|Day's range||40.05 - 40.79|
(Bloomberg) -- Leaving behind the waters of the Caribbean Sea, the 1,100-feet long oil tanker Maran Apollo is emblematic of the wider petroleum market.Steaming at 11.5 knots, she’s heading toward China, where oil demand is fast recovering, hauling a cargo of two million barrels of U.S. crude. But her voyage didn’t start a few days ago. She loaded in early May, and with no buyers during the worst of the coronavirus outbreak, the supertanker stood floating in the U.S. Gulf of Mexico for almost two months, waiting for better times.Only a few days ago, she weighed anchor and left for the Chinese port of Rizhao -- a sign that refiners are starting to pull in crude that went unwanted for months.It’s not any kind oil on board, though. Refiners are competing for barrels in one corner of the market known as medium-heavy sour crude -- barrels with a higher content in sulfur and relatively dense. It’s the kind of oil that Saudi Arabia and its allies pump. And also the type of crude that’s pumped offshore in the U.S. Gulf of Mexico -- and that’s what’s in the Maran Apollo’s tanks.Like the wine industry, the oil market has its own vintages: global refiners seek their barrels much like connoisseurs covet bottles of Bordeaux and Burgundy. Urals of Russia and Arab Light from Saudi Arabia are normally two of the most widely consumed -- think Cabernet Sauvignon, maybe a Merlot. But in today’s oil market, such crude is in increasingly short supply due to record output cuts by the two nations and their allies.“Deep OPEC+ cuts and demand recovery have tightened balances and this has been reflected in improvements in physical differentials,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “But the recovery has not been even, with medium-sour crudes faring better than light-sweet crudes.”In normal times, medium-sour crude is usually cheaper than other streams, particularly those known as light sweet crude that have a lower sulfur content and are less dense.But OPEC, which pumps mostly medium-sour crude, has cut output to the lowest since 1991, and Russia has also implemented brutal reductions. On top of that, medium and heavy sour crude accounts for the bulk of the supplies from Iran and Venezuela, where production has collapsed under the weight of U.S. sanctions and lack of investment.The market is reflecting the under supply. The price of Urals, Russia’s flagship grade, has surged to a record premium to the Brent crude benchmark. Last week, it briefly changed hands at $2.40 a barrel above Dated Brent, a regional benchmark, compared with a discount of more than $4.50 a barrel in April, according to traders. S&P Global Platts, a price-reporting agency, assessed the grade at a premium of $1.90 for delivery to Rotterdam on June 29, matching a prior record high.The surge means that Urals is selling in Rotterdam, the main oil refinery hub in northwest Europe, at roughly $45 a barrel, compared with a low point of about $15 a barrel in early April.The price pattern is similar for other sour crude streams, from Oman in the Middle East to Oriente in Latin America. All are commanding hefty prices at a time when oil demand globally remains down roughly 10% below normal levels. Because sour crude makes a significant chunk of a typical refinery’s diet, the price increase is strangling the plants’ profitability.“OPEC+ continues to tighten the screws,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said, referring to the group’s output cuts.With the physical oil market tightening, OPEC is now able to increase the prices it charges to refiners. On Monday, Saudi Aramco, the state-owned oil company, lifted its official selling prices to Asia for the third consecutive month, largely reversing all the discounts it offered during a brief price war with Russia in March and April.Aramco and other national oil companies sell their crude at differentials to oil benchmarks, announcing every month the discount or premium they’re charging to global refiners. These so-called official selling prices help set the tone in the physical oil market, where actual barrels change hands.The Saudi oil giant is now selling its most dense crude, called Arab Heavy, for the first time ever, at roughly the same price at its flagship Arab Light, an indication of the strength of the market for the medium-heavy sour grades. Typically, Arab Heavy has sold at a discount of about $2-to-$6 a barrel to Arab Light.Not only is medium-heavy sour crude trading at a premium to benchmarks, but barrels for immediate delivery are commanding premiums to forward contracts, a price pattern known as backwardation that also reflects a tight physical-market. Dubai crude, a Middle Eastern medium sour barrel, is one example: backwardation between barrels for delivery now and in three months has surged to 60 cents per barrel. In mid-April it stood at minus $9.24 per barrel because the physical market was so glutted back then.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Oil prices fell on Tuesday, erasing earlier gains, on concerns that the surge in coronavirus cases in the United States, the world's biggest oil user, will limit a recovery in fuel demand. With 16 U.S. states reporting record increases in new COVID-19 case in the first five days of July, according to a Reuters tally, there is mounting concern that public health measures to limit the virus spread will curb fuel demand. "The potential for demand destruction as lockdown re-instatement looks more likely are combining with concerns about OPEC+ discipline to weigh on oil prices," said CMC Markets's Chief Market Strategist Michael McCarthy in Sydney in an email.
(Bloomberg) -- Indonesia is accelerating plans to almost double its oil refining capacity, ignoring a temporary slump in demand triggered by the coronavirus pandemic, as the former OPEC member seeks to cut reliance on fuel products imports.PT Pertamina will spend $48 billion over the next seven years to increase processing capacity to 1.8 million barrels per day from 1 million currently. The expansion, which also includes building 8.6 million metric tons of petrochemicals capacity, will help the country halt refined products imports, according to the state-owned company.Indonesia’s reliance on imports is now more than 50% of its annual demand because of years of underinvestment in building refining capacity. The national oil company plans to expand existing refineries and build a new one which can produce cleaner fuels including Euro V standard gasoline and green fuel from palm oil that may help cut annual imports worth $9 billion.If Pertamina failed to act now, or further delay its plan to add refining capacity, the nation may become fully dependent on imports, President Director Nicke Widyawati told parliament last week. There’s an urgency to upgrade existing refineries that mostly produce fuels meeting Euro II emission standards because of the need to switch to cleaner fuels to cut pollution, she said.Additionally, fossil fuel demand is forecast to continue growing until at least 2030, before consumers start using more renewable energy, Widyawati said. To meet the demand for renewables and biofuels, Pertamina is setting up green refineries, which will use palm oil as a raw material to produce fuels.“We are also integrating some refineries with petrochemical plants, so when demand for fuel declines, we can switch production,” Widyawati told the parliament.Still, sourcing capital for the expansion, some of the largest capital projects in Indonesia’s history, may become a huge challenge for Pertamina and prompt it to work with multiple partners, according to industry consultant Wood Mackenzie.Global Partners“The other challenge is that oil production is fast declining in Indonesia and hence a need to partner with a crude supplier to secure long term crude supply,” Wood Mackenzie’s Research Director Sushant Gupta said. “These investments are also coming at a time when the global refinery industry is expected to see a refinery capacity surplus in the medium term and weak margins.”Russia’s Rosneft PJSC, Abu Dhabi National Oil Co., Mubadala Investment Co. and Taiwan’s CPC Corp. are among oil companies in talks with Pertamina for the refinery and petrochemical projects, which on completion will also allow Indonesia to export fuel products to countries including Australia and New Zealand.Indonesia, which quit the Organization of the Petroleum Exporting Countries in 2016, has had some success in reducing fuel products imports. It halted aviation fuel and diesel imports last year, helped by increased local output and higher blending of palm oil with diesel to power vehicles and industrial generator sets.Shrinking OutputIndonesia’s goal of becoming self-sufficient in energy supply can’t be met by expanding refining capacity alone, Woodmac’s Gupta said. The country’s crude oil output has declined to about 700,000 barrels per day from a high of 926,000 barrels in 2008, according to official data, underlining the need for long-term crude supply partnership.While the government has a target to restore crude output to 1 million barrels per day by 2030 by squeezing out more from existing fields and hunting for large discoveries, it may be a daunting task. It may have more chances of boosting output through overseas acquisitions, according to Andrew Harwood, research director for Asia Pacific upstream oil & gas at Woodmac.“In the current price environment, there is limited capital available for investing in exploration and enhancing recovery from mature fields in Indonesia,” Harwood said. “Therefore, Pertamina is more likely to look at additional overseas acquisitions to improve its oil production outlook.”With a growing middle-class population and rising fuel demand driven by swelling car sales, Indonesia may still face a shortage of fuel products even after expanding its own production capacity, according to Woodmac. The country may see a shortfall of about 450,000 barrels per day of transport fuels such as gasoline, jet fuel and diesel in 2027, making it one of the largest deficit markets globally, the consultant estimates.“We believe Indonesia will have to strike a balance between building its own refineries and importing products from global markets,” Gupta said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- U.S. crude futures edged lower with investors concerned that lackluster demand through the summer months will weigh on the market’s recovery.As coronavirus infections rise across much of the U.S., major fuel-consuming states including California, Florida, Arizona and Texas have reimposed stricter measures to curb the spread. Gasoline demand could fall by 17% in July from the same time last year if lockdowns are reintroduced, according to JBC Energy GmbH.Drivers across the U.S. normally hit the road for the Independence Day holiday -- usually a high point for gasoline demand during the summer -- but the virus kept more people indoors. Domestic gasoline consumption during the long weekend was more than 20% below last year’s levels, according to GasBuddy.“The coronavirus impacts in the country are causing folks to hunker back down again,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund focused on energy. “This could be a real problem for the market going forward.”While the U.S. benchmark crude has doubled in value since April to just above the $40-a-barrel mark, futures are having trouble rallying beyond that level amid uncertainty over re-openings across the country.In Florida, Miami-Dade Mayor Carlos Gimenez is planning an emergency order to close restaurants and gyms. Florida reported 206,447 Covid-19 cases on Monday, up 3.2% from a day earlier. In Texas, a county official is calling for a stay-home order once again in the Houston area.In global markets, Brent crude showed strength with demand faring better. Saudi Aramco lifted pricing for all of its crudes to Asia by $1 a barrel. Aramco also raised pricing to the U.S., where it’s reining in shipments, for a fourth month.“Brent is strengthening because of the Saudi price increase this morning and because European economies are re-opening and handling the Covid problem better than in the U.S.,” said Bob Yawger, director of the futures division at Mizuho Securities USA.Traffic congestion data -- a rough measure of automobile activity -- remains mixed, with some cities growing steadily busier and others slipping back. Of 13 world cities examined, traffic is heaviest in Shanghai and lightest in Mumbai. Congestion in Los Angeles on July 2, just before the Independence Day holiday, was 82% lower than a year ago.But in a warning sign for oil’s resurgence, the higher prices from OPEC’s largest producer come in the context of a refining industry that’s struggling to turn a profit. A refiner using Saudi Arabia’s flagship Arab Light crude in Singapore would currently make a loss with the most basic processing, according to Oil Analytics data.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Strong gains in Chinese equities spilled over into US stocks which paved the way for higher gold prices. Stronger than expected US ISM services numbers helped add to riskier assets, which have been highly correlated gold, helping to buoy the yellow metal.
(Bloomberg) -- Crude oil is the world’s most important commodity, but it’s worthless without a refinery turning it into the products that people actually use: gasoline, diesel, jet-fuel and petrochemicals for plastics. And the world’s refining industry today is in pain like never before.“Refining margins are absolutely catastrophic,” Patrick Pouyanne, the head of Europe’s top oil refining group Total SA, told investors last month, echoing a widely held view among executives, traders and analysts.What happens to the oil refining industry at this juncture will have ripple effects across the rest of the energy industry. The multi-billion-dollar plants employ thousands of people and a wave of closures and bankruptcies looms.“We believe we are entering into an ‘age of consolidation’ for the reﬁning industry,” said Nikhil Bhandari, refining analyst at Goldman Sachs Inc. The top names of the industry, which collectively processed well over $2 trillion worth of oil last year, are giants such as Exxon Mobil Corp. and Royal Dutch Shell Plc. There are also Asian behemoths like Sinopec of China and Indian Oil Corp., as well as large independents like Marathon Petroleum Corp. and Valero Energy Corp. with their ubiquitous fuel stations.The problem for the refiners is that what’s killing them is the medicine that’s saving the wider petroleum industry.When U.S. President Donald Trump engineered record oil production cuts between Saudi Arabia, Russia and the rest of the OPEC+ alliance in April, he may have saved the U.S. shale industry in Texas, Oklahoma and North Dakota, but he squeezed refiners.A refinery’s economics are ultimately simple: it thrives on the price difference between crude oil and fuels like gasoline, earning a profit that’s known in the industry as a cracking margin.The cuts that Trump brokered lifted crude prices, with benchmark Brent crude soaring from $16 to $42 a barrel in the space of a few months. But with demand still in the doldrums, gasoline and other refined products prices haven’t recovered as strongly, hurting the refiners.The industry’s most rudimentary measure of refining profit, known as a 3-2-1 crack spread (it assumes three barrels of crude makes two of gasoline and one of diesel-like fuels), has slumped to its lowest level for the time of the year since 2010. Summer is normally a good period for refiners because demand rises with consumers hitting the road for their vacations. This time, however, some plants are actually losing money when they process a barrel of crude.Worst FearJust a few weeks ago, the outlook appeared to be improving for the world’s biggest oil consumers. Demand in China was almost back to pre-virus levels and U.S. consumption was gradually rebounding. Now, a second wave of infections has prompted Beijing to lock down hundreds of thousands of residents. Covid-19 cases are also on the rise in Latin America and elsewhere.With demand in the U.S. now showing signs of heading south again as coronavirus cases flare up in top gasoline-consuming regions including Texas, Florida and California, the margins are at risk of deteriorating in America, which accounts for nearly two in each ten barrels of oil refined worldwide.“The worst fear for refiners is a resurgence of the virus and another series of lockdowns around the world that would again significantly impact demand,” said Andy Lipow, president of Lipow Oil Associates in Houston.Another problem is that -- where it has been recovering -- the demand pickup has been uneven from one refined product to the next, creating significant headaches for executives who need to select the best crudes to purchase, and the right fuels to churn out. Gasoline and diesel consumption has surged back, in some cases to 90% of their normal level, but jet-fuel remains nearly as depressed as at the nadir of the coronavirus lockdowns, running at just 10% to 20% of normal in some European countries.Refiners had resolved the problem by blending much of their jet-fuel output into, effectively, diesel. But that, in turn, is creating a new challenge: too much of so-called middle distillates like diesel and heating oil.“Right now gasoline demand is barely keeping some plants alive,” said Stephen Wolfe, head of crude oil at consultant Energy Aspects Ltd. “And with jet production shifting over to diesel and gasoline production, that puts even more strain on product supply,” he added.In the U.S. refining belt, processing rates are being continually tweaked in response to potential fluctuations in demand. In April, during the height of U.S. lockdowns, Valero Energy Corp.’s McKee, Texas, refinery cut rates to about 70%. It then raised processing to near 79% in anticipation of the Memorial Day holiday, before finding a new low of 62% by mid June, according to people familiar with the situation.Ultimately, if refiners don’t make money, they buy less crude, potentially capping the oil-price recovery of the past few months for Brent and other benchmarks. Even so, the actions of Saudi Arabia, Russia and the rest of the OPEC+ group suggest that refiners will remain squeezed for longer, with oil prices outpacing the recovery in fuel prices.The immediate problem is compounded by a longer-term trend: the industry has probably overbuilt over the last decades, and older plants in places like Europe and the U.S. can’t compete with new ones popping up in China and elsewhere in the world.“Refinery margins in the next five years are going to be worse than the average for the last five years, and particularly bad in Europe,” said Spencer Welch, vice president of oil markets and downstream consulting at IHS Markit. “We already thought that refining was in for a tough time, even more so now.”Catalyst for ChangeThe weakness means that the industry’s collective earnings will plunge to just $40 billion this year, down from $130 billion in 2018, according to an estimate from industry consultant Wood Mackenzie Ltd. of 550 refineries around the world.That could be a catalyst for change. The demand hit from the virus is yet to cause any delays in a number of mega-refining projects, most of which are in China and the Middle East, that will start operations from 2021 to 2024, according to the analysts at Goldman Sachs. This will cause global utilization rates to be 3% lower over this period than in 2019. Plants are more likely to close in developed countries because the bulk of demand -- and new refining capacity -- is in developing nations, they said.Many of the refineries that are being built in the Middle East and China will also get government backing, a fact that only makes life more challenging for the plants in Europe and the U.S.The industry is already moving to resolve the overcapacity: oil trader Gunvor Group Ltd. has said it may mothball its refinery in Antwerp, and U.S. refining group HollyFrontier Corp. in June announced it was changing its Cheyenne plant from processing crude oil into a renewable diesel facility.For now though, there’s a more mundane reality to deal with: the market. OPEC and its allies can constrain the supply of crude -- squeezing refiners -- but they can’t make end users consume fuel.“The reality is that refineries can only run as fast as demand lets them,” said Steve Steve Sawyer, director of refining at Facts Global Energy. “With product stocks already very full, any further loss of demand would mean an immediate response from refiners.”(Updates with analyst comment in final paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The crude oil markets rallied a bit against the backdrop of a positive Monday but find quite a bit of noise just above that they need to deal with.
Gold markets went back and forth on Monday, reaching towards the $1800 level but it looks like we still have the same resistance in that region.
Oil continues its upside move and heads towards the test of the next resistance level at $41.50.
(Bloomberg) -- Producing coconut oil could be more harmful for the environment than previously thought as it exacerbates already-high extinction rates of animals in unique, tropical areas.According to a new report from the U.K.’s University of Exeter, production of coconut oil threatens around 20 animal species for every million tons made. That’s more than four times as many as for other oil-producing crops such as palms, olives and soybeans.Increasing numbers of conscientious consumers -- alongside the rise in popularity of lifestyle choices such as veganism -- have shifted the spotlight onto the ecological impact of products such as vegetable oils. Production of palm oil is well-known to be environmentally damaging because of the quantity of land which needs to be cleared to make way for the crop. Consumers are less aware of the impact of farming coconuts, the report said.“Many consumers in the West think of coconut products as both healthy and their production relatively harmless for the environment,” said lead author and conservation scientist Erik Meijaard, who declared a potential conflict of interest through paid work for oil palm company ANJ-Agri and his chairmanship of the IUCN Oil Palm Task Force. “As it turns out, we need to think again about the impacts of coconut.”The findings highlight the difficulties for consumers looking to make environmentally conscientious spending choices. That has often meant turning to dairy-free substitutes, such as coconut milk, because of their perceived health benefits and environmentally friendly image. Yet, without objective guidance on the environmental impacts of different crops, their ability to make informed decisions is undermined, the report said.“It remains challenging to identify and weigh which species and environments have been or will be threatened by production of which products, and in which contexts, but such measures are needed,” according to the report. “New measures can enable consumers to make better choices. While perfection may be unattainable, improvements over current practices are not.”The palm oil industry is reckoning with its environmental impacts with the help of initiatives, such as the Roundtable on Sustainable Palm Oil. No such body exists for coconut oil production. The study focused on the biodiversity impact of vegetable oils and did not address the impact on greenhouse gases, which could be quite different for each source.Coconut is a popular product, mostly used for oil but also for copra, milk and water. Production of coconut oil affects such a high number of species because the crop is mostly grown on tropical islands with rich diversity and many unique animals. However, the authors emphasize the objective of the study is not to add coconut to the growing list of products that consumers should avoid, noting that olives and other crops also raise concerns.“Consumers need to realize that all our agricultural commodities, and not just tropical crops, have negative environmental impacts,” said co-author Professor Douglas Sheil of the Norwegian University of Life Sciences. “We need to provide consumers with sound information to guide their choices.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The direction of the September E-mini Dow Jones Industrial Average on Monday is likely to be determined by trader reaction to the 50% level at 25938.
British pound rallied a bit on Monday. This was helped by Chinese equities kicking off with the bank, bringing up the amount of risk appetite around the world.
Shares of Occidental Petroleum (NYSE: OXY) leaped 41.3% in June, according to data provided by S&P Global Market Intelligence. Occidental's stock started June on a high note. Two other factors added fuel to Occidental's rally last month.
(Bloomberg) -- Saudi Arabia raised pricing for August oil shipments to Asia, the U.S. and northern Europe amid signs that energy demand is recovering from its coronavirus-triggered collapse.The world’s biggest crude exporter is increasing rates as it pushes other major producers to keep cutting supply to re-balance the market.State producer Saudi Aramco lifted the official selling price for its flagship Arab Light crude to buyers in Asia, its biggest market, for a third consecutive month, though by less than expected. Aramco raised pricing to the U.S., where it’s also reining in shipments, for a fourth month.“The increase in prices reflects the overall recovery in oil markets,” said Carole Nakhle, chief executive officer of London-based consultant Crystol Energy. “Demand growth remains uneven and may even be subject to temporary reversals, but it is unlikely to fall off a cliff because lockdowns, if re-introduced, are likely to be more localized.”Arab Light crude to Asia rises to $1.20 a barrel above the Middle East benchmark, compared with a 20-cent premium for July, the company said in a statement. Traders and refiners, who are struggling with low margins, expected the premium to climb to $1.45, according to a Bloomberg survey.Aramco raised U.S. pricing by between 20 cents and 40 cents a barrel. Light crude will sell at a premium of $1.65 a barrel, up by 30 cents, the company said. It also increased rates for most grades sold to northwestern Europe -- the main hub for which is Rotterdam. The only reductions are to the Mediterranean region, where Aramco pared prices by as much as $1 a barrel.Saudi Arabia and Russia have led efforts by the OPEC+ producer alliance since April to reduce output and drain stockpiles. The group agreed in June to extend cuts totaling nearly 10 million barrels a day -- roughly 10% of world supply before the pandemic hit -- for a third month until the end of July. They plan to scale them back after that.OPEC+ is “on the right track” but still has “a long way to go” before re-balancing oil markets, Saudi Energy Minister Prince Abdulaziz bin Salman said in mid-June. The Saudis slashed their crude shipments last month to a multi-year low, according to Bloomberg tanker tracking.Brent crude has more than doubled since OPEC+’s April agreement to around $43 a barrel. The global benchmark is still down 34% this year.(Updates with analyst comment in fourth paragraph; pricing details in fifth.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Today’s session begins with the market up six days from its last main bottom. This means we should start watching for signs of a top.
S&P; 500 futures are pointing to a higher open amid global market optimism.
“Avangrid has above-average EPS growth potential from utility and renewables opportunities, along with upside options not yet priced in,” wrote Morgan Stanley.
The direction of the August Comex gold futures contract on Monday will likely be determined by the pair of 50% levels at $1787.00 and $1780.90.
(Bloomberg) -- Commodity investors get vital insights into energy, metals and crop markets this week against a backdrop of better-than-expected economic data and countervailing concern over the jump in coronavirus infections. Global confirmed cases are now rising by well over 1 million per week, casting doubt over expectations raw materials demand will rebound.The International Energy Agency leads the line-up with its monthly overview of the worldwide oil market as OPEC and allies ratchet back supplies. Crop traders will dissect the latest WASDE snapshot, with corn a particular focus. And metals markets are primed for more virus-related disruptions in Chile, which may aid copper, as well as signals of booming iron ore flows, which may hurt prices.A brace of companies report, with numbers from Suedzucker AG, Europe’s top sugar producer, and major cocoa processor Barry Callebaut AG. And last but not least, San Francisco Federal Reserve President Mary Daly and Richmond Fed President Thomas Barkin take part on Tuesday in a discussion on the U.S. economy hosted by the National Association for Business Economics.By the NumbersOil-market watchers will keep a keen eye on the International Energy Agency’s monthly report on the global crude market this week for signals on how consumption is recovering from the virus-induced slump. The market will also examine key compliance data, which the IEA releases every month, indicating to what extent the Organization of Petroleum Exporting Countries and its allies are making the cutbacks they’ve pledged to clear a glut and shore up prices.Last month, OPEC’s output fell to the lowest since 1991, while Russia reached near-total compliance with its quota. Meanwhile, tanker-tracking data compiled by Bloomberg show crude supplies from OPEC’s Middle East exporters, excluding Iran, fell for a second month in June as Saudi Arabia and key Persian Gulf allies made further voluntary production cuts on top of the unprecedented 9.7 million barrels a day agreed by the OPEC+ group of countries in April. OPEC will release its own monthly oil market report on July 14.Red AlertIt’ll be a significant week in the copper market as investors assess fresh anti-virus curbs in Chile’s mining industry, export figures from the South American nation, and the metal’s technical backdrop. Prices may extend gains above $6,000 after state-owned Codelco suspended construction work at its largest copper mine, adding to other curtailments and shift-pattern changes. While the country managed to maintain output at high levels in May, the first clear view into how it fared in June comes on Tuesday, with monthly export data.There’s also important technical action in the charts, too, with copper now backwardated. In addition, driven by the powerful recovery in prices since March, copper’s 50-day moving average is now fast closing in on its 200-day counterpart and may move above it in the coming days. That pattern, a so-called golden cross, can portend further gains in an asset. Still, the last time that chart watchers saw it unfold for copper was right at the start of 2020, just before the metal swooned as the pandemic erupted.The Big QuestionThe U.S. Department of Agriculture just rocked the corn market when it said American farmers planted a lot fewer acres than analysts had expected. Traders will be anxious to see how that impacts the U.S. corn outlook in the World Agricultural Supply and Demand Estimates update on July 10. The big question: will the smaller plantings be enough to make up for declining demand in ethanol production, helping to keep inventories under control?And in Brazil, the second-largest corn exporter after the U.S., the crop is now seen coming in below initial estimates after adverse weather affected some regions. Traders will be looking for the Conab release on Wednesday to make that adjustment in its July report.Hungry for InformationEarnings this week from Suedzucker and Barry Callebaut should give a fresh glimpse of how the sugar and chocolate sectors are holding up, particularly as more shops and restaurants reopen in Europe. Figures from Suedzucker, Europe’s top sugar producer, are due Thursday and traders will watch for clues on whether the region’s prices will gain amid previously expected shortages, despite worries that slowing economies will curb demand.Barry Callebaut could give the cocoa market more clarity on how chocolate demand is faring when the major processor reports results on Thursday, too. Grindings beat expectations in Europe and Asia earlier this year, but analysts said that was more to do with ramping up output ahead of potential supply-chain disruptions, rather than real consumption. The market’s been under pressure lately, with London futures near the lowest in more than a year.Hitting FiftyIron ore is on the slide, dropping into the $90s a ton on indications that surging global supplies are easing tightness in the seaborne market. With vessel-tracking data pointing to a jump in flows from Australia, this week should bring confirmation of another bumper month at Port Hedland, possibly a record. The world’s largest bulk-export terminal is used by miners including BHP Group, Fortescue Metals Group Ltd. and Roy Hill Holdings Pty.The print for June’s performance should come in the opening half of the week -- there’s no fixed date -- and the figure may surpass the peak of 48.9 million tons set a year ago and could top 50 million tons. Last week, Brazil reported exports of 30 million tons for June, well up on the prior month and narrowly ahead of the year-ago number. Between them, the two nations account for the majority of worldwide exports, with cargoes feeding China’s steel industry.For the DiaryClick here for oil marketsClick here for gas marketsClick here for metals marketsClick here for agriculture marketsClick here for the latest DaybreakAnd for the global stage, click hereFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
A strike at Coal India Ltd <COAL.NS> cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a senior company official told Reuters. The world's largest coal miner's production fell to 573,000 tonnes per day over the three days, compared with a June average output of 1.29 million tonnes per day. Offtake by customers, such as power generators, fell nearly 62% to an average of about 536,000 tonnes per day, the official said.
Saudi Arabia's state oil producer Aramco has hiked official selling prices (OSPs) for its crude to Asia by $1 a barrel in August, and raised the OSPs for almost all grades to Europe and the United States. Saudi Arabia has set the August price to Asia at plus $1.20 a barrel versus the Oman/Dubai average, Aramco said in a statement on Monday.
In order to sustain the rally, inventories are going to have to continue to drop and people are going to have to continue to work, plain and simple.
If the Fed’s balance sheet has been a key driver of risk sentiment, will this dynamic start to weigh on risk? It seems unlikely to cause too great a stir as we know the Fed have the capacity to turn the taps on any time. Also, put China CN50 on the radar as this index is on fire right now, where we saw sizeable inflows into Chinese A-shares on Friday.