Energy – US crude stocks fall
The oil market remains relatively firm. ICE Brent is trading just below US$95/barrel. Saudi Arabia’s energy minister said yesterday that OPEC remains committed to a balanced market and does not have a specific price target. Additionally, the group will review supply reductions monthly. Pressure on the group is likely to increase as long as prices remain high and we cannot rule out that OPEC or at least Saudi Arabia will begin to ease some of their supply cuts this year.
API figures released overnight showed US crude oil inventories fell by 5.25 million barrels over the past week, higher than the 1.7 million barrels the market had expected. Crude inventories at WTI’s delivery hub Cushing also saw a sharp decline of 2.56 million barrels, which will reinforce WTI’s rapid time gap. At the same time, gasoline stocks increased by 732 Mb over the week, while distillate stocks decreased by 258 Mb. The EIA’s most widely followed inventory report will be released later today.
Although fundamentals have been a key driver of oil prices in recent weeks, we could see macroeconomic influences come back into play at least immediately, given the FOMC meeting. The Fed is expected to keep rates unchanged at this meeting. But markets will be watching for any indication of what the Fed might do at its meetings later this year.
TTF rose almost 6.7% yesterday due to further supply issues from Norway. The Troll field will be completely shut down on Wednesday, meaning 125 million m3/day of supply will not be available. The complete shutdown will continue until Thursday, after which supply will gradually recover. However, given the number of delays we have seen over the summer, there is clearly a risk that we will see further delays in capacity returning to the market.
Metals – Shares under LME warrant increase
Recent data from the LME shows that total lead stocks under warranty increased by 10,675 tonnes to 69,200 tonnes yesterday, leaving stocks under warranty at their highest levels since June 2021. The majority of entries were reported in Singapore and Taiwan warehouses. This saw total foreign exchange stocks increase by 10,075 tonnes to 71,050 tonnes. Zinc also saw gains, with warrant stocks rising 5,700 tonnes to 81,025 tonnes, while canceled warrants extended their decline for a third straight session, falling 9,000 tonnes to 34,325 tonnes yesterday.
The latest LME COTR report shows that investors increased their net bullish positions in copper by 3,016 lots to 55,941 lots in the week ending September 15. Likewise, speculators increased their net long position in zinc by 7,240 lots, to 39,616 lots. On the other hand, fund managers reduced their net long position in aluminum by 1,644 lots to 76,461 lots during the last reporting week.
Agriculture – Nigerian cocoa production
The National Cocoa Association of Nigeria said national cocoa production for 2023/24 will be affected by heavy rains and black rot disease, making it difficult for the association to make production forecasts for the season . Furthermore, according to the Cocoa Research Institute of Nigeria, the current black rot disease could harm more than 40% of national production if left untreated.
In its latest report, the European Commission said EU soft wheat exports for the current season stood at 6.32 million tonnes as of September 17, down 27% year-on-year. The main destinations of these expeditions were Morocco, Nigeria and Algeria. As for corn imports, they stood at 3.3 million tonnes over the same period, down 44% year-on-year. Last season, the EU saw an increase in corn imports due to a poor domestic harvest.
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