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21-04-2020

Commodities and World’s Economy


Yesterday History has been created. Oil Prices crashes to NEGATIVE -$37 in May
month future. Reason: Excess Supply and lack of storage in April with HUGE
LONG UNWINDING Prices for June Futures still trades above $18 USD. In
America inventory of crude is full and there is no place to store further crude oil.
And we cannot stop the production of crude oil. So, you can imagine it is very
panic situation in terms of growth and demand. No one was buying delivery in
NYMEX CRUDE WTI. Crude demand represents the growth of economy of any
country. Now we can observe that GDP of World (Avg. of all countries) is
shrinking and the economy of world is in deep trouble.

Fig. 1. WTI CRUDE May Fut. Contract at NYMEX

In India on MCX crude may Fut. Is trading 12 % down:

Fig. 2. Crude Prices may Fut. Contract at MCX


21-04-2020

Generally Traders, FII and Hedge Mutual funds take Hedged positions for safe
and minimising the loss. I mean when crude and equity fall then they buy GOLD.
Now We can observe crude is at historic LOW and Gold Prices are Historic Hight.
In international level (COMEX) gold is trading around $1700 and it can touch
1900-1950. In Indian market gold is trading around 46500.

Fig. 3. Gold Prices May contract at MCX


And price behaviour of gold is telling it can touch 50000 soon. Except gold no
other commodities are rising. Silver is trading in the range of 35000 to 45000.
Due to lock down demand of cement is almost zero. Now we can think how is
economy is going to do in future.

Fig. 4. Silver Prices July Fut. Contract at MCX

Dr. A. K. Pal
Prof. & Analyst(Data)
21-04-2020