The oil market saw modest gains last week, marking its fourth consecutive weekly increase as ICE Brent settled slightly higher. The surge was partly bolstered by heightened hurricane activity in the Gulf of Mexico. Hurricane Beryl, now veering towards Texas, poses a risk to offshore oil and gas production. However, the primary concern lies in potential disruptions to refinery infrastructure upon landfall. Significant outages could exert upward pressure on refined product prices while potentially dampening crude oil prices.
Speculative activity in ICE Brent indicated a notable increase in net long positions by 37,440 lots, bringing the total to 195,811 lots as of last Tuesday. This uptick was predominantly driven by new long positions entering the market. The release of the CFTC’s Commitments of Traders (COT) data, delayed due to a recent US public holiday, is expected to shed further light on market positioning dynamics.
Upcoming Events and Outlooks in Energy Markets
The energy calendar is packed with significant releases this week. The EIA is set to publish its Short-Term Energy Outlook, providing updated forecasts for US oil and gas production alongside global oil market projections on Tuesday. Wednesday will see OPEC releasing its monthly oil market report, with market participants keenly watching for potential adjustments in oil demand growth forecasts. Divergences between OPEC and the IEA regarding demand outlooks have been notable in recent months. Lastly, the IEA will issue its monthly oil market report on Thursday, adding further insights into market dynamics.
Metals Market: Chinese Copper Premium Rebounds
Recent data from the Shanghai Metals Market (SMM) indicates a resurgence in the premium paid on imported copper, reaching positive territory for the first time in nearly two months. The Yangshan copper premium, reflecting additional costs over global exchange prices, climbed to $3 per ton on Friday, the highest since May 10, 2024. Despite this, domestic demand remains subdued, as evidenced by a rise in Shanghai Futures Exchange (ShFE) copper inventories to 321,642 tonnes, following three consecutive weeks of decline.
Other Metals and Precious Metals Update
Aluminium inventories surged by 3.9% week-on-week to 244,020 tonnes, the highest level since April 21, 2023. Zinc and lead stocks also saw modest increases, by 0.2% and 4.3% respectively, while nickel inventories decreased by 4.2% to 21,490 tonnes.
In precious metals, gold prices edged higher towards $2,400 per ounce amid indications of slowing wage growth and rising unemployment rates in recent US economic data. The dollar index saw a sharp decline, alongside lower US 10-year bond yields, hinting at growing expectations for a September rate cut, with futures markets now pricing an 81% likelihood of such a move.
Agriculture: US Wheat Export Sales Strong
Recent data from France’s Agriculture Ministry shows that as of July 1, only 1% of soft wheat has been harvested, well below the 8% from last year and the five-year average of 5%. Meanwhile, the US corn crop remains in good to excellent condition at 82%, slightly down from 81% the previous week and below the 83% recorded last year.
US weekly net export sales for the week ending June 27 underscored robust demand for wheat, despite declines in soybean and corn shipments. Soybean exports fell to 378.7 thousand tonnes, lower than both the previous week’s 384.7 thousand tonnes and the 780.6 thousand tonnes from a year ago. Corn exports similarly decreased to 668.7 thousand tonnes, marginally below the previous week’s 681.5 thousand tonnes and slightly lower than a year ago. In contrast, US wheat shipments surged to 805.3 thousand tonnes, surpassing both the previous week’s 667.2 thousand tonnes and the 402.8 thousand tonnes reported last year, and exceeding market expectations.
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