According to the Vietnam Commodity Exchange (MXV), as of the close of trading yesterday (June 6), the global raw commodity market was overwhelmingly positive. Most commodities saw price increases, which supported a significant rise in the MXV-Index, up 1.86% to 2,315 points, the highest in a week.

ECB Cuts Interest Rates, Oil Prices Continue to Rise

As of June 6, oil prices extended their gains for the second consecutive day. WTI crude oil rose by 2% to $75.55 per barrel, while Brent crude increased by 1.86% to $79.87 per barrel. MXV reported that the rise in oil prices was primarily supported by market optimism regarding the European Central Bank's (ECB) decision to cut interest rates.

At the end of its two-day meeting, the European Central Bank (ECB) decided to lower interest rates to 4.25% from 4.5%, marking its first rate cut since September 2019. Following this, the Danish Central Bank also reduced its benchmark rate by 25 basis points to 3.35%.

This decision has bolstered market optimism that the U.S. Federal Reserve (FED) may take similar action around September to prevent an economic downturn. The growth forecast for the Eurozone in 2024 has been revised up to 0.9% from the previous 0.6%, enhancing the outlook for oil demand and supporting higher oil prices.

Despite a significant drop in oil prices after the OPEC+ meeting, due to expectations of a return of 2.2 million barrels per day from voluntary production cuts starting in Q4 2024, Saudi Energy Minister indicated that OPEC+ might pause or reverse the production increase if the market does not behave as anticipated.

Russian Deputy Prime Minister Alexander Novak also suggested that adjustments to the agreement might be necessary, attributing the price drop to market misunderstandings and speculative factors. The risk of OPEC+ reversing its decision and tightening oil supply at the end of the year has driven renewed buying interest.

Additionally, a report of an explosion in the Red Sea, near the Yemeni port city of Mokha, has added geopolitical risk to the oil market.

Metals Surge Due to Macro and Supply-Demand Factors

At the close of trading on June 6, the metals market saw a broad-based increase. Among precious metals, silver led the gains with a 4.3% rise to $31.36 per ounce, marking its strongest increase in over a week. Platinum also saw a notable increase of 1.13%, reaching $1,011.60 per ounce.

Similar to crude oil, the metals market received strong buying support due to expectations that the FED will cut rates soon after the ECB's long-awaited rate reduction.

Additionally, recent U.S. labor market data showed weakness, with jobless claims reaching a one-month high and job openings dropping to their lowest in over three years. Analysts believe that the FED will need to cut rates by the end of the year to prevent a "hard landing" for the economy.

In the base metals sector, industrial raw materials also saw a significant recovery due to combined macroeconomic and supply-demand factors. At the close, COMEX copper prices increased by 1.56%, while iron ore prices rebounded by 1.74% to $108.65 per ton, ending a five-day losing streak.

China's National Energy Administration announced that the country will accelerate its electrical transmission projects, aiming to complete 37 major transmission lines and start construction on 33 additional lines by the end of the year, to keep up with a record boom in renewable energy.

Additionally, expectations that Chinese steel mills will increase their inventory of raw materials ahead of the holiday period were a key factor driving iron ore purchases in yesterday's session.

Analysts noted that steel producers typically ramp up iron ore stockpiles at ports ahead of the Dragon Boat Festival, which falls on June 8-10 this year. Data from Mysteel also indicated that iron ore inventories at major Chinese ports had increased by 35% year-on-year to 1.17 million tons as of Wednesday (June 5).

Source: MXV