If OPEC+ Doesn't Apply A Significant Supply Cut, Crude Oil Prices Could Go Down

What Can Affect Crude Oil Price This Week? OPEC+ Meets This Wednesday

ING Economics ING Economics 03.10.2022 13:20
Oil prices have started the week on a strong footing, with expectations that OPEC+ will announce a large supply cut when they meet on Wednesday. In addition, the European gas market is facing fresh supply disruptions due to Russia making further cuts in gas flows Energy- OPEC+ looking to cut output OPEC+ will meet in person on Wednesday to discuss output policy for November. And growing noise around what the group will do is pushing oil prices higher at the moment. There are growing expectations that the group will announce a large cut, with suggestions OPEC+ could agree on a reduction of more than 1MMbbls/d. This would be the biggest output cut seen from the group since the peak of Covid. However, if the group were to announce a reduction of around 1MMbbls/d, it is important to remember that the group is already producing well below their production targets and so the actual cut would likely be much smaller. There are only a handful of producers who are hitting their production targets and so it is likely that only these producers would have to make a cut. According to IEA numbers, OPEC+ output in August was 3.37MMbbls/d below target output. According to reports, Chinese consultant JLC has said that 15mt of refined product export quotas have been released to refiners. 13.25mt of quotas can apparently be used for clean product exports, whilst the remaining 1.75mt is for low sulfur fuel oil. In addition, it seems as though unused quotas will be able to be rolled over into the first quarter of next year. There has been plenty of market talk about Chinese refined export quotas but still no official confirmation from the government. There have been further European gas supply disruptions over the weekend. Gazprom has halted gas flows to Italy which come via Austria. Gazprom has blamed the stoppage on regulatory changes from Austria and stated that the grid operator did not confirm transport nominations. The Austrian government has said that Gazprom has not signed necessary contracts. Involved parties are apparently looking to fix the issue. In addition, Gazprom is also cutting gas flows to Moldova by 30%, blaming the reduction on Ukraine’s force majeure for gas transit through the Sokhranivka entry point. Furthermore, Gazprom has said that it has the right to terminate the current supply contract for Moldova at any time given that an agreement on the settlement of historic debts has not been reached.   Metals – zinc inventory withdrawals continue Both LME and SHFE zinc have continued to see large inventory withdrawals over the past few weeks. SHFE zinc stocks dropped by nearly 18.1kt over the last week to 37.7kt, whilst stocks over the third quarter have declined by nearly 100kt, reflecting some tightness in the physical market. Meanwhile, LME zinc stocks also fell by around 7.9kt over the last week to 53.6kt- the lowest levels in more than two years. These LME inventory declines have proved supportive for time spreads with the cash/3M spread spiking to a backwardation of US$46.25/t on Friday. Speculators increased their net bearish position in COMEX gold by another 8,334 lots over the last week, pushing their net short position to a fresh 3-year high of 41,300 lots as of 27 September. Meanwhile, investors also continued to liquidate their gold holdings with the total known ETF holdings falling by another 1.1m oz over the last week. ETF gold holdings have dropped by around 2.8m oz over September and around 7.3m oz over the third quarter. Investor demand for gold has dropped significantly over the last few months due to rising interest rates; however physical demand from both central banks and retail consumers continues to be healthy. Agriculture – USDA reports tighter corn stocks In its quarterly grains stocks report, the USDA reported US corn inventory stood at around 1.38b bushels as of 1 September; while this is higher than year ago levels of 1.24b bushels, the market was expecting an even higher number of around 1.5b bushels. The agency also reported that soybean inventories stood at around 274m bushels, which was above market expectation of around 243m bushels. As for wheat, the USDA estimated stocks at around 1.78b bushels, marginally lower than the 1.79b bushels that the market was expecting. Speculative net longs in both CBOT soybean and corn dropped over the last week due to the pessimistic economic environment. CFTC data shows that managed money net longs in CBOT soybean declined by 9,860 lots over the last week to 94,831 lots as of 27 September. Similarly, money managers trimmed their net long position in CBOT corn by 10,055 lots over the last week, leaving then to hold a net long of 237,854 lots. Read this article on THINK TagsZinc Russia-Ukraine OPEC+ Natural gas Grains Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The World’s Top Oil Exporter Expects Demand To Recover

Energy - Brent Crude Oil: What Could The Level Of $88 Mean?

Craig Erlam Craig Erlam 30.09.2022 16:51
Oil edges higher into the weekend Oil prices are rising again as we head into the weekend, with the focus now on the OPEC+ meeting next week. There’s been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices. A sizeable cut now looks on the cards; the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn. Not to mention how any cut would work considering the shortfall in output targets throughout this year. Brent continues to trade around the March to August lows having traded below here over the last week amid recession fear in the markets. We’re now seeing some resistance around $88, perhaps a sign that traders don’t believe OPEC+ will deliver a large enough cut to make a significant difference. Encouraging but maybe not sustainable Gold is making gains for a fourth consecutive day after a difficult start to the week. While the recovery has been encouraging, it’s hard to imagine it building on it in any significant way as that would probably require rate expectations to have peaked and inflation perhaps to have as well. While that may be the case, it’s hard to imagine pressure easing from here which may maintain pressure on the yellow metal for a little longer yet. Key resistance to the upside lies around $1,680 and $1,700, with $1,620 and $1,600 below being of interest. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil edges higher, gold rally continues - MarketPulseMarketPulse
Crude Oil Price:  A Crucial Event Takes Place In The Week Ahead

Crude Oil Price: A Crucial Event Takes Place In The Week Ahead

ING Economics ING Economics 30.09.2022 14:52
Next week all attention will be on OPEC+ as the group decides on output policy amid recent price weakness and the uncertain demand outlook. Meanwhile, the German government has announced a EUR200bn package due to surging energy prices, which includes a price cap for gas Source: Shutterstock Energy - Germany gas price cap There is increasing noise that OPEC+ will be looking to agree on an oil production cut at their meeting next week, given the broader pressure that we have seen on oil prices. However, since reports that Russia had proposed a 1MMbbls/d supply cut, there have been no suggestions from other members on the potential size of any cut. In August, OPEC+ production was estimated at around 3.37MMbbls/d below target production levels. So in reality, any cut in supply will likely be smaller than whatever figure the group announces. The latest refined product inventory data for the ARA region shows that total refined product stocks fell by 139kt over the week to 5.2mt according to Insights Global. All products saw declines with the exception of gasoil. Naphtha saw the largest fall with stocks decreasing by 144kt (or 33%) to 288kt. Although the reported decline seemed to have little impact on the naphtha crack. Meanwhile, for middle distillates, there was some relief with gasoil stocks increasing by 125kt over the week to 1.81mt. The German government yesterday announced a EUR200bn package to address surging energy prices. Part of the package will include a price cap on natural gas with further details expected to be released next month. It is planned that these measures would run through until the spring of 2024. A price cap on gas is a questionable approach, as it will do little to ensure that we see the necessary demand destruction, particularly if Russian gas flows come to a complete halt. Interestingly, Germany’s network regulator yesterday also warned that natural gas consumption was above average last week - coming in 14.5% above the 2018-2021 average. Metals – LME discussing a ban on Russian metals LME nickel and aluminium both spiked higher yesterday after it emerged that the LME is discussing potential plans to ban Russian metals for delivery into exchange warehouses. The LME is looking to launch a discussion paper on the acceptance of Russian metals in exchange warehouses which could potentially lead to tighter restrictions on the delivery of Russian metals. This is purely a discussion for now and no decision has been made yet. Providing further support to LME metals yesterday was the softer USD. However, sentiment across broader financial markets remains negative given concerns over the macro outlook. Glencore is reportedly reviewing the sustainability of operations at its Portovesme lead production plant in Italy as high-power prices affect profitability. The company suspended primary zinc production at the plant last year due to high power prices, although zinc recycling and lead production continued. Glencore produced around 159kt of lead in 2021 from its three facilities in Europe including Portovesme, although exact details of lead production from the plant are not known. Read this article on THINK TagsRussian metals OPEC+ LME Gas price cap Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Oil Is An Indicator Of The Health Of The Global Economy

Platinum Weighed Down By A Strong US Dollar, Wheat Supported By Supply Concerns, RBOB Gasoline On The Rise Again

Rebecca Duthie Rebecca Duthie 29.09.2022 15:26
Summary: 2022 has seen platinum prices drop 10.71%. Wheat futures close to 3-month highs. RBOB Gasoline rises after 100 days of declines. Platinum futures under pressure from strong US Dollar Since the start of 2022, platinum prices have dropped by 103.12 USD/t oz., or 10.71%, according to trading on a contract for difference (CFD) that monitors the benchmark market for this commodity. Gold, silver, platinum, and palladium were all affected negatively by the surging US dollar (DXY), which rose to new 20-year highs on Wednesday morning. As demand from the Chinese automobile industry remained poor and is now being further pushed by a rising dollar, platinum fell 1.1% to $838 per troy ounce (DXY). Additionally down 1.4% to $2,056 per troy ounce was palladium. Platinum Jan ‘23 Futures Price Chart Concerns around a wheat shortage driving prices As fresh escalation threats about the Russian invasion of Ukraine stoked concerns about a shortage, Chicago wheat futures increased and came close to reaching the nearly three-month high from late September. Shortly before holding referendums to join Russia in four regions of Ukraine, President Putin ordered Russia's first military mobilization since World War II. Concerns were raised about Moscow's ability to halt the UN-negotiated safe trade route from Ukrainian Black Sea ports, which would eliminate the newly resumed supply from one of the world's largest wheat exporters and producers. News that increased export levies from the Kremlin would restrict sales of the nation's record harvest this marketing year contributed to further price increases. Chicago Dec ‘22 Wheat Futures Price Chart RBOB Gasoline futures In response to a hurricane barreling into Florida, President Joe Biden issued a warning to oil corporations not to raise gasoline prices. This is the second time this week that he has expressed concern over rising pump costs. Regular gasoline is becoming more expensive on average in the United States. After falling for nearly 100 consecutive days throughout the summer driving season, the price has now started to rise once more. RBOB Gasoline Oct ‘22 Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com, capital.com
Brent And WTI Crude Oil Prices Flirting With $80 Level, Nord Stream Sabotaged

Brent And WTI Crude Oil Prices Trading Near $90 And $80 Levels Respectively, Nord Stream Sabotaged

Craig Erlam Craig Erlam 28.09.2022 14:45
Oil rebound brief as gas spikes amid sabotage on Nord Stream pipelines Oil prices rebounded on Tuesday but that proved to be only a brief correction as economic doom and gloom has driven them lower again this morning. With Brent trading only a little above $80 and WTI below, you have to wonder how much more OPEC+ will tolerate and the size of output cut they may be considering next week in light of the new economic outlook and price. Read more: Tim Moe (Goldman Sachs) Comments On USD And Turbulent Times For Markets In General, Ole Hansen (Saxo)Talks Nord Stream | FXMAG.COM Gas prices have also been highly volatile in light of the latest developments on Nord Stream One and Two. While the latter was never likely to come online and the former unlikely as flows have been gradually reduced to zero over the course of the year, the apparent act of sabotage on both kills any hope of additional gas along those routes. The question for many is therefore what the sabotage sought to achieve, occurring around the inauguration of a pipeline that will deliver Norwegian gas to Poland. Gold slipping again on a stronger dollar Gold is falling again as yields rise and the dollar rallies once more on Wednesday. The yellow metal has been hammered by the repricing of interest rate expectations recently and is now threatening to break below $1,620, with support next appearing around $1,600. It’s now fallen more than 20% from its highs this year and could have further to go yet before we see peak inflation and rates priced into the market. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil pares gains, gold loses ground - MarketPulseMarketPulse
Oil trades around USD 100, gold edges higher

WTI Crude Oil Touching January Lows, Palladium Futures Reaching Highest Level In 4-weeks, Coffee Futures

Rebecca Duthie Rebecca Duthie 28.09.2022 11:45
Summary: Likelihood of a worldwide recession that might harm energy consumption. Palladium prices are 30% lower than they were in March. The drawback is that continued upward momentum has been constrained by a generally stronger dollar. WTI Crude Oil touching January lows On Wednesday, WTI crude futures declined toward $77 per barrel, returning to their lowest levels since early January, as worries that OPEC+ may further restrict supply were countered by a strengthening currency and increasing US petroleum inventories. After a White House official ruled out a currency deal among major nations to reduce the dollar, the dollar index soared to a fresh 20-year high. Prior to the release of official figures later on Wednesday, industry data revealed that the US crude stockpiles increased by over 4 million barrels last week. With aggressive monetary tightening increasing the likelihood of a worldwide recession that might harm energy consumption, oil prices have been under intense selling pressure since June and are expected to report their first quarterly loss in more than two years. While this was going on, dramatic drops in oil prices fueled rumors that OPEC+ might reduce output to stop the decline. Moscow reportedly urged the cartel to reduce production by approximately 1 million barrels per day. WTI Crude Oil Futures Price Chart Palladium touching 4-week highs As the dollar index deviated from 20-year highs, palladium futures increased their gains to $2,200 per ounce, the highest level in almost four weeks. Nevertheless, in spite of rising interest rates and slowing GDP, palladium prices are 30% lower than they were in March. It is anticipated that central banks would keep raising interest rates to keep inflation from soaring even when the economy is slowing. Furthermore, despite the price increase and supply chain disruptions, demand for palladium, which is used in auto catalysts for gasoline-powered vehicles, has not yet returned to its pre-pandemic levels. However, there is still a shortfall on the palladium market. Palladium Futures Price Chart Coffee futures Due to limited supply, Arabica coffee futures on ICE increased their gains from a one-month low reached on September 16th. While Brazilian crop agency Conab reduced its 2022 arabica coffee production estimate from May's projection of 35.71 million bags to 32.41 million 60kg bags, as adverse weather curbed coffee yields, posing risks for next year's production, new data showed ICE-certified arabica stocks fell to a fresh 23-year low of 460,387 bags. At the same time, exports of coffee from Colombia, the second-largest producer of arabica beans in the world, decreased 7% during the first seven months of the year and plunged 21% year over year in August. The drawback is that continued upward momentum has been constrained by a generally stronger dollar. Coffee Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com
Japan's Prime Minister Tested Covid Positive. Gazprom Confirmed Gas Shipment Would Be Stopped!

NGAS Touching 2-month Lows, Cotton Futures Down, Gold Sitting At Lowest Level In 2.5 Years

Rebecca Duthie Rebecca Duthie 27.09.2022 10:27
Summary: Natural gas futures are still up around 100% for the year. Cotton futures were trading at levels last seen in July 2021. The price of gold is still close to its lowest levels in 2.5 years. Larger-than-expected storage build driving NGAS prices down Under pressure from a larger-than-expected storage build, natural gas futures reached a bottom below a level not seen in two months. According to the most recent EIA data, US utilities put 103 billion cubic feet (bcf) of natural gas underground storage, significantly more than the median estimate of 93 bcf. Due to high domestic output levels and prospects for better weather through early October, prices were already under pressure. Expectations that demand would decrease even further in October when the Cove Point liquefied natural gas (LNG) plant in Maryland shuts down for maintenance added to the pessimistic picture. Due to the strong demand for US LNG exports and the rising prices of natural gas in Europe and Asia, natural gas futures are still up around 100% for the year. NGAS Oct ‘22 Futures Price Chart Cotton futures touching lows not seen since July 2021 As traders assessed the potential of larger supplies and lower demand due to quicker rate hikes and economic uncertainty, cotton futures were trading at levels last seen in July 2021. Regarding the supply, the USDA's most recent report showed that the crop of US cotton increased from 12.48 million acres in August to 13.79 million acres in September, or over 19% more than the 11.22 million acres planted in 2021. 375 lakh bales are anticipated to be produced in India, another major producer, during the season 2022–23, assuming that the weather is cooperative through October. Crops are still in danger because of unfavorable weather and pest infestations in the main growing regions. Cotton Dec ‘22 Futures Price Chart Gold futures Tuesday saw a minor recovery in gold prices from a recent low as the continuous dollar advance paused, moving closer to $1,630 an ounce. On predictions that the US Federal Reserve will tighten monetary policy even more in order to combat rising inflation, the price of yellow metal is still close to its lowest levels in 2.5 years. On Monday, a number of Fed members reaffirmed their commitment to the fight against inflation, despite the possibility of some negative economic consequences and additional market instability. Investors also considered a study from the OECD, which revised its prediction for global economic growth from 2.8% to 2.2% in 2023, citing aggressive monetary tightening in leading nations and the protracted Russia-Ukraine war. Despite the fact that storing non-yielding gold bullion is generally regarded as a hedge against inflation and economic uncertainty, higher interest rates increase the opportunity cost of doing so, and investors continue to choose the dollar as a safe haven asset. Gold Dec ‘22 Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com

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