The CRB has just hit the 50% retracement of the late May 2018 highs to late Dec swing lows (and has breached the 200-D SMA) – That is significant, and when coupled with continued progress as far as Sino/US trade talks and supply side issues, the upside remains compelling.
The index has increased by 19.77 or 11.24% since the beginning of 2019 – (Historically, CRB Commodity Index reached an all-time high of 370.73 in April of 2011 and a record low of 155.53 in February of 2016). It currently sits around 187.70.
However, a lot of the make up of the index and its lofty heights is down to the price of oil which is on the verge of toppling the 61.8% retracement Fibo on the $63 handle for WTI while Brent, the global benchmark has breached $70bbls – (Petroleum-based products (based on their importance to global trade, always make up 33% of the weightings)).
Looking to ANZ Bank’s own commodity index, the ANZ China Commodity Index surged 1.5% on the back of a rally in commodity markets, where iron ore was up nearly 10%. “The energy sector rebounded strongly (+2.6%), driven by strong gains in oil. Agriculture and precious metals managed to eke out small gains, up 0.8% and 0.2% respectively. Industrials was the only sector to end the week lower (-1.1%).”
The analysts at ANZ had this to say about Crude oil prices:
“Prices rallied as better-than-expected economic data added to the already positive mood amid ongoing supply-side disruptions. Tension is rising in Libya, raising concerns of further disruptions to oil markets. After rebel leader, Khalifa Haftar, ordered his forces to advance on the capital Tripoli last week, the internationally recognised government said it would counterattack to clear these forces. Fighting has already commenced on the outskirts of Tripoli, with no sign of abating. While the fighting was away from the main oil fields, the risk of this expanding across the country is rising by the day. Sentiment on Friday was boosted by data that showed strong employment numbers in the US. This helped the market shrug off the biggest jump in drilling activity for a year. The number of drill rigs operating in the US rose by 15 to 831 last week, according to Baker Hughes data. The new rigs were concentrated in the Permian Basin.”