The oil market closed the week with a slight gain as ICE Brent settled higher, marking its fourth consecutive weekly increase. Hurricane activity in the Gulf of Mexico provided some upward support, particularly as Hurricane Beryl redirected its path towards Texas. This shift poses risks to offshore oil and gas production and raises concerns about potential impacts on refinery infrastructure upon landfall. Any significant disruptions to Texas refineries could bolster refined product cracks, potentially influencing crude oil prices negatively but supporting refined product prices.
Speculative activity reflected optimism as positioning data revealed a notable increase in net long positions in ICE Brent by 37,440 lots, bringing the total net long to 195,811 lots as of last Tuesday. The rise was driven primarily by new long positions entering the market. Updated CFTC COT data, delayed due to the recent US holiday, is expected to provide further insights today.
Looking ahead, the energy calendar remains packed with significant releases. The EIA is set to unveil its Short-Term Energy Outlook on Tuesday, featuring updated forecasts for US oil and gas production alongside global market projections. Wednesday will see OPEC‘s monthly oil market report, closely watched for any revisions to oil demand growth forecasts amid ongoing discrepancies with the IEA‘s outlook. Finally, the IEA will release its own monthly oil market report on Thursday.
Metals See Mixed Signals: Chinese Copper Premium Rebounds
In the metals sector, recent data from the Shanghai Metals Market (SMM) indicates a rebound in the premium paid on imported copper, returning to positive territory for the first time in nearly two months amidst gradual demand recovery. The Yangshan copper premium, reflecting the additional cost over global exchange prices, climbed to $3 per ton on Friday, marking its highest level since May 10, 2024. However, domestic demand remains subdued, as evidenced by Shanghai Futures Exchange (ShFE) reporting a 2,121-ton increase in copper stocks last week, reaching 321,642 tonnes after three consecutive weeks of decline.
Other metals displayed varied trends. Aluminium inventories rose by 3.9% WoW to 244,020 tonnes, the highest level since April 21, 2023. Zinc and lead stocks saw increases of 0.2% and 4.3%, respectively, while nickel inventories decreased by 4.2% to 21,490 tonnes.
Precious Metals and Agriculture Highlights
Gold prices edged higher on Friday, approaching $2,400 per ounce, bolstered by US economic data indicating sluggish wage growth and rising unemployment rates. The dollar index saw a notable decline, alongside decreases in US 10-year bond yields, suggesting renewed market expectations for a September rate cut, with futures markets now pricing in an 81% probability.
In agriculture, US wheat export sales remained robust according to the latest data. France’s Agriculture Ministry reported that only 1% of soft wheat had been harvested by July 1, falling short of last year’s 8% and the five-year average of 5%. Meanwhile, the corn crop maintained strong ratings, with 82% in good to excellent condition, slightly down from 81% the previous week and below the 83% reported last year.
Weekly US net export sales data for the week ending June 27 showed mixed results. Strong demand was noted for US wheat, while soybean and corn shipments decreased. Soybean exports totaled 378.7kt, down from 384.7kt the previous week and well below market expectations. Corn exports also dipped to 668.7kt, slightly lower than the previous week and last year’s figures, albeit falling short of market forecasts. Conversely, US wheat shipments stood at 805.3kt, surpassing both the previous week’s figures and year-ago levels, and exceeding market expectations.
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