Commodities: Metals buoyed by stronger than expected Chinese price data

Commodities were well bid as higher-than-expected factory price data out of China referencing the month of December boosted the price of many metals.

Factory gate prices in China blew past forecasts in December - helped by higher industrial commodity prices - news of which pushed copper futures up by 2.92% to $2.6125 a pound on COMEX as of 2112 GMT.

Gold futures on COMEX were also slightly higher, rising by 0.16% to $1,186.80/oz. despite a tick higher in the US dollar.

As of 2036 GMT Bloomberg's commodity index was higher by 0.59% to 86.85, while the spot US dollar index was edging higher by 0.09% to 102.02.

On a related note, in a research note sent to clients analysts at Citi said the price of the yellow metal should be lower than where it was at currently.

"A simple market based regression model using these drivers suggest significant downside to gold ahead. And interestingly, dissecting these drivers shows that whilst USD and 1y1y rates have contributed negatively to fair value estimates, there is a large residual/unknown driver pulling the other way.

"Perhaps investors are holding the yellow metal as an uncertainty hedge (can Trump deliver, upcoming politics, China, Brexit etc.) or maybe as an inflation hedge? Thoughts welcome."

The energy corner on the other hand was bathed in red, at least outside of natural gas.

Front month Brent crude futures were down by 2.42% to $53.64 while West Texas Intermediate was down by 2.3% to $50.79 a barrel on the ICE.

To take note of, in its latest short-term energy outlook the Energy Information Administration forecast US crude oil production would rise from 8.9m barrels a day in 2016 to 9.0m b/d in 2017 and 9.3m b/d in 2018.

As an aside, analysts at Citi commented: "WTI is expected to remain under pressure near-term with Cushing (where WTI is priced) inventories now just 750-k bbl off the peak storage of 68.3-m bbls hit in May-16 and turnarounds starting soon. This raises the specter of Cushing closing in on capacity constraints and WTI spreads buckling, compounding the bearish impacts of index rebalancing at the start of the year."

February 2017 natural gas on NYMEX on the other hand was up by 5.54% at $3.28/MMBtu..

Dry natural gas output on the other hand fell by 1.8 Bcf/d or 2.4% in 2016 from the year before, the IEA said in the same report, although increases to average output levels of 1.4 Bcf/d in 2017 and 2.8 Bcf/d in 2018 were expected.

As of 2036 GMT, Bloomberg's commodity index was higher by 0.59% to 86.85, while the spot US dollar index was edging higher by 0.09% to 102.02.