Symax Fintech Daily Market Insights 09.01.24

Crude oil prices remain stuck in rut, which looks like excellent news for both bonds and stocks. WTI tumbled Monday as Saudi Arabia cut prices, pushing it back down close to $70 a barrel to keep it in line with levels from back before Russia’s invasion of Ukraine in 2022 sent the fuel soaring. 

The slide reinforces bond-market expectations that inflation will average about 2.2% a year over the coming five years. That provides a calm backdrop for Thursday’s December CPI report. Little wonder that stocks and bonds welcomed the decline in oil. As the softness of the oil market becomes more apparent, the bigger risk now may be that a sustained slide would signal a concerning lack of global growth momentum, but that would likely require a drop to well below $70 a barrel.

For now, crude looks to be in a sweet spot for the global economy. Prices aren’t surging, which would revive fears of hot inflation, but neither are they tumbling, which would bring recession angst back into play. BB

Oil tankers continue Red Sea movements despite Houthi attacks – Oil and fuel tanker traffic in the Red Sea was stable in December, even though many container ships have rerouted due to attacks by Iran-aligned Houthi militants, a Reuters analysis of vessel tracking data showed. The attacks have driven up shipping costs sharply along with insurance premiums, but have had less impact than feared on oil flows, with shippers continuing to use the key East-West passage.

Brazil’s soybean harvest kicks off with low yields in Mato Grosso – Brazilian soybean farmers have begun to reap their 2023/24 soybean crop, covering some 0.6% of the national planted area as of last Thursday, agribusiness consultancy AgRural said on Monday. Field work is more advanced in top grain state Mato Grosso, where yields “are much lower than normal” after hot and dry weather destroyed part of the crop.

Unseasonable rains in Ivory Coast lift cocoa outlook, farmers say – Unseasonable rains in most of Ivory Coast’s cocoa regions last week are expected to boost both the main crop and the April-to-September mid-crop, farmers said on Monday. The world’s top cocoa producer is in its dry season, which runs officially from mid-November to March when rains are usually scarce.

China’s Dalian commodity exchange excludes iron ore from fee waivers – China’s Dalian Commodity Exchange has excluded iron ore, coking coal and coke from its latest waivers on commission fees, according to traders and a state-backed media report, a move market players say could be aimed at reining in speculation. The exchange said on Friday it would waive or reduce some commission fees market participants incur in executing transactions and other processes from Jan. 9 to the end of the year, without specifying the products affected.

Alumina price panic a sign of future aluminium volatility – The Shanghai Futures Exchange price for the product that sits between bauxite and metal in the primary aluminium production chain jumped 30% over the last two weeks of December, peaking at a Jan. 3 high of 3,838 yuan per metric ton. The distant trigger for the supercharged rally was a Dec. 18 explosion at an oil terminal in Conakry, the capital of Guinea, which is a major bauxite supplier to China’s alumina refineries.

Shell signs 20-year purchase deal with Canadian Ksi Lisims LNG project – Global gas giant Shell has agreed to buy two million metric tons of liquefied natural gas per year from Ksi Lisims LNG, partners in the proposed Canadian project said on Monday. British Columbia’s Pacific coast is close to Canada’s vast Montney shale field and has a relatively short shipping distance to Asian markets.

Norway’s Statkraft to invest up to $6.6 bln in hydro, wind power – Norway’s state-owned renewable power producer Statkraft on Monday said it plans to invest up to $6.56 billion to upgrade its domestic hydro and wind power facilities and to build new onshore wind farms. The plans would double Statkraft’s current output from wind farms and boost the effect of the company’s hydro power plants, adding some 3 terrawatt hours of additional electricity output, the company told a press conference in Oslo

Russian wheat export prices edge up over last two holiday weeks – Export prices for Russian wheat have increased slightly over the last two holiday weeks, while market activity has remained low, analysts said on Monday. The price of 12.5% protein Russian wheat scheduled for free-on-board (FOB) delivery in February was $244 per metric ton, up $1 from the level two weeks ago, the IKAR agriculture consultancy reported.

Ukraine grain exports down more than 4 mln tons year on year – Ukraine’s grain exports so far in the 2023/24 July-June marketing season have fallen to about 19.4 million metric tons from almost 23.6 million tons at the same stage last year, agriculture ministry data showed on Monday. The volume exported this season includes 7.8 million tons of wheat, 10.3 million tons of corn and 1.2 million tons of barley.

Oil prices steadied on Tuesday after sliding in the previous session, as markets weighed Middle East tensions against demand worries and rising OPEC supply. Brent crude futures rose 17 cents, or 0.2%, to $76.29 a barrel at 0707 GMT, while U.S. West Texas Intermediate crude futures inched up 0.1%, or 5 cents, to $70.82 a barrel. The benchmarks had fallen over 3% and 4% respectively on Monday on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output. On the Gaza war, the Israeli military has said its fight against Hamas will rage through 2024, worrying markets that the conflict could grow into a regional crisis that could disrupt Middle Eastern oil supplies. U.S. Secretary of State Antony Blinken arrived in Tel Aviv late on Monday to brief Israeli officials on his two days of talks with Arab leaders on ending the war.