WORLD COMMODITIES TRADING
OPEC sees bearish oil outlook for rest of 2019
OPEC delivered a downbeat oil market outlook for the rest of 2019 on Friday as economic growth slows and highlighted challenges in 2020 as rivals pump more, building a case to keep up an OPEC-led pact to curb supply.
In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020. The bearish outlook due to slowing economies amid the US-China trade dispute and Brexit could press the case for OPEC and allies including Russia to maintain a policy of cutting output to support prices. Already, a Saudi official has hinted at further steps to support the market.
OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices. OPEC left its forecast for 2020 oil demand growth at 1.14 million bpd, up slightly from this year. But OPEC added that its forecast for 2020 economic growth faced downside risk.
World Oil rises, but downbeat OPEC outlook caps gains
Oil prices on Friday rebounded from a two-day drop, alongside equities as expectations of further stimulus by central banks helped to ease recession concerns.
Brent crude LCOc1 was ended the session up 41 cents, or 0.7%, at $58.64 a barrel, after falling 2.1% on Thursday and 3% the previous day. US. crude CLc1 rose 40 cents to settle at $54.87 a barrel, having dropped 1.4% in the previous session and 3.3% on Wednesday. Before the OPEC monthly report, Brent touched a session high of $59.50 and US crude traded at $55.67 as investors expect further interest rate cuts from the Federal Reserve and moves by the European Central Bank next month to fight softening growth.
For the week, both oil benchmarks eked out small gains after two consecutive weeks of losses, even as Wall Street’s three main indexes were on track to rack up their third weekly loss, as investors worried about the risk of recession and US-China trade tensions.
BNP Paribas cut its forecast for 2019 for U.S. crude by $8 to $55 per barrel and for Brent by $9 to $62 per barrel, citing slowing economy amid the trade dispute.
Earlier this week, data releases included a surprise drop in industrial output growth in China to a more than 17-year low, and a fall in exports that sent Germany’s economy into reverse in the second quarter.
The price of Brent is still up nearly 10% this year helped by supply cuts led by OPEC and its allies such as Russia, a group known as OPEC+.
Gold drops but eyes 3rd weekly gain
Gold fell on Friday as stocks and the dollar firmed, but fears of a slowing global economy and lack of clarity on the US-China trade war kept bullion on track for a third straight weekly gain.
Spot gold was down 0.5% at $1,514.70 per ounce as of 1:42 p.m. EDT (1751 GMT), but is up over 1% so far this week. US gold futures settled down 0.5% at $1,523.60.
Bullion has risen more than $100 since the beginning of the month amid falling global bond yields, heightened trade tensions and a slew of disappointing economic data globally. Earlier this week, 10-year Treasury yields dropped below the two-year yield for the first time in 12 years. Curve inversion is widely considered a warning that the economy is headed for recession.
US President Donald Trump said on Thursday he believed China wanted to make a trade deal and that the dispute would be fairly short. Beijing had vowed to counter the latest tariffs on Chinese goods but called on Washington to meet it halfway on a potential deal.
Investors will now focus on the U.S. Federal Reserve’s annual symposium next week for further hints on monetary easing.
On the technical side, spot gold may fall into a range of $1,483-$1,503 per ounce, according to Reuters technical analyst Wang Tao.
Elsewhere, silver fell 0.6% to $17.16 per ounce, but was on track for a second consecutive weekly gain. Platinum rose 0.9% to $849.95 an ounce, while palladium rose 0.4% to $1,450.7 an ounce.
CBOT corn rises as parts of US midwest remain dry
Chicago Board of Trade (CBOT) corn futures firmed on Wednesday on worries that dry conditions would drag down crop yields in parts of the US Midwest, traders said. Prices rebounded from early lows as spillover selling pressure in response to lower stock markets and crude oil faded. CBOT September corn rose 2-1/2 cents to $4.06-1/2 per bushel and new-crop December corn closed up 1-1/2 cents at $4.14 a bushel. Both held support at their 200-day moving averages but hit overhead resistance at their 100-day moving averages. Dry weather in parts of the eastern US Midwest elevated concerns about lower yields. Crop conditions are already sub par following excessive rains during spring planting. The USDA is due to report weekly export sales totals on Thursday morning. Old-crop corn sales were seen at 100,000-300,000 tonnes and new-crop sales were expected at 200,000-600,000 tonnes.
ICO raises global coffee surplus forecast
The International Coffee Organization on Wednesday raised its forecast for global coffee production in 2018/19 to 168.77 million 60-kg bags from 167.75 million. The inter-governmental body now sees a global surplus of 3.92 million bags for the season versus a previously expected surplus of 3.11 million. The ICO also raised its forecast for global consumption in 2018/19 to 164.84 million bags from 164.64 million. A surplus of 4.08 million bags was estimated for the 2017/18 season, up from 3.84 million seen previously.
Palm oil prices seen firming
Palm oil prices are expected to climb early next year as rapidly increasing consumption and slowing growth in production reduce global stockpiles of the tropical product, a leading analyst said on Wednesday. Prices of the vegetable oil are forecast to average $570 a tonne, Free on Board (FoB) Indonesia between January and June next year, from $468 a tonne in July, Thomas Mielke, executive director of Hamburg-based newsletter Oil World told an industry conference in Singapore.
Demand for palm oil is accelerating. Global consumption of palm oil is expected to rise by 7.3 million tonnes in 2018/19 (October to September), while world production is forecast to rise by 4.2 million tonnes, Mielke said. Benchmark palm oil prices are up 1.6 percent in August, rising for a second month in a row.The market has lost 32 percent in the last two years of losses. Palm oil stocks, which have been rising, are likely to decline in the second half of the year and in 2020, he said.
China iron ore keeps sliding
Most ferrous metals in China’s futures markets remained under pressure on Wednesday, with iron ore extending its slide for the fifth session to its weakest in six weeks, amid the spectre of rising supply and weakening demand.
The most-traded iron ore on the Dalian Commodity Exchange, for January 2020 delivery, slumped as much as 5.7 percent to 658 yuan ($93.46) a tonne, the weakest intraday level since June 26. It ended down 5.4 percent at 660.50 yuan after flirting with the day’s downside limit. Slipping into bear-market territory, spot cargoes of benchmark 62percent iron ore for delivery to China finished at $101 a tonne on Tuesday, based on SteelHome consultancy data. That reflects a more than 20percent drop from last month’s five-year peak. Dalian iron ore lost more than 12percent since the start of August with signs that the global supply crunch is easing and the seasonal tepid demand for steel during summer in China fuelling its pullback from record highs.