Oil Jumps As Opec Agrees To Modest Output Hikes
Oil prices soared on Friday after oil producers agreed to modest crude output increases to compensate for losses in production at a time of rising global demand.
The Organization of the Petroleum Exporting Countries and other top crude producers, meeting in Vienna, agreed to raise output from July by about 1 million barrels per day (bpd).
The real increase, however, will be around 770,000 bpd, according to Iraq, because several countries that recently suffered production declines will struggle to reach full quotas, while other producers may not be able to fill the gap.
The actual output increases set a bullish tone, as they came in below some of the highest figures that had been discussed prior to the meeting.
Brent crude settled up $2.50, or 3.4 percent, to $75.55 a barrel. US crude rose $3.04, or 4.6 percent, to $68.58 a barrel, getting an additional boost after a surprise large drawdown at the storage hub at Cushing, Oklahoma. Brent crude was up 2.7 percent on the week, while US crude was up 5.5 percent.
For about three weeks ahead of the OPEC meeting, prices had retreated from 3-1/2-year highs on fears that larger production increases could lead to oversupply.
Copper Hits 3-Week Low
Copper slipped on Wednesday after an inventory rise highlighted a healthy supply situation, while other metals were lifted by bargain hunting after steep losses due to fears of a trade war.
Copper hit a three-week low during Asian trading and was rebounding when data on London Metal Exchange inventories knocked the metal lower again in early European activity.
The daily data showed on-warrant copper stocks in LME-registered warehouses – those not earmarked for delivery – jumped by 15,800 tons to 264,575, surging 38 percent since May 29.
Signals from the physical market also indicated the copper market was not suffering from shortages, said Oliver Nugent, commodities strategist at ING Bank in Amsterdam.
“The key data point from the physical side is the premiums, and those have softened through June,” he said.
Fears of a trade war between the United States and China have battered financial markets and spurred a big liquidation in bullish speculative positions in metals in recent days.
Euronext Wheat Rebounds From 1-Month Low
Euronext milling wheat prices rose on Wednesday, recovering from a one-month low a day earlier, but gains were capped by continuing worries over international trade tensions.
Benchmark December wheat on the Paris-based Euronext exchange settled 1.75 euro, or 1.0 percent, higher at 178.00 euros ($206.28) a tonne.
The filling of a chart gap lent impetus to the rebound from Tuesday’s one-month low of 174.75 euros.
“There was a bit of bargain buying and some technical momentum, but Chicago is not really giving support,” a futures broker said. “It looks like Trump is going to press ahead (with trade tariffs against China), whereas there had been hope it was bluffing, so it’s making the market scared.”
After an earlier rebound, Chicago grain and soybean futures gave up gains as the focus remained on the threat of a trade war between Washington and Beijing, as well as favourable crop conditions in the US Midwest.
Coffee Prices An ’Embarrassment’
Current international coffee prices of around $1.15 per lb are an “embarrassment,” the head of Colombia’s coffee federation said on Wednesday, and growers are struggling to make a living off the crop.
Colombia is the world’s top producer of washed arabica. The growers’ federation has repeatedly asked for government aid this year, amid lower domestic and international coffee prices and a once-strengthening peso currency that cut export income.
Coffee-growers are barely breaking even with current prices, added Velez, who has said he would like a price of at least $1.30 per pound, with an exchange rate of 3,000 pesos to the dollar.
CBOT Corn Firms Slightly
Chicago Board of Trade corn futures closed fractionally higher on Wednesday in a light technical bounce a day after trade tensions and US crop weather pressed most months to contract lows, traders said.
CBOT July corn settled up 1/2 cent at $3.54-1/4 per bushel while new-crop December ended up 1/4 cent at $3.75-3/4.
Rally capped by favorable Midwest weather that has bolstered US crop production prospects.
The US Energy Information Administration said weekly US output of corn-based ethanol rose to 1.06 million barrels per day, while stocks of the biofuel fell to 21.65 million barrels.
Gold Lower As Dollar Steadies
Gold prices dropped, remaining near a six-month low on Wednesday as the US dollar hovered around 11 month peaks but was offset by festering global trade tensions, while platinum hit a 2-1/2-year trough.
Rising US interest rates also pressured bullion.
Spot gold lost 0.2 percent at $1,272.44 by 1:36 p.m. EDT (1736 GMT). US gold futures for August delivery settled down $4.10, or 0.3 percent, at $1,274.50 per ounce.
Trade tensions between the United States and China are showing no signs of easing. On Tuesday, a White House trade adviser said Beijing had underestimated the US president’s resolve to impose more tariffs.
That followed Washington threatening to impose tariffs on $200 billion of Chinese goods and Beijing saying it was raising tariffs on $50 billion of US goods.
Iran Tenders Again To Buy 60,000 Tonnes Of Sugar
Iranian state purchasing agency the Government Trading Corporation of Iran (GTC) has issued another international tender to buy 60,000 tonnes of raw cane sugar, European traders said on Wednesday.
The tender closes on July 24 and offers are to be made in euros. Origin is optional and shipment is sought in September.
The GTC previously issued another tender for 60,000 tonnes of raw sugar closing on July 10.
Indian Oil Imports From Iran Surge To Highest Since 2016
India’s oil imports from Iran surged to about 705,000 barrels per day (bpd) in May, their highest level since October 2016, according to data from shipping and industry sources, despite the threats of fresh US sanctions.
From June India’s oil imports from Iran could drop because at least two refiners — accounting for about 35 percent of Indian refining capacity of around 5 million bpd — are preparing to curb purchases under pressure from the US sanctions.
On May 8 US President Donald Trump said that the United States was pulling out of a 2015 international nuclear deal with Iran and would impose new sanctions seeking to reduce the country’s oil shipments.
India’s oil imports from Iran in May rose by 10.2 percent from the previous month and were about 45 percent more than a year ago, the data showed.
Iran’s oil exports hit 2.7 million bpd in May, Iranian news agency SHANA reported this month, representing a record high since the lifting of international sanctions on Tehran in 2016.
Indian state refiners had cut oil imports from Iran in the 2017/18 financial year because of a dispute over development rights for a giant gas field.
However, the refiners had drawn plans to raise imports in the current fiscal year from April after Iran agreed to steep shipping discounts.