Oil rises as investors worry about global demand
Oil prices rose slightly as concerns about the outlook for global consumption were balanced with news that major OPEC producers struggled to produce enough to meet growing demand.
At one point, both types of oil gained more than 1 USD / barrel, but Brent crude oil ended the session 21/9 only increased 44 US cents to 74.36 USD / barrel. WTI October crude oil futures to expire in the session rose 27 US cents to 70.56 USD/barrel. WTI November futures rose 35 US cents to $70.49 per barrel.
TASS news agency said Russia believes global demand may not recover to pre-pandemic 2019 peaks, as the energy balance shifts.
However, the Organization of Petroleum Exporting Countries and its allies, including Russia, struggled to produce enough oil in August to meet current consumption as the world recovered from the pandemic. Some countries appear to have produced less than expected as part of the OPEC+ deal, which indicates a growing supply shortfall.
Investors in financial markets worry that Evergrande’s meltdown could trigger a domino effect in China’s heavily indebted companies and knock down stock and commodity prices.
In addition, the US Federal Reserve is expected to begin tightening monetary policy that could reduce investors’ tolerance for risky assets such as oil.
U.S. oil production is still recovering from hurricanes that have made landfall in the Gulf Coast region. Royal Dutch Shell, the largest U.S. Gulf of Mexico oil producer, said damage to offshore transshipment facilities due to Hurricane Ida will reduce output early next year.
Gold price increases
Gold prices rose on uncertainty over Evergrande’s default, ahead of a US Federal Reserve meeting that could provide clues about the central bank’s stimulus cuts schedule.
Gold, the safe-haven asset, has risen on recent concerns about global economic growth or, more specifically, China’s economic slowdown.
Spot gold rose 0.7 percent to $1,776.09 an ounce, while U.S. gold for December delivery closed up 0.8 percent at $1,778.2 an ounce.
However, according to an analyst at Kitco Metals, gold prices still follow a downtrend in the short term.
The positive effects from the falling USD and rising oil prices also supported gold prices.
The Federal Open Market Committee will issue a policy statement and new economic projections at the end of its September 22 session. Some analysts believe they may announce the start of easing their asset purchases in the fourth quarter, which could push gold prices lower.
Copper drops to one-month low
Copper prices continued to slide to a one-month low on renewed fears that troubles at China’s Evergrande Group could spill over into the global economy.
Three-month copper on the London Metal Exchange LME fell 0.3 percent to $8,983 a tonne, its lowest level since Aug. 19. This contract has lost about 7% this month.
Evergrande will have to pay $83.5 million in bond interest on September 23.
The fact that copper price broke the psychological level of 9,000 USD is causing new liquidity to take place. Investors also feared a faster pace of stimulus tightening in the United States, as central bank officials walked into a two-day meeting ending on September 22.
Canadian miner Teck Resources cut its forecast for annual refined zinc production due to wildfires in British Columbia.
Refined copper production was short of 90,000 tonnes globally in June compared with a surplus of 4,000 tonnes in the previous month.
Aurubis AG, Europe’s largest copper producer, said that its Stolberg copper plant in Germany will begin to partially resume production on November 1.
Japanese rubber fell
Rubber prices in Japan fell more than 5% due to the global risk sentiment on fears that Evergrande’s debt crisis spread to broad markets and derailed the recovery from the pandemic.
The February 2022 Osaka rubber contract closed down 9.5 JPY or 5.7% to 194.5 JPY/kg.
Rubber in Shanghai term January 2022 is not traded due to Chinese holidays.
Coffee prices increase
Robusta coffee for November term closed up 8 USD to 2,160 USD/ton.
This market continues to receive support from increased robusta coffee demand related to high arabcia prices and supply disruptions from Vietnam due to a shortage of shipping containers.
December Arabica coffee futures rose 0.75 US cents to 1.8335 USD/lb.
Production fell in Brazil, partly because drought and frost have made arabica supplies scarce.
Brazil’s coffee crop is expected to fall 25.7% this year from a record 2020 crop of 63 million bags.
Sugar prices increase
Raw sugar for October delivery closed up 0.11 US cents to 18.97 US cents/lb.
Dealers said the market was heavily influenced by trends in financial markets as the potential for contagion from the Evergrande crisis would be limited.
The price of white sugar for December term closed up 3.3 USD to 501.20 USD/ton.
Maize declines due to harvest progress, soybeans increase
Corn prices in Chicago fell for a fourth straight session as the U.S. harvest improved, while prolonged storm disruptions dampened export sentiment.
Wheat followed the decline of corn, while soybeans strengthened after hitting a near 3-month low in the previous session.
Corn futures on the Chicago Mercantile Exchange closed down 4-3/4 US cents at $5.17/bushel.
CBOT wheat fell 10-1/2 US cents to 6.90-1/4 USD/bushel.
Soybeans fell 11-1/2 US cents to 12.74 USD/bushel.
Prices of some key items on the morning of September 22:
