cloud and supported by 0/8 which held. The contract keeps failing to stabilize after it continued its sharp impulsive collapse. This came about after a failure at retesting the 8/8 move and high after it spat 8/8, and the minimum target. It had completed a measured 4/8 correction off highs then broke key support at 38% then 50% and 50wma confluence in the freefall.



  • Prices were mixed with all contracts closing within $.01 of unchanged.
  • Lack of rainfall in Argentina, the world’s largest exporter of soybean oil and meal and the third-largest exporter of corn, has slowed the planting of its current corn and soybean crops and nearly halved its wheat output.
  • The Buenos Aires grains exchange on Thursday (1/18/23) cut its estimate for Argentina’s 2022/2023 corn harvest to 44.5 million tonnes, after the country’s agricultural areas were hit by drought, down from the 52 million tonnes it collected last cycle.
  • Corn planting advanced to 88.6% of an expected area of 7.1 hectares, while soybean planting advanced to 95.5% of the 16.2 hectare area forecast by the exchange, it added.
  • Moisture across the bulk of Brazil is expected to be normal with no major early harvest delays. Mch-23 briefly violated support at its 100 day MA, intra-day, however closed back above it.
  • Export sales were strong at 45 mil. bu of old crop, the highest since late Nov-22. YTD commitments are still down 46% from YA, vs. the revised USDA forecast of down 22%.
  • The FF survey projects 2023 corn areas at 90.5 mil. acres up from 88.6 mil. acres in 2022, however below the USDA baseline est. 92 mil. The smaller increase in corn acres attributed to a bigger jump in wheat plantings last fall. Cattle of feed was generally in line with expectations.
  • Ukrainian farmers have harvested 85% of the expected area through January 12, according to the country’s agriculture ministry. That brings production up to 925.2 million bushels so far. Total grain production is expected to decline by more than 40% this season.


Corn Futures Outlook

Corn failed to hold last week’s price action failing towards the Kijun after a 7/8 fail to close under the weekly cloud and under the 50wma. Earlier in the year Corn had topped out at the highest since 2012 in Chicago at +1/8 and corrected with impulse back to break the Tenkan which it swiftly did a spit of a spit after bouncing off 720, which also the price successfully retested the high from April 2021. From here we saw Tenkan fail again. Which is back where we are.



  • The soybean complex closed lower across the board Friday.
  • The BAGE estimated Argentine soybean plantings at 96%, up from 89% last week. Ratings slipped again with 3% G/E, down from 4% LW and 29% YA. 60% of the crop is poor/VP, up from 56% LW and 30% YA. Their production forecast remains at 41 mmt, vs. USDA at 45.5 mmt.
  • If we assume the BAGE production figure of 41 mmt, holding everything else steady, global soybean production would still be a record at 383.5 mmt, up 15 mmt (4%) from the previous record in 20/21.
  • Products down hard resulting in crush margins sharply lower for the 2nd consecutive Friday. Spot board crush margins closed under $2.00 for the first time in 6 months.
  • Old crop soybean exports were strong at 36 mil. bu, the USDA announced the sale of 220k tons (8 mil. bu.) of soybeans to an unknown buyer. YTD soybean commitments are up 5% from YA, vs. the revised USDA forecast of down 8%.
  • Soybean meal sales at 363k tons were above expectations. Virtually no new soybean oil sales, as expected.
  • Chinese customs data show final 2022 soybean imports at 91.1 mmt, down 6% from 2021. Imports from Brazil were 54.4 mmt down 6%. Imports from the US at 29 mmt were down 10%.
  • A survey of US farmers by Farm Futures projects 2023 soybean acres at 88.9 mil. acres up from 87.45 mil. in 2022 and well above the USDA baseline est. of 87 mil. acres in Nov-22.


Soybeans Weekly Outlook

Soybeans after it rejected new lows at the bottom of trendline finally got the legs to break above the 50wma. The 50 wma and the tenkan are both under the Kijun providing heavy resistance. We sit near the January breakup. The weekly cloud and Murray mingle around the $14.9/bushel benchmark.

Recall beans broke down from the bull pennant framed by +4/8 and +1/8 with the Kijun unable to sustain support right at the breakout. Support at the 50wma gave way to under the futures pivot at $15/bushel benchmarks and at the close of the week was a magnet to the recovery bounce. Pressure came from futures spitting the Weekly +4/8 over $17.50/bushel three times. The market needs to rebalance that energy.


For complete Oil and Natural Gas Coverage please visit our dedicated publications ‘Around the Barrel’ and ‘Into the Vortex.’ – Weekly Analysis and Outlook for Energy Traders and Investors

WTI Weekly KnovaWave Shape
US Natural Gas KnovaWave Weekly Grid

BDI Freight Index

Baltic Dry Index Weekly

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