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Commodities at a dead end? | HF analysis

by SuperiorInvest

Oil prices rallied after reports that OPEC+ may consider raising output at its Dec. 4 meeting were dismissed. more precisely, Saudi Arabia has denied talk of an increase in oil output, clarifying that OPEC+ remains committed to cutting oil production and may take further measures to balance the market as prices fall.

This earlier rumor surprised the market, especially after the recent decision to limit supply. And it added to an overnight drop in prices amid growing concerns that China will not reopen its economy due to a surge in covid cases and the first deaths since the summer. WTI crude fell to $75.08, a fresh one-year low, before climbing to $79.86. Brent bounced back to $87.48 after diving to $82.32.

Oil markets continue to closely monitor demand outlook and monetary policy expectations. Fed officials pushed back against overly optimistic market expectations about the policy outlook and fears that China’s Covid restrictions will be tightened again put pressure on oil prices last week. Meanwhile, gas prices are watching the EU’s renewed attempt to agree a price cap when energy ministers meet this week.

Oil prices last week they decreased significantly and remained under pressure even today in the area of ​​80.50, as the demand outlook was marred by fading hopes that China will ease virus restrictions and add more stimulus. China reported its first covid-related death in months at the weekend, sparking fears of a re-tightening of covid restrictions. At the same time, the PBOC last week warned of inflationary risks and appeared to show the limits of monetary policy support. WTI extended losses below $80 a barrel, the lowest in more than seven weeks.

Highly uncertain production and the EU’s ban on Russian oil flows starting next month should keep oil prices floored in the medium term. However, with Europe rushing ahead of schedule with Russian diesel and European refineries appearing to be glutted with oil for now, the prospect of future shortages is enough to offset demand concerns at this point.

Gold prices corrected lower last week and remained under pressure so far this weekas risk aversion increased and American dollar rather than precious metals he mined the port’s currents. The precious metal is currently trading at $1,745.57 as Fed officials continued to reflect the market’s overly optimistic view of the Fed’s policy outlook. Gold has bounced back quite a bit from lows around $1,630 earlier in the month, but remains in the hands of policy outlook and overall sentiment.

Agricultural commodity prices mostly corrected lower and wheat futures in particular fell to their lowest levels in nearly three months, as did supply the outlook has improved. There was some uncertainty about the outlook for the Black Sea Grain initiative, but Russia eventually agreed to extend the UN-brokered deal. This means that the trade corridor for vessels carrying Ukrainian grain in the Black Sea will remain in place for another four months from November. Ukrainian authorities have reported that the country has been able to export more than 11 million tons of grain by ship since the agreement began 1st August. This went a long way to easing fears of a global shortage. Accordingly, the datafrom the USDA WASDE report, world supply projections increased and the end of sthat means for the coming marketing year, as higher production in Australia and Kazakhstan offsets potential declines in Argentina and the EU.

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Andria Pichidi

Market analyst

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