Summary:
- Fears around global supplies for crude oil persist.
- Increased anxiety around world coffee supplies.
- Worsening outlook for outlook for the auto industry weighing on palladium futures.
WTI Crude Oil Futures
After a report from the industry revealed another larger-than-expected drop in US crude stockpiles, adding to fears about a tightening global supply, WTI crude futures maintained their recent surge above $95 per barrel on Wednesday. US crude stockpiles dropped by 5.632 million barrels last week, according to a late-Tuesday API data; this was significantly more than the 900,000 barrel drop that analysts had predicted. Analysts anticipate a 933,000 barrel decline in the official EIA data that will be issued later in the day. Tuesday saw an almost 4% increase in oil prices after Saudi Arabia hinted at potential production curbs from OPEC+ to fend off negative pressure on prices. The price of petroleum is still down nearly 25% from its peak in June due to rising concerns that a global economic slowdown will reduce consumer spending as major central banks aggressively raise interest rates to fight inflation. Oil prices now face additional downside risks from the potential collapse of the 2015 nuclear agreement, which would increase Iranian oil shipments.
WTI Crude Oil Futures Price Chart
Coffee Futures
Due to indications of severe dryness in top producer Brazil, Arabica coffee futures on the ICE were trading at their highest level since June 22. This increased anxiety over world supplies. According to Somar Meteorologia, Minas Gerais, which produces 30% of Brazil's arabica crop, had 0% of the normal amount of rain in the previous week. According to Maxar Technologies, the La Nina weather pattern is likely to persist through the end of the year. This suggests that Brazil will receive less rain through the end of the year, which could intensify the drought and put more strain on the country's coffee harvests.
Coffee Dec ‘22 Futures Price Chart
Palladium Futures
Late in August, the price of palladium futures fell to its lowest level in a month, trading around $1,990 per ounce as the Fed's anticipated aggressive rate hikes increased demand for the US dollar and scared investors away from non-interest-bearing assets. The worsening prognosis for the auto industry put pressure on futures, which decreased demand for autocatalyst parts.
Palladium Sep ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com