Commodities Market Roundup on May12:
- US West Texas Intermediate crude price rose 6% to $105.71.
- Brent crude climbed $5.05, or 4.9%, to $107.51 a barrel.
- Nymex natural gas for June delivery increased by 9.90 cents.
- This month, corn was the best performer, with the S&P GSCI rising 9 points
US West Texas Intermediate crude price rose 6% to $105.71.
The International Energy Agency’s monthly report provides a detailed and essential overview of the global oil market, but it is often dry.
However, the May report is more specific, as it predicts that the oil market will continue to suffer from shortages in the coming months due to formal and informal embargoes on Russian oil, which is at a low level not seen in years. As a result, markets for products, especially distillates such as diesel, will continue to be stronger than those for the crude oil used to produce them.
According to the IEA report, what has happened so far may be the calm before the storm. According to the report, Russian exports have remained the same, despite growing international pressure and a decline in oil production.
Brent crude climbed $5.05, or 4.9%, to $107.51 a barrel.
Despite ongoing negotiations, Russian oil has been threatened with a total embargo by the European Union. Due to Russia’s role as a leading producer and exporter of crude oil and fuels, disruptions that are expected to worsen have tightened markets worldwide, especially for refined products such as diesel.
Andrew Lipow, president of Lipow Oil Associates in Houston, predicted that prices would continue to rise if the European Union phases out Russian oil purchases later this year.
Analysts say the market will become more congested as the EU haggles over an embargo on Russian oil, and trade flows will change. However, the vote has been delayed due to Hungary’s opposition since it requires unanimous support.
Today, Nymex natural gas for June delivery increased by 9.90 cents, or 1.30%, to $7.7390 per million British thermal units.
Robert Habeck, Germany’s Economy Minister, told WirtschaftsWoche that the survival of Europe’s biggest economy “depends on several conditions”, but it is possible.
The country could survive the ban by filling storage facilities, increasing LNG terminals, and reducing consumption. In addition, Germany is planning to reduce its reliance on Russian gas by fast-tracking the approvals of four floating LNG projects.
In the first quarter, gold prices rose significantly in response to Russia’s invasion of Ukraine, pushing the metal closer to its all-time high of nearly $2,075 an ounce. However, the geopolitical premium has begun to unravel, despite the war in Eastern Europe still raging almost three months after it began.
Gold has failed to live up to it lately despite its reputation as a safe-haven asset. In fact, gold has strangely tracked equity market losses rather than risky assets in recent weeks, indicating that real interest rate performance is more relevant to gold than investor sentiment. In the near term, the XAU/USD could face further headwinds as real yields rise amid hawkish Fed policy, especially if the recession narrative fades and traders abandon defensive positions.
S&P Dow Jones indexes indicate the S&P GSCI Agriculture index rose 5.8% MoM due to the strong performance of grains and oilseeds. This month, corn was the best performer, with the S&P GSCI rising 9 points. S&P GSCI Soybean Oil rose by 23% in April, hitting a record high. S&P GSCI increased 5.1% in April, helped by yet another higher inflation reading.
This year, several hard commodities experienced strong growth, including Teucrium Corn Fund (CORN B), Teucrium Wheat Fund, WEAT and Teucrium Soybean Fund (SOYB B), which are up 36%, 53%, and 21%, respectively.