Category Archives: Commodities

By Shariq Khan

NEW YORK (Reuters) – Investors were more bearish than ever on last week, deepening a months-long selloff that pressured prices to multi-year lows amid growing concerns of weak demand in top consuming nations.

Negative sentiment swept oil markets so strongly that short positions on overtook long positions for the first time, data from the Intercontinental Exchange (NYSE:) showed on Friday. Short positions – bets on lower prices – totaled 164,223 contracts, while long positions, or bets on higher prices, amounted to 151,543 contracts, the data showed.

“This historic speculative selling pressure prompted a more than $10/bbl collapse in crude prices between late-August and this past Tuesday,” Commodity Context analyst Rory Johnston wrote.

Investors’ oil outlook has soured as demand growth for the commodity has failed to meet the lofty levels of recent years, pressured by turmoil in top importer China’s economy. Supplies have also overwhelmed markets this year, with U.S. oil producers pumping record amounts of oil.

Brent crude futures settled below $70 a barrel on Sept. 10 for the first time since December 2021. They closed at $72.75 a barrel on Tuesday, down more than 20% since this year’s peak of more than $90 a barrel in mid-April.

Hedge funds were particularly bearish on diesel as prices approached their lowest levels in three years, TACenergy traders wrote on Monday.

Money managers increased short bets on U.S. ultra-low sulfur diesel futures by more than 12,000 contracts to 65,084 contracts in the week to Sept. 10, data from the Commodity Futures Trading Commission showed.

ULSD futures slumped to $2.04 per gallon last week, their lowest since December 2021, dragged down by weak economic activity and growing use of alternative fuels.

Record-low sentiment in speculative markets could mean that the months-long slump in oil prices is nearing its end, going by historical patterns, market participants said.

“Extreme positions by speculators are known to be reliable contrary indicators as when everyone gets on the same side of the boat, that’s when it tips over,” U.S. fuel distributor TACenergy said.

They cautioned that it is hard to predict when positioning will reverse, but markets could see sharp volatility when it does.

“With so much combined short interest, when the bidding does start, you can expect there to be some fast price spikes,” TACenergy said.

SINGAPORE (Reuters) – Oil prices edged up in early trade on Monday amid expectations of a U.S. interest rate cut this week, though gains were capped by U.S. supply resumptions following Hurricane Francine and weaker China data.

futures for November were up 15 cents, or 0.2% at $71.76 a barrel at 0015 GMT. futures for October were up 23 cents, or 0.3%, at $68.88 a barrel.

Both contracts had settled lower in the previous session, with concerns about supply disruptions easing as Gulf of Mexico crude production resumed following Hurricane Francine and as rising data showed a weekly rise in U.S. rig count.

Still, nearly a fifth of crude oil production and 28% of output in the Gulf of Mexico remain offline in the hurricane’s aftermath.

A key factor that will dominate the market this week is how aggressive a rate cut the U.S. Federal Reserve will deliver following its Sept. 17-18 meeting. Fed fund futures show investors are increasingly betting the central bank will cut by 50 basis points instead of 25 bps, according to CME FedWatch.

Lower interest rates will reduce the cost of borrowing, which can boost economic activity and lift demand for oil.

“We remain in the gradualist camp and expect the Fed to begin cutting by 25 basis points,” ANZ analysts in a note.

In China, the world’s top oil importer, industrial output growth slowed to a five-month low in August, while retail sales and new home prices weakened further. Oil refinery output also fell for a fifth month, as disappointing fuel demand and weak export margins curbed production.

Meanwhile, the dollar remained steady after Republican presidential candidate Donald Trump was safe following what the FBI said appeared to be a second assassination attempt outside his golf course in Florida.

In the Middle East, Prime Minister Benjamin Netanyahu said Israel would inflict a “heavy price” on the Iran-aligned Houthis, after they reached central Israel with a missile on Sunday for the first time.

By David Lawder

(Reuters) -The Biden administration on Friday locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles, to boost protections for strategic industries from China’s state-driven industrial practices.

The U.S. Trade Representative’s office said that many of the tariffs, including a 100% duty on Chinese EVs, 50% on solar cells and 25% on steel, aluminum, EV batteries and key minerals, would take effect on Sept. 27.

The USTR determination, published on Friday and first reported by Reuters, showed that a 50% duty on Chinese semiconductors, now including two new categories – silicon wafers and polysilicon used in solar panels – is due to start in 2025.

The action, which marks the end of a more than two-year review of tariffs that had been imposed by former president Donald Trump, mostly left unchanged the top-line duty increases announced in May by President Joe Biden. These include a new 25% tariff on lithium-ion batteries, minerals and components, with those for EVs taking effect on Sept. 27, and those for all other devices on Jan. 1, 2026.

The Biden administration also left in place Trump’s tariffs on over $300 billion worth of Chinese goods ranging from toys and t-shirts to internet routers and industrial machinery at rates of 7.5% to 25%.

The final decision largely disregarded pleas from automakers for lower tariffs on graphite and critical minerals used in EV battery production because they are still dependent on Chinese supplies.

The action drew industry complaints that the increases would disrupt supply chains, including for semiconductor-intensive products, and do little to stop China’s technology transfer and industry domination practices that have led to excess factory production now flooding global markets.

“Since implementation, the tariffs have cumulatively cost American businesses and consumers $221 billion, while failing to alter Chinese trade policies and practices of concern,” Information Technology Industries Council President Jason Oxman said in a statement. “With today’s announcement, USTR once again relies on the blunt and ineffective tool of tariffs with no support for their effectiveness.”

‘TOUGH, TARGETED’

Lael Brainard, the top White House economic adviser, told Reuters the decision was made to ensure that the U.S. EV industry diversifies away from China’s dominant supply chain.

She said such “tough, targeted” tariffs are needed to counter China’s state-driven subsidies and technology transfer policies that have led to over-investment and excess production capacity. Washington is investing hundreds of billions of dollars worth of its own tax subsidies to develop domestic EV, solar and semiconductor sectors.

“The 100% tariff on electric vehicles here does reflect the very significant unfair cost advantage that Chinese electric vehicles in particular are using to dominate car markets at a breathtaking pace in other parts of the world,” Brainard said. “That’s not going to take place here under the vice president’s and the president’s leadership.”

China has vowed retaliation against the “bullying” tariff hikes and argued that its EV industry’s success is due to innovation, not government support. A spokesperson for China’s embassy in Washington did not immediately respond to a request for comment.

The higher U.S. tariffs take effect as Trump and Vice President Kamala Harris are both courting voters in auto and steel producing states, trying to position themselves as tough on China ahead of the November presidential election. Trump has vowed to impose 60% tariffs on all Chinese imports.

The European Union and Canada also are imposing new tariffs on Chinese EVs, the latter matching the 100% U.S. duties.

PORT, MEDICAL RELIEF

The final tariff decision does provide some temporary relief for U.S. port operators who were facing a new 25% tariff on massive ship-to-shore cranes, an industry that China dominates with no U.S. producers.

The duty would add millions of dollars to the cost of each crane. USTR said it will allow exclusions from the tariffs for any Chinese port cranes that were ordered prior to the May 14 initial tariff announcements, as long as they are delivered by May 14, 2026.

USTR raised tariffs to 50% on medical face masks and surgical gloves, from an initially proposed 25%, but delayed their start to allow a shift to non-Chinese suppliers. The planned duty on Chinese syringes, which were in short supply during the COVID-19 pandemic, will immediately rise to 100% from a previously planned 50%, but USTR will allow a temporary exclusion for enteral syringes, used to feed infants, for a year.

The agency also said it will consider requests for tariff exclusions for five Chinese industrial machinery categories, including those for machinery for purifying or filtering liquids, industrial robots and printing machinery.

By Shariq Khan

(Reuters) – Oil prices rose on Friday, extending a rally sparked by output disruptions in the U.S. Gulf of Mexico, where Hurricane Francine forced producers to evacuate platforms before it hit the coast of Louisiana.

futures rose by 34 cents, or 0.5%, to $72.31 per barrel by 0016 GMT. U.S. West Texas Intermediate crude futures rose by 38 cents, or 0.6%, to $69.35 a barrel.

If those gains hold, both benchmarks will break a streak of weekly declines, despite a rough start that saw Brent crude dip below $70 a barrel on Tuesday for the first time since late 2021. At current levels, Brent is set for a weekly increase of about 1.7%, and WTI is set to gain over 2%.

Oil producers assessed damages and conducted safety checks on Thursday as they prepared to resume operations in the U.S. Gulf of Mexico, as estimates emerged of the loss of supply from Francine.

UBS analysts forecast output in the region in September will fall by 50,000 barrels-per-day (bpd) month-over-month, while FGE analysts estimated a 60,000 bpd drop to 1.69 million bpd.

Official data showed nearly 42% of the region’s oil output was shut-in as of Thursday.

The supply shock helped oil prices recover from a sharp selloff earlier in the week, with demand concerns dragging benchmarks to multi-year lows.

Both the Organization of Petroleum Exporting Countries and the International Energy Agency this week lowered their demand growth forecasts, citing economic struggles in China, the world’s largest oil importer. A shift towards lower-carbon fuels is also weighing on China’s oil demand, speakers at the APPEC conference said this week.

China’s imports averaged 3.1% lower this year from January through August compared to the same period last year, customs data showed on Tuesday.

“Flagging domestic oil demand in China has become a hot topic and was further underlined by disappointing August trade data,” FGE analysts said in a note to clients.

Demand concerns have grown in the United States as well. U.S. gasoline and distillate futures traded at multi-year lows this week, as analysts highlighted weaker-than-expected demand in the top petroleum consuming country.

U.S. oil and fuel stocks rose last week as demand declined sharply, data from the U.S. Energy Information Administration showed on Wednesday.

Investing.com– Oil prices rose from a near three-year low in Asian trade on Wednesday as traders waited to gauge the impact of Hurricane Francine on production in the Gulf of Mexico.

Prices also took some support from industry data showing an unexpected weekly draw in U.S. oil inventories. 

But oil markets were nursing steep losses from Tuesday, as disappointing Chinese import data and a cut to the Organization of Petroleum Exporting Countries’ demand forecast presented a dour outlook for oil markets. 

expiring in November rose 0.5% to $69.51 a barrel, while rose 0.6% to $65.50 a barrel by 20:34 ET (00:34 GMT). 

Francine becomes a hurricane, Gulf of Mexico production impacted 

Francine became a category-one hurricane on Tuesday evening, with the storm set to make landfall in Louisiana on Wednesday. 

The storm is set to cut a path of destruction across the American mid-South in the coming days, and saw a slew of oil and gas producers halt output in the Gulf of Mexico/

The region accounts for about 15% of U.S. oil production, with any disruptions in production likely to tighten supplies in the near-term. 

US inventories see unexpected draw- API 

Data from the showed U.S. oil inventories saw a draw of 2.79 million barrels in the week to September 6, against expectations for an increase of 0.7 mb. 

The API data showed declines in gasoline inventories, suggesting that demand in the world’s biggest fuel consumer remained strong even as the travel-heavy summer season came to an end.

The API data usually heralds a similar reading from official , which is due later on Wednesday. 

Oil wallows near 3-year low on demand fears 

But despite the positive signals, oil prices tumbled to their lowest levels since December 2021 on Tuesday, hit chiefly by concerns over slowing global demand. 

The selldown was initially sparked by data from China which showed oil imports to the country shrank for a third consecutive month in August, amid slowing growth and waning fuel demand in the world’s biggest oil importer.

Fears of a demand slowdown were exacerbated by the OPEC slashing its demand growth forecast for the year. The cartel now sees 2024 global oil demand growth at 2.03 mb, compared to prior forecasts of 2.11 mb. 

By Georgina McCartney

(Reuters) – Oil was steady in early trade on Tuesday as investors weighed supply disruptions from Tropical Storm Francine and the potential for further output cuts against persistently weak Chinese demand.

futures rose 16 cents, or 0.22%, to $72.00 a barrel by 0004 GMT. U.S. West Texas Intermediate crude futures rose 12 cents, or 0.17%, to $68.83 a barrel.

Both benchmarks gained around 1% at Monday’s settlement.

The U.S. Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening, as Tropical Storm Francine barrelled across the Gulf.

The port of Corpus Christi remained open but with restrictions.

The tropical storm is forecast to strengthen significantly over the next couple of days, and was expected to become a hurricane on Monday night or Tuesday morning, according to the National Hurricane Center (NHC).

Exxon Mobil (NYSE:) said it shut-in output at its Hoover offshore production platform, while Shell (LON:) paused drilling operations at two platforms. Chevron (NYSE:) also began shutting in oil and gas output, at two of its offshore production platforms.

“At least 125,000 barrels per day (bpd) of oil capacity is at risk of being disrupted,” ANZ analysts said in a note, citing data from the NHC.

Elsewhere, global commodity traders Gunvor and Trafigura anticipate oil prices may range between $60 and $70 per barrel on wakened Chinese demand and persistent global oversupply, executives told Asia Pacific Petroleum Conference (APPEC) attendees on Monday.

China’s shift towards lower-carbon fuels and a sluggish economy are dampening oil demand growth in the world’s largest crude importer, APPEC conference speakers said.

China’s annual demand growth has slowed from around 500,000-600,000 bpd in the five years before the COVID-19 pandemic to 200,000 bpd now, said Daan Struyven, head of oil research at Goldman Sachs.

Refining margins in Asia have slipped to their lowest seasonal levels since 2020.

With the 2024 U.S. presidential election approaching, analysts expect uncertainty and volatility to rise in the markets.

The race between Vice President Kamala Harris and former President Donald Trump remains highly fluid, with polls indicating a narrow lead for Harris in key battleground states. Although this unpredictable environment poses potential risks to markets, strategists at UBS advise against making dramatic portfolio changes based solely on electoral predictions.

“Electoral shifts have tended to produce temporary volatility, making large sectoral shifts to reflect predictions about the outcome dangerous in our view,” strategists note.

Instead, UBS recommends that investors consider several strategies to hedge against the potential volatility surrounding the election.

The Swiss franc and gold are highlighted as effective hedges. The Swiss franc, known for its safe-haven status, is particularly appealing in times of political uncertainty, especially since the Swiss National Bank is unlikely to cut rates significantly further.

Gold, on the other hand, offers a hedge against concerns over the stability of the U.S. dollar, which could be threatened by geopolitical tensions or an unsustainable U.S. fiscal deficit.

Lastly, structured strategies are also recommended by UBS strategists. These “can enable investors to retain exposure to further potential gains in stocks, while reducing sensitivity to a temporary correction,” the bank said in a recent note.

By using structured products, investors can benefit from market upsides while having a buffer against possible downturns.

Moreover, strategists have identified stocks that are likely to be highly sensitive to election outcomes, particularly in the U.S. consumer discretionary and renewables sectors. In addition, they highlight the as a currency where managing overexposure might be prudent given the potential for increased election-related volatility.

UBS also warns against overreacting to polling data. While the election outcome is uncertain, it is not the primary driver of financial market returns. Economic data and Federal Reserve rate expectations are likely to have a more significant impact.

Thus, UBS suggests that investors focus on improving the resilience of their portfolios rather than attempting to predict the election outcome.

According to the latest poll data, Vice President Kamala Harris holds a narrow lead over former President Donald Trump. The ABC News/Ipsos poll released on Sunday shows Harris leading Trump 50% to 46% among all adults and registered voters.

By Sebin Choi and Daewoung Kim

SEOUL (Reuters) – More than 30,000 protesters gathered in South Korea’s capital in broiling heat on Saturday, demanding more aggressive action by the government to combat global warming.

With temperatures exceeding 30 degrees Celsius (86 degrees Fahrenheit), protesters young and old marched in the country’s biggest demonstration so far this year, snarling traffic in central Seoul.

They waved large banners reading “Climate justice,” “Protect our lives!” and “NO to climate villain (President) Yoon Suk Yeol’s administration”.

“Truth is, without the air conditioner this summer was not liveable and people could not live like people,” said Yu Si-yun, an environmental activist leading the protest.

“We are facing a problem not unique to a country or an individual. We need systemic change and we are running out of time to act.”

Organised by the 907 Climate Justice March Group Committee, the protest followed a ruling last month by South Korea’s top court that the nation’s climate change law fails to protect basic human rights and lacks targets to shield future generations.

The 200 plaintiffs, including young climate activists and even some infants, told the constitutional court that the government was violating citizens’ human rights by not doing enough on climate change.

South Korea, which aims to be carbon-neutral by 2050, is the biggest coal polluter after Australia among the Group of 20 big economies, with a slow adoption of renewable energy. The government last year lowered its 2030 targets for curbing industrial greenhouse-gas emissions but kept its national goal of cutting emissions by 40% from 2018 levels.

Even South Korea’s kimchi has fallen victim to climate change. Farmers and manufacturers say the quality and quantity of the napa cabbage used in the ubiquitous pickled dish is suffering due to intensifying heat.

“Feel how long this summer is,” said Kim Ki-chang, a 46-year-old novelist who was participating in the protest for a third straight year.

“This would be a much bigger threat and survival issue to younger generations than the older ones, so I think the older generation should do something more actively for the next generation.”

Seoul has had a record 20 consecutive nights defined as “tropical”, with low temperatures remaining above 25 C (77 F).

Protest organising committee member Kim Eun-jung said the demonstrators chose the popular Gangnam financial and shopping area this year, not the Gwanghwamun area they used last year, to have their voices heard by the many big corporations there that the group blames for carbon emissions.