Oil up 1% on supply concerns
Oil prices rose 1% as the International Energy Agency expected increased demand for the gas-to-oil transition due to high gas prices this winter, although the demand outlook remained bleak.
Closing the session on September 14, Brent crude oil gained 93 US cents or 1% to $94.1 per barrel, while WTI closed up $1.17, or 1.3%, to $88.48 per barrel.
The International Energy Agency (IEA) expects a deepening economic slowdown and a slowing Chinese economy to keep global oil demand flat in the fourth quarter of this year. That could hold back the price rallies later this year.
The IEA also said it expects widespread conversion from gas to oil for heating purposes, saying it will average 700,000 bpd between October 2022 and March 2023 – double the level a year ago. That coupled with overall expectations of weak supply growth boosted the market. Global inventories fell by 25.6 million barrels in July.
In the US, however, crude inventories rose last week, for a second straight week, driven by the release of the Strategic Petroleum Reserve (SPR). Commercial stocks rose 2.4 million barrels as 8.4 million barrels were released from the SPR, part of a program scheduled to end next month.
Traders also said there was a chance that US rail could stop due to the ongoing labor dispute adding further support to the oil market. The three unions are negotiating for a new contract that could affect rail shipments that are important in the delivery of crude oil and products.
Gold falls below $1,700/ounce
Gold prices fell below $1,700 an ounce on expectations that the US Federal Reserve would raise interest rates sharply.
Spot gold fell 0.3 percent to $1,696.83 an ounce, after September 13 marked its biggest percentage drop since July 14, driven by a rally in the dollar after U.S. inflation. suddenly increased. US gold for December delivery closed down 0.5% at $1,709.1 an ounce.
Markets are pricing in a rate hike of at least 75 basis points at the Fed’s September 20-21 meeting, after the US consumer price index unexpectedly rose 0.1% in August.
Meanwhile, the USD fell 0.2%, making gold cheaper for buyers in other currencies.
Copper and aluminum prices fell on fears of rising interest rates undermining economic growth prospects and keeping the dollar near 20-year highs.
The dollar’s biggest one-day gain since March 2020, making the currency-denominated metals more expensive for buyers in other currencies and putting pressure on other central banks to raise interest rates. In China, the world’s biggest metal consumer, the central bank is expected to halt monetary easing despite a weakening economy.
Three-month copper futures on the LME exchange fell 0.9 percent to $7,801 a tonne. Aluminum fell 1.7% to $2,273 a tonne after hitting its lowest level since April 2021 at $2,227.40 a tonne. Both metals are down about 20% this year.
Adding to the pressure on aluminum prices was an increase in LME inventories to 345,600 tonnes from 276,050 tonnes in early September. Although that eased supply concerns, inventories remained below normal. Meanwhile, copper inventories are decreasing at Chinese exchanges and bonded warehouses. Limited supply pushed the price of spot copper higher than 3-month copper on the LME to around $100/ton, the highest since November 2021.
Chinese steel leaves two-week high
China steel prices fell after hitting two-week highs this session, sending prices of the steelmaking component including iron ore lower, difficulties with the global economy added to worries about demand for the metals. black.
Concerns about steel production have increased rapidly in recent weeks amid a fragile recovery in domestic demand, and the possibility of increased Covid-19 restrictions in China also put pressure on iron and steel prices.
Steel bar contract for January 2023 on the Shanghai futures exchange closed down 1.3% at 3,741 CNY ($537.07)/ton, ending a 3-day rally. Hot rolled coil fell 1.6% to CNY 3,800/ton, while stainless steel dropped 1.8% to CNY 17,065/mt.
Iron ore for January delivery on China’s Dalian Commodity Exchange fell 0.7 percent to CNY 720.5 a tonne, also down from a two-week high.
Iron ore for October delivery in Singapore fell 2.8% to $100.45 per tonne.
Meanwhile, a strengthening storm in the East China Sea could disrupt construction and other activities in the country.
Japanese rubber increased
Japanese rubber prices rose for a fifth straight session, following gains in the Shanghai market, although gains were limited by falling domestic shares.
Rubber contract for February 2023 on the Osaka exchange closed up 1.3 JPY to 224.2 JPY ($1.56)/kg.
In Shanghai, the price of rubber for delivery in January 2023 increased by 160 CNY to 12,730 CNY (US$1,828)/ton.
Rubber production in Thailand may be affected by continued heavy rain forecast and flood warnings.
Japan’s core machinery orders rose further in July, raising hopes that business spending growth can offset near-term difficulties from the global economic slowdown and the weakening JPY.
Arabica coffee down nearly 3%
December Arabica coffee futures closed down 5.85 US cents, or 2.7%, at $2,1485/lb. Prices fell for the third consecutive session.
Dealers say the market remains on the defensive as crop prospects in Brazil improve with late September rains spurring a key flowering period.
Robusta coffee for November delivery fell $9, or 0.4%, to $2,230 a tonne.
Sugar prices fall
Raw sugar for October delivery closed down 0.11 US cents or 0.6% at 18.27 US cents/lb.
Stronger-than-expected sugar production in South-Central Brazil in the second half of August helped hold the market. In addition, India is ready to allow the export of 5 million tons of sugar in the first batch of the new market year starting from October.
The October white sugar, which expires on September 15, dropped $1.50, or 0.2 percent, to $604.8 per ton, retreating from the previous session’s 10-year high.
Corn, soybeans down, wheat up
US soybeans and corn fell on technical selling as investors readjusted their positions. Wheat is strong on the back of a falling dollar and uncertainty over Ukraine’s grain export corridor following Moscow’s criticism of the deal.
Chicago soybeans for November delivery closed down 23-3/4 US cents to $14.55, retreating from gains in the previous session.
December corn futures fell 10-1/2 US cents to 6.82-1/4 USD/bushel. Resistance is at $7/bushel, a level this contract hasn’t been higher since June 22.
Winter soft red wheat for December delivery rose 11-3/4 US cents to 8.72-1/4 USD/bushel.
Prices of some key items in the morning of September 15:
