Every week, the overview of raw materials allows you to review the news of the commodities markets in order to better understand the variations in energy prices, metals and agricultural raw materials.
Energy : For the second consecutive month, OPEC+ decided to accelerate the increase in its oil production. In June, production will increase by 411,000 barrels per day, which brings the total increases to 960,000 barrels per day since April. The cartel says that the lifting of production cuts is justified by a healthy market. This argument is rather wobbly while the whole world wonders about the consequences of the trade war launched by Donald Trump on oil demand. The unofficial reason for this change of radical CAP would come from the posture of Saudi Arabia, which no longer wishes to play the role of Swing Producer, or extra producer, alone.
Concretely, the Saudi kingdom exerts pressure for this increase in order to sanction members such as Iraq and Kazakhstan which do not respect their quotas. By increasing the offer, Saudi Arabia hopes to punish these countries while seeking to recover market share and encourage strict compliance with quotas by its members for the future.
Second, this strategy meets American demand for lower prices and the timing is perfect since Donald Trump will visit Ryad in mid-May for his first international trip.
Finally, the enlarged cartel could aim to reduce oil production in countries outside OPEC+ such as the United States and Brazil, where production costs are higher. The strategy is nonetheless risky since it could lead to an overabundance of supply compared to uncertain demand, in particular in a context of potential global economic slowdown. This is what the market is dreading today: crude prices win this Monday. The Brent is negotiated below 60 USD per barrel while the WTI is exchanged around 56.50 USD.
Metals : The announcement of China concerning the evaluation of commercial discussions with the United States has stimulated the hope of a reduction in customs duties, boosting the price of industrial metals. Copper at three months on the London Metal Exchange increases at 9389 USD per metric ton. As for precious metals, gold lost a little land last week at USD 3,250 despite the support of an unstable economic environment. To date, gold has increased more than 25% from the 1is January, supported by market volatility and purchases of central banks.
Agricultural products : On the wheat market, the term contracts in Chicago observe are stable after recently reached notable low points. Recent precipitation forecasts have improved the conditions for winter wheat, and hot and dry weather should promote spring wheat sowing. The bushel of wheat is exchanged at 545 cents (maturity July 2025).
Related news :