Commodity Snapshot
Oil prices fell in cautious trading on Tuesday due to the Federal Reserve’s decision on U.S. interest rates and expectations of higher crude oil exports from Russia amid ongoing drone attacks on refineries. Crude oil futures rose to their highest level since late October, driven by lower exports from Saudi Arabia and Iraq and stronger demand in China and the U.S. WTI crude futures held above $82 per barrel.
However, increased Russian exports following Ukrainian attacks on Ukraine’s oil infrastructure put downward pressure on prices. Morgan Stanley raised its Brent oil price forecasts by $10 per barrel to $90 for the third-quarter of 2024, and its first-quarter and second-quarter forecasts to $85 per barrel and $87.5 per barrel, respectively.
UBS reports a significant rise in open interest in Brent, reaching its highest level since November 2021. The increase in the U.S. oil benchmark WTI has been moderate. Factors supporting the return of financial investors’ interest in crude oil include Brent’s expected $80-90/bbl range this year, and the bank advises investors with high risk tolerance to sell Brent’s downside price risks or add exposure to longer-dated Brent oil contracts.
Spot gold prices were trading lower against a stronger dollar as markets prepared for central bank meetings and FOMC Chairman Jerome Powell’s speech. Investors adjusted expectations of Fed cuts this year, with markets expecting no change in interest rates at the Fed’s two-day policy meeting. Gold is considered a hedge against inflation, but rising interest rates dull its appeal. Spot gold was down -0.31% to $2,153.21 an ounce by 6 am ET.
Agriculture commodities like soybean and wheat are trading lower, while cocoa futures gain. Ukraine’s Agriculture Ministry reports a 9.4% YoY decline in grain exports to 32.4mt as of 18 March, with wheat exports up 5% YoY and corn shipments down 17% YoY.
Stocks to watch: Profire Energy (PFIE) +8%, Permian Basin Royalty Trust (PBT) +7%, YPF ADR (YPF) +7%, Hallador Energy Co (HNRG) -10%, Cross Timbers Royalty Trust (CRT) -9%, Lithium Americas (NewCo) (LAC) -11%, Sibanye Stillwater Limited ADR (SBSW) -8%. Caledonia Mining Corporation Plc (CMCL) -7%.
Recent Commodity Price Movements
Energy
Crude oil (CL1:COM) -0.25% to $82.51.
Natural Gas (NG1:COM) +0.89% to $1.72.
Metals
Palladium (XPDUSD:CUR) -3.33% to $997.75.
Platinum (XPTUSD:CUR) -1.19% to $901.65.
Copper (HG1:COM) -1.25% to $4.06.
Agriculture
Corn (C_1:COM) -0.12% to $435.46.
Wheat (W_1:COM) -0.42% to $540.46.
Cotton (CT1:COM) -1.12% to $93.51.
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Spot gold was trading -0.3% lower at $2,176.89 an ounce as markets awaited the release of U.S. CPI data, which could influence the Federal Reserve’s policy path. A hotter-than-expected reading could delay the central bank’s easing cycle. Low interest rates help bullion by reducing the opportunity cost of holding the zero-yielding asset. A mixed tone prevailed across commodity sectors, with China’s economic growth concerns affecting bulks and supply concerns supporting industrial metals. Commodity Snapshot Commodity Snapshot Commodity Snapshot
Natural gas and crude oil prices were trading in the green, while oil prices fell earlier due to persistent demand concerns in China. NS Trading president Hiroyuki Kikukawa said that concerns over weak demand in China outweighed the extension of supply cuts by OPEC+. Mixed US jobs data prompted some traders to adjust positions. However, losses will be capped by increased geopolitical risk, with the possibility of a ceasefire in the Hamas-Israel war and conflict expansion in Russia and its neighbors. Europe remains the most impacted region, as oil product shipments from Asia have fallen since January. OPEC+’s voluntary production cut agreement could tighten the market as demand recovers from its seasonal lull.
Natural gas and crude oil prices were trading in the green, while oil prices fell earlier due to persistent demand concerns in China. NS Trading president Hiroyuki Kikukawa said that concerns over weak demand in China outweighed the extension of supply cuts by OPEC+. Mixed US jobs data prompted some traders to adjust positions. However, losses will be capped by increased geopolitical risk, with the possibility of a ceasefire in the Hamas-Israel war and conflict expansion in Russia and its neighbors. Europe remains the most impacted region, as oil product shipments from Asia have fallen since January. OPEC+’s voluntary production cut agreement could tighten the market as demand recovers from its seasonal lull.
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