Middle East Strife Sparks Late Crude Rally US crude oil futures soared during the Friday trading session, allowing West Texas Intermediate (WTI) contracts to target for the first time in about a year. But why did oil prices suddenly enjoy an end-of-week spike? Geopolitical tensions. In the Middle East, the Iran-backed Houthis political group announced that it attacked an international airport and airbase in Saudi Arabia with drones. While the Saudis have not confirmed the attacks, Riyadh has been consistently fighting the Houthis since 2015 in Yemen. What made the developments even more noteworthy was that President Joe Biden directed the State Department to revoke the Houthis’ terrorist designation, potentially setting up a diplomatic conflict with Saudi Arabia. Political analysts
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Middle East Strife Sparks Late Crude Rally
US crude oil futures soared during the Friday trading session, allowing West Texas Intermediate (WTI) contracts to target $60 for the first time in about a year. But why did oil prices suddenly enjoy an
In the Middle East, the
What made the developments even more noteworthy was that President Joe Biden directed the State Department to revoke the Houthis’ terrorist designation, potentially setting up a diplomatic conflict with Saudi Arabia. Political analysts believe that the decision would diminish the US alliance with the Kingdom.
But why would this matter? In recent months, the Saudis have been an instrumental force in balancing global crude markets, allowing US oil and gas producers to ramp up production. The nation announced that it would curtail output to offset the increased production capabilities of Libya, Kazakhstan, and Russia. Should the
On Wednesday, the Energy Information Administration (EIA) reported that domestic inventories declined 6.644 million barrels in the week ending February 5, beating the median estimate of an increase of 985,000 barrels. Crude stocks at the Cushing, Oklahoma storage facility decreased 658,000 barrels.
- Friday Settlement: +$1.49, or 2.56%, to $59.73 per barrel
- Weekly Performance: +4.66%
- YTD Performance: +23.36%
Arctic Freeze Not Enough for Natural Gas
It was a whirlwind week for natural gas prices as the
On the surface, it would appear that natural gas would be recording a massive rally. Many parts of the US are being blanketed with
The primary issue is that the US possesses a massive amount of natural gas supplies. If output would be affected by
The past week’s EIA supply report did not support natural gas prices either. The US government reported a
Could natural gas prices face a serious drop once temperatures begin to warm up? It might depend on what the next two supply reports show.
- Friday Settlement: +$0.029, or 1.01%, to $2.897 per million British thermal units
- Weekly Performance: +0.52%
- YTD Performance: +14.24%
Supply and Demand Impact Platinum
Platinum is trading at its best level in about six years, buoyed by increasing supply shortages and growing industrial demand.
In South Africa, disruptions at the nation’s refineries are adding tremendous pressure on output and inventories. For the last few months, a mix of power outages and the coronavirus pandemic have hurt the country’s mining sector, leading to an accumulated backlog that will require months for the industry to catch up.
Automakers are turning to platinum as an alternative to palladium amid skyrocketing prices. As part of the sector’s efforts to adhere to governments’ emissions regulations, carmakers are utilizing palladium and platinum for their catalytic converters that limit a vehicle’s pollution capabilities. With palladium trading just below $2,400 an ounce, companies are investing more into platinum, which is weighing on global stockpiles.
Investment demand is another contributing factor to platinum’s 2021 rally. Last year, platinum had lagged behind its metal counterparts. Overall, according to the World Platinum Investment Council, the platinum market is anticipated to remain in a deficit this year.
Oil is going up and commodities in general are going up. On a relative basis platinum is low on a historical level. So it’s definitely receiving a lot of investor attention and not necessarily that anything fundamentally has changed in the
- Friday Settlement: +$17.50, or 1.4%, to $1,264.50 per ounce
- Weekly Performance: +11.14%
- YTD Performance: +17.14%
USDA Takes a Bite Out of Corn’s 2021 Rally
The US Department of Agriculture (USDA) released its February World Agricultural Supply and Demand Estimates (WASDE) report — and the numbers disappointed corn prices.
According to the USDA, the 2020–2021 corn ending stocks were lowered to 1.502 billion bushels, down from the January estimate of 50 million bushels. The market had penciled in a reading of 1.382 billion bushels before the report was released.
Export projections also disappointed the corn bulls, with USDA researchers raising their 2020–2021 corn exports by 50 million bushels to 2.6 billion. Early forecasts had wanted to see as much as 200 million bushels, especially with stronger demand from China. The USDA increased China’s 2020–2021 corn imports by up to 24 million metric tons, up from 17.5 million metric tons in January.
For the most part, the conclusion that investors could make from the February WASDE report is that the USDA is monitoring the timing and pace of US corn inspections and shipments before releasing more bullish projections.
- Friday Settlement: -$0.015, or 0.28%, to $5.395 per pound
- Weekly Performance: -1.73%
- YTD Performance: +11.07%
The World Loves Iron Again
The iron ore industry is rebounding, and it is not only because of China. Many major economies have seen significant increases in iron imports, with an estimated total global volume of seaborne iron ore discharged at ports in January coming in at 134 million tons, according to Refinitiv data.
While Chinese imports came in just below 99 million tons in January, imports by the world (minus China) rose 3.3%
Here were some of the most noteworthy imports from January:
- Japan: 7.68 million tons
- South Korea: 5.98 million tons
- Western Europe: 7.29 million tons
One of the biggest beneficiaries of this development? Australia. Despite its geopolitical squabble with China, the country’s trade surplus climbed to a
- Friday Settlement: +$0.34, or 0.21%, to $160.08 per ton
- Weekly Performance: +3.74%
- YTD Performance: +2.5%
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