Summary:

• WTI Crude Oil prices have been rallying as investors weigh concerns over ongoing supply tightness over a potential slowdown in demand.
• Concerns around dry weather conditions in Brazil may lead to lower coffee yields.
• Palladiums prices rise in the wake of China easing covid restrictions in China

WTI Crude Oil Prices are rising as concerns around supply outweigh demand concerns

WTI Crude Oil prices have been rallying as investors weigh concerns over ongoing supply tightness over a potential slowdown in demand. Industry data reflected that Crude inventories declined last week worse than the market has expected. In addition the US crude benchmark jumped 2% in the previous session in the wake of reports that major producers UAE and Saudi Arabia are at (or very close to) near term limits, whilst simultaneously unrest in Ecuador and Libya which threaten to tighten supply further. This comes before an OPEC+ meeting this week, where the group is expected to stick to its policy of modest output increases.

WTI Crude Oil Aug ‘22 Futures Price Chart

Coffee prices downside may be limited

Arabica Coffee futures are trading at around 2 week lows as coffee production improved. In addition, the USDA projected global coffee production to rise in their 2022/23, mainly due to Brazil’s arabica crop entering the on-year of the biennial production cycle. However, concerns around dry weather conditions in Brazil may lead to lower coffee yields and limit the downside in coffee prices.

Coffee Sep ‘22 Futures Price Chart

Palladium Prices Rise

Palladium Futures have risen to around 2 week highs after they rebounded from 6 month lows that we hit in mid-June in the wake of China’s decision to lift covid restrictions in Shanghai which lifted hopes of a recovery in metal demand. China is the largest consumer of palladium, and accounts for 26% of the total global consumption. In parallel, traders expect major central banks to ease back from aggressive monetary tightening due to easing inflation and disappointing macroeconomic figures, raising expectations of a recovery in global economy and in turn consumer spending.

Palladium Sep ‘22 Futures Price Chart

Sources: finance.yahoo.com, tradingeconomics.com