USD Weakness Supports Commodities, Energy Prices Rise on Reduced Oil Surplus Estimates

Yesterday, the weaker USD provided some support to the commodities complex as markets remain sensitive to external developments. Energy prices managed to settle higher, despite ongoing uncertainty in global markets, with ICE trading below US$70/bbl. The oil market seems unfazed by Ukraine’s ceasefire agreement, still unsure of Russia’s stance.

American Petroleum Institute’s numbers were bearish, showing a 4.2m barrel increase in US crude oil inventories. However, draws in Cushing crude oil inventories and gasoline stocks offset some of the bearishness. The latest EIA Short-Term Energy Outlook reduced oil surplus expectations for 2025 and 2026, with US crude oil production estimates marginally increased.

European gas prices rose with colder weather forecast in Northwest Europe and increased tensions between Russia and Ukraine. On the metals front, President Trump threatened to raise tariffs on Canada, but backed down after Ontario dropped its electricity surcharge. Broader tariffs on aluminium and steel imports come into effect today, impacting US industry.

In agriculture, the USDA projected larger wheat stocks in its latest report, with domestic and global balance sheet revisions. Corn and soybean balances remained relatively unchanged, but wheat saw an increase in US ending stocks due to reduced export estimates.

Overall, these developments in the commodities market can have significant implications for investors and consumers alike. Energy prices may see continued volatility, metals prices could rise further due to tariffs, and agricultural products may experience price fluctuations based on global supply and demand. It’s important for individuals to stay informed about these market trends to make informed decisions about their investments and finances.